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Malaysia has registered a growth of 4.6 per cent for 2008, Deputy Prime Minister and Finance Minister Datuk Seri Najib Razak announced yesterday.

The earlier gross domestic product (GDP) target for 2008 was 5 per cent. GDP growth in 2007 was 6.3 per cent.

Najib said the slower growth was due to the worsening global economy that had caused a significant drop in the country’s exports.

“The global economic scenario is getting more critical and a prolonged recession is expected,” he said at a press conference in Putrajaya yesterday.

For the October-December period, Malaysia’s GDP grew 0.1 per cent compared with 4.7 per cent in the third quarter. This was the lowest quarterly GDP growth since 2001, but still credible compared to other economies that were hit worst by the global economic crisis.
Singapore’s economy contracted 4.8 per cent in the fourth quarter, bringing 2008 GDP growth to just 1.1 per cent. Japan recorded minus 4.6 per cent growth in the fourth quarter and minus 0.7 per cent for the full year.

Malaysia’s manufacturing sector contracted by 8.8 per cent from a growth of 1.8 per cent in the third quarter due to weaker demand for electronic and electrical products.

Najib said the services sector grew 5.6 per cent, while the manufacturing, mining and construction sectors recorded negative growth of 8.8 per cent, 5.7 per cent and 1.6 per cent respectively.

Agriculture activities, meanwhile, saw a lower growth of 0.5 per cent due to a moderate increase in crude palm oil production (3.6 per cent) and a significant reduction in rubber production (-28.4 per cent).

He said it is unlikely that the current quarter will see any improvements.

“Of course it all depends on the situation in the US and Europe. We have to see the effectiveness of the fiscal stimulus and efforts to revive the banking sector in US.

“However, all signs indicate deeper and more prolonged recession, as even IMF (International Monetary Fund) and most countries have revised economic growth projections, including Singapore which did it four times,” Najib said.

He said the mini-budget to be tabled in Parliament on March 10 would help cushion the impact of a global recession on Malaysia, as the country would go into full gear to increase GDP growth by stimulating domestic demand. – BTimes

This would be complemented by other initiatives, including easier monetary policies. The fiscal deficit for this year would be maintained at its earlier estimate of 4.8 per cent of gross national product.

The government would likely revise its earlier GDP projection of 3.5 per cent for 2009, as it was no longer sustainable in view of the weakening external economic environment.

Najib said a new GDP target for the year would be announced on March 10.

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Net profit was 30 per cent lower from a year ago as earnings were hurt by RM112 million in charges related to the Bank Niaga-Lippo Bank merger and the purchase of 42 per cent of BankThai

Bumiputra-Commerce Holdings Bhd (BCHB) reported a lower net profit of RM1.95 billion in financial year 2008, hurt by charges related to two acquisitions in the region.

Net profit was 30 per cent lower compared to a year ago, mainly because the large exceptional gain from the sale of its insurance and asset management businesses in 2007 was not repeated last year.

Last year’s earnings were also hurt by RM112 million in charges related to the merger of Bank Niaga and Lippo Bank in Indonesia and the purchase of 42 per cent of BankThai in Thailand.

Still, BCHB’s net profit would have been down by just 2.6 per cent last year if the merger and acquisition-related charges and gains had been stripped out.
The lower earnings translated into a return on equity (ROE) of 12.3 per cent, below its own target of 16 per cent but within analysts’ current expectations, chief executive officer Datuk Seri Nazir Razak said.

The group has set an ROE target of 12.5 per cent this year and expects loans to grow 8 per cent, slower than last year’s 13.7 per cent, as the economy cools.

“We are bracing ourselves for a tough macro operating environment in 2009,” Nazir said during a media briefing in Kuala Lumpur yesterday.

Its focus this year is to mitigate the risk of higher credit defaults while “pursuing revenues carefully in a higher risk and reward environment”, Nazir added.

“There’s huge appetite for credit, which means there’s opportunity to take on some transaction at higher margin,” he said, pointing to the wide credit spread for Malaysian corporate bonds in the international market.

The net non-performing loan ratio is expected to rise to between 2.5 per cent and 2.7 per cent this year, from 2.3 per cent last year, Nazir told analysts later.

Although many private-sector economists have projected a recession, BCHB’s growth forecast this year is based on a 1 per cent expansion in the Malaysian economy.

“We need to be aware that this is not 1997/98. Malaysia is way stronger than that,” Nazir said.

He stressed that BCHB had no plans to retrench or offer a voluntary separation scheme amid the downturn. It will also not extend the paycut in its stockbroking unit to other divisions, Nazir said.

BCHB’s staff cost is highly performance-based, he said, which was down by 11 per cent last year, reflecting the poorer financial showings.

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