MONTHLY NEWS SCAN

Tinjauan Berita Bulanan Compiled by IDS

Vol. 24 Issue 9 IDS Online http://www.ids.org.my 1 – 30 September 2019

HIGHLIGHTS to media reports. (26 September. a 0.5% drop. Manufacturers surveyed FOCUS BBC News) by the Ministry of Economy, Trade and Industry expect output to rise • France and Germany united on Eurozone gets fresh help to bolster 1.9% in September and decline 0.5% strategy to fight global flagging growth: The European in October, the data showed. (30 slowdown: French minister Central Bank has unveiled fresh September, Reuters) • US and Japan agree initial trade stimulus measures to bolster the deal focusing on agriculture eurozone, including cutting a key South Korea inflation expectations • Miti: M’sia committed to working interest rate. The deposit facility rate, fall, raise chance of rate cut: South with the US for mutual benefits paid by banks on reserves parked at Korean consumers’ inflation • Fitch Research sees FDI into the ECB, was already negative, but expectations fell to the lowest on Malaysia picking up has now been cut from minus 0.4% to record, a survey from the Bank of • Franchise sector is growing in minus 0.5%. The ECB also said it Korea (BOK) showed, bolstering the was re-starting quantitative easing. It chances for another rate cut in will buy €20bn of debt a month from October. Consumers’ median • RM20m for Sabah Pantas 1 November. The eurozone’s main inflation expectations for the next 12 programme interest rate has remained unchanged months fell to 1.8% in September, at zero. (12 September, BBC News) down from 2.0% in August and the INTERNATIONAL lowest since the data was first ANTARABANGSA Cooling U.S. consumer spending released in February 2002. The underscores risks to economy: U.S. nation’s consumer price index was France and Germany united on consumer spending barely rose in unchanged in August from a year strategy to fight global slowdown: August and business investment earlier, the weakest pace since the French minister: France and remained subdued amid lingering country began releasing inflation data Germany agreed on a joint strategy to trade tensions, prompting economists in 1965 and far below the central respond to a global economic to slash their economic growth bank’s 2% target and annual forecast slowdown at a time of international estimates for the third quarter. The of 0.7%. (26 September, Reuters) trade tensions, French Finance reports from the Commerce Minister Bruno Le Maire said in a Department, however, likely do not China plans to step up efforts to lift statement. In a news conference signal a recession looming as economy -central bank: China plans alongside Germany’s Finance and consumer spending remains to step up economic adjustments to Economy Ministers, Le Maire said supported by solid income growth, counter its slowing economy while the strategy was based on three thanks to the lowest unemployment providing adequate liquidity in the pillars: “Reducing public debt where rate in nearly 50 years and a huge economy, said the central bank. The it is necessary. And it is the case in savings buffer. (27 September, United States and China have been France; Pursuing structural reforms, Reuters) locked in an escalating trade war for as we are doing in France; Having more than a year, which has hit budget policies that can take up the Russia seen cutting rate further in China’s already slowing economic baton from monetary policy.” (19 2019 as inflation slows: Reuters growth. The statement was posted on September, Reuters) poll: Russia is expected to cut the official Twitter-like Weibo interest rates further this year amid account of the Peoples’ Bank of US and Japan agree initial trade slowing inflation and sluggish China. (29 September, Reuters) deal focusing on agriculture: The economic growth, a monthly Reuters US and Japan have agreed an initial poll showed. The central bank is seen UK growth rebound eases trade deal that will eliminate or lower cutting its key interest rate to 6.75% in the fourth quarter of 2019, recession fears: The UK’s economy tariffs on certain products traded grew faster than expected in July, between them. Duties on some according to a consensus forecast of 20 analysts and economist polled in easing fears that it could fall into agricultural goods will be removed or late September. The previous poll recession. The economy grew 0.3% lowered, while digital products will published in late August predicted in July, the UK’s official statistics also benefit. US President Donald that the central bank would lower the body said, helped by the dominant Trump said the world's first and third key rate to 6.75% only in the first services sector. Growth was flat over largest economies achieved a quarter of 2020. (30 September, the three months to July, but this was “tremendous” deal. The trade Reuters) an improvement on the 0.2% agreement did not mention car tariffs contraction seen in the April-to-June of up to 25%, which were previously Japan August factory output falls quarter. This contraction, coupled threatened by the US. But Japanese 1.2% month/month: Japan’s with some weak business surveys, Prime Minister Shinzo Abe said he industrial output fell 1.2% in August, raised concerns the UK was heading had received assurances that no such government data showed, coming in for recession. (9 September, BBC tariffs would be imposed, according below the median market forecast for News) 1 – 30 September 2019 MONTHLY NEWS SCAN (Tinjauan Berita Bulanan) 1 weakness in new orders. (4 Inflation set to trend low at below NATIONAL September, ) 1.0 pct -- MIDF Research: Inflation NASIONAL is forecast to return to a low level of Report: Malaysia to cut interest below one per cent in upcoming Miti: M’sia committed to working rate in Dec: Malaysia’s export months as the lower base effect with the US for mutual benefits: momentum has outperformed in resulting from the tax holiday period Malaysia is committed to continue South-East Asia, according to the last year is coming to an end. working with global economies for Institute of Chartered Accountants in According to MIDF Research, the mutual benefits, including with the England and Wales’ (ICAEW) latest fixed petrol price for RON95 at United States (US) of which we have Economic Update: South-East Asia RM2.08 will also continue to put a had over six decades of strong report. The momentum it said, downward pressure on the overall relationship in terms of trade and reflected a more modest deceleration inflation, especially that of transport. investment, said the Ministry of in export growth and resilient “Even with the removal of RON95 International Trade and Industry domestic demand, comparing the price cap, the prices are expected to (Miti) in a statement. Miti said that be on the low side in line with global growth of trade-dependent economies Malaysia’s bilateral trade with the US crude oil prices which are affected by grew by 1.2% in 2018 to such as Singapore, Thailand and the multiple headwinds,” it said in a RM155.76bil. This constitutes 8.3% Philippines which have seen slower research note today. (25 September, of Malaysia’s total trade in that same momentum in the second quarter of Bernama) year. Miti said that exports to the US 2019. “However, despite the have increased by 2.4% to outperformance of the Malaysian Malaysia’s timber products export RM90.81bil – the highest recorded economy to date, Bank Negara is hits RM12.5 billion: Malaysia has since 2008. (20 September, The Star) expected to lower interest rates by 25 exported about RM12.5 billion worth basis points (bp) in December, with a of timber products between January Fitch Research sees FDI into further 25 basis points cut in the first and July this year, said Malaysian Malaysia picking up: Fitch quarter of 2020. (24 September, The Timber Industry Board (MTIB) Solutions Macro Research expects Star) director-general, Mohd Kheiruddin foreign direct investment (FDI) into Mohd Rani. Among the high value- Malaysia to likely to continue picking Malaysia’s labour force added products exported were wood up over the coming quarters and participation rate falls to 68.5% in chips (RM512.3 million) and wooden continue decreasing Malaysia’s July: The labour force participation frames (RM75.1 million). “MTIB is vulnerability to outflows. In its rate in Malaysia dropped 0.1 confident that timber product exports outlook report on the Malaysian percentage point to 68.5% in July as will continue to increase following economy, it said this view was firstly compared to the previous month, said the high demand for the products in supported by Malaysia’s successful the Department of Statistics the global market, backed by the renegotiation and resumption of the Malaysia. Similarly, the labour force rapid growth of the construction RM44bil East Coast Rail Link and participation was 0.1 percentage industry in the respective importing other China-backed projects would point lower from July 2018.Chief countries,” he told reporters after the likely to bring more direct investment statistician Datuk Sri Mohd Uzir closing of the Wood-based into the country. Fitch Research said Mahidin reported that the labour Furniture and Lifestyle Exhibition.. there was further upside risk from the (28 September, Bernama) possibility of other projects being force in July rose 2% against July 2018 to 15.7 million persons. He resumed, such as the - M’sia likely to turn more inward to Singapore High Speed Rail, added that employed persons also increased 2% to 15.18 million hold up economic growth – RHB: especially if the government manages Malaysia is likely to turn more to decrease its high public debt load persons over the same month. (13 September, The Star) inward to hold up economic growth, to what it deems a sustainable level. says RHB Research. It said the

(19 September, The Star) government may look to shore up PPI for local production falls 1.9 spending for the fiscal Budget 2020. July’s export performance further pct in August 2019: The Producer “The government has indicated that it evidence of trade diversion – UOB: Price Index (PPI) for local production is unlikely to introduce new tax Malaysia’s exports in July 2019 are decreased 1.9 per cent in August measures for Budget 2020 and we further evidence of trade diversion 2019 compared with the same month think the budget would likely be amid higher exports of electrical and of the preceding year, said Chief more expansionary to counter the electronics (E&E) products and pick- Statistician Malaysia Datuk Seri Dr effects of the trade war and the fiscal up in exports to the US and China, Mohd Uzir Mahidin. He said in a deficit may come in at -3.20 per cent said United Overseas Bank statement, out of 1,063 items covered of gross domestic product (GDP) (Malaysia) Bhd (UOB Malaysia). in the PPI, 39.5 per cent items versus the medium-term target of Malaysia’s exports in July 2019 showed an increase in August 2019 3.00 per cent," the research house registered an increase of 1.7 per cent compared to last year, while 38.7 per said in a note today. It expects the to RM88.0 billion year-on-year (y-o- cent items showed a decline with country’s economic growth to hold y). Its senior economist Julia Goh, 21.8 per cent items unchanged. The up, albeit moderating to 4.3 per cent however, said the overall impact of mining index declined 10.9 per cent, for 2020 compared to an estimated of deteriorating US-China relations followed by the water supply (-2.6 4.5 per cent this year as weak global remains negative and is evident from per cent), manufacturing (-1.0 per demand amid the protracted US- weaker import demand as well as China trade tension will likely weigh August’s manufacturing Purchasing cent) and agriculture, forestry and fishing (-0.9 per cent) indices, he on the country’s exports. (27 Managers’ Index, which fell for the September, Bernama) fourth month with sustained said. (30 September, Bernama) 1 – 30 September 2019 MONTHLY NEWS SCAN (Tinjauan Berita Bulanan) 2

interactions will be to our mutual Sabah aiming for more Chinese LOCAL benefits,” he stressed. (24 September, investors: The State Government is The Borneo Post) aiming for more Chinese investors to TEMPATAN boost the State’s economic Franchise sector is growing in RM78 million to repair dilapidated development. Chief Minister Datuk Sabah: State Trade and Industry schools in Sabah – Lim: The Seri Mohd said being Assistant Minister Azhar Datuk Federal Government has approved an rich in natural resources, there is Matussin said the franchise industry allocation of RM78 million for Sabah great potential for the state to be in Sabah is growing, as evidenced by to carry out repair works on 30 old developed further. “We always the increasing number of franchise and dilapidated schools in the state. welcome Chinese investors to come outlets emerging in the market. “This Finance Minister said and invest in the state and build their positive scenario is beneficial to the yesterday that the funding was for factories in Sabah. “This not only country as it also stimulates the this year. He also said that they have gives returns for investors and the domestic economy,” he said, when adopted a new formula whereby the government but will also create jobs launching the BizFranchise Program Sabah government will have an for the local people especially the 2019 at The Klagan Regency, Kota active role in monitoring the work younger generation, he said adding KInabalu. He said the development status of the schools that are being that the investors can also bring in of the nation’s franchise industry can repaired or replaced with a new one. new advanced technologies to the be interpreted with its contribution of He said that this was to avoid being state. We will do our best to provide RM30.3 billion to the country’s GDP informed that the repair works have the investors with the many facets in 2018, which is an 8.5 per cent already been done, but in reality, it is needed to make them feel increase from its previous otherwise. (18 September, The comfortable in the state,” he said in contribution of RM27.7 billion in Borneo Post) his speech at the 70th Anniversary 2017. “In light of these statistics, I celebrations of the Peoples Republic of China. (29 September, Daily hope more franchise businesses can RM2.6m boost for Tenom farmers: be opened in Sabah. (21 September, Express) Agriculture and Agro-based Industry Daily Express) Minister Dato’ Sabah agriculture blueprint to help congratulated the Tenom community boost rubber tappers income: The RM20m for Sabah Pantas on the opening of the new Area programme: The Federal plight of Sabah rubber tappers whose Farmers Association (PPK) office returns have hit rock bottom will be Government has approved RM20 that cost about RM2.6 million. The million for the implementation of the addressed by the government. The building was built starting Aug 1, government will help them when the Sabah Native Land Services (Pantas) 2016 on a 0.463acre lot and was fully programme this year, said State Land Sabah blueprint on agriculture is completed by Mar 31, last year. unveiled soon, said Infrastructure Survey Department Director Datuk Salahuddin said the completed Safar Untong. He said the Development Minister Datuk Peter building is a landmark for successful Anthony. Peter, who has been programme, introduced in 2012, had entrepreneurs in the field of been implemented in 21 districts, besieged for assistance from rubber agricultural pathways. He said that tappers in his constituency, said that involving 141 villages. “During that his Ministry would have no problem period, 20,948 land lots covering the agriculture blueprint would have providing subsidised fertiliser for hill 36,048.344 hectares had been a comprehensive plan to strengthen surveyed, with 6,335 draft grants rice fields to farmers and paddy Sabah agriculture sector. “The issued,” he said at the launch of the farmers this season. (18 September, concerns of the rubber tappers will be Pantas programme in Kampung Kiau Daily Express) taken into account in the blueprint,” Taburi, here (Kota Belud). It was he said in calling for patience among launched by Sabah Rural Plan to turn KK into a film-making the tappers. (30 September, New Development Minister Datuk Ewon hub: Deputy Chief Minister cum Sabah Times) Benedick, who is also Kedamaian Tourism, Culture and Environment Assemblyman. (16 September, Daily Minister Datuk RM238.5 juta peruntukan projek reiterated her commitment to further dalam perancangan KKM di Express) Sabah: Kerajaan memperuntukkan develop the local film industry. She said it is part of the State RM238.5 juta untuk menampung kos Tangau promotes Sabah as semua projek pembinaan dan naik- investment hub in Nanning: Sabah Government’s plan to turn the city taraf fasiliti kesihatan yang berada has what it takes to become an into a filmmaking hub. “I have dalam perancangan untuk Sabah. investment hub in the region, said identified certain land and talked to Menteri Kesihatan Malaysia Datuk Deputy Chief Minister Datuk Seri several filmmaking companies, both Seri Dr berkata, Panglima . local and international, who dropped terdapat 14 projek Kementerian “We have all the requisite ingredients by at my office to discuss the Kesihatan Malaysia (KKM) yang for your investment to succeed? A possibility of putting our efforts berada dalam perancangan di negeri strategic geographic location, access together to make Kota Kinabalu a ini. “Projek-projek itu merangkumi to raw materials, supporting hub for film production in the lapan fasiliti baharu seperti infrastructure and facilities and a future,” she said during the closing pembinaan Klinik Kesihatan (KK) proactive government. “Let me night of the 10th Kota Kinabalu dan kuarters serta enam projek naik- taraf,” katanya. Dzulkefly berkata, assure you that the Sabah International Film Festival’s (KKIFF) lapan projek pembinaan fasiliti Government is always open to new Cinebalu, here (Kota Kinabalu). baharu itu melibatkan projek KK business ideas and proposals. We “Sabah has what it takes to emerge as Langkon (Jenis 6) Kota Marudu stand ready to facilitate your a ‘home’ of the film industry in the dengan proses tendernya dijangka investment interest and would do our not too distant future.” (16 dibuka pada 2020. (28 September, level best to ensure that all business September, Daily Express) Utusan Borneo)

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SELECTED FACTS AND FIGURES FAKTA MUTAKHIR

Malaysia’s GDP in Real & Nominal Terms Between 2015-2018

(Source: 21 September, The Star)

Malaysia’s Economic Indicators: Leading, Coincident & lagging Indexes, July 2019

(Source: 25 September, Department of Statistics Malaysia)

Malaysia’s Monthly Rubber Statistics, July 2019

(Source: 13 September, Department of Statistics Malaysia) 1 – 30 September 2019 MONTHLY NEWS SCAN (Tinjauan Berita Bulanan) 4

Malaysia’s Producer Price Index, August 2019

(Source: 30 September, Department of Statistics Malaysia)

Malaysia’s Consumer Price Index, August 2019

(Source: 25 September, Department of Statistics Malaysia)

1 – 30 September 2019 MONTHLY NEWS SCAN (Tinjauan Berita Bulanan) 5