Malaysia delayed plans to implement a new fuel subsidy system after rejecting a proposal on the use of identity cards to buy subsidized gasoline, Domestic Trade and Consumer Affairs Minister Ismail Sabri Yaakob said. Another proposal to limit purchases based on a vehicle’s engine capacity has also been rejected because it isn’t “practical”. He also said that there were “no plans for now” to increase fuel prices. The government would have been able to save about RM1bn (US$296m) annually if the revamp were to start in May. However, a “subsidy rationalization lab” would instead be set up to review all forms of subsidy, including for food and petrol. The government now aims to come up with a new system before presenting the nation’s annual budget in October, he added. (Bloomberg, Malaysia Insider) Please see our Economic Update for further details
Bank Negara Malaysia (BNM) has raised the Overnight Policy Rate (OPR) by 25bps to 2.25% at its monetary policy committee (MPC) meeting yesterday as the economic recovery is firmly established. It said the domestic economy has since improved significantly and is now on a path of recovery. Given this improved economic outlook, the MPC decided to adjust the OPR towards normalising monetary conditions and preventing the risk of financial imbalances that could undermine the economic recovery process. "At the new level of the OPR, the stance of monetary policy continues to remain accommodative and supportive of economic growth," it said. (Financial Daily) Please see our Economic Update for further details
A high demand for halal products can help propel the economy towards achieving its target economic growth of 6%, said International Trade and Industry Deputy Minister Datuk Mukhriz Mahathir. He said having a diversified range of halal food products can also be an integrated step towards promoting Malaysia as a global halal hub. "We are competing with several neighbouring countries like Thailand, in the food industry, but we have an edge over the others as our food products are unique in that they carry the halal logo which is accepted worldwide.”There are many European companies which want to strike business deals with Malaysian companies as they are confident of the halal logo which is promoted widely," he said. (Bernama)
Malaysia will gradually reduce corporate income tax once the proposed goods and services tax is implemented by the middle of next year, said Deputy Finance Minister Datuk Chor Chee Heung. Businesses related to government services such as food and transport would be exempted from the new tax. The levy is expected to generate RM1bn in additional annual tax revenue for the government, he said. (Bernama, Bloomberg)
Malaysia hopes to conclude negotiations for a free-trade agreement (FTA) with Chile before the year-end, said International Trade and Industry Ministry Secretary-General Tan Sri Abdul Rahman Mamant. “With Chile, we are in the advanced stage (of negotiations) actually. Only a few items are still sensitive so we hope the government can make a final decision on some of the sensitive items,” he said. (Bernama, StarBiz)
Foreign investments in Penang declined a whopping 78.0% to RM2.2bn last year against RM10.2bn recorded in 2008. "It's the lowest investment ever recorded by the island state in the past five years," said Penang Gerakan Small-and--Medium Entrepreneurs (SME) Bureau Chairman Michael Heah. According to the Malaysian Industrial Development Authority (Mida), the number of approved projects recorded in Penang also dipped 31.1% to 104 projects in 2009 from 151 projects in 2008. (Bernama)
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