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Malaysia News Update - April 2003
Govt maintains 4.5% GDP growth forecast	Bank Negara’s gross domestic product (GDP) growth rate forecast for the country remains at 4.5% for now but could be “weaker” due to external uncertainties, while interest rates are currently at “appropriate levels” said its Assistant Governor Datuk Latifah Merican Chong. Meanwhile, the National Economic Action Council (NEAC) says Bank Negara’s gross domestic product (GDP) forecast growth of 4.5% in 2003 is achievable despite the Iraq war and the fallout from the Severe Acute Respiratory Syndrome. Its executive director Datuk Mustapa Mohamed said the central bank’s growth projection was achievable because of measures in the stimulus package, which would be unveiled soon.
World Bank forecasts 4.2% growth for Malaysia this year	The World Bank has forecast that Malaysia’s economy would grow by 4.2% this year and 5.5% next year despite geopolitical uncertainties and the impact of the Severe Acute Respiratory Syndrome (SARS) outbreak on economic activity. It said strong economic fundamentals gave the country “greater flexibility to sustain economic recovery.”
MIER cuts 2003 GDP forecast to 3.7%	The Malaysian Institute for Economic Research (MIER) cut the economic forecast for 2003 to 3.7% from 5.7% as the country is entering a slowdown due to the Iraq war and the fallout from the Severe Acute Respiratory Syndrome (SARS) outbreak.
Business confidence resilient in 1Q	Business confidence remained surprisingly resilient in the first quarter due to expectations the Iraq war would be swift and decisive with the situation returning to normal quickly, followed by a growth recovery in the second half of the year. Malaysian Institute of Economic Research (MIER) executive director Dr Mohamed Ariff said the business conditions index (BCI) rose 13.2 percentage points to 99.3 points in the first quarter, compared with 86.1 points in the previous quarter.
Consumer confidence down	Consumers appear to be adopting a more conservative attitude on the economy's prospects lately in view of the war in Iraq and the Severe Acute Respiratory Syndrome (SARS) outbreak. Malaysian Institute of Economic Research (MIER) executive director Dr Mohamed Ariff said consumer confidence, as measured by the think-tank Consumer Sentiments Index (CSI) dipped to 105.2 points in the first quarter of 2003, compared with 112.8 points in the previous quarter.
Merrill Lynch raises weighting on Malaysian equities	Malaysia reflected an external strength in its foreign reserves position and balance of payment outlook with its ability to weather the volatility in electronics sector, according to Moody’s Investors Service in its report on the country. The global credit rating firm said Malaysia’s export performance has been somewhat volatile but because the import content of exports is relatively high where imports have fallen in years when exports fell. This, it said, has maintained the trade surplus. In September last year, Moody’s upgraded Malaysia’s foreign currency country ceiling to BAA1 for both debt and bank deposits.
Malaysia’s external strength key to rating upgrade	US investment bank Merrill Lynch has raised its weighting on Malaysian equities to "overweight" from "market weight", favouring rising commodity prices, which are supporting corporate earnings there, and growth in consumption. According to Reuters, a Merrill Lynch report viewed Malaysia as now the most attractive equity market in Asia after India. The bank forecast an average 17% rise in blue-chip earnings in Malaysia and 7% growth in consumption this year, although gross domestic product (GDP) growth would slow to 3.9% from 4.2% in 2002.
Don: Economy now stronger to withstand crisis	The Malaysian economy is now in a much stronger position to withstand challenges compared to the time of the Asian financial crisis in 1997/1998, according to academician and National Economic Action Council (NEAC) head of the special consultancy team on globalisation, Professor Dr Mahani Zainal Abidin.
Malaysia had lower trade surplus of RM4.9bil for February	Malaysia recorded a lower trade surplus of RM4.9bil in February 2003 compared with RM6.3bil in the previous month, the country's sixty-fourth consecutive month of trade surplus since November 199, according to preliminary data released by Malaysia External Trade Development Corporation (Matrade).
Balance of payment surplus rises to RM2b	Malaysia's balance of payment surplus rose 76.9% to RM2.3bil in the 4th quarter compared with RM1.3bil in the 3rd quarter of last year, the Statistics Department said.
Manufacturing sales for February up 17% to RM25.8bil	Manufacturing sales grew 17.3% year-on-year in February to RM25.8bil from RM22bil previously, according to the latest figures released yesterday by the Statistics Department.
CPI for January to March 2003 up 1.4%	The Consumer Price Index (CPI) for January to March 2003 increased by 1.4% to 104.1 compared with 102.7 in the same period last year, the Department of Statistics said.
Motor vehicle sales 5.5% down	Motor vehicle sales in March fell 5.5% to 35,130 units from 37,194 units a year earlier, largely owing to uncertainties created by the war in Iraq and the Severe Acute Respiratory Syndrome (SARS) outbreak, according to the Malaysian Automotive Association (MAA).
February IPI lower by 0.9%	Malaysia's Industrial Production Index (IPI) for the month of February decreased by 0.9% to 178.1 year-on-year due to lower indices in the electricity and manufacturing sectors.
Plastics sector seen maintaining 5% growth	Malaysia's plastics industry is expected to maintain a 5% growth this year amid a rebound in the electronic and electrical (E and E) sector and a revitalised US economy. Malaysian Plastics Manufacturers Association (MPMA) is confident of the positive outlook of the industry amid the strengthening E and E sector, which contributes 30% to the plastics industry's revenue growth. Its president Callum K.S. Chen said the targeted 5% growth is achievable despite the military conflict in the Gulf and the outbreak of Severe Acute Respiratory Syndrome (SARS).
Rafidah tells locals to scout for business abroad	International Trade and Industry Minister Datuk Seri Rafidah Aziz has urged local businessmen to seek out trade overseas on their own initiatives as fewer foreigners are making business trips to Malaysia due to current global uncertainties.
Manufacturing growth may slow	The manufacturing sector may grow at a lower rate this year than the 5% forecast earlier, said International Trade and Industry Minister Datuk Seri Rafidah Aziz Meanwhile, the Federation of Malaysian Manufacturers (FMM) sees that growth in Malaysia's manufacturing sector is expected to be halved to about 2% as a direct effect of the war in Iraq. The country is already feeling the initial impact of the war on its exports, with cancellation of orders coming in for shipments of electrical goods to West Asian countries such as Kuwait and Bahrain.
FMM: Liberalise foreign direct investments further	The Federation of Malaysian Manufacturers (FMM) has called for further liberalisation of foreign direct investments (FDI) with a view of abolishing equity policies.
MITI reviewing 2 acts	The International Trade and In- dustry Ministry (Miti) is reviewing the Industrial Coordination Act (ICA) and the Promotion of Investments Act (PIA) to ensure their continued relevance, according to its minister Datuk Seri Rafidah Aziz.
MITI sets up new services division	The International Trade and Industry Ministry (Miti) has established a new Manufacturing Related Services (MRS) division to promote and facilitate the development of key manufacturing related and support services.
Corporate governance standards have improved	The results of a survey reveal that the corporate governance gap between Malaysia and other Asia-Pacific economies has narrowed since 1998. PcW executive chairman Datuk Raja Arshad Tun Raja Uda says respondents to the survey think Malaysia's corporate governance standards have improved with the introduction of new guidelines and listing requirements.
NEAC collating financial aid requests from SARS-hit sectors	The National Economic Action Council (NEAC) is collating the financial assistance requests from business sectors affected by the Severe Acute Respiratory Syndrome (SARS). NEAC executive director Datuk Mustapa Mohamed said the requests would be submitted to the government for consideration. The financial assistance requests include tax breaks, loans and grants.
SC unveils seven revised fund-raising guidelines	The Securities Commission (SC) has released seven revised fund-raising guidelines to mark today's completion of the three-phase Malaysian capital market's transition to a disclosure-based regulatory (DBR) framework for fund-raising from the previous merit-based regulatory.
Malaysian companies confident of economy	Despite the uncertainties in the global economy, Malaysian companies are still active and contributing towards generating activities in the domestic economy, according to International Trade and Industry Minister Datuk Seri Rafidah Aziz.
Data still being collected for economic package	The Government intends to introduce a comprehensive package that will boost domestic demand and investments, improve transactions between public and private sectors, put a cap on escalating costs and improve delivery systems
Malaysia scores as offshore financial services location	Malaysia has been identified as a promising offshore location for financial services in the developed world, which is expected to transfer about two million jobs to low-cost bases abroad over the next five years.
Knowledge-intensive FDIs more beneficial to the country: MIDA	New foreign direct investments (FDI) flowing into Malaysia are more knowledge-intensive than capital-intensive and therefore more beneficial to the country in the longer term, said Malaysian Industrial Development Authority (Mida) deputy director-general Datin Kaziah Abdul Kadir.
KL tells state firms to get its approval before job cuts	State-owned Malaysian companies must seek government permission before cutting jobs as a means of dealing with the effects of the Sars outbreak and the Iraq war, Deputy Prime Minister Abdullah Badawi said.
ASEAN to benefit from war	ASEAN and countries in east Asia are expected to benefit from the war in Iraq as the local private sector has started to aggressively explore new opportunities in these countries, according to Datuk Seri Rafidah Aziz.
Malaysia needs new partners to boost bargaining power at WTO	Malaysia needs to forge new partnerships with non-traditional but like- minded partners to boost its bargaining power at the World Trade Organisation (WTO), says a renowned economist. This is especially crucial now that the coalition of Association of South-East Asian Nations (Asean) members formed for WTO negotiations has virtually collapsed, said Dr Razeen Sally, senior lecturer in International Political Economy at the London School of Economics and Political Science, the UK.
Malaysia to enhance economic ties with US	Malaysia will enhance economic ties with the United States despite the differing views on the Iraq war. National Economic Action Council executive director Datuk Mustapa Mohamed said the war had nothing to do with business partnerships between the two countries although there were moves to boycott American products.
Malaysia-China trade not yet affected by epidemic	Economic and commercial counsellor's office first secretary Deng Liyang says the trade office is currently monitoring the impact of SARS on bilateral trade between Malaysia and China. To date, the impact of SARS outbreak is not visible on trade figures.
ASEAN takes joint stand to battle SARS	The Asean + 3 Health Ministers Special Meeting on Severe Acute Respiratory Syndrome (SARS) has taken a joint stand, including mandatory screening of individuals before they leave affected countries and the barring of suspected and probable cases from travelling.
Abdullah will strengthen growth: Economist	Datuk Seri Abdullah Ahmad Badawi is expected to consolidate the social and economic growth achieved during Prime Minister Datuk Seri Dr Mahathir Mohamad's administration, economist Michael Backman says.
Malaysia's central bank governor's term extended	Datuk Dr Zeti Akhtar Aziz has been reappointed governor of Bank Negara (the central bank) for another three-year term. The three-year term was significant as it reflected the confidence of the political leadership in Dr Zeti's stewardship of the central bank and the management of the financial system.