Business Times - 03 Jan 2008
M'sian building sector set for 5.8% growth
Driving expansion are oil pipeline, rail, water, undersea power cable projects
(KUALA LUMPUR) Malaysia's construction sector is expected to grow for the second consecutive year by 5.8 per cent compared with 4.7 per cent last year, fuelled by stimulus measures outlined to boost domestic activities, says research company Inter-Pacific Research Sdn Bhd.
In its economic and market outlook report released here yesterday, the research house said the positive outlook will help boost investors' confidence by yielding the desired multiplier effect that will enable the domestic economy to withstand any adverse shocks arising from the external front.
The country's construction sector was in recession for three consecutive years from 2004.
Inter-Pacific said some of the high impact projects expected to contribute to the growth will be the Trans-Peninsular oil pipeline (RM25 billion or S$10.8 billion), double tracking rail projects (RM19 billion), Pahang-Selangor water transfer (RM9 billion) and the Bakun undersea cable and overhead transmission (RM9 billion) projects.
Following the slight decline in government development expenditure by 2.1 per cent to RM40 billion this year from RM40.9 billion last year, private finance initiative projects are also expected to play a more meaningful role this year.
However, Inter-Pacific said in its report that there was a disturbing trend in the utilisation of development expenditure. 'A total of RM200 billion has been allocated under the Ninth Malaysia Plan and only 29.1 per cent or RM58.2 billion has been utilised so far.
'For instance, the actual projection for development expenditure in 2007 is RM40.9 billion but only RM22.3 billion were utilised until third quarter.
'On an annualised basis, our estimates showed gross development expenditure would reach RM30 billion in 2007, a shortfall of RM10.9 billion. This trend is somewhat disturbing.'
Citing the importance of the current development of economic zones in the country where huge funds have been allocated, it said: 'If it persists, it raises our scepticism as to whether there will be another construction boom. The last time we experienced a boom was between 1994 and 1996 driven by buildings and transport-led projects. This time around, we expect growth to come from rail, water, oil and gas and regional developments. Hence, we hope for greater development expenditure in 2008.'
Meanwhile, the building materials industry is also expected to benefit from the improving construction activities, with cement and steel being the two sub-sectors to see significant gains.
'Whilst taking advantage of improving domestic construction/infrastructure activities, we expect pick up in property activities, strong demand from Singapore for their resorts built and a healthy export market (Middle East construction boom) to further lend support for higher demand of cement. We expect cement demand to grow by about 6 per cent per annum over 2008 and 2009,' Inter-Pacific said.
It said the stable cement price averaging RM215 per tonne coupled with better utilisation rate, should help to partly offset the rising operation costs from electricity, paper bags, fuel and raw materials.
Steel, meanwhile, is envisaged to exhibit better performance supported by domestic construction activities, higher selling prices, and stronger export market.
Steel prices are expected to remain firm in the near term, mainly supported by strong demand from the single largest consumer namely China, said Inter-Pacific.
The International Iron and Steel Institute has projected the global demand for steel this year to grow by 6.1 per cent, while demand from China, which consumes 35 per cent of the total world steel, is set to expand by an additional 10 per cent this year. - Bernama
Showing posts with label Malaysia Update. Show all posts
Showing posts with label Malaysia Update. Show all posts
Thursday, January 3, 2008
Tuesday, November 13, 2007
Bloomberg: The next 50 years will be even harder for Malaysia
Business Times - 13 Nov 2007
The next 50 years will be even harder for Malaysia
By WILLIAM PESEK JR
THOSE wondering where Malaysia is headed should keep an eye on Tony Fernandes. Perhaps no one personifies the promise of Asia's 10th-biggest economy better than the 43-year-old entrepreneur. In 2001, he created a budget airline, beating the odds in a place dominated by government-linked companies that tend to abhor competition. AirAsia Bhd has been turning heads ever since.
It was another airline magnate, Aristotle Onassis, who said that the key to succeeding in business is knowing something others that don't. Mr Fernandes knew that not only were Asians ready for no-frills carriers, but so were investors.
Mr Fernandes is often called South-east Asia's answer to Richard Branson. It seems highly appropriate, then, that the two men teamed to launch AirAsia X Sdn, a long-haul budget carrier that this month made its maiden flight. Mr Branson's Virgin Group Ltd is among its key backers.
For all his success, Mr Fernandes also is a microcosm of why Malaysia's economy isn't on the upward trajectory it could be.
Politicians' efforts over the years to protect the turf of Malaysian Airline System Bhd (MAS) backfired, leaving Kuala Lumpur lagging behind in the race for Asia's travel hub. Malaysia has effectively tied one hand behind its back to help out national champions at the expense of the bigger picture.
'I'm asking this for national interest, not MAS's interest or anything else,' says Mr Fernandes of his battle to fly from Kuala Lumpur to Singapore. 'The consumers have suffered enough.'
Politicians continue to dither over another national champion: state-controlled carmaker Proton Holdings Bhd. While talks on an alliance with Volkswagen AG are progressing, the saga is a reminder that Malaysia's leaders are wasting time the nation doesn't have. In Proton's case, the exercise is about finding a partner to help revive sales and return the 24-year-old company to profit. Yet this, like Mr Fernandes's fight to expand his innovative airline, is emblematic of how politicians often don't grasp that Malaysia's place in Asia is rather tenuous.
Again, Malaysia is a remarkable place with incredible potential. Its economy has achieved great things in the 50 years since independence from Britain. Twenty-five years ago, this was a tropical backwater. Today, Malaysia's modern, skyscraper- filled capital is home to the world's second-tallest buildings, the twin Petronas Towers.
The world also has lots riding on Malaysia, a predominantly Muslim nation with a uniquely multi- ethnic economy. It's a place where micro-miniskirts comfortably exist next to women in headscarves.
Yet the next 50 years will arguably be even harder than the last. It wasn't one of the original Asian tigers, yet Malaysia became one over the years. Now, amid Asia's boom, the economy has its fair share of blemishes with which to grapple.
'The world is moving ahead at a rapid pace, and it won't wait for Malaysia,' says Razlan Mohamed, chief executive of Malaysian Rating Corp. The nation 'needs to work harder and work faster,' he added.
Chrisanne Chin, finance faculty head at MIMS Business School, Malaysian Institute of Management & INTI University College, puts it this way: 'It's not so much what Malaysia is lacking, but that China, India, Vietnam and even Thailand and Indonesia have improved so much that they are very capable of leapfrogging Malaysia in a short span of another five years because of specific comparative advantages, from low costs to human capital to technology.'
Human capital is a particular concern. The government needs to do more to train the leaders of tomorrow and import the talent that companies require to thrive. It also has to win more of the foreign direct investment flowing elsewhere in Asia.
There's much back-slapping about how the US$147 billion economy may expand 6 per cent this year and 6.5 per cent in 2008. The real picture can be found in the World Economic Forum's latest competitiveness survey, in which Malaysia slipped two spots to 21st place.
A huge obstacle for Malaysia is something that can barely be discussed: a 37-year-old affirmative- action programme favouring the predominant Malay community. It alienates non-Malays, limits foreign investment, stifles competition and keeps the economy from moving towards a meritocracy. Yet it's a third-rail issue. Most Malaysians won't even discuss it without first looking around to see who is listening.
A sense of political drift doesn't help. Four years in office, Prime Minister Abdullah Ahmad Badawi has spent more time trying to solidify the influence of his political party - the United Malays National Organisation (Umno) - than bringing Malaysia's economy to the next level. Investors and businesspeople complain that Mr Abdullah, who, oddly, also serves as finance minister, hasn't attacked subsidies on products such as oil, or tackled corruption as he had promised.
For a glimpse of the future, one could do worse than ask Ramon Navaratnam, president of anti- corruption group Transparency International Malaysia and author of the 2006 book Where to, Malaysia? 'The future is bright, but only if we are honest with ourselves that we have a lot of very difficult work to do,' he says. 'Otherwise, we will see the rest of Asia pulling ahead and Malaysia walking in place.'
- Bloomberg
The next 50 years will be even harder for Malaysia
By WILLIAM PESEK JR
THOSE wondering where Malaysia is headed should keep an eye on Tony Fernandes. Perhaps no one personifies the promise of Asia's 10th-biggest economy better than the 43-year-old entrepreneur. In 2001, he created a budget airline, beating the odds in a place dominated by government-linked companies that tend to abhor competition. AirAsia Bhd has been turning heads ever since.
It was another airline magnate, Aristotle Onassis, who said that the key to succeeding in business is knowing something others that don't. Mr Fernandes knew that not only were Asians ready for no-frills carriers, but so were investors.
Mr Fernandes is often called South-east Asia's answer to Richard Branson. It seems highly appropriate, then, that the two men teamed to launch AirAsia X Sdn, a long-haul budget carrier that this month made its maiden flight. Mr Branson's Virgin Group Ltd is among its key backers.
For all his success, Mr Fernandes also is a microcosm of why Malaysia's economy isn't on the upward trajectory it could be.
Politicians' efforts over the years to protect the turf of Malaysian Airline System Bhd (MAS) backfired, leaving Kuala Lumpur lagging behind in the race for Asia's travel hub. Malaysia has effectively tied one hand behind its back to help out national champions at the expense of the bigger picture.
'I'm asking this for national interest, not MAS's interest or anything else,' says Mr Fernandes of his battle to fly from Kuala Lumpur to Singapore. 'The consumers have suffered enough.'
Politicians continue to dither over another national champion: state-controlled carmaker Proton Holdings Bhd. While talks on an alliance with Volkswagen AG are progressing, the saga is a reminder that Malaysia's leaders are wasting time the nation doesn't have. In Proton's case, the exercise is about finding a partner to help revive sales and return the 24-year-old company to profit. Yet this, like Mr Fernandes's fight to expand his innovative airline, is emblematic of how politicians often don't grasp that Malaysia's place in Asia is rather tenuous.
Again, Malaysia is a remarkable place with incredible potential. Its economy has achieved great things in the 50 years since independence from Britain. Twenty-five years ago, this was a tropical backwater. Today, Malaysia's modern, skyscraper- filled capital is home to the world's second-tallest buildings, the twin Petronas Towers.
The world also has lots riding on Malaysia, a predominantly Muslim nation with a uniquely multi- ethnic economy. It's a place where micro-miniskirts comfortably exist next to women in headscarves.
Yet the next 50 years will arguably be even harder than the last. It wasn't one of the original Asian tigers, yet Malaysia became one over the years. Now, amid Asia's boom, the economy has its fair share of blemishes with which to grapple.
'The world is moving ahead at a rapid pace, and it won't wait for Malaysia,' says Razlan Mohamed, chief executive of Malaysian Rating Corp. The nation 'needs to work harder and work faster,' he added.
Chrisanne Chin, finance faculty head at MIMS Business School, Malaysian Institute of Management & INTI University College, puts it this way: 'It's not so much what Malaysia is lacking, but that China, India, Vietnam and even Thailand and Indonesia have improved so much that they are very capable of leapfrogging Malaysia in a short span of another five years because of specific comparative advantages, from low costs to human capital to technology.'
Human capital is a particular concern. The government needs to do more to train the leaders of tomorrow and import the talent that companies require to thrive. It also has to win more of the foreign direct investment flowing elsewhere in Asia.
There's much back-slapping about how the US$147 billion economy may expand 6 per cent this year and 6.5 per cent in 2008. The real picture can be found in the World Economic Forum's latest competitiveness survey, in which Malaysia slipped two spots to 21st place.
A huge obstacle for Malaysia is something that can barely be discussed: a 37-year-old affirmative- action programme favouring the predominant Malay community. It alienates non-Malays, limits foreign investment, stifles competition and keeps the economy from moving towards a meritocracy. Yet it's a third-rail issue. Most Malaysians won't even discuss it without first looking around to see who is listening.
A sense of political drift doesn't help. Four years in office, Prime Minister Abdullah Ahmad Badawi has spent more time trying to solidify the influence of his political party - the United Malays National Organisation (Umno) - than bringing Malaysia's economy to the next level. Investors and businesspeople complain that Mr Abdullah, who, oddly, also serves as finance minister, hasn't attacked subsidies on products such as oil, or tackled corruption as he had promised.
For a glimpse of the future, one could do worse than ask Ramon Navaratnam, president of anti- corruption group Transparency International Malaysia and author of the 2006 book Where to, Malaysia? 'The future is bright, but only if we are honest with ourselves that we have a lot of very difficult work to do,' he says. 'Otherwise, we will see the rest of Asia pulling ahead and Malaysia walking in place.'
- Bloomberg
BT: Malaysia's faltering growth
Business Times - 13 Nov 2007
Malaysia's faltering growth
LAST Friday, the ringgit rose to 3.31 units against the greenback, its strongest showing since capital controls were imposed on Malaysia in September 1998. It has strengthened close to 6 per cent against the US dollar since the beginning of the year. Should investors then conclude that things are looking good in Malaysia and the ringgit will continue to appreciate? In fact, things aren't particularly rosy in Kuala Lumpur. The ringgit strengthened against the US dollar only because the greenback is in secular decline for reasons that are well known: a stuttering economy amid declining US interest rates and higher risk premiums for US assets.
In fact, the ringgit is a relative laggard vis-a-vis the US dollar compared to its regional peers. The Malaysian unit has depreciated steeply against the British pound, the Australian and Canadian dollars and the euro while declining slightly against the Singapore dollar and the Indian rupee.
Seen in that context, Malaysia's currency appreciation against the greenback is par for the course. The fact is Malaysia's economic growth has fallen short of expectations. Officially, the projections are for 6 per cent GDP growth this year, against last year's 5.9 per cent. But most private economists consider the figure bullish and think that the final tally will come in lower than the official forecast. More to the point is the quality of the country's growth which, truth be told, is poor. Malaysia has grown primarily because the government has continued to run up fiscal deficits which have become a common budgetary feature since 1998. This is in contrast with other countries equally hard hit by the Asian financial crisis like South Korea, Thailand or Indonesia, which are in surplus or close to balance.
Moreover, Malaysian growth has come against a backdrop of robust global economic expansion. Even so, despite the large and sustained fiscal deficits, Malaysia has only managed to eke out growth not much better than average global growth. That should be worrying and should be of concern to the Malaysian authorities.
The trend has continued to persist. This is manifest in the fact that the Malaysian export machine seems to be stalling. September's export numbers grew only 1.1 per cent year on year, up slightly from August's 0.8 per cent. And all that coming from three straight months of contractions previously. Indeed, Malaysia's export performance in 2007 has been lacklustre, to say the least, and one of its weakest in a long time. Out of the 10 major exporting nations in the region, Malaysia came out last in year-to-date export growth. And the 10 ranged from the developed economies like Hong Kong, South Korea, Japan, Singapore and Taiwan to the low-income countries like China, Thailand, Indonesia and Vietnam.
The figures seem to suggest that Malaysia's competitiveness is being eroded. Malaysia needs to address the issue without delay.
Malaysia's faltering growth
LAST Friday, the ringgit rose to 3.31 units against the greenback, its strongest showing since capital controls were imposed on Malaysia in September 1998. It has strengthened close to 6 per cent against the US dollar since the beginning of the year. Should investors then conclude that things are looking good in Malaysia and the ringgit will continue to appreciate? In fact, things aren't particularly rosy in Kuala Lumpur. The ringgit strengthened against the US dollar only because the greenback is in secular decline for reasons that are well known: a stuttering economy amid declining US interest rates and higher risk premiums for US assets.
In fact, the ringgit is a relative laggard vis-a-vis the US dollar compared to its regional peers. The Malaysian unit has depreciated steeply against the British pound, the Australian and Canadian dollars and the euro while declining slightly against the Singapore dollar and the Indian rupee.
Seen in that context, Malaysia's currency appreciation against the greenback is par for the course. The fact is Malaysia's economic growth has fallen short of expectations. Officially, the projections are for 6 per cent GDP growth this year, against last year's 5.9 per cent. But most private economists consider the figure bullish and think that the final tally will come in lower than the official forecast. More to the point is the quality of the country's growth which, truth be told, is poor. Malaysia has grown primarily because the government has continued to run up fiscal deficits which have become a common budgetary feature since 1998. This is in contrast with other countries equally hard hit by the Asian financial crisis like South Korea, Thailand or Indonesia, which are in surplus or close to balance.
Moreover, Malaysian growth has come against a backdrop of robust global economic expansion. Even so, despite the large and sustained fiscal deficits, Malaysia has only managed to eke out growth not much better than average global growth. That should be worrying and should be of concern to the Malaysian authorities.
The trend has continued to persist. This is manifest in the fact that the Malaysian export machine seems to be stalling. September's export numbers grew only 1.1 per cent year on year, up slightly from August's 0.8 per cent. And all that coming from three straight months of contractions previously. Indeed, Malaysia's export performance in 2007 has been lacklustre, to say the least, and one of its weakest in a long time. Out of the 10 major exporting nations in the region, Malaysia came out last in year-to-date export growth. And the 10 ranged from the developed economies like Hong Kong, South Korea, Japan, Singapore and Taiwan to the low-income countries like China, Thailand, Indonesia and Vietnam.
The figures seem to suggest that Malaysia's competitiveness is being eroded. Malaysia needs to address the issue without delay.
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