20100325 1116 Malaysian Economic News.

Bank Negara Malaysia (BNM) raised the country’s 2010 economic forecast from 2-3% to 4.5-5.5%, pledging that its monetary policy will continue to support growth even as it begins to “normalize” interest rates amid an “uneven” global recovery. Governor Tan Sri Dr Zeti Akhtar Aziz said that the economy can surpass the government's forecast growth rate for this year, following new measures which are expected to be announced next week and further improvement in the global economy.

• The main contribution to 2010’s growth would come from the expected strengthening in domestic demand (3.2%), driven mainly by the private sector, with favourable domestic conditions, including improvements in the labour market, rising disposable incomes and sustained consumer confidence, supporting a further expansion in private consumption.
• Inflation is expected to remain modest at an average of 2.0-2.5% this year. This projection reflects the improving economic conditions and takes into account the possible adjustments to administered prices and subsidy restructuring by the government.
• In strengthening Malaysia's economic development via capital flows, local companies should be encouraged to invest abroad to ensure the country's long-term competitiveness. Investments abroad by Malaysian companies can be expected to continue to remain sizeable in the future and this development is in response to the changing structure and competition in the region and in the global economy. (Bloomberg, Bernama)

While the current monetary policy remains supportive and accommodative to growth, Bank Negara Malaysia (BNM) will continue to monitor the need to raise the benchmark interest rate, amid an “uneven” global recovery. “This is an assessment that we will continue to monitor because while we are seeing very strong growth taking place in the Asian region, the developed world still plays a major part of the global economy. Therefore, we have to monitor closely and as our growth strengthens we will decide whether we will continue with the normalization of interest rates,” BNM said. (StarBiz)

The financial system is expected to remain resilient gong forward even as downside risks remain during the recovery in the international and domestic economic and financial environment. “The bank will continue to ensure readiness of its supervisory and surveillance capacity in detecting, monitoring and assessing emerging risks and threats to the stability of the Malaysian financial system to ensure timely and appropriate policy responses,” Bank Negara Malaysia (BNM).

• BNM is provided with adequate legal backing to effectively discharge its role and responsibilities in addressing current and future challenges in safeguarding financial stability. "The bank is entrusted with the responsibility to regulate and supervise financial institutions under its purview, provide oversight over the money and foreign exchange markets, exercise oversight over the payment systems and promote a sound, progressive and inclusive financial system," it said. (Financial Daily, Bernama)

The new blueprint being drawn up for the financial sector will help realise the nation's vision of becoming a developed economy by 2020. "To realise the nation's vision of becoming a high-income economy, the financial sector has an important role towards supporting this transition.

• The blueprint will also be an enabler, driver and catalyst of economic growth, with an enhanced capacity to contribute positively to the economic transformation process," said the central bank. (Bernama)

Bank Negara Malaysia (BNM) has commenced the implementation of a three-year Business Plan, developed last year, as part of the organisational transformation to become more strategy-focused and performance driven. This is supported by the increased organisation-wide clarity of the strategic results and enhanced cross functional collaboration required to deliver these results," said Governor, Tan Sri Dr Zeti Akhtar Aziz.
·    She highlighted that a structured and robust talent assessment process has been also put in place and is accomplished by a more dynamic and differentiated reward system to ensure incentives are appropriately aligned. (Bernama)

Bank Negara Malaysia (BNM) will continue to work on reconciling new international banking standards, which were developed following the global financial crisis last year, with the domestic market. The global financial crisis had prompted the Basel Committee of Banking Surpervision (BCBS) to introduce risk-sensitive capital and liquidity reforms. (Financial Daily)

As many as 2.3m or 48% of applicants who applied for credit cards were cleared by institutes of credit card issuing firms last year. Prime Minister Datuk Seri Najib Tun Razak said the rate revealed that issuing of credit cards was not done on whim and fancy as Bank Negara Malaysia (BNM) conducted checks on the processes of evaluation and issuing of credit cards related to financial institutions so that the process was above board. (Bernama)

Strategic brand creations will be more crucial for Malaysian companies to be players in the global market as the nation moves into the next phase of development and further integrate with the global economy, says Deputy Minister of International Trade and Industry Datuk Muhkriz Mahathir.

• He said the government's direction would focus on building Malaysian brands into global as it translates into greater competitiveness for Malaysian products and services. (Bernama)

China should be given the option to manage the yuan on its own despite pressures from US lawmakers to allow the currency to appreciate. Malaysia, which is China’s largest trading partner from South-East Asia, is looking forward to an “orderly adjustment” of the yuan, said Bank Negara Malaysia (BNM) governor Tan Sri Zeti Akhtar Aziz. “We don’t want to see destabilizing implication from any sudden changes to the foreignexchange rate,” she noted. (Malaysian Reserve)