ETP update: 10 Key Achievements (Nov 2012)

Below is the 10 key achievements highlighted by CEO of Pemandu, that demonstrates the positive inroads of the ETP:

1. Projects will be implemented within the 12 focused National Key Economic Areas (NKEA) and also implement 51 Strategic Reform Initiatives (SRI) to ensure competitiveness will flourish.
   
2. Whilst Malaysia's GNI per capita was only US$6,700 in 2009, it grew dramatically by 45% in 2011. (Target is US$15,000 by 2020)
   
   
3. GDP grew by 5.3% year-to-date. This is significant, considering Singapore's growth of only 1.3% while neighboring countries recorded the following GDP growth:
• Thailand 3.0%
• South Korea 1.6%
• Taiwan 1.0%
• Hong Kong 1.3%
  
4. Economy continues to grow to reach new GDP and GNI records in 2011, with Government achieved its highest revenue in history with RM185 billion in 2011, allowing the Government to implement many programmes, including those under GTP such as BRIM1 and BRIM2.
   
5. Private investment continues to achieve robust growth. As of Sept 2012, private investment grew by 25.5% yoy, reaching a new record of RM112.2 billion.
   
   
   
6. Domestic private consumption continues healthy growth of 8.2% year to date, an evidence of growing disposable income by Malaysians.
   
7. FTSE Bursa Malaysia KLCI market capitalization scaled new historic high on 1st Nov of 1,675.69 points, with market capital Rm1.46 trillion.
   
   
   
8. Consistent delivery of fiscal deficit reduction from 6.6% of GDP in 2009, 5.6% in 2010, 4.8% in 2011 and further reductions are planned in 2013 and beyond. Debt ceiling was capped at 55% of GDP.
   
   
   
9. Recognition of Malaysia's tremendous progress by external parties such as World Bank (ranking in Doing Business), AT Kearney's FDI confidence index, IMD World Competitiveness Yearbook, WEF Global Competitiveness and CNN ranked KL as 4th best shopping cities.
   
10. Achievements against the KPI were at 123% in 2011 and 94% this year

Source: etp.pemandu.gov.my (summarized by Finance Malaysia blog for ease of reading)

Summary of 2011 Bank Negara Malaysia Annual Report

The global economy grew at a more moderate pace in 2011 after the strong rebound in 2010. The growth momentum was weighed down by continued structural weaknesses and fiscal issues in the advanced economies, geopolitical developments in the Middle East and North Africa region and the disruptive impact of natural disasters on global manufacturing production. These developments reverberated onto international financial markets and contributed to heightened market volatility throughout the year.

Despite the less favourable external environment, emerging economies continued to record firm domestic-driven economic growth. At the same time, emerging economies faced increasing challenges from volatile capital flows and rising inflationary pressures. Amidst this environment, the Malaysian economy continued to grow steadily underpinned by the expansion in domestic activity and firm regional demand.

The Malaysian Economy in 2011

The Malaysian economy recorded a steady pace of growth of 5.1% in 2011 (2010: 7.2%), despite the challenging international economic environment. Growth was lower in the first half of the year, particularly in the second quarter, as the economy was affected by the overall weakness in the advanced economies and the disruptions in the global manufacturing supply chain arising from the natural disaster in Japan. Although the global economic environment became increasingly more challenging and uncertain in the second half-year, Malaysia’s economic growth improved due to stronger domestic demand.

Outlook for the Malaysian Economy in 2012

• Malaysia’s economy is projected to experience a steady pace of growth of 4 – 5% in 2012
• Domestic demand to remain resilient
• 2012 Budget expected to provide support to private consumption
• Upward revision of public sector wages and one-off financial assistance to low and middle-income groups
• Ongoing implementation of projects under ETP
• Higher capital expenditure by both the Federal Government and the non-financial public enterprises
• Implementation of the Special Stimulus Package through Private Financing Initiative

Labour market conditions are expected to soften in 2012 amid the slower economic activity. The unemployment rate is projected to increase to 3.2% of the labour force in 2012. Headline inflation is expected to moderate in 2012, averaging between 2.5 – 3.0%. The lower inflation projection reflects the moderation in global commodity prices and a more modest growth in domestic demand.

Source: BNM report

4 Components of Economic Growth (August 2011)

So far, equity markets are down anywhere between 10-20% and bond yields in a number of major markets are reaching historic lows. Although it is difficult and nerve racking, investors should understand some of the forces behind what's creating this volatility and how they're likely to play out in the near term.

When will market rebound?

Again, we simply cannot answer that million-dollar question. If I know, I won't be writing this article here telling you all stories and facts. We should have a longer term view, especially during volatile times when fears dominating the marketplace.

So, what are some of the driving forces behind?

If we go back to basics, the 4 components that really drive economic growth are Government, Consumer, Corporate, Import & Export. If we look at each individually, we can do better opinion, by analyzing them.

Government:

Since 2008, governments have played an increasingly dominant role in the markets that we're familiar with. They are expanding monetary policy, expanding fiscal policy, bailing out companies, regulating companies or buying companies. Who else can replace the government now? Of course, NO one. The government are now a fact of life in the markets and investment as we know it. Example, the Citigroup bailout had actually turned out to be a very profitable investment for US Government. Undeniably, we have to understand each movements of government in order to make returns from.

However, Government cannot runaway from political issues which may confused the markets. Everyday, we guessed what is Obama or Bernanke going to say next, what's ECB going to do, when is our next general election? As the market continues to test Governments and its policy continue to evolve, we are due for continued uncertainty and volatility in the market.

Consumer:

We as a consumer are going through a difficult time, especially in developed markets. We faced with higher taxes, unemployment and inflation, all eroding our disposable income which in turn makes spending power and confidence lower. Market falls because of lower consumption/retail figures, and this will further enhance fear in the eyes of the consumer in return.

Investment:

This is what ETP of Malaysia means: Private investment with Government facilitation. However, corporates is talking about managing their costs and having a good solid balance sheets with cash to avoid problems in downturns. Right now, they are the healthiest of the 3 domestic components towards economic growth. Government is indebted more than corporates. Companies with strong balance sheets are in a better positions in expanding, be it organically or through acquisitions, like what Google doing right now (taking over Motorola).

Picture taken from www.money4invest.com

Export-Import:

Lastly, developing countries are the main growth drivers in international trades. Still, they are growing, albeit slower pace. We need to keep an eye of it and it's impact between developing and developed countries.

In summary, we should not over-react given the volatility of the market. In fact, we should take this as an opportunity to take on good solid companies for long-term investing. I still see a lot of good companies trading at single digit P/E, some with good dividend yield too. Should you forego the chances?

MRT at Iskandar: Is it Viable?

When everyone talk about mass rapid transit (MRT) system at KL, it's reasonable given the terrible bumper to bumper traffic jam every working days. Certainly, it creates a buzz in Malaysia with its RM50 billion price tag. Maybe because of the buzzing topic, Iskandar Regional Development Authority (IRDA) also looking at the possibility of implementing a 500km MRT within the region which would also provide a direct link to Johor Bahru. The project is scheduled for completion by 2020. What's your reaction?

I believe many people will think the same with me - unbelievable. My jaw drops down the floor thereafter. We do not have to perform  those sophisticated calculation to judge whether the Iskandar MRT is viable or not. I came out with these 3 points.

3 Stupid Questions to ask our-self

1. Population
• KL is capital of our country, while Iskandar is a region which encompass the capital of a state
• Do you think that Iskandar has more people than than the capital of KL?
• Some more, Iskandar is 3x larger than Singapore, but with much lesser population
2. New vs Old
• KL is an not well planned city, which contributes to traffic problems now
• However, Iskandar is a new city with ample of land, with ample of time to plan. Why not take your land and time as an advantage to plan ahead?
• We don't have choice in KL, we're forced to resort to MRT
3. Alternative ways
• Well, everyone knows that MRT system is an extremely expensive project. Thus, we should source for other ways first, before considering MRT.
• With ample of vacant lands still available now, why straightaway jump to MRT?
• Also, population are not there yet, what's the urgency to build MRT now?
• Instead, we should consider the following system first: Roads, Bus, Highways, LRT, then only MRT. MRT should be the last due to higher cost.

The 5 flagship zones of Iskandar Malaysia, namely Johor Bahru City (A), Nusajaya (B), Western Gate Development (C), Eastern Gate Development (D), and Senai-Skudai (F)

Wait... What am I using? Common sense, man (without calculator in my hand).

To support my view, below is what written by OSK Research:

"We feel that the chances of the Iskandar MRT being implemented anytime soon is slim. Based on IRDA's estimated cost of RM30m/km, the entire project will work out to RM15bn which is certainly a huge sum. Although an efficient public transport network is a crucial element of Iskandar to emerge as a thriving metropolis region, we think that it is still too soon for an MRT to be built. At this juncture, we believe that the Federal Govt is probably going to focus more on the KL MRT, LRT extension and various other ETP projects to ensure that it kicks off on time before considering the Iskandar MRT."

Source: IRDA, Iskandar Malaysia website

Are you in the right sector?

What would be your benchmark to measure whether a sector is good or bad? Anyway, I believe most of us use "salary" as the main or only benchmark. Obviously, salary or income is one of the main factor for fresh graduates nowadays to consider whether to take the job or not.

Yesterday, I attended a forum on Economic Transformation Programme (ETP) organized by Malaysia Financial Planning Council (MFPC). Of course, no one is more suitable to answer those questions other than the CEO of PEMANDU, which is the main backbone to the success of ETP.

Excerpt from TheStar newspaper

So, are you regretted of what you are practicing now?

The statement cannot just simply applied to every Malaysians, as that was just an average benchmark. In fact, there are many engineers who earns big-bucks out there. As long as you are determine and posses the right attitude and behavior, you could be a high income individual.

The interpretation should be:

"Along with the growing Malaysia economy, financial sector poised to outperform other sector especially when we're talking about high-income nation. When people are resourceful, they will save and invest, which ultimately benefiting the financial sector which provides services like investment, stock broking, insurance, personal wealth management..."

Also, please take note that the financial sector will not prosper, if Malaysia do not have enough professional, such as engineers, doctors, lawyers and accountants. Can our nation grows without these professionals? If a country were lacking behind, can financial sector prosper, subsequently can their employees? We should not simply jump into particular sector based on such survey.

Related posts:

6 Key Takeaway from ETP open day

6 Key Takeaways from ETP open day

Key Takeaway from Economic Transformation Programme (ETP):

 

  

 

Transforming Klang River to River of Life ?

 

Funding ?

 

Throughout the presentation, this sentence keeps on repeating to remind us... So did here...

 

Source: www.pemandu.gov.my