Bank Negara Malaysia (BNM) has raised the overnight policy rate (OPR) by 25 basis points (bps) to 2.75%, its fourth consecutive rate hike since May.

BNM said the OPR hike, which increases the cost of borrowing, was needed to control inflationary pressures amid the country’s strengthening economy.

In May, the central bank raised the OPR to 2% from 1.75%, reportedly the lowest on record, following a 25 bps cut in July 2020. It raised the OPR by another 25 bps to 2.25% in July and hiked it up by another 25 basis points (bps) to 2.50% in September.

In a statement, BNM said that inflationary pressures were “more persistent than expected” due to strong demand, tight labour markets, and elevated commodity prices, despite improvements in global supply chain conditions.

BNM said the adjustment would also pre-emptively manage the risk of excessive demand on price pressures.

Source: FreeMalaysiaToday.com

Penang expects to welcome more manufacturers to relocate to the state next year, said special investment advisor to Penang chief minister, Datuk Seri Lee Kah Choon.

He said the relocations will boost the state’s economic growth, thanks to its business-ready infrastructure.

“It is safer for the companies to relocate their facilities here as the state and Malaysia, in general, are considered green zones.

“Taiwan, for example, is a red zone country with earthquakes and typhoons. Malaysia is a much safer place, and plus, we already have the supply chain, so this could be the wild card for us,” he told Bernama after officiating at the opening of NI Malaysia Sdn Bhd’s new supply chain distribution hub on Tuesday.

Lee said the state has started receiving inquiries from foreign companies currently based in China to relocate here due to the ongoing US-China tussle.

Nevertheless, he cautioned that manufacturers should expect business to be a little quiet in 2023, in line with the global market expectations, taking into account a possible recession.

When asked about Penang’s July-December 2022 approved manufacturing investments, Lee predicted the state would register the same amount as in the first half of the year, making a return to the pre-pandemic level.

Earlier, Lee was reading the speech by Penang Chief Minister Chow Kon Yeow, who has been confirmed positive for Covid-19.

In his speech, Chow said Penang topped the nation’s list in 2021 with an all-time high export value of RM354 billion, with electrical and electronics products and medical devices making up about 80% of the state’s total exports.

“Penang was among the top contributors to the country from January to June 2022, with RM7.9 billion in approved manufacturing investments.

“In January to August 2022, Penang’s export value climbed 30% year-on-year to RM291 billion, representing 29% of the country’s total.

“And, it lately led the nation’s list once again with a total of RM14.4 billion or 33.2% of the nation’s total exports in September 2022,” said the chief minister.

Meanwhile, NI managing director Selvam Chinappan said the completion of its Penang distribution hub will play a critical role in strengthening the company’s global footprint.

“The facility will also serve as a global distribution centre for its software-connected automated test and automated measurement systems.

“When fully operational, the facility will further enable NI’s growth for products related to Industry 4.0 Megatrend applications, including Internet of Things, [5G], and Automotive (Advanced Driver Assist Systems and Autonomous Driving) technology,” he said.

NI Penang’s new wing is part of the broad-based expansion plan that NI announced in 2019, which includes US$40 million (RM189.45 million) in capital investment and the creation of 250 new jobs across research and development, manufacturing, and sales capabilities.

Commenting on the launch of NI’s new global supply chain distribution hub, Malaysian Investment Development Authority (Mida) chief executive officer Datuk Wira Arham Abdul Rahman said moving forward, Mida plans to push for even greater productivity and sustainability outcomes.

“We want to create higher-skilled jobs that command higher wages, guided by the National Investment Aspirations,” he said.

NI is an American multinational company that produces automated test equipment and virtual instrumentation software and began its operations in Penang in 2009.

Source: TheEdgeMarkets.com

Bank Negara Malaysia (BNM) will tighten the overnight policy rate (OPR) by a quarter-point for the fourth time in a row on Thursday (Nov 3) as upside risk to inflation persists and to support a weakening ringgit, a Reuters poll showed.

The central bank started raising rates in May, even though inflation was within its target range of 2% to 3%. It has since hiked rates by 75 basis points to keep inflation in check.

In September, inflation fell marginally to 4.5%, from 4.7% in August, but robust domestic demand and an accommodative budget pose a risk, and economists said all-time high core inflation in September indicated that it was sticky.

All but two of 27 economists in the Oct 25 to 31 poll predicted that BNM would hike the OPR by 25 basis points to 2.75%, from 2.50%, in the meeting on Thursday.

“The direction of fiscal policy measures in 2023 is still unclear,” noted Sanjay Mathur, ANZ’s chief economist in Southeast Asia and India.

“Besides, the odds of the US Federal Reserve delivering another 75-basis-point hike in November have also risen. This does not bode well for the ringgit, especially when international reserves are also on a steady path of decline.”

The local currency has fallen around 12% this year.

Two economists at Barclays and UOB respectively expect BNM to pause in the meeting, given a weakening global outlook, and to assess the effect of cumulative hikes.

Nearly 90% of economists forecast that BNM will raise the OPR in the first quarter of 2023 (1Q2023), including the two economists calling for a pause in November, giving a median forecast of 3%.

While 13 of 18 pencilled in a 25-basis-point hike in 1Q2023, three said 50 basis points. Two economists predicted no move.

The median forecast showed that the OPR would remain at 3% until at least the end of next year. However, beyond 1Q2023, seven economists expect rates to go up at some point in 2023.

“As core inflation gains momentum, we continue to expect BNM to hike policy rates in consecutive meetings (25 basis points per meeting) through the first half of next year, bringing the OPR up to 3.5%, from 2.5% currently,” analysts at Goldman Sachs said.

“The evolution of subsidy policy after the election remains a key risk. A faster shift to targeted fuel subsidies may imply higher inflation pressures, and more hawkish BNM policy outcomes than in our baseline forecasts.”

The Malaysian economy grew by 8.9% in 2Q2022, its fastest expansion in a year, mostly driven by domestic demand and resilient exports, although the momentum is unlikely to be sustained.

“Economic growth is likely to weaken considerably over the coming quarters, as the boost from the reopening fades, and weaker external demand drags on exports,” Gareth Leather, a senior Asian economist at Capital Economics, said.

Source: TheEdgeMarkets.com

Through the Penang Development Corporation (PDC), the Penang government is working on enhancing investors’ experience at the state’s industrial parks.

Meetings and discussions between PDC, local authorities, state legal advisor and the Penang Land and Mines Office are now ongoing to study the idea of establishing the ‘Industrial Park Management Council’.

State Entrepreneurial Development, Trade, and Industry Committee chairman Datuk Abdul Halim Hussain said the industry players in Penang had voiced the effectiveness of the current industrial park management model and proposed the setting up of a special council to oversee the management of existing and new industrial parks in Penang.

Meanwhile, PDC chief executive officer Datuk Aziz Bakar said PDC is finalising the papers and would be tabling them in the state executive council meeting when they are ready.

“We hope to complete them by early next year. The proposed ‘Industrial Park Management Council’ could be tasked to manage issues happening in the industrial parks, such as traffic and infrastructure,” he said during the fourth Penang Socio-Economic Recovery Consultative Council (PSERCC) meeting in Komtar yesterday.

Chief Minister Chow Kon Yeow stressed the importance of enhancing the experience of investors to continue growing the state.

“The industry is a major lifeline for Penang,” he said.

Chow said Penang had recorded the highest Gross Domestic Product (GDP) growth compared with other states in 2021.

“If a comparison is made between the period before and after the Covid-19 pandemic, the state’s GDP per capita increased by 6% in 2021 – from RM55,202 per person in 2019 to RM58,527 per person in 2021.

“We will ensure that this excellence can be continued through the implementation of various projects and programmes per the people’s interest, especially in the current endemic phase,” Chow said.

Source: Buletin Mutiara

About The Zen

A mixed development by Asia Green at Bayan Mutiara. It is located next to Tun Dr. Lim Chong Eu Expressway, just a short drive away from the ongoing Penang World City township development by Tropicana Ivory. This development comprises a 46-storey skyscraper with two residential towers, and shop offices located at lower level. The residential component will feature 1,200 affordable units and 730 bigger open market units.

Find out more about The Zen development