Malaysia’s 2017 fiscal deficit target ‘achievable’
Malaysia is likely to meet its 2017 fiscal deficit target of 3% of gross domestic product (GDP), on expectation of higher GDP growth, as well as crude oil price gains that would support government revenue, according to Nomura. It said the fiscal deficit target was “achievable”, as Brent crude oil prices averaged US$52 a barrel year-to-date, above the US$45 budget assumption, as commodity prices improved.

“We also expect robust GDP growth at 5.3% this year, to exceed the budget assumption of 4% to 5% growth, which should support individual income tax and GST collections. Importantly, we believe the government remains firmly committed to its fiscal consolidation agenda, as demonstrated by its willingness to tighten fiscal policy in H2 last year, to meet its full-year deficit target.

“There is scope to cut development spending, which is more discretionary. We also now see a delay in the next general election to next year (it must be held by August 2018), versus our previous baseline of between September and October this year, which would alleviate election-related spending pressures,” Nomura said.

Moody’s maintains Malaysia’s credit profile
Moody’s Investors Services has declared that Malaysia’s credit profile remains resilient despite external vulnerabilities in the form of fiscal challenges. In its report released today, the firm explained that the country’s foreign currency reserves have climbed out of a “recent trough”, but remains vulnerable to any active non-resident investors that may cause sudden swings in capital flows. “Our view on its credit profile does not change during periods of heightened external volatility. It would take a significant deterioration of external metrics from current levels for Malaysia’s credit profile to weaken. “Other sources of credit risk would be a sharp growth slowdown or meaningful deterioration in the public finances, neither of which we deem likely at this time,” it said.
Age of Malaysia’s Population Will Up Demand for Housing, REHDA Calls for Relaxing of Regulations for First Time Buyers
The age of Malaysia’s population offers great potential for the housing industry as it is expected to create a great demand for housing. Orkney Holdings Sdn Bhd, which provides consultancy services on strategy and project implementation in the real estate and services sectors, however, said due to the technological changes in Malaysia, the assets that were being built would need to be rethought. Its Executive Chairman, Rafiq Jumabhoy, said “Malaysia’s real estate outlook is patchy as there are certain parts of the country that are going to do well. “Creating a blanket statement would be wrong. In Iskandar Malaysia and Kuala Lumpur we can see it but in Selangor you can’t be definitive that it’s going to be an oversupply.”

Meanwhile, the Real Estate and Housing Developers’ Association (REHDA) is appealing to the government to relax regulations for first time house buyers and properties below RM500,000. REHDA President, Datuk Seri Fateh Iskandar Mohamed Mansor said the request includes a cheaper interest rate and longer loan tenure for transactions in the two categories. “We would like an end to the financing issue, especially for first time buyers, and property below RM500,000, to be more flexible,” he said.

RAM Holdings Inks MoU With Scope on Financial Knowledge Programmes
RAM Holdings Bhd has signed a memorandum of understanding with the Sarawak Centre of Performance Excellence (SCOPE) to jointly design, develop and implement knowledge-sharing and development programmes. RAM said under the MoU, SCOPE would collaborate with RAM’s training arm to conduct a series of programmes aimed at creating awareness and upscaling the knowledge and exposure of Sarawak’s public and private sectors on capital markets, with a special focus on the bond market.
China’s Belt and Road acquisitions surge despite outbound capital crackdown
Mergers and acquisitions by Chinese companies in countries that are part of the Belt and Road initiative are soaring, despite Beijing’s crack down on China’s acquisitive conglomerates to restrict capital outflows. Chinese acquisitions in the 68 countries officially linked to President Xi Jinping’s signature foreign policy totalled US$33 billion, surpassing the US$31 billion tally for all of 2016, according to Thomson Reuters data. Unveiled in 2013, the Belt and Road project is aimed at building a modern-day “Silk Road”, connecting China by land and sea to Southeast Asia, Pakistan and Central Asia, and beyond to the Middle East, Europe and Africa.