Economic News

[FHBH12]

Malaysia Q3 GDP growth expected to reflect recovery in exports
Published November 14, 2013

[KUALA LUMPUR] Malaysia's economy is expected to have picked up pace in the third quarter, bolstered by resilient domestic demand and a small but significant recovery in exports.

After struggling in the first half of 2013, Malaysia's exports are growing again, helped by higher demand for the country's crude oil and electronics shipments.

Exports grew every month in third quarter. In September, they rose 5.6 per cent from a year earlier, boosted by Southeast Asian demand for refined petroleum products and higher electronics. September's trade surplus was the biggest since November 2012.

The median forecast of a Reuters poll was 4.8 per cent growth in third-quarter gross domestic product from a year earlier, picking up from 4.3 per cent in the second quarter. The forecasts ranged from 3.6 to 5.3 per cent.

Few analysts give quarter-on-quarter growth estimates. Full-year growth was seen at 4.7 per cent, down from 4.9 per cent in an August poll.

Alan Tan, economist at Affin Investment, who forecast 5.3 per cent third-quarter growth, said the improvement in exports was key.

Malaysia's industrial production hasn't matched the growth in exports. In September, factory output rose just 1.0 per cent from a year earlier, well below expectations.

Patricia Oh, economist at AmBank, said export-oriented demand will feed through to boost factory output in coming months. "We expect international trade to support economic growth in the fourth quarter, and growth in the manufacturing segment will be able to rely on external demand," she said.

REDUCED BUDGET DEFICIT WORRIES

Malaysia's finance ministry last month forecast a slight pick-up in next year's GDP growth to 5.0-5.5 per cent from an expected 4.5-5.0 per cent in 2013.

The country's central bank kept interest rates unchanged earlier this month but said it expected inflation to edge higher over coming months. The central bank said price pressures would be tempered by factors including stable external prices as well as improvements in food production and distribution.

Malaysia's third-quarter current account data will be released with GDP data on Friday. In the second quarter, the surplus narrowed to 2.6 billion ringgit ($809.6 million) from 8.7 billion ringgit in January-March.

The narrowing current account surplus, a chronic budget deficit and high debt burden have weighed on the ringgit as well as Malaysian stocks and government bonds but the worst appears to be over. The ringgit has come off the year's lows while foreign demand for Malaysian government bonds rose in September, after four months of falls.

Investor concerns have been allayed by the government's steps to improve public finances. Prime Minister Najib Razak cut fuel subsidies in September and the following month announced a new flat rate consumption tax starting in April 2015. - Reuters

http://www.businesstimes.com.sg/bre...th-expected-reflect-recovery-exports-20131114

 

[FHBH12]

It seems that property tax has increased easily by 2-3 times recently. Can anyone verify?

 

[FHBH12]

It seems that property tax has increased easily by 2-3 times recently. Can anyone verify?

I read here and there that the increase was quietly done. Example as below.

KL folk cry foul over proposed city tax hike, say could risk BN’s future electoral prospects
BY JENNIFER GOMEZ
NOVEMBER 14, 2013

Ask Robert Quah about the proposed 100% hike in assessment rates for Kuala Lumpur house owners and his anger is palpable.

The head of the Taman Seputeh residents’ association believes the hike could be an impetus to kick out the ruling Barisan Nasional (BN) government in the next general election, due by 2018.

He is not alone. Other representatives of residents’ associations are also seething at the increase announced by Kuala Lumpur City Hall through notices, which house owners have been receiving in the past week.

The last revision of assessment rates in Kuala Lumpur was 21 years ago.

And according to a report in The Star last year, the total number of residential properties in Kuala Lumpur stood at about 1.77 million units.

Federal Territories Minister Datuk Seri Tengku Adnan Tengku Mansor yesterday justified the hike in assessment rates by saying property prices have gone through the roof.

“If a house used to cost RM80,000, but is now worth RM700,000, but the assessment rate is still low, what are we going to do?” Tengku Adnan said in Parliament yesterday.

Quah was not convinced with Tengku Adnan’s reasoning.

"The increase is ridiculous," he said, adding that for link houses in Taman Seputeh, the assessment rate has increased from about RM9,000 to RM18,000.

In Kepong, some owners of low-cost houses are saying the hike is as much as 267%.

"They (City Hall) sent us a letter saying that we have 12 days to object," Quah added.

The vocal representative did not stop there, he questioned why Prime Minister Datuk Seri Najib Razak was being quiet about the rising cost of living which was burdening the middle-class.

"The PM is so quiet, he is the man behind all of this," Quah hit out, adding that this hike could lead to people taking to the streets to protest if not addressed.

What was even more ridiculous, he said, was the rationale given for the increase.

Quah disclosed that when a Taman Seputeh resident went to City Hall to get an explanation on how the new rate was calculated, he was told that "the rate had not been increased for years".

"That is their explanation. Where else can they get the money from, I guess."

Bukit Bandaraya residents’ association president Datuk Mumtaz Ali also questioned why City Hall was increasing the rates without consulting the people.

"Why are they not adhering to the PM's call for 'rakyat didahulukan'?

"They have not engaged us. What we want to know is have they improved their services?"

He said that on the contrary, residents in the leafy Bukit Bandaraya suburb were suffering because of the approvals given for more commercial activity in the area, which the authorities justified as adding value to the neighbourhood.

Bangsar Baru residents’ association secretary Prem Kumar Nair agreed, adding that this rate increase would not go down well with the people, especially with the recent goods and services tax (GST) announcement and Putrajaya’s recent removal of the subsidy for sugar and reduction in fuel subsidies.

"The government must first address pilferages and undertake cost saving measures, as we know government agencies pay suppliers more than they need to,” he said.

"City Hall has a lot of money in its coffers. So they must first address the wastages and leakages instead of asking us to pay more."

Desa Aman residents’ association secretary Koh Guan Swee concurred that the people were burdened with rising costs, adding that this was not the right time to increase rates as salaries have remained stagnant.

"It will never be the right time to raise anything now until the government finds a way to improve the income of the middle and lower-middle class who are suffering with the rising cost of living," he said.

Koh added that fresh graduates with degrees were only earning RM2,000 a month and as such could not support themselves without the help of parents who were also struggling to pay bills.

He also took City Hall to task for wanting to increase rates when service levels have not improved.

Prem also asked, "Can they justify that they have done enough to mitigate the traffic congestion in the city and the crime rate?

"Have they built enough pavements so that the public can be safe from snatch thieves?"

Quah, meanwhile, added that the excessive increase in rates cannot be justified.

"If they increase by 5 or 10%, it is acceptable, but they have increased by more than 100%.

"This is like being stabbed in the back," Quah said, adding that he had formed a committee to come up with a letter of protest to City Hall.

Mumtaz also said that most home owners in Bangsar were in their twilight years and would not be able to afford the high rates.

They all demanded that City Hall engage the people in consultation and get feedback before pushing the new rates on home owners.

Kuala Lumpur lawmakers, meanwhile, pointed out that the new rates would have a domino effect on many, including tenants.

Cheras MP Tan Kok Wai said, "Obviously landlords will then increase their rent and pass this on to their tenants."

Lembah Pantai MP Nurul Izzah Anwar took Mayor Datuk Seri Ahmad Phesal Talib to task for sanctioning the move, comparing his management with that of former mayor Tan Sri Ahmad Fuad Ismail.

"He (Ahmad Fuad) managed to always raise revenue for the City Hall without having to raise the assessment rates," she pointed out. – November 14, 2013.

http://www.themalaysianinsider.com/...-city-tax-hike-say-could-risk-bns-future-elec

 

[malpaso]

It is right that assessment rates be increased. I believe that the quantum of tax to be paid is still low.

http://malaysia.angloinfo.com/money/general-taxes/property-taxes/

So previously, if assessment rate (as quoted) is 9,000RM. at a rate of 6% of assessment rate, the assessment tax payable is RM540. Now it has doubled to 1080RM.
It is still OK. City hall rationale is correct. A house 20 years ago is only worth 80K in Kepong. Now it is 400K. The owners have been paying a cheap rate for decades.
However, what Mr Quah says is also true. If majlis bandaraya collect more taxes, they should improve the conditions of the old tamans.
For example, in tmaan perling, one can hardly see the road at night, the street lights are too dimly lit.

 

[FHBH12]

It is right that assessment rates be increased. I believe that the quantum of tax to be paid is still low.

http://malaysia.angloinfo.com/money/general-taxes/property-taxes/

So previously, if assessment rate (as quoted) is 9,000RM. at a rate of 6% of assessment rate, the assessment tax payable is RM540. Now it has doubled to 1080RM.
It is still OK. City hall rationale is correct. A house 20 years ago is only worth 80K in Kepong. Now it is 400K. The owners have been paying a cheap rate for decades.
However, what Mr Quah says is also true. If majlis bandaraya collect more taxes, they should improve the conditions of the old tamans.
For example, in tmaan perling, one can hardly see the road at night, the street lights are too dimly lit.

Malaysia government is very hungry for money now. It will be increasing GST to increase revenue in 2015, but in the meantime it has to increase subsidies (for low cost housing) and handouts in 2014. I'm not too sure if the increase in revenue will be translated to better infrastructure and security. If it does, then I don't mind paying the extra. Mine should be due very soon...

 

[cybermad]

normally in which month is property tax payable ?

 

[FHBH12]

Lower tax rate but increase tax base? It is getting confusing

MBJB to lower residential property taxes
Nov 15, 2013 - PropertyGuru.com.my

In a bid to ease the burden of the lower income group, the Johor Bahru City Council (MBJB) plans to lower residential property taxes within the state.

With effect from January 2014, the reduction will be based on the type of title, said Housing and Local Government Committee chairman Datuk Abd Latif Bandi during the 2014 Budget debate at the 13th Johor State Assembly sitting at Kota Iskandar.

The rate for the housing category was reduced from 0.13 percent to 0.12 percent and Malay reserve housing was lowered to 0.04 percent from 0.05 percent.

“Low cost housing is at 0.11 percent down from 0.13 percent. As for agricultural land, it's maintained at 0.07,” said Abd Latif.

However, business property taxes will be increased to 0.27 percent from 0.26 percent and industrial to 0.30 percent from 0.28 percent.

Those dissatisfied with the new rates were advised by Abd Latif to submit their written complaints by 2 December.

http://www.propertyguru.com.my/property-news/2013/11/11273/mbjb-to-lower-residential-property-taxes

 

[FHBH12]

normally in which month is property tax payable ?

Not too sure, probably around Jun/Jul and Jan/Feb. Twice a year.

 

[FHBH12]

Malaysia's GDP records stronger Q3 growth
Reasonably robust expansion of 5% helps keep alive PM Najib's claim he can cut budget deficit to 4% of GDP this year
BY S JAYASANKARAN [email protected]
PUBLISHED NOVEMBER 16, 2013

Kuala Lumpur

MALAYSIA'S third quarter registered stronger growth of 5 per cent in real gross domestic product (GDP) terms, up from the 4.4 per cent registered in the previous quarter and roughly in line with government forecasts for the whole year.

Released by Malaysia's central bank yesterday, the figures revealed that the country grew by 4.53 per cent during the first nine months of the year, in line with the government's forecast of between 4.5 per cent and 5 per cent for the whole year.

The reasonably robust growth helps keep alive Prime Minister Najib Razak's claim that he can cut the country's budget deficit to 4 per cent of GDP this year.

Total federal government debt is expected to hit 54.8 per cent of GDP this year - close to the 55 per cent mandated debt ceiling - but the government has avoided ratings downgrades by keeping the deficit in check.

Mr Najib had done this by keeping growth on the boil through his Economic Transformation Programme (ETP), an enormously ambitious capacity-building exercise that is largely private-investment driven. So far it is working.

The central bank said that domestic demand was the key driver of growth coming in at 8.3 per cent compared to 7.4 per cent in the second quarter.

A mild global economic recovery also saw exports turning around to grow by 1.7 per cent versus a contraction of 5.2 per cent in the previous quarter.

The ETP has been generating momentum. Private investment grew by 15.2 per cent (12.7 per cent in the second quarter) driven by capital spending in the services and manufacturing sectors, as well as oil and gas projects.

Putrajaya had also assured international investors that there would be no deficit on the country's current account of its balance of payments. It proved to be right.

The current account surplus in the third quarter rose to RM9.8 billion (S$3.8 billion) compared to RM2.6 billion in the second quarter. Indeed, the surplus for the first nine months clocked in at RM21.2 billion.

Even accounting for a net deficit of RM11.5 billion on the nation's financial account, the central bank said that the overall balance in the third quarter was in surplus amounting to RM11.8 billion from a mere RM1.5 billion in the second quarter.

Total foreign direct investment for the nine months rose 8.7 per cent year-on-year to RM27.6 billion.

Interestingly, reverse investment by Malaysian firms overseas for the nine months rose 6.7 per cent year-on-year to RM35.7 billion.

More than 75 per cent of the amount, however, came from the oil and gas sector (Petronas' investment in Canada's shale gas) and the finance sector (Malaysian banks expanding regionally).

Meanwhile, the international reserves of the central bank as at end-September rose to almost US$136 billion, enough to finance over nine months of retained imports.

Bank Negara Malaysia, the central bank, seemed to indicate that monetary policy would remain easy. It has maintained its overnight policy rate of 3 per cent for more than 16 months now, a rate that it said "remained supportive of economic activity".

Bank Negara was bullish on the economy going forward, saying that both domestic demand and the gradual recovery in the global economy would support growth. "The economy is therefore expected to remain on its steady growth trajectory," it concluded.

http://www.businesstimes.com.sg/pre...ysias-gdp-records-stronger-q3-growth-20131116

 

[FHBH12]

Good GDP growth in Malaysia. Probably much higher in Iskandar. Likely continued price growth for properties since many businessmen and executives are doing well. Developers are launching clusters, semi-Ds and bungalows instead of terraces. I see big shortage of this class of landed in 2013 and 2014. A 20"x70" intermediate terrace should see prices moving towards $700k+ RM in average location, and $800k+ RM in good location in 2014.

 

[FHBH12]

Iskandar could be model: ex-M'sia MP
Project augurs well for other economic corridors in M'sia
BY KELLY TAY [email protected]
PUBLISHED NOVEMBER 14, 2013

[SINGAPORE] While the success of the Iskandar project is not yet apparent, it could serve as a model for future Singapore-Malaysia collaborations in other economic corridors across the Causeway.

So said former Malaysian Member of Parliament Nungsari Ahmad Radhi on Tuesday, at the 20th Singapore Economic Roundtable jointly organised by the Institute of Policy Studies and The Business Times.

"I wouldn't classify Iskandar as a success story yet because it's still early days. It's still largely a property play right now, and it has to move towards a better kind of economic integration to benefit both sides better," said Dr Nungsari, who is now managing director of Prokhas, a special purpose vehicle wholly owned by the Minister of Finance Inc in Malaysia.

"But the cooperation and familiarity that has been created in Iskandar actually augurs well for opportunities everywhere else - certainly in the northern areas, in Penang, in Kuantan. Of course it also depends on the sort of industries that Singapore firms are looking for," he added.

Apart from Iskandar in Johor, Malaysia has carved out four other economic corridors with investment and business incentives. These are the Northern Corridor Economic Region, the East Coast Economic Region, the Sabah Development Corridor, and the Sarawak Corridor of Renewable Energy.

As power and economic heft continues to shift towards North Asia, Dr Nungsari believes deeper collaboration between Singapore, Malaysia and Indonesia needs to be seen as a political and economic imperative, and not merely a nice-to-have prospect.

"The future of this immediate region will have to be developed along the Malacca straits ... Then we will have a decent chance to be the location for production to feed demand that's going to come from up north," said Dr Nungsari, who was previously an executive director at sovereign wealth fund Khazanah Nasional.

He noted that the Greater Mekong Subregion - comprising Cambodia, Laos, Myanmar, Thailand, Vietnam, and China - could become a potential competitor in this respect.

Although Dr Nungsari acknowledged that a surplus economy like Singapore should funnel resources towards the ascending region of North Asia, he said that Singapore must think of its immediate neighbours as well.

"With such growth and size come responsibilities, because your behaviour and non-behaviour actually affects other things. I think given Singapore's advanced standing in development, it should integrate better (with its neighbours) on the non-economic side of things first, which would then lead to better economic integration later.

"As opposed to always being characterised as the place where the brain drain goes to, things should be the other way around. Singapore can share the brains and be an exporter of talent to the region - it's a possible way of building some bridges," said Dr Nungsari.

http://www.businesstimes.com.sg/premium/top-stories/iskandar-could-be-model-ex-msia-mp-20131114

 

[FHBH12]

Malaysia is hungry for more Sing Dollars. Iskandar is unique. Don't think other regions in Malaysia will enjoy such close economic collaboration with Singapore.

 

[FHBH12]

It's 'risk on' again, thanks to Yellen
Incoming Fed chairman's comments this week spark two all-time highs on Wall Street, and a 24-point gain for STI
BY R SIVANITHY [email protected] SENIOR CORRESPONDENT
PUBLISHED NOVEMBER 16, 2013

JANET Yellen hasn't yet assumed the role of chairman of the US Federal Reserve but already she is wielding an influence on financial markets. Her comments during the week, widely interpreted as indicating that the Fed will continue pumping money into the system via its QE (quantitative easing) programme, have soothed worries that if the money printing stops, then stocks might actually have to rise or fall on fundamental or economic factors.

Now, thanks to reassurances from the incoming Fed chair that the taps will remain open, it's "risk on" again - at least on Wall Street. US indices rose to two all-time highs on Wednesday and Thursday - first because Ms Yellen's thoughts were released ahead of her testimony to the Senate Banking Committee and then again when she actually stood before the committee. In response, the Straits Times Index (STI) gained 24 points or 0.8 per cent over the week, with the index yesterday rising 10.19 points to 3,201.27.

At her confirmation hearing on Thursday, Ms Yellen said it was "imperative that (the Fed does) what (it) can to promote a very strong recovery". Ms Yellen did not sound happy with the current state of affairs, saying that "it's important not to remove support, especially when the recovery is fragile" and that the labour market was still performing "far short" of its potential.

At the same time, she strongly set out the case for quantitative easing, saying that while the Federal Open Market Committee was monitoring potential negatives of the programmes, she judged that the benefits still outweighed the costs.

Mind you, take a step back and look at the STI's performance for the year and the picture isn't anything to write home about. In almost 11 months, the index's gain is now a measly 34 points or 1.07 per cent. Compare this to a stunning 26 per cent rise in the S&P 500 so far in 2013, the main market benchmark for the country which originated the great financial crisis of 2008 and still remains mired in recession, and investors have an idea of how powerful money printing can be and where fund managers' priorities lie.

Blue-chip underperformance aside, the slump in penny stocks that started last month with the crash in Asiasons Capital, Blumont and LionGold continued this week, manifesting itself in significantly reduced daily volume and only sporadic bursts of interest in low-priced issues. In yesterday's session, only 1.6 billion units worth $1.02 billion were traded, figures which at the height of the penny boom earlier this year could well have been chalked up by a single counter instead of the entire market.

In the commodities segment, eyes were peeled on Olam International, which on Thursday reported a 5.7 per cent rise in profit for its first quarter ended Sept 30. In response, Olam's shares yesterday added 3.5 cents to $1.53 with 5.4 million units traded, even if the company's figures only stirred lukewarm interest from analysts.

HSBC Global Research, for example, rated the stock "neutral'' with a $1.64 target. It said Olam was on the right trajectory to achieve the goal of turning free cash flow (FCF)-positive in FY2014. "However, turning FCF to equity positive will take longer, in our view. For that, overall gearing levels (including inventories) need to moderate further from the current 1.9x," said HSBC. "While below the self-imposed 2x limit, it is not sufficient to improve the comfort levels of investors, in our view."

Nomura called a "buy" on Olam with a $2 target while OCBC Investment Research maintained a "hold" with a $1.45 fair value.

http://www.businesstimes.com.sg/premium/companies/others/its-risk-again-thanks-yellen-20131116

 

[FHBH12]

Looks like QE will stay on course in 1H 2014. Tapering might happen only slowly. Temasek has set up office in New York and focusing on US. Get ready for better economy (and higher inflation) next year.

 

[cow138]

Malaysia tends to have difficulty in collecting taxes.

The tax collection infrastructure is not strong. Maybe that's the reason to use a GST based system to increase the tax revenue.
If it translates into better infrastructure and a cleaner environment then I think this is definitely a good thing

 

[malpaso]

Malaysia government is very hungry for money now. It will be increasing GST to increase revenue in 2015, but in the meantime it has to increase subsidies (for low cost housing) and handouts in 2014. I'm not too sure if the increase in revenue will be translated to better infrastructure and security. If it does, then I don't mind paying the extra. Mine should be due very soon...

the news is for KL. JB i think haven't raised yet. they may not. my friend stay pulai perdana 2.. i think the tax is like 100++ RM nia.

 

[malpaso]

Looks like QE will stay on course in 1H 2014. Tapering might happen only slowly. Temasek has set up office in New York and focusing on US. Get ready for better economy (and higher inflation) next year.

that's good becos any tapering gonna push up interest rates and hammer my reits.

 

[Jetstream]

There was talk that Johor is mulling switching its wkend to Fri-Sat. It was this way pre-1994 when it's then MB Muhyiddin Yassin (now DPM) switched it to the current Sat-Sun to boost investment and the economy. Wonder what the new administration seeks to achieve by the reversion to the pre-1994 status; will the economy suffer? Anyway, it's not implemented yet.

 

[FHBH12]

the news is for KL. JB i think haven't raised yet. they may not. my friend stay pulai perdana 2.. i think the tax is like 100++ RM nia.

Hopefully it is not raised. I'm quite concerned about the impact of GST and further reduction of subsidies.

 

[malpaso]

future development to concentrate at senai / zone E for aviation industry.

http://www.starproperty.my/index.ph...r-to-soar-irda-to-develop-it-as-aviation-hub/