More bad news – exports plunge 30% in May
Jul 3, 09 6:18pm Malaysiakini.com
Malaysia’s exports slumped 29.7 percent in May from a year earlier, hitting their lowest level since 2001 with demand evaporating, according to official data released today. The Ministry of Industry and Trade said in a statement that exports plunged to RM42.95 billion year-on-year while imports fell 27.8 percent. Total trade from January to May was worth RM360.78 billion, a decrease of 25.3 percent from a year earlier, but Malaysia did manage to record a trade surplus of RM10.02 billion for May. Yeah Kim Leng, chief economist at ratings agency RAM Holdings, said the sharp contraction was the worst for Malaysia since the dot com bubble burst in 2001. “This is worse than expected given that we were expecting some improvements,” he told AFP, noting that export figures however improved slightly by 4.5 percent month-on-month from April. “What we can infer from this is the stabilisation in global demand will only be reflected in Malaysia’s export performance in the third quarter,” he added. Lower overseas demand The trade ministry said the steep decline in exports was mostly due to lower demand from key trading partners, especially for electrical and electronic products which account for one-third of Malaysia’s total exports. Malaysia’s key exports markets are Singapore, China, Japan, Thailand and the United States. In April, Malaysian exports fell 26.3 percent. The government has said the export-dependent economy is likely to contract by 4.0-5.0 percent this year due to the drop-off in exports and manufacturing. Foreign investment has also seen a big dip this year. Trade Minister Mustapa Mohamed said yesterday that foreign direct investment for the first five months stood at RM4.2 billion compared to RM46 billion in 2008.
|Foreign investment in free fall|
|Jul 2, 09 3:36pm|
Foreign investment in Malaysia has plummeted this year, Trade Minister Mustapa Mohamed said today after the government announced liberalisation measures aimed at luring investors.
“Foreign direct investment for 2008 was RM46 billion and for January to May this year we have only seen RM4.2 billion,” Mustapa told reporters.
This means that foreign investments for the first five months of this year is less than 10 percent of the total figure for last year.
Wahad Hamid, deputy head of the Malaysian Industrial Development Authority, said the investment climate was extremely tough despite a strong performance by Malaysia in the three previous years.
“Last year, total investment was about RM62 billion but this year we are only targetting half of that, about RM30 billion,” he told reporters.
Mustapa said he was confident that liberalisation measures announced by Prime Minister Najib Razak this week would help bring in more funds, amid forecasts of a 5.0 percent economic contraction this year.
“We are confident that investor sentiment will improve, we are encouraged by all the measures taken by the government,” he said.
The liberalisation moves targeted a decades-old policy of positive discrimination for Muslim Malays, which critics say is making Malaysia uncompetitive.
Analyst: New measures poorly timed
Najib scrapped a rule requiring initial public offerings to reserve 30 percent of stock for Malays – who dominate the population of the multicultural nation – and dumped regulatory approval for foreign property purchases.
However, Mohammed Ariff, head of the influential Malaysian Institute of Economic Research, said the measures were poorly timed and would not bear fruit until the global economy recovers.
“The liberalisation announcements should have been made in the good times instead of now, as there would have been a lot of responses from foreign investors,” he told AFP.
Ariff said that despite hopes for a recovery next year, Malaysia’s economy is unlikely to really get back up on its feet until 2012.
“To me real recovery is not just positive growth but going back to the growth we are used to, of around six percent, and that is way off – until 2012,” he said.