EXPORTS INCREASED 11 PER CENT IN 2005

Malaysia's total trade for 2005 recorded its second highest growth over the last five years, increasing 9.9 per cent to RM967.8bil, and is expected to hit RM1tril this year.  Exports increased 11 per cent to RM533.8bil while imports grew 8.5 per cent to RM434bil.  This increased Malaysia's trade balance to RM99.8bil from RM80.7bil in 2004.  It also marked a trade surplus for eight consecutive years, said Minister of International Trade and Industry Datuk Seri Rafidah Aziz at a media conference yesterday to unveil Malaysia's trade performance in 2005. 

December recorded the highest monthly total trade of RM89.5bil.  Export for that month grew 13.9 per cent from November to RM49.5bil and imports soared 15.1 per cent to RM40.1bil.  Rafidah said the export growth in 2005 was higher than the world merchandise export growth of 6.5 per cent, projected by the World Trade Organisation.  It was also consistent with the 2006 Budget's estimate of 10.8 per cent export growth for 2005.  The continued positive economic expansion in the industrialised and developing economies and growth in exports to major markets, especially the US and Asean and new markets in South Asia, West Asia, Africa and Latin America, were identified as driving the growth in export last year. 

Besides that, strong external demand, due to the global recovery in the electrical and electronics (E&E) sector and escalation in average price of crude petroleum to US$56.60 per barrel last year, which boosted Malaysia's export earnings from petroleum and liquefied natural gas, also contributed to the growth.  Imports in 2005, up 8.5 per cent, was the second highest growth rate in the last five years.  It was attributed to higher imports of capital and intermediate goods, collectively accounted for 85.1 per cent of total imports.  Intermediate goods imports grew 7.5 per cent to RM309.3bil, in tandem with higher levels of manufacturing activities in Malaysia, as reflected in the 4.1 per cent growth in the Industrial Production Index for 2005. 

The 7.7 per cent increase in capital goods imports to RM59.7bil was due to higher capital formation from investment activities.  Rafidah said Malaysia's exports this year was set to remain robust based on projected positive outlook for the economy and trade as well as the expected expansion of the domestic economy.  She added that exports of E&E products were expected to strengthen due to increasing demand for wireless applications and consumer electronics in major markets.  The Malaysian American Electronics Industry (MAEI) has projected a positive outlook for Malaysia's E&E sector in 2006, with preliminary forecast for sales of its members to expand between 5 per cent and 7 per cent.  MAEI expects more value-added activities to be undertaken within Malaysia's E&E sector this year.  The strengthening of the ringgit would not have much effect on the country's exporters and importers, Rafidah said.

(Source:  The Star, 15 February 2006)

GOVT TO DEFER GST RULE

The Finance Ministry yesterday said the government has decided to defer the implementation of the goods and services tax (GST) from Jan 1, 2007 to a new date to be announced.  In a statement, the ministry said its Tax Review Panel had received feedback that strongly suggested a need for more time to further refine the proposed GST model and to ensure businesses were ready to implement the GST.  The private sector had highlighted the need for lead-time, especially for potential changes in business processes, development of software and training of personnel, it added.

Economists were generally positive on the deferment but some expressed hope GST would be implemented sooner rather than later.  "The move is prudent as we aren't ready for (GST) implementation.  Since we already had two years to prepare for GST, it is hoped that the new date would be sooner rather than later, given the sizeable longterm benefits of migrating to a value-added tax system," said RAM Consultancy Services Sdn Bhd managing director and chief economist Dr Yeah Kim Leng.  Avenue Securities economist Maslynnawati Ahmad concurred, saying "hopefully it (the postponement) would not be dragged on for too long."

SBB Securities Sdn Bhd economist Manokaran Mottain however strongly supported the move to defer the GST implementation date and highlighted inflation worries.  "GST will result in higher prices for goods and services if it is implemented so soon, especially with the recent inflation numbers," he said.  Accounting firms welcomed the move as giving more time for businesses to prepare for the additional documentation work in GST, but all called for legislation to be firmed up and the future date for implementation to be fixed soon.  Deloitte Kassim Chan GST implementation team leader Ronnie Lim said with only 10 months to January 2007, companies would not have had sufficient time to implement GST.  Although its implementation was announced during the last budget, many companies had been taking a wait-and-see attitude as details of GST were still very much under wraps, he said.  Lim's view was shared by KPMG Tax Services senior tax partner Khoo Chin Guan and Shamsir Jasani tax advisory & compliance senior manager Murugan Anbanantham.  "Ultimately, they (the private sector) need assurance from the Government that GST will be a certainty," Khoo said. 

PricewaterhouseCoopers Malaysia senior executive director Wan Heng Choon said the postponement was not unexpected as GST was not simply a tax issue but had impact on the whole supply chain.  The Federation of Malaysian Manufacturers (FMM), however, felt that the implementation of GST would erode the competitiveness of local industries, particularly exporters.  The effect of GST on input costs at multi stages, as opposed to the current single-stage sales and service tax, would raise the cost of funding the inputs, FMM said.  "During this time of acute global competition and high energy prices, any rise in costs can affect our industries' competitiveness and dampen demand for our exports," it said.

(Source:  The Star, 23 February 2006)

MALAYSIA ECONOMY GREW 5.3 PER CENT IN 2005

Malaysia's economy recorded an expansion of 5.3 per cent last year, a slower growth from the previous year's annual gross domestic product (GDP) growth of 7.1 per cent.  For the fourth quarter 2005, GDP growth, in real terms, eased to 5.2 per cent compared with 5.3 per cent in the third quarter, the Statistics Department said in a statement yesterday.  It said the manufacturing sector posted a relatively high growth rate of 7.3 per cent against 5.7 per cent, 3.1 per cent and 3.5 per cent in the previous three quarters respectively. 

Agriculture, on the other hand, recorded a negative growth of 1.1 per cent in the fourth quarter due to a 6 per cent drop in oil palm production.  Mining eased by 2 per cent due to negative growth in the production of crude oil, condensate and natural gas of 3.6 per cent, 0.8 per cent and 0.5 per cent respectively.  The construction sector contracted by a further 0.6 per cent in the fourth quarter while services moderated to 6 per cent against 6.3 per cent in the third quarter.  For the full year, the manufacturing, services and agricultural sector grew 4.9 per cent, 6.5 per cent and 2.1 per cent respectively, while mining and construction contracted by 2 per cent and 1.6 per cent. 

Final consumption expenditure continued to increase significantly by 10 per cent during the fourth quarter against the previous quarter's 9.3 per cent, mainly led by government expenditure, which grew 12.8 per cent, while private consumption expanded by 9 per cent.  The external sector also registered a significant growth with exports growing by 10.4 per cent and imports by 8 per cent in the fourth quarter.  The strength of the exports was attributed to electrical and electronic products, palm oil and palm oil-based products, timber and related product and liquefied natural gas. 

The increase in imports was largely on account of imports of intermediate goods.  Avenue Securities economist Maslynnawati Ahmad said the slowdown in the fourth-quarter growth was mainly due to declines in the agricultural and mining sectors.  "Overall, the GDP figures were within our expectation," she said, adding that for this year, the brokerage estimated the DGP growth rate to remain flat at 5.3 per cent.  "We don't expect much boost from the Ninth Malaysian Plan since projects that were brought forward to last year haven't taken off yet," she said.  An economist at another brokerage, who declined to be named, said the fourth-quarter GDP was below his estimate of 5.7 per cent.  Nonetheless, the brokerage expects the economy to grow by 5.5 per cent this year amid stronger external demand.  "We expect the agriculture and mining sectors to pick up again, hence lifting the GDP," he said.  Services were likely to be supported by tourist arrivals, he added.  In a separate statement, Bank Negara said its international reserves rose to RM270.4bil as at Feb 15 from RM269.4bil as at Jan 27. 

(Source:  The Star, 23 February 2006)

GOVT OPTIMISTIC OF 5.5 PC GROWTH

The Government is confident of meeting a projected 5.5 per cent gross domestic product (GDP) growth this year, Second Finance Minister Tan Sri Nor Mohamed Yakcop said.  Bank Negara Malaysia on Wednesday said the economy grew at 5.2 per cent in the fourth quarter, bringing the full year expansion to 5.3 per cent in 2005.  The data was slightly below market expectations and a Business Times poll of economists, which expected the fourth quarter to grow at 5.6 per cent and 2005 to register 5.37 per cent growth.  "We have projected a 5 per cent growth last year, so 5.3 per cent was higher.  We are confident to achieve 5.5 per cent this year," Nor Mohamed said after officiating the Finance Ministry's Integrity Day in Putrajaya yesterday.  He said growth this year would be driven by services, manufacturing and agriculture. 

Nor Mohamed declined to comment further on the official interest rate, which was raised by another 25 basis points to 3.25 per cent on Wednesday.  "As I said earlier, these marginal increases in rates and all that, in the bigger scheme of things, they are not major factors that affect growth and development," he said.  "The economy seems to be doing well," he added.  He also said the Government has not decided on a new date to implement the Goods and Services Tax (GST), which was initially scheduled to take effect from January next year.  "There were some issues raised, many associations came back to say that they need more time to prepare (for the change in tax system)," he said.  He said the delay was not related to the fact that the country is in the midst of fighting inflation.  "It is just the technical aspect, for them to get things ready," he said. 

Economists believe the GST is a more efficient tax system in terms of collection as it is less prone to leakages, but the timing of implementation is important as it will add to inflationary pressure.  Meanwhile, Nor Mohamed said although regulated short-selling of shares is to allowed in Malaysia, the Government will have to consider lifting the ban going forward.  "We need to consider whether we are ready, whether the country has reached the stage of advancement to allow such activities," he said.

(Source:  Business Times, 24 February 2006)

ROBUST ECONOMY THIS YEAR:  IMF

The International Monetary Fund (IMF) expects Malaysia to register a robust economic performance this year with a 5.5 per cent growth rate, from 5.3 per cent last year.  In a statement from Washington yesterday, it also projected the deficit to narrow to 3.4 per cent of gross domestic product (GDP), from an estimated 3.7 per cent in 2005.  The trade balance is expected to increase to US$33.2 billion, up from US$31.5 billion while the current account surplus is expected to rise to 20.5 per cent of GDP from 18.9 per cent. 

The IMF also noted that since the exit from the exchange rate peg on July 21 last year, the ringgit continued to appreciate slowly against the greenback, with a cumulative appreciation of 2.5 per cent.  It described Bank Negara's monetary stance as accommodative, although it has raised its policy interest rate twice by 55 basis points since last November.  The inflation rate, the fund said, is projected to grow at 3.1 per cent this year, from an average 3.0 per cent last year.  The IMF's executive board had last week concluded its Article IV consultation with Malaysia, and observed that the near-term outlook is generally favourable, with expectations that recovery of private investment and domestic consumption will drive a broad-based expansion.

The downside risks stem mainly from the effects of continued high oil prices on trading partners' demand for Malaysia's exports.  IMF directors welcomed the recent increase in retail fuel prices, saying it will reduce budgetary pressures and encourage more efficient energy use.  They also recommended the establishment of a petroleum fund that would be fully integrated into the budget, and supported by clear rules regarding the deposit and withdrawal of hydrocarbon revenues into and out of the fund.  The petroleum fund would also help ensure effective governmental oversight of the operations and assets of the national oil company, which will be a key element of the fiscal consolidation effort, the IMF said. 

(Source:  Business Times, 22 March 2005)

ECONOMY SET TO GROW 6PC

The Malaysian economy is poised to grow at 6 per cent this year, driven by stronger export performance and an upturn in the global semiconductor industry, said Ban Negara Governor Tan Sri Dr Zeti Akhtar Aziz.  Real GDP is projected to grow faster this year from last year's 5.3 per cent, driven by exports and a resilient domestic demand.  Speaking to reporters at the release of the central bank's 2005 Annual Report yesterday, Dr Zeti said mining (5 per cent) and manufacturing (7 per cent) are expected to lead the expansion to be seen in all sectors in 2006.

The agriculture sector is expected to expand by 2 per cent; services by 6 per cent and construction by 1 per cent.  She also expects private investment to expand, particularly in the manufacturing sector and the oil and gas industry, spurred by the favourable demand conditions.  Domestic demand, she said, would be driven by private consumption as a result of rising income and demographic factors.  On the supply side, growth in the manufacturing sector is expected to strengthen in line with the global semiconductor cycle while the services sector is expected to sustain its strong performance. 

The commodities sector is expected to see a more broad-based growth, with improvement in the production of rubber, crude oil and the other agriculture segments, while crude palm oil output consolidated after three years of strong performance.  The construction sector is expected to see a turnaround with an improvement in civil engineering activities that are supported by higher activity in the oil and gas industry as well as through new projects under the Ninth Malaysia Plan.

For 2006, the central bank has estimated inflation to be in the range of 3.5 per cent to 4 per cent and may even exceed 4 per cent before moderating in the second half of the year.  "At this point, the rate of inflation is still supportive (of the economy) and not 'contractionary' therefore we are not in the mode of monetary tightening … the interest rate is still positive," she said.  Zeti also said that the ringgit exchange rate regime should reflect the underlying economic condition of the economy.

(Source:  Business Times, 23 March 2006)

MEMBERS NEWS

PEWTER TRIBUTE

It is said that people born in the Year of the Dog possess the best traits of human nature, often displaying a deep sense of loyalty and honesty.  Inspired by the traits of this Chinese zodiac sign, Royal Selangor welcomes the Year of the Dog with four new designs featuring the happiness theme.  The Royal Selangor limited edition Year of the Dog plaque depicts a Shih Tzu and butterflies in a playful dance of gaiety, symbolising wealth, lofty aspirations and thriving opportunities that will last throughout the year. 

Its different textures and indepth detailing, from the Shih Tzu's fine fur to the weathered tree bark, are a testimony to Royal Selangor's high standard of craftmanship.  While the Shih Tzu and butterflies are embellished in 24K gold for that added touch of luxury, the beauty of this plaque lies in the engraved poem, which talks about good fortune and prosperity.  To complement the design of the plaque, Royal Selangor has created a Shih Tzu pewter figure that is more contemporary in style.  Combining bold modern design with distinct oriental charm, this figurine is reminiscent of the mythical lion-dog, playing with a ball. 

Royal Selangor's Year of the Dog plaque, pewter figurines and decorated zodiac plate range from RM95 to RM2,500.  In addition, Royal Selangor will also be offering six Chinese New Year bundles of Prosperity, Luck, Harmony, Wealth, Abundance and the Four Seasons.  The Harmony and Wealth bundles features two new delicate miniature teapots – the Pumpkin and Goldfish – designed by the creator of the limited edition Year of the Dog plaque.  The bundles, priced from RM50 to RM400, are available at Royal Selangor stores and authorised dealers nationwide.  For details and enquiries, call Royal Selangor at 03-4145 6000.

(Source:  The Sun, 12 January 2006)

ROYAL SELANGOR PROJECTS NEW IMAGE

It is impossible not to give the Royal Selangor print advertisement a second glance.  The tagline goes "Pewter has a new attitude," and the photograph shows a new attitude," and the photograph shows a model posing playfully with a pewter product.  Clearly, there has been a significant shift in Royal Selangor's marketing and branding strategy.  A name synonymous with pewter, Royal Selangor has embarked on a campaign to give the metal alloy an image makeover by projecting it as sassier and sexier. 

The company has been around since 1885 and has earned a solid reputation at home and abroad for its tableware, homeware and corporate gifts.  Yet, unlike gold or even silver, pewter is rarely associated with qualities such as glamour and sophistication.  Royal Selangor Marketing Sdn Bhd sales and marketing manager Yong Yoon Li told BizWeek that although the brand is well known and respected, it lacks contemporary appeal.  He says:  "We are strong in the corporate gift sector, and our brand is synonymous with Malaysian gifts.  Currently, most of our customers are between 45 and 55 years old, (a market segment seen as) reserved and safe.  "However, we are not addressing an audience who are moer sophisticated and design savvy through our current protfolio of products and marketing ideas."

Creative director Christopher Yong points out that Malaysians perceive Royal Selangor products as mainly gifts used by tourists.  "In order to change their perception, we have to offer products that are relevant, besides being stylish and sexy," he explains.  Yoon Li says the process of revamping the brand began three years ago, when the company held focus group sessions.  The information gathered was used to implement an internal branding exercise.  "After that, we moved to branding externally, such as through the new print advertisements and brochures, as well as the new look for our stores," he adds.  Yoon LI says the company's most valued attributes are vital in repositioning the brand.  The idea is to refocus Royal Selangor's customer base without compromising the company's strengths.  "Our anchor values in innovation, entrepreneurship, sense of pride, design and integrity are a result of our 120 years of heritage."

Based on these values, the company identified its customer value proposition.  Adds Yoon Li:  "We offer uncompromising craftsmanship, exciting designs and good service.  The company is targeting the younger group, not just in age, but also those who are young at heart."  Product development is, of course, a connerstone of this new approach.  Royal Selangor has launched various products that are meant to appeal to its new target customers, that is, the urbane, contemporary, affluent and stylish crowd.

In February 2005, the company unleashed an advertising and promotion campaign.  Yoon Li says the advertisements are more lifestyle-oriented and light-hearted compared with those of its previous campaigns.  He explains:  "The new advertisements are evocative, as they reflects the role of pewter in one's life and its relevance.  Before, our advertisements were product-focused, showcasing products and providing some description.  "We also organised innovative marketing programmes to feed the aspirations of our customers, such as our product launch in autumn and working with partners for Force of Nature and Live 8 events."

Some of the Royal Selangor stores have been given a facelift to enhance shoppers' experience.  "We refurbished our flagship store at Suria KLCC last year.  The concept was to create a warmer and relaxed feeling for shoppers.  We had received feedback that previously, our stores were considered cold and intimidating.  "Our products are displayed in individual islands and standalone units to encourage shoppers to feel the products and make discoveries of their own," says Yoon Li.  Besides the store at Suria KLCC, those at Starhill Gallery and Sunway Pyramid have also undergone changes, while stores at the KL International Airport and Mid Valley Megamall are expected to sport the new concept by mid-2006.  Last September, Royal Selangor launched a range of wearable accessories known as Plus.  "It has not been done before, and the line gives individuals the freedom to interpret how they can use the accessories," said Christopher.  He adds that the company will step up its pace in working with designers, and it expects to produce a new signature range every year.

(Source:  The Star, 14 January 2006)

MOULDING IT RIGHT AT SELANGOR PEWTER

There is a Chinese saying that a family business empire seldom extends into the third generation.  How much truth is there in this popular saying or is it just a mere myth?  In the context of the world economy, the complexion is fast changing for family businesses.  As the succeeding generations get better educated and modern business precepts are applied to the business, rather than decay and grind down, these family-owned businesses instead display a dynamism and vigour that was never contemplated by the sages of old.  In fact, some of these third-generation businesses go on to become global businesses.

A case in point is Royal Selangor Pewter – Malaysia's best known and global pewter brand.  Founded in 1885 by Yong Koon, in a little shop in Jalan Silang, Kuala Lumpur, to meet the local demand for incense burners and oil lamps for Chinese altars to tea caddies and wedding tea pots, the company has seen exponential growth under the direction of his son, Peng Kai and later his grandson, Datuk Yong Poh Kon.  It was Poh Kon who took the company global.  Having been involved in the family business from young, and travelling the world with his father picking up entrepreneurial and negotiating skills, Poh Kon has taken Royal Selangor to greater heights. 

Says Poh Kon:  "Constant innovation in designs and manufacturing processes has always kept the company ahead of the competition!"  The family's long tradition of quality combined with style is probably what has kept Royal Selangor ahead of the pewter market curve. Adopting his father's mantra of "always producing the best", Poh Kon has succeeded in perpetuating this culture of excellence throughout the organisation, so much so that the company's wide belief that "Royal Selangor is the best in the staff as well as entrenched in their processes. 

To further develop the Royal Selnagor brand globally, Poh Kon has never hesitated to indulge in the occasional takeover and to hire professional managers from outside the family.  Royal Selangor had acquired Canada's largest pewter company, Seagull Pewter as well as the renowned London Silversmiths, Comyns.  These acquisitions have, no doubt, helped Royal Selangor break into new markets and gains access to new technologies as well as traditional designs. 

Royal Selangor has certainly come a long way.  From the first outlet in Jalan Tuanku Abdul Rahman in Kuala Lumpur, royal Selangor today can be found throughout Malaysia & Singapore, Europe, Hong Kong and Japan.  The completion of the Royal Selangor Visitor Centre in 2004 is a major milestone for both the company and the country.  The impressive centre showcases the history of tin mining in Malaysia, pewter-making and traces the growth of the brand from its humble roots in Jalan Silang.  If Yong Koon is around today to see the position of the brand, he would have been extremely proud of his son, Peng Kai and Poh Kon.  Who says that a family business cannot last three generations?  Poh Kon is already blooding the next generation to take over the baton, and continue building on the legacy that Yong Koon left behind and take it to greater heights! 

(Source:  Business Times, 21 January 2006)