Government could reduce GST if oil rebounds to US$55 next year
According to MIDF Research, if Malaysia maintains its fiscal consolidation measures and crude oil prices rise to an average of US$55 a barrel next year, the government will have room to reduce the GST rate to 5%, and to 4% should crude jump to US$75 per barrel. It noted that a reduction in the consumption tax rate should help to boost private consumption, as domestic economy is in need of a support during the time of a slowdown in global trade activity. In addition, as major oil producers improve operating efficiency while bringing down breakeven cost production level, more supply is expected to enter the market at higher prices. MIDF Research is projecting an average price of US$45 a barrel for the whole of 2016. The estimate for a lower GST rate was based on revenue of RM69.5 billion next year. At the current rate of 6%, GST collected will be RM42 billion, with the balance coming from oil-related revenue. If crude oil reaches US$55, the government stands to gain RM34.5 billion from oil, and the remaining RM35 billion from 5% GST rate. If it reaches US$75 per barrel, only 4% GST is needed to collect RM28 billion, with the rest from oil revenue. (The Edge Markets)

Eco World, PDC cancels contract for Eco Marina project
Eco World Development Group Bhd and Penang Development Corp (PDC) have agreed to cancel the contract for the proposed RM10 billion Eco Marina mixed development project in Batu Kawan, Penang. Studies carried out during the planning process found that the 60.70-acre golf course, which was part of the project, would requirea larger area, thus adversely impacting its viability. Eco World had accepted the letter of award (LOA) for the project in April last year. Eco World or its subsidiary was to buy 121.6 hectares of 99-year leasehold land in Batu Kawan for RM790.93 million to develop residential and commercial properties as part of the Eco Marina project, as well as developing and leasing the 18-hole golf course. (New Straits Times Online)

malaysia_protonMoF to pump RM1.25bil into Proton
Minister of Finance Inc (MoF Inc) will pump RM1.25 billion into Proton Holdings Bhd by subscribing to 1.25 billion units of new redeemable convertible cumulative preference shares (RCCPS) issued by the beleaguered automaker to raise RM1.25 billion cash. The amount injected is a conditional soft loan, according to International Trade and Industry Minister Datuk Seri Mustapa Mohamed. The national carmaker, which is wholly-owned by DRB-Hicom Bhd, plays a crucial role in the national automotive industry where it has about 12,000 direct workers and approximately 50,000 employed under various vendor companies. Proton needs to come up with a restructuring plan, and seek a strategic and renowned partner to assist in R&D, to become a competitive player in the automotive industry at the international level. DRB-Hicom noted that Proton had been experiencing flagging vehicle sales in recent years and this had affected its cash flow. (The Edge Markets)

Brexit will hurt Malaysian real estate investments in UK
Britian’s exit (Brexit) from the European Union (EU) will hurt major Malaysian real estate investments in the United Kingdom, as the British pound would significantly drop in value. Allianz SE chief economist Michael Heise said the pound could see a substantial 10% drop, even 15% or 20% which would hurt the London real estate market. A report from Knight Frank in November last year found that Malaysia has been the third largest Asian investor into the UK and Australian property markets in 2014 and 2015. Malaysia’s investments accounted for US$5.61 billion, and one major Malaysian project in the UK is the Battersea Power Station redevelopment project. (The Edge Markets)

Magna buys RM43mil Shah Alam land for residential project
Property developer Magna Prima Bhd has acquired 5.25 acres of leasehold land in Shah Alam for RM43 million cash, which will be used for a residential project. The land was purchased from Regalia Raintree Sdn Bhd and is located in Seksyen 13, next to the Kelab Golf Sultan Abdul Aziz Shah. The proposed development, The View Residence, will comprise three blocks of 15-storey residential apartments totaling 315 units, and five shop offices. It is expected to have a GDV of RM220.81 million, with total development cost estimated at RM180.69 million. The project is expected to commence in the third quarter of 2016 and estimated to be completed by 2019. (The Star Online)

Sern Kou to acquire land in Kota Bharu for expansion
Sern Kou Resources Bhd, a furnitire manufacturer, is buying a piece of freehold land in Kota Bharu, Kelantan for RM6.9 million to cater for expansion purposes. Its wholly-owned subsidiary Valued Products (M) Sdn Bhd successfully bidded for the property at a public auction. The industrial land measuring 115,200 square metres, has nine buildings erected on it, comprising a total gross floor area of nearly 24,550 sq m. It will be used to cater for the expanding production activities, as the property is located adjacent to Sern Kou’s forestry. (The Edge Markets)