ThxPORTAL - My OnlinE InvestmenT ProgresS

Total Government Gross Debt (National Currency) for Malaysia in year 2010 is MYR 415.174 Billion. Gross debt consists of all liabilities that require payment or payments of interest and/or principal by the debtor to the creditor at a date or dates in the future. This includes debt liabilities in the form of SDRs, currency and deposits, debt securities, loans, insurance, pensions and standardized guarantee schemes, and other accounts payable. Thus, all liabilities in the GFSM 2001 system are debt, except for equity and investment fund shares and financial derivatives and employee stock options. Debt can be valued at current market, nominal, or face values (GFSM 2001, paragraph 7.110).



Current Account Balance (US Dollars) for Malaysia in year 2010 is US$ 28.119 Billion. Current account is all transactions other than those in financial and capital items. The major classifications are goods and services, income and current transfers. The focus of the BOP is on transactions (between an economy and the rest of the world) in goods, services, and income.



General government total expenditure (National Currency) for Malaysia in year 2010 is MYR 238.079 Billions. Total expenditure consists of total expense and the net acquisition of nonfinancial assets. Note: Apart from being on an accrual basis, total expenditure differs from the GFSM 1986 definition of total expenditure in the sense that it also takes the disposals of nonfinancial assets into account.



Population for Malaysia in year 2010 is 28.251 Million .



Unemployment Rate (% of Labour Force) for Malaysia in year 2010 is 3.3 %.



Inflation (End of Year Change %) for Malaysia in year 2010 is 2.354 %. Data for inflation are end of the period, not annual average data.



Gross National Savings (% of GDP) for Malaysia in year 2010 is 33.113 %. Data are based on individual countries' national accounts statistics. For many countries, the estimates of national saving are built up from national accounts data on gross domestic investment and from balance of payments-based data on net foreign investment.



Investment (% of GDP) for Malaysia in year 2010 is 21.297 %. Data are based on individual countries' national accounts statistics. For many countries, the estimates of national saving are built up from national accounts data on gross domestic investment and from balance of payments-based data on net foreign investment.



GDP (Current Prices, National Currency) for Malaysia in year 2010 is MYR 765.966 Billion. GDP is expressed in billions of national currency units.



GDP Growth (Constant Prices, National Currency) for Malaysia in year 2010 is 7.156 %. Annual percentages of constant price GDP are year-on-year changes; the base year is country-specific.

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KUALA LUMPUR, July 8 (Bernama) -- Malaysia may slip into a double-dip recession if European countries face a similar slowdown, said Tun Dr Mahathir Mohamad.

The former Prime Minister said there were emerging signs of a double-dip recession hitting European countries and this would indirectly influence the Malaysian economy.

"I just returned (from England). In Europe (a double-dip recession) is imminent. If that happens, we may also be "infected", he told reporters after witnessing a contract signing agreement between Iris Corp Bhd and Koperasi Atlet Malaysia Bhd here Thursday.

Dr Mahathir was commenting on predictions made by economists and analysts that a double-dip recession may occur in the second-half of this year and whether Malaysia would suffer the same fate.

While saying the government had in place several economic plans and adopted progressive measures like the New Economic Plan, Dr Mahathir said it would, however, be difficult to predict the future as whatever occured overseas would have repercussions on Malaysia.

"Government is doing a lot of things but we cannot predict (the future) as external developments do affect us," he said.

Prime Minister Datuk Seri Najib Tun Razak said on Tuesday that Malaysia may face a possible slowdown in the second-half of the year prompted by external factors.

A famous banker also said recent data emerging out of the United States and Europe pointed to a possible global economic recession.

-- BERNAMA

Malaysia's latest issue of five-year global bonds advanced on their first day of trading after yesterday's sale attracted orders for more than five times the US$1 billion (RM3.3 billion) originally sought.

The Islamic notes due June 2015 yielded 3.87 per cent early yesterday in Hong Kong, six basis points less than the 3.93 per cent the securities were priced at in yesterday's sale, according to data provided by Barclays plc, one of the deal's three arrangers. That's 171 basis points more than similar-maturity US Treasuries, nine basis points less than when the bonds were sold.

"Malaysia is oil-rich, the fundamentals are solid and they don't have funding needs," Paul Chan, the Hong Kong-based chief investment officer at Invesco Asia Ltd, said before the sale. "There will be scarcity value in Malaysia's dollar bonds. Asian countries are generally underrated" given what's happening in Europe, he said.

Malaysia's sale of so-called sukuk notes, its first international debt issue since 2002, will set a new benchmark for pricing bonds in the nation, Prime Minister Datuk Seri Najib Razak said on May 19.
The government sold US$1.25 billion (RM4.1 billion) of the securities, after attracting orders of almost US$5.5 billion (RM18.2 billion), according to a sale document obtained by Bloomberg. CIMB Group Holdings Bhd and HSBC Holdings plc, along with Barclays, arranged the offering.

Islamic bond sales are growing for the first time since 2007 as yields on securities complying with the religion's ban on interest fall more than those on emerging-market debt even as Europe's debt crisis worsens.

Offerings of sukuk have climbed 10 per cent to US$6.1 billion (RM20.2 billion) so far this year, the most since a 47 per cent increase in the same period three years ago, according to data compiled by Bloomberg.

Malaysia has the world's biggest market for Islamic bonds, which are backed by physical assets and pay profit rates instead of interest that is prohibited under syariah principles. The country accounted for 65 per cent of outstanding sukuk last year, according to CIMB Group Holdings Bhd, one of the lead arrangers for the latest notes.

The sukuk, which is of the Ijarah structure, were assigned debt ratings of "A-" by Standard & Poor's (S&P) and "A3" by Moody's Investors Service last week, the two company's fourth lowest investment grades. Greece, which sparked the European debt crisis amid concern about its ability to repay investors, has a junk, or high-risk, rating of "BB+" from S&P.

The premium investors demand to hold bonds in developing nations over US Treasuries narrowed 20 basis points yesterday to 319 basis points, according to JPMorgan Chase & Co's EMBI+ Index. A basis point is 0.01 percentage point.

Malaysia's latest bond issue would pay returns with rental income received by leasing 12 state-run hospitals, according to a sale document obtained by Bloomberg News last week.

State-owned Petroliam Nasional Bhd's (Petronas) 4.25 per cent Islamic bonds due August 2014 yielded 3.92 per cent yesterday, according to Royal Bank of Scotland Group plc, or 207 basis points more than similar-maturity Treasuries.

"Usually the trading differential between Petronas and Malaysia is 20 or 25 basis points, so that's what I was expecting," said Brayan Lai, a Hong Kong-based credit analyst at Credit Agricole CIB. "The issuer came into a rally in the markets, so they probably got a good deal." - Bloomberg

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SHARE prices on Bursa Malaysia extended their losses today on continuous selling mainly in key blue chips and banking-related stocks, dealers said.

The benchmark FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) fell as much as 25.84 points amid rising concerns that Europe's debt crisis may spread and over reports of North Korea readying its military for a possible confrontation with South Korea over the sinking of a warship.

At 5pm, the FBM KLCI lost 23.56 points or 1.85 per cent to close at 1,250.13, off it intraday low of 1,247.85. It had opened 8.72 points lower at 1,264.97.

OSK Research said the fragile sentiment in the near term was likely to drive extended volatility in the market with the index possibly attempting to consolidate after the sharp losses over the past week with a downside bias.

KUALA LUMPUR: Malaysia will offer around US$1bil in a global sukuk issue to investors from Wednesday, its first international debt sale since 2002, two sources familiar with the planned issue told Reuters.

The sources said the Government was targeting about US$1bil (RM3.2bil) for the bond that would be entirely sukuk and would be launched at an Islamic economic forum.

Lead managers for the deal are CIMB and HSBC.

CIMB declined to comment while HSBC was not immediately available.

“(The government) is targeting about US$1bil,” one of the sources familiar with the deal told Reuters, adding that there would be a global roadshow for the paper.

The sale comes as global credit markets grapple with worries of another crisis after the recent sell-off sparked by credit worries in Europe.

Malaysia last tapped the global bond market in 2002 when it raised US$600mil through the sale of its first international sukuk.

Sukuk can have higher yields than conventional paper because of the relatively illiquid secondary Islamic bond market but a global sukuk offering would help reinforce Malaysia's ambitions to become an international syariah banking hub.

Prime Minister Datuk Seri Najib Razak had said in April Malaysia would likely tap global bond markets by offering a US dollar Islamic bond to test investor appetite for its assets. The country usually relies on domestic bond issuances to fund its expenditure. The government sold RM88.5bil ringgit of bonds in the country last year with Islamic paper accounting for a third of that, according to central bank data.

Malaysia has only one outstanding conventional bond -- due in 2011and worth US$1.75bil. The country ran a budget deficit of 7.4% in 2009, its highest in more than two decades. It aims to reduce that to 5.6% this year. - Reuters

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Malaysia’s exports have been paralysed by the “nightmare” chaos caused by the European volcanic ash cloud and would hurt the nation’s economic recovery, a hauliers’ spokesman said today.

Southeast Asia’s third largest economy, which relies heavily on exports, is tentatively emerging from the global downturn as global trade picks up.

But Walter Culas, chairman of the airfreight forwarders association of Malaysia, told AFP that with the ash cloud forcing the closure of European airspace for almost a week hundreds of tonnes of cargo are not being delivered.

“As of today about 400 tonnes of cargo are stranded at the airport. The volcanic ash has paralysed valuable cargo movement to Europe from Malaysia,” he said. “The total losses could snowball to billions of ringgit,” Culas said.

Malaysia’s central bank said it may increase interest rates further to avert asset bubbles and discourage risky investments by people seeking better returns, even as inflation will likely remain “modest” this year.

“We will review the conditions at our next monetary policy meeting and work towards further normalizing if necessary,” Governor Zeti Akhtar Aziz said in a March 12 Bloomberg Television interview in Kuala Lumpur. “Inflation will continue to be modest and therefore it would not prompt us towards tightening, but that does not preclude that we will continue to normalize interest rates.”

Malaysia raised its benchmark interest rate to 2.25 per cent this month, becoming the second Asian nation to increase borrowing costs as the region leads a recovery from the global slump. The central bank wants to prevent “financial imbalances” that could undermine the economy’s recovery from last year’s recession, Zeti said.

“There is no compelling evidence of asset bubbles in Malaysia based on current indicators,” Suhaimi Ilias, chief economist at Maybank Investment Bank Bhd. in Kuala Lumpur, said before the interview. Still “the risk is there if the interest rate is kept very low for an extended period as money searches for returns to beat inflation that is creeping up.”
China has started draining excess cash from the economy to prevent asset bubbles. Australia and Vietnam have raised borrowing costs as inflation accelerates, and the Philippine central bank last week pared back a lending program for banks.

Significant Risks

Keeping interest rates too low for too long may lead to the “mispricing of risks” by those who anticipate borrowing costs will stay low, as well as create asset bubbles, Zeti said. While the central bank doesn’t expect to see bubbles forming “on the horizon,” there are signs that people are buying higher- yielding assets “that pose significant risks,” she said.

Bank Negara Malaysia will monitor the strength of the economic recovery in deciding whether interest rates need to rise further, the governor said. Current borrowing costs are still “very supportive” of economic growth, Zeti said. The level at which rates are considered to be “normalized” would depend on the strength of the recovery, she said, adding that inflation won’t be “a factor” in 2010 even after taking into account possible increases in fuel and power prices.

The central bank, whose policy team next meets in May, raised its overnight policy rate from a record-low of 2 per cent on March 4, the first increase in almost four years, saying the economy’s recovery is “firmly established.”

Faster Growth

Malaysia’s gross domestic product expanded 4.5 per cent last quarter after contracting the previous nine months. Exports surged by the most in more than 11 years in January.

“We expect growth to improve from the levels we have seen in the fourth quarter,” Zeti said. “Certainly the first half of the year, all the signs are pointing to stronger growth” as domestic demand and investment recover, she said.

JCY International Bhd., a Malaysian supplier of hard-disk- drive components for Seagate Technology and Western Digital Corp., said last month it plans to spend 182 million ringgit ($55 million) in the financial year starting Oct. 1, 2010 to increase its capacity amid rising orders.

Inflation of about 2 per cent would be considered “modest,” Zeti said. Malaysia’s consumer prices rose for a second month in January, climbing 1.3 per cent from a year earlier from an average 0.6 per cent in 2009.

Should price gains accelerate further to 3 per cent, for example, “we would begin looking at what are the sources of inflation because if it was demand-induced then” the central bank would look at “tightening” monetary policy, Zeti said.

Ringgit’s Gain

Zeti refrained from raising interest rates in 2008 when consumer prices rose as much as 8.5 per cent in July and August amid soaring oil and commodity prices, saying inflation wasn’t driven by higher demand and would ease as global growth slowed. Malaysia’s policy makers aren’t “inflation targeters,” she said last week.

The Malaysian ringgit has climbed 2 per cent since the central bank’s decision to raise rates this month, making it Asia’s best-performing currency outside Japan during the period.

The currency’s appreciation has reflected Malaysia’s strengthening “fundamentals,” Zeti said.

“We have seen this level before and we are not concerned,” she said. “We have allowed our exchange rate to be market determined and we are there to ensure orderly market conditions. Our export sector has never relied on the exchange rate to gain competitiveness.”

Zeti, who said previously Malaysia will consider allowing the ringgit to be traded overseas once the country has a more developed foreign-exchange market, said in the interview the central bank has formed a task force involving the financial and banking industry to work toward developing the country’s foreign-exchange market “with a view to internationalizing” the ringgit.

“Once that market has become more vibrant and with the products and services being offered in terms of the forward market and so on, and in terms of hedging instruments, then we’ll look at internationalizing the currency,” she said. “Right now we don’t have a time frame.” -- Bloomberg

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PETALING JAYA: The local bourse’s benchmark FTSE Bursa Malaysia KL Composite Index, which has risen 2.9% from March 4 when Bank Negara announced a 25-basis point hike in the overnight policy rate to close yesterday at 1,321.43 points, will start to retrace from April as the region’s central banks begin to normalise their respective monetary policies.

Analysts believe that with the lack of fundamentals to fuel the rally further, the market would start to see outflow of funds as soon as central banks in the region start to raise their benchmark policy rates, which could commence next month.

“The risk of retracement is there, we see it starting from April. This month is still okay but much also depends on when China starts to raise interest rates,” OSK Research Sdn Bhd research head Chris Eng told StarBiz.

Last week, China’s premier Wen Jiabao warned of a latent risk in the country’s banks in a speech to the National People’s Congress and has targeted a reduction of new loans by 22% this year to 7.5 trillion yuan to stop speculation in the property market.

Although there was no talk of monetary policy tightening in Wen’s speech, analysts believe the People’s Bank of China would start raising interest rates soon as the country’s inflation rate rose 2.7% in February from a year ago, according to data released by the National Bureau of Statistics yesterday.

“We think the market will be quite volatile over the next four months and will move between the 1,250 and 1,400-point level before stabilising around 1,300 points towards year-end and start another rally next year,” Eng said.

He said the current market rally was largely due to foreign interest in select plantation and banking stocks only, with the larger capitalised stocks in both industries seeing the most play.

“There is a risk of money flowing out in an environment where sentiments are still cautious,” Eng said.

UOB Kay Hian (M) Holdings Sdn Bhd research head Vincent Khoo said although Malaysia had a leg-up due to the rate hike, which put the spotlight on the ringgit, the rest of the region would eventually catch up.

He expects the market to retrace to the 1,230-point level eventually, beginning in the second quarter.

“The two factors that will impact the markets will be the continued rise in global inflation and growth momentum slowing down; we see this happening over the second and third quarters,” Khoo said.

India is also facing expectations of a rate hike as a recent decision to raise fuel prices has stoked inflation while Thailand could start normalising interest rates as inflation starts to rise and economic recovery gains momentum.

The Bank of Thailand’s monetary policy committee issued a statement yesterday saying that the central bank would continue to closely monitor inflation and economic developments, a statement viewed by analysts as preparing the market for an eventual rate hike.

Morgan Stanley Research’s Shweta Singh, Tan Deyi and Chetan Ahya said in a report dated March 10 that the Bank of Thailand’s monetary policy committee statement, which placed more emphasis on inflation and economic developments, put the country one step closer to a normalisation of interest rates.

They expect policy normalisation by central banks in the region to begin in the second quarter as the growth cycle slowly firmed up and the rate hikes would depend on how pre-emptive the central banks want to be.

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KUALA LUMPUR, Jan. 26 (Xinhua) -- The Malaysian Institute of Economic Research (MIER), an independent body undertaking research on economic issues, expects Malaysia's budget deficit to shrink to 5.6 percent of the gross domestic product (GDP) this year.

Its executive director Zakariah Abdul Rashid told reporters after the MIER National Economic Outlook Conference here on Tuesday that the reduction was made through the cut in the country 's expenditure.

Zakariah said that the cut in expenditure was expected to be much larger than the reduction in revenue this year, resulting in a smaller budget deficit.

He pointed out that in 2009, the Malaysian government expenditure was so high that the deficit was estimated at around 7. 4 percent of the GDP.

On growing concern over inflation, Zakariah said the inflation rate was quite stable in the meantime and should not be too much a concern to the consumers as the main focus laid within the economic growth.

Meanwhile, Zakariah stressed that liberalization of the country 's economy was necessary since it would attract private sector, deemed the main driver of the country's economy, to participate in the economic activities.

A sector must be made competitive before it was appealing to the investors, said Zakariah.

The MIER is an independent, non-profit organization devoted to economic, financial and business research that serves as a think- tank for the Malaysian government and the private sector.

Its research activities cover four divisions, namely Macroeconomic Surveillance and Forecasting, Policy Studies, Industry Studies, as well as Area Studies.

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Malaysia's 2010 budget deficit will be lower than this year as the government will cut its operating expenditure by 15 percent, Second Finance Minister Ahmad Husni Hanadzlah said on Tuesday.

Malaysia is readying its 2010 budget after a year in which the government projects the economy will shrink by 5 percent, its first big recession since the 1998 Asian financial crisis. The budget deficit is expected to balloon to 7.6 percent of gross domestic product this year.

The International Monetary Fund last week urged the government to introduce a goods and services tax to boost revenues and the Fund forecast the deficit would hit 7.7 percent of GDP this year and only decline slightly to 7.1 percent of GDP in 2010.

"We are looking at it (GST) seriously," Husni told a press conference, although he added that: "The government does not want to cause any pain to the people".

Malaysia's budget deficit excluding oil revenues will be 11 percent of GDP, according to the IMF, and with lower oil prices in 2009 than in 2008, the income from oil will shrink in 2010 as it is based on 2009 prices.

Malaysia may however introduce changes to its fuel subsidy regime as early as next year and switch to a means tested formula, Husni said.

PUTRAJAYA, Malaysia, Aug 18 (Reuters)

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Sales of Islamic bonds may increase 24 per cent this year, led by Southeast Asia, as the region’s expansion helps drag the world out of recession, said CIMB Group Holdings Bhd, the leading arranger of such issuance.

Global sales of bonds that comply with the religion’s syariah principles, known as sukuk, will probably reach US$25 billion this year, Badlisyah Abdul Ghani, chief executive officer of CIMB Islamic Bank Bhd, a unit of CIMB Holdings, said in an interview yesterday. Gulf issuance will fall after Dubai World’s attempt to reschedule US$22 billion of debt eroded investor confidence, he said.

“Economic growth will trigger the need for funding,” said Badlisyah, whose bank handled 22 per cent of global sukuk sales in 2009. “Most sales will come from this part of the world,” with countries including Indonesia and Thailand “moving aggressively to facilitate the industry,” he said.

Sukuk sales rose to US$20.15 billion last year from US$14.13 billion in 2008, according to data compiled by Bloomberg. Islamic finance bans the payment of interest and stipulates agreements be based on the transfer of goods or services.
The Islamic finance industry’s assets under management may swell to US$2.8 trillion by 2015 from about US$1 trillion as Muslim wealth increases, according to the Kuala Lumpur-based Islamic Financial Services Board. The assets of the top 500 Islamic banks expanded to US$822 billion last year from US$639 billion in 2008, Standard & Poor’s said Feb. 1.

Developing East Asia, which excludes Japan, Hong Kong, Taiwan, South Korea and Singapore, will grow 8.1 per cent this year, faster than a November estimate of 7.8 per cent, the World Bank said on Jan. 21.

Malaysia Dominates

Malaysia, which accounted for about half global sukuk sales in 2009, will continue to dominate the sales, followed by Indonesia, which has the world’s largest Muslim population, Badlisyah said.

Thailand plans to sell as much as 50 billion baht (US$1.5 billion) of Islamic bonds in the third quarter to fund infrastructure projects, the Islamic Bank of Thailand said on Feb. 1. Indonesia plans to sell 3 trillion rupiah (US$319 million) of Islamic bonds to individuals this month, the finance ministry’s debt management office said in January.

Malaysia has eased foreign ownership rules and approved new products as part of efforts to become a hub for Islamic financial products. It also plans to issue new Islamic banking licenses and two new permits to sell Islamic insurance.

Thailand will introduce new rules in the first quarter to allow local companies to sell Islamic bonds for the first time to provide them with a new source of funding, the country’s Securities and Exchange Commission said in November. -- Bloomberg

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PUTRAJAYA, 3 Feb (Bernama) -- Tabung Haji pada Rabu mengisytiharkan bonus pendeposit tahunannya sebanyak lima peratus bagi tahun 2009 dengan anggaran keseluruhan bayaran berjumlah RM1.1 bilion.

"Walaupun 2009 merupakan tahun yang mencabar, Tabung Haji dengan komitmen dan perancangan yang rapi masih mampu mencatat pencapaian kewangan yang boleh dibanggakan," kata Menteri di Jabatan Perdana Menteri Datuk Seri Jamil Khir Baharom ketika mengumumkan bonus itu di sini.

Tabung Haji, yang mengumumkan kadar yang sama pada tahun sebelumnya, telah mengisytiharkan pemberian bonus interim pada kadar 2.25 peratus pada September lepas dengan jumlah bayaran RM465 juta.

"Jika dibuat perbandingan terhadap kadar purata pulangan perbankan komersil untuk simpanan tetap dan tabungan, jelas sekali pemberian bonus Tabung Haji sejak dahulu lagi mempamerkan satu kadar yang amat kompetitif," kata Jamil Khir.

Seramai 5.1 juta pendeposit Tabung Haji akan menikmati bayaran bonus itu mulai Isnin depan.

Dana pendeposit terkumpul Tabung Haji meningkat pada kadar 12 peratus tahun lalu kepada RM23 bilion daripada RM20.6 bilion tahun 2008.

Tabung Haji memperuntukkan zakat perniagaan sebanyak RM39 juta berbanding RM38 juta pada tahun sebelumnya.

Jamil Khir berkata Tabung Haji mungkin boleh membayar dengan kadar yang lebih baik untuk tahun 2010 berbanding tahun lalu memandangkan senario ekonomi semakin pulih.

Tabung Haji yang pernah membayar bonus setinggi tujuh peratus pada tahun 2007, telah mengambil kira kos tanggungan langsung haji sebanyak RM54 juta bagi musim haji 1430 hijrah yang lalu.

Ia telah mencatatkan pendapatan dan keuntungan selepas zakat masing-masing sebanyak RM1.7 bilion dan RM1.1 bilion, dan kedua-duanya meningkat pada kadar 12 peratus.

-- BERNAMA

Malaysia’s gross domestic product may rebound this year from a contraction in 2009 amid signs the global economy is recovering from the worst recession since the 1930s, the Malaysian Institute of Economic Research said.

Southeast Asia’s third-largest economy will probably expand 3.7 per cent this year and 5 per cent in 2011 after shrinking a projected 3.3 per cent in 2009, the partially government-funded research institute said in a statement in Kuala Lumpur today.

“The services sector will be the pillar of strength amidst a glum manufacturing sector,” the research group said. “However, Malaysia may not regain more strength until the global economy is back on track, which is going to be at a disappointingly slow pace.”

Asia is leading the world’s economic recovery after the region’s policy makers slashed interest rates to unprecedented lows and governments announced more than US$950 billion of stimulus measures. Malaysia’s consumer prices rose in December for the first time in seven months as food and housing costs climbed, and the government has raised its economic growth forecasts on signs of sustainable demand.
Prime Minister Datuk Seri Najib Razak said on January 20 the economy may expand 3.5 per cent or more this year, predicting faster growth than the government forecast in October.

Developing East Asia, which excludes Japan, Hong Kong, Taiwan, South Korea and Singapore, will expand 8.1 per cent this year, faster than a November estimate of 7.8 per cent, the World Bank said on January 21. South Asia will grow 7 per cent in 2010, it said.

Export Growth

Exports of goods and services may grow 9.3 per cent this year after declining 17.5 per cent in 2009, the institute predicts. “Demand recovery as well as improving commodity prices are expected to lift exports growth,” it said.

Bank Negara Malaysia has refrained from following Australia and Vietnam in raising borrowing costs even as commodity prices rise amid a global economic rebound.

Inflation may average 2.3 per cent in 2010 from an expected 0.8 per cent in 2009, the institute predicts. The jobless rate may improve to 4.2 per cent this year from an estimated 4.5 per cent in 2009, it said. -- Bloomberg

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Malaysia may approve the introduction of a goods and services tax (GST) in March to increase revenue as the government seeks to narrow a budget shortfall, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said.

Full implementation of the levy may take about 1 1/2 years after approval as the system’s infrastructure is put together, Ahmad Husni told reporters in Hong Kong, clarifying earlier comments at a conference when he said that Malaysia would “introduce” the tax in March.

“We know very well that the sources of revenue for the government have been dependent heavily on petroleum,” he told the conference. By introducing the consumption tax, “we can have alternative sources of revenue.”

The goods and services tax of 4 per cent is expected to generate an additional RM1 billion annually in revenue, Ahmad Husni said last year.
Essential items such as agricultural products, poultry and livestock products, sugar, rice, flour, cooking oil and eggs will be exempted from the tax, the government has said.

The government is on track to implement a new fuel-subsidy program in May that will be targeted to those in need, compared with an existing plan that subsidizes everyone, Ahmad Husni said today. Malaysia will also unveil a new economic model for the country next month, he said.

The nation aims to privatize as many as 17 state-owned companies this year through initial public offerings or sales to the private sector, Ahmad Husni said. He declined to name the companies or the industries. - Bloomberg

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Bank Negara Malaysia is likely to raise interest rates by 50 basis points in the second half of this year and another 100 basis points in 2011, according to Deutsche Bank Group.

"It is simply because inflation is returning to normal. It is coming back at two per cent in Malaysia," said the group's managing director and head of global markets research, Asia Pacific, Dr Michael Spencer.

"Given the concerns that in some parts that Asia's asset bubbles are potentially building up, I think it is reasonable for central banks to raise rates," he said at a media briefing on Malaysia's economic outlook in Kuala Lumpur today.

However, Spencer said that real interest rates are likely be lower at the end of 2010 than what they are currently.
"We also expect the US Federal Reserve to raise interest rates by 100 basis points in the third quarter," he said.

Spencer said that most Asian central banks are expected to start raising interest rates well before the US Federal Reserve and European Central Bank, which is also likely to start raising rates in third quarter.

"Our forecast of about 90 basis points of rate hike on average this year contrast with expectation of a 1.6 per cent increase in inflation between December 2009 and December 2010," he said.

According to Spencer, India, China and the Philippines will the first in the region to raise interest rates.

He said a spike in oil price inflation is likely to be over by mid-year and a return to more normal food price increases should bring the Asian inflation rate up to 3.6 per cent this year from 1.2 per cent in 2009.

Spencer said with the average inflation rate since 2004 at 3.7 per cent, the return of inflation should not be a major concern.

He expects the ringgit to strengthen against the US dollar on support from the inflow of capital into the country, saying that it is set to rise to 3.2 against the greenback in the next 12 months.

At midday today, the ringgit was traded at 3.351 against the US dollar.

On economic growth, Spencer said Malaysia is expected to register a 5.5 per cent growth this year, driven by domestic consumption.

"The biggest swing will be the contribution of domestic consumption," he said.

Private consumption is likely to be at 3.3 per cent this year and 4.0 per cent in 2011, Spencer said, adding that it was at 1.0 per cent last year. -- Bernama

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PETALING JAYA: Banks which had made loans to LCL Corp Bhd may have to face a “haircut” when they try to recoup their money.

LCL Corp’s default in loan repayments to at least three banks could affect the financial institutions negatively, according to a local analyst.

“How adversely these banks are affected will depend on the amount borrowed and LCL Corp’s repayment scheme over time,” he told StarBiz.

LCL Corp, which last month slipped into the financially troubled Practice Note 17 (PN17) status, currently owes a total of RM112.26mil to the three banks.

The banks involved are Affin Bank Bhd (RM69.42mil), Bank Islam Malaysia Bhd (RM2.63mil) and The Royal Bank of Scotland Bhd (RM40.21mil).

“LCL Corp has 11 months to resolve its outstanding loans to these banks,” the analyst said, noting that the company had issued a statement to Bursa Malaysia on Jan 4 that it was presently considering and formulating a regularisation plan to resolve its financial obligations to the banks.

He added that the banks might well have to settle for less than what was owed.

“Ideally they would like to receive full payment but chances are slim and winding up the company’s operations is an unfavourable option,” he said.

The analyst said LCL Corp’s debt servicing capability going forward would depend on how Dubai recovered from its credit crunch, as well as collections from LCL Corp’s debtors and the sale of the company’s non-core assets.

A financial analyst from Singapore told StarBiz that LCL Corp’s debt position could signal “more companies following the course of LCL Corp in the later part of the year, especially if the credit crunch in Dubai remains unresolved.”

He noted that some banks had tightened their credit facilities to companies with exposure to Dubai in view of the higher risk of doing business there, adding that there was a lesson to be learned from the LCL Corp episode.

“They (banks) should review their lending practice to ensure that companies they back with sizable loans should not invest, do business or rely purely on one market for their growth and expansion,” the analyst said, noting that LCL Corp had relied too heavily on Dubai, with over 70% of its business, revenue and growth derived from there.

“There was a clear signal of over exposure to one region, and too much focus on the construction industry,” he noted. LCL Corp’s core business is in providing interior fit-out services.

source HERE

Investors of the Amanah Saham Bumiputera (ASB) fund may see better dividend distribution this year, since the country's economy has been showing a positive growth rate.

Permodalan Nasional Bhd (PNB) president and group chief executive Tan Sri Hamad Kama Piah Che Othman said the state-owned company has been providing good returns through its various funds to its investors every year.

"Our past record revealed that despite facing economy slowdowns, PNB continued to offer a promising dividend rate," he told reporters after he paid PNB's business tithes amounting to RM1.7million for the financial year 2008 to Tengku Mahkota Pahang, Tengku Abdullah Sultan Ahmad Shah at Istana Abdulaziz in Kuantan yesterday. Tengku Abdullah is the Pahang Islamic Affairs and Malay Customs Council president.

Earlier, Hamad Kama Piah said Pahang is the fourth state to receive the business tithes from PNB for 2008.

Other states were Sarawak totalling RM2.7 million, Malacca RM900,000 and Penang RM2.2million.
The business tithes paid by PNB is calculated based on profit derived by the institution from investment holdings, property managment, unit trust management and consultation services.

source HERE

- Clive Maund

What was really odd about yesterday was that we saw a big dollar breakout, but Treasuries fell heavily. We are now believed to be on the verge of another massive deflationary downwave, similar to last year, but worse. However, this time it is very possible that while we will see a flight to cash, we will not witness a stampede into Treasuries, or at least not on anywhere near the same scale. So what is going on here? - what are the principal underlying dynamics? Anyone who has had the misfortune to watch a nuke exploding, misfortune because you get irradiated, knows that first you see a very bright flash, then there is a period of tranquillity as the flash dies down and the mushroom cloud starts to rise, before the shockwave hits, when things get pretty rough to say the least.

Youv'e seen the flash - now get ready for the shockwave...

What happened in Dubai just over a week ago was the bright flash, and the media have used the intervening period before the shockwave hits to reassure everyone that everything is going to be just fine - "You just relax, nothing will come of it, it's only $60 billion down the drain or whatever - have a cup of tea". The trouble is that it's not $60 billion at all - the reality is that this is a default on a massively larger scale. Dubai was a vast sinkhole into which western banks and governments unquestioningly poured not just billions but trillions of dollars which was then leveraged enormously by means of derivatives enabling Dubai to build itself up into a latter day Rome, with a level of opulence and extravagence that would have made Caesar green with envy.

When people think of Dubai the things that come to mind are the massively extravagent 7-star hotels, the towering record breaking skyscraper, palm-shaped island resort complexes etc and forests of new office buildings and apartments etc. What the vast majority don't realize is that the stupendous leverage afforded by derivatives has in addition enabled Dubai to create an immense global empire of businesses, most of the elements of which are broke, having racked up staggering levels of debt. Dubai is the nexus of the derivatives pyramid and it is flat, stony broke.

Where did all the money come from to pay for all these things? - why from taxpayers and pension fund contributors the world over of course, but especially in the US, with Wall St acting as a giant conduit sluicing a torrent of cash into Dubai. The interesting thing is that there was never any accountability - countries and companies vied with each other for the privelege of pumping money into the exalted kingdom, seduced by its supposedly limitless oil wealth, and requesting or requiring guarantees was regarded as impolite. Now that Dubai is broke, the Dubai government has suddenly distanced itself from Dubai World, and the attitude towards the Western banks and governments who have poured trillions into Dubai is "Tough luck - you lose, suckers".

What this means is that trillions of dollars which are now counted as assets on the balance sheets of banks worldwide and especially in the US are actually liabilities. So what do you think is going to happen to the stock prices of these banks - and stockmarkets generally, when the world wakes up and acknowledges this reality - when the shockwave hits?? Small wonder that the charts for Goldman Sachs and J P Morgan look very like the market charts before the '87 crash, but that was "small potatoes" compared to what is coming down the pipe this time.

Introducing Sukuk: Islamic Loophole for Dubai Debt Debacle

Islamic followers can be capitalists too. Although oil prices (currently around $77 per barrel) have fallen from the peak near $150 per barrel in 2008, oil rich nations have gotten creative in how they raise debt-like financing. Critical to fueling the speculative expansion in some oil rich areas has been the growth in sukuk bonds, which have been created as a function of loophole exploitation in Islamic finance principles.

U.S. Does Not Have Monopoly on Debt Driven Greed

The pricked debt bubble that spanned the range of Icelandic banks to Donald Trump (read more) has now spread to Dubai commercial real estate, evidenced by the plastering of recent global headlines. At the center of the storm is Dubai World, a quasi-government owned conglomerate of Dubai, which is in the process of negotiating a $26 billion debt restructuring with the government and sukuk bondholders.

This overleveraged Dubai market ($80 billion in total debt) helped finance the tallest building in the world, largest man-made islands, and a ski-resort based in the desert, in the face of collapsing real estate prices. Critical to Dubai World’s debt restructuring is a $3.5 billion sukuk bond issued by its commercial real estate subsidiary Nakheel Development (“Nakheel”). So what exactly is a sukuk (plural of sakk)?

Investopedia lists the following definition for sukuk:

“An Islamic financial certificate, similar to a bond in Western finance, that complies with Sharia, Islamic religious law. Because the traditional Western interest paying bond structure is not permissible, the issuer of a sukuk sells an investor group the certificate, who then rents it back to the issuer for a predetermined rental fee. The issuer also makes a contractual promise to buy back the bonds at a future date at par value.”

more HERE

PETALING JAYA: The debt payment crisis of conglomerate Dubai World will not adversely affect the Islamic finance industry in Malaysia as it has limited exposure to the sheikhdom’s debt, according to industry observers.

CIMB Islamic Bank Bhd CEO Badlisyah Abdul Ghani said the situation in Dubai was purely a credit issue and applicable for both conventional interest-based and Islamic capital market in the Middle East.

Credit issue was not exclusive to Islamic capital market and the problem Dubai was facing had no bearing on the structure of the sukuk market or its instruments in particular, he said in an email reply to StarBiz.

“What’s happening in Dubai has no impact on Islamic finance in Malaysia as Malaysian Islamic banks are not exposed to the Dubai market, with most concentrating on doing business in Malaysia only or regionally in South-East Asia. If (there is) any, exposure would be extremely insignificant,” he added.

The Malaysian Islamic finance industry, he said, was unparallelled in terms of depth and sophistication and had gone through two major global financial crises with one involving Malaysia directly and emerged practically unscathed both times.

Ernst & Young Advisory Services head of assurance Abdul Rauf Rashid agreed, saying that there was limited direct implication to the local financial industry as not many investors were directly exposed to Dubai or papers issued by organisations from the Gulf Cooperation Council (GCC) countries.

In response to a query, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said: “The Malaysian conventional and Islamic banks have limited exposure to Dubai and the recent development has not had an impact on their operations.

“The fundamentals of the banking system remain strong and continue to support the economic recovery process.”

more HERE

KUALA LUMPUR: The worst of the global economic crisis is over and developing countries like Malaysia can expect to register 6% gross domestic product (GDP) growth next year, according to UBS Investment Bank (global economics) managing director Paul Donovan.

“Our GDP forecast of 6% for Malaysia is slightly higher than concensus but we are sticking to it,” he told a media roundtable on Global Macroeconomics Outlook 2009 yesterday.

Donovan said in South-East Asia, Malaysia was expected to lead the pack in GDP growth, ahead of Singapore, Thailand and Indonesia, which were all expected to record lower GDP growth (5% or below).

“By and large, Malaysia has not been significantly affected by the global economic crisis, as compared with the West,” he said, adding that the United States and Europe were now on a growth trend, albeit slowly.

He said UBS expected the growth trends in the West to continue to be slow, at least for the next couple of years, and that it might even take five to six years for the spare or excess stock capacity to be absorbed by the global markets, as many were still trying to reduce their inventory levels.

“While the worst is over, banks in the developed world are still cautious with their lending practices,” Donovan said, adding that many small and medium-scale enterprises were still facing a credit squeeze by financial institutions.

On the Asian front, he said, the economic fundamentals were much stronger, lead by China and India.

“We expect a V-shaped recovery for these countries, including Malaysia.”

He said that there was very little past impairments or obstacles to economic growth, as opposed to the West.

Donovan also said inflation, unemployement rates and interest rates were not expected to rise significantly in the region.

“Infact, we expect a strong rebound for Malaysia,” he said, but conceded that the country as a trading nation might have been slightly affected by lower export demand, especially from the developed world, during the peak of the global economic crisis.

During the crisis, he said, government spending and pump-priming activities worldwide had lifted consumer spending confidence.

“But we foresee lower government spending next year and expect the private sector and the domestic market to be the main drivers of growth.”

On the US dollar, Donovan said the currency might even strengthen in the coming months but was expected to weaken over the longer term.

On the stock market, UBS Securities Malaysia Sdn Bhd managing director and head of Malaysia Equities Leong Fee Yee said it was fairly healthy and that any upside would depend on the earnings performance of companies.

“And they (company earnings) have to be sustainable,” she said.

source HERE