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AmBank Research expects gradual pickup in inflation

PETALING JAYA: AmBank Research expects inflation to rise gradually going forward, driven by firmer commodities prices and tighter labour market conditions, which should result in firmer wages and better disposable spending by households.

Nevertheless, the research house said that better investment in capacity expansion and labour productivity should contain the upside inflationary pressure.

“We project inflation would be around 2-2.5%, which falls within the Bank Negara Malaysia (BNM) range of 2-3%. We continue to believe that strong growth conditions will allow BNM to normalise monetary policy further,” it said in a note today.

“Hence, we maintain our 30% chance of BNM raising the OPR (overnight policy rate) by 25 basis points in September, taking the year-end policy rate to 3.5%,” it added.

On a separate note, PublicInvest Research said it expects the consumer price index (CPI) to remain benign for the rest of the year due to smaller effect of global cost factors.

It said it is of the view that the series of US interest rate adjustments will keep a lid on commodities like oil, adding that a favourable base effect would also help CPI following 2017’s elevated average of 3.7%.

In addition, it said the strength of the ringgit will also help as this will clamp the cost of imported goods.

The firm forecasts CPI to average at 2.2% this year with core CPI to remain tepid at 1.9%.

“Based on the mandate of BNM which is to ensure price stability while being supportive of growth, we don’t see strong evidence for the policy rate to be intervened again post the adjustment in January given the projected gross domestic product growth rate of 5.3% in 2018 and 2019.”

“Additionally, inflation rate projection of 2.2% and 2.7% in 2018 and 2019 is within the long-term average of 2.6% (2006-2017), hardly a strong reason to suggest risks of financial imbalances or demand-driven inflation,” it added.

Furthermore, it said should there be any pressure on global cost factors, notably oil prices, due to extreme conditions like geopolitical risks or supply disruption, it believes that the condition will be transitory in nature and hence, does not warrant any adjustment.


Short-term rates to remain steady on BNM interventions

KUALA LUMPUR, April 16 ― Short-term rates are expected to remain steady today on Bank Negara Malaysia’s (BNM) operations to absorb surplus liquidity from the financial system. Today’s liquidity is estimated at RM27.65 billion in the…


Bank Negara: Foreign insurers can’t choose alternative initiatives for divestment

KUALA LUMPUR: Foreign insurers, who have repatriated about RM16.5 billion between 2008 and 2017 in the form of dividends but didn’t contribute as much as expected for the development of the domestic industry, cannot choose alternative initiatives with their promise to divest stakes, said Bank Negara Malaysia (BNM).

The contributions of the foreign insurers to the overall development of the domestic insurance industry, despite a long presence in Malaysia, have not been at the level expected.

For example, there has been minimal improvement in insurance penetration, compounded by the lack of breadth in products (especially for lower income segments) and concentration of high-cost distribution models, BNM said in a statement today.

“The bank welcomes any initiative by insurers that would benefit the Malaysian economy and the general public, as expected of any ordinary responsible corporate citizen that operates in the country,” it said in reply to report that foreign insurance companies would set up healthcare trust as an alternative to fulfilling their commitment to pare down their shareholding by 30% before the June 30 deadline.

BNM also noted that the bank had not received such a proposal.

The bank stressed that the agreed foreign shareholding level was a commitment provided by the foreign shareholders in being granted a licence to operate in the country.

The foreign insurers were given the licence to operate in the domestic market on the basis of the specific commitments and assurances given.

“A licence would not have been given if the commitments were not made,” it said
Over the years, ample opportunities and flexibilities have already been conceded to accommodate actions that should have been taken by shareholders to deliver on their commitments.

The bank therefore fully expects shareholders to honour an explicit promise made, and to operate in Malaysia in a manner that benefits the development of the domestic insurance market and the economy generally. This should be commensurate with the significant returns accruing to foreign insurers from the Malaysian market.

Shareholders of foreign insurers have benefited enormously from their presence in the Malaysian market.

BNM estimates that a total of RM16.5 billion, or 70%, of total profits attributable to foreign shareholders of insurers were repatriated over the period of 2008 to 2017 in the form of dividends.

In addition, foreign insurers repatriated an estimated RM1.3 billion in management fees and outsourcing arrangements to foreign affiliates between 2014 and 2016. – Bernama


International banking model must evolve for future needs, says BNM deputy governor

KUALA LUMPUR, April 12 — The model of international banking must evolve to become more desirable and beneficial for the needs of the future, said Bank Negara Malaysia (BNM) Deputy Governor, Shaik Abdul Rasheed Abdul Ghaffour. He said the…


Stocks in Focus (12-04-2018)

KUALA LUMPUR (April 11): Based on corporate announcements and newsflow today, stocks that could be in focus on Thursday (April 12) may include: Fitters Diversified…


BNM to introduce minimum standards for mobile payments

KUALA LUMPUR, April 11 — Bank Negara Malaysia (BNM) will introduce minimum standards for the nascent but growing area of mobile payments in the coming months to enhance consumer protection. Governor Tan Sri Muhammad Ibrahim said mobile payment…


Luno Malaysia started processing withdrawals on March 29

KUALA LUMPUR: Luno Malaysia, which has had transactions for its Malayan Banking Bhd account suspended since last year, started processing withdrawals on March 29.

Currently, pending withdrawals are being processed in batches, while Luno continues to work on a long-term solution to process both ringgit withdrawals and deposits in Malaysia. Deposits are still not possible.

“Enabling Malaysian customers to have access to their funds is our main priority,” said David Low, country manager for Luno Malaysia, said in a statement today.

“We are also testing other solutions for processing both deposits and withdrawals, which will allow us to resume full services in Malaysia. Malaysia, and more broadly Southeast Asia, is critical to our mission to bring digital currencies to everyone, everywhere.”

Luno also announced that it has formally registered with Bank Negara Malaysia (BNM) as a reporting institution as required by the policy document, Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) – Digital Currencies (Sector 6).

The policy document sets out the minimum requirements and standards that a reporting institution must observe – to increase the transparency of activities relating to digital currencies and ensure effective and robust AML/CFT control measures are put in place.

“We view any steps toward regulation of digital currencies as a very positive sign,” said Vijay Ayyar, head of countries for Luno. “We will continue engaging with various government agencies to ensure that the industry is well understood and that risks are mitigated. We have been working closely with BNM over the past year and similarly with many other regulators globally”.

In a separate status update on Luno’s operations, the digital currency exchanger said it will reactivate withdrawal functionality on April 23, allowing customers to submit new withdrawal requests. All new requests will be processed on May 2.

It said all withdrawals will be processed in batches, with high-value transactions processed first, followed by all other withdrawals. As these transactions will be processed manually, they will take time to process and there will be a small administrative fee charged by Maybank.

Luno allows the trading of the two largest digital currencies – bitcoin and ethereum – on its platform.

Year to date, bitcoin’s price has fallen almost 50% to US$6,757 (RM26,100), while ethereum’s price is down almost 48% at US$398.42.


Luno started processing withdrawals on March 29

KUALA LUMPUR: Luno Malaysia, which has had transactions for its Malayan Banking Bhd account suspended since last year, started processing withdrawals on March 29, 2018.

Currently, pending withdrawals are being processed in batches, while Luno continues to work on a long-term solution to process both Ringgit withdrawals and deposits in Malaysia. Despotis are still not possible.

“Enabling Malaysian customers to have access to their funds is our main priority,” said David Low, Country Manager for Luno Malaysia said in a statement today.

“We are also testing other solutions for processing both deposits and withdrawals, which will allow us to resume full services in Malaysia. Malaysia, and more broadly Southeast Asia, is critical to our mission to bring digital currencies to everyone, everywhere.”

Luno also announced that it has formally registered with Bank Negara Malaysia as a reporting institution as required by the policy document: Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT) – Digital Currencies (Sector 6).

The policy document sets out the minimum requirements and standards that a reporting institution must observe — to increase the transparency of activities relating to digital currencies and ensure effective and robust AML/CFT control measures are put in place.

“We view any steps toward regulation of digital currencies as a very positive sign,” said Vijay Ayyar, Head of Countries for Luno. “We will continue engaging with various government agencies to ensure that the industry is well understood and that risks are mitigated. We have been working closely with BNM over the past year and similarly with many other regulators globally”.


ESIA Framework for VBI to be fully developed by 2020

KUALA LUMPUR: The Environmental and Social Impact Assessment Framework (ESIAF) for Value-based Intermediation (VBI) is expected to be fully developed by 2020. The International Centre for Education in Islamic Finance (INCEIF) president and chief executive officer Datuk Dr Mohd Azmi Omar said the development of the framework was intended to facilitate the incorporation of ESI […]


BNM: We didn’t say Malaysians are poor

PETALING JAYA: Bank Negara Malaysia (BNM) said its analysis on the living wage does not suggest that Malaysians are poor as it is just a benchmark on the income needed to attain a minimum acceptable living standard.

“It is not a benchmark to assess the extent of poverty,” the central bank said in response to a news report that calls for the government to implement the living wage immediately.

BNM stressed that it is important to understand the concept fully so that any comments on the issue will not mislead and cause confusion.

The central bank's findings from conducting focus groups and price levels in 2016 showed that a family with two children will need a minimum of RM6,500 a month, while a single person RM2,700, to afford a minimum standard of living in Kuala Lumpur.

Compared with the median household income in Kuala Lumpur in 2016 of RM9,073, it was found that up to 27% of households in Kuala Lumpur were earning below the living wage.

BNM highlighted that the living wage mainly serves as a guide for employers to consider paying employees according to the needs of a minimum acceptable living standard.

“The living wage does not supersede the relevance of the current minimum wage of RM920 to RM1,000. The minimum wage is legally binding and aims to address the basic needs of households.”

However, it noted that the ability to pay a living wage should be assessed with due consideration to employees' productivity, so that it does not translate into unwarranted increase in cost that might lead to higher inflation.

“In addition to meeting basic needs, the living wage also provides for a meaningful participation in society, the opportunity for personal and family development, and freedom from severe financial stress,” it added.