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EEA Forum 2013  –  4th July 2013

Overview of the Economy and Property Market(Strategic Planning & Business Performance Division, KLCCH)

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Contents

2

Global Economy Overview

Malaysia Economy Overview

Policies & Regulations

Office Market Retail Market

Hotel Market

Residential Market

Construction Material News

MRT Updates

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Global Economy Overview

EEA Forum 2013  –  4th July 2013

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World Bank Cuts 2013 Global Economic Growth Outlook, Lowers Forecast

For China, India, Brazil, Raises Projections For US, Japan” –  World Bank’s

Global Economic Prospect Report 2013 (released June 13th) 

 World economy less volatile - citing slower-than-expectedexpansion in China, India and Brazil and a stubborn contraction inEurope who is still reeling under severe austerity measures and weakconsumer sentiment.

Global growth is set at 2.2 percent, less than the 2.3 percent growthregistered last year. The Bank, in its January forecast, had expected theglobal economy to grow by 2.4 percent.

Predicted that the global economy will expand 3 percent in 2014 and3.3 percent in 2015.

Overall, growth in high-income countries is projected to accelerateslowly, with GDP expanding a modest 1.2 percent this year, but firmingto 2.0 and 2.3 percent in 2014 and 2015.

The recovery is on more solid ground in the United States, wherea fairly robust private sector recovery is being held back, but notextinguished, by fiscal tightening. Meanwhile, in Japan, a dramaticrelaxation of macroeconomic policy has sparked an uptick inactivity, at least over the short term,” the report said. 

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IMF projects most advanced economies to improve in 2014 and a

stabilized view for Malaysia  –  World Economic Outlook 2013

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Cebr’s World Economic Table 2013 - by 2022 the Chinese economy, currently 53%

of the size of the US economy, is predicted to be 83% of the size of the US economy

and catching up fast.

The USD is seen gaining strength in support

of improving US economy outlook.

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Greece now leads the rich world with an astonishing 62.5 percent  of its youth

workforce out of a job. Since April 2012, Greek youth unemployment has grown by

about one percentage point a month. At that rate, it would pass 70 percent in

early 2014.  –  The Atlantic May 31st 

Country Unemployment

Rate %

USA 7.6

China 4.1

 Japan 4.1

Germany 5.3

France 10.8

Malaysia 3.0

Singapore 1.9

Thailand 0.89

Indonesia 5.92Brunei 2.6

World's economy “is slowly getting back on its feet. However,

the recovery remains hesitant and uneven,” –  World Bank

Cautious optimism that the US economy is on a mend –  private

sector-led growth, recovery of the housing and labor market

Euro area expected to remain weak

Asia’s economy likely to improve 2013 driven by resilient

domestic demand, modest strengthening in export demand and

Gov’t-led infrastructure investment

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2012e 2013f

Population 29.3 Mil 30.7 Mil

GDP 743.54 Billion 780.98 Billion

GDP Growth 4.5 –  5.0% 4.5 –  5.5%

Per capita Income RM 30,956

(USD 9,890)

RM 32,947

(USD 10,526)

Inflation Rate

(CPI)1.9 -

Labor Force 12.9 Mil 13.3 Mil

Unemployment 3.2% 3.1%Total Export

(f.o.b.)

RM 702.2 Bil RM 740.7 Bil

Total Import (c.i.f) RM 607.4 Bil RM 639.9 Bil

Major Export

Products (Jan – 

Dec 2012)

• Electrical & Electronic Products

• Refined Petroleum Products

• Palm Oil• Liquefied Natural Gas (LNG)

• Chemicals and Chemical Product

• Crude Petroleum

Major Exports

Markets (Jan –  

Dec 2012)

• People’s Republic of China 

• Singapore

•  Japan

• USA• Thailand

The Malaysian Economy

Source : Matrade, MIDA, DOS

The Total Exports for Jan-Apr 2013 is RM 225.28 Bil againstTotal Imports of RM 207.98 Bil

MITI –  GDP 2011 (58 % by Services Sector). Target 202065% to be a developed nation.

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 The Malaysian Economy

The ETP sets out to achieve a Gross NationalIncome (GNI) of US$15,000, create 3.3 million jobs and secure US$444 billion in investments

by 2020. World Bank’s approach is used to define our

high income target - World Bank’s current GNI

per capita threshold for a high income economyis US$12,476.

World Bank’s published historical global inflation

figure of two per cent (2%) is factored to arrive at

a high-income threshold of US$15,000 in 2020. Source : ETP Annual Report 2012, MIER Economic Briefing Apri l ‘13 

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Bank Negaramaintains anOvernight Policy Rateof 3%

Most commercialbanks having BLR at6.60% effective May2011.

Banking

Institution

BLR (%p.a.)

updated 1

Feb ‘13 

Bank of America

Malaysia Berhad

6.30

 J.P Morgan Chase

Bank Berhad

6.20

The Royal Bank of

Scotland Berhad

6.25

Bank Simpanan

Nasional Berhad

(BSN * BFR)

6.55

Bank Rakyat

Berhad

6.30

Bank Muamalat -

*BFR

6.35

Al-Rajhi Bank -

*BFR

6.30

Year BLR (%)

2011 6.60

2010 (July) 6.30

2010 (May) 6.05

2010 (Mac) 5.80

2009 5.55

2008 6.75

2007 6.75

2006 6.00

2005 6.00

2004 6.00

2003 6.50

2002 6.50

2001 6.75

2000 6.75

1999 8.00

1998 10.50

1997 9.25

1996 8.50

1995 6.60

1994 8.25

1993 9.50

1992 9.00

1991 7.50

1990 7.00

1989 7.00

The Malaysian economy is expected to be in

a steady growth path.

Domestic demand remains key driver of

growth, supported by private sector

investment and consumption.

Public sector spending is expected to

increase at a more moderate rate

 The Malaysian

Economy

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Policies & Regulation

EEA Forum 2013  –  4th July 2013

Mi i W I l t ti i li ith bj ti f t f i

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Minimum Wage Implementation – 

 in line with objective of transforming

Malaysia into a high-income and high-productivity economy..

Malaysia implemented a minimum wage policy on 1 January 2013, thereby joining more than 150 other countriesthat already have minimum wage laws in place. For microenterprises, the implementation date is 1 st July.

The policy sets a minimum wage of RM900 per month (RM4.33 per hour) for Peninsular Malaysia and RM800 per

month (RM3.85 per hour) for Sabah, Sarawak and the Federal Territory of Labuan, covering both the local andforeign workforce, except for domestic workers such as domestic helpers and gardeners.

The minimum wage policy is estimated to benefit about 27% of workers nationally.

BNM opines that there will be short-term cost containment. Malaysia’s low and stable inflation, together with thehealthy profit margins of firms, would further aid in mitigating the extent of the pass-through of costs to consumers

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Kuala Lumpur City Hall (DBKL) has introduced a new system for processing of

development approvals which allows real estate developers to get faster approval -

system known as "Kuala Lumpur Integrated Submission, Be Systematic, and

Transparent" (KL IS BEST), is expected to shorten the processing period to only fourmonths from six to eight months  currently. Under this system, only one

development approval application is submitted to DBKL as the engineering, landscape

and fire prevention plans are lumped together. DBKL has identified 10 project

developers to sign MoU with DBKL for the purpose of reviewing and submitting

development plan applications to DBKL. Amongst developers identified were KLCC

Property Holdings Berhad, IJM Properties Sdn Bhd, Continental City Sdn Bhd,

Primamuda Holdings Sdn Bhd and Ekovest Properties Sdn Bhd (NST –  31st May)

Proposed Goods and Services Tax at 7 % similar to Singapore. On May 17 th Minister

in the PM’s Dept. Datuk Seri Idris Jala said the new tax mechanism can guarantee

revenue of RM 20 Bil to RM 27 Bil at maturity.

Policies & Regulations

Source : NST, The Star, internet