Malaysia remains confident about sustaining its investments, considering the low growth rate of the second quarter of 2020. The confidence in the business community and investor community has been enhanced by government progress in resolving the Covid-19 pandemic, Datuk Seri Mohamed Azmin Ali said.
He assumed that the Gross Domestic Product ( GDP) forecast growth of 6.3% to 7.5% by the International Monetary Fund ( IMF) and World Bank for next year also added to the investors’ positive sentiments about the country.
During the 2nd quarter of 2020, Malaysia posted its GDP contract of 17.1 percent – the worst quarterly double-digit decrease reported since 1998, as a result of the introduction by the Government of the Movement Control Order (MCO).
The Malaysian Investment Development Authority (MIDA) has brought 32 projects to Malaysia as of 31 May 2019, totalling RM 17.5 billion. Of these, 28 projects have been accepted, and four are still being evaluated.
Azmin Ali added that, while attracting more foreign investors, the Government remains committed to holding the country as a competitive investment destination.
For further reading, please refer to the article below:
Despite Malaysia’s low growth in the second quarter of 2020, local and international investors remain optimistic of keeping their investments in the country.
Senior Minister cum International Trade and Industry Minister Datuk Seri Mohamed Azmin Ali said the confidence of the business community and investors have been strengthened by the government’s success in tacking the Covid-19 pandemic, the decline in unemployment rate and the government’s commitment via the economic stimulus packages worth RM295 billion, reported Bernama.
He believes that the International Monetary Fund (IMF) and World Bank’s forecast of 6.3% to 7.5% growth in gross domestic product (GDP) for next year also contributed to the positive sentiment of investors towards the country.
“Although this is just a projection, it shows the level of confidence of foreign and local investors in Malaysia and the Perikatan Nasional (PN) government,” he told Bernama following the launch of the National Month Celebration 2020.
“In order to record a positive growth as projected by the IMF and World Bank, we need to accelerate the country’s economy from now onwards.”
He shared that the government remains committed to keeping the country as a competitive investment destination, while still attracting more foreign investors.
And given the strides made by the government, Azmin is confident that Malaysia’s economy will return on a better path next year.
In the Q2 2020, Malaysia saw its GDP contract 17.1% – the worst double-digit quarterly drop registered since 1998 due to the government’s implementation of the Movement Control Order (MCO) to curb the spread of Covid-19.
As of 31 May 2019, the Malaysian Investment Development Authority (MIDA) lured 32 projects to relocate to the country with investments totalling RM17.5 billion.
Of these, 28 projects have been approved, while four projects are still under evaluation.
According to Hong Leong Investment Bank Research (HLIB), there is a high possibility by the next Monetary Policy Committee (MPC) meeting this September, Bank Negara Malaysia ( BNM) will reduce overnight policy rate (OPR) by an additional 25 base points (bps) to 1.50 percent.
On July 8th 2020, the central bank announced that it had cut its OPR by 25bps to 1.75 percent to provide more policy support to speed up the economic rebound and that it will continue to analyse changing conditions and use its policy tools to build the conditions for sustainable economic recovery as needed.
“Therefore, as economic activity is expected to remain weak and inflation prospects modest, we assume BNM is able to reduce the OPR by another 25bps as soon as its September MPC meeting to 1.5%,” the research company concluded.
Since the floor was set 16 years ago, 1.75% OPR is the lowest. Yesterday, with a cumulative 125bps cut, BNM cut its fourth rate this annual.
HLIB said the reduction timing was sooner than planned when anticipated to cut 25bps in the second half of 2020 (2H20).
“The pace and strength of recovery remain subjected to adverse risk from domestic and external factors in spite of expectations of gradual improvement in Malaysia’s growth outlook,” he said.
In addition to the policy measures introduced domestically to mitigate the negative impact of Covid-19 lapse in October, HLIB indicated that economic downside risk could lead to more job losses and deterrence in slow and uncertain growth.
“As infection rates increased, countries that opened up their economies had to reimpose lockdowns in some sectors. This would lead to a decline in global demand and supply, reducing the pace of the global recovery, “said HLIB.
The MPC has predicted that inflation will be reduced by 2020, with the average inflation headline potentially negative for the year, with world oil prices projected to be slightly lower.
The MPC assesses the risk of a large and sustained price decline to be minimal, but ultimately inflation will depend on global oil and commodity prices.
For further reading, please refer to the article below:
KUALA LUMPUR (July 8): Hong Leong Investment Bank Research (HLIB) is not discounting the possibility that Bank Negara Malaysia (BNM) will cut the overnight policy rate (OPR) by another 25 basis points (bps) to 1.50% by as early as its next Monetary Policy Committee (MPC) meeting in September.
The central bank yesterday announced it had cut the OPR by 25bps to 1.75% to provide additional policy stimulus to accelerate the pace of economic recovery and will continue to assess evolving conditions and utilise its policy levers as appropriate to create enabling conditions for a sustainable economic recovery.
“Consequently, as economic activity is expected to remain weak and inflation prospects modest, we think it’s possible for BNM to reduce the OPR by another 25bps as early as its September MPC meeting to bring it to 1.50%.” the research house concluded.
The 1.75% OPR is the lowest since the floor was set 16 years ago. Yesterday, BNM made its fourth rate cut this year, with a cumulative 125bps slashed so far.
HLIB said while it had expected a 25bps cut in the second half of 2020 (2H20), the timing of the reduction was earlier than expected.
“Despite expectations of gradual improvement in Malaysia’s growth prospects, the pace and strength of the recovery remain subject to downside risks emanating from domestic and external factors,” it said.
HLIB added that policy measures implemented domestically to mitigate the negative impact of Covid-19 will lapse in October, putting downside risks on the economy, while sluggish and uncertain growth could lead to further job losses and deter investment.
“Globally, countries that opened their economies had to reimpose lockdowns in certain areas as the rate of infection rose. This will lead to downward pressure on global demand and supply conditions, limiting the strength of global recovery,” HLIB said.
The MPC expected inflation to be muted in 2020, with average headline inflation likely to be negative for the year as global oil prices are projected to be substantially lower.
The risk of a broad-based and persistent decline in prices is assessed by the MPC to be limited, but inflation will be ultimately dependent on global oil and commodity prices.
1. OCBC Bank (Malaysia) Bhd
OCBC said it will not be compounding interest and profit on mortgages and loans for SMEs during the period.
This means that these customers will not be charged any interest on the interest that arises from the moratorium period, it said in a statement.
“These are both trying and uncertain times. So we are seeking to alleviate our customers’ burdens as much as we can. Although compounding might be allowed for, we have elected not to do so in light of the pressing circumstances,” said OCBC Bank chief executive officer Datuk Ong Eng Bin.
2. Malayan Banking Bhd (Maybank)
Maybank also announced that it will not compounding interest for all individual, SMEs and non-retail and corporate customer loan facilities that qualify for the loan moratorium.
It noted that its fixed-rate hire purchase loans already do not have compounding interest, while eligible products under the moratorium include personal, mortgage, ASB, education and SME loans.
All Islamic financing facilities’ profit rates are already not compounded in line with Shariah principles.
“The bank hopes that with this additional measure, it will be able to provide them further relief from their financing obligations for this period and help them weather the other challenges they may be facing. The Covid-19 pandemic is an unfortunate situation and the bank is taking this opportunity to do the right thing in line with its mission of humanising financial services. Maybank is committed to relieving its customers’ distress during these trying times, and to allow them to focus on what matters most, which is their family and health,” it said.
3. CIMB Group Holdings Bhd
CIMB Bank and CIMB Islamic Bank are also waiving compounded interest and/or profit on its deferred loan and financing repayments.
For individual customers, eligible Islamic and conventional products under this moratorium include ASB Financing, home financing, auto financing and personal financing (Express Cash, Cash Plus Loan and Awam-i).
Whereas for SME customers, the moratorium applies to all existing term loans/financings and industrial hire purchase.
“CIMB welcomes the proactive measures announced by Bank Negara Malaysia to support Malaysians who are experiencing financial constraints during this challenging period. As a financial group that has always prioritised the well-being and advancement of people and communities, we hope this will help our customers who are faced with financial adversities and allow them to focus on other more critical areas of their livelihood,” said CIMB Group chairman Datuk Mohd Nasir Ahmad.
4. RHB Bank Bhd
RHB Bank Bhd will not be compounding interest for its retail and SME customers during the moratorium period.
The bank said that interest for all retail and SME banking facilities would not be compounded during the moratorium period, with instalment payment amounts remaining unchanged upon the conclusion of the six months.
RHB Banking Group managing director Datuk Khairussaleh Ramli said these additional measures introduced by BNM in partnership with the banking industry provides critical relief to ease the financial burden of individuals and businesses, particularly the SMEs, during this extremely challenging period.
5. Public Bank Bhd
Public Bank will not be compounding interest on monthly instalment payments for loans held by individual and business customers.
For Islamic financing, profit will continue to accrue on the outstanding principal amount; however, it will not be compounded, in accordance with Shariah principles.
“Following Bank Negara Malaysia’s announcement on March 25, 2020, Public Bank further extends the relief assistance to its customers by not charging any compounding interest on the interest that accrues during the moratorium period
“With the escalating Covid-19 outbreak, Public Bank is very concerned about its impact on the nation and hopes this extended financial assistance will provide additional relief to its customers,” said Public Bank managing director Tan Sri Tay Ah Lek in a statement.
6. AmBank and AmBank Islamic
AmBank and AmBank Islamic will not be compounding interest or profit on loans and financing during the six-month pause on loan repayments.
“We welcome BNM’s recent move to provide flexibilities for banking institutions like AmBank to respond speedily to customer needs in times like this. It is our responsibility as a trusted homegrown financial institution to come to the aid of our customers in their time of need. Forgoing compounding interest on top of the six-month payment deferment initiative and the credit card balance conversion programme is our way of giving back,” said AmBank Group chief executive officer Datuk Sulaiman Mohd Tahir in a statement.
7. Affin Bank and Affin Islamic Bank
Affin Bank Bhd and its Islamic counterpart Affin Islamic Bank Bhd announced that they will not be compounding interest and profit for term loans and term financing during BNM’s moratorium.
In line with BNM’s guidelines, all retail and SME customers from both banks will be enrolled in the six-month deferment automatically.
For Islamic financing facilities under Affin Islamic Bank, profit rates are already not compounded, in line with Shariah principles.
“As the current situation is both challenging and filled with uncertainties, we hope the gesture announced today can make this difficult time easier for the customers and communities we serve. We are also committed to consistently identify more ways we can best help our customers”, said Affin Bank chief executive officer Kamarul Ariffin Mohd Jamil via a statement today.
8. Standard Chartered Bank Malaysia Bhd and Standard Chartered Saadiq Bhd
Standard Chartered Bank Malaysia Bhd will not be compounding the interest on its conventional loans while profit on Islamic financing by Standard Chartered Saadiq Bhd will not be compounded, in compliance with Shariah law, during the six months.
Products included in the automatic loan deferment programme are personal loans/personal financing-i, residential mortgage/Saadiq MyHome-i or Saadiq MyHomeOne-i and commercial mortgage loan/BizProperty Equity-i and business instalment loan/guaranteed instalment loans/biz-financing-i.
“The uncertainty caused by the pandemic has left many individuals and businesses in the lurch and this is our way of helping them cope and navigate through this tough period,” said managing director and chief executive officer Abrar A. Anwar.
HSBC Malaysia announced non-compounded interest or profit during the moratorium period for retail and SME customers.
10. Alliance Bank
Interest on conventional loans will not be compounded during the moratorium period.
Profit for Islamic financing is not compounded but the interest/ profit on the deferred loan and financing repayments will continue to accrue during the 6-month period.
Other banks includes the following. However, please do contact your Bank for more details as each bank T&C is different and subject to change without prior notice.
KUALA LUMPUR: Banking customers, including individuals and small and medium sized enterprises (SMEs) will be allowed to delay the repayment of their existing loans, including mortgages and hire-purchases, for a period of six months.
This is part of the central bank’s new measures to assist borrowers experiencing temporary financial constraints due to the Covid-19 outbreak.
In a letter to the heads of financial institutions today, Bank Negara said the automatic moratorium will be effective from April 1.
“Banking institutions should provide individuals and SME borrowers with adequate information on how the suspended loan/financing repayments/payments will be treated during the moratorium period,” the central bank said.
The automatic moratorium is applicable to ringgit-denominated loans or financing that are not in arrears exceeding 90 days as at April 1, 2020.
The moratorium does not apply to credit card balances.
For outstanding credit card balances, Bank Negara said customers should be offered the option to convert the outstanding balances into term-loan of not more than three years.
“For corporate borrowers, banking institutions are strongly encouraged to facilitate requests for a moratorium,” the letter stated.
PETALING JAYA: Non-performing loan (NPL) growth for banks in Malaysia could be higher than their loan growth this year as the industry deals with the economic fallout from the coronavirus (Covid-19) outbreak.
S&P Global Ratings projects the NPL ratio could peak to between 1.7% and 1.8% of outstanding loans this year compared with 1.5% as of Dec 31,2019.
The ratings house also revised down its credit growth forecast for Malaysian banks, from the previous 3%-5% to 1%-3% in 2020.
S&P Global Ratings credit analyst Nancy Duan said: “The global outbreak of Covid-19 and renewed domestic political uncertainty add obstacles for Malaysian banks, which are already grappling with the effects of a slowing economy and dampened investor and consumer sentiments over the past year.”
In particular, the global health emergency and domestic political upheaval are affecting oil prices, consumer confidence and the broader economy in Malaysia.
S&P Global Ratings’ forecasts are based on the assumption that the Covid-19 outbreak will subside and the domestic political stability can be restored over the coming months.
Should these risks prolong beyond the second quarter of 2020, the forecast figures would need to be revisited.
A banking analyst disagrees with the assumptions of the foreign credit agency and expects loan growth in 2020 to be about 4%, in line with gross domestic product (GDP) growth.
“Looking at the 1.6% NPL ratio recorded in January 2020, there could be a slight uptick going forward.
“This will depend on the depth of external factors apart from Covid-19, such as the US-China trade tensions, which is still ongoing, ” he said.
When asked if the overnight policy rate (OPR) cuts can help boost loan demand, the analyst opined that this would be dependent on market sentiments, as further rate cuts may not translate to improved consumer purchasing power.
Kenanga Research, in a sector report, said accommodative interest rates will continue to support a resilient household loan segment, alleviating the moderation in business loans.
Given the banks’ modest target for 2020 after the recent results season, the research house forecasts loan growth at 4% to 4.5% for the year, driven by resilient household and business loans, with a fiscal push expected in the second half of the year.
“The soft interest rate regime is expected to support loan growth coupled with ease of application.
“While the uptick in impaired loans is a concern, it is still below its five-year peak of 1.67% in February 2015, ” said Kenanga Research.
Meanwhile, S&P Global Ratings also expects more potential easing from Bank Negara to support the economy, leading to a further five to 10 basis point compression of banks’ net interest margin in 2020.
“Our base case assumes stable capital adequacy ratios.
“However, risks are now tilted to the downside, given added drains on profitability and the rising dividend payouts announced by some banks last week, ” it said.
On the government’s RM20bil stimulus package, S&P Global Ratings expects it to have a neutral impact on local banks.
“Supportive policies in the package could strengthen lifelines to banks’ affected clients.
“However, we feel the special credit facility of RM2bil is more symbolic than material, and that credit demand will weaken visibly, especially over the first half of 2020.
“Transitory asset-quality problems could become permanent if the severity and duration of the disruptions were prolonged.
“This in turn would eventually push up banks’ credit costs – meaning the allocation of provisions for impaired and potentially impaired loans, ” the credit risk research house noted, projecting sector-wide credit costs to be 20 to 25 basis points of total loans in 2020.
It is interesting to note that Malaysian banks’ direct exposure to the most disrupted sectors by Covid-19, such as hotels, restaurants and airlines, is small, at only a single-digit percentage of loan books on average.
Duan added that Malaysian banks are fundamentally strong, backed by low NPL ratios, light credit costs, and large capital buffers.
“The banks’ credit profiles have remained solid despite muted profitability in recent years. Conditions in 2020 will put the banks to a much bigger test to their resilience, ” she said.
Despite Malaysia’s low inflation rate, many still struggle to get by. Why is this so? The World Bank’s latest Malaysia Economic Monitor report highlights areas that may contribute to our high cost of living.
MALAYSIANS say they are struggling to get by financially with the prevailing perception being that that cost of living is cripplingly high.
This is despite the fact that Malaysia experiences consistently low rates of inflation. Headline inflation averaged less than 2% per year since January 2015 and moderating to less than 1 per cent since January 2018 – well below the growth rates of the economy and average nominal incomes.
Why then, are Malaysians feeling the pinch?
In its latest Malaysia Economic Monitor (MEM) report released on Monday, the World Bank Group Malaysia identified four factors that impact the cost of living and may account for Malaysians’ difficulty in making ends meet.
They are (i) inadequate income, (ii) insufficient affordable housing, (iii) high household debt, and (iv) consumer price inflation differentials.
According to the Gallup World Poll, as of 2018, nearly 30% of Malaysians felt that they do not have enough money for food and 23% reported having inadequate money for shelter.
In fact, the World Bank found that approximately 27% of households in Kuala Lumpur earn less than Bank Negara’s 2016 estimated monthly living wage – RM2,700 a month for a single person, RM4,500 for a couple without a child and RM6,500 for a couple with two children in the city.
Although median incomes continue to outpace inflation, the MEM report found that wage growth for the youth and workers without tertiary education has been slow-moving.
How do we bring down costs?
According to Khazanah Research Institute’s (KRI) director of research Dr Suraya Ismail, government-led social programmes have a positive impact on consumption expenditure by lowering living costs.
“The expenditure for households will be lower in countries where the provision of government services is extensive and cover households’ basic needs. Examples would include universal healthcare, free formal education, subsidised childcare and subsidised mass transportation systems, ” she says in an email interview with Sunday Star.
One way to finance these initiatives is through progressive tax.
“As reported in MEM, the total tax revenue is only 14% of GDP. This is not enough even when compared to international benchmarks. More could be done to increase this percentage, by increasing taxes on personal wealth as well as the top income earners, ” says Suraya.
Apart from progressive tax, the MEM suggests increasing stamp duty on purchases of higher-value properties and widening the scope of the real property gains tax.
Sunway University Business School economist Professor Yeah Kim Leng believes that the issue of low wages can be overcome by raising the quality of the education system, improving industry competitiveness and productivity, and accelerating the shift to higher value, knowledge-based and technology-driven activities.
“This will require sound, prudent macroeconomic management that not only ensure a stable price environment but a well-functioning economy that engenders investor confidence, ” says Yeah, who is also Malaysian Economic Association Deputy President.
“Investor confidence will lead to sustained domestic and foreign investment that in turn generates the demand for skilled and high-paying jobs, thereby creating a virtuous cycle of investment, employment and wage growth that banishes the low wage-high living cost conundrum, ” he explains.
Furthermore, Yeah suggests that given the country’s low labour income share, companies that achieve a certain minimum profitability could be encouraged to adopt the shared prosperity goal.
In this model, B40 employees would be given greater emphasis in salary and wage allocation of company budgets and performance incentives.
“A 10-10 “double happiness” formula of at least 10% annual salary increase and a bonus of at least 10% of the employee’s annual salary would not only address increase employees’ morale but also contribute to a more equitable society, ” he says.
Variation in consumer price inflation
In Malaysia, living costs vary significantly depending on geography. The MEM report found that although household incomes tend to be higher in high-cost areas like Kuala Lumpur, oftentimes the extra income is not enough to fully offset higher prices.
This is why many in urban areas say that they feel especially burdened by high costs.
Suraya explains that costs of living will always be more pronounced in urban settings, hence why the calculation of living wage for families are normally calculated for a specific metropolitan area.
“This is to give an indication to both families and employers the comparatively high costs of living in cities. For families, this the compensation needed to attain a decent life in this area and for firms, this is the price to retain good talent, ” she says, explaining that food, shelter and transportation are the three main contributors to the high costs of living.
She says that the price of housing and food items need continuous monitoring by the government to ensure they remain competitive.
The MEM report also recommends the development of a spatial price index in addition to a cost of living index can also help consumers manage their finances.
Shortage of affordable housing
According to the MEM report, various studies have found that housing affordability has deteriorated over the years to the point that overall housing is considered “seriously unaffordable” in Malaysia using the price-income ratio (PIR) as a measure.
The report found that the lack of affordable housing is particularly severe among households earning less than RM5,000. Furthermore, only 18% of newly-launched home units in 2016 were priced below 200,000.
Apart from prioritising low to middle income households in current housing policies, the MEM points out that Malaysia can strengthen the rental market by enacting the Rental Tenancy Act, establishing a Tenancy Tribunal and developing a rental database and rental affordability indicators.
“The MEM mentioned that since 2004, real growth in employment income for 20-29 year-olds with post-secondary education has been marginal. The ensuing age cohorts; 30-39,40-49,50-59, fared better during the same time. If the trend suggests that wage stagnation occurs during this period for the youth (20-29), it is prudent not to purchase any big-ticket items on debt or loans (cars and houses included), ” says Suraya.
Instead, she illustrates how more can be done to assist this group with the provision of affordable rental facilities and efficacious public transport systems.
The Institute for Democracy and Economic Affairs (Ideas) Senior Fellow Dr Carmelo Ferlito takes a step back and questions whether Malaysia should even implement policies to improve home-ownership.
“How much the problem is a real one and how much a perceived one? Let’s not take PIR in isolation. Let’s look at PIR in combination with the fact that home-ownership rate is 76% and household debt is 82% of GDP, ” he says in an email interview with Sunday Star.
“Should we address the former figure or the latter? Probably household debt is more an issue than homeownership. Have we reflected on the fact that there is a rising number of unsold affordable housing? We should reflect more broadly on the factors of such weakness of demand: how much is really due to prices (as affordable units go unsold) and how much to a change in the system of preferences, which means with new generations preferring mobility to stability, traveling today rather than building a house for tomorrow?, ” he questions.
“I think that if we allow the market to correct itself, rather than trying to interfere with its readjustment process, the market will provide the necessary solutions, ” he says.
However, Ferlito believes that the government should eventually focus on addressing the shelter issue for those most in need, the B10, not by forcing them to get a home loan but by implementing supported rental schemes.
PETALING JAYA (Oct 4): The Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector Malaysia (PEPS) is urging the government to review the current Real Estate Property Gains Tax (RPGT) so it can have a positive impact in stimulating the country’s housing market.
Stating its Budget 2020 wish list in a press release today, the association said property ownership from the 6th year onwards should no longer be deemed as speculative investment hence, the 5% RPGT on such property ownership among individual Malaysians or permanent residents should be withdrawn.
As for foreign individual owners and companies, the current RPGT of 10% for the property disposal from the sixth year onwards, should be reduced to 5%, the group said.
“The removal and reduction of the RPGT after the fifth year will indirectly stimulate the property market and encourage more buyers and investors to re-enter the property market and this will also assist to reduce the property overhang and help developers to reduce the supply of unsold units in the secondary market,” it said.
The association also hoped that Putrajaya will consider reducing the stamp duty rate for property transactions worth RM1 million and above to 3.5%, from the current rate of 4%.
To help more people own homes and to stimulate the market further, PEPS suggested that first time homebuyers of properties below RM500,000 be given 100% loan while the margin for the third property onwards be increased to 80%. To ease lending eligibility, the government should allow more funds from the borrower’s EPF Account 2 to be withdrawn for the purchase of affordable homes.
The association also proposed that the government set up a National Centralized Corporation on Affordable Housing to plan, coordinate and implement the government’s blueprint and plans on affordable housing nationwide while working with state governments and developers on affordable housing matters.
The business model could be based on Singapore’s Housing Development Board.
“Existing agencies involved in affordable housing such as PR1MA could be absorbed under this new corporation,” it added.
To reduce the property overhang in the market, the association suggested a fast release mechanism of Bumiputera units to make the unsold units available in the open market.
PEPS also felt that there is a need to attract foreign buyers to ease the overhang. Hence it proposed that the government reduce the financial criteria required for foreigners to apply for the Malaysia My Second Home (MM2H) Visa Permit by lowering the liquid assets amount required.
State governments should also consider lowering the minimum threshold for foreigners to own properties in Malaysia, such as from RM1 million to RM800,000 in Kuala Lumpur and from RM2 million to RM1 million in Selangor.
PEPS also hoped to see the upcoming Budget 2020 offer more tax incentives and allowances to property developers or contractors who adopt the Industrialised Building System (IBS).
“At the moment only new IBS manufacturers or companies with pioneer status are given tax exemption and tax allowance,” it noted.
KUALA LUMPUR: Malaysia’s export momentum has outperformed in South-East Asia, according to the Institute of Chartered Accountants in England and Wales’ (ICAEW) latest Economic Update: South-East Asia report.
The momentum it said, reflected a more modest deceleration in export growth and resilient domestic demand, comparing the growth of trade-dependent economies such as Singapore, Thailand and the Philippines which have seen slower momentum in the second quarter of 2019.
“However, despite the outperformance of the Malaysian economy to date, Bank Negara is expected to lower interest rates by 25 basis points (bp) in December, with a further 25 basis points cut in the first quarter of 2020.
“This is provided that the government will continue to focus on fiscal consolidation in the upcoming budget announcement on Oct 11, ” the report said.
ICAEW economic advisor and Oxford Economics lead Asia economist Sian Fenner said: “Amid ongoing global headwinds and uncertainty around the outcome of US-China trade talks, we expect to see a further deterioration in economic prospects across the region, particularly amongst more trade-dependent economies.”
Overall, regional gross domestic product (GDP) growth is expected to moderate to 4.5% this year, amid another round of tariffs and trade restrictions by the US and China with the GDP to stabilise at the same rate in 2020.” — Bernama
KUALA LUMPUR (Sept 12): Bank Negara Malaysia’s (BNM) monetary policy committee (MPC), at its meeting today, decided to maintain the overnight policy rate (OPR) at 3%.
BNM said the stance of Malaysia’s monetary policy, at the current level of the OPR, remains accommodative and supportive of economic activity and that the committee will continue to assess the balance of risks to domestic growth and inflation, to ensure that the monetary policy stance remains conducive to sustainable growth amid price stability.
Malaysia’s Finance Minister Lim Guan Eng wants banks to provide greater access to financing to first-time homebuyers, as well as to small and medium enterprises (SMEs) considering the fact that the country’s household debt as a ratio to gross domestic product (GDP) has fallen to 83% in 2018 from 83.8% in 2017.
In a statement today, Lim said consumers have more room now to borrow for wealth accumulation purposes, either in saving schemes, or for non-speculative investments including acquisition of long-term assets. Read more