Middle East

Malaysia Strong Asian Investment Opportunity

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Malaysia: Major Asia Asset

Just two days ago a $3.7bn investment announcement came from Malaysia, set to “to jumpstart foreign interest in its economy even as other Asian countries try to stem speculative inflows in search of higher-yielding markets.” The country’s Prime Minister (Najib Razak) intends to try and get $444bn worth of investments resulting in Malaysia becoming a “developed country by 2020,” including $165m by Asia Media to create digital media infrastructure as well as the establishment of a state-owned energy development agency to be able to attract $106m worth of investments this year. This is all part of the country’s “Economic Transformation Programme,” a project that is due to be put into practice over the next decade.

Other Asian Countries Less Successful

Malaysia has been doing pretty well recently vis-à-vis investments. Indeed it has already attracted around $5bn in pledges from Exxon Mobil and Royal Dutch Shell Pic as well as other (smaller) projects. For example Indonesia, the Philippines and Thailand are having quite a few issues attracting investments anything near to the success of neighboring Malaysia.

But this hasn’t deterred Najib who is determined to ensure Malaysia stays one step ahead, “transforming [it] into a high-income economy within 10 years by generating new growth areas and restructuring the economy to lure investors.” Yet this goal is not as easy as it may seem. Investment blueprints from the past aren’t showing such great results. As well, in general the economy has been suffering from a less-than-skilled workforce to enable it to develop into the “financial services hub” it wants to. Yet it is past the stage of being a low-end manufacturing center,” as countries such as Vietnam now have that role.

Notorious Najib

Still, given all these efforts made by the country’s premier, the public is remaining loyal to Najib. Although one has only to look at the facts on the ground to see where the country really is, given that the exchange was down more than 5 percent from where it was just four years ago. While there is now more opportunity for competition, in general, investors are expecting the government to “take more aggressive steps to reduce its fiscal deficit and overhaul an affirmative action policy they say hinders competition.”

Malaysia PJ: Malaysia Post Japan’s Trauma

It might not have been a surprise if any parts of Asia – including Malaysia – would have been negatively impacted by Japan’s trauma. But in fact this hasn’t been the case, according to Datuk Donald Lim Siang Chai, the country’s Deputy Finance Minister. He claimed that it will “have little impact on the Malaysian economy in 2011.” Vis-à-vis the country’s exports to Japan he said that actually some areas (like plywood and liquid natural gas) would actually probably “increase during the second quarter of this year as Japan increases its reconstruction work of earthquake-damaged areas.”

As well, Malaysia probably won’t be affected by Mid-East and North African troubles either since trade between those countries is anyway only at around 2 percent.

So all in all things are looking good right now for Malaysia. The country has developed a strong enough economy and excellent relations with regions with which to continue exporting to see it through any troubled times Asia may be encountering.

Happy Days for UAE

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Well, anyone living and investing in the UAE should be pretty happy. Things are going well which is why it shouldn’t be such a great surprise that the population has more than doubled in the last few years. In fact, figures show that there has been an increase of a staggering 65 percent inhabitants in the region from 2006 to 2010. This could be to do with the economy since most of these newbies to the area are comprised of overseas investors and workers with a mere 11 percent of those living there being UAE nationals at the end of June 2010. It is Abu Dhabi that has had the large influx of investors.

GDP Rise

The region’s non-oil GDP was said to have increased by 3.3 percent over the course of the year, according to figures released by the International Monetary Fund, as opposed to the 2.1 percent figure of last year. Additional development is anticipated due to the UAE’s “low interest rates, strong crude prices and better prospects promote expansion. ” People living in the area are thrilled with the news and “optimistic” that such trends are set to continue.

More Pocket Money?

But, at the end of the day, it remains unclear as to whether all this good news will mean more money in the pocket of the average UAE citizen. Apparently it may not. It looks like salaries are going to either stay the same or just increase a minimal amount. This is despite the fact that it seems to be an employee’s market right now as companies are on the lookout for a not-endless supply of skilled workers. So it seems a bit strange that salaries remain under lock and key. Nonetheless it’s all relative. Despite the lack of rising salaries, according to a study these salaries are still at the top of the entire Middle East market.

Mid-East Flare Up Leaves Korea a Mess

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While China’s economy and finance markets are looking bold and strong, its Korean neighbor isn’t faring quite so well.  The potential of the Middle Eastern mess is once again being blamed for the success and stagnation of the yuan and the won.  Indeed, statistics showed a hit of 345.35 billion yuan (probably supported by short- and medium-term bonds).  Meanwhile in North Korea the “dire economic situation” is so extreme that international food aid calls (which have likely lessened due to missile and nuclear programs) are becoming increasingly louder, apparently to no avail.  On the one hand the country was blaming international pressure for their failure while simultaneously asking the world for charitable handouts.  Despite its attractive-looking economy, China has not been dealing with the Middle Eastern mess so well, and instead psychologically ignoring its very existence, or running into a panic at the thought of what might entail.

China’s Success Mimics Korea’s Failure

So while the Chinese economy is going from strength to strength, the same can’t be said for Korea.  This hasn’t always been the case.  At one time, it was reported that South Korea was providing around 400,000 tons of rice each year to North Korea but once relations between the two started depleting around three years ago, this gift ended too.

Looking towards China though, things couldn’t be brighter.  It seems that Yujiapu is set to be home to “the world’s largest financial zone a decade from now.”  A set of twelve buildings are to be constructed marking just the “first phase” in this new financial world headquarter, really putting the rest of the region to shame.  While their brothers in North Korea are looking for bread and water, the Chinese are enjoying festive banqueting.


 

Substantial Drop in Asian Shares

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Recent world events – New Zealand earthquake, Japan’s credit rating downgrade and continued Middle East and Libyan unrest – led to a significant drop in stock markets across Asia.  For example, South Korea’s Kospi, the Nikkei 225 stock and Hong Kong’s Hang Seng index all plummeted around 2 percent.  As well, Japan had trouble dealing with its huge debt following Moody’s Investors Service downgrading its outlook for the country’s credit rating, citing “increasing uncertainty” over Japan’s capacity to effectively deal with rising debt.  This doesn’t spell good news for the country which only last month had its sovereign debt rating cut by Standard & Poor.  Australia, China, Singapore and Taiwan are currently in the same boat vis-à-vis stock markets. The only good news for the region of late has been the increase in oil prices.