20120718 1001 Local & Global Economy Related News.

The government is currently engaging with all quarters to provide more in-depth knowledge on the proposed goods and service tax (GST), said Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah. He said the authorities, through many initiatives, were in the consultation phase of the new tax involving the Malaysian public, business community and the private sector. The GST Bill was tabled in Parliament for first reading in Dec 2009 but its second reading, originally planned for Mar 2010, was postponed. (BT)

The Inland Revenue Board (IRB) is eyeing an annual tax revenue growth of 15%, from a record RM109.7bn collected last year, under its newly-launched IRB Corporate Plan 2012-2015. CEO Tan Sri Mohd Shukor Haji Mahfar said the target was within reach as the board has identified ways to improve tax administration and compliance for direct tax collection. The three-year strategic plan, which complements the 10th Malaysia Plan, will focus on tax management, service delivery, organisation risk management, information technology management, coordination, human resource optimisation, human capital development and teamwork. (BT)

Consumer confidence in Malaysia rose 4 pts to an index of 111 in 2Q12, a six-year high according to the latest global online consumer confidence findings by Nielsen. Nielsen said Malaysia advanced to fifth place from seventh among the 56 countries surveyed, after Indonesia (120), India (119), the Philippines (116) and Saudi Arabia (115). (Bernama)

After two quarters of contraction, the Retail Trade Index (RTI) finally breached the 100 pts threshold to settle at 119.4 pts in 2Q12 (85.3 pts in 1Q12). Heightened consumer spending due to various government initiatives may have shored up retail spending, according to the Malaysian Institute of Economic Research (Mier). (Bernama)

Malaysia's economic scenario next year will depend on domestic demand and external factors, particularly developments unraveling in the protracted euro zone debt crisis. Malaysian Institute of Economic Research (Mier) Executive Director Dr Zakariah Abdul Rashid said the global economic picture was not very encouraging as China's economy was moderating while Europe's was shrinking. The continuing weaknesses in the US, particularly its weak job market, was also contributing to the sluggish economy. The infrastructure contracts and the completion of already-commissioned projects under the ETP will likely to sustain investment momentum this year amid a boost to consumer spending will bode well for the economy, Mier said. (Bernama, Financial Daily)

Weakness in the global outlook clouds Malaysia’s prospects given the country‟s close integration with the world economy, according to the Asian Development Bank (ADB). In its revised Asian Development Outlook (ADO) 2012 indicated that growth in Malaysia is moderating to about 4% in 2012, then quickening to 5% in 2013 as the external environment improves and domestic demand will again play its role to anchor growth in the region. Inflation rate will most likely recede to 2.4% because of the moderation of domestic demand coupled with the lower prices of imported commodities. Inflation is predicted to pick up to 2.8% in 2013. (Financial Daily)

Thailand's car sales in Jun surged to 123,471 units, up 75.7% yoy (107.6% yoy in May), driven by a recovery in both domestic and external demand. (Reuters)

The Thai cabinet approved a Baht15bn budget to shore up rubber prices, of which Baht10bn will come from the state Rubber Estate Organisation and the remaining Baht5bn will be an extra allocation. (Bangkok Post)

Singapore: Export growth unexpectedly quickens on pharmaceuticals

Singapore’s export growth unexpectedly quickened in June as pharmaceutical shipments rebounded, countering a smaller increase in electronics sales. Non-oil domestic exports climbed 6.8% from a year earlier, after a 3.2% gain in May, the trade promotion agency said. The median of 13 estimates in a Bloomberg News survey was for a 2% increase. (Bloomberg)


India's potential growth rate may have fallen to around 7.5% as the uncertainty surrounding economic activity since the financial crisis of 2008-09 has increased now, Reserve Bank of India Governor Duvvuri Subbarao said. (WSJ)

FDI in China fell by 3% in 1H12 to US$59.1bn, well below the US$60.89bn recorded in the same period last year, according to the commerce ministry. (AFP)

China: Boosts treasuries holdings amid slowing economic growth

China, the largest foreign US creditor, boosted its holdings of government securities in May to the most in six months as the American economy stalled and Europe’s sovereign-debt crisis deepened. Chinese holdings rose 0.4% to USD1.17tn, Treasury Department data released show. Those of Japan, the US’s second-largest lender, rose 1.4% to an all-time high of USD1.11tn. Net foreign purchases of Treasuries increased USD54.2bn, or 1%, to a record USD5.26trn in May, the data show. (Bloomberg)

Germany: Investor confidence falls to six-month low
German investor confidence declined for a third month in July as the euro area’s debt crisis and cooling global demand dimmed the economic outlook. The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, fell to minus 19.6 in July from minus 16.9 in the previous month. (Bloomberg)


Greece is seeking extra money from its international creditors in the form of a bridge loan to cover a €3.1bn bond redemption entirely held by the ECB in late Aug and is hoping to avoid introducing additional cutbacks for this year. The government is putting together a plan to save €11.5bn (US$14bn) over the next two years. (WSJ)

Italy: Contracted more than 0.5% in second quarter, BOI says
Italy’s recession-hit economy shrank more than 0.5% in the three months through June amid the European debt crisis and declining domestic demand, the Bank of Italy said. The drop in GDP was “slightly more than half a percentage point” in the period, the central bank said. Industrial output probably fell 1.5% in the second quarter from the first, the Rome-based bank said. (Bloomberg)

US: Consumer price index unchanged, core up 0.2%
The cost of living in the US was little changed in June, a sign inflation may stay subdued as Federal Reserve officials have predicted. No change in the consumer-price index followed a 0.3% drop in May, a Labor Department report showed. The measure matched the median forecast of economists in a Bloomberg News survey. The so-called core measure that excludes volatile food and fuel costs rose 0.2% for a fourth month. (Bloomberg)


US Federal Reserve Chairman Ben Bernanke admitted that US economic data had been "disappointing" and that a future reduction in unemployment would likely prove "frustratingly slow." He added that revelations that the Libor had been rigged were "very troubling," undermined confidence in the financial system and should be fixed. He also said that the central bank was considering a range of tools it could employ to help the economy but he hewed closely to the message of watchful waiting that the central bank's policy panel delivered in June. (AFP, Reuters)

The US ICSC-Goldman Store Sales Index experienced no change on a wow basis in the 14 Jul week (2.0% in the previous week), whilst on a yoy basis, the measure gained 2.6% (3.0% in the earlier week). (Bloomberg)

US industrial production gained 0.4% mom in Jun (a revised -0.2% in May), overshooting consensus of 0.3%. The capacity utilisation rate rose to 78.9% from a revised 78.7% in May. Analysts expected 79.2%. (Bloomberg)