Outcome of Conference of Rulers (Emergency, Parliament & Politics)

Following the much awaited Conference of Rulers, the outcome came to an interesting twist. This is especially so after the PM of the incumbent government preempted today's conference with his own announcement of the National Recovery Plan yesterday evening.

I have previously highlighted the importance of being patient and staying sidelines during this uncertain times in my Weekly Update / Strategy Note at the start of the week. The hardest to factor into investment decision are factors beyond our control such as politics. I personally can accept volatility of the stock market but I cannot tolerate political uncertainty. U-turns and frequent policy changes impact decisions of business community, foreign investors and local investors. With that it shifts the baseline and open room to losses.

Based on the PM announcement yesterday, I was harbouring very little expectation for the Conference of Rulers outcome today. As it appears that prior to the PM announcement yesterday, the PM did meet the Agong for briefing. However, I was rather relief to read the statement of the Agong and the Rulers. I read it multiple times and to read between the lines just now. I will only highlight what is important to investors :

1. Parliament is to convened as soon as possible. Reading in tandem with the other press statement from the Conference of Rulers, it appear to highlight that the Rulers statement used the word immediately ("segera") which concur with Agong's decision for the Parliament as soon as possible ("secepat mungkin")

2. The Rulers unanimously agree that Emergency is no longer required beyond 1st August 2021. In short - no extension whatsoever.

3. The Agong highlighted the importance of Parliament and the Rulers highlighted the sanctity of democracy including the separation of powers (judicial, executive, legislative).

4. The Agong indicated for the MPs to debate the National Recovery Plan announced by the PM as well as the Emergency Ordinances.

Some quarters are still arguing that the Conference of Rulers does not resolve any issues as Constitutional Monarchy means the incumbent Government and PM must make the necessary recommendation or provide the necessary advice to the Agong. Some also argue the wordings are ambiguous and not sufficiently clear to amount to an order or direction by the Agong to the PM and his cabinet.

In my view, these concerns does not arise. This because Malaysia is a democracy based on the Westminister model with a Constitutional Monarchy. The head of state is the Agong and the executive consist of the PM and his cabinet. It would appear contradictory to the democratic system if the Agong interfered directly. However, in their role, the monarch can provide their view on matters of the country. Additionally, under the current Emergency state, the Agong has wider powers to govern.

I do not believe the incumbent Government or PM would dare to go against the view or outcome from today's Conference of Rulers. Therefore, I believe this is a good move towards restoring Malaysia's democracy especially if the Parliament can reconvene "as soon as possible". With the hallmark of a democracy intact, emergency no longer in force, it is much better than if the current status quo remains.

That said, would the PM stall the reconvening of the Parliament? Would the Speaker be fair & impartial? Would there be political manoeuvring once the Parliament reconvenes? All these remains to be seen which would add to the political uncertainty. I would advise caution but I am cautiously optimistic.