20100520 1111 Malaysian Economic News.

Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz said inflation will remain modest this year and the process of rate normalisation will be dynamic. If there was any slowing down, the rate normalization would take a pause. But in a period of very strong growth, there is potential room to normalise further.

• She stressed that local financial institutions had limited exposure to the debts crisis in Europe. Thus, the central bank expected the local economic situation to improve further despite the uncertainties coming out from Europe. (Bernama)

Bank Negara Malaysia and the Australian Treasury have signed a Memorandum of Understanding (MoU) to facilitate cross border co-operation in the financial services industry, including Islamic finance and the regulation of financial products. It focus on several key areas:

• Ehancing mutual co-operation on capacity building and human capital development in the financial services industry. 
• The exchange of information and experience in the legal, regulatory and supervisory frameworks. 
• Facilitating and promoting the development of an effective and conducive financial market infrastructure.
• Enhancing cross-border financial activities including research on Shariah matters in Islamic finance products and services to promote consistent application for cross-border transactions. (BNM, Bernama)

Malaysia for the first time since 1999 has earned a position among the top 10 most competitive countries in the world with an index score of 87.2228, jumping eight notches to 10th place this year(18th in 2009), according to the IMD World Competitiveness Yearbook 2010.

• International Trade and Industry Minister Datuk Seri Mustapa Mohamed said this strengthened position rests largely on significant improvements in Government and Business Efficiency rating, moving up to 9th (19th in 2009) and 4th (13th in 2009) respectively, demonstrated that the Government Transformation Programme (GTP) was beginning to deliver results. 
• Among middle-income countries, with GDP per capita under US$20k, Malaysia ranks second only to Taiwan. (MITI, Bernama)

PM Datuk Seri Najib Tun Razak on 19 May launched a benchmark US dollar denominated Global Sukuk under the Malaysia International Islamic Financial Centre (MIFC) initiative. The sukuk, which will be listed on Bursa Malaysia, Hong Kong and the Labuan financial exchange, is assigned a rating of A- by Standard and Poor's and A3 by Moody's. The rating “reflects the strength of the transaction documentation, including the lease and purchase undertaking agreements,” Standard & Poor’s said. (Bernama, BT)

Malaysia is on track to reduce its fiscal deficit to 5.6% or lower of the GDP this year from 7.0% in 2009, PM Datuk Seri Najib Tun Razak said. External debt has improved to 34.4% of GDP and notably, as a result of prudent debt management strategies. The Government’s external debt is presently at only 2% of the GDP. (StarBiz)

The Employees Provident Fund (EPF) expects its investments to touch RM500bn mark by end-2013, said Deputy Chief Executive Officer (Investment) Shahril Ridza Ridzuan. Its investments stood at RM385bn as at 1Q10. (Bernama)

The Employees Provident Fund (EPF) plans to tighten the guideline for members to invest in unit trust funds to ensure their investments are protected. It will set a certain minimum criteria before a unit trust fund is made available under the EPF scheme for withdrawal from members’ accounts.

• At present, there are more than 300 unit trust funds approved by EPF, managed by 37 different unit trust managers. In Jan-Mar 10, an average of RM2.18bn was withdrawn (RM3.31bn in 2009) out of an average of RM3.35bn of contributions received every month. (NST, The Star)

Five separate memorandum of agreement (MoA) worth a total US$125.3m were signed at the 6th World Islamic Economic Forum yesterday. The first MoA valued at US$30m, was on strategic partnership for the global distribution of Islamic investment products. The second MoA worth US$33m, was on collaboration on customization of Islamic investment products and hedging solutions. The third MoA was for the sale and purchase of Malaysian fresh fruits and frozen chicken, valued at US$7.3m. The fourth and fifth agreements with a total value of US$58m. (StarBiz)