The unveiling of the ETP Annual Report was an opportunity
for the Government to trumpet its 2011
success stories. Despite the
criticisms, the ETP is still the best framework for a discussion on
Malaysia among foreign investors. In
fact, we see the ETP bearing fruit towards end-2012, thus justifying our call
to acquire Construction, O&G and Banking stocks, especially in 2H2012. 2013
should be a brighter year as infrastructure investments in the
MRT, Double Track and RAPID projects
generate strong multiplier effects. For now, however, we remain NEUTRAL on the
Malaysian market given the risk of a mid-year market retracement. Our year-end
KLCI target of 1,620 pts remains.
PM puts GTP in the spotlight. At the launch of the GTP and ETP’s
2011 Annual Reports yesterday, the Prime Minister rightly spent more
time focusing on the GTP, which has a broader impact on the ‘rakyat’ and which
is driven by the Government.
PEMANDU highlights
the SRIs. At a separate briefing, PEMANDU chose to focus more on the Strategic
Reform Initiatives (SRIs), which
are enablers in the
transformation of the Malaysian economy. This was to deflect criticism that the
ETP was too focused on private sector projects without looking at proper
economic reform. The success stories
among the SRIs included the cancelation or simplification of 52% of the
licences needed to run a business in Malaysia, reducing the budget deficit to
5% and continued efforts by the Government to pare down its stake in businesses
that it currently owns.
ETP achieves broad
goals. For 2011, the ETP achieved its broad goals, with GNI at RM830bn vs
the targeted RM797bn, private investment
totaling RM94bn vs the
targeted RM83bn, and 313,741 jobs committed vs the
330,000 targeted. All the NKEAs achieved varying degrees of success
with regard to KPIs that were scheduled for tracking in 2011. Special mention
goes to the Agriculture NKEA for admitting that a number of its EPPs such as
cattle rearing in palm oil estates and feedlot farms did not justify the
investments needed and thus, would not see further developments going forward.
The key ETP beneficiaries.
In the Annual Report, the usual broad-based targets of increasing broadband
penetration, oil extraction and palm oil yield were highlighted again. Rather
than dwelling on these well-known targets, we choose to highlight a few
specific plans moving forward that could benefit a few specific companies,
including:
-
Greater KL
– Plans for environment management including sewerage, solid waste management and river
cleaning. Could benefit MRCB (TRADING BUY, FV: RM2.50)
-
O&G – Plans for the merger of acquisitions
between offshore fabricators. Could benefit Kencana Petroleum (BUY, FV: RM3.60)
and MMHE (NEUTRAL, FV: RM5.40)
-
Tourism – Plans for more Premium Outlets. Could
benefit Genting Plantations (BUY, FV: RM10.13)
-
Communications
– Plans to increase the number of
Data Centres in Malaysia. Could benefit Time dotcom (BUY, FV: RM0.87)
-
Education
– Proposal to remove the quota for Malaysian students in International Schools. Could be good for SEGi (BUY, FV: RM2.17) and Help International (NEUTRAL, FV: RM1.55).
Still the Best we’ve
Got. All in, despite the criticisms leveled at it and the challenges it
faces, we believe the ETP is still the best economic programme that Malaysia
has seen.
PM focuses on GTP.
During the launch of the 2011 Annual Reports for the Government
Transformation Programme (GTP) and the Economic Transformation Programme (ETP),
the Prime Minister naturally dedicated more time in his speech to the GTP. This
is because the GTP is a Government-led initiative aimed at improving the
quality of life for the broad spectrum of Malaysians in the areas of:
1. Cost of Living – where the Government touted the various
relief efforts it had undertaken in 2011,including one-off cash payments to the
needy, affordable housing schemes and continued subsidies.
2. Crime Rate – where the GTP has led to an 11% drop in
overall crime and 39% drop in street crime since 2009.
3. Education – where the efforts to build up the capacity of
Malaysia’s pre-school education have led to 77% of Malaysian children now
attending pre-school.
4. Rural Basic Infrastructure – where the most rural roads
targeted to be built over a 2-year period was achieved over 2010 and 2011.
5. Public
Transportation – where the MRT, LRT enhancement and the Double-track
railway were touted.
6. Low Income Households – where 44,000 households were
lifted from hardcore poverty.
7. Corruption – where a total of 900 offenders were
convicted in 2011.
Going forward, the GTP will focus on the Rural
Transformation Programme, which will be unveiled soon.
PEMANDU zooms in on
SRIs. Separately, the Performance Management and Delivery Unit (PEMANDU)
held another briefing on the progress of the ETP. At this briefing, PEMANDU
focused more on the Strategic Reform Initiatives (SRIs) to help correct the
misperception that it was overly project-focused given that aside from the SRIs,
the ETP comprises mainly the Entry Point Projects (EPPs) and Business
Opportunities (BOs) that appeal more to
investors. Within the 6 SRIs, PEMANDU highlighted a number of success stories
in reforming Malaysia’s economic landscape to make it more competitive. These
are:
1. Competition, Standards and Liberalisation – The
Competition Act came into force on 1 Jan 2012 and 8 services sub-sectors fully
liberalized.
2. Public Finance – The budget deficit was further reduced
to 5% in 2011 against a target of 5.4%. The target for 2012 is 4.7%.
3. Public Service Delivery – 405 licences will be simplified
or eliminated by June 2012, thus eliminating 52% of the licences required
to do business in Malaysia.
4. Human Capital Development – TalentCorp continues its work
of attracting talented Malaysians to return.
5. Government’s role in Business – The Government will pare
down its stake in another 5 Government-Linked Companies (GLCs) and sell its
stake in another 8 companies this year.
6. Narrowing Disparities – Agencies such as TERAJU will
continue their work of identifying and encouraging deserving Bumiputera SMEs. ETP
achieves its targets. In the broader picture, the ETP has achieved its main
targets in the areas of :
- Gross National Income – where Malaysia’s GNI reached
RM830bn in 2011 vs the targeted RM797bn.
- Private Investment – Malaysia drew
RM94bn in private investments in
2011 vs the targeted RM83bn.
- Jobs Committed – Malaysia saw 313,741 jobs being committed
vs the 330,000 targeted.
In terms of the EPPs within the 12 National Key Economic
Areas (NKEAs), the achievements were as highlighted in Figure 1.
Source: OSK188
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