Investment & Market Trends

PUTRAJAYA: A total of 14 Memoranda of Understandings, Agreements (MoUs/MoAs), protocols and joint statements involving 9 ministries have been exchanged between Malaysia and China, witnessed Prime Minister Datuk Seri Anwar Ibrahim and China Premier Li Qiang. The documents were exchanged during Li’s official visit to Malaysia, marking his first visit to the country as premier, in conjunction with the 50th anniversary of diplomatic relations between Malaysia and China. The 9 ministries involved are the Ministry of Investment, Trade and Industry (MITI); Finance (MOF); Agriculture and Food Security; Housing and Local Development; Home Affairs; Science, Technology and Innovation (MOSTI); Higher Education (MOHE); Tourism, Arts and Culture; as well as Communications. Apart from the MoUs, Malaysia and China also inked the second cycle of the Malaysia-China 5-year programme for economic and trade cooperation to deepen further linkages between industries in priority sectors like high-level manufacturing and digital economy. The programme, which will from 2024 to 2028, aims to deepen cooperation in robotics, entrepreneur development, innovation and startup, along with research and development in agriculture and primary industries. According to MITI, the second cycle will also focus on existing areas such as trade and investment, manufacturing, the digital economy, logistics and the development of small and medium enterprises. On this, MITI Minister Tengku Datuk Seri Zafrul Abdul Aziz and China’s Minister of Commerce Wang Wentao signed and exchanged 3 key documents – the first document related to the initial Malaysia-China 5-Year Programme for Economic and Trade Cooperation, while the other 2 were new MoUs aimed at increasing high-quality investment in the digital and green economies. More specifically, both countries aim to explore cooperation in digital infrastructure, including communication networks, smart infrastructure and smart cities, enabled by technologies such as AI and 5G connectivity in sectors like manufacturing, transportation, business, finance, education and healthcare. The MoU on green development seeks to explore cooperation in clean energy, new energy vehicles, green finance, sustainable infrastructure construction and green technology. This includes research and development (R&D) and the establishment of scientific and technological innovation platforms to accelerate the green transformation journey of both countries. MITI also welcomes the Malaysia-China cooperation on establishing a single window system to facilitate cross-border trade by streamlining trade regulatory processes and simplifying documentation. The system will enable the seamless digital exchange of trade-related information between customs authorities in both countries, which would utilize leading-edge technologies including AI and blockchain to ensure real-time and accurate exchange of data. “The single window trade initiative is a strategic step towards enhancing Malaysia’s trade facilitation capabilities and is expected to significantly expedite the movement of goods while reducing the administrative burden for businesses. “This will not only support bilateral trade growth, but also nurture economic resilience between the two countries,” Tengku Zafrul said. China has been Malaysia’s largest trading partner for 15 consecutive years since 2009. Last year, total trade with China was valued at RM450.84 billion (US$98.80 billion), contributing 17.1% of Malaysia’s global trade.

KUALA LUMPUR: Hong Leong Investment Bank (HLIB) remained positive on DRB-HICOM Bhd’s long-term outlook on potential growth driven by Proton subsidiaries amid increasing market competition. In a research note, HLIB said that Proton is targeting to achieve 2024 sales of 160,000 units against 151,000 units in 2023, through new models introduced and attractive promotional campaigns. “Proton has recently launched the updated X50 RC with good discounts and is expected to launch another X70 facelift soon, along with introducing a new electric vehicle (EV) model by the end of the year in line with management’s target of one new model launch per annum,” it said. HLIB said the DRB-Hicom management brushed aside the potential market competition from Zeekr’s entry into the Malaysian market, given the different market segment, where Zeekr would be positioned as a higher premium segment than Proton’s e.MAS EV. Zeeker is a publicly listed Chinese automobile company and the brand is owned by Geely Automobile Holdings. HLIB also said that Bank Muamalat and CTRM would continue supporting DRB-Hicom 2024’s performance. “We reiterate our ‘buy’ rating with an unchanged target price (TP) of RM1.65 based on a 20% discount to sum-of-parts (SOP) RM2.04,” said the research firm. Additionally, Kenanga Research also maintained its ‘market perform’ call on DRB-Hicom with a SOP-derived TP of RM1.40. The research house said it likes the company for being the second largest player in the local automotive sector, second only to Perodua, with a market share of about 30% and its strong Proton and Honda franchises as well as its improving banking franchise under Bank Muamalat. “However, DRB-Hicom’s outlook has weakened with Rival Perodua turning up the heat with aggressive new launches, coupled with earnings drags from certain non-performing units,” it said. Kenanga Research said the risks to its call include consumers cutting back on discretionary spending amidst high inflation and persistent disruptions in the global supply chain. “Other risks also include a slowdown in capital market activities and a global recession hurting the demand for transport and aviation services,” it added. — BERNAMA

KUALA LUMPUR: The startup ecosystem in Kuala Lumpur has generated more than RM220 billion (US$47 billion) in ecosystem value from 1 July 2021 to 31 December 2023, said Cradle Fund Sdn Bhd. The agency – operating under the Finance Ministry and administered by the Ministry of Science, Technology and Innovation (MOSTI) –  said that the ecosystem value measures the city’s economic impact from the value of exits and startup valuations. In a statement, Cradle said that KL also received recognition in the latest Global Startup Ecosystem Report (GSER) 2024, placing it among the top 30 emerging ecosystems, which reflects its rapid growth and substantial economic impact. Its Group Chief Executive Officer Norman Matthieu Vanhaecke said these achievements underscore the efforts and strategic initiatives to foster a conducive environment for startups. “Malaysia views startups as a pivotal force in driving local innovation and technological advancement. Cradle seeks to combine the resources and experiences of all ecosystem stakeholders. “With a consistent commitment to cultivating a high-performing, inclusive, globalised and sustainable ecosystem, Cradle envisions propelling Malaysia to the forefront of the global startup ecosystem,” he said. According to the GSER 2024 report, Kuala Lumpur’s ecosystem has also received notable rankings in several key areas within Asia, namely the Top 15 Asia Ecosystems in Funding, the Top 20 Asia Ecosystems in Performance and the Top 20 Asia Ecosystems in Talent and Experience. — BERNAMA

KUALA LUMPUR: Malaysian Reinsurance Bhd and the Singapore branch Pacific Life Re Ltd have inked a Memorandum of Understanding (MoU) to provide sustainable retakaful solutions to takaful operators. In a statement, Malaysian Re’s President and Chief Executive Officer Ahmad Noor Azhari Abdul Manaf said the collaboration has allowed both parties to deliver exceptional retakaful solutions to meet the diverse needs of their customers. The collaboration was first established in 2019 and since then, Malaysian Re through its retakaful division Malaysian Re Retakaful Division (MRRD) has worked with Pacific Life Re to provide family retakaful solutions leveraging on Pacific Life Re’s global experience and technology solutions powered by UnderwriteMe, Pacific Life Re’s fully-owned subsidiary. “Within the first 5 years of this collaboration, Malaysian Re has expanded not only its takaful business but also its conventional business and we look forward to unlocking new opportunities from the extension of this collaboration. “By combining both Malaysian Re and Pacific Life Re’s strengths and advantages, we are well-positioned to continue providing innovative retakaful solutions to address complex risk challenges faced by the industry as well as promote the benefits of retakaful to a larger pool of industry players,” Noor Azhari said. Meanwhile, Pacific Life Re’s Managing Director Vasan Errakiah said this collaboration underscores the shared vision and commitment of both Malaysian Re and Pacific Life Re to meet the demands of the sector and contribute to the enhancement of retakaful solutions. “By combining our expertise, we are confident that we will continue to deliver greater value to our customers and contribute to the development of a robust and innovative retakaful market,” he added.

KUALA LUMPUR: Malaysia’s tax system requires reform due to its imbalanced distribution of non-tax revenue, which tends to narrow the tax base, said an economist. Bank Negara Malaysia’s (BNM) board of directors member, Dr Nungsari Ahmad Radhi said that the country’s taxation system must undergo reform to give greater buoyancy to government revenue and to broaden the tax base. “The problem with our tax base is that it is not buoyant to show a 1% gross domestic product (GDP) growth yields more than 1% tax revenue,” he said at the BNM-organised Sasana Symposium 2024. Nungsari emphasised that the current taxation system relied on direct taxes, such as income and corporate taxes and taxpayers will be monitoring government spending. Nungsari said the dependency on non-tax revenue in the form of dividends from Petroliam Nasional Bhd (Petronas) is not sustainable in the long run. “We have been taking so much from Petronas, that they are not making enough investments to explore more wells to pay the dividend they have been paying. “We have to be prepared for the post-carbon, post-(crude) oil scenario where petroleum-based revenues will no longer be there as in the past,” he said. Nungsari also said that in the longer term, structural issues highlighted in Madani Economic framework would need close attention. — BERNAMA