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Malaysia Economy

Malaysia: Government Proposes 4% GST Implementation, Effective September 2011

26 November 2009

Goods and services tax (GST) bill to be read in parliament next month. Additional RM1bn annual revenues expected a year after GST implementation. Government does not expect GST implementation to be inflationary.

Malaysia Macro: OPR Kept On Hold As Expected; Still No Hints Of Exit Strategy

24 November 2009

Bank Negara Malaysia (BNM) kept the Overnight Policy Rate (OPR) at 2.0% as expected.
BNM maintained its view of external economies signaling “further improvements” as per October’s monetary policy statement, with a similar cautious tone
Domestic economy recovery assessed to be “gaining momentum”
Hints that technical deflation may have troughed, 2010 inflation to be “modest”
Current monetary policy stance deemed “appropriate”, and with no hints of exit strategy we expect OPR to remain on hold till 4Q10.

Download Citi Research’s Malaysia Macro Flash 24 Nov 2009

Malaysia: September IP Disappoints on Manufacturing Breather (10 Nov 2009)

10 November 2009

Industrial production fell 6.0%yoy in September, slightly better than August’s revised 7.0%yoy fall (prior Aug: -5.7%yoy), but underperforming consensus and our expectations of -3.8% and -2.0% respectively.
Drag from sluggish manufacturing and electricity production, though mining showed some improvements
Cyclical recovery should continue despite temporary breather in September suggest that the recovery trajectory will not follow a straight path

Download Malaysia Macro Flash: 10 Nov 2009

Malaysia Macro: Detailing the Human Capital Deficit (Citi Group, 09 Nov 2009)

10 November 2009

Malaysia’s inadequacies in the area of human capital are a major obstacle to the private investment revival and industrial upgrading
Measures to upgrade indigenous stock of human capital have proven ineffective, thus increasing the urgency in reversing the ‘Brain Drain’ and importing foreign talent.
Lastly, there is the problem of a shortage in, and dependence of the Manufacturing, Construction and Services sectors on, low skilled, low cost foreign labor

Download Malaysia Macro Weekly: 09 Nov 2009

Malaysia: Downside Surprise in September Exports (Citi Group, 04 Nov 2009)

4 November 2009

YoY exports fell at a faster pace in September on high base effects from September 2008
Exports worsened on the back of sharper YoY declines in Electrical & Electronics, Crude Petroleum, Manufacturers of Metal and Optical & Scientific Equipment
Imports also fell in YoY terms on the back of a faster decline in capital goods imports
Market Implications – While underperformance of YoY export growth was slightly exaggerated by base effects, September data signals that Malaysia has yet to fully catch up with regional exporters.

Download Malaysia Macro Flash: 04 Nov 2009

Malaysia Macro Weekly: Thoughts on Monetary Policy Exit Strategy (Citi Group, 02 Nov 2009)

2 November 2009

With the start of fiscal exit strategy, monetary policy will have to stay accommodative for the time being to support growth
Trough in inflation, weak MYR keeps monetary conditions accommodative for now
Levels, and not just growth rate of output matter more for demand side inflation pressure and OPR decisions, with policy unlikely to react to supply side inflation risks
Keep an eye on credit growth

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Malaysia Macro: OPR Unchanged at 2%, With No Hints of Exit Strategy Yet (28 Oct 2009)

28 October 2009

Major Points:

Bank Negara Malaysia (BNM) kept the Overnight Policy Rate (OPR) at 2.0% as expected
External economies seen as “improving further” vs. “gradually recovering” in August, though still a tad cautious.
Domestic economy recovery assessed to be “gaining strength”; expected to continue into 2010.
Hints that technical deflation may have troughed and 2010 inflation expected to be positive but subdued.
Still no hints of exit strategy, with monetary policy stance deemed “appropriate”; OPR to remain on hold until 1H10

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Asia Macro and Strategy Outlook: Exiting the Sweet Spot

27 October 2009

Major Points

(i) 3Q growth likely ended on a strong note, though momentum could ease ; (ii) Negative output gap buys time for rate hikes to be delayed till 2010, though RBA’s hike may pressure central banks to be more pre-emptive; (iii) More liquidity management measures likely before rate hikes, including on the capital account; (iv) Beginning of the end of extraordinary fiscal stimulus? and (v) Macroeconomic strategy in Asia.

Download it here

Malaysia Macro Weekly: Details of a Downsized Deficit

27 October 2009

In assessing Budget 2010, three questions are worth answering. First, how will the targeted deficit reduction be achieved, and how realistic are the targets? Second, what will this mean for the near-term economic outlook? Third, has the Budget effectively tackled the medium-term structural gaps facing Malaysia?

Malaysia Macro: Ambitious Fiscal Consolidation Announced in Budget 2010 (23 Oct 2009)

26 October 2009

Major Points

Budget 2010 signals the start of medium term fiscal consolidation.
Ambitious 2009 and 2010 deficit targets at RM51.1bn (7.4% of GDP) and RM40.5bn (5.6% of GDP) respectively; official GDP forecasts revised upwards.
Lower gross issuance in 2010 short term positive for MGS market
Key measures — [1] Proposed 5% property gains tax from Jan 2010 [2] 1%-pt [...]

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