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"Malaysia Shipping Report Q1 2014" now available at Fast Market Research

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2013-12-04 11:06:28 - New Transportation market report from Business Monitor International: "Malaysia Shipping Report Q1 2014"

Election Pushes, Slower Global Demand Pulls

Second quarter economic growth in Malaysia came in under expectations largely, we think, because of the impact of slower Chinese growth on Malaysian exports. Q213 GDP growth came in at 4.3% year-on-year (y-o-y), half a point down on Bloomberg consensus forecasts of 4.8%. BMI believes we have yet to see the worst of China's economic slowdown, meaning that Malaysia's export drive will remain somewhat subdued.

While net exports are acting as a drag on growth, there are still some bright spots in the country's outlook, with both investment and domestic consumption looking strong. Construction activity is likely to be on the up, as many public sector infrastructure projects, part of the government's Economic Transformation Programme (ETP),

have been scheduled to start up during H213. There is also a healthy pipeline of private sector investment projects. Household consumption is also holding up well, boosted by low unemployment (at a historic low of around 3%). Taking these factors into account, we are maintaining our GDP growth forecast at 4.6% in 2013, followed by 4.6% again in 2014.

Full Report Details at

We are holding steady our 2013 forecasts for activity levels at the country's major ports (Port Klang and Port Tanjung Pelepas). While the numbers have not changed, compared to our last quarterly reports the downside risks are a little larger, due to slightly weaker export demand prospects. Bulk tonnage and container traffic will rise by between 2% and 5% this year, and we now expect most ports to lag, rather than lead GDP percentage growth.

Headline Industry Data

* The real value of Malaysia's total trade will rise by 3.4% in 2013, a small increase on the estimated 2.3% expansion experienced in 2012. 2014 growth will rise to 4.1%.
* Total cargo volume handled at Port Klang will rise by 2.9% to 203.64mn tonnes in 2013, while volume at the Port of Tanjung Pelepas will rise by a slightly higher 3.1% to 122.81mn tonnes.
* In 2014 Port Klang cargo volume growth will remain broadly steady at 2.8%, and Tanjung Pelepas will also experience a fractional slowdown to 3.0%.
* 2013 Box traffic at Port Klang is projected to rise 4.96% to 10.5mn twenty-foot equivalent units (TEUs), while at the Port of Tanjung Pelepas a gain of 2.1% to 7.86mn TEUs is expected.
* In 2014 Port Klang box traffic will rise to 8.0%; Tanjung Pelepas will see a pick-up to 4.1%

Key Industry Trends

PTP Says Double-Digit Growth Possible In 2014: Port of Tanjung Pelepas (PTP) management says it is confident of achieving double-digit growth rates in 2014. Chief executive Glen Hilton was quoted saying 'we are expanding under a three-year modernisation plan designed to be completed around May 2014'. A total of MYR1.4bn (US$440.2mn) is being invested to bring the port up to the standard necessary to receive the new generation of mega-container vessels. Hilton said that in 2012 the port handled 7.7mn TEUs, and that its current capacity from 12 berths stands at 8.5mn TEUs. While acknowledging that the market has been fluctuating, Hilton said 'although we are in tough economic times, we will continue to work well with customers like Maersk Line to attain continued growth'.

Choppy Waters For MISC: Pressure on MISC's balance sheet may be behind reports that the company is considering a cash call. These coincided with mixed Q213 financial results and news that parent company Petronas will start directly procuring LNG tanker newbuilds, rather than leasing them from MISC. The company saw revenues come in at around US$670mn in the second quarter, a y-o-y decrease of 3.2%. MISC attributed the drop to a decrease in revenue from its heavy engineering operations, compounded by weak freight demand and a relatively depressed global shipping market.

Northports Raising Capital For Expansion: Malaysia-based port operator Northports was considering whether to go to the stock market or use Islamic bonds to raise MYR1bn (US$299mn) for its expansion, reported Seatrade Global in August. The operator said it would take the final decision on which financial instrument to use by October. Northports has acknowledged that it will struggle to meet its 5% growth target owing to the current economic situation. Earlier, technical specialists were reported to be engaged in assessing the feasibility study for a project aimed at expanding the break and dry bulk processing facilities of Northport, the port operating unit of NCB Holdings. The project represents a total investment of MYR200mn (US$61.6mn) and entails expansion to the north of Wharf 25.

Key Risks to Outlook

Domestic political risk has dropped significantly after the elections earlier this year. The unopposed election of Prime Minister Najib Razak as president of the ruling party, the United Malays National Organisation (UMNO) in October, can also be taken as a positive sign of continuity in the government's business-friendly policies. In our view there remains is a rather more technical risk, concerning the way the government will unwind its pre-electoral stimulus programme. In the run-up to the polls a series of fiscal deficit-widening decisions were taken. This pump-priming included a generous budget for 2013, with cash handouts for the poor and wage increases for public sector workers. To bring the deficit back under control some kind of fiscal tightening will now be needed in the post-electoral period.

About Business Monitor International

Business Monitor International (BMI) offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities, across 175 markets. BMI offers three main areas of expertise: Country Risk BMI's country risk and macroeconomic forecast portfolio includes weekly financial market reports, monthly regional Monitors, and in-depth quarterly Business Forecast Reports. Industry Analysis BMI covers a total of 17 industry verticals through a portfolio of services, including in-depth quarterly Country Forecast Reports. View more research from Business Monitor International at

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