The monetary policy committee (MPC) of Bank Negara Malaysia announced today that it has raised the overnight policy rate (OPR) by 25 basis points, raising it to 2.25%.

This came amid rising food and energy prices.

“The ceiling and floor rates of the corridor of the OPR are correspondingly increased to 2.5% and 2%, respectively,” it said in a statement.

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, citing the severity of the global economic slowdown as a result of the pandemic and the contraction of Malaysia’s economic activity.

In a statement issued after the MPC meeting today, BNM noted that the reopening of the global economy and the improvement in labour market conditions continued to support the recovery of economic activity.

“However, these have been partly offset by the impact from rising cost pressures, the military conflict in Ukraine and strict containment measures in China,” it said.

The central bank noted that inflationary pressures have continued to increase mainly due to elevated commodity prices and strong demand conditions, despite some easing in global supply chain conditions.

Consequently, it expects central banks to continue adjusting their monetary policy settings, some at a faster pace, to reduce inflationary pressures.

“Going forward, the pace of global growth is expected to moderate, and will continue to be affected by the elevated cost,” BNM added.

BNM noted that in Malaysia, economic activity has strengthened in recent months as reflected in the growth momentum in exports and retail spending as the nation makes the transition into endemicity.

It said the unemployment rate also declined with higher labour participation and improving income prospects.

“Looking ahead, while external demand is expected to moderate, weighed down by headwinds to global growth, economic growth will be supported by firm domestic demand,” it added.

Year-to-date, inflation averaged 2.4% and it is project to be within the 2.2% to 3.2% range for the year but the headline inflation may be higher in some months due mainly to the base effect from electricity prices.

“Nevertheless, the extent of upward pressures on inflation will remain partly contained by existing price controls, fuel subsidies and the continued spare capacity in the economy,” it explained.

Moving forward, the committee said, the inflation outlook would hinge on global commodity price developments, mainly due to the conflict in Ukraine and prolonged supply related disruptions, as well as domestic policy measures.

“On the back of the positive growth prospects for the Malaysian economy, the MPC decided to further adjust the degree of monetary accommodation,” the statement said.

BNM also pointed out that the reopening of international borders on April 1, 2022 would facilitate the recovery of the tourism sector while investment activities and prospects would continue with the realisation of multi-year projects.

It cited a weaker-than-expected global growth, further escalation of geopolitical conflicts, and worsening supply chain disruptions as key downside risks to growth.

It said that at the current OPR level, the stance of the monetary policy would remain accommodative and supportive of economic growth.

Source: FreeMalaysiaToday.com

The Penang Waterfront Convention Centre (PWCC), which is set to be the largest convention centre in the state, will act as a catalyst for more events to take place in the state after its scheduled completion in the first quarter of 2025.

Chief Minister Chow Kon Yeow, who was present to inspect the work’s progress of The Light City project, expects the PWCC, measuring about 76,000sq ft, to be a key venue attraction for major events.

“We welcome the construction of PWCC to accommodate more huge events to take place in Penang as more business visitors will visit the state.

“Of course, we have the Setia SPICE Convention Centre in Bayan Lepas to cater to various events, but a bigger convention facility is needed as an alternative.

“The conclusion of the prestigious SEMICON Southeast Asia (SEA) 2022 in Setia SPICE Arena and Convention Centre last month has proven that a larger facility will be a boost for us.

“This is to ensure that more events can take place in Penang, rather than they are held in our neighbouring countries.

“We look forward to PWCC’s completion,” he said in his speech after visiting the project site this evening.

The ongoing construction works of The Light City project, which is located next to the Penang Bridge, is developed by IJM Perennial Development Sdn Bhd (IJMPD).

The shopping-centre component of the mixed development will feature a variety of retail tenants.

The RM4.5bil mammoth mixed development project has two phases. The first phase includes The Waterfront Shoppes, PWCC, hotel & office tower and Mezzo residences, while the second phase comprises The Waterfront Shoppes, Commercial Tower (future development) and Essence residences.

Both phases are expected to be completed in the first quarter of 2025.

IJMPD general manager Tan Hun Beng, who briefed Chow and the media personnel earlier on the project, noted the state’s needs to have a bigger convention hall to cater to more huge events.

“We will do our best to speed up the construction’s progress to ensure PWCC can be completed soon.

“It is our hope to assist the state in bringing in more exhibitions and conferences,” he said.

Also present was IJMPD director Datuk Toh Chin Leong.

Source: Buletin Mutiara

Tenaga Nasional Bhd (TNB) is investing RM500mil to strengthen the electricity supply in Penang.

In a statement published two weeks ago, TNB said the project would bring a direct connection of electricity supply from the national grid to Penang through overhead line transmission from the mainland to maintain the island’s electricity supply.

“The 8.5km monopole transmission tower project, connecting the Perai Power Station (SJ) Main Inlet Substation (PMU) to the Light PMU in Penang, was built in parallel with the Penang Bridge and is the second of its kind in Malaysia,” TNB said.

TNB chief grid officer Datuk Ir. Husaini Husin said the project, expected to be completed by the end of 2024, will be an iconic landmark of Penang due to the unique transmission line tower with a betel nut design.

He added the project would ensure that the capacity of the existing supply system is not affected when the only power station on the island, SJ Gelugor with a generating capacity of 300 megawatts (MW), is scheduled to end its service contract at the end of 2024.

“Peak load demand on the island recorded in January 2020 reached 777.85MW compared to the existing supply system capacity (firm capacity) of 1,130MW. We want to ensure this capacity is stable when SJ Gelugor ends its service,” Husaini said.

The first TNB’s monopoly overhead line project has been completed along 4.2km connecting Pantai Siring to Pulau Besar Melaka; the land survey work for the second project is being carried out in the sea area near the Penang Bridge.

Husaini said the project is part of TNB’s ongoing investment in developing and modernising the national grid into a stable and reliable smart grid in meeting the country’s energy transition needs.

“The reinvestment from TNB’s business results is a two-pronged approach, namely ensuring the efficiency and reliability of the electricity supply network for customers to enjoy, as well as creating activities that inject into the country’s economic recovery, especially in a post-Covid-19 pandemic,” he added.

Source: TheStar.com.my

Malaysia’s central bank will raise rates by 25 basis points on Wednesday, its first consecutive rise in more than a decade, to rein in inflation stemming in part from a weaker ringgit as the US Federal Reserve hikes aggressively, a Reuters poll found.

Bank Negara Malaysia (BNM), although dealing with low inflation compared with many other economies, unexpectedly raised its key overnight policy rate by 25 basis points to 2.00% at its May meeting.

All 22 economists in the June 27-July 1 poll forecast rates to rise by another 25 basis points to 2.25% at the July 6 meeting. The central bank last raised rates twice in a row in mid-2010.

Still, BNM, which has said it intends to take a “measured and gradual” pace, was expected to go slow compared with other global peers.

A slight majority of survey respondents, 12 of 22, predicted another 25 basis point rise in September to 2.50%, while the remaining 10 expected no change after a July hike.

Either way, more rate hikes are certainly coming.

“BNM will be mindful of potential upside pressure to inflation stemming from recent increases in the minimum wage, upward adjustments in price ceilings for certain food products, and a pickup in demand-pull inflation on the back of economic reopening,” noted Derrick Kam, Asia economist at Morgan Stanley.

Inflation rose to 2.8% in May from 2.3% in April. The ringgit lost ground last quarter and has weakened nearly 6% so far this year, raising the prospect of imported inflation pressure.

“The ringgit has been falling against the greenback due to aggressive rate hikes by the US Federal Reserve, and raising the overnight policy rate will help to shore up the currency by maintaining the interest rate differential,” said Denise Cheok, an economist at Moody’s Analytics.

For the November meeting, 12 of 22 analysts in the poll predicted rates at 2.50%, eight said 2.75%, while two said 2.25%.

Median forecasts from the poll also predicted 25 basis points hikes in each of the first two quarters of 2023. For Q1 2023, nine of 20 economists expected rates to rise to 2.75%, six forecast 3.00%, while five said 2.50%.

The overnight rate was expected to reach its pre-pandemic level of 3.00% in the second quarter next year. Around half of the respondents, nine of 19, predicted it to have risen to 3.00%, six said 2.75%, three said 2.50% and one said 3.25%.

BNM at its May meeting kept its 2022 economic growth forecast between 5.3% and 6.3% and projected headline inflation to remain between 2.2% and 3.2% this year.

Source: FreeMalaysiaToday.com

The National Property Information Centre’s (Napic) property market snapshot for the first quarter of this year (Q1 2022) shows residential overhang has dropped marginally to 35,592 units valued at RM22.45 billion.

Last year, the volume of residential overhang reached an “all-time high” of 36,863 units valued at RM22.79 billion.

As of Q1 2022, high-rise units make up 58.1% of the residential overhang at 20,680 units. Terrace houses comprise 20.8% at 7,407 units, while other property types form the remaining 21.1% (7,505 units).

Johor has the highest residential overhang at 5,992 units, followed by Penang at 5,816 units and Selangor (5,215).

The bulk of overhang properties are priced below RM1 million. High-end properties, which make up 13.2% of the total overhang, amount to RM9.37 billion across 4,706 units.

This is followed closely by properties priced at RM500,000 to RM1 million, making up 28.7% of the total, valued at RM6.9 billion across 10,227 units.

As much as 28.5% (10,158 units valued at RM1.91 billion) are properties priced below RM300,000, which is within the housing ministry’s definition of affordable homes.

Serviced apartments

Serviced apartment overhang has also seen a negligible drop from 24,295 units in Q4 2021 to 24,050 units in the first quarter. However, the total value of serviced apartment overhang has remained stagnant at RM20.45 billion.

With 16,425 units, Johor leads the serviced apartment overhang by a drastic margin. Kuala Lumpur and Selangor take second and third spots, respectively, with 4,459 and 2,337 units.

A staggering 64.4% of the serviced apartment overhang consists of properties priced between RM500,000 and RM1 million. It carries a value of RM11.61 billion.

This is followed by properties priced above RM1 million, making up 23.8% with a volume of 5,720 units and value of RM7.75 billion.

Serviced apartments priced from RM300,000 to RM500,000 make up 9.3% of the total with RM150 million, while those priced below RM300,000 only comprise 2.5%.

The severity of the overall property overhang begs the question if a return of the Home Ownership Campaign and a more inviting Malaysia My Second Home programme is needed.

New supply

There were 2,936 units in residential new launches in Q1 2022, of which only 164 units (5.6%) have been taken up.

Some 90.5% (2,657 units) of new residential launches are landed properties, while 9.5% (279 units) are high-rises.

Johor saw the most launches with 604 units, followed by Melaka (562 units), Pahang (466), and Selangor (349).

Most of these launches (1,197 units) were for properties priced from RM300,001 to RM500,000, which make up 40.8% of the total.

This is followed by properties below RM300,000 at 32.9%, which amounts to 965 units; and those priced between RM500,001 and RM1 million at 21.8% (640 units).

Only 134 units (4.6%) are properties priced above RM1 million.

Source: FreeMalaysiaToday.com