Monday, 1 July 2013

CIMB Malaysian Economic News - 01 July 2013

The annual growth in broad money (M3) increased to 9.5% in May (+8.2% in Apr). Net financing to the private sector grew at a slower pace of 10% in May (+11.1% in Apr) due to a moderation in the growth of both outstanding loans of the banking system (9.3% vs. 10.5% in Apr) and net issuances of private debt securities (PDS). (Bank Negara Malaysia)

The producer price index (PPI) for the domestic economy dropped 4.6% yoy in May (-4.9% in Apr) with local production index and import price index decreasing by 6% and 1.4% respectively (-6.5% and -1.2% respectively in Apr). On a mom basis, PPI for the domestic economy decreased 0.8% (-0.5% in Apr) due a reduction in the PPI for local production by 0.9% (-0.5% in Apr) and import price index by 0.6% (-0.4% in Apr). (Department of Statistics)

Hoteliers and security service providers are among the 400 macro companies with six or more workers nationwide that have been given leeway to defer the implementation of the minimum wage until 31 Dec this year, Human Resource Minister Datuk Richard Riot said. He said after 1 Jan next year, his ministry would not give anymore exemption to any company that is required to pay the minimum wage of RM800 a month in Sarawak, Sabah and Labuan and RM900 in the peninsula under the Minimum Wages Order 2012 for the private sector. Micro companies are categorised as those with five workers and below. (Bernama)

East Asia-Pacific Central Banks expressed their optimism on the resilience of the region's economies at the just-concluded 18th Executives' Meeting of East Asia-Pacific Central Banks (EMEAP) Governors' Meeting, according to Bank Negara Malaysia (BNM) on 30 Jun. "Robust macroeconomic policies and wide-ranging reforms to the financial system and the increasing regional integration reinforce this trend," it said in a statement. (Bernama)

Deputy Domestic Trade, Co-operatives and Consumerism Minister Datuk Ahmad Bashah Md. Hanipah has expressed optimism that the franchise industry could contribute RM24.5bn to the country's GDP next year. As of 28 Jun this year, a total of 672 franchise companies have been registered nationwide, he said.

  • The government has allocated RM8m for the Small Franchise Loans Scheme (SPKF) through his ministry to assist local franchisees from the low and medium income groups, and as of Jun, 247 applications for loans totalling RM6.32m have been approved. (Bernama)

More than 300 companies are unsure if they have been successful in obtaining an extension to the new minimum retirement age of 60, which comes into effect 1 July for the private sector. Malaysian Employers Federation (MEF) ED Shamsuddin Bardan said 331 companies - comprising MNCs, GLCs and SMEs - had written to the Human Resources Ministry, seeking to delay the implementation of the new minimum retirement age but had yet to receive a response.

  • Many of the companies have staff who would be hitting their retirement age in July.
  • Annually, about 3% of the 6.5m private sector workers reach the age, which means that some 97,500 will turn 55 between July and Dec this year. (The Star)

Over RM48.6bn in investments have been committed by local and foreign investors to set up various kinds of industries at the East Coast Economic Region (ECER) which is touted to be the "Klang Valley of the east coast." The foreign investors are from several countries including China, the US, Germany, Australia, France, South Korea and Japan.

  • Some of the corporations investing in ECER include China Shougang, HTVB, Arkema, CJ, Gevo, Huntsman Tioxide, BP, Eastman, Basf Petronas Chemicals, Grace, Sarku Marine, Suzuki, Kaneka Corp, and Johnson Controls for various businesses including steel mills, iron ore plants, car plants, biopolymer and petrochemicals units. 
  • "We are in various stages of discussions with more investors and expect RM11bn in investments this year," said Datuk Jebasingam Issace John, the CEO of East Coast Economic Region Development Council (ECERDC). (Starbiz)

The wide-reaching Financial Services Act 2013 (FSA) will come into force today sources said, giving financial regulators stronger powers aimed at creating better governance and checks and balances among Malaysia's financial institutions. Bank Negara is expected to issue a statement on this today. (Starbiz)

Malaysia is optimistic about a steady bilateral trade growth in 2013 with South Korea after having achieved total trade value of RM18bn in just the first four months of this year. Ministry of International Trade and Industry director-general Datuk Seri Dr Rebecca Sta Maria said the figure represents a 9.6% increase compared to RM16bn in the corresponding period last year. Imports for the same period increased by 25.1% to RM9.35bn, while recoding a lower performance in exports by 3.5% to RM8.6bn, she said. (Malaysian Reserve)

Malaysia is on track to achieve the target of RM65bn in tourism revenue this year, said Tourism and Culture Minister Datuk Seri Mohamed Nazri Abdul Aziz. He said encouraging growth could be seen in terms of the RM4.7bn collected from shopping alone in 1Q13. (Malaysian Reserve)

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