Malaysia keen for cooperation with Iran in Halal industry ~ 23 Oct 2016
http://www.malaysiasun.com/index.php/sid/248775169
RI remains global investment sweet spot ~ 14 Oct 2016
http://www.thejakartapost.com/news/2016/10/14/ri-remains-global-investment-sweet-spot.html
1MDB fund flows: DBS, UBS to take action against staff for control lapses ~ 12 Oct 2016
http://www.straitstimes.com/business/companies-markets/1mdb-fund-flows-dbs-ubs-to-take-action-against-staff-for-control-lapses
Growth Outlook remains resilient for East Asia & Pacific in 2016-18 ~ 5 Oct 2016
http://www.thailand-business-news.com/asean/54509-growth-outlook-remains-resilient-east-asia-pacific-2016-18.html
Bond market staying its course in Malaysia ~ 1 Oct 2016
http://www.thestar.com.my/business/business-news/2016/10/01/bond-market-staying-its-course-in-malaysia/
Foreign investment flows the highest since 2009 ~ 21 Jun 2016
http://www2.anba.com.br/noticia/21871759/macro-en/foreign-investment-flows-the-highest-since-2009/
Will the ringgit get better? ~ 18 Jun 2016
http://www.thestar.com.my/business/business-news/2016/06/18/will-the-ringgit-get-better/
The value of a country’s currency is based on the macroeconomic fundamentals of the country. It depends on trade flows, foreign direct investments (FDIs) and other services between the host country and other countries. These factors determine the supply and demand for the currency. For instance, a higher level of FDIs draws higher demand for the ringgit. When there is high demand for our goods and services, the ringgit gets better. When the stock market becomes an attractive destination for the funds, the ringgit tends to get stronger.
Malaysian ringgit may worsen over the economy, negative news on 1MDB scandal and NajibThe Malaysian ringgit has fallen about 40% over the past year.
Malaysia is China’s ‘weak link’ in checkmating ASEAN ~ 15 Jun 2016
http://www.asiasentinel.com/politics/1mdb-behind-malaysia-asean-capitulation-to-china/
China-Malaysia: tightening economic tiesMay 6th 2016
China has been tightening its economic relationship with Malaysia over the past six months. Already its main trading partner, and among the five main foreign investors, China has taken a number of initiatives in support of Malaysia's struggling economy through a mix of official statements of confidence, highly publicised investments and significant sovereign bond purchases. This rapprochement makes both economic and geopolitical sense for China. It is also welcome in Malaysia, despite criticisms of Chinese "interference" and increasing tensions in the South China Sea.
China's involvement in Malaysia takes place at a time of economic difficulties for the country, which continues to suffer from a slowdown in economic activity, low oil prices, a volatile ringgit and high consumer debt. The country is also dealing with the repercussions of a lingering scandal at a state-owned investment entity, 1Malaysia Development Berhad (1MDB), which has put pressure on the embattled prime minister, Najib Razak. China's support thus comes at a much-needed time.
Three-pronged supportChina's support for Malaysia has so far come in three main forms. The first is unflagging official support from China's top leaders for the country's government, despite the 1MDB scandal. This was exemplified by the visit of the Chinese premier, Li Keqiang, to the country in November 2015, during which he pledged to help the Malaysian economy through support to 1MDB, the purchase of Malaysian Government Securities (MGS, long-term interest bearing bonds) and greater openings for local institutional investors to acquire mainland Chinese equities.
Soon after Mr Li's visit, the state-owned China General Nuclear Power Group (CGN) purchased 1MDB's energy assets in Edra Global Energy Bhd for US$2.3bn. One of the three pillars of 1MDB's rationalisation plan, this buyout effectively prevented a default on one of 1MDB's loans and relieved it from intense short-term pressure. The acquisition therefore eliminated the systemic risk that Edra's debt represented for Malaysia's public finances and banking system.
Support continued in April this year with the purchase of about M$30bn (US$7.2bn) worth of MGS by China. Both the timeframe and scale of this purchase momentarily dispelled the risk of sudden and massive outflows of capital, such in September 2015 when the ringgit dipped to a multi-year low.
Although not solving all Malaysia's ills—or those of 1MDB—Chinese support has provided some much-needed breathing space. It had temporary but positive effects on the ringgit at different stages of its deployment. It has also helped to assuage the concerns of investors about the impact of 1MDB's financial difficulties on Malaysia's creditworthiness. A US-based credit rating agency, Moody's, recently announced that it did not consider 1MDB to pose a "systemic threat" to Malaysia's public finances or economy. Finally, China's investments helped Malaysia to come closer to its foreign direct investment target for the year.
What is in it for China?Beyond its partner's interests, China throwing its weight behind Malaysia and 1MDB, despite downgraded economic prospects and a lingering political crisis, has a clear economic and geopolitical rationale. Economically, China's continued engagement with Malaysia comes in the context of a push to expand Chinese investments in the region, as signalled by the "One Belt, One Road" strategy. Malaysia has so far reaped impressive benefits from this shift. China's Ministry of Commerce reported a rise of more than 200% in overseas direct investment (ODI) in Malaysia in 2015 in its preliminary accounting. Chinese ODI in Malaysia was officially recorded at US$521.3m in 2014, against flows of US$7.8bn to the Association of South-East Asian Nations (ASEAN) as a whole.
It also helps to support Chinese companies' operational expansion into the country, which increasingly serves as a stepping stone for development in the region as a whole. CGN, for example, is looking for opportunities to promote its clean energy and nuclear power activities in South-east Asia, and seems to have identified Malaysia as a valuable hub. It recently announced that it would set up its South-east Asia regional headquarters in the country.
Less spoken of was another 1MDB-related investment by a state-owned railway company, China Railway Group (CREC), to develop a property project in the outskirts of the Malaysian capital, Kuala Lumpur. The project, which will house the terminus for the planned Singapore-Kuala Lumpur high-speed rail project, will also host CREC's regional headquarters. CREC hopes to pilot its regional expansion from there.
China's investments have directly benefited both players, with CREC seen as a front-runner for the upcoming high-speed rail bid, and CGN now the largest foreign investor in Malaysia. Its ownership of Edra means that it controls around 14% of total energy generation capacity in the country.
The increased weight of China, and Chinese companies, within Malaysia's economy also brings with it political advantages. It contributes to deflate, or at least drown under billions in investment, Malaysian criticism of "interference" from China. These had emerged in September last year when China's ambassador to Malaysia commented that China would oppose any form of racial discrimination and not tolerate violent demonstrations in Malaysia ahead of a planned rally by ethnic Malay supporters of the government in Kuala Lumpar's Chinatown area.
These comments triggered an angry reaction in some quarters in Malaysia, where they were perceived as a Chinese attempt to interfere in the country's internal affairs. China's ambassador was also criticised for refusing to heed a summoning by Malaysia's Ministry of Foreign Affairs to explain his comments. In any case, the event rocked an otherwise burgeoning relationship. China's renewed vow of friendship, backed by significant financing, might have been aimed at eliminating remaining resentment on the issue.
Preserving China's and Malaysia's "special relationship" also serves China's regional objectives. Malaysia has in the past been an effective mediator and often been sympathetic to Chinese concerns in the context of debates within ASEAN. As China grows more assertive in the South China Sea, it will want to make sure that Malaysia remains committed to its rather cautious stance on territorial disputes in the region. Malaysia has recently voiced concerns about China's construction works on islands in the South China Sea, deeming them an "unwarranted provocation".
But Malaysia also undoubtedly needs China's support. As the US finds it harder to deal with the Malaysian government in the context of the 1MDB corruption scandal, China could seize this opportunity to reassert the strength of Malay-Chinese relations and demand more of its partner. This comes at a particularly important time, as an international ruling is soon expected over the legality of China's controversial "nine-dotted line" that demarcates its territorial claims in the South China Sea.
Overall, the tightening of Chinese–Malaysian economic relations illustrates China's distinctive approach to foreign policy, with the country using a mix of politico-diplomatic and economic influences to build good relations while ensuring that its interests are preserved. In the short term more China-initiated projects, investments and initiatives should be expected. This will provide Malaysia with some partial relief from its economic challenges. Nevertheless, The Economist Intelligence Unit still expects the country's real GDP growth to ease from 5% in 2015 to 4.3% this year.
China's approach is not without risks, however. Its support could backfire if it is perceived as attempting to prop up Mr Najib's embattled administration. We expect Mr Najib to leave office before the end of this year. Changes in government in other countries with close economic relations with China, such as Myanmar and Sri Lanka, have been accompanied by a cooling in bilateral relations. In Malaysia's case, with Mr Najib's replacement likely to come from the same political party, the risks are more understated, but nevertheless present.
Singapore, China, India among the top 10 markets for foreign investment in 2016 ~ 4 May 2016
https://www.techinasia.com/foreign-investment-index-2016-asia
Chinese investments springing up in Malaysia ~ 19 Apr 2016
http://ippreview.com/index.php/Home/Blog/single/id/107.html
Malaysia's 1MDB says completes sale of US$2.3 billion power assets to China's CGN ~ 23 Mar 2016
http://www.reuters.com/article/us-malaysia-1mdb-china-idUSKCN0WP0BX
China becomes Malaysia’s biggest foreign investor, thanks to 1MDB purchasesBy Amy Chew
12 January, 2016
China is now Malaysia’s largest foreign investor, following its recent acquisition of 1MDB assets, extending Beijing’s reach into the Southeast Asian country’s economy.
The scale of China’s rise to become the top foreign investor is compelling - just a year ago, it was nowhere near the top of the table. While official figures for 2015 are not out yet, economists say China will certainly emerge in first place.
In 2014, foreign direct investment (FDI) to Malaysia mainly originated from Singapore, Japan, the Netherlands, the US and Norway, which amounted to RM257.7 billion (US$58 billion), or 55.1 per cent of total FDI.
However, some economists do not expect China’s top position to be sustained as Malaysia’s economic transition plan (ETP) to become a high-income nation by 2020 aims for high-value industries.
“I do not expect China’s pole position for FDI to be sustainable as Malaysia wants to move up the value chain into high technology . That will come from its traditional FDI sources of US, Japan, EU and Singapore,” says Yeah Kim Leng, Dean of the School of Business at the Malaysia University of Science and Technology.
China, however, has been Malaysia’s largest trading partner since 2009, and is both the largest market for Malaysian exports and the largest importer to Malaysia. Total trade between the two countries in 2014 reached RM207.85 billion.
On November 23 last year, Chinese Premier Li Keqiang said China would buy more Malaysian government bonds and give the country a 50 billion yuan (US$7.6 billion) quota to invest in Chinese stocks and bonds.
China’s investments in Malaysia are well diversified. It is not only securing natural resources for its energy needs but building infrastructure and educational facilities.
Call it soft power.
China’s Xiamen University launched its first overseas campus in Malaysia, which can accommodate 10,000 students, in 2013. The first phase of the RM1.03 billion campus located in Sepang, Selangor state, was completed in October 2015.
The initial intake for undergraduates starts in February.
Other major Chinese investments include property and industrial developments.
Three Chinese companies are developing properties in Iskandar Malaysia, a special economic zone in the southern state of Johor which borders Singapore.
China’s Guangzhou R&F Properties Co Ltd is investing RM4.5 billion to build condominiums in Iskandar, while Country Garden Holdings Co Ltd is investing RM900 million in 45 condominium towers, offering a total of 9,500 units.
Greenland Holdings Group Ltd is investing RM2.4 billion in its Iskandar property development.
In Pahang state, Guangxi Beibu Gulf International Port Group is spending RM8 billion to expand and deepen the provincial capital’s Kuantan port on the eastern seaboard as well as build the Malaysia-China Kuantan industrial park.
