20100409 1301 Malaysian Economic News.

The Industrial Production Index (IPI) rose 4.9% yoy in February (13.7% in Jan) due to higher manufacturing and electricity indices. The manufacturing output increased 6.8% yoy, mining production declined marginally by 0.3% yoy and electricity production rose 11.4% yoy in February. However, the index declined 11.0% mom. For the January- February period, the IPI rose 9.4%. (DOS, Bernama) Please see our Economic Update for further details

The manufacturing sales rose 17.3% yoy to record RM40.3bn in February (28.9% in Jan). Month-on-month, the sales value, however, decreased by 7.0% or RM3.0bn. In the January-February period, it posted a double-digit growth of 23.0% or RM15.7bn to RM83.7bn.

• Total employees engaged in the manufacturing sector decreased 16,327 persons or 1.7% yoy to 952,289 persons (-3.7% in Jan). As compared to the preceding month, it increased 0.2% or 2,124 persons in February.
• Salaries and wages paid increased 0.3% mom or RM5.4m to RM2.2bn. The total amount paid also increased 14.2% yoy or RM267.2m in February (12.7% in Jan).
• On productivity, average sales value per employee decreased 7.2% mom to register RM42,350. However, it increased by 19.3% yoy in February (33.9% in Jan). (DOS, Bernama)

The government will postpone the introduction of a goods and services tax (GST) to after 2011, Second Finance Minister Ahmad Husni Hanadzlah said, delaying plans that would increase revenue and help narrow the budget deficit. The government hasn’t decided on the next two readings of the bill to pass the law. The current timelines won’t apply. The government will approve an additional budget this year to carry out new initiatives and as some ministries need more funds to execute their programs, Ahmad Husni added.

• The government wants to give the public time to understand the changes in the socalled New Economic Model (NEM) before implementing new systems. The 10th Malaysia Plan that will be unveiled later this year may set out the new timelines for the GST, the minister said. (BT, Bloomberg)

The central bank said the economy has the potential to grow above 5.0% this year. “This year, the economy is projected to grow in the region of 5.0% with further upside potential. The fiscal and monetary polices will be aimed at providing sustainable economic growth,” said Governor Tan Sri Dr. Zeti Akhtar Aziz. (BT)

South Korea's trade with Malaysia is expected to increase by 42% this year (-32% in 2009) in line with the global economic recovery. There was a general trend from 2005 to 2007 where trade grew by about 10% annually, said Deputy Trade Minister, Lee Hye-Min. Among the sectors that would give bilateral trade a boost were green energy, semiconductor, computers and electronics. He said the Asean-Korea Free Trade Agreement (FTA) should look to further liberalise the services and investment areas, especially in the movement of people. (Bernama)

An allocation of RM32.5bn is needed for the proposed flood mitigation projects nationwide under the Tenth Malaysia Plan (10MP). That compared to RM2bn was spent on relocating and evacuating flood victims and repairing damaged infrastructure under the 9MP. Natural Resources and Environment Minister Datuk Seri Douglas Uggah Embas said the proposal had been submitted to the Cabinet for approval. (Bernama)

Employers are still deducting levy from their foreign workers although the government has put a halt to it, Malaysian Trades Union Congress (MTUC) claimed. Its vice-president A. Balasubramaniam said with effect from Apr 09, employers should have stopped levy deduction from the salaries of their foreign workers. This means that the employers had to the pay the levy in full as a deterrent for them not to employ foreigners. "However, this was not being implemented because there was "confusion as to whether the immigration or labour department was responsible for its implementation," said Balasubramaniam. (Bernama)

An independent commission will be set up to investigate and take action against the power of monopolies and cartels in determining prices when the Competition Act 2010 is passed by the Dewan Rakyat.

• "The independent commission will monitor cases involving monopolies and cartels that are established after the Dewan Rakyat passes and gazetted it," Domestic Trade, Cooperative and Consumerism Minister Datuk Seri Ismail Sabri Yaakob said. 
• He said the commission's establishment was an important step in creating a consumer-friendly business environment to thwart the power of monopolies and cartels. (Bernama)

The Selangor Malay Chamber of Commerce Malaysia (DPMMS) feels that the economic equity of Bumiputeras, particularly Malays should be raised from 30% under New Economic Policy (NEP) to 50% under the New Economic Model (NEM). On plans under the NEM, where the government and the Employees Provident Fund (EPF) will be building a new hub in Sungai Buloh for the Klang Valley, DPMMS hoped that the government will consider giving entrepreneurs under DPMMS the chance to participate in the project. (Bernama)

Malaysia’s economy is firmly on the recovery path and may grow faster than forecast, central bank Governor Zeti Akhtar Aziz said at the Korea-Malaysia Business Forum. “The Malaysian economy is projected to grow in the region of 5% with further upside potential,” Zeti said. (Bloomberg)

The price of pigs from farms will be increased by 30 sen to RM7.90 for every 100gm from tomorrow. Federation of Livestock Farmers Association chairman (swine unit) Jeffery Beh said it was the first time that the price of the animal had reached so high. Beh, who blamed the increase on higher price of pig feed worldwide caused by natural disasters, said the price of corn was RM400 per tonne four years ago but had now risen to between RM860 and RM870. He hoped that the new price would be maintained until year-end. (The Star)