The Ministry of International Trade and Industry (MITI) has proposed to amend or review the Promotion of Investments Act (1986) to boost the development of domestic investments, said secretary-general Datuk Dr Rebecca Fatima Sta Maria. The move is to allow domestic companies that are already in operation to avail themselves of the incentives and benefits. The idea is not to frustrate domestic companies but facilitate growth and transformation, she said. MITI has also proposed to review the criteria to allow more domestic companies to benefit from small-scale incentives by raising the preferential tax threshold for small and medium enterprises (SMEs) from RM500,000 to RM2.5m. Apart from that, MITI has also proposed to extend the Reinvestment Allowance to selected services sector, she said. Under MIDA, 60% of the 9,506 domestic manufacturing projects approved with tax incentives since 1980 were Malaysian-owned, said Rebecca.
As at 21 Dec 2011, total disbursement of incentives, including soft loans and grants provided to the SMEs, stood at RM636.5m. (Bernama)
China could face an economic crisis if it does not implement major reforms in the next 20 years, the Wall Street Journal said, citing a report by the World Bank and Chinese government researchers. The "China 2030" report, to be released next Mon, warns economic growth is at risk of a sharp and sudden slowdown, which could trigger a severe downturn in the world's second-largest economy. (AFP)
China has called for greater use of rare earths for its own domestic manufacturing, with the nation to "give full play to China's dominant position of rare earths resources to expand the scale of the rare earths new materials industry," the government said in a development plan for 2011-2015. (AFP)
The People’s Bank of China suspended its regular open market operation for the second straight week, thereby injecting funds into the market in Beijing's latest effort to keep money market liquidity conditions loose and provide support to the country's slowing economy. (WSJ)
The preliminary HSBC China Manufacturing PMI was 49.7 in Feb, compared with a final reading of 48.8 for Jan, HSBC Holdings PLC said. (WSJ)
Japan said it may provide up to US$50bn to the International Monetary Fund to help fight Europe's debt crisis, but the exact figure is yet to be decided. (AFP)
South Korean composite consumer sentiment index grew to 100 in Feb (98 in Jan), according to the Bank of Korea. (Bloomberg)
Singapore: Sees volatile inflation after slowing in Jan
Singapore said inflation will remain elevated and volatile in the next few months even after consumer price gains eased to the slowest pace since May.The Department of Statistics said the consumer price index rose 4.8% last month from a year earlier. The median estimate of 15 economists surveyed by Bloomberg News was for a 4.7% gain. The core inflation rate was 3.5% in Jan. (Bloomberg)
Indonesia: Higher fuel prices may hurt inflation target
Indonesia’s inflation may exceed the central bank’s target this year if the government raises prices of subsidized fuel by IDR1,000 (USD0.11) per liter or more, Governor Darmin Nasution said. The government will discuss its plan to raise fuel prices with parliament “soon” and any decision will be announced when it revises the 2012 state budget, Energy and Mineral Minister Jero Wacik said. He added the government will propose to increase the price of subsidized fuel by IDR500 to IDR1,500 per liter. An increase of IDR1,000 to IDR1,500 would mean “inflation will rise above our target,” Nasution told reporters in yesterday. Bank Indonesia targets inflation of 3.5% to 5.5% in 2012, and has said consumer prices may rise 5% this year if the government proceeds with a plan to limit the sales of subsidized fuel. (Bloomberg)
Global: India said to propose BRICS Bank to fund emerging nations
India has proposed setting up a multilateral bank that would be exclusively funded by developing nations and finance projects in those countries, two government officials with knowledge of the matter said. The plan has been circulated to the countries in the so- called BRIC group - Brazil, Russia, India and China - as well as to South Africa, an Indian government official said. A Brazilian government official confirmed the proposal. The plan will be discussed among developing nations alongside the meeting of Group of 20 finance ministers in Mexico City this weekend. (Bloomberg)
Australia: Gillard calls Labor leadership vote after Rudd resigns from post
Australian Prime Minister Julia Gillard called a leadership vote for 27 Feb, setting up a second showdown with her predecessor Kevin Rudd as weeks of growing tension damage the Labor government. “We need a leadership ballot in order to settle this question once and for all,” Gillard, the nation’s first female prime minister, said at a press conference, after Rudd yesterday resigned as foreign minister. The move aims to bring to a head 11 days of escalating rivalry between Gillard and Rudd, as opinion polls show Labor’s popularity is hovering near a record low. (Bloomberg)
Germany: Merkel signals she’ll keep austerity pressure on Greece after rescue fund
German Chancellor Angela Merkel indicated she will maintain pressure on Greece to meet debt- cutting pledges required for its second financial rescue, saying fiscal discipline is needed to hold the euro area together.Merkel’s renewed backing for European unity in the face of the debt crisis marked her first public comments since euro-area finance ministers signed off on Wednesday a 130bn-euro ($172bn) rescue for Greece aimed at averting the first sovereign default in the currency union’s 13-year history. (Bloomberg)
Germany: Business confidence increases to 7-month high
German business confidence rose more than economists forecast to a 7-month high in Feb as progress in taming Europe’s debt crisis tempered the risk of a recession. The Munich-based Ifo institute said its business climate index, based on a survey of 7,000 executives, climbed to 109.6 from 108.3 in Jan. That’s the fourth straight gain and the highest reading since Jul. Economists predicted an increase to 108.8, according to the median of 38 estimates in a Bloomberg News survey. (Bloomberg)
Italy: Consumer confidence rose more than forecast in Feb
Italian consumer confidence rose more than economists forecast in Feb as an easing of Europe’s sovereign debt crisis buoyed household sentiment and the outlook for employment. The national statistics office Istat said that the confidence index rose to 94.2 from a revised 91.8 in Jan, which was a 16-year low. Economists forecast a reading of 92.1, according to the median of 10 estimates in a Bloomberg News survey. (Bloomberg)
Greece: IMF said to limit exposure at €30bn after new loan
An IMF official said that the organisation will seek to keep its exposure to Greece under a new bailout package at 30bn euros ($39.8bn), including money still owed from a previous loan. IMF MD Christine Lagarde has indicated that the fund’s credit to Greece after the second loan will remain at the maximum available under a 30bn-euro loan agreed in 2010, said the official, who spoke to reporters on condition of anonymity. About 10bn euros of the first loan hasn’t been disbursed, the official said. (Bloomberg)
Euro: EU confirms Spain 2012 recession, warns on further austerity
Spain’s economy will relapse into a recession in 2012 and additional austerity measures may worsen the slump, the European Commission said. Spain’s economy will contract 1% this year after expanding 0.7% in 2011, the commission said in a report yesterday. Spain’s deficit-reduction efforts are being hobbled by a slump in growth since the last quarter of 2011. The International Monetary Fund expects the fourth-largest economy in the euro area to contract 1.7% this year, its second recession in as many years, preventing the nation from meeting its budget goals. (Bloomberg)
EU: Economy to contract as Italy, Spain tumble
The European Commission said Europe’s economy will shrink in 2012, with Italy and Spain facing sudden crunches as they battle to escape the debt crisis.The 17-nation euro economy will contract 0.3%, the commission said, abandoning a Nov forecast of 0.5% growth. The downgrade was mainly due to projected contractions of 1.3% in Italy and 1% in Spain. (Bloomberg)
US: UK and Japan warn Volcker rule poses threat to recovery
The UK and Japan have urged the US to rewrite its so-called “Volcker rule”, claiming that trading restrictions on US banks could hit the international sovereign debt market at a delicate moment in the global recovery.George Osborne, the British chancellor, has joined forces with Jun Azumi, his Japanese counterpart, in warning in a column in the Financial Times that the US banking reforms could make it more difficult, costlier and riskier for countries to issue and distribute debt, at a time when many eurozone countries are already under strain. The article is the highest profile expression of international concern about the impact of the US reforms, coming from the finance ministers of two countries regarded as among Washington’s greatest economic allies. (Financial Times)
US: Home prices declined 2.4% in 4Q, FHFA says
US home prices fell 2.4% in the fourth quarter from a year earlier, as sales were boosted by investors seeking lower-cost distressed properties. Prices dropped 0.1% from the prior three months on a seasonally adjusted basis, the Federal Housing Finance Agency said yesterday in a report from Washington. In December, prices retreated 0.8% from a year earlier, while increasing 0.7% from the previous month. Foreclosures are boosting the supply of properties on the market and dragging down values for all houses. (Bloomberg)
US: Jobless claims hold at four-year low
The number of Americans filing first-time claims for jobless benefits last week held at a four-year low and consumers became more confident, indicating an improving labor market may boost household spending. Applications for unemployment insurance benefits were unchanged in the week ended 18 Feb at 351,000, the fewest since March 2008, Labor Department figures showed yesterday. (Bloomberg)
US: Obama seeks corporate tax rate cut
President Barack Obama on Wednesday proposed a lower corporate tax rate and an end to dozens of loopholes he said helps companies move jobs and profits overseas. The president wants to lower the corporate tax rate from the current 35%, the highest in the world after Japan. Under his plan, manufacturers would receive incentives so that their effective tax rate could be even lower. Obama's election-year plan would set a new 28% corporate tax rate, still higher than the 25% rate sought by congressional Republicans. Obama said the framework will lower the corporate tax rate and broadens the tax base in order to increase competitiveness for companies across the nation. Corporations would have to give up dozens of cherished loopholes and subsidies that they now enjoy. Corporations with overseas operations would also face an unspecified minimum tax on their foreign earnings. (Bloomberg)
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