Recently published research from Business Monitor International, "Malaysia Freight Transport Report Q1 2013", is now available at Fast Market Research
Boston, MA -- (SBWIRE) -- 02/08/2013 -- Modest Recovery Sets Pace For Freight Demand
We expect a modest economic recovery in Malaysia in 2013, with GDP growing by 4.6%, up from an estimated 3.8% in 2012. This will set the general tone for the freight transport sector. BMI's numbers are nevertheless below the consensus view, as we believe the economy is undergoing a rebalancing process. In the context of a sluggish world economy exports are losing their role as the 'engine of growth'. In contrast, domestic demand is coming more to the fore, particularly as the government, with an eye on general elections next year, has just approved an expansionary fiscal package including cash handouts and tax rebates. However, we believe there are limits to what can be done on this front, as to maintain the confidence of investors the administration must also be seen keeping the fiscal deficit and the national debt-to-GDP ratio under control. The net result therefore is our core scenario of rebalancing and modest growth. We also expect import growth in 2013 to be just ahead of exports: 4.2% versus 4.0% in real terms.
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Headline Industry Data
- The real value of Malaysia's total trade will rise by a predicted 4.1% in 2013, picking up modestly from the estimated 3.4% expansion experienced in 2012.
- Total cargo volume handled at Port Klang will rise by 5.0% to 219.5mn tonnes in 2013, while volume at the Port of Tanjung Pelepas will rise by a slightly lower 4.4% to 144.43mn tonnes.
- Rail freight volume is projected to rise 2.7% to 6.325mn tonnes in 2013 and to average 4.6% annual growth in the five-year period to 2017.
- Air freight volume is set to grow by 4.8% to 8.890mn tonnes in 2013, marginally up on the 4.3% growth rate achieved in 2012.
Key Industry Trends
Government Buys Another Toll Company
The government has announced its decision to buy another toll company - the Eastern Dispersal Link (EDL), which operates an 8.1km section of highway in Johor. The takeover is expected to be completed by the end of 2012, at an estimated cost of MYR1.2bn (US$390mn). BMI is not impressed, as we believe that this acquisition highlights the significant political risk associated with Malaysia's toll road sector, where policies are often changed to suit the government's needs. Approximately one in three citizens owns a car in Malaysia and the current government incumbent, the Barisan Nasional (BN) party, has often made changes in toll regulations to maintain political support. For example, during the global recession in 2009, the BN government revoked a ruling on an increase in toll rates for five expressways in March 2009 so as to forestall a public outcry. With elections scheduled to be held before March 2013, it has become politically important for the government to prevent costs increases for the electorate.
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