Northern Corridor Implementation Authority set to reach RM10bil target

GEORGE TOWN: The Northern Corridor Implementation Authority (NCIA) has raked in RM7.2bil in investments in the first half of the year, closer to realising the targeted RM10bil investments for 2013.

Chief executive Datuk Redza Rafiq Abdul Razak told StarBiz that the NCIA had surpassed the targeted 25% investments from the local private sector.

“Of the RM7.2bil achieved, 43% is from local private sector participation, while the remainder is from overseas.

“The investments have created 10,750 jobs, compared with the targeted 8,000 jobs from the RM10bil investments,” he said.

Redza said the NCIA was confident of reaching its RM10bil target, as there were new investments flowing into the services sector in the northern region.

“For example, we recently roped in RM575mil in investments for the hotel industry in Taiping until 2016.

“Of the RM575mil, some RM160mil would be spent this year for hotel projects in Taiping.

“We expect similar investments to pour into the services and hospitality sectors of other northern towns and states this year,” he elaborated.

Redza said the NCIA was currently negotiating for biotechnology investments from overseas into the northern region to take the agriculture sector to the next level.

“We are in the advanced stage of negotiations with a biotechnology company from the United States to invest in a northern state,” he said.

On Budget 2014, Redza said the NCIA was hoping to see the implementation of demand-driven incentives to encourage multinational corporations (MNCs) to utilise the resources of small and medium enterprises (SMEs).

“For example, to complement the existing incentives for MNCs, the Government could introduce attractive measures to drive the local SME-MNC partnership.

“We would arrange financial facilities for the SMEs working with the MNCs with institutions such as Malaysia Venture Capital Management Bhd and Malaysia Debt Ventures Bhd,” he said.

Redza added that the NCIA would also like to see the implementation of economic measures that would raise the incomes of farmers via the introduction of high-value crops.

“Such measures would also reduce Malaysia’s imports of food products, which have an estimated value of RM14.2bil per year, more than the RM13.4bil worth of food products exported,” he said. - The Star

Positive outlook for Malaysian economy

KUALA LUMPUR: The Malaysian economy is expected to grow steadily at 5% to 6% in 2013, thanks to strong domestic demand, robust private investment and a better global outlook.

Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz expects growth to be sustained on the back of higher domestic demand and an improvement on the exports front as the global economy recovers.

She added that last year's better-than-expected 5.6% full-year growth came despite a weaker global economic environment.

Zeti said private investments were expected to grow 15.6% this year, led by investments in the services sector while private consumption growth would remain firm at 7.1% backed by income growth and stable employment prospects.

She told a press conference that the minimum wage policy would contribute positively to income growth while the unemployment rate was expected to remain stable at 3.1%.

Meanwhile, CIMB Investment Bank Bhd economic research head Lee Heng Guie expects the economy to grow by 5.5% this year.

“While domestic catalysts will continue to anchor growth, the cyclical upturn in exports should improve economic prospects,” he said.

Lee also said robust private investment growth and public spending would continue to fuel total investment growth.

The country’s economy is doing fine and is set to grow by 5% to 6% this year. The expansion will be due to strong domestic demand, private investment and a better global outlook, says Zeti.

“More projects under the Economic Transformation Programme will be realised this year, thus creating a spillover effect on the construction, real estate and financial services sectors,” he added.

Zeti expects the inflation rate to average 2% to 3% this year. She said the central bank would focus on addressing potential risks to inflation and growth.

She said the Government's fiscal consolidation efforts would continue with the debt-to-gross domestic product ratio to be trimmed to 4% after falling to 4.5% in 2012 and 5% in 2011.

“Government spending will be moderate while revenue will improve significantly, notably that of the Inland Revenue Board, which raised 14% more than expected,'' she said.

On another note, Zeti said the online interbank GIRO fee would be capped at 10 sen effective May 2. According to her, the current rate was RM2 per transaction.

The online interbank GIRO transfer would only be applicable to the Internet and mobile channels.

Zeti also said that the cheque issuance price would be increased progressively to encourage users to migrate to online transactions. - The Star

Cloudy outlook for Malaysia, says ADB

KUALA LUMPUR (July 18): Weakness in the global outlook clouds Malaysia’s prospects given the country’s close integration with the world economy, according to the Asian Development Bank (ADB).
In its revised Asian Development Outlook (ADO) 2012 released last week, the ADB said growth in Malaysia is moderating to about 4% in 2012, then quickening to 5% in 2013 as the external environment improves and domestic demand will again play its role to anchor growth in the region.
“Private consumption will have to depend on the government’s plan in 2012 to raise wages for the public sector and also for their one-time offer of cash payment to the low- and middle-income groups which constitute 53% of all households in Malaysia,” ADB said.
It added that the labour market is likely to soften this year, particularly in the trade-exposed industries. Job vacancies in January 2012 declined steeply from a year ago. Consumer sentiment weakened late last year.
Private investment in export-oriented industries such as electrical and electronics products will be subdued by the weak global outlook this year, although investment will likely be relatively buoyant in industries that depend on domestic demand. The ADB said the government is pressing ahead with its Economic Transformation Programme launched in 2010 and will proceed all the way to 2020.
“This US$58 billion (RM183 billion) programme was introduced for development of higher value-added industries and infrastructure in partnership with private investors.
“Included in this programme are construction projects such as the US$11.5 billion mass rapid transit rail system in Kuala Lumpur, the redevelopment of the Sungai Besi military airbase and a large site near the centre of the capital for residential and commercial purposes,” it said.
The ADB said the production sector will play a role in driving growth in 2012. “The government has eased some restrictions on foreign investments in 17 services subsectors such as accounting, education, legal and medical services, following a similar move for 27 subsectors back in 2009.
“Inflation rate will most likely recede to 2.4% because of the moderation of domestic demand coupled with the lower prices of imported commodities,” the ADB said.
The ringgit appreciated by 3.4% against the US dollar in the first quarter of 2012 and this helped to dampen inflation which is predicted to pick up to 2.8% in 2013. The ADB said Malaysia’s exports of merchandise will most likely drop this year due to torpid global trade and softer price of export commodities such as palm oil. Imports will increase at a modest rate with forecasts of substantial surpluses, it said.
“Subsidies for fuel, staple foods, electricity, health and education rose from 1.3% of total government spending in 1990 to 14.3% in 2011, which is about 4% of the GDP.
“Subsidies reduce inflation but raise fiscal deficit, reduce budget funding for social and economic development, and distort resource allocation,” the ADB said. It said developing Asia will expand by 6.6% this year and 7.1% next year, lower than the 6.9% and 7.3% forecasts in ADB’s ADO published in April.
This article appeared in The Edge Financial Daily on July 18, 2012.

Caveat on Prima homes

KUALA LUMPUR: The Government is unlikely to allow 1Malaysia Housing Programme (Prima) homes to be re-sold at market prices after the 10-year moratorium.

Syarikat Perumahan Negara Bhd (SPNB) managing director Prof Datuk Dr Kamarul Rashdan Salleh said the Government might buy back the units if owners decide to sell them after the tenth year.

“They (owners) cannot sell it in the open market. I think the Government will enforce that,” he said after the “Affordable Housing: A Fact or Fiction?” panel discussion during the 3rd Annual Affordable Housing Projects conference on Wednesday.

Dr Kamarul said the Government was still contemplating all options.

On Monday, Housing and Local Government Minister Datuk Seri Chor Chee Heung said that the Government was using unused federal land to build 42,078 affordable homes for families who earned less than RM5,000.

The units, which cost between RM150,000 and RM300,000, would be built in 20 locations in the Klang Valley, Rawang and Seremban.

He also said that while the owners would be given the units at a lower price, they would not enjoy the appreciation of prices as compared to those buying non-subsidised properties.

The discussion moderator, Australia's Housing Choices international adviser and former chief executive officer Michael Lennon said there was a need for a clear national policy.

In a question-and-answer session, Surbana International Consultants Pte Ltd director (Strategy and Branding) Ng Beng Eng said that governments should spearhead effective intervention efforts for affordable homes and the private sector could later be roped in. - The Star

Bank Negara expected to keep interest rate steady at 3%

PETALING JAYA: Bank Negara is expected to keep the overnight rate policy (OPR) unchanged at 3% at its monetary policy committee meeting scheduled today as the domestic economy is still resilient enough to face external headwinds from the eurozone.

Bank Islam Research said Bank Negara might possibly choose to keep the OPR unchanged at 3% at this juncture.

“The threat to growth prospects has intensified but not collapsed and there are signs of resilience in domestic demand.

“Furthermore, there appears to be some relief, albeit possibly short-term, in financial markets after European Union (EU) leaders took steps to solve the fiscal debt crisis and concerns over risks of financial imbalances may also nudge Bank Negara to lean toward keeping the monetary policy unchanged over the immediate-term,” it said in a report yesterday.

Nevertheless, should Bank Negara unexpectedly lower the OPR as a pre-emptive measure against downside risk to global growth, Bank Islam expected policymakers to move at a moderate and measured pace and a reduction of more than 25 basis points (bps) in the OPR to below 2.75% was not envisaged.

Malaysia Rating Corp Bhd also did not foresee Bank Negara undertaking such a step in the near term due to the respectable growth performance in first quarter of this year. Athough the economy might continue to moderate in the near term, it should not be sufficient to induce the central bank to rush into a more accommodative stance.

“In addition, policymakers will likely be extra cautious about fiddling with the OPR as there is limited pass-through from short-term rates to longer-term borrowing rates and thus overall economic activity.

“Also, an overly accommodative monetary policy is inconsistent with Bank Negara efforts to contain expansion in already overstretched household balance sheets in the economy and the capacity utilisation rate in the manufacturing sector has continued to be above its median level,” it said in an economic research report.

Citi Investment Research also expected the OPR to remain at 3% for the rest of 2012, even though the July statement could strike a more dovish tone.

“Bank Negara governor has reiterated recently that interest rates remain appropriate' as the domestic economy continues to hold up.

“Inflation concerns have taken a backseat for now, as May headline consumer price index inflation fell further to 1.7% year-on-year on falling transport prices, though core inflation (ex food and transport) also ticked down.

“Nonetheless lingering pipeline pressures on core remain, especially if domestic demand picks up in the second half of theyear on the back of pre-election fiscal spending. Growth will have to slow much more sharply, with a material loss of jobs and/or contraction in credit, before concerns household debt are overcome and rate cuts are serious consideration,” it said. - The Star

Bank Negara to keep key interest rate unchanged

Domestic demand still very strong, says Zeti

KUALA LUMPUR: Bank Negara will maintain its key benchmark interest rate at 3% due to robust domestic demand unless the country's export growth is affected sharply by global developments, including the eurozone sovereign debt crisis.

Its governor Tan Sri Dr Zeti Akhtar Aziz said the central bank was closely monitoring the global situation.

Domestic demand was still very robust; it was the trade that had been affected by the developments in Europe, she said.

Zeti: Domestic demand was still very robust; it was the trade that had been affected by the developments in Europe.

Bank Negara would maintain interest rate at the current level unless export growth was affected sharply, Zeti said on the sidelines at the launch of the Financial InstitutionsDirectors Education Forum here yesterday.

“The domestic demand comprising of consumption is still strong, investments are robust and loan growth is also strong. These are the factors that will be taken into consideration in deciding the overnight policy rate (OPR),'' she said when asked whether Bank Negara was prepared to cut interest rates at its next monetary policy committee (MPC) in the event of any disruptive global growth.

Zeti said consumption was currently growing by 6% to 7% while investments, on the other hand, were growing by more than 10%. This, she said, was positive for the country's economy to remain in the range of 4% to 5% growth for this year .

The MPC maintained the key benchmark interest rate or OPR at 3% for the sixth consecutive meeting, citing that domestic demand had continued to support growth, driven by firm consumption and investment activity and expected this trend to continue.

Data released by central bank for the first quarter showed that gross domestic product expanded by 4.7% year-on-year supported mainly by domestic activities.

Malaysian exports contracted for the second consecutive month in April from a year earlier on weaker electrical and electronics products, and commodities sales to developed economies.

Exports for the month fell 0.1% to RM57.74bil from RM57.8bil previously, while imports rose 7.4% to RM50.23bil. - The Star

Bank Negara says growth on track and sticks to 4% to 5% forecast

KUALA LUMPUR: Bank Negara is maintaining its growth forecast for the country this year at 4% to 5% but is closely monitoring the ongoing debt crisis in Europe, said governor Tan Sri Dr Zeti Akhtar Aziz.

“As of now, the prospect for moderation in growth in the global economy has already been priced in.

“But we recognise the risks that exist if Europe doesn't emerge with a solution to the evolving debt crisis that is unfolding,” Zeti said at a briefing on the Labuan Financial Services Authority's annual report 2011.

She added that should the solutions come, it would resolve many issues. Then, the growth projection would “remain intact”.

Zeti with the Labuan Financial Services Authority’s annual report 2011

However, should things get worse with deep recession taking place in Europe, all global economies would be affected, she said.

“But I would like to highlight that these are not new developments to the region. When the global economy suffered an economic contraction in 2008-2009, Malaysia was able to minimise the contraction to just over 1%,” Zeti said, adding that most countries in Asia then recovered rapidly.

Zeti said should a crisis happen again, Malaysia would be “able to emerge quickly” because the country did not have the kind of conditions prevailing in the crisis-affected countries.

Moreover, Malaysia had low unemployment, continued access to financing, low inflation rate and surplus on its balance of payment current account, she said.

“We have reserves buffer to insulate us from any impact of significant deleveraging and we have a more developed financial system that is able to intermediate the volatility that would emerge out of a major downturn,” she said.

Zeti believes that Asia would be able to rise to the challenge and emerge again to resume its growth potential.

She said the region had also become more cohesive and had come together in terms of surveillance and managing crisis, noting that it now had an integrated crisis management framework in place.

On the softer trade numbers announced recently, Zeti said: “Yes, our exports have declined but we have already priced that in. In fact, it only declined recently and we had expected the moderation to be happening earlier.

“The domestic economy is very strong. Consumption demand, private investment activity is very robust. Because of this, we are still confident it's going to be within the range (of economic growth projection).”

Asked if the current monetary policy would be maintained until year-end, she said it was reviewed at each monetary policy meeting. “The environment is very dynamic and monetary policy is a forward-looking policy.”

At its May 11 meeting, Bank Negara has kept its key interest rate at 3%. - The Star