Wednesday, September 9, 2015

Malaysia ruling party closes ranks behind Najib after meeting

Malaysia ruling party closes ranks behind Najib after meeting


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Malaysia's ruling party closed ranks around Prime Minister Najib Razak at a meeting of its supreme council, with his ousted deputy pledging loyalty amid a funding scandal that has dented the country's financial markets.
PHOTO: BLOOMBERG
[KUALA LUMPUR] Malaysia's ruling party closed ranks around Prime Minister Najib Razak at a meeting of its supreme council, with his ousted deputy pledging loyalty amid a funding scandal that has dented the country's financial markets.
Former deputy premier Muhyiddin Yassin made the promise to the United Malays National Organisation, Mr Najib told reporters after chairing the top party meeting on Wednesday. Mr Muhyiddin was removed from his post in late July after publicly calling for answers on the imbroglio surrounding debt-ridden state investment company 1Malaysia Development Bhd, including its investment decisions.
"I welcome the solidarity, unity and loyalty pledge to UMNO," Mr Najib said with Mr Muhyiddin standing silently next to him. Mr Muhyiddin, who remains UMNO's deputy president, has also pledged to ensure a victory in the next national election for the broader Barisan Nasional coalition, Mr Najib said.
Southeast Asia's third-largest economy has faced more than two months of upheaval over claims Mr Najib received billions of ringgit linked to 1MDB in his private accounts. Mr Najib denied the allegations, fired several critics and pushed back against detractors, while the government has transferred some 1MDB investigators to different posts.
Mr Muhyiddin was replaced by Ahmad Zahid Hamidi as deputy prime minister after he said it was unlikely that Barisan Nasional would win if elections were held now. In the 2013 ballot the coalition lost the popular vote for the first time even as it retained office. UMNO has been in power since independence in 1957.
Mr Najib in recent weeks has called for unity within UMNO over 1MDB and his handling of the economy as he beds down unpopular measures such as a goods and service tax, as infighting would erode support for the government and party.
BLOOMBERG

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China, Pakistan set to sign economic zone deal: officials

China, Pakistan set to sign economic zone deal: officials

[KARACHI] Pakistan is set to sign a 40-year-lease with a Chinese company to develop a massive special economic zone in the deep sea port of Gwadar, officials said Wednesday.
The scheme is part of the the China-Pakistan Economic Corridor (CPEC), an ambitious $46 billion investment plan linking western China to the Arabian Sea with infrastructure, energy and transport projects.
The contract assigning the 923 hectare (2300 acre) swathe of tax-exempt land to China Overseas Port Holding Company (COPHC) is likely to be signed this month or October, Dostain Khan Jamaldini, chief of the Gwadar Port Authority (GPA) told AFP.
As part of the wider plans, "work on the Gwadar International Airport would start in the next couple of months and we are quite hopeful of completion of the national highway connecting Gwadar with the north within the next month", he added.
Pakistan is also raising a special security force of between 10,000 and 25,000 men to protect the port, which lies in the restive southwestern province of Baluchistan which since 2004 has been roiled by a separatist insurgency.
Abdul Razzaq Durrani, the director general of GPA, confirmed the deal.
Gwadar port, located 540 kilometres southwest of Karachi, was built in 2007 with technical help from Beijing as well as Chinese financial assistance of some US$248 million.
But acquiring the land from private owners to build the economic zone took several years and cost the Baluch government around US$62 million, Mr Durrani said.
Some Baluch nationalists have accused the Chinese of conspiring with the Pakistani elite to plunder the province's resources while doing little to share profits and create jobs for local people.
But Simbal Khan, a geo-political analyst, said that China had made similar deals in Africa, Vietnam, Sri Lanka and Bangladesh and the project was of great strategic value to both countries.
"Pakistan is looking at the CPEC project as a game changer, kick starting an era of infrastructure growth and investment. The land deal is just part of the Gwadar port infrastructure that needs to develop to realise the expectations of Pakistan and China from this mega project," she said.
AFP
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China to step up fiscal incentives to boost growth

China to step up fiscal incentives to boost growth

[BEIJING] China will adopt "stronger" fiscal policies to support growth, Beijing said as it seeks to sooth increasing fears about the world's second-largest economy following turmoil in domestic and overseas markets.
The government will accelerate major construction projects, allow more small companies to benefit from tax cuts, and encourage private capital to invest in key areas, among other measures, the finance ministry said in a statement released Tuesday.
Global markets have been in turmoil for weeks on worries about slowing growth in China, a key driver of global expansion, wiping trillions off share prices. The panic has also hammered mainland Chinese markets, with Shanghai's exchange plummeting after a debt-fuelled bubble burst.
The finance ministry gave no specific values for future spending. But it said that by the end of August the central government had already spent 96 per cent of its annual infrastructure investment budget.
To achieve China's 2015 growth target of around seven percent, the ministry said it would step up and improve a "proactive fiscal policy, fine-tune the measures in a timely manner and accelerate reforms that will help stabilise growth".
In share trading Wednesday the Shanghai stock market surged 2.29 per cent, extending a rally of almost three percent Tuesday on hopes for government measures to support the economy.
Economic expansion stood at 7.0 per cent in each of the first two quarters this year, but on Monday the government lowered its 2014 growth reading to 7.3 per cent, from the 7.4 per cent announced in January.
Leaders have taken a series of measures to bolster growth and curb falling share prices, including cutting interest rates last month for the fifth time since November and lowering the Chinese currency's central rate against the US dollar by nearly five percent in a single week.
But the benchmark Shanghai Composite Index has slumped nearly 40 per cent since mid-June despite official interventions that investment bank Goldman Sachs estimates have cost US$234 billion.
Official data released Tuesday showed the country's imports decreased for the 10th consecutive month in August by dropping 13.8 per cent, adding to concerns over sluggish domestic demand.
"China's economy has been placed under new pressures recently as uncertainties were added into the world recovery after turmoil in the global financial markets, sharp falls in main stock exchanges, continued depreciation of emerging market currencies and new record lows of prices of commodities including oil," the finance ministry said.
It vowed to reform the tax system and "further regulate" the management of local government debt, which is regarded as a main threat to financial stability.
On Wednesday, the National Bureau of Statistics announced it was reforming quarterly gross domestic product (GDP) calculation method to base the figures on economic activity of each quarter and "improve accuracy".
Analysts have questioned the veracity of official Chinese statistics, with some saying they can paint a rosier picture than reality.
AFP
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Bank of England to raise rates in Q1 2016, following US Fed: Reuters poll

Bank of England to raise rates in Q1 2016, following US Fed: Reuters poll

[LONDON] The Bank of England will raise interest rates early next year, likely following close on the heels of the Federal Reserve, according to a Reuters poll which concluded it should not be swayed by easing elsewhere in Europe.
Around 40 central banks have loosened policy this year - including the European Central Bank - but roughly three quarters of the economists in this week's poll said the BoE will raise the bank rate by 25 basis points to 0.75 per cent before April.
Twenty-three of the 28 economists who answered an extra question said it was a good idea for Britain's central bank to hike rates while others are loosening. "The Bank of England must do what it thinks is right for the UK economy, where conditions are different from those in the euro zone," said Stephen Lewis at ADM Investor Services. "There would be more danger in raising rates if the Federal Reserve were not doing so." If the United States Fed raises rates this year, as currently expected, it would be the first upward move in the world's largest economy in almost a decade. However, predictions as to when it pulls the trigger have been consistently pushed back.
What the Fed and BoE polls have both persistently shown is that even when rates do begin to rise they will do so gradually. The bank rate will only be at 1.25 per cent by the end of 2016, 2.00 per cent a year later, and then see out 2018 at 2.50 per cent.
Expectations for a BoE rate hike have boosted sterling and official data on Wednesday showed British manufacturing output fell hard in July, blamed on a combination of weak demand from abroad and the strong currency.
Still, Britain's economy has enjoyed relatively healthy growth compared to the eurozone and the poll suggested it would grow 0.6 per cent per quarter from now through to the middle of 2016, in line with an August poll.
Growth will then dip to 0.5 per cent for the last two quarters of next year. While inflation is expected to pick up, it will not reach the Bank's 2 per cent target until 2017.
Bank Governor Mark Carney said at the end of August the recovery in Britain's economy "will likely put the decision as to when to start the process of gradual monetary policy normalisation into sharper relief around the turn of this year".
With inflation staying low, wage growth will broadly pick up from here and comfortably outstrip price rises through to the end of next year, the poll found. Wage growth is one of Carney's cornerstones as to when rates could rise.
Ian McCafferty was the lone member of the Monetary Policy Committee to vote for a rank rate rise last month, citing growing demand and wage pressures. The poll found even by the end of the year only two of his eight colleagues would have joined him.
"The recent financial market volatility and fears of a more pronounced slowdown in China are an additional source of uncertainty that will likely only serve to reaffirm the wait-and-see position of most committee members," Daniel Vernazza at UniCredit said.
China's imports shrank far more than expected in August, falling for a 10th straight month, and adding to concerns the world's second-largest economy may be slowing even more sharply than earlier expected.
None of the 54 economists polled expect any increase when the Bank of England announces its latest decision on Thursday and markets are not pricing in the first rise until the second quarter.
REUTERS
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UK growth slowed in three months to August: NIESR

UK growth slowed in three months to August: NIESR

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Britain's economy probably slowed in the three months to the end of August, the National Institute of Economic and Social Research said on Wednesday. 
PHOTO: BLOOMBERG
[LONDON] Britain's economy probably slowed in the three months to the end of August, the National Institute of Economic and Social Research said on Wednesday.
Growth in the period was estimated at 0.5 per cent compared with 0.6 per cent in the three months to the end of July, the think tank said.
Official data published earlier on Wednesday showed industrial output contracted in July, pushed down by the earlier-than-usual summer shutdown of auto plants and weak demand for British exports.
"Despite the slight softening, growth remains close to the estimated long-run potential of the economy, but below the average rate of growth - 0.7 per cent per quarter - observed since the start of 2013," NIESR said.
It has previously forecast that the UK economy will expand by 2.5 per cent in 2015 as a whole, compared with 3.0 per cent in 2014.
REUTERS
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