31 August, 2006

Happy Birthday Malaysia !

Happy Birthday Malaysia ! Grand 49th National day

Or should it be 39th birthday, 10th anniversary ? According to Lim Kit Siang :

'As a result, a Barisan Nasional component party leader has admitted that on the occasion of the 49th National Day, nation-building in the country “had gone backwards, minus 10 Merdeka years”.'

KUCHING: Padang Merdeka in the heart of the city here came alive with declarations pledging loyalty to the nation, lively performances by people in colourful attire, uniformed bodies and bands, and various cultural performances as Malaysia celebrated its 49th National Day.

The Yang di Pertuan Agong, Tuanku Syed Sirajuddin Syed Putra Jamalullail, and Raja Permaisuri Agong Tuanku Fauziah Tengku Abdul Rashid, and the Cabinet led by Prime Minister Datuk Seri Abdullah Ahmad Badawi joined thousands of Malaysians taking part in the grand celebration here this morning.

While maintaining the theme, "Kerana Mu Malaysia", this year's celebration also carries a sub-theme, "Misi Nasional Penjana Wawasan" (National Mission Generates Vision), aimed at highlighting the five main thrusts of the Ninth Malaysia Plan (9MP).(Star)


Malaysia PM expected to stand his ground in budget

Malaysia's premier is likely to resist the temptation to deliver a popular budget on Friday, opting for fiscal prudence despite pressure to spend more.

With talk of an early election and government coffers boosted by oil revenue, the budget for 2007 would seem the perfect platform for Abdullah Ahmad Badawi to woo Malaysians burdened by higher interest rates and dearer fuel and electricity.

But Abdullah, who is also finance minister, is expected to stick to a long-term plan to shrink the budget deficit and find new sources of growth so he can wean the economy off decades of fiscal pump-priming, economists said.

"Abdullah's not in a good position. He's in a Catch-22 situation: damned if you do, damned if you don't," said Chan Kok Peng, chief economist with BNP Paribas Peregrine.

The budget for 2007, Abdullah's third since coming to power in late 2003, is to be unveiled on Friday at 0800 GMT.

Pressure to boost spending is coming from his own party, where his predecessor, Mahathir Mohamad, is fanning dissent with criticism of the current administration.

Mahathir is unhappy that Abdullah has dropped some state projects, such as a planned new bridge to neighbouring Singapore.

"If he does not spend on megaprojects, he will alienate a lot of supporters. If he does it, then they'll say he is bending to Mahathir's pressure," Chan said.

Spending under the budget would probably top this year's 136.8 billion ringgit ($37.2 billion), but the government would avoid large infrastructure projects that were the hallmarks of Mahathir's 22-year reign, economists said.

The deficit in 2006 is forecast to be 18.44 billion ringgit, or 3.5 percent of gross domestic product, down from 3.8 percent in 2005.

Abdullah will probably focus on his priority of developing the farm sector as well as services, manufacturing and education, although it may include bonus payments for civil servants, economists said.

"Overall, the direction is still towards fiscal consolidation," said UOB economist Ho Woei Chen.


Abdullah has to keep the economy motoring along -- economists forecast healthy 5.5 percent growth for this year and next -- while trying to rein in a fiscal deficit that international rating agencies say is keeping Malaysia's ratings down.

"As far as government expenditure is concerned, I think foreign investors will be looking at how deeply Malaysia goes into deficit, but obviously the government has this dilemma because they want to pump prime as well," said Gerry Ambrose, managing director of Aberdeen Asset Management.

Under a five-year state development plan announced in March, Malaysia is harnessing private capital to fund state projects. One local firm has proposed an 8-billion-ringgit bullet train between Kuala Lumpur and Singapore.

As pressure grows for the government to spend more, the budget is seen as a test of Abdullah's political will.

A pump-priming budget would appease members of the main ruling party, the United Malays National Organisation (UMNO), which has strong links with the depressed construction industry.

Mahathir has influence within UMNO and analysts are worried the row could split the party, sparking political instability.

As speculation grows of a general election in late 2007 or early 2008, the budget also has to cater for ordinary Malaysians struggling with rising costs of living.

Fuel prices have risen steeply since Abdullah began cutting state subsidies in 2004 and Malaysia's monopoly power distributor raised prices for the first time in nine years in May.

Malaysia's Q2 growth revs up to 5.9 pct on year

Malaysia's economy grew at its fastest annual pace in almost two years in the second quarter, and the central bank signalled interest rates may yet go higher.

Official figures on Wednesday showed gross domestic product was up 5.9 percent in the second quarter from a year earlier, a touch above market forecasts for 5.8 percent growth, as exports and domestic demand held firm.

It was the fastest growth since a 6.8 percent annual rise in the third quarter of 2004, but the central bank indicated it was keeping its options open on interest rates, saying the risks were equally balanced between slowing growth and rising inflation.

"Because they are in balance, we have taken a pause till there is greater clarity on the movements of the indicators for the external environment as well as on energy prices," central bank chief Zeti Akhtar Aziz told reporters.

The ringgit and the yield on the benchmark 10-year government bond were unchanged after the data. The stock market had finished trading.

Bank Negara, the central bank, has raised its key interest rate by a total of 80 basis points since last November. But at 3.50 percent, the rate is still among the lowest in Asia.

Most economists said Malaysia would probably keep rates steady for the rest of 2006, amid signs that higher credit costs were hurting consumer spending.

"The second-half growth momentum will slow down, and on top of that the bank expects inflation to be moderate, so my take is that these two will keep interest rates steady," said Leslie Khoo, Singapore-based regional economist with Forecast Private.

Zeti said on Wednesday the full impact of recent rate rises had mostly been realised.

In a sign of softer consumer spending, the Malaysian Automotive Association, an industry body, has said new vehicle sales are expected to drop 6 percent this year, reversing an earlier forecast of growth, due partly to rising interest rates.

But some economists said Malaysia could raise rates again before year-end to curb inflation, which remains under pressure from high oil prices despite easing from a 7-year high in March.

"The continued growth would leave open the door for another rate hike before the end of the year," said David Cohen, economist with Action Economics. "The rate is relatively modest compared to the inflation -- and by the end of the year, 3.75 percent seems like a good bet right now."


Despite economists' forecast for slower growth for the rest of 2006, Zeti expected Malaysia's trade-driven economy to maintain its growth momemtum, underpinned by strong expansion in Asia and a recovery in Japan and Europe.

The economy is officially forecast to grow 6.0 percent this year but some economists have said Malaysia might not be able to achieve that because U.S. economic growth is slowing.

The central bank revised up annual growth for the first quarter to 5.5 percent from 5.3 percent.

Malaysia does not provide seasonally adjusted figures to show the growth rate between quarters.

Neighbouring Singapore's economy grew 8.1 percent in the second quarter from a year earlier, while South Korean gross domestic product expanded a smaller-than-expected 5.3 percent in the same period amid signs of slower U.S. economic expansion.
(Source: Reuter)


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