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Miti: Trade outlook challenging on global economy weakness [25-06-2013]  
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The International Trade and Industry Ministry expects trade growth to be “challenging” this year, according to Minister Datuk Seri Mustapa Mohamed.

He said Miti and the Malaysia External Trade Development Corp had initially forecast a trade growth of 4% to 5%, compared to Bank Negara’s more conservative 3% to 4% estimate.

But based on trade data for the first four months of the year, which saw exports and imports contracting 2.7% on the back of continued weakness in the global economy and softening commodity prices, he said Malaysia’s trade growth would likely end 2013 closer to the central bank’s forecast.

“We hope there is a reversal in commodity prices in the later part of the year, which would be positive for our trade figures,” he told the reporters yesterday at the launch of the Miti 2012 report.

“Achieving our forecast would be challenging. However, the second half of the year could be better than the first in terms of economic performance.”

On another note, Mustapa said the Government was on track with its plan to reduce car prices by 20% to 30% within the next five years.

“What has been happening over the past few weeks is consistent with what the Government has promised. But the reduction is up to the car companies,” he said, adding that prices were likely to fall gradually by some 5% per year.

He reiterated, however, that the Government had no intention of scrapping excise duties, which currently range between 65% and 105%.

“We can’t remove excise tax unless there is a replacement,” he said, explaining that the Government was in the midst of fiscal consolidation and would be hard-pressed to plug the RM7bil hole resulting from the removal of the tax.

“That said, most companies only pay between 40% and 50% in excise duties. Some are also using a lot of local components.

“For instance, Proton and Perodua are almost 100% local parts, and they pay very minimal excise duties. So, a reduction in excise tax may not lead to an automatic drop in car prices.

“From our interaction with the automotive players, it is quite obvious that the free trade agreements (FTA) have had an effect on car prices. This has brought more competition to the market, thus margins have come down for car companies,” he said.

Miti announced in March that import duties for completely-built-up (CBU) cars from Japan would be cut to 15% this year, while CBU cars from Australia would see a reduction to 13.6% as part of the Government’s plan to phase out this type of tax by 2016 under several FTAs it is party to.

The Malaysia-Japan Economic Partnership Agreement came into force in 2006 while the Malaysia-Australia FTA took effect last year.

StarBiz had also reported last week that Proton Holdings Bhd might be the first to announce a cut in prices, starting with its lower-end Proton Saga.

It is learnt that the national carmaker was looking to slash the price of the entry-level Proton Saga by RM5,000 from its list price.

The price of the basic manual transmission Proton Saga is listed at RM38,361.

More clarity is expected when the revised National Automotive Policy is announced in the third quarter, with details of the proposed revision to be unveiled pending a review by the Cabinet.

Malaysia’s total trade rose 3% last year over 2011 to RM1.3 trillion, with exports reaching a new high of RM702.2bil and direct investments RM162.4bil, the best on record, due to strong domestic and regional demand as well as private investments. Imports expanded 5.9% to RM607.4bil.

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