Malaysia Morning Wrap | EG Industries Expands into 5G Photonics and EV Market with Stake Acquisition in ND Rubber

This week, global financial markets will closely monitor several central banks' monetary policy decisions, including those from Singapore, New Zealand, India, and South Korea, as well as key inflation data from major economies. The Monetary Authority of Singapore is expected to maintain its policy despite projected 3.1% GDP growth, while the RBNZ may cut rates. Additionally, Vietnam will release its Q3 GDP and September CPI, providing insights into economic health. In the U.S., data on consumer credit, trade balance, CPI, and Producer Price Index will offer further clues about the economic trajectory amidst ongoing inflation concerns.

Prime Minister Datuk Seri Anwar Ibrahim stated that Budget 2025, to be unveiled on October 18, will focus on addressing inflation and improving wage levels across Malaysia. In a CNBC interview, he highlighted the necessity of raising incomes to match the cost of living, despite the lower prices of essential goods like oil and flour compared to other regional markets. Anwar emphasized actions taken, such as the recent 15% salary increase for civil servants, as an exemplar for private sectors, especially profitable conglomerates, to boost wages. This move comes as Malaysia's inflation rate stands at a moderated 1.9% year-on-year as of August 2024, with the salary adjustments for civil servants set to roll out in phases starting December 2024.

Economist Mohd Sedek Jantan from UOB Kay Hian Wealth Advisors suggests that Malaysia should prioritize investments in agricultural technology (agritech) in the upcoming Budget 2025 to attract high-net-worth investors, particularly family offices. As the global demand for sustainable food sources grows due to climate change and rising food prices, agritech offers a vital solution. Sedek proposes tax breaks for agricultural R&D and subsidies for innovative farming technologies to boost these investments. He also recommends developing closed-ended and infrastructure funds to support agritech projects, enhancing Malaysia's appeal as a premier hub for family offices. With the Johor-Singapore Special Economic Zone and competitive operational costs compared to Singapore, Malaysia could leverage these advantages to solidify its position as a top investment destination for wealthy individuals and family offices.

Prime Minister Datuk Seri Anwar Ibrahim remarked that although the Malaysian ringgit has recently appreciated, becoming Southeast Asia's best-performing currency, it still remains undervalued at RM4.10 per US dollar, compared to its historical rate of RM3.80. In an interview with CNBC, Anwar emphasized that the ideal scenario would be for the ringgit to strengthen gradually through natural market forces, reflecting confidence in government policies and reforms. Despite the ringgit's fall to 4.2155/2240 against the US dollar from 4.1230/1280 the previous week, BMI Country Risk & Industry Research has revised its end-of-2024 forecast for the ringgit to RM4.00, up from RM4.55, citing the currency's strong performance in the third quarter of 2024. Anwar, serving concurrently as finance minister, acknowledged concerns among exporters due to the strengthening currency but noted these were not significant, as the ringgit’s current value still supports Malaysia’s predominantly export-driven economy.