Malaysia's first quarter GDP shrinks 6.2%: Bank Negara

NST

KUALA LUMPUR, Wed: Malaysia's first quarter gross domestic product this year contracted by 6.2 percent from a growth of 0.1 percent in the fourth quarter last year but the prognosis for improved economic conditions look brighter in the second half of the year.

Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz, in announcing the GDP figures, attributed the contraction to the significant deterioration in external demand following the deepening recession in advanced economies.

"Export demand continues to be weak and the environment is still challenging. Despite early signs of improvement, Q2 will be similar to Q1," she told a press conference on the country's economic performance here today.

The economy was expected to continue to contract in the second quarter, she said.

"However, economic conditions are expected to improve in the second half of this year supported by fiscal stimulus measures and enhancing access to financing," said Dr Zeti.
"Malaysia is expected to see a significant improvement in the third quarter this year and a higher degree of positive growth in the fourth quarter that would continue into next year."

"There will be improvement, but it will also depend on both the external and domestic environment as well," she said.

"If the measures taken by other economies does take place, then Q2 would have seen the worst, she added.

Elaborating on the first quarter contraction, Dr Zeti said it was contributed also by the large inventory drawdown, particularly in the manufacturing and commodity sectors.

Fixed investment registered a decline due to weaker business sentiment. Public spending however, provided some support to growth.

On the supply side, all sectors recorded contraction except for the construction sector.

First Batch Of Sukuk Bonds Open For Sale

The Star

PETALING JAYA: The first batch of the dual-series RM2.5bil Islamic bonds, which offer returns of 5% per year, is open for sale today.

Applications can be made at any commercial or Islamic bank, or development financial institution in the country from today to May 13. Allocation is on a first-come, first-served basis.

The minimal allocation is RM1,000, while the maximum value is capped at RM50,000.

The first series of this Islamic bond, called Sukuk Simpanan Rakyat (SSR) 01/2009, is part of the Government’s RM60bil stimulus package announced on March 10, where up to RM5bil in saving bonds will be issued this year for people aged 21 and above, and with a maturity period of three years.

This programme is designed for Malaysian citizens as an alternative savings vehicle providing double the current fixed deposit rates, with option for account holders to withdraw their money any time.

Features include flexibility for holders to redeem as early as the first quarterly profit payment, including profits, and without an early exit penalty.

Retrenched Workers Are In Higher Demand Now

Source: Emailed by Jobstreet

Recently the government provided a real boost for retrenched workers in its 2nd stimulus package announcement

It announced that companies who employ workers retrenched from 1 July 2008 be given double tax deduction * on the amount of remuneration paid.

This allows companies to enjoy big tax savings by employing retrenched workers.

How does it work?

If an employer recruits a retrenched worker from another company and pays a salary of RM24,000 a year. Normally, tax deduction to the employer is RM24,000 from taxable profit. However, with this measure, the company is allowed to deduct RM48,000 from profit, that is, at double the salary. This represents an additional tax reduction for the company of RM6,000 or 25% from RM24,000.

If you are in this situation, now is the best time to get that interview because companies are much more likely to hire a retrenched worker because of this government incentive!

Government Jobs For 3,000 ICT Grads

The Star

PETALING JAYA: There will be a silver lining soon for 3,000 unemployed information and communications technology (ICT) graduates as the Government will spend RM72mil for them to become facilitators in schools with SchoolNet connectivity nationwide.

Energy, Water and Communication Minister Datuk Shaziman Abu Mansor said that under the internship programme the graduates would be paid a RM1,000 monthly allowance for two years to help them weather the economic slowdown.

He said the programme, to begin in June, would give priority to rural schools.

“We also hope the 3,000 graduates will take this opportunity to continue to improve their ICT expertise and knowledge,” he said.

“This is not so much to give them permanent jobs but to enable them to continue to hone their ICT skills so that they can get jobs in the future.”

He said any unemployed ICT graduate was welcome to apply for the programme.

“The ministry and the Malaysian Communications and Multimedia Commission will be selecting the applicants,” he said, adding that the ministry would also cooperate with local public universities to provide the 3,000 with further ICT training during the internship programme.

Shaziman added that the ministry would also upgrade 3,000 schools with the SchoolNet programme from 1Mbps to 4Mbps with the RM100mil provided under the second economic stimulus package.

On another matter, Shaziman an­­nounced that all ICT-based companies earning less than RM5mil annually would be exempted from contributing to the universal service provision fund until the end of next year.

“This is to enable these companies to operate well in this trying economic climate,” he said.

It was mandatory for all ICT operators to contribute 6% of their revenue to the fund set up to provide telephony services to under-served areas and groups a decade ago.

Oil Prices At Highest For This Year

The Star

NEW YORK: A weakened dollar and evidence that OPEC has significantly slowed production sent oil prices soaring to new highs for the year Thursday.

"I think we'll see higher oil prices for a while," said Michael Lynch, president of Strategic Energy & Economic Research.

"There's an expectation that the market has bottomed out."

Benchmark crude for April delivery surged $3.47, or 7 percent, to settle at $51.61 a barrel on the New York Mercantile Exchange.

Oil prices hit $52.25 earlier in the day, a price last seen on Dec. 1.

Crude prices have increased 11.6 percent since OPEC ministers met in Vienna on Sunday.

The group said it would not cut production again immediately, but there is growing consensus that the millions of barrels taken off the market already each day are starting to balance a supply and demand picture that has been skewed for months.

With the April contract set to expire Friday, most of the trading had shifted to the contract for May delivery, where prices jumped $3.14 to settle at $52.04 a barrel.

Analysts rushed to buy crude after the Federal Reserve announced late Wednesday it would buy long-term government bonds, a measure that's expected to jolt the U.S. economy with lower rates on mortgages and other consumer debt.

The Fed also said a $1 trillion program to jump-start consumer and small business lending could be expanded to include other financial assets.

The announcements sent the dollar into a tailspin.

The U.S. dollar dropped against other major currencies almost immediately, at one point falling to levels not seen since January.

The dollar has fallen about 5 percent against the euro over the past couple days. Because oil is bought and sold in dollars, a weak U.S. currency makes crude cheaper globally.

"The government is basically printing money to buy back all this paper, and it devalues the dollar," said Phil Flynn, analyst at Alaron Trading Corp.

Flynn said the rise in oil shouldn't be taken as a sign that the economy in on the mend.

The Fed is using all of its powers to prop up American businesses, "and this is one of their last shots," Flynn said.

"If this doesn't work, they're out of bullets."

A government report that said jobless claims set a new record for the eighth straight week.

The Labor Department said continuing claims for unemployment insurance jumped 185,000 to a seasonally adjusted 5.47 million, another record-high and more than the roughly 5.33 million that economists expected.

Initial claims dropped to a seasonally adjusted 646,000 from the previous week's revised figure of 658,000, however.

That was better than analysts' expectations.

Job cuts are part of the reason for a severe drop-off in miles driven by Americans, a growing number whom no longer commute to work.

The Federal Highway Administration said Thursday that motorists logged seven billion fewer miles in January, 3.1 percent less than the same period in 2008.

The dour economic news did little to dissuade investors as prices topped $50.47 a barrel, the previous high for 2009.

Part of the reason is that the Organization of Petroleum Exporting Countries appears to be pushing through the production cuts it promised to make last year, according to tanker tracker Oil Movements.

Member states agreed last year to squeeze global oil supplies, trimming 4.2 million barrels per day.

Crude exports from OPEC countries have been shrinking during the past few months.

They're expected to drop 770,000 barrels a day in the four weeks leading to April 4, according to an Oil Movements report.

While the recession kept oil near five-year lows, tighter supplies in the spring and summer should buoy crude prices in the next three months, the report said.

Cameron Hanover analyst Peter Beutel said a new high at closing Thursday, along with OPEC production cuts, the federal stimulus package and other bullish factors "are working together to be more important at this moment than the recession and its impact on demand."

"It means things are better than they've been in a while," Beutel said.

Also surging were natural gas prices after a government report showed that U.S. stockpiles fell slightly more than expected last week.

The Energy Information Administration report said inventories held in underground storage in the lower 48 states fell by 30 billion cubic feet to about 1.65 trillion cubic feet for the week ended March 13.

In other Nymex trading, gasoline for April delivery jumped 7.16 cents to settle at $1.4373 a gallon, while heating oil rose 9.2 cents to settle at $1.36 a gallon.

Natural gas for April delivery jumped 49 cents to settle at $4.174 per 1,000 cubic feet.

In London, Brent prices rose $3.01 to settle at $50.67 on the ICE Futures exchange.

PIDM (Perbadanan Insurans Deposit Malaysia)

Deposit Insurance

Deposit insurance is a system that protects depositors against the loss of their insured deposits placed with banks in the unlikely event of a bank failure.

It is established by the Government to enhance the consumer protection framework and promote financial system stability. It is not related to or managed by general or life insurance companies.

Generally, it is a Government sponsored scheme, although in certain countries it is sponsored by the banks.

The deposit insurance system in Malaysia was launched in September 2005 and is managed by Perbadanan Insurans Deposit Malaysia (PIDM).

PIDM is a Government agency established under the Akta Perbadanan Insurans Deposit Malaysia 2005.

Benefits to depositors

• Deposit insurance protection is automatic

• PIDM protects depositors holding deposits with banks

• There is no charge to depositors for deposit insurance protection

• Should a bank fail, PIDM will promptly reimburse depositors on their deposits

Benefits to the financial system

• PIDM promotes public confidence in the Malaysian financial system by protecting depositors against the loss of their deposits

• PIDM reinforces and complements the existing regulatory and supervisory framework by providing incentives for sound risk management in the financial system

• PIDM minimises costs to the financial system by finding least cost solutions to resolve troubled banks

• PIDM contributes to the stability of the financial system by dealing with bank failures expeditiously and reimbursing depositors promptly

With the introduction of a deposit insurance system in Malaysia, depositors receive protection for their deposits under the law. Depositors will know how and when reimbursement of their deposits will be made in the event of a bank failure.

Deposit insurance is recognised internationally as an important component of a country’s financial safety net and has been implemented in some 100 countries around the world.

Al Rajhi Bank

Al Rajhi Bank is the largest Islamic banking group in the world recognized for being instrumental in bridging the gap between modern financial demands and intrinsic Islamic values. One of the fastest growing and most progressive banks in Saudi Arabia, it owes its banking excellence to its unwavering commitment to Shariah principles and the use of technology to offer diverse products to meet customer needs. The Group has a vast network of over 500 bank branches, 2,000 ATM machines and over 18,000 POS installed all over the kingdom.

Leveraging on its established principles and operations in the Middle East, Al Rajhi Bank ventured out as an international bank by setting up its first overseas operations in Malaysia in October 2006. Operating on the same platform as the home bank, Al Rajhi Bank Malaysia extensively uses the latest banking technology to consistently provide customers with speed and convenience in banking. It opened its first and main branch at Jalan Ampang on 16th October 2006. Today, it has 19 branches, 14 in the Klang Valley, one each in Johor Bharu, Melaka, Penang, Kuching and Kota Bharu.

The bank is expanding its suite of products and services that currently offers Savings account-i, Current account-i, Personal financing-i, Charge card-i, Debit card-i, Fixed term investment-i, Automobile financing-i, Home financing-i, Structured Home Financing-i, Al Musafir Card-i and customised corporate products. As of Feb 2008, Al Rajhi had a customer base nearing 100,000 and the numbers are steadily growing.

Based in Riyadh, Saudi Arabia, Al Rajhi Bank plays an integral part in the life of the desert Kingdom. We've been serving its citizens, financing its growth and contributing to Saudi development for over 50 years, catering for both the retail and wholesale needs of our clientele. We've now grown into the country's largest branch and ATM network with over 18,000 POS installed with merchants all over the Kingdom. We're also one of the largest joint stock companies in Saudi, with a paid-up capital of SR 13.5 billion (US$ 3.6 billion)

Malaysia marks as first foray into the international banking market and it's an exciting and highly significant development in the history of the bank.