MONTHLY NEWS SCAN

Tinjauan Berita Bulanan Compiled by IDS

Vol. 25 Issue 8 IDS Online http://www.ids.org.my 1 – 31 August 2020

HIGHLIGHTS unlike financial markets, economic Japan factory output up but retail FOCUS forecasters have yet to show any new sales down amid fragile Covid-19 wave of optimism about quelling the recovery: Japan’s factory output rose virus and business returning to • IMF says coronavirus may shrink in July at the fastest pace on record, global imbalances further in 2020 normal. Indeed, the latest Reuters poll driven by automobiles and car • China’s factory deflation eases in suggests that if the world’s largest parts, signaling a gradual recovery economy is to sustain its momentum, July from the blow delivered by the • Malaysia’s 17.1 pct GDP a second round of fiscal stimulus contraction in Q2, the worst so ahead of the upcoming presidential coronavirus pandemic. But retail sales far in ASEAN election to preserve jobs would be fell for a fifth straight month and at a • Shocks in oil and gas industry required. (21 August, Reuters) somewhat faster pace, a worrying sign weigh on financial performance for private consumption, which • RM15 mln spent on education aid Singapore factory output shrinks accounts for more than half of the program – CM 8.4% on further biomed declines: world’s third-largest economy. The • 180 juta untuk industry halal Factory output has racked up its third Sipitang data on Monday (Aug 31) straight month of contraction on the underscored the fragility of an back of further declines in the volatile INTERNATIONAL biomedical sector. Overall production economy that suffered a record 27.8 ANTARABANGSA fell 8.4 per cent in July from the same per cent contraction in the April-June month last year - a steeper drop than quarter as the pandemic took a heavy IMF says coronavirus may shrink the revised 6.5 per cent fall in June. toll on both domestic and external global imbalances further in 2020: Exclude biomedical manufacturing demand. (31 August, The Straits The International Monetary Fund said and the decline would be 5.2 per cent, Times) recently that global current account according to Economic Development imbalances narrowed in 2019 as trade Board (EDB) datapublished recently. German economy contracts by slowed, and the coronavirus could (27 August, The Straits Times) record 9.7% in Q2: The German narrow them further in 2020, but some economy contracted by a record 9.7 commodity exporters and tourism- US and China hold ‘constructive’ per cent in the second quarter from the dependent countries will swing to trade talks after delay: The US and current account deficits. The IMF’s China have held talks over their so- previous three months as consumer called “phase-one” trade deal after the spending, company investments and External Sector Report on currencies discussion was delayed earlier this and imbalances for the world’s 30 exports all collapsed at the height of month. Both sides saw progress and the Covid-19 pandemic, the statistics largest economies showed that net are committed to the agreement, the current account balances fell by 0.2 US Trade Representative said. office said recently. The economic percentage point to 2.9% of global Negotiations had been expected to slump was much stronger than during GDP. (5 August, Reuters) take place on 15 August but were the financial crisis more than a decade postponed by President Donald ago, and it represented the sharpest China’s factory deflation eases in Trump. In an election campaign decline since Germany began to July: China's factory deflation eased speech earlier this month, Mr Trump record quarterly gross domestic last month, driven by a rise in global said: “I don’t want to talk to China product calculations in 1970, the right now.” (25 August, BBC News) oil prices and as industrial activity office said. (26 August, The Straits climbed back towards pre-coronavirus Times) levels, adding to signs of recovery in UK worst hit among major the world's second-largest economy. economies: The UK was the hardest The producer price index fell 2.4 per hit by Covid-19 among major French business activity weaker cent from a year earlier, the National economies from April to June, the than expected in August: PMI: Bureau of Statistics said, compared Organisation for Economic Co- French business activity has lost more with a 2.5 per cent decline tipped in a operation and Development has said. momentum than expected in August, a Its economy suffered its biggest slump survey showed, as firms worked off Reuters poll of analysts and a 3 per on record over the three-month period cent drop in June. (11 August, The as coronavirus lockdown measures backlogs of work built-up during a Straits Times) pushed the country officially into coronavirus lockdown. Data compiler recession. Its 20.4% contraction was IHS Markit said its preliminary U.S. economic recovery outlook well above the 9.8% drop for the 37 purchasing managers index (PMI) fell steady even as Wall St touches OECD nations as a whole, the think to 51.7 points from 57.3 in July - far record: Reuters Poll: The U.S. tank said. Spain was the next worst below the average forecast for 57.2 in economy is recovering smartly from hit, with a decline of 18.5%. (26 a Reuters poll of economists. (21 the deepest recession on record, but August, BBC News) August, Reuters) 1 – 31 August 2020 MONTHLY NEWS SCAN (Tinjauan Berita Bulanan) 1 to US$8.83 billion,” it said. (28 overall weight, ” he said. (19 August, NATIONAL August, Bernama) The Star) NASIONAL Exports rise 3.1 pct, trade surplus Economic indicators show signs of Malaysia’s 17.1 pct GDP soars 57.5 pct in July 2020 – MITI: recovery, growth projected to contraction in Q2, the worst so far Malaysia’s exports in July 2020 improve – Mustapa: Malaysia's in ASEAN: The massive 17.1 per cent increased 3.1 per cent to RM92.53 economic growth is expected to gross domestic product (GDP) billion from that of July 2019, the improve in the second quarter of this contraction in the second quarter (Q2) highest export value ever recorded for year and recover next year, said 2020 has so far made Malaysia the the month of July, said the Minister in the Prime Minister's worst-performing economy in International Trade and Industry ASEAN. For Malaysia, the figure is Department (Economy) Datuk Seri Ministry (MITI). This was also the Mustapa Mohamed. He said even the worst double-digit quarterly second highest export value ever contraction since 1998, or about 22 though analysts generally opined that registered after RM97.12 billion the economic performance in the years, following the unprecedented posted in October 2018, it said, adding lockdown imposed to stem the spread second quarter would experience a that imports in July 2020 declined 8.7 contraction due to the COVID-19 of COVID-19. This has forced Bank per cent year-on-year (y-o-y) to Negara Malaysia (BNM) to revise impact, however the economic RM67.38 billion. “Trade surplus down the country's 2020 indicators issued by the Statistics expanded 57.5 per cent to RM25.15 GDP forecast to -3.5 to -5.5 per cent Department had shown signs of from -2 to 0.5 per cent previously, as billion from RM15.97 billion in July 2019, and was the highest monthly recovery in stages. In fact, this was the initial assumption was based on a supported by a better labour market in lockdown period of only four weeks trade surplus ever recorded,” it said in a recent statement . (28 August, June 2020 which registered an instead of seven weeks. BNM unemployment rate of 4.9 per cent, governor Datuk Nor Shamsiah Mohd Bernama) down 0.4 percentage points compared Yunus said the economy June 2020 trade up 2.2 pct as was expected to recover and post a with 5.3 per cent in May 2020. (10 movement restrictions gradually lift August, Bernama) growth of 5.5 per cent to 8.0 per cent – MITI: The gradual lifting of in 2021. (14 August, Bernama) movement restrictions due to COVID- Natural rubber exports up 14.2 pct Shocks in oil and gas industry weigh 19 in Malaysia has resulted in an in June 2020, says DOSM: Exports on financial performance: The oil improvement in total trade in June of Malaysia'a natural rubber increased and gas industry is experiencing 2020 to RM144.84 billion, up 2.2 per 14.2 per cent in June 2020 to 38,587 its third price collapse in 12 years but cent from June 2019. Deputy tonnes from 33,780 tonnes in May after the first two shocks, the industry International Trade and Industry 2020, according to the Department of rebounded and business continued as Minister Datuk Lim Ban Hong Statistics Malaysia (DOSM). The usual. This time it is different as the said his ministry has been actively main export destination was China current context combines a supply promoting the use of digital platforms, accounting for a 68.1 per cent shock with an unprecedented drop in exhibitions and business matching share, followed by Finland (4.2 per demand for the commodity and a that are increasingly relevant under cent), Germany (3.8 per cent), the global humanitarian crisis brought the new normal. “The Malaysian US (2.9 per cent) and Taiwan (2.7 per about by the COVID-19 government has relaxed the cent). “Rubber gloves are still the pandemic. Additionally, the sector’s regulations on entry of expatriates into financial and structural health is worse our country. Foreign professionals or main export item with export value than in previous crises. The advent of key management personnel holding increasing by 30.7 per cent from shale, excessive supply, and generous the Employment Pass Category One RM2.13 billion in May 2020 to financial markets that overlook the are allowed to enter the country but RM2.78 billion in June 2020,” chief limited capital discipline have all with strict compliance to the standard statistician Datuk Seri Dr Mohd Uzir contributed to poor returns. (31 operation procedures (SOPs) set by Mahidin said in a recent statement. August, Bernama) (10 August, Bernama) the Immigration Department and the Malaysia’s official reserves at Ministry of Health.” (15 August, Malaysia plans for next phase of US$104.21 bln as at end-July 2020: Bernama) economic empowerment: Tengku

Malaysia’s international reserves Zafrul: The government has begun remained usable as at end-July 2020, Malaysia’s inflation rate in July with official reserve assets at declines 1.3%: Malaysia’s inflation planning for the next phase of US$104.21 billion, in accordance rate in July fell 1.3% from a year ago economic empowerment which will with the International Monetary due to lower fuel prices and it was in be further elaborated in 2021 Budget, Fund’s Special Data Dissemination line with a Bloomberg forecast, but said Finance Minister Tengku Datuk Standard (IMF SDDS) format. In a from a month ago, inflation was seen Seri Zafrul Aziz. He said the statement, Bank Negara Malaysia picking up. Chief statistician Datuk government is confident that the (BNM) said other foreign currency Seri Mohd Uzir Mahidin said in a measures taken through Prihatin and assets amounted to US$911.5 million statement that the Consumer Price Penjana stimulus packages have as at end-July 2020. “For the next 12 Index (CPI) fell to 119.9 from 121.5 a demonstrated a positive impact on months, the pre-determined short- year ago. “The decrease in the overall recovery efforts. The teams from the term outflows of foreign currency index was attributed by the decline in Ministry of Finance continued the loans, securities and deposits, which transport (-10.3%); housing, water, Jelajah Belanjawan 2021 to Johor on include among others, scheduled electricity, gas and other fuels (- August 15-16 and to Pahang on repayment of external borrowings by 2.6%); clothing & footwear (-0.6%) August 25, to seek feedback on the the government and repayment arising and furnishings, household equipment economic recovery package initiatives from the maturity of foreign currency & routine household maintenance (- Bank Negara Interbank Bills, amount Prihatin and Penjana. (27 August, 0.1%) which contributed 45.7% to Business Times)

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RM10bil satellite town planned in RM7.23mil in grants to 505 young LOCAL Putatan: The district will have a 100- Sabah agropreneurs: Some 505 TEMPATAN acre shopping mall cum premier young agropreneurs in Sabah have outlets square with special received grants amounting to RM7.23 RM15 mln spent on education aid Commercial Free Trade Zone (FTZ) million via the Young Agropreneur program – CM: A total of RM15 status several years from now, part of Grant (GAM) between Jan 1, 2016 million has been spent on Yayasan a mega mixed development to be until May 31 this year, says Deputy Sabah’s One-Off Education developed at Dumpil Bay, along Kota Minister II of Agriculture and Food Assistance programme, said Kinabalu-Putatan-Lok Kawi Industries Datuk Che Abdullah Mat Caretaker Chief Minister Datuk Seri highway. The special Commercial Nawi. He said the government, Shafie Apdal. “Ever since we took FTZ status has been applied and at a through the Agriculture and Food over the governance and management final stage of approval by the Federal Industries, is willing to help young of Yayasan Sabah last year, a total of Government, said Datuk Seri Dr Arsit people venture into agriculture under RM15 million has been given to local the Young Agropreneur Programme students. Last year we spent RM10 Sedi who is Chairman of Setara Juara Sdn Bhd (SJSB), the developer, at a by providing grants, financing and million and this year we spent RM5 technical training. Between Jan 1, press conference.. He said the said million,” Shafie told reporters after 2016 and June 30 this year, 6,063 officiating the presentation ceremony shopping mall and premier outlets young agropreneurs nationwide had at Wisma Tun Mustapha recently. square are part of the mixed been approved under the programme Some 3,600 students benefitted from development which would also involving an allocation of RM108.29 this year’s programme, an initiative consist of tourism, commercial, million. (17 August, Daily Express) that was launched by Shafie on international second home, hotels, September 21, 2018. (28 August, The Airbnb, recreation and theme park to 4,400 units of PPR under Borneo Post) be developed on 250 acres at an construction in Sabah: Seven overall cost of over RM10 billion. (12 projects involving 4,400 units of 180 juta untuk industry halal August, Daily Express) Projek Perumahan Rakyat (PPR) are Sipitang: Daerah Sipitang bakal under construction in Sabah, the menjadi pengeluar utama makanan RM10m for damaged Sepulut- Dewan Rakyat was toldrecently. segar dan kering terbesar di Sabah Pensiangan stretch, bridges: Deputy Housing and Local sebaik sahaja projek Sipitang Halal Caretaker Infrastructure Development Government Minister Datuk Seri Dr Agro Plantation Ekonomic Minister Datuk Peter Anthony Development (SHAPE) yang menelan Ismail Abd Mutalib said the projects belanja RM180 juta akan approved RM10 million for the are PPR Ulu Perasan (900 units), Kota dilaksanakan sebelum akhir tahun ini maintenance of the 37-kilometre Belud; PPR Sapagaya (410) and PPR di Kampung Iburu, di sini. Seluas damaged Sepulut-Pensiangan stretch Tungku (650), Lahad Datu; PPR Pitas 2,798 hektar tanah telah diwartakan as well as damaged bridges. The (440), Kudat; PPR Kampung untuk projek itu yang akan allocation which will also be included Kiansom Besar (1,000), Inanam; PPR dilaksanakan oleh Lembaga in the Twelfth Malaysia Plan (12MP), Tagasan (500), Semporna; and PPR Kemajuan Tanah Negeri Sabah was announced by Peter during his Gayang 2 (500), Tuaran. He said two (LKTNS) selain turut menawarkan official visit recently and the damaged other housing programmes — Rumah lebih 4,000 peluang pekerjaan kepada road and bridges are currently under Mampu Milik (RMM) and Rumah warga tempatan. Bekas Menteri maintenance. Parti Warisan Mesra Rakyat (RMR) — were being Pelajaran dan Inovasi Negeri, Datuk committee member Jekerison Kilan implemented in Sabah by Syarikat Dr Yusof Yacob memberitahu, said the damaged and muddy road as Perumahan Negara Berhad (SPNB). SHAPE merangkumi pembinaan (26 August, The Borneo Post) well as damaged bridges caught the kilang pemprosesan, pusat attention of Peter who immediately 4G coverage in Kiulu undergoing penyelidikan agro, ternakan lembu instructed the contractor concerned to active expansion: The government tenusu dan kambing bersekala besar, repair the road. (10 August, Daily through the Malaysian selain turut membuka ladang durian, Express) Communications and Multimedia kelapa, halia, nenas dan kopi. (26 Commission (MCMC) is actively Ogos, Utusan Borneo) Finas revamp to improve Sabah expanding 4G coverage in Kiulu

functions: The National Film which used to have only spotty radio Helping rural youths get boat operating permit: The State Youth Development Corporation Malaysia coverage with 3G network. In a recent and Sport Ministry will work with the (Finas) is undergoing a revamp to statement, MCMC said efforts are relevant departments to ensure youths further improve its functions and being carried out in six main locations in rural and riverside areas get a boat services, especially in Sabah. Finas in Kiulu namely Pukak, Lokub, licence to improve their livelihood, Chairman Zakaria Abdul Hamid said Mantob, Kitapol, Kampung Sinorut said an official. Permanent Secretary the initiative would broaden its roles and Kampung Gonipis, and the to the Ministry Yusrie Abdullah said in the State. “We took note of the expansion would increase high-speed youths, the main assets for the state’s functions of Finas in Sabah where, 4G data coverage as well as audio development, should gain more skills. previously, they only involved service. “This process involves fibre “A boat engine operating licence is a licensing and enforcement,” he said optics connection to all transmitter necessity and the ministry wants during a get-together with local film towers in the locations, involving youths in the state to benefit from and music industry players at the almost 39 kilometre-long fibre optic various government programmes to National Culture and Arts Department cables and the project is expected to reduce unemployment and help rural auditorium, here (Kota Kinabalu), complete by end of this year,” it said. youths get jobs,” he said. (15 August, recently. (8 August, Daily Express) (19 August, The Borneo Post) Daily Express)

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SELECTED FACTS AND FIGURES FAKTA MUTAKHIR

Malaysia’s Economic Performance, Second Quarter 2020

(Source: 14 August, Department of Statistics Malaysia)

Malaysia’s Monthly Rubber Statistics, June 2020

(Source: 10 August, Department of Statistics Malaysia)

Malaysia’s Quarterly Balance of Payments, Second Quarter 2020

(Source: 14 August, Department of Statistics Malaysia)

1 – 31 August 2020 MONTHLY NEWS SCAN (Tinjauan Berita Bulanan) 4 Malaysia’s Producer Price Index, July 2020

Table 1: Producer Price Index (2010=100) Local Production by Sector (MSIC 2008), Malaysia:

(Source: 27 August, Department of Statistics Malaysia)

Malaysia’s Consumer Price Index, July 2020

Chart 1: Percentage Change of Consumer Price Index by Main Group:

(Source: 18 August, Department of Statistics Malaysia)

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