BNM keeps OPR at 3% in last MPC meeting of 2023 

Inve$t | Market Sentiments | 03 November 2023

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Bank Negara Malaysia (BNM) has maintained the overnight policy rate (OPR) at 3% in its Monetary Policy Committee (MPC) meeting on Nov 2. According to the MPC, the advance gross domestic product estimate points to an improvement in economic activity in the third quarter. Growth in 2024 will be driven mainly by resilient domestic expenditure, with some support emanating from the expected recovery in electrical and electronics exports. The MPC remains vigilant to ongoing developments to inform the assessment of the outlook for domestic inflation and growth and will ensure that the monetary policy stance remains conducive to sustainable economic growth amid price stability. 

Implementation of tax on high-value goods starting May 2024 – MOF 

According to the Ministry of Finance, Malaysia will implement a tax on high-value goods from May 1, 2024. In a written response to Parliament on Nov 1, the ministry stated that it was currently finalising the policy and will announce the tax mechanism, types of goods to be taxed and tax rates once approved by the Cabinet. PM Datuk Seri Anwar Ibrahim had announced in his Budget 2024 speech in October that a tax of 5% to 10% will be introduced for high-value goods. Malaysia expects to bolster its fiscal position by introducing a tax on high-value goods, among other new taxes combined with subsidy cuts.  

Rent-to-own scheme to be expanded to allow B40, M40 groups to own homes 

According to Local Government Development Minister Nga Kor Ming, the government will expand the Rent-to-Own scheme to enable more people from the B40 and M40 groups to own homes. Cooperation with financial institutions will be continued to provide attractive and sustainable housing financing packages. The ministry through PR1MA Corporation Malaysia (PR1MA) and Syarikat Perumahan Negara Berhad (SPNB) had been developing housing projects such as the SPNB Housing and PR1MA Housing programmes for the M40 group nationwide. He said this at the winding-up the debate on the Supply Bill 2024 for the ministry in the Dewan Rakyat on October 31. To date, a total of 28,583 SPNB housing units have been completed, 1,024 units are under construction and 531 units are in the planning process. 

He added that PR1MA has also built 35,454 affordable housing units, while 14,427 units are in progress and 3,765 units are being planned nationwide as of Oct 15. The government has also agreed to set the standard size for the People’s Housing Project (PPR) unit at 750 square feet, with a minimum of three bedrooms and two bathrooms for each unit. This new direction in the PPR implementation is in line with the government’s aim to enhance the living conditions of residents in these housing units. 

With this, KPKT will ensure that newly constructed PPRs will be well-integrated with other facilities, including recreational parks, food courts and convenience stores. In addition, to promote home ownership, the ministry has introduced the i-Biaya initiative which is a financing assurance through the Housing Credit Guarantee Scheme (SJKP), specifically for first-time homebuyers, including those without a fixed income or payslips, such as workers in the gig economy. 

Through this initiative, the government provides financing assurance of up to RM500,000. This includes the principal financing amount, the Mortgage Reducing Term Assurance (MRTA) guarantee, the Mortgage Reducing Term Takaful (MRTT), legal fees and valuation fees. Throughout the SJKP implementation from 2008 until Sept 30, 2023, a total of 30,841 loan applications, amounting to RM5.85 billion, had been approved and the government, through the 2024 Budget, has proposed an additional RM10 billion in guarantees to benefit 40,000 borrowers. 

Bursa, Dalian Commodity Exchange ink agreement for soybean oil futures settlement price 

KUALA LUMPUR (Nov 2): Bursa Malaysia Derivatives Bhd (BMD) and the Dalian Commodity Exchange (DCE) have signed the licensing agreement for the soybean oil futures settlement price — the first product collaboration between a Chinese derivatives exchange, and an Asian exchange based outside of the republic. Under the agreement, the DCE has authorised use of the settlement price of DCE soybean oil futures by BMD as the basis to calculate the cash settlement price of its upcoming new product, the Bursa Malaysia DCE soybean oil futures contract (FSOY). The underlying asset of the FSOY will mirror that of the DCE soybean oil futures.  

Bursa Malaysia targets to launch the product in the first quarter of 2024, subject to regulatory approval. The latest collaboration between BMD and the DCE marks a historic milestone in the development of the Asian derivatives market. In a joint statement, both entities stated that it represents the first instance of a Chinese derivatives exchange authorising an Asian exchange to incorporate Chinese commodity futures settlement prices into its product offerings. Simultaneously, adopting foreign commodity futures prices as the basis for calculating cash settlement prices not only sets a precedent for the Malaysian futures market, but also leverages the proven success of the DCE soybean oil futures contract. 

The licensing agreement was signed at the 17th China International Oils and Oilseeds Conference in Dalian, China, a landmark event in the global oils and oilseeds industry jointly organised by the DCE and BMD. The settlement price licensing agreement was signed by BMD chairman and Bursa Malaysia Bhd chief executive officer Datuk Muhamad Umar Swift and DCE CEO Yan Shaoming. 

According to Muhamad Umar, as the leading commodity derivatives marketplace in ASEAN, BMD continually develops products to help market participants navigate the complexities of international markets and discover trading opportunities. Through this cooperation, BMD is proud to offer an innovative solution that simplifies market access, and empowers industry players to effectively manage cross-market risks. 

The soybean oil futures launched by the DCE in 2006 are widely used as a price reference for China’s spot soybean oil trades, while their institutional market participants are industry players who account for 90% of the soybean crushing volume in China. Meanwhile, BMD offers the world’s most liquid crude palm oil (CPO) futures contract, and is established as the global centre for CPO price discovery. Thus, the introduction of the FSOY will leverage the strengths of both exchanges to offer market players arbitrage opportunities between soybean oil and palm oil, which are common substitutes. 

The FSOY will provide international traders with an alternative avenue to access Chinese soybean oil prices, with the convenience to trade both commodities on the same exchange (BMD), enabling cross-margining and capital efficiencies. 

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