afternoon highlight (29/03/12/058/535) Implications of minimum wage

Implications of minimum wage

Dramatic rise in wages poses upside risk to inflation

RECENT news suggests that Prime Minister Najib is likely to announce setting a minimum wage on Labour Day (May 1). This is authorised under the National Wages Consultative Council Act of 2011 passed by parliament in July last year.

Because of the looming general elections, the announcement is likely to be construed as politically motivated, but there are also important economic consequences of a legislated minimum wage requirement.

The minimum wage is likely to be set anywhere between RM800 to RM1,000 per month. If we assume RM1,000, this would imply a significant 17% rise in the wages of unskilled workers, which according to Malaysia's Employers Federation 2010 Salary Survey, are earning an average RM852 a month.

To put this in perspective, it compares with the average increase of wages in the manufacturing sector of only 6% per year.

This poses an upside risk to inflation, in our view. First, overall labour productivity growth, which has been slowing in the last few years to an average of 2.7% (versus 5.3% pre-1998), is likely to substantially lag the potential increase in minimum wages, resulting in a rise in unit labour costs.

Second, while one could argue that the legislation only affects a certain segment of the employed sector, in 2010 the share of private wage earners earning RM1,000 or below comprise nearly 50% of total employment, according to the Malaysian Institute of Economic Research.

Given the significant share, this is also likely to affect wage negotiations among higher skilled workers, and could stoke higher wage expectations.

As is common in other countries (e.g. Indonesia), minimum wages can be perceived as a wage-setting mechanism (which sets a floor to actual wages) rather than just a safety net for low-wage workers.

Finally, given the current strength in domestic demand (indeed Bank Negara's annual report suggests that domestic demand “will continue to be the anchor for growth,”) firms are likely to pass on rising input costs, fueling CPI inflation.

There are also longer-term concerns:

● Minimum wages could introduce rigidities into the labour market that may ultimately structurally raise unemployment rates. We think part of the reason Malaysian unemployment rates recovered quickly during the 2008/09 global financial crisis is that wage flexibility allowed downward adjustment in wages rather than employment losses during the downturn. Indeed, wages fell more sharply in 2008/09 than in the previous recession, and the unemployment rate recovered to pre-crisis levels more quickly and stayed there until now. The legislated minimum wages could reduce some of that flexibility.

● This could also hurt external competitiveness, which, as we have argued before, is facing some pressures that are not due to an appreciating real exchange rate. If a minimum wage of RM1,000 is set, Malaysia's labour costs will be nearly twice the regional average and will be the highest in South-East Asia except Singapore.

We understand that the Government is fully aware of these concerns and has pledged to address them by a broader set of structural reforms under Prime Minister Datuk Seri Najib Tun Razak 's New Economic Model and the 10th Malaysia Plan unveiled in 2010.

The problem, however, is implementation has been slow so far and without more meaningful progress, these concerns will likely persist. One key argument of the proponents of the minimum wage is that this is supposed to complement these reforms by imposing a hard constraint on firms to improve productivity and reduce their reliance on low-skilled, low-wage foreign workers.

The risk is the reforms lag the minimum wage implementation, and hence the argument fails to hold, while external competitiveness could suffer.

The extent of the impact will still depend on the level of the minimum wage set, and the enforcement among firms.

While the latter remains to be seen, for the former, we can draw on some findings from academic literature to gauge the optimal level of the minimum wage, i.e. whether it is high enough to improve living standards of wage workers but low enough to keep competitive pressures under control.

A study by the World Bank suggests that a useful rule of thumb for developing economies is that the minimum wage at the national level should be no more than 40% of average wages.

By this benchmark, a minimum wage set at RM1,000 for Malaysia seems appropriate on average, though there is considerable variation across sectors. For instance, it is around 41% of the current average in the manufacturing sector, but about 75% of the rubber sector.

In terms of the near-term monetary policy implications, although headline inflation eased for the fourth consecutive month in February to 2.2% year-on-year from 2.7% in January, we see risks to our current policy rate forecast of a total 50 basis points cut in the second half of 2012.

We think the risk of Bank Negara remaining on hold for the rest of 2012 has already increased given that in its recently released annual report, the central bank continued to assess that “at the current level (3%) of the overnight policy rate, monetary conditions remain supportive of economic activity.”

Minimum wages implemented in May could provide additional upside risks to inflation, when fiscal policy is highly expansionary and commodity prices are elevated.

Source : New Straits Times                    
Date : 29 March 2012
afternoon highlight (29/03/12/058/535)

Today's Pick (30/03/12/056/750) MARC projects 4.4% GDP growth for 2012

Today's Pick (29/03/12/055/749) CPI growth to see little change

Today's Pick (20/03/12/048/742) Malaysian economy expected to pick up steam in latter part of year

Malaysian economy expected to pick up steam in latter part of year

KUALA LUMPUR: The Malaysian economy is likely to pick up momentum in the latter part of 2012 as improving external conditions boost demand for the electrical and electronic products.

Expectations by a Business Times poll are for the economy to grow at an average moderate pace of 4.41 per cent this year.

The gross domestic product (GDP) will probably grow by 5.28 per cent come 2013.

The International Monetary Fund has projected Malaysia's economy to slow to 4 per cent in 2012 and expects inflation to ease and remain contained.

Bank Negara Malaysia will release its annual report of financial developments tomorrow. But it will yet be known if the central bank will release the official forecasts before the Treasury does during the presentation of the fiscal budget.

Bank Islam chief economist Azrul Azwar Ahmad Tajudin says there is a possibility for the central bank authorities to revise the official 2012 GDP growth forecasts to a 4-5 per cent range instead of 5-6 per cent.

When the fiscal budget was released last October, the official growth forecast was kept within a 5-6 per cent range.

Almost all of the research houses left their 2012 forecasts intact, encouraged by the recent numbers which point to a resilient domestic demand. RHB Research revised the growth forecast upwards from 3.6 per cent to 4.5 per cent.

Citi has maintained its above consensus 5 per cent growth forecast for 2012, based on a modest manufacturing-led slowdown with growth bottoming at 4-4.5 per cent in the first quarter of the year.

"Base effects and the composite leading indicators suggest a near-term slowdown but more favourable base effects, bottoming electrical and electronics (E&E) exports and fiscal lift should see a pick-up from the second quarter."

It said that while the E&E cycle is highly correlated with G3 (the US, the EU and Japan) growth, Malaysia has typically lagged the North Asian NIEs (newly industrialised economies) by about a quarter or so.

HSBC Bank senior economist Frederic Neumann pointed out the agility of Asia's smaller economies which have shown better data in recent months.

On the other hand, China and India have struggled from the effects of the eurozone and external headwinds.

"In Asia's smaller economies, data surprised largely on the upside in recent months, with healthy gains in industrial production, exports, and local spending

"In part, this is because smaller markets are more sensitive to the global cycle, which shows signs of stabilisation," Neumann added.

He said Asean and Asian tigers Hong Kong, South Korea, and Taiwan don't face the fundamental imbalances that plague their larger neighbours.

Stronger data are expected to remain with a background of liquidity flush and this flood of money provides the biggest kick in Asia's smaller markets, easing sharply financial conditions and spurring growth.

Asean economies have regained a competitive niche as wages in China soar, and India's manufacturing sector remains shackled by inadequate infrastructure, with foreign direct investment pouring back into places like Indonesia, Thailand, and Malaysia.

Neumann said although Asean economies' dependency on external demand has declined in recent years, Malaysian, Thailand and the Philippine economies should have extra strength from fiscal boost this year. By Rupa Damodaran

Date : 20 March 2012

Source : Business Times

Today's Pick (20/03/12/048/742)

afternoon highlight (15/03/12/048/523) Singapore SMEs eyeing Malaysia, China for expansion

Singapore SMEs eyeing Malaysia, China for expansion

KUALA LUMPUR: Malaysia is one of the most preferred locations for Singaporean small- and medium-sized enterprises (SMEs) with expansion plans, according to the United Overseas Bank (UOB) Mid-Sized Corporate Business Sentiment Survey conducted in December 2011.

Thirty-seven per cent of the 1,600 mid-sized Singaporean companies surveyed expressed intentions to expand their business in Asia in 2012 because of continuing demand from countries in the region.

Of these, 21 per cent are eyeing Malaysia as a potential location for business expansion. China is at the top of the list at 27 per cent, while Indonesia and Vietnam are tied in third place is at 15 per cent.

"Prospects are positive for companies eyeing Malaysia as an expansionary destination," said UOB Malaysia chief executive Chan Kok Seong in a statement.

"Malaysia's facilitative and open policies to attract foreign direct investment, such as the allowance of 100 per cent foreign equity holdings and funds repatriation to their base country, have made it attractive for companies to do business here.

"There is high interest from Singapore companies wanting to establish a presence in Iskandar Malaysia, Johor, which has a lot more potential for growth.

We note that this trend is increasing and believe that the close proximity to Singapore is a key consideration as it allows Singaporean companies to manage their business from their doorstep."

He also attributed the increase in interest to the recent announcement made by Singapore in wanting to reduce its dependency on foreign labour.

The extension of the Mass Rapid Transit system from Singapore to Johor Baru within the next four to five years is another positive factor for businesses considering opening or moving operations to Johor Baru.

In recent months, UOB Malaysia has received an increased number of enquiries from Singaporean companies about purchasing industrial factories and warehouses in Johor Baru, especially from those in the food and beverage industry.

"With our network of banks across the Southeast Asian region, we are well poised to facilitate outgoing and incoming cross-border deals through our UOB Global Business Development arm.

We have industry specialists who are domain experts in the specific regulatory and legal policies, and are able to provide advisory on optimal financing and investment schemes for cross-border deals," said Chan.

Source : New Straits Times
Date : 15 March 2012
afternoon highlight (15/03/12/048/523)

afternoon highlight (10/02/12/025/499) Total trade up 8.7pc, thanks to Asia exports

Total trade up 8.7pc, thanks to Asia exports

Malaysia chalked an 8.7 per cent growth in its total trade for 2011, thanks to an Asia-driven export market, enabling the country to record an all-time high of RM1.27 trillion in total trade.

International Trade and Industry Minister Datuk Seri Mustapa Mohamed said the strong trade performance was recorded despite the slow economic recovery in the US, uncertainties arising from the debt crisis in the eurozone, pockets of unrest in West Asia following the Arab Spring, supply chain disruptions due to the tsunami and earthquake in Japan and floods in Thailand.”

The growth figures also beat the five to six per cent official forecasts. Asian markets absorbed 71.3 per cent of the total exports, which remained focused largely on manufactured goods.

Mustapa expects total trade to grow by five to six per cent in 2012, after factoring in the risks from the eurozone debt crisis.
Services exports are projected to grow by 4.9 per cent this year.


“As East Asia is forecast to grow fastest, followed by South Asia, growth in Malaysia’s exports is expected to follow this path,” he told a media briefing yesterday.

China, Asean and India will continue to be the major drivers of export growth. For 2011, exports grew by 8.7 per cent to
RM694.55 billion while imports rose by 8.6 per cent to RM574.23 billion.

Exports in December beat market expectations and increased by 6.1 per cent due to nonelectrical and electronic (E&E) products while imports increased by 10.4 per cent.

Malaysia also achieved its 14th consecutive trade surplus since 1998, which was comparable to developed Singapore and South Korea.

For 2011, the minister said China had overtaken Singapore to become Malaysia’s largest export market, with a total value of RM91.25 billion.

Palm oil (47.4 per cent), crude rubber (62.7 per cent) and liquefied natural gas contributed to the increase in exports to China last year, he added.

Exports to Japan also rose last year, driven by higher demand for products to meet post-tsunami needs, especially for the construction of infrastructure and energy needs.

In the case of India, he said it was the only market that recorded a significant increase of RM1 billion in Malaysia's exports of E&E products, which forms the mainstay of Malaysia's manufacturing products.

On markets still stricken with uncertainties, such as the European Union, Mustapa said exports enjoyed a growth of 4.7 per cent, mostly on commodities such as palm oil and crude rubber.

In the case of the US, where the economic recovery was slow, export growth was also led by palm oil, although E&E exports declined.

Apart from tapping China's large appetite for Malaysian merchandise, Mustapa said his ministry was keen to increase the number of investments to Malaysia by leveraging on the 50-odd trade investment missions lined up this year.

To sustain export growth in 2012, the ministry will intensify export promotion programmes in these markets


Source : New Straits Times
Date : 10 February 2012
afternoon highlight (10/02/12/025/499)

afternoon highlight (10/02/12/025/499) Total trade up 8.7pc, thanks to Asia exports

Total trade up 8.7pc, thanks to Asia exports

Malaysia chalked an 8.7 per cent growth in its total trade for 2011, thanks to an Asia-driven export market, enabling the country to record an all-time high of RM1.27 trillion in total trade.

International Trade and Industry Minister Datuk Seri Mustapa Mohamed said the strong trade performance was recorded despite the slow economic recovery in the US, uncertainties arising from the debt crisis in the eurozone, pockets of unrest in West Asia following the Arab Spring, supply chain disruptions due to the tsunami and earthquake in Japan and floods in Thailand.”

The growth figures also beat the five to six per cent official forecasts. Asian markets absorbed 71.3 per cent of the total exports, which remained focused largely on manufactured goods.

Mustapa expects total trade to grow by five to six per cent in 2012, after factoring in the risks from the eurozone debt crisis.
Services exports are projected to grow by 4.9 per cent this year.


“As East Asia is forecast to grow fastest, followed by South Asia, growth in Malaysia’s exports is expected to follow this path,” he told a media briefing yesterday.

China, Asean and India will continue to be the major drivers of export growth. For 2011, exports grew by 8.7 per cent to
RM694.55 billion while imports rose by 8.6 per cent to RM574.23 billion.

Exports in December beat market expectations and increased by 6.1 per cent due to nonelectrical and electronic (E&E) products while imports increased by 10.4 per cent.

Malaysia also achieved its 14th consecutive trade surplus since 1998, which was comparable to developed Singapore and South Korea.

For 2011, the minister said China had overtaken Singapore to become Malaysia’s largest export market, with a total value of RM91.25 billion.

Palm oil (47.4 per cent), crude rubber (62.7 per cent) and liquefied natural gas contributed to the increase in exports to China last year, he added.

Exports to Japan also rose last year, driven by higher demand for products to meet post-tsunami needs, especially for the construction of infrastructure and energy needs.

In the case of India, he said it was the only market that recorded a significant increase of RM1 billion in Malaysia's exports of E&E products, which forms the mainstay of Malaysia's manufacturing products.

On markets still stricken with uncertainties, such as the European Union, Mustapa said exports enjoyed a growth of 4.7 per cent, mostly on commodities such as palm oil and crude rubber.

In the case of the US, where the economic recovery was slow, export growth was also led by palm oil, although E&E exports declined.

Apart from tapping China's large appetite for Malaysian merchandise, Mustapa said his ministry was keen to increase the number of investments to Malaysia by leveraging on the 50-odd trade investment missions lined up this year.

To sustain export growth in 2012, the ministry will intensify export promotion programmes in these markets


Source : New Straits Times
Date : 10 February 2012
afternoon highlight (10/02/12/025/499)

afternoon highlight (31/01/12/019/494)OPR dijangka kekal tiga peratus

OPR dijangka kekal tiga peratus

KUALA LUMPUR 30 Jan. - Bank Negara Malaysia (BNM) dijangka mengekalkan Kadar Dasar Semalaman (OPR) kepada 3.0 peratus pada Mesyuarat Dasar Monetari pertama pada tahun ini yang berlangsung esok.

Rata-rata penganalisis ekonomi berkata, jangkaan itu dibuat berdasarkan kedudukan ekonomi global yang lembap dan kedudukan kadar faedah yang akomodatif.

Ketua Ekonomi Bank Islam (M) Bhd., Azrul Azwa Tajuddin berkata, pertumbuhan ekonomi yang dijangka perlahan merupakan faktor yang diambil kira dalam pengekalan OPR.

Menurutnya, BNM tidak akan mengurangkan OPR dalam mesyuarat esok kerana situasi ekonomi sekarang adalah lembap dan bukan meleset seperti yang berlaku pada 2009.

Katanya, meskipun kadar inflasi menurun tetapi ia masih berlegar antara 2.0 hingga 3.0 peratus.

''Dasar monetari bergantung kepada tinjauan dan inflasi dan apabila melihat kepada kedua-duanya tidak ada sebab mengapa BNM akan menurunkan OPR, sebaliknya lebih wajar dikekalkan," katanya kepada Utusan Malaysia di sini hari ini.

Azrul berkata, sekiranya OPR diturunkan, dikhuatiri ia akan menyumbang kembali kenaikan inflasi.

Jumaat lalu, Gabenor BNM, Tan Sri Dr. Zeti Akhtar Aziz berkata, polisi monetari negara masih akomodatif di tengah-tengah pertumbuhan global yang sederhana pada tahun ini.

Tambah beliau, kadar semasa akan kekal akomodatif dan BNM akan membuat penilaian sesuai yang penting untuk mengekalkan pertumbuhan dan pekerjaan.

Sementara itu, Naib Presiden dan Ketua Penyelidikan Runcit Affin Investment Bank (AIB), Dr. Nazri Khan yang berpendapat bank pusat akan mengekalkan kadar faedah semasa disebabkan pertumbuhan global yang perlahan.

Selain itu, ia juga mengambil kira keputusan beberapa negara serantau yang masih mengekalkan OPR yang sama.

''Kami menjangka OPR 3.0 peratus dikekalkan tetapi OPR mungkin akan diturunkan sebanyak 50 mata asas lagi menjelang akhir tahun ini,'' ujar Nazri.

Sebelum ini, ECM Libra Investment Research turut meramalkan dasar monetari akan mengekalkan OPR pada 3.0 peratus sehingga kadar inflasi menurun.

Syarikat penyelidikan itu berkata, dasar monetari negara masih lagi menyokong pertumbuhan dengan bekalan wang November berkembang 12.8 peratus, tahun ke tahun, sementara OPR telah mewujudkan persekitaran kadar faedah sebenar yang rendah.

"OPR pada 3.0 peratus sendiri telah menjuruskan kepada kadar inflasi semasa 3.3 peratus, membayangkan kadar faedah sebenar yang negatif.

"Ini menjadikan OPR lebih akomodatif kepada pertumbuhan ekonomi kerana ia menjadikan perbelanjaan alternatif yang lebih menarik berbanding simpanan,'' katanya.

Source : Utusan Malaysia
Date : 31 January 2012

afternoon highlight (27/01/12/017/492) Malaysia's ties with S. Africa start on good footing

Malaysia's ties with S. Africa start on good footing

SOUTH Africa, which is Malaysia's largest trading partner in Africa, makes a "flying" start to boost bilateral ties in 2012.

Thanks to Prime Minister Datuk Najib Razak's visit in the beginning of the year, albeit brief, the vistas for trade and investment opportunities are expected to broaden.

But the rates can be improved over the next decade based on the 15 per cent two-way annual growth rate for the past decade, said South African High Commissioner Thami Mseleku.

"As Malaysia's largest trading partner on the African continent, South Africa continues to offer the best investment destination for Malaysian business," he said.

Following Najib's visit, there is work underway to take the bilateral relations to a new level, which includes a visit by the Malaysian business community to meet their counterparts in South Africa.

"Malaysian businesses should take advantage of opportunities presented through his country's world-class infrastructure and sophisticated economic environment.

"Furthermore, South Africa is well positioned as a global business partner and serves as a gateway not only for the Southern African (SADC) region, but also Africa as a whole."

South Africa is Malaysia's 25th largest trading partner. Total trade amounted to RM5.2 billion last year.

For South Africa, Malaysia is its largest export destination in the Asean region with total bilateral trade increasing over four-fold to about RM 5.83 billion in 2010 - the balance of trade in Malaysia's favour.

Malaysian goods such as palm oil, telephone sets, monitors and projectors, automatic data processing machines and rubber are finding their way into the South African market, while Malaysian imports comprise mainly commodities - mineral fuels, iron and steel, aluminium but also an array of agricultural products.

According to the Malaysian External Trade Development Corp (Matrade) Malaysia's trillion ringgit trade volume in 2010 was contributed by significant increases in exports from South Africa, where exports jumped by 40.7 per cent, thanks to the palm oil uptake.

South Africa's significance as a member of the G20 major economies has earned further international recognition in the group of emerging countries with it joining the BRICS (Brazil, Russia, India, China and South Africa) grouping.

Highly ranked in the 2011 World Bank Report for Ease of Doing Business, South Africa was ranked number two in the ease of obtaining credit and 10th in investor protection out of 183 countries.

The World Economic Forum's Global Competitiveness Report ranked South Africa 54th in terms of overall competitiveness, ahead of countries such as Russia, Brazil and Mexico.

South Africa was also ranked 38th in business sophistication and 24th in business sector innovation.

"As an investment destination South Africa presents a number of very lucrative opportunities, especially in business process outsourcing and IT enabled services, electro-technical industries, automotives and components and metal fabrication, capital and transport equipment," Mseleku said.

The South African government offers various attractive investment incentives, targeted at specific sectors or types of business activities.

"Among others, foreign investment and training grants and significant tax deductions for qualifying projects are available," he said, adding that South Africa has no general restrictions on inflows and outflows of foreign capital under exchange controls.

"Local borrowing for the purpose of genuine FDI may be undertaken without restriction, while foreign companies may also raise capital in the local equity and bond markets (inward listings) with prior approval."

Also, there are no restrictions on property ownership by non-residents provided that there is compliance with procedures.

"Currently, Malaysian investment in South Africa is found in the petroleum sector, as well as in the leisure and housing sectors," Mseleku said.

Petronas is the majority shareholder of the South African Engen oil company, which operates 1,600 service stations in 17 countries on the African continent.

Important South African business activities in Malaysia include the establishment of the hugely popular and successful Nandos peri-peri chicken franchise, with 35 outlets currently in operation.

"To give further momentum to the business relationship between the two countries, the South African High Commission will be arranging several events in the next few weeks and months.

The High Commission will soon join forces with the Malaysian Institute of Accountants in hosting a special seminar "Business and Investment Opportunities in South Africa".

South African firms in the arms manufacturing and security industry will be showcasing their products and engage in business enterprises during the forthcoming Defence Services Asia Fair and Exhibition at the Putra World Trade Centre.

The efforts of the High Commission to enhance business relations between Malaysia and South Africa are augmented through the support given by the Malaysia-South Africa Business Council.

Mseleku said the recent visit to South Africa by Najib underlines the significance of the strong relationship between the two countries, which evolved during Malaysia's support for the liberation movement, and were further cemented through the personal friendship between the countries' iconic statesmen, Tun Dr Mahathir Mohamad and former president Nelson Mandela.

To Malaysia, Najib's visit signalled close relations between both countries and Malaysia's consistent foreign policy of supporting South Africa and the struggles of its black people for their rights.

Najib was in South Africa at the invitation of South African president Jacob Juma, along with 45 other heads of state to gather in Bloemfontein, to witness the historic moment of the centenary celebration of the ruling party, the African National Congress.

Source : New Straits Times
Date : 26 January 2011

Today's Pick (27/01/12/017/709) Pelaburan domestik diutamakan

Pelaburan domestik diutamakan

TAHUN 2012 diunjur sebagai tempoh yang sangat mencabar kepada semua negara termasuk Malaysia berikutan krisis ekonomi global yang berterusan.

Sehubungan itu, Wartawan Utusan Malaysia, NORLAILI ABDUL RAHMAN telah menemubual Menteri Perdagangan Antarabangsa dan Industri, DATUK SERI MUSTAPA MOHAMED untuk mendapatkan pandangan tentang usaha-usaha dilakukan dalam memastikan ekonomi Malaysia kekal berkembang di sebalik apa yang berlaku. Berikut adalah temu bual tersebut:

UTUSAN: Umum mengetahui ekonomi global sememangnya bermasalah, apakah usaha yang dilakukan untuk meningkatkan pelaburan termasuk pelaburan asing?

MUSTAPA: Kita akui bahawa tahun ini lebih mencabar untuk mencapai angka pelaburan yang sama seperti mana tahun 2010 dan 2011. Namun, harus diingat, pertumbuhan negara bukan bergantung kepada pelaburan langsung asing (FDI) semata-mata sebaliknya pelaburan domestik (DDI) juga menjadi penyumbang utama kepada perolehan Malaysia. Jadi pada tahun 2012 ini, MITI dan kerajaan mahu memberi lebih tumpuan kepada DDI. Ini bukan bermakna kami menidakkan sumbangan pelabur asing, tetapi strategi ini bertujuan memastikan pertumbuhan negara tidak terjejas.

Sejauh mana prestasi pelaburan kita tahun lalu?

Malaysia terus kekal sebagai destinasi pelaburan yang menarik bagi pelabur asing.

Dari Januari hingga November 2011, Malaysia telah menarik pelaburan yang besar dalam sektor perkilangan, perkhidmatan dan sektor-sektor utama dengan pelaburan yang diluluskan sebanyak RM120.4 bilion daripada 3,825 projek.

Angka ini melepasi sasaran purata pelaburan tahunan yang disasarkan di bawah Rancangan Malaysia Ke-10 sebanyak RM115 billion.

Dari jumlah ini pelaburan domestik adalah sebanyak RM69.2 bilion atau 57.5 peratus manakala pelaburan asing pula sebanyak RM51.2 billion. Apabila projek-projek tersebut dilaksanakan, kita menjangkakan sebanyak 118,384 peluang pekerjaan akan dijana kepada rakyat tempatan.

Apakah negara-negara yang menjadi pelabur utama FDI di negara ini?

Prestasi Pelaburan Januari hingga November 2011 menunjukkan Jepun, Amerika Syarikat, Singapura, Arab Saudi dan Republik Korea adalah sumber utama pelaburan asing dalam projek-projek yang diluluskan bagi sektor perkilangan dengan pelaburan sebanyak RM14.4 bilion atau 56.2 peratus daripada jumlah pelaburan asing yang diluluskan.

Bolehkah Datuk Seri ceritakan dengan lebih terperinci, sektor manakah yang telah menerima pelaburan paling tinggi pada tahun lalu?

Bagi Januari hingga November 2011, Industri elektrik dan elektronik (E & E) kekal sebagai industri yang tertinggi diikuti dengan keluaran logam asas, kimia dan produk kimia, kelengkapan pengangkutan dan produk logam yang direka. Kelima-lima industri ini menyumbang RM33.1 bilion atau 72.7 peratus daripada jumlah pelaburan yang diluluskan.

Apakah inisiatif-inisiatif lain yang bakal diperkenalkan bagi mendorong lebih banyak pelaburan masuk ke negara ini.

Pelbagai inisiatif untuk memastikan bahawa negara ini kekal sebagai destinasi yang menarik bagi aliran FDI global. Inisiatif-inisiatif ini dikaji semula dari semasa ke semasa dan dipantau secara berterusan untuk memastikan keberkesanan mereka dalam usaha mengekalkan daya saing, Kerajaan sentiasa berusaha untuk memperbaiki persekitaran perniagaan di negara ini termasuk penyediaan insentif-insentif yang menarik untuk menarik pelaburan yang berkualiti dari kedua-dua pelabur tempatan dan asing kerana ia tidak lagi mempromosikan projek-projek yang nilai tambahnya rendah dan projek-projek yang berorientasikan buruh.

Menyentuh mengenai Perjanjian Perdagangan Bebas (FTA) yang merupakan salah satu cara untuk meningkatkan perdagangan Malaysia, jadi berapa banyakkah FTA yang bakal ditandatangani Malaysia pada tahun ini?

Kita sedang berunding FTA dengan Australia, Kesatuan Eropah, Turki selain Pakatan Trans-Pasifik (TPP) yang melibatkan sembilan buah negara. Selepas ini, Malaysia juga mungkin akan menandatangani FTA dengan Majlis Kerjasama Teluk (GCC). Keempat-empat FTA tersebut kecuali TPP diyakini mampu dimuktamadkan pada tahun ini.

Bolehkah Datuk Seri jelaskan lebih lanjut tentang FTA dan kelebihan yang boleh dinikmati oleh Malaysia menerusinya?

Malaysia mengamalkan dasar ekonomi terbuka dan banyak bergantung kepada perdagangan antarabangsa sebagai jentera pertumbuhan ekonomi yang penting, terutamanya dari segi eksport.

FTA banyak membantu Malaysia untuk mendapatkan akses pasaran yang lebih baik bagi barangan dan perkhidmatan selain mempromosi dan memudahkan perdagangan dan pelaburan melalui langkah-langkah fasilitasi serta kerjasama ekonomi.

Apakah faedah-faedah lain yang boleh dinikmati oleh Malaysia melalui FTA?

Ia mewujudkan peluang-peluang akses pasaran bagi pengeksport dan pembekal perkhidmatan Malaysia. Bagi barangan, akses kepada pasaran rakan FTA dipertingkatkan melalui layanan keutamaan (preferential treatment) yang dinikmati oleh barangan eksport Malaysia berbanding eksport negara-negara lain yang tidak mempunyai FTA dengan negara tersebut.

FTA juga menjadi memberikan kelebihan kepada pengeksport-pengeksport Malaysia di pasaran-pasaran yang dilindungi, contohnya tekstil dan pakaian di Amerika Syarikat.

Berapa banyakkah perjanjian FTA yang telah di meterai termasuk melalui ASEAN dan apakah hasil yang telah diraih?

Sebanyak 10 perjanjian FTA telah dimeterai dan dilaksanakan yang hasilnya menyaksikan pembukaan pasaran oleh rakan FTA Malaysia, sekali gus meningkat prestasi perdagangan. Sebenarnya banyak hasil yang telah diraih, contohnya di bawah perjanjian Malaysia-Japan EPA (MJEPA) yang mula dilaksanakan 13 Julai 2006 menyaksikan jumlah perdagangan antara kedua-dua negara telah meningkat sebanyak 14 peratus kepada RM133 bilion pada tahun 2010, berbanding RM113.3 bilion pada tahun 2005.

Malah eksport Malaysia ke Jepun telah meningkat sebanyak 32 peratus kepada RM66.8 bilion bagi tahun 2010, berbanding RM50.5 bilion pada tahun 2005.

Manakala FTA Malaysia-Pakistan CEPA (MPCEPA) yang dilaksanakan 1 Januari 2008 pula memperlihatkan eksport ke Pakistan mencatatkan peningkatan sebanyak 69 peratus kepada RM7.3 bilion bagi tahun 2010, berbanding RM4.3 bilion pada tahun 2007.

Datuk Seri telah memperjelaskan kelebihan daripada perdagangan, bagaimanapun manfaat dari segi pelaburan?

Dari segi pelaburan pula, dengan adanya FTA pelabur Malaysia akan diberi layanan yang sama dengan pelabur tempatan (national treatment) dan pelaburan mereka dilindungi di bawah undang-undang tempatan dan pelbagai lagi kelebihan yang ada.

MITI telah mengambil alih peranan oleh Kementerian Pembangunan Usahawan dan Koperasi (MECD) dalam membangunkan usahawan, apakah usaha dilakukan untuk memantapkan mereka?

Kami juga turut memperkenalkan satu program baharu yang berkaitan dengan keusahawanan sosial di kalangan pelajar-pelajar di peringkat institusi pengajian tinggi (IPT). Program yang dikenali 1Malaysia Young Entrepreneur Challenge (1MYEC) berperanan mempromosi bakat dan kemahiran keusahawanan di kalangan pelajar. Seramai 260 peserta daripada 31 IPT menyertai program ini pada 2011.

Bagi program peningkatan produk dan pemasaran, sejumlah 11 program telah berjaya dilaksanakan pada tahun 2011. Program-program tersebut adalah Showcase SDSI peringkat Nasional 2011, penyertaan pameran perdagangan domestik di MIHAS 2011, Ekspo Perdagangan Regatta Sarawak, HalFest 2011, Pameran Produk di Showcase Pelancongan Sabah 2011.

Untuk program-program di bawah outreach/turun padang pula, lima siri program MITI Bersama Usahawan (Karnival Usahawan), tiga program Transformasi Halal, 21 lawatan kilang, lima seminar dan tiga dialog bersama NGO Bumiputera telah berjaya dilaksanakan.

Bagaimanakah pula program lain?

MITI telah melaksanakan banyak program termasuk program SIFE World Cup 2011, di mana Kuala Lumpur telah terpilih sebagai tuan rumah bagi program ini yang diadakan mulai 3 hingga 5 Oktober 2011. Sejumlah 2,800 pelajar dari 37 negara seluruh dunia menyertai program ini. Negara-negara yang terlibat antaranya ialah Jerman, Amerika Syarikat, Jepun, Korea, negara-negara Afrika seperti Zimbabwe, Afrika Selatan dan juga negara-negara daripada Amerika Selatan dan Timur Tengah.

Adakah MITI akan memperkenalkan program baharu tahun ini?

Program yang dirancang oleh MITI bagi tahun 2012, salah satunya adalah usaha bagi memantau projek rintis di bawah Lab Bumiputera. Sejumlah 20 projek rintis telah dikenalpasti melalui Lab Bumiputera yang dilaksanakan oleh BPU pada 2011. Setakat ini, satu projek rintis MY MRT telah diluluskan oleh Teraju Delivery Committee bagi pelaksanaan 2012. MITI juga dipertanggungjawabkan untuk memantau pelaksanaan projek-projek ini.

Apakah kekangan yang dihadapi oleh MITI dalam melaksanakan program Bumiputera?

Berbeza dengan MECD dahulu, MITI mempunyai peruntukan yang amat terhad sehingga tidak mampu untuk melaksanakan program keusahawanan secara agresif dan memenuhi kehendak pelanggan yang ramai terdiri daripada pelbagai lapisan masyarakat. Sungguhpun begitu, MITI kerap melaksanakan program-program kerjasama dengan pihak-pihak luar seperti dialog, seminar dan latihan serta telah mewujudkan saluran Khidmat Nasihat Keusahawanan melalui Business Advisory Centre (BAC) yang dilancarkan secara rasmi pada 29 Mac 2010.

Sungguhpun begitu, MITI telah memainkan peranan yang agak menonjol berbanding agensi-agensi lain yang juga ‘mewarisi’ peranan dan tanggungjawab berikutan pembubaran MECD.

Apakah hasrat Datuk Seri pada tahun ini?

Sebagai menteri yang bertanggungjawab di dalam hal-hal berkaitan dengan pelaburan dan perdagangan terutamanya, apa jua kami lakukan di MITI, Petunjuk Prestasi Utama (KPI) saya menjurus kepada pelaburan dan perdagangan negara. Paling penting kita dapat menyediakan iklim pelaburan dan perdagangan yang konduksif untuk pelabur-pelabur tempatan dan luar negara sekaligus dapat menjana peluang pekerjaan yang baik dan berkualiti kepada rakyat Malaysia.

Source : Utusan Malaysia
Date : 26 January 2012

afternoon highlight (20/01/12/014/489) Mier raises growth forecast for 2011 to 4.9pc

Mier raises growth forecast for 2011 to 4.9pc

KUALA LUMPUR: The Malaysian Institute of Economic Research (Mier) has raised its growth forecast of Malaysia for 2011 to 4.9 per cent from 4.6 per cent previously.

Executive director Dr Zakariah Abdul Rashid, however, expects 2012 to hold dimmer growth prospects compared to 2011.

These are underpinned by downside risks from developments in the euro zone, weak US recovery, hard-landing of the Chinese economy and growing Middle East tensions.

Speaking at a media briefing on the fourth quarter 2011 performance, yesterday, Zakariah said Mier's results of various indices showed that the Malaysian economy was already in a contractionary mode.

"We can only conclude that fourth quarter 2011 real GDP (gross domestic product) growth moderated both year-on-year and quarter-on-quarter and that economic growth will likely get bumpier in the months ahead.

"The results of Mier's fourth-quarter Business Conditions Survey indicate declining manufacturing sector sentiments.

The business conditions index ended below the 100-point threshold level while consumer sentiments have also fallen during the fourth quarter, which indicates a marginal worsening of sentiments.

Its CEO Confidence Index, which compiles opinions and projections from chief executives of mostly small- and medium-sized companies, also ended the fourth quarter below the 100-point threshold level.

They were pessimistic about the near-term economic outlook.

Zakariah said big-ticket items are being postponed as the business community preferred to wait and see the general election results before proceeding.

Mier expects the economy to decelerate markedly to 3.7 per cent in 2012.

Source : New Straits Times
Date : 20 January 2012

afternoon highlight (17/01/12/011/486) StanChart sees 2.7% GDP growth for M'sia in 2012

StanChart sees 2.7% GDP growth for M'sia in 2012

KUALA LUMPUR (Jan 17, 2012): Malaysia's economy is expected to hit a trough this quarter, before growth accelerates as the year progresses, boosted by a pick-up in domestic activity, analysts at Standard Chartered Research said.

They expect the still-robust demand for commodities, led by palm oil, rubber and liquefied natural gas (LNG), to cushion the impact of weaker export numbers from the manufacturing sector.

Standard Chartered predicts the country's gross domestic product (GDP) will expand at a "sub-par" rate of 2.7% in 2012, which is about half the pace of the government's official forecast of between 5% and 6% this year.

The economy grew 4.8% last year.

The government's growth target for 2012 is "too aggressive" given the poor global economic outlook this year, said the bank's Southeast Asia head of research Tai Hui.

"Malaysia, being an open economy, is susceptible to the fallout in the West,'' he said in a briefing yesterday.

Standard Chartered also sees the possibility of a 50-basis point (bps) rate cut by Bank Negara Malaysia in the first half of 2012, starting with a 25bps cut in March. "The focus will be growth over inflation,'' Tai said.

While growth will not collapse like it did in 2008 and 2009, a further deterioration of the European debt mess will prompt central banks across Asia to be more dovish and growth-oriented in the first quarter of 2012.

"Asia has not decoupled from the West, but is better insulated and more diversified,'' the bank's chief economist Gerard Lyons said.

He also sees the trend of inflows from the West into Asia continuing, as global investors continue to seek higher yields outside their home markets.

With the West still deep in crisis, gold is poised to become a winner again this year.

The bank's global head of commodities research Hsi Han Pin said gold price is expected to rebound toward US$2,000 an ounce from its recent pullback to US$1,600.

Hsi also has a relatively benign view on crude palm oil (CPO), which he expects to average RM3,450 a tonne in 2012, up from RM3,216 in 2011.

This is higher than local analysts' prediction of an average RM3,000 a tonne.

Source : The Sun
Date : 17 Jan 2012

Today's Pick (16/01/12/010/702) M'sian economy will achieve 5% growth, say economists

Afternoon Highlight (06/01/12/004/479) 5% growth achievable by M'sia

5% growth achievable by M'sia

AmResearch says 2012 GDP target can be met on roll-out of ETP projects

PETALING JAYA: The country's gross domestic product (GDP) growth is expected to grow 5% on a year-on-year basis with domestic demand, in the form of private consumption and investment, to support growth in the quarters ahead despite lower exports and external uncertainties.

AmResearch Sdn Bhd director of economic research Manokaran Mottain said in a report that a 5% growth would be sustainable supported by the implementation of the Economic Transformation Programme (ETP) projects that had been announced last year as well as a further roll-out of new projects identified for this year.

He said in the worst-case scenario, GDP growth could range between 4% and 4.5% should the euro zone crisis lead to a systemic failure in global financial markets and developed countries falling into a recession.

“Fiscal policy will also play an important role in the country's performance, though the Government is still committed to prudence management without destabilising growth momentum,” Manokaran said.

The Government has committed under Budget 2012 to reduce the fiscal deficit to 4.7% of GDP this year, from an estimated 5.4% of GDP in 2011.

Manokaran said the implementation of the ETP projects would encourage growth across other sectors of the economy with the multiplier effects to be seen in the construction and manufacturing sectors.

“As activities in these sectors increase, higher employment and income prospects will further push domestic demand and thus, overall GDP growth is expected to rise in tandem,” he said.

Although there would be broad-based growth, Manokaran said services would expand by 6.2% supported by the increasing demand coming from the implementation of many ETP projects this year as well as strong private consumption, steady intra-Asian trade and increased tourist spending.

He said the manufacturing sector would likely see a more apparent slowdown, due to the impact of a weaker external demand and estimated the sector to grow by 3.6% while the construction sector was projected to grow 8.1% on the back of the Mass Rapid Transit, KLIA2 and development programmes in rural areas.

Manokaran said lower inflation levels (estimated to be between 2.5% and 3%) as well as favourable labour market conditions would also help to provide further support on the back of the potential decline in external demand.

He said Bank Negara might not cut the benchmark overnight policy rate (which stood at 3%) this year given the robust levels of GDP growth as well as the potential threat of rising inflation (due to continued rise in food price inflation).

Manorakan expects the ringgit to end the year at 3.10 to the US dollar on the back of the reduced risk appetite among foreign and local investors.

“Despite this, we remain optimistic that the appreciation trend will likely regain traction in 2012.
“Notwithstanding the recent depreciation, most currencies in the region continue to be deemed as undervalued, given the relatively strong growth potential as well as robust levels of private capital inflows,” he said.

Source : The Star
Date : 6 January 2012
Afternoon Highlight (06/01/12/004/477)

Today’s Pick (03/01/12/01/693) Businesses in Malaysia less optimistic:Grant Thornton

Businesses in Malaysia less optimistic: Grant Thornton

BUSINESSES in Malaysia are less optimistic about the economy this year, said global advisory firm Grant Thornton.

Managing partner of SJ Grant Thornton, Datuk N.K. Jasani, said there will be a polarisation of business confidence between Europe and the rest of the world in 2012.

However, he said the threat of total meltdown in the eurozone means business leaders remain uncertain about this year and that uncertainty is sapping confidence and choking business growth prospects.

"The business optimism results mirror the perilous position of the global economy, stronger results for key markets such as Brazil, China and the US being offset by the lack of a clear resolution to the sovereign debt crisis in Europe," he said in a statement last week.
According to Grant Thornton's International Business Report (IBR), the global business confidence was balancing on a knife edge into 2012.

It said with the global economic outlook dominated by the crisis in the eurozone, fears are increasing that business growth will become more difficult than in 2011.

The research also suggest global trade is suffering.

Having risen by 10 percentage points in third quarter, the proportion of businesses citing a shortage of orders rose again in fourth quarter, up five percentage points to 37 per cent globally.

This result was largely driven by an increase of nine percentage points across the eurozone, but businesses in North America and Brazil, Russia, India and China are also suffering.

Jasani said the prospects for growth are mixed around the world. Businesses have to work harder to maintain margins and competitiveness in the face of powerful economic headwinds.

"This threatens to undermine business prospects around the world, not just in Europe. Businesses in the higher growth economies such as China and Brazil remain positive for now but Europe is the world's largest single market and consequently a key trading partner.

"The effects of a further downturn will resonate even in these high growth markets and beyond," he added.

Source: New Straits Times
Date : 3 January 2012
Today’s Pick (03/01/12/01/692)