Archive for the ‘Economics’ Category

Ringgit ends higher against US dollar on 2021’s first trading day

Monday, January 4th, 2021
At 6 pm, the local currency rose to 4.0040/0090 versus the greenback from last Thursday's close of 4.0200/0250. NST pix by Amran Hamid.At 6 pm, the local currency rose to 4.0040/0090 versus the greenback from last Thursday’s close of 4.0200/0250. NST pix by Amran Hamid.

KUALA LUMPUR: The ringgit ended higher against the US dollar on the first trading day of the year in line with Asia’s emerging currencies, as buying interest continued from last week on optimism over global growth recovery in 2021 amid vaccine rollout.

At 6 pm, the local currency rose to 4.0040/0090 versus the greenback from last Thursday’s close of 4.0200/0250.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said the US dollar weakness and firm Brent crude oil price, which hovered close to US$53 per barrel, had been the main underpinning factors for the ringgit’s appreciation.

“The risk-on mode has been prevalent. The US Dollar Index (DXY) has skidded further to 89.548 points today while other currencies such as the Japanese yen, euro and Aussie dollar have all been rising.

“Going forward, data on the US Institute of Supply Management’s Manufacturing Purchasing Managers’ Index and the nonfarm payroll will be closely watched to gauge the strength of the US economy in December,” he told Bernama.

He noted the decision by the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) on the oil production quota would also be on investors’ radar this week.

“The current support level is located at RM3.9939,” he said.

The ringgit was traded mostly higher against other major currencies, except the Singapore dollar.

It appreciated vis-a-vis the Japanese yen to 3.8968/0021 from 3.9018/9078 last Thursday, rose versus the euro to 4.9213/9291 from 4.9358/9427, and strengthened against the British pound to 5.4743/4827 from 5.4905/4977 previously.

However, the local note slipped against the Singapore dollar to 3.0402/0450 from 3.0395/0444 last Thursday

By Bernama.

Read more @ https://www.nst.com.my/business/2021/01/654470/ringgit-ends-higher-against-us-dollar-2021s-first-trading-day

Food security 2021 and beyond

Sunday, January 3rd, 2021
As for food economy, disruptions in the food chain are minimal as food supply has been adequate and markets stable. We were able to keep food supply chains alive and mitigate the pandemic’s impacts across the food supply chain system.  - NSTP file picAs for food economy, disruptions in the food chain are minimal as food supply has been adequate and markets stable. We were able to keep food supply chains alive and mitigate the pandemic’s impacts across the food supply chain system. – NSTP file pic

THE economy in 2020 was affected by Covid-19 pandemic, and projected to contract by 4.5 per cent while nearly 100,000 people lost jobs since the start of movement control order (MCO).

As for food economy, disruptions in the food chain are minimal as food supply has been adequate and markets stable. We were able to keep food supply chains alive and mitigate the pandemic’s impacts across the food supply chain system.

But, at the household level, especially the bottom B40, the impacts of the pandemic have an increasingly debilitating effect on their ability to buy healthy and affordable food, particularly households that spend up to 70 per cent income on food.

In 2021, there is no room for complacency. At the global level, it is predicted another 135 million people could face acute food insecurity by the first half of 2021.

Frailties in the production and supply of food could be further exacerbated by the potential for weather-related shocks, millions of jobs being impacted across the agricultural value chain, resultant food price spikes and financial losses impacting on hundreds of thousands of small and medium-sized local organisations that are critical to the integrity of food supply chains across the world.

In short term, what is important is that to continue to closely monitor food prices and strengthen market supervision, ensure effective delivery of agricultural inputs including feed, smooth logistical operations of regional agricultural and food supply chains, and the smooth flow of trade while making full use of the international market to secure food supply and demand.

In the medium term, to ensure better food security preparedness in case of another pandemic or other major catastrophes where several initiatives can be considered:

1. Farmers must have continuous access to the market. Efforts need to be intensified through a combination of private market and government procurement;

2. Ensure the supply of agricultural inputs such as seeds, fertilisers and livestock feed are not interrupted to ensure continuous food production;

3. Ensure adequate storage of food stocks in the event of an emergency;

4. For consumers whose livelihoods are cut off due to MCO, ensure continuous livelihood assistance especially among the urban poor who do not have a permanent job; and

5. Incentivise and support the digitisation of food business supply chain from farms to consumers. Digitization will help reduce the need of migrant labourers.

In the long term, beyond the pandemic, initiatives need to be implemented to ensure the country’s food security. A success factor of the industrial crops is the private sector involvement and the co-existence of estates plantation with smallholders. The estate subsector is largely comprised of privately-owned plantations with modern technology.

This successful model need to be emulated in the food production where large farms which is private sector led co-exist with the smallholder farm units. This calls for:

A. Entrepreneurship – food production has not yet been practiced as an industrial crop. Thus it requires agroentrepreneurs who can practice commercial and high-tech food production;

B. Innovation and investment in agricultural system technology will play an important role in fostering agricultural productivity. Thus, the food production sector needs to develop, use various technologies and farming concept of smart farming.

Examples of these technologies, include soil and water sensors, weather detection, satellite imaging, automation, vertical farming, artificial intelligence, nanotechnology, applications GPS, robots, and precise farming;

C. Promoting climate-smart farming – climate change increases the risk of crop-yield, livestock-raising, and fisheries. Thus, the challenge is to achieve sustainable agricultural development for food security under climate change; and

D. Rapid urbanization has attracted poverty and food security issues as urban dwellers are buyers of clean food and rely on income to access foo

d. Promoting urban agriculture will reduce household food spending and increase food supplies.

The role of the government is to foster an enabling environment for private sector investment by corporate investors in food production and work together with smallholder farmers as in industrial crops.

Government investment in essential public goods and services (such as advisory services, productivity-enhancing research, supply chain development, human resource development in entrepreneurship, and social safety net) is a fundamental part of the enabling environment.

To stimulate investment, incentives to the private sector must be formulated so that return in investment in food production is at par with industrial crops, such as oil palm investment. This can be encouraged through appropriate domestic resource mobilisation initiatives and fiscal policies.

By Datuk Dr. Nasir Shamsudin.

Read more @ https://www.nst.com.my/opinion/columnists/2021/01/654137/food-security-2021-and-beyond

Manufacturing sector needs new master plan to enhance competitiveness

Wednesday, December 30th, 2020
Another idea recently suggested by economists was that  countries like ours should no longer rely on import substitution and export-oriented industrialisation, but move towards open economy industrialisation based on global competitiveness and market-based competition. - NSTP/ASYRAF HAMZAHAnother idea recently suggested by economists was that countries like ours should no longer rely on import substitution and export-oriented industrialisation, but move towards open economy industrialisation based on global competitiveness and market-based competition. – NSTP/ASYRAF HAMZAH

MANUFACTURING will continue to be a major source of output increases and diversification in many emerging economies, Malaysia included. But this sector has begun to decline in its importance to total employment and output, estimated at 22 per cent of the gross domestic product compared with about 28 per cent a decade ago.

Researchers say this “premature deindustrialisation” is taking place too early as our per capita income is about US$10,000. Our economy has not moved into technology-intensive industrialisation, while our services have yet to be export-oriented.

In part, this was because our labour-intensive industrialisation strategy may have reached its limit of comparative advantage, implying that we have to develop new strategies based on competitive advantage. The latter was mooted by Michael Porter about two decades ago.

Another idea recently suggested by economists was that countries like ours should no longer rely on import substitution and export-oriented industrialisation, but move towards open economy industrialisation based on global competitiveness and market-based competition.

Malaysia’s prime mover for industrialisation, the Malaysian Investment Development Authority (Mida), will have to work out different strategies now if Malaysia is to become attractive to new industrial location possibilities, after the United States-China trade tension and the Covid-19 pandemic. Choosing technology-based and globally competitive firms for this country is the only way for further economic restructuring, which will release us from the middle-income trap.

Malaysia may have to offer a different set of industrial incentives for technology-based industries, including those related to the digital economy, in the forthcoming 12th Malaysia Plan document to be released early next year. What new incentives can be promised by Mida must be announced in the plan.

For a start, Mida chairman Datuk Majid Khan must work with state governments, requesting them to offer a new set of strong state-based incentives over and above the traditional incentives offered by it in the past decades. Sarawak, Sabah, Johor, Pahang, Selangor and Penang can offer more incentives based on their resource potentials, such as land, energy, water, forestry and human resources, as well as institutional infrastructure. These, if added to Mida’s traditional offers, can be far-reaching in attracting many industries in search of new locations.

Government-linked companies must promise more attractive utility support and other new assistance during these trying times.

These, in combination with what Mida has to offer, will boost Malaysia’s attractiveness as an investment hub during the 12th plan period. In this regard, we have to think of extraordinary strategies in this unusual time. The long-term economic interest of the nation must prevail.

Having got a new set of strategic incentives, Majid must be authorised to negotiate with the industries for him to make offers directly to them, including their potential locations and new immigration-related measures befitting the new industries we aim to attract. Majid has to act fast, and we all need to support him.

The news that a few internationally renowned firms bypassing Malaysia in favour of neighbouring countries may not be a surprise. Those countries
may have special incentives which we do not have as yet. Let us design targeted special incentives to enable them to come to our shore.

In fairness to Mida, it did commit many high-tech industries to locate their new investments here. These include international firms such as Smith and Nephew, Bruker Corp, LAM Research, Devcom, and Ultra Clean Holdings, Bosch, B. Braun, and Eppendorf.

A core of related firms can be developed to create a new cluster of industries through interfirm linkages. Our experiences in this networking and alliances can be further promoted. In Penang, the initial success in developing electronics-based industrialisation was due to the success of the state leadership in following the strategy of building its competitive advantage based on the industrial cluster approach of the second industrial master plan initiated in 1995.

Lest I am late, let me suggest that the forthcoming 12th Malaysia Plan recommends the formulation of a new long-term industrial master plan to overcome the structural weakness of our industries, namely a smaller value-addition contribution to the economic growth notwithstanding the large volume of manufacturing exports and imports.

By Tan Sri Dr. Sulaiman Mahbob.

Read more @ https://www.nst.com.my/opinion/columnists/2020/12/653077/manufacturing-sector-needs-new-master-plan-enhance-competitiveness

All that’s left are tough choices

Monday, December 28th, 2020
Joe Biden (pic) can continue Donald Trump’s legacy or protect the semiconductor global supply chain. - AFP picJoe Biden (pic) can continue Donald Trump’s legacy or protect the semiconductor global supply chain. – AFP pic

SEMICONDUCTORS, the backbone of high technology used to produce integrated circuits or chips for computers and smartphones, is China’s biggest single import by value.

China, for years, has been trying to steer away from its dependence on the United States and other countries through innovation-driven development and a plethora of state-led policies.

So when the US hawks added the world’s second-largest smartphone maker Huawei Technologies Co Ltd to the US entity list and barred it from acquiring essential chips from Taiwan Semiconductor Manufacturing Company, it fired up China to mitigate its reliance on foreign suppliers and pick up the pace towards technological independence.

The Chinese Communist Party in its fifth plenum placed innovation as a key driver for China’s long-term modernisation programme to make headway in core technologies, which likely include production of top-of-the-line semiconductors with a focus on science and technology to provide a strategic support for national development.

The 14th Five-Year Plan reaffirmed China’s commitment to become a global leader in innovation and build success in new industrialisation, informatisation, urbanisation and agricultural transformation via “dual circulation”, a term coined by President Xi Jinping last spring as a strategy to fuel the domestic cycle (production and consumption) by 2035.

After Goldman Sachs predicted that China can produce seven-nanometer (nm) chips by 2023 and New York Times columnist Thomas Friedman said Beijing made attempts to build an entire microchip supply, ending its dependence on US technology through the latest Five-Year Plan, China’s largest chip foundry, SMIC, last month added a new chapter in the country’s chipmaking history by getting closer to introducing the more advanced N+1 7nm node.

Recently, the US Department of Commerce sanctioned dozens of Chinese companies, including SMIC. It was claimed the move would limit the company’s ability to produce semiconductors at advanced technology levels (10nm or below).

The US action was apparently a reaction to China’s step forward for attaining technological self-reliance and SMIC’s rise despite the US blockade.

In the long term, US sanctions could strengthen the Chinese chip-making champion since it reportedly completed the development of process nodes from 28nm to 7nm in record time and may rush for volume production of leading-edge 7nm nodes ahead of schedule.

The only conclusion that can be drawn from the aggressive move is that the US thinks China, if not stopped, may catch up with America soon in technology and potentially end American global technological dominance.

After US President Donald Trump announced that the US was considering imposing exports restrictions on SMIC in September, an industry group in the US with 2,400 members worldwide warned that blacklisting the company would jeopardise the US’ technological edge, affect the delivery of US goods and hit US market share across the world, in addition to having detrimental impact on the US’ industry, economy and national security.

Peterson Institute senior fellow Chad Bown cautioned that restricting major semiconductor manufacturers in Taiwan and South Korea from using US tools to make anything for Huawei would instead threaten the US allies’ sovereignty and set a dangerous precedence of unilateralism.

In a highly-entwined world,the semiconductor industry is a global affair as components for a chip could travel more than 40,000km and cross borders over 70 times before they are installed in a device or delivered to a customer.

The US is using its leverage to disrupt globalisation and global supply chains that experts said won’t be practically feasible, at least in the foreseeable future.

Trump’s White House is impetuously taxing itself in an effort to cut off technology exports to China.

But unlike what happened to Huawei, the US did not add SMIC to the list, which would have prevented it from buying US supplies and technology. However, it remains concerned that US export restrictions are still a threat.

With only weeks left before his departure,Trump is not only causing pain for US exports, he is also infringing on international trade rules by causing harm to the free market, fair competition and the national interest of US allies, as well as killing off what remains of US credibility internationally.

US President-elect Joe Biden will inherit technology chaos from his predecessor; so he will have to make hard choices—carry on Trump’s anti-China legacy to stave off political hogwash in the country or shield the semiconductor global supply chain from disruption to regain the trust of US manufacturers and allies.

Whatever path Biden chooses will define the course of the China-US technology war.

BAzhar Azam.

Read more @ https://www.nst.com.my/opinion/columnists/2020/12/652576/all-thats-left-are-tough-choices

Britain faces major Brexit challenges after last-minute deal

Saturday, December 26th, 2020
EU flags fly during a demonstration outside the British Houses of Parliament in Westminster, central London, Britain. - EPA/File picEU flags fly during a demonstration outside the British Houses of Parliament in Westminster, central London, Britain. – EPA/File pic

LONDON: Britain is set for a new chapter on Friday (Saturday in Malaysia) after securing a hard-fought post-Brexit trade deal with the European Union as EU envoys awaited a briefing on an accord reached only after months of tortuous negotiations.

The country will now not tumble off a trade “cliff-edge” come Jan 1, avoiding a mountain of tariffs and quotas.

But major changes are inevitable as Britain definitively quits the EU’s single market and free movement with the bloc comes to an end after nearly half a century of integration.

Britain had been in a standstill transition period still subject to the bloc’s rules since formally leaving the EU on Jan 31.

Standing in front of a Downing Street Christmas tree in a video message late on Thursday, Prime Minister Boris Johnson vaunted the hundreds of pages of text as “a “good deal for the whole of Europe” and a “present” for Britain.

The address was “a victory speech,” Anand Menon, director of the UK in a Changing Europe think-tank, told AFP.

“Boris Johnson was elected Prime minister to get Brexit done, he has now definitively got Brexit done,” Menon said.

Johnson has come under fierce criticism for his management of the country’s coronavirus outbreak, which has so far left almost 70,000 dead, the heaviest toll in Europe.

In recent days, thousands of trucks have been backed up at Channel ports after France and other European partners blocked crossings over rising cases of a new virus variant believed to spread faster.

Some pointed out that the transport chaos, which raised fears of shortages of fresh produce, could be a glimpse of what awaited the country if it crashed out of the EU single market without a deal.

The EU has offered Britain unprecedented tariff- and quota-free access to its single market of 450 million consumers.

But it has in return secured London’s commitment to respect its always-evolving rules in some areas such as environmental protection, labour regulation and tax, aiming to avoid Britain undercutting companies inside the bloc.

The UK has also signed up to guarantees that it will not abuse state aid to firms to seek an unfair advantage.

It was the question of fish that emerged as the last stumbling block this week when London pushed to reduce EU fishing fleets’ share of the estimated €650 million annual haul by more than a third.

The final agreement settled on a 25-per cent cut to be phased in over a five-and-a-half year period.

EU officials have promised to support their fishing sector through the painful cuts, a major downside of a deal European Commission chief Ursula von der Leyen called “fair and balanced” overall.

With the agreement now shared with the bloc’s 27 member countries, their ambassadors will meet in Brussels.

They are expected to take two or three days to analyse the agreement and decide whether to approve its provisional implementation.

For Britain, “that a deal has been agreed at all is in many respects a remarkable achievement,” the Times newspaper judged.

Nevertheless, the final package is “a source of relief rather than celebration”, it added, with new restrictions including an end to free movement into the UK for European workers and into the EU for Britons.

Young people will be hit by Britain’s withdrawal from the continent-spanning Erasmus student exchange programme, to be replaced by a home-grown scheme named for pioneering computer scientist Alan Turing.

“The deal is hardly the end of the process. Now that (Johnson) has delivered on his promise to get Brexit done, his challenge is to make a success of it,” the Times warned.

The left-leaning Guardian was harsher, saying that “Johnson deserves no credit for dodging a calamity that loomed so close because he drove so eagerly towards it.”

In fact, the newspaper added, the deal “prescribes an immediate downgrade for the UK economy.”

British MPs are set to debate the text of the agreement on Wednesday, but there is little doubt it will be approved after the opposition Labour party pledged its backing.

On the European side, provisional approval by national capitals must be followed by a vote in the European Parliament in early 2021.

by AFP.

Read more @ https://www.nst.com.my/world/world/2020/12/652272/britain-faces-major-brexit-challenges-after-last-minute-deal

Malaysia on the path to recover, revitalise, reform

Wednesday, December 23rd, 2020
With the aim of leaving no one behind, the PN government has shown that it cares for our lives and livelihoods greatly amid these trying times. - Bloomberg picWith the aim of leaving no one behind, the PN government has shown that it cares for our lives and livelihoods greatly amid these trying times. – Bloomberg pic

LETTER: Malaysia is back on the path of recovering, revitalising and reforming after being battered by the deadly Covid-19 pandemic.

Not only the Perikatan Nasional government has introduced a super friendly-budget that focuses primarily on getting the people and the country back on their feet, it has also garnered their support via the RM305 billion package, said to be one of the highest in Asia.

Indeed, the bold and giant steps taken to safeguard the people and prop up the economy will make them even better to march forward. The PN government’s focal priority has always been on the fight against Covid-19 with something for everyone and to ensure the rakyat’s prosperity, business continuity and economic resilience remains the focus during these unprecedented times.

And so, when the accusations in the form of an article came, with the headline “Malaysia – a country in decay?” as carried by a news portal, I was truly devastated and angry. In his article, the writer, a local, claimed he was asked by an expatriate friend why he came back to Malaysia after living in the United States as his friend had labelled Malaysia as a racist nation.

The writer blamed Covid-19 travel restrictions as the reason he was still working from Malaysia. Hope he would not end up like other Malaysians who had given up their Malaysian citizenship only to repent later! I strongly feel that as a Malaysian, he should have been more nationalistic and patriotic in his writing. Of course, he is free to write just about anything else in this whole wide world but he should give credit where it is due.

Saying Malaysia is in decay, he went on pointing out that the country was experiencing a massive brain drain, the reason why highly-skilled people were leaving the country in droves, unfavourable business climate for investors, overdependence on foreign workers and lastly, the country’s education system which he said was in shambles. On education, he also said the deteriorating standards and uncomfortable emphasis on religion had driven the non-Malays to abandon national schools.

Surely, he doesn’t even know what he is writing about? If this writer strongly feels this way, then he should aptly settle down elsewhere, definitely not this country which has given him so much for what he is today! No one could have predicted that Covid-19 would raise a perfect storm, hitting Malaysia and the world over hard this year! Instead of condemning the government through sweeping and general statements, he should have given constructive opinions or ideas on ways to help people badly hit by the virus, especially the vulnerable groups, instead of the other way round.

The virus has very much cancelled everything for everyone. Lives were upended, livelihoods under strain. I am wondering why only now he is hurling all sorts of allegations against the government which has been around less than a year. He should have been fair and responsible!

As it is, in less than one year, the PN government, in my observation as a responsible citizen, has done and is still doing its best to develop the nation. If the pandemic had not struck, I strongly believe that it would have done far better in running the country.

The World Bank, in its blog, stated that despite myriad challenges, there were encouraging signs that Malaysia was riding it out comparatively better as its economy rest on strong fundamentals.

It also said recently that a diversified economic structure, a sound financial system, an effective public health response and proactive macroeconomic policy support have all helped soften the blow of the pandemic. It also said despite the enormous uncertainty over the timing of a return to economic growth, there is light at the end of the tunnel.

The blog also stated, the government is set on not just getting out of the health crisis but also trying to get into better shape than it was before, so it is able to withstand the next one. A multi-cultural, multi-religious and multi-ethnic country, Malaysia is not a racist nation but one that is moving forward with optimism in terms of intercultural and interreligious relations.

Generally speaking, for the writer’s information (in case he has long forgotten his Malaysian root), we, Malaysians, are peace-loving people who for the most part have lived harmoniously for centuries and who have been keeping the country together. Multi-ethnicity is an asset and a challenge for us all but we understand it very well.

With the aim of leaving no one behind, the PN government has shown that it cares for our lives and livelihoods greatly amid these trying times. Malaysia will show a better ending than what we have anticipated if all its people work hand-in-hand to help each other. So, stop making sweeping statements or generalising that only border on provocation as this could derail racial integration and harmony of this country.

by ZARAH ATAN.

Read more @ https://www.nst.com.my/opinion/letters/2020/12/651780/malaysia-path-recover-revitalise-reform

Asia-Pacific performs better than rest of the world in 2020

Wednesday, December 23rd, 2020
Despite facing a sharp decline in trade, Asia and the Pacific is expected to perform better than the rest of the world during 2020. - NST/file pic. Despite facing a sharp decline in trade, Asia and the Pacific is expected to perform better than the rest of the world during 2020. – NST/file pic.

LETTER:The emergence of the Covid-19 pandemic, coupled with increasing trade tensions and an already slowing global economy, has paved the way for the world’s worst economic performance since the Great Depression.

Global international trade value is estimated to dip by 14.5 per cent in 2020, according to the new Asia-Pacific Trade and Investment Trends briefs issued by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).

Despite facing a sharp decline in trade, Asia and the Pacific is expected to perform better than the rest of the world during 2020. The region’s prominence in merchandise trade is expected to rise to an all-time high this year accounting for 41.8 per cent of the world’s exports and 38.2 per cent of global imports. In 2021, merchandise trade volumes are expected to rebound by 5.8 per cent and 6.2 per cent of real exports and imports respectively.

ESCAP however warns that the path towards full trade recovery remains highly uncertain. Macroeconomic conditions remain unfavourable for many Asia-Pacific economies with high unemployment rates, deflation, indebtedness and geopolitical tensions among the structural factors hindering the recovery of countries.

For small economies, the path towards full economic recovery may also be challenged by the potential permanent damage done to the travel and tourism industries, which are their major sources of income and employment. These downside pressures signal a potential sluggish recovery in 2021.

“The pandemic has a devastating effect on developed and developing economies alike, threatening to bring possibly millions of people back to poverty and unemployment. These people will not only need more aid, but also more trade,” said United Nations Under-Secretary-General and Executive Secretary of ESCAP Ms. Armida Salsiah Alisjahbana.

“I urge countries in the region to work towards developing a better set of trade rules that are resilient in times of crisis and stimulate sustainable economic recovery for inclusive and greener economies.”

Covid-19 has also had an immediate and severe effect on foreign direct investment (FDI). While data is still being collected on all forms of FDI, quarterly figures from announced greenfield investments clearly demonstrate how hard the region has been hit. In the first three quarters of 2020, greenfield FDI dropped by 40 per cent compared to the same period in 2019.

Lockdown measures, including the physical closure of businesses, manufacturing plants and construction sites, were responsible for delayed and canceled investment projects in 2020.

FDI is expected to remain below pre-crisis levels throughout 2021. The outlook beyond 2021 is highly uncertain and dependent on the duration of the crisis, the effectiveness of policy interventions to stimulate FDI and navigate the socio-economic effects of the pandemic, as well as geo-economic tensions.

The recent signing of the Regional Comprehensive Economic Partnership, however, may help FDI bounce back in the recovery period, especially for smaller and least developed countries in the group.

The trade briefs also highlight that over the medium-to-longer term, two main trends will affect trade – global value chain (GVC) restructuring and the digitalisation of the global economy. These trends are likely to cause significant structural shifts, both across and within economies.

To address these challenges, ESCAP underscores the necessity of complementary policies on social protection and education as well as in other areas covering new issues such as data protection and privacy, cybersecurity, e-commerce and other electronic transaction tax. This will be vital to allowing Asia-Pacific economies to fully capture the benefits from inclusive and sustainable digital trade and digital FDI growth.

The four new Asia-Pacific Trade and Investment Trends briefs are part of an annual series produced by ESCAP to support policymakers develop short-to-medium term plans to mitigate adverse impacts from emerging risks and uncertainties in the global and regional economies.

They also aim to maximise the potential of trade and FDI to contribute to sustainable development in an uncertain and changing trade and investment environment.

by UNITED NATIONS ECONOMIC AND SOCIAL COMMISSION FOR ASIA AND THE PACIFIC.

Read more @ https://www.nst.com.my/opinion/letters/2020/12/651741/asia-pacific-performs-better-rest-world-2020

Reset the urban-rural development gap

Wednesday, December 23rd, 2020
We should be planning to develop rural areas more as counter urbanisation becomes a trend. - NSTP/File pic
We should be planning to develop rural areas more as counter urbanisation becomes a trend. – NSTP/File pic

LETTER: The desire to seek greener pastures has led many people and families to move to cities, particularly Kuala Lumpur. Almost 80 per cent of Malaysians call themselves urbanites.

Keeping in mind that the global urbanisation rate is only 55 per cent, Malaysia is observing an alarmingly rapid urbanisation rate. The process is inevitable, but at what cost?

The externalities that came about from rapid unplanned urbanisation — poor social, infrastructural and administrative systems — are a recipe for disaster, especially in terms of socio-related risks and quality of life degradation.

We are not the first to face this. China, South Korea, Japan and Singapore share a common trend. When a city reaches its maximum capacity to accommodate inhabitants, a reverse migration happens, also called counter urbanisation.

It can happen due to people’s desire to get away from the pressures of city life, buy houses at more affordable prices, enjoy fresher and less polluted air, join a close-knit community, and increase their purchasing power by having a lower cost of living.

The shift in population from urban areas to the outskirts takes the burden off the city infrastructure and administrative systems, helps shake up and create a healthier rural economic landscape.

The key is by having an influx and flow of money to local businesses.

However, one big hurdle is the readiness of rural areas to embrace this movement.

This is where the anticipation of receiving gentrifiers in the said areas will put pressure on the government to review and provide public infrastructure, facilities and amenities.

It opens up doors for marginalised areas to receive the attention they deserve.

Factors that are appealing to urban dwellers should be thoughtfully planned and shifted to rural areas, for example, good public transportation, injection of digital technology, introduction of high-income economies, transformation of economic structures, and improved quality of education and healthcare facilities.

We have been sleeping on our rural areas for far too long.

In fact, we should stop calling our outskirts as rural.

The shift of mindset from “primitive” and “basic” to “advanced” and “modernisation” should be planted at every governmental level where policy-making and management can be more inclusive and equitable.

An example of this is where the rural area being deemed as a “complementary” counterpart to the urban area described in the National Rural Physical Planning Plan 2030 should be revised.

The Covid-19 pandemic opens up opportunities for remote working arrangements and system digitisation.

It is high time related ministries work together and create an inter-sectoral plan that takes into consideration the multifaceted elements of urbanisation and counter urbanisation.

In line with this, policymakers, elected representatives and city councillors should start discussions on how to reset this as a priority at all levels of government.

Adequate resources and revenue allocation by the federal government, right to the drafting of new key performance index by local councils and municipalities, are recommended.

A concerted effort is needed to ensure modernisation, jobs and infrastructure advancement are taken to areas outside central districts.

With a more demanding electorate, this is no longer about providing basic infrastructure and facilities to marginalised areas.

In line with the Shared Prosperity Vision 2030, the anticipation of counter urbanisation opens up an avenue for the government to address the urban-rural development gap, thus promoting equitable growth across the nation.

by DR NOOR HASHIMAH HASHIM LIM.

Read more @ https://www.nst.com.my/opinion/letters/2020/12/651568/reset-urban-rural-development-gap

No business and forced to pay rent

Tuesday, December 22nd, 2020

Yong (right) speaking to the traders at KKIA.

KOTA KINABALU: Airport traders are stressing as to how to come up with money to pay for the stall rental and workers’ salaries amidst zero income since the movement control order was implemented in March this year.

A group of them said apart from not having earnt a single cent over these past few months due to the closure of airports and borders due to the pandemic, they are now forced to pay rent.

“We have no business since March but the airport management still wants us to pay rent,” said one of the business operators who did not want to be named.

He said after discussing with the MAHB management, they agreed to forfeit the next six months rent with the condition that tenants settle their April to June’s rent and renew a one-year rental agreement.

“Previously when the economy was good, we were required to renew our agreement every three months but now under such uncertain circumstances, they want us to pre sign a one-year agreement and to pay the rent, this is unfair,” he said.

“Because once we sign, we cannot shorten or cancel our tenure. Who will risk it and sign such agreements under the circumstances now?” he asked.

The operator claimed they were also required to sign a three-year parking spot rental agreement or else they are required to pay their parking fees on an hourly basis.

He said the airport management keeps pressing them to clear their debts and reminding them to renew their tenure agreement, making them feel as if they were being chased by loan sharks.

“Our rental is not cheap. For example, an 8×8 sq ft stall can cost up to RM12,000 per month, now that we have no business at all for the past several months since March, how do they expect us to pay,” he asked.
He said they have to also pay for their workers’ salaries despite zero income during this period.

They have handed a letter of appeal to the MAHB management but they have yet to receive any positive response.

Following this, the operators decided to meet up with Malaysia-China Business council board of director (Cultural and Tourism Committee) Datuk Yong Chiew Lip for help.

“We hope Yong can bring this matter to the higher authorities,” said the operator.

Yong said he will arrange a time with MAHB management to discuss this matter and find a win-win solution for all.

This association is aimed at helping related businesses and industry players with problems faced due to Covid-19.

Those who need information or assistance during this pandemic can ask via sabahmcbc@gmail.com.

Read more @ https://www.theborneopost.com/2020/12/22/no-business-and-forced-to-pay-rent/

MCO looseing, vaccine promise will spur consumer demand, says HLIB

Friday, December 18th, 2020
HLIB expect retail spending to be positive year-on-year (YoY) due to low base effect in 2020, however, downward pressure on disposable incomes, and sustained sluggish foot traffic in retail areas such as shopping malls from anxiety surrounding Covid-19. NSTP/WEBHLIB expect retail spending to be positive year-on-year (YoY) due to low base effect in 2020, however, downward pressure on disposable incomes, and sustained sluggish foot traffic in retail areas such as shopping malls from anxiety surrounding Covid-19. NSTP/WEB

KUALA LUMPUR: The loosening of Movement Control Order (MCO) restrictions, gradual rolling out of vaccines and reopening of the economy are expected to result in modest return to normalcy and hence moderate recovery in consumption behaviour.

Hong Leong Investment Bank Bhd (HLIB) has upgraded the consumer sector from Underweight to Neutral, with valuations of retail players currently depressed and poised for better earnings in 2021.

“Going into 2021, we expect retail spending to be positive year-on-year (YoY) due to low base effect in 2020, however, negative factors remain, namely chronically high unemployment levels translating to continued downward pressure on disposable incomes, and sustained sluggish foot traffic in retail areas such as shopping malls from anxiety surrounding Covid-19.

“While we note that recent vaccine news is positive for overall sentiment, HLIB’s internal estimates reckon the roll out will take time, with only about 20 per cent of the population expected to be vaccinated by end-2021,” the firm said in a report.

The bank-backed research firm noted that along with the recovery in global consumption, many key commodities prices of consumer staples such as sugar, wheat, milk powder, palm oil, coffee and cocoa have begun to recover between 20-35 per cent since mid- financial year (FY) 2020 lows.

Despite strong rebound in many key commodity prices which is expected to remain going into 2021, HLIB reckon the higher raw material costs will be mitigated by stronger ringgit, (HLIB’s internal forecast of average RM4.00/USD in 2021) and better revenues from hotels, restaurants, cafes (HORECA) channels that are gradually returning to regular operations.

However, the research firm noted that the tobacco sector will be reliant on government clamp downs.

To recap, the government had announced measures in Budget 2021 on tobacco namely tightening the renewal of cigarette import licenses, limiting transshipments of cigarettes at certain ports, imposition of tax on the importation of cigarettes with drawback facilities, aimed at curbing the rampant illicit tobacco trade that has come to account for the bulk of tobacco volumes.

“Our channel checks estimate that 30-40 per cent of illicit cigarettes are imported via transhipments.

“While effective clamp down on this channel could drive volumes back to the legal market, we understand this process will take time to bear fruit,” HLIB noted.

Recent loosening of MCO restrictions with interstate travel no longer being banned and no limit on the number of diners per table, bodes well for retail players going into next year.

“With valuations of retail players currently depressed and poised for better earnings in 2021, our top picks in the consumer sector are retail stalwarts Focus Point Holdings Bhd with a Buy call and a target price of RM1.02 and

Aeon CO (M) Bhd with upgraded to Buy from Hold previously with a target price RM1.25,” the research firm said.

By NST Business.

Read more @ https://www.nst.com.my/business/2020/12/650529/mco-looseing-vaccine-promise-will-spur-consumer-demand-says-hlib