Economic Update - ETP moving along, 21 new projects announced

- 21 new initiatives under the Economic Transformation Programme (ETP) were announced by the Prime Minister yesterday, as part of the continued commitment of the government in ensuring the success of the ETP.

- The 21 projects cover 7 National Key Economic Areas (NKEAs) and will generate an estimated RM20.46bil in investments, RM4.59bil in gross national income (GNI) as well as 39,918 in incremental jobs.

- To date, 131 projects have been announced since the launch of ETP, resulting a committed investment of RM199.7bil, RM134.09bil increase in GNI along with an expected creation of 359,659 new jobs.

- The Kuala Lumpur/Klang Valley NKEA was the largest beneficiary among the 7 NKEAs as GuocoLand (Malaysia) Bhd would invest a total of RM12.5bil to develop the Sepang International City.

- Another NKEA that has received substantial amounts of investments was E&E, as Infineon Technologies (Kulim) Sdn Bhd announced an initial investment of RM4bil in the Kulim Hi-Tech Park over the next 10 years.

- In the latest announcement, the Prime Minister also provided comprehensive updates on six policy reforms initiatives under the Strategic Reform Initiatives (SRIs).

- Among the updates was the minimum wage law, which falls under the Human Capital Development SRI as well as improved tax collection under the Public Finance SRI.

- Given the heightened level of uncertainties in the global economy, prospective gains from the ETP in inducing higher domestic demand and investments will be the major driving force in keeping economic declines at bay.

- While a rebound in the quarters ahead is still on the cards, the major downside risk however remains to be the Eurozone given the high levels of uncertainty regarding the future of Greece as well as the potential contagion impact on other countries and the global banking system.

- In this regard, while we maintain our view that an average annual GDP growth of around 5% would be recorded this year, we are keeping a close watch on the developments in the Euro area and will adjust our estimates as and when needed.

Source: AmeSecurities