20110815 1112 Local & Global Economic Related News.

The government is confident that the country will still be able to achieve 5%  economic  growth despite the U.S. and European debt crises. However, PM Datuk Seri Najib Tun  Razak  said this could be achieved if all groups worked  towards sustaining economic  growth, particularly with the private sector remaining committed in their investment.

• “Malaysia is an open economy in which our total external trade is twice our GDP. So,  whatever happens to the world economy; say, if world economic growth is 1% less, the  effect is a 0.4% decrease to our GDP,” he said.   
• The 2012 Budget would take into account the external economic circumstances, PM  added. (The Star, Bernama)    

Small and big onions, and garlic have now been listed in the Hari Raya Aidilfitri 2011  Festive Season Price Control Scheme. This brings the total number of items listed under  the scheme to 20, said Domestic Trade, Co-operatives and Consumerism Minister Datuk  Seri Ismail Sabri Yaakob. Control of goods will be enforced for two weeks from 22 Aug to 5  Sep, said. (Bernama)  

Tourism Malaysia is targeting 1.25m  tourists from China this year, its acting directorgeneral, Datuk Azizan Noordin, said Saturday. He was confident the target could be  achieved, looking at the trend, with 1.13m tourists from China last year and 1.02m in 2009.  (Bernama)  

Malaysia has secured a RM2bn industrial biotechnology investment in the East Coast  Economic Region (ECER). South Korea's CJ Cheiljedang Corporation and France's  Arkema SA last Friday announced the setting up of the world's first bio-methionne plant  and Asia's first thiochemical platform in ECER Special Economic Zone (SEZ), Kertih  Polymer Park, Terengganu.

• PM Datuk Seri Najib Tun Abdul Razak, who witnessed  the announcement, said the  project project was expected to generate about RM20bn in cumulative sales by 2020  and provide employment opportunities to almost 500 local knowledge workers.   
• The 80,000 tonne bio-methionine production plant and the thiochemicals platform will be  constructed on a 70 hectare site next year and will be operational in 2013. (Bernama)    

Semiconductor and electronic firms in Penang are bracing themselves for the worst  towards the latter part of this year when the economic slowdown and stock market selloff  are expected to bite hard during a traditionally strong period. Pentamaster Corp executive  chairman CB Chuah said orders from China, the U.S. and Europe for 4Q11 were not  coming in.

• “Normally, it would come in around this time. But, because of global economic crisis,  they are not,“ he noted.  
• Globetronics Technology Bhd CEO Heng Huck Lee expects its customers to exercise  caution on orders for the remainder of the year.   
• Apart from slower demand, some manufacturers are faced with a double whammy from  rising costs.  
• Menwhile, Malaysian America Electronics Industry chairman Datuk Wong Siew Hai said  U.S. multinational corporations still did not know  what to expect. “Due to the  uncertainties, they are tightening control over their expenses,” he added. (Starbiz)  

ECER gets RM2bn boost
South Korea’s CJ CheilJedang Corp and France’s Arkema SA have announced a RM2bn JV to build the world’s first bio-methionine plant to produce animal feed in Malaysia. Both companies would commit the amount to be invested over a ten year period. The plant together with Asia’s first thiochemical platform would be located on 70 ha in Terengganu’s Kertih Polymer Park in the East Coast Economic Region’s (ECER) special economic zone. (StarBizWeek)

EU: Italy approves USD64 Billion plan to balance budget by 2013
Italian PM Silvio Berlusconi’s Cabinet approved EUR45.5bn (USD64bn) in deficit cuts to balance the budget and try to convince investors the country can tame the region’s second-biggest debt. The plan will raise the capital gains tax, increase levies on the highest earners, cut government spending and reduce funding to regional administrations. It was passed last Friday night in Rome by decree, meaning it will take effect immediately and then must be approved by parliament within 60 days. (Bloomberg)

EU: Germany’s Feld says France may lose AAA in medium term
Lars Feld, a member of German Chancellor Angela Merkel’s council of economic advisers, said France’s AAA credit rating is at risk of a downgrade in the medium term, according to an interview with Frankfurter Allgemeine Sonntagszeitung. France’s debt ratio to its gross domestic product is too high, Feld said. He also cited a budget deficit that is “significantly” higher than in Germany. Germany also has an AAA rating. The European Union rescue fund would have to be restructured if France’s rating was cut, probably resulting in higher costs for Germany, the German economic adviser said in the interview. (Bloomberg)

U.S. retail and food sales continued to increase last month, a positive sign  in the  uncertain economic situation, the U.S. Department of Commerce reported. The Commerce  Department said that the combined retail and food sales gained 0.5% mom to seasonally  adjusted US$390.4bn in Jul (+0.3% in Jun). Economists expected a 0.4% rise in Jul.  (Xinhua, Bloomberg)

U.S. retail and food sales excluding autos  were up 0.5% mom in Jul (+0.2% in Jun).  Economists expected a reading of 0.2%. (Xinhua, U.S. Census Bureau, Bloomberg)  

U.S. consumer confidence plunged in Aug to the lowest level since May 80, adding to  concern that weak employment gains and volatility in the stock market will prompt households to retrench. The Thomson Reuters/University of Michigan preliminary index of  consumer sentiment slumped to 54.9 in Aug (63.7 in Jul). Economists projected a decline  to 62. (Bloomberg)  

U.S. business inventories rose slightly less than expected in Jun, suggesting firms  remained cautious about future demand at the end of 2Q. Inventories climbed 0.3% in Jun  (+0.9% in May), the Commerce Department said. Economists had expected a rise of 0.5%  in Jun. (Reuters)  

Eurozone industrial production fell in Jun at the sharpest rate for six months in the latest  sign that the economy is slowing rapidly, official  data showed. Industrial output fell 0.7%  mom in Jun (+0.2% in May), the sharpest drop since  Dec. On a yoy basis, it was 2.9%  stronger in (4.4%  in May), the Eurostat agency said. Economists estimated the reading  would rise 0.2% mom in Jun. (WSJ, Bloomberg)  

Japan's  industrial output climbed 3.8% mom in Jun (+6.2% in May), revised data  showed, confirming growth is moderating following a rapid recovery from a massive  earthquake and tsunami in Mar.  (Reuters)  

China said the nation's lenders issued a lower-than-expected Rmb492.6bn (US$77 billion)  in new loans in Jul (Rmb633.9bn in Jun), indicating Beijing's efforts to rein in liquidity are  taking effect. Economists forecast new lending of Rmb555bn in Jul. (AFP)  

The  Hong Kong economy expanded 5. 1% yoy in 2Q (7.5% in 1Q), lower than market  expectations of around 6%, according to figures released by the city's government. On a  seasonally adjusted qoq basis, the economy contracted 0.5% in real terms in 2Q (+3.1% in  1Q), which was the first quarterly decline in two years. Economists expected a 0.4%  increase. (Xinhua)

Japan’s finance minister warned he’s ready to intervene in the currency market again to  stem a  yen advance that risks slowing the nation’s recovery.  “An unstable situation is  continuing,” Yoshihiko Noda, said. “As foreign exchange market matters are my  prerogative, I will continue to closely watch the markets and take bold action if it becomes  necessary.” (Bloomberg)  

Singapore will maintain the thrust of the policies that have helped the economy, even as  it will make adjustments to address specific concerns, Prime Minister Lee Hsien Loong  said. Investors are waiting to see  what Singapore will do after the May general election,  and the island will maintain policies that are important to the country and helpful to  investors, he said. The nation will keep its policies pragmatic and constructive, he said.  (Bloomberg)  

U.S. ambassador to China Gary Locke said that President Barack Obama and the United  States government are “committed to getting our  fiscal house in order.” “We know that  over the last several days more people are buying U.S. Treasuries,” Locke said. “It is a  clear indication that investment in the U.S. is safe and secure,” Locke said. (Bloomberg)

China’s  central bank said that the U.S. faces “debt sustainability” risks in the mediumand long-term, the latest expression of concern from the nation that is America’s biggest  creditor. The risk of a U.S. default has been “basically eliminated in the short term” after  the raising of the government’s debt ceiling, it said. (Bloomberg)  

Chinese regulators have told banks to tighten lending for real estate on concern credit  risks will increase as the impact of government curbs deepens in the next three to five  months, a person familiar with the matter said. The China Banking Regulatory Commission  told lenders last month not to extend the maturity of loans to developers, not to grant new  credit to help developers repay maturing debt and to set significantly higher standards on  loans for commercial properties than residential, the person said, declining to be identified  as the discussions were private. (Bloomberg)