The Star Online: Business
The Star Online: Business |
- Look into your past life to plan your future financial life
- Major shift seen in SME landscape
- External environment poses key challenge to Malaysia's growth
| Look into your past life to plan your future financial life Posted: Imagine if you had a time machine that allows you to travel back in time and travel back again to the future, what financial decisions would you change for the better? Surely, there would be useful lessons from the past. One observation from the past would obviously be how cheap everything used to be and how we have taken them for granted. How we wished we had kept pace with inflation because each ringgit would have been stretched sufficiently to afford the inflated prices. How you wished you had started on that saving plan because you didn't know it would come in handy for your retrenchment. And why on earth did we waste money on things we never needed, clothes we never wore or food that was bad for our health? If only you knew you weren't going to be as healthy now as you were in your younger days, you would have been better covered medically. You would also have set up an income replacement plan then due to a serious illness that forced you out of work prematurely. You now realise that the ringgit values in the sales illustrations were future values which have lost its purchasing power over the years. Money certainly has a time value. Coming back from the past, the corporate world has changed and economies have evolved. It should have made sense to have diversified your investments and kept your portfolios consciously invested. The frequent switching in and out of your funds and the panicky reactions to periodic news and events weren't rewarding at all. Instead, rebalancing your portfolios annually and avoiding the herd mentality would have been wiser. Perhaps you would have allocated a smaller portion of your funds to speculating and a lot more to investing. We all know we don't have such a time machine but seriously when you look back into your own financial lives, there are many financial lessons to be learnt. Take stock of these lessons daily. Now that you are back to the future, list them in your smartphone as resolutions to change. After all, it is only through mistakes that we become better at everything in life. |
| Major shift seen in SME landscape Posted: PETALING JAYA: Small and medium-scale enterprises (SMEs) will need to reinvent the way they do business in light of the sector's liberalisation, said SME Corp chief executive officer Datuk Hafsah Hashim. "We are likely to see a major shift in the landscape, as the Government gradually liberalises the sector by 2015 in line with the obligations under the Asean Free Trade Agreement," she told StarBiz. Forty-five segments of the various services sub-sectors have been fully liberalised: 27 in 2009 and a further 18 in 2012. The highest concentration of SMEs is in the services sector (580,985 or 90%), and close to 80% of them are micro enterprises. The share of the micro enterprises in the overall SME landscape is 77%. According to Hafsah, this shows that at present many of the services sub-sectors are fragmented and dominated by small firms, but with huge potential in the future. They refer to business services, including professional services, logistics (transportation and storage), tourism-related services as well as retail. "Building domestic capacity prevents the hollowing out of existing players from competitive pressures, and facilitates the shift towards a services-based economy, as the services sector is expected to be the main growth driver of the economy, with its share to gross domestic product (GDP) projected to rise from 54% to 65% by 2020," she said. She added that the SME master plan (2012-2020) was crafted to create competitive SMEs to increase their contribution from 32% to 41% to GDP by 2020. To achieve this, Hafsah said, SMEs in certain fragmented sub-sectors might need to consolidate to strengthen their position to benefit from economies of scale, greater efficiency and product differentiation. "Rationalisation or consolidation is usually market-driven, and business associations can identify segments that were ready for consolidation. "They could set up their own research unit to assist their members in their respective fields and areas of business," she elaborated. Malaysian Investment Development Authority deputy chief executive officer 1 Datuk Azman Mahmud said that one of the strategic thrusts in the third industrial master plan was encouraging mergers and acquisitions, consolidations and strategic partnerships among industries. "Malaysian companies should outsource some of their low-end operations to other countries. In certain industries, such as the electronics sector, some companies have relocated or expanded their labour-intensive operations in China, while maintaining their high value-added activities in Malaysia," he said. Under the domestic investment incentive package announced last year, the Government has introduced an incentive package to encourage mergers among small service providers in professional services. The merged entity would pay a flat corporate tax rate of 20% for five years and stamp duty exemptions on legal documents related to the merger. "During the consolidation period, there may be some disruption in activity and additional cost, and the incentive would be helpful to cushion the impact," Hafsah said. |
| External environment poses key challenge to Malaysia's growth Posted: KUALA LUMPUR: Despite strong economic growth in recent times, the external environment remains a key challenge to Malaysia to maintain a positive growth in near-term. Weak commodity prices, anemic global demand for electrical and electronic products and waning strength of emerging economies such as China and India will pose a challenge to an open economy including Malaysia. Malaysian Rating Corp Bhd Chief Economist Nor Zahidi Alias said global economic uncertainties and jitters that surrounded the 13th general election were major factors that dragged Malaysia's economy in the first half of the year. "At the same time, weak commodity prices dented the export sector and affected the headline growth," he told Bernama. Nor Zahidi said the situation was also being amplified by weaknesses in some emerging economies, including China, which is expected to experience a slower-than-expected growth of between 7% and 7.5% this year. Nomura, in its latest global market research that focused on China, remarked that one percentage point drop in China's gross domestic product would lower global growth outside the world's second biggest economy with the hardest hit economies being in Asia. The biggest casualty would be Hong Kong, with growth falling by one percentage point or more, it said. The impact is also large on commodity-producing countries including Malaysia, Australia and those in Latin America despite being located much further away from China. China is the world's largest consumer of commodities including natural rubber and copper. Standard Chartered Bank Regional head of research Edward Lee said there were many factors to affect long-term sustainable growth such as a stable macroeconomic environment. "Malaysia has been very successful in maintaining high and sustained growth. Naturally, the battle does not stop here," he said. However, inflationary pressure may start to kick in next year especially if the electricity tariff was adjusted and petroleum subsidy was further reduced, Nor Zahidi said. Lee said global food and oil prices have picked up recently and turned positive on a year-on-year basis. "This may add to inflation although any impetus currently is expected to be moderate. We expect a full year inflation at about 2.1%," he said. Nor Zahidi said the price pressure would also come from the goods and services tax (GST) if it was implemented next year. "We view the impact of GST, if introduced next year, will be a one-off event, but its implication on consumer spending cannot be underestimated," he said. Lee expects further fiscal consolidation to take place in near-term for the Government to sustain its long-term fiscal position and to address rising household debts. "Lending conditions may gradually tighten in some areas. For example, Bank Negara has already introduced new micro prudential rules to address the high household debt," he said. The downward pressure on ringgit would also become a concern especially if outflows continue to increase following the US Federal Reserve's intention to cutback bond purchases, said Nor Zahidi. "The concern may deepen if Malaysia's current account surplus continue to shrink," he said. On the domestic side, the situation was less worrying as some imbalances such as high household debts may induce policymakers to implement measures that will moderate the pace of private consumption, Nor Zahidi added. Malaysia's current account surplus has narrowed to RM8.7bil in the first quarter 2013 from as high as RM40bil in the third quarter of 2008. Malaysia's current account surplus has narrowed significantly over the last two years, reaching a 10-year low of 3.7% of gross domestic product (GDP) in Q1 2013 from over 10% of GDP in 2011. The narrowing has been driven by a combination of weak exports, strong domestic demand and low commodity prices. – Bernama |
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