Deals Major Corporate ties in 2008 Major Market Activi- look Property Market Out- global financial crisis price increase and Impact of the fuel Property Market Review of Malaysian package RM7b stimulation 2009 Budget Review Economy Review of Malaysian CONTENT growths of 6.7% and economic growth for Re vi ew of Ma la ys ia n Pr op er ty Ma rk et (0 8/ 09 ) 1Q08, respectively” 3Q08 moderated to 7.4% in 2Q08 and recording strong “The Malaysian 4.7%, after JS VAL UE RS PR OP ER TY CO NS ULT AN TS 11 31 13 10 7 5 3 1 prices. The global fuelencouraged price declined by toend be- the of declining 2008The (to inflationary global 4.4% pressures eased in fuel towards December the 2008), about 8.5% in July and Augustup 2008. the country inflationprice to to 7.7% in increase June byprice, and which about has 40%, prompted hasprice the pushed has country’s been fuel peggedtion. against the Effective global June fuel 2008,have the continued country’s to fuel The push escalating the global country’s fuel infla- prices sinceInflation 2007 GDP (RM million) recession. several countries facingprompted potential global economic economiccial slowdown institutions. with billion The bailout packages financial toand rescue crisis Europe the finan- has governmentsthe global to financial crisis, initiateSeptember which 2008 has multi heightened led theThe US beginning bankruptcy of filing by Lehman Brothers in 2008. RM1.92 per literthe to 40% RM2.70 increase effectiveattributed June in to the the rising petrol2Q08, inflation, triggered price, respectively. by from Thegrowths lower of growth 7.4%moderated was and to 6.7% 4.7%,The after in Malaysian economic recording 1Q08 growth strong and forGross Domestic 3Q08 Products (GDP) REVIEWOFMALAYSIANECONOMY 110,000 115,000 120,000 125,000 130,000 135,000 140,000 07-1Q GDP (RM mil) 07-2Q 07-3Q 07-4Q 08-1Q Growth (%) 08-2Q 08-3Q Growth (%) 0% 1% 2% 3% 4% 5% 6% 7% 8% costs of construction materialsrespondingly, have crude also palm de- oilpeak of prices USD146 per and barrel inlow the July USD40 2008. per Cor- barrel in early 2009 from the activities. ing banks to lendmore more liquidity to in finance theFebruary economic banking system, 2009. allow- Ratio The (SRR) to reduction 2%BNM from will has 3.5%, also inject effective reduced the 1st Statutory Reserve 25 reduction was theRate second (BLR) reduction to between afterinstitutions 5.95% a have and reduced 6%.economic The the growth. As Base a results, Lending economic most financial growth amid the(OPR) downside by risks 75 to basis points(BNM) to 2.5% reduced to the promote In Overnight February Policy 2009, Rate BankInterest Negara rates Malaysia clined. 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% % change (yoy) Interest rate 0% 1% 2% 3% 4% 5% 6% 7% 8% - basis point cut in November 2008. Jan -08 Jan-08 Feb-08 Feb-08 Mar-08 M ar -08 BLR Apr-08 Ap r-08 May-08 Consumer Price Index Jun-08 M ay -08 Jul-08 12-month fixed deposit Jun-08 Aug-08 Jul-08 Sep-08 Oct-08 Au g-08 Nov-08 Sep-08 Dec-08 Oct-08 Jan-09 Feb-09 Nov -08 Review of Malaysian Property Market (08/09) Page 2 REVIEWOFTHEMALAYSIANECONOMY As a result of the reduction, the deposit rates, continues to decline. Unemployment rate is including the fixed deposit rates are expected expected to increase to about 4%. Multina- to reduce. As at December 2008, the interest tional companies that have announced clo- rates for 1-month and 12-month fixed depos- sures or restructuring of their manufacturing “No significant its were 3% and 3.5%, respectively. plants in Malaysia include Intel, Sony Corp improvement is and Panasonic. anticipated, Most companies, particularly public listed especially in the first Global economy companies are expected to report “lower than forecasted” financial results in 2009 in view half of 2009. The The bankruptcy filing by Lehman Brothers of the poor market condition. As a result, the Holdings Inc in September 2008, marked the economic stock market is not expected to perform fa- beginning of the global financial crisis in US progression will vourably in 2009, especially during the first and Europe. The financial crisis is the conse- half. depend greatly on quential effect of the US sub-prime crisis, the containment of which erupted in the middle of 2007. The With the inflationary pressure eases to about financial crisis has caused the global share 3% to 4%, the government is expected to the financial crisis markets to plummet. adopt and implement measures to promote and effectiveness of economic growth within the country. The failing of major financial institutions in Amongst the measures announced include the stimulation US and Europe has prompted governments lowering of the BLR, expansionary 2009 packages” worldwide to introduce various bail-out and Budget and RM7 billion stimulation package. economic stimulation packages to revive the banking systems and economic progression in With low inflation rate, Bank Negara Malay- their countries. In spite of these packages, the sia (BNM) is expected to reduce the over- negative impact is expected to trigger a slow night policy rate (OPR) again in 2009 to down in the global economy in 2009. stimulate the country’s economy. The cut will reduce the BLR further from the current The recent military attacks by Israel on Pales- 5.95%. The reduction also corresponds with tine has not only created global market uncer- the interest rate cuts by other countries. tainties, global fuel prices have also signaling an upward trend. The crude oil future was While most countries have undertaken vari- trading at USD47 per barrel from below ous measures to stimulate their economies, USD40 per barrel. The increase created fear however, no significant improvement is an- “Despite the that the crude oil price may increase again. ticipated, especially during the first half of depressing economic 2009. The economic recovery will depend The impact of the financial crisis on the greatly on the containment of the crisis and outlook, the global economy is imminent. The economic effectiveness of the stimulation packages. growth for Singapore slowed to 1.5% in 2008 government compared with 7.7% growth in 2007. In Ministry of Finance has revised downward its maintained its 2009, Singapore’s economic growth is fore- economic growth forecasts for 2008 and 2009 growth forecast of casted to be between –2% and 1%, down to 5% and 3.5% from earlier 5.7% and 5.4%, from the earlier forecast of 1% to 2% made in respectively. The government promises addi- 3.5%, promising November 2008. tional stimulation packages in the event that additional the country’s economy worsens. stimulation Private analysts such as Malaysian Institute Malaysian Economic Outlook packages to of Economic Research (MIER) and Citi In- stimulate the With the anticipated reduced demand for in- vestment Research have forecasted lower dustrial products, the country’s industrial GDP growths of 1.3% and 0.5%, respectively economy if output is expected to reduce. In view of this, for 2009. Both analysts expects Malaysian necessary” companies may resort to retrenchment to re- economy to enter into a technical recession duce their operational costs if the demand during the first half of 2009. Review of Malaysian Property Market (08/09) Page 3 2009 BUDGET REVIEW The 2009 Budget is focused on enhancing the Various measures have been proposed to help well being of all Malaysians, e.g. which was the Malaysians, such as increase of tax rebate themed ‘A Caring Government’. Overall, the from RM350 to RM400 per head, reduction budget will focus on three specific strategies: of the highest tax rate for individuals from “The Budget 2009 is 28% to 27%, reduction of import duties on focused on Ensuring the well being of Malaysians selected consumer products, tax exemption Developing Quality Human Capital on interest income and many others. enhancing the well Strengthening the Nation’s Resilience being of all Amongst the measures proposed to encourage house ownership are as follows: Malaysians, The budget deficit for 2008 is expected to specifically to expand to 4.8% of the Malaysian GDP, which For purchase of medium cost houses up is higher than the original 3.1% target. The to RM250,000, the 50% stamp duty ex- counter the government expects the fiscal deficit to re- emption is extended to loan agreements inflationary threats duce to 3.6% in 2009. Overall, the govern- ment allocated RM207.9 billion for the 2009 affecting the people” The fund under the Housing Credit Guar- Budget, which is 5.1% higher than the re- antee Scheme (SJKP) will be increased vised allocation for 2008. to RM100 million from RM50 million. The scheme has been rolled out to all local financial institutions Other indirect taxes 13.1% To provide low cost housing, Syarikat Borrowings and Perumahan Negara Berhad will construct use of gov assets Income taxes 33,000 low cost houses and a sum of 14.4% 43.0% RM330 million is provided to Jabatan Export duties Perumahan Negara to complete 6,500 1.5% units under Program Perumahan Rakyat Import duties 1.1% The government will upgrade the terms Non-tax revenue & of housing loans for the civil servants ot her taxes 26.9% In view of the increasing fuel prices, there ^ Estimated Income has been pressing needs to improve the public transportation. Hence, the following has been proposed under the 2009 Budget: General “One of the key Security administration The services of RapidKL and Rapid- 2.0% 1.0% measures announced Social services Emolument Penang to be improved 8.6% 18.4% under the 2009 Budget Economic Debt service RM35 billion will be expended during is to improve the services charges 13.5% 6.5% the 2009 to 2014 to enhance the capacity public transportations, of existing rail services, build new rail which include Supplies & tracks, increase the number of buses, as Other services extension and new expenditures 12.9% well as better infrastructure facilities 14.7% LRT lines in Klang Pensions and gratuities Valley” Subsidies Grants & 3.5% The existing LRT system in the Klang 16.4% transfers to state govt Valley will be extended by 30 km, which 2.4% is 15 km each for the Kelana Jaya and Ampang lines.