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A celebration amongst MBLBC members, partners and friends, ushering in the New Year of 2016

Speech MBLBC New Year’s Reception 15th January 2016

James de Caluwé

Vice-President MBLBC

The views expressed herein are those of the author itself and do not represent the collective view of the MBLBC. The author, nor the MBLBC, will be held liable for the use or abuse of the information contained herein.

Economy Malaysia 2015

  • A strange year showing a phase of transition: the year where Emerging Markets ventured into negative sentiments compared to the Developed Markets, particularly the US and the EU who remained more or less on track in respect to their growth
  • Belgium GDP grew at 1.3% with an average inflation of 0.48% (GDP Eurozone 1.5% / inflation 4%).
  • Malaysia’s GDP grew likely approximately 5% but this was in a series of downward revisions from the earlier 6% forecast made. The inflation was at around 3.8% and grew at the fastest pace since the economic crisis of 2008. Word is also that the CPI does not reflect the true increase in the cost of living.
  • The year was marked by:
    • The introduction of the GST.
    • The slide of the Malaysian Ringgit.
  • Malaysia did suffer from the weakening of the commodities worldwide: as a main exporting country of oil and mainly natural gas, the impact on the country’s revenue is huge with an unprecedented revision of the annual Being the second largest palm oil producer and exporter, the weakness in palm oil prices added to that effect. This did not bode well in order to support the Ringgit, the situation of Malayia’s current account and the efforts to reduce the budget deficit.
  • The growing expectations at the end of the first half of 2015 that the Federal Reserve would increase interest rates and start with the gradual decline in quantitative easing, also prompted investors to return to the US dollar causing a massive selling of ringgits and the subsequent weakening. Finally the interest rate hike happened, but this was already calculated in the FX
  • The slowdown in China, Malaysia largest trading partner after Singapore, urged the Chinese government to float the CNY and devaluation on the 11th of August. The Ringgit followed in tandem.
  • 1MDB came, in that respect, at a very bad time further eroding the confidence of foreign investors in Malaysia, causing the Ringgit to be the worst performer of all Asian currencies in

Outlook Economy Malaysia 2016

  • Not being an economic expert, I should start my outlook on the economy for Malaysia in 2016 with a disclaimer but I will try anyway to venture in this uncharted
  • The rising cost of living does not show any signs to stop: at the end of 2015 there were increases in toll rates which still have to be factored in for the cost of
  • Also, the year started with a first unpleasant surprise in that area, at least to us as an industrial manufacturer: Malaysia has in all silence increased the natural gas price by a whopping 15% on the 1st of January 2016 and communicated on this only at the start of the year. Strangely enough, this was not picked up at all by any media. This hike goes into the current global trend of decreasing energy prices and brings Malaysia’s gas price on par with European gas prices despite being a large gas producing country. Energy competitiveness against the US has now been completely
  • Average salary increments of 5.57% for executives and at 5.51% for non-executives, the latter mainly driven by the increase in minimum salary from RM900 to RM1,000 for Peninsular Malaysia. The continuation of the salary increments versus Europe and the US, is putting Malaysia in a higher cost structure for labor intensive
  • The economic news out of China is not very promising – at the least the events on the stock exchange are likely signs on the wall of a hard fall instead of a soft
  • The further negative pressure on the crude oil prices, with indices edging below USD30 per barrel for the first time since April 2004 will not help Malaysia’s budget which still remains depending for approximately 30% on oil- and gas-revenue. On a wider scale all commodities show a further
  • As such, my expectations are for a further weakening of the Malaysian Ringgit against the USD. For exporting businesses, this hopefully will balance some of the rise in costs



Information has been provided on an “as is” and “as available” basis. Malaysia Belgium Luxembourg Business Council (“MBLBC”) makes every effort to ensure, but does not guarantee, or warrant – express or implied – the accuracy or completeness of the information herein, the use of which is at the user’s sole risk. The views and opinion expressed in the post are those of the author and not necessarily reflective of MBLBC’s or any of its’ members’ official views and opinion.