MIER says growth to fall from 5.3% in 2008 to 3.4% next year

KUALA LUMPUR, Oct 16 — While optimistically predicting Malaysia's economic to grow 5.3 percent for 2008, the Malaysian Institute of Economic Research (MIER) today forecasted the Gross Domestic Product (GDP) growth will contract to 3.4 percent in 2009 due to a gloomy global outlook.

MIER executive director Datuk Dr Mohamed Arif Abdul Kareem said it adjusted the GDP growth from 4.6 percent to 5.3 percent for 2008 due to the higher-than-expected domestic growth during the first half of this year and the resilient US economy earlier this year

However, Bernama reported that he cautioned it was likely that growth would deteriorate late this year as the Malaysian economy was taking a hit from the knock-on effects of a flagging global economy.

He added that the United States had managed to post a good performance in the second quarter of 2008, delaying a severe slowdown thanks to tax rebates, a stronger dollar and cut in interest rates.

According to him, Malaysia may experience a technical recession in 2009 or two consecutive contractions, “probably in the second and third quarter”. Mohamed Arif said indications also pointed to the Malaysian economy facing a “strong headwind” in the coming years.

“It is not something that we saw in 1997/98 Asian financial crisis where it saw sharp contractions and sharp recovery,” he said, adding MIER had revised the 2009 outlook to 3.4 percent from 5.0 percent earlier.

“The effect will be milder this time but it's going to last longer. We will not experience a growth contraction of 7.4 percent this time around,” he added.

Mohamed Arif said the economy should be back on track to growth trajectory in 2011 and until then “we will see sluggish growth as we have to wait others to recover as well”.

However, he said that Malaysia's fundamentals were generally good except the budget deficit.

“Budget deficit this year will exceed five percent of GDP and exceed four percent next year,” he said, adding that the expected widening of deficit was due to lower government revenue as crude oil prices came down to US$70 per barrel.

He also said that the 2009 Budget had envisaged the oil price at US$125 per barrel with the oil earnings contributing about 40 percent to the government revenue.

According to Mohamed Arif, the Malaysian economy is also one of the better ones in the region.

“It is in the sense that macroeconomy has been good, the financial sector is fairly stable and we continue to record current account surpluses. We are in a better position to weather the storm compared to others but we cannot take things for granted,” he said.

On the ringgit, MIER was of the view that the local unit was still undervalued though in weakening mode.

“The ringgit is weakening partly because the US dollar is strengthening. Ironically, the dollar is strengthening amid a weak economy. One salient explanation is that the US is continuing its borrowings. Capital is still flowing from the US, thus pushing up demand for the dollar,” Mohamed Arif said.

“We dont think the ringgit will go back to the three ringgit to a dollar as we have forecast earlier. The ringgit will strengthen as the dollar adjusts downwards. It may hit its low of 3.6 and settle around 3.3 or 3.4 next year,” he said.

On the interest rate, Mohamed Arif said that MIER did not rule out the possibility of the government revising downward the rate early next year.

“It is not going to be large. It could be 25 basis points. It is likely to happen in line with moderate inflation,” he said.

Regarding the political scene, Mohamed Arif said long-term investors were not disturbed by the current political development amid slower economic growth though “one may coincide the other and compound the difficulties”.

“They said we are heading in the right direction, political speaking. Malaysia is more mature, going for the dual party system. It is music to the ears because it can ensure good governance, transparency and accountability,” he said.

According to Mohamed Arif, MIER is worried about the secondary impact of the US recession as China's economy is not immune.

“There are already indications that China is beginning to feel the pinch.

If China doesnt export as much as before, our exports will also be affected. We cannot take this lightly,” he said.

He also said that the global rescue package would only provide some relief but it could not really prevent a recession. - Bernama

MALAYSIA: INDEX OF ECONOMIC FREEDOM

MALAYSIA
Rank: 48
Regional Rank: 8 of 30

Malaysia's economy is 65.8 percent free, according to our 2007 assessment, which makes it the world's 48th freest economy. Its overall score is 2.1 percentage points higher than last year, partially reflecting new methodological detail. Malaysia is ranked 8th freest out of 30 countries in the Asia–Pacific region, and its overall score is higher than the regional average.

Malaysia enjoys high levels of fiscal freedom, monetary freedom, trade freedom, and labor freedom. Both the top income tax rate and the top corporate tax rate are moderate, and overall tax revenue is relatively low as a percentage of GDP. Inflation is minor, and the government does not widely distort market prices with direct subsidies. The tariff rate is fairly low, and the government has been working to eliminate some of the non-tariff barriers that impede trade. A highly flexible labor sector with simple employment procedures and no minimum wage helps businesses to stay competitive.

Malaysia suffers from weak investment freedom and weak financial freedom. Despite efforts to liberalize procedures, foreign investment is deterred by such impediments as limited voting shares in companies, enforced hiring of ethnic Malays, and case-by-case government preinvestment approval. Malaysia's financial sector is fairly well developed, but it is also subject to significant government interference and some restrictions on foreign involvement.

Background:

Malaysia's ruling political party, the United Malays National Organization, has held power in a 14-party coalition called Barisan National since 1957. Prime Minister Abdullah Badawi is expected to remain in power until the next election in 2009. Services and industry are the mainstays of the economy and provide the vast majority of employment opportunities. The Office of the U.S. Trade Representative announced on March 8, 2006, that it would initiate negotiations with Malaysia for a free trade agreement. Negotiating a comprehensive agreement is expected to be challenging for both sides.

Business Freedom - 68.6%

Starting a business takes an average of 30 days, compared to the world average of 48 days. Entrepreneurship should be easier for maximum job creation. Obtaining a business license can be difficult, but closing a business is relatively easy. The overall freedom to start, operate, and close a business is relatively well protected by the national regulatory environment.

Trade Freedom - 71.8%

Malaysia's weighted average tariff rate was 4.1 percent in 2003. The government has made progress in liberalizing the trade regime, but non-automatic import licensing, import bans, burdensome regulations and standards, export licensing, non-transparent import tax rules, export subsidies, weak protection of intellectual property rights, restrictive government procurement rules, and services market access barriers add to the cost of trade. Consequently, an additional 20 percent is deducted from Malaysia's trade freedom score to account for these non-tariff barriers.

Fiscal Freedom - 87.8%

Malaysia has moderate tax rates. Both the top income tax rate and the top corporate tax rate are 28 percent. The government has announced that it will reduce individual and corporate tax rates when introducing a value-added tax (VAT). Other taxes include a capital gains tax and a vehicle tax. In the most recent year, overall tax revenue as a percentage of GDP was 16 percent.

Freedom from Government - 79.8%

Total government expenditures in Malaysia, including consumption and transfer payments, are moderate. In the most recent year, government spending equaled 26.5 percent of GDP, and the government received 11.5 percent of its revenues from state-owned enterprises and government ownership of property.

Monetary Freedom - 80.0%

Inflation in Malaysia is relatively low, averaging 2.5 percent between 2003 and 2005. Relatively low and stable prices explain most of the monetary freedom score. Most prices are determined in the market, but the government influences certain prices through state-owned enterprises; controls the prices of petroleum products, steel, cement, wheat flour, sugar, milk, bread, and chicken meat; and usually sets ceiling prices for an extended list of essential foods during major holidays. Consequently, an additional 10 percent is deducted from Malaysia's monetary freedom score to account for these policies.

Investment Freedom - 40.0%

Foreign investment rules have been eased over the years, but foreign investors still face such restrictions as limited voting shares, prior approval, and mandatory hiring of ethnic Malays. In September 2005, the government eased restrictions for domestic residents to buy foreign-listed securities and for foreigners to sell shares in the domestic market. Residents and non-residents may hold foreign exchange accounts, but government approval is required in many cases. Nearly all capital transactions are prohibited, are subject to restrictions, or require government approval.

Financial Freedom - 40.0%

Malaysia's financial sector is relatively well developed but subject to extensive government intervention. Of the 29 commercial banks operating as of September 2005, 10 were domestically owned and 13 were foreign-owned. Six Islamic banks (five domestic and one foreign) account for over 10 percent of baking assets. The government owns a majority of Malaysia's two largest local commercial banks. Foreign equity in banks is restricted, with participation in commercial banking limited to a maximum of 30 percent. The government influences the allocation of credit. There are several offshore banks, insurance companies, and other financial institutions. Numerous restrictions apply to the insurance industry, including restrictions on expatriate employment and foreign equity. Foreigners may trade in securities and derivatives, but foreign participation in stockbrokerages and trust management companies is restricted.

Property Rights - 50.0%

Private property is protected in Malaysia, but the judiciary is subject to political influence. Corporate lawsuits take over a year to file. Cases are generally handled in a satisfactory manner, although many firms include a mandatory arbitration clause in their contracts.

Freedom from Corruption - 51.0%

Corruption is perceived as present. Malaysia ranks 39th out of 158 countries in Transparency International's Corruption Perceptions Index for 2005.

Labor Freedom - 89.5%

The labor market operates under flexible employment regulations that enhance employment and productivity growth. The non-salary cost of employing a worker is moderate, and dismissing a redundant employee is not difficult. The government restricts the number of expatriates that foreign and domestic firms may hire. Malaysia does not have a national minimum wage.

Quick Facts

• Population: 24.9 million
• GDP (PPP): $255.8 billion; 7.1% growth in 2004; 5.2% 5-yr. comp. ann. growth; $10,276 per capita
• Unemployment: 3.6%
• Inflation (CPI): 1.5%
• FDI (net inflow): $2.6 billion
• Official Development Assistance: $447 million (0.2% from the U.S.)
• External Debt: $52.1 billion
• Exports: $118.6 billion
  Primarily electronic equipment, petroleum, liquefied natural gas, wood, wood products, palm oil, rubber, textiles, chemicals
• Imports: $96.8 billion
  Primarily electronics, machinery, petroleum products, plastics, vehicles, iron and steel products, chemicals

It's the money, honey

It's the money, honey
By Chan Akya

Mark Twain quipped that the lack of money is the root of all evil. Humans are irrational, but societies are rarely so, until they choose to become extinct. Understanding the economic factors underpinning society helps us to appreciate the process of change better than an independent evaluation of all else.

The success and decline of religions, as well as the failure of political systems such as communism, all hark back to economic factors. The ability to feed and care for adherents has too often been mistaken for spiritual success, in much the same way that religion can be blamed for entrenched inequality and poverty - for example, by its role in maintaining social strictures that in essence allowed vested interests to flourish in various countries. Communism collapsed not because it is a bad idea per se, but because the idea is inconsistent with cold economic realities.

Even in the most basic of human activities, economic rationale rules. Women choose men based on their ability to provide economic security for their offspring and themselves. Men in turn choose women based on their own status in society, getting the women that best represent their position. This is why some old, rich men are with nubile members of the opposite sex. At the social level, this translates into a definition of success that allows many humans to make rational choices. In this environment, both men and women may choose alternative lifestyles when they fail to make the grade in their own societies.

Peace, love and goodwill to all men; bah humbug. Show me the money, honey. ...more

PM: People are starting to feel good about the Economy

PM: People are starting to feel good about the economy

Of late, the maintstream media almost of frenzy announced about the economics activity of malysia, indicating that people are starting to feel good and confident about the country’s economic performance and current market developments. Is it a prelude to indicate an early 'General Election' or is it that the government is trying to assuring the people that eveything is OK with the economy and we are in control?

“Those who were previously worried about the country’s economic future are now having renewed confidence in our economy. There are reports indicating this,” said Prime Minister Datuk Seri Abdullah Ahmad Badawi at his monthly meeting with Internal Security Ministry officials and department heads under the ministry.

Among the factors that changed people’s perception of the economy according to the Prime Minister were:

• the rising stock market index,


• strengthening of the country’s financial position


• the increasing foreign and domestic investments that stood at more than RM40bil


• the positive investments and financial standing


• renewed people’s confidence in our economic development, adding that there were opportunities behind whatever challenges the country faced.

Armed with the high confidence level, people would now strive to improve and expand their businesses and ventures, said the Prime Minister.

In Kuala Lumpur, a spokesman for the Federation of Malaysian Unit Trust Managers said unit trust prices had been doing well since 1997. “This is especially in the last few months as local and overseas markets have performed well. Equity-based and balanced (investing in equities and fixed income) funds have done well.”
Sources said the Government has been cautious, laying the foundation over the last couple of years.
“Indicators show that the effect is having a broader impetus on the economy, and we want this to have legs,” said one source.

“Those who are more optimistic are the high-end business people. Those in rural places are also benefiting from high commodity prices. We expect the trickle-on effect to come down to the man-in-the street, especially when the wealth effect spreads from the buoyant stock market,’’ he said.

In 2006, Malaysia drawn a record of over RM20bil in foreign investments in the manufacturing sector, with 1,077 manufacturing projects worth RM46bil being approved last year, exceeding the RM27.5bil annual target set under the country’s Third Industrial Master Plan.

International Trade and Industry Minister Datuk Seri Rafidah Aziz said recently that last year’s 12.8% increase in foreign direct investments from RM17.9bil in 2005 was the highest level recorded to date.

Recently, the Malaysian Institute of Economic Research (MIER) also revised its 2007 gross domestic product (GDP) growth forecast upwards to 5.2% from 4.8% earlier.

Analysts and dealers also concurred on further strong corporate earnings from companies to keep the upward momentum of the stock market.

Brief informations about DCCI (Dayak Chamber of Commerce and Industry)

Posted: Fri Feb 02, 2007 9:37 pm Post subject:

uhangKanowit wrote:
"in what ways, DCCI nulong bansa kitai iban? tell me. nothing much. we iban work alone. improving alone. loan alone. struggle alone. tender alone."

DCCI was formed not particularly to help individual dayak businessman, but to be used as a platform for the Dayaks Entrepreneurs to air their greivances collectively with the government and at the same time to enabled the government department particularly MITI, KPUN, KPDN&HEP, MARA and other relevant agency to channel informations of interest to the Dayak Business Community. By having a chamber for the Dayak Business community, it is much more easier for the relevant government department to deal with the dayak business community rather than to deal individually. Hence, the formation of DCCI for this purpose. Being an entrepreneur, first and foremost, you have to help yourself before you're asking for help from others. Because it is your business and you must know what you want with your business. You must have training or experience in the type of business under consideration. To succeed you must find the best business for you, one in which you are most skilled and interested. Otherwise, you don't go into business if you do not know what you want to do with your business.

Quote: The Star, Sat 3/2/07
Prudent path to success.

“To succeed you must love what you do and you must know what you are doing. You must plan ahead and have direction,” he said. “In business you must start from small, study everything and go step by step.” -- Naza Group of Companies boss Tan Sri S.M. Nasimuddin S.M. Amin

DCCI is just an entity to gather the dayak business community, but the members must be active to make it function. Without the members active participation, DCCI will not be able to function. In other word, you have to make the DCCI to function in order to help you, particularly an entrepreneur.

"Ask not what DCCI can do for you, Ask yourself what you can do for DCCI."

uhangKanowit wrote
... all DCCI can do, only give a talk about business. might as well i can do so. no need DCCI, i also can give a talk about business. others comm. chambers connected with govrn. do DCCI connected with state/federal govern? conclusion : govern. please help us. all i can say to DCCI, may the force be with you.

Attending Business talk or training is a vital function for any budding entrepreneur. As a matter of fact, any entrepreneur who are getting assistance from KPUN, SMIDEC, or MARA it is compulsory to attend a business training/talk. Business talk is part of a business networking among fellow entrepreneurs and for the dissemination of informations.

As you mentioned, "might as well i can do so. no need DCCI, i also can give a talk about business". Well, you're most welcome to offer your service to DCCI. Just give the DCCI President a call. In fact DCCI very often call experienced outside businessman to give business talk to DCCI members, which is very useful, especially for budding entrepreneurs. Experience in management will contribute much to a successful operation. Most business failures are due to poor management. This program by the DCCI is essential both for the start-up business owner and for the entrepreneur who is preparing to expand a successful business. Seminar leaders will discuss strategic planning, marketing, administration, personnel, finance, and accounting. You will learn to develop an effective business plan to manage your business; to create a marketing action plan that will help you to achieve your sales goals; to prepare financial projection; and to use financial information to make better and more informed decisions. So, it is not just a business talk per se.

Successful Contracting with the State/Federal Government

Navigating the state/federal procurement maze for the first time can be a daunting challenge. This is where the DCCI "business class" will provide the "map" you need to bid on government contracts. Become an educated bidder and solve the mystery about the manner in which government organizations purchase goods and services from the private sector. Prepare your business to become a "player" in the game of state/federal procurement. If you have never sold to the state/federal government and you want to enter the marketplace now, this is the place to start, the DCCI.

Do DCCI connected with the state/federal government?

The answer is, Yes. Legally. Otherwise, the Bumiputra Economic Congress 2005 (BMEC 2005) would not be a resounding success. For your information, the BMEC 2005 was attended by state and federal ministers, including the Prime Minister and other senior leaders of our business community. In fact some of the resolutions in BMEC 2005, were incorporated in the 9th. Malaysia Plan. Please, study the 9th. Malaysian Plan, if you have not done so. It is a goldmine. Being an entrepreneur you must take the opportunities presented by the government. Don't wait for someone to spoon-feed you to get a project or two. My advice is to stop whining.

“Good culture should remain but tradition and mindset should be improved so that they do not become obstacles to development”