The timing is all against Msia, especially.

Someone said earlier that with the weak RM, we can also depend on tourist income. I am waiting for the numbers here. I highly doubt our tourism revenue will help us out here, but like they say,... wait for the numbers. Numbers donèt lie.

Manufacturing activity weakened further in August, 2015 from July, 2015. I donèt see this as very encouraging for the end-August Trade Surplus Number.

It is always raw materials being mentioned as the biggest component for price increase for the manufacturers.

New orders at local goods producers dropped for the SIXTH month IN A ROW.

Anyway, the above report covers all the factories in general, and not limited to only the electronics and electrical sector.

You were comparing the RM vs the USD earlier for the corresponding period, hence my analysis of the exchange rate as in my earlier posting.

I believed the same effect has persisted too, using yr eg : the SGD vs RM BEFORE crossing the support of 3.80 vs the USD.

SGD vs RM on July 31, 2914 : 2.5584

SGD vs RM on July 31, 2915 : 2.7797

By the way, I thought we were discussing abt why the import figure ballooned in end-July 2015 compared to end-July 2014. You are mentioning 'export' now.

It's okay,.. I would agree that if we are exporting exactly the same things as our neighbours, then if our currency depreciated more against the USD compared to our neighbour's currency, then we may have an advantage there in terms of pricing point if our pricing is denominated in the RM, and if our raw materials did not increase in cost. Or in other words, all else remaining the same.

Otherwise, if we have new taxes imposed (eg GST), or our raw materials increased in cost, or we have new labour problems because of the currency depreciation (eg my maids don't have enough funds to repatriate home, hence demanding more pay), then the advantage may be evened out.

If the export can be maintained with current factory output, then the import needs to be lowered ! But what Nikkei hinted points to the export being possibly lowered due to lower factory output for August compared to July this yr.

I believed SMEs make up a larger proportion of components contributing to the overall export figure. If SMEs suffer higher costs of raw materials and disadvantages in export procuders due to the currency being used to quote to their customers, then we have a big roblem here too.

On the workers, it depends on what type of workers we are talking about. If they are foreign talents needing to repatriate funds home, then we have a problem too since after they sent the funds home, the conversion will cause their families back home to receive a lower amount compared to previous times, eg Filipino maids sending funds home will find their families getting lower amount of pesos after conversion. Subsequently, they will demand a higher pay to offset the reduced pesos arriving back home.

The Monetary Policy Statement will have a more direct effect on us. The ann't will declare if the Base Lending Rate (BLR) will be increased or maintained at the current level. An increase will INCUR a lot of (further) Direct and Indirect Inflationary pressures on us, as if what we are experiencing now is not enough...

Let's watch the Sep 11 ann't closely...

Yeah, a small victory to encourage us not to worry too much,...

After the Int'l Reserves ann't this evening, it looks like the foreign funds have slowed down the exodus. This will be a plus point to support why BNM NEED NOT increase the BLR on Sep 11...

...but there are other good reasons why they need to increase it too.

Right,...

Good,... this confirms my point. Thank you.

We must try to read and interpret the meaning of the numbers accurately. MGS yield not increasing means bondholders not selling means bond prices did not drop further means bondholders NOT RUNNING AWAY !

Yes, I thought we can start answering 'Yol' later, but since AV has initiated this, that's right - what about the debts that we have currently, and the expenses that we will soon be incurring to handle the budget deficits ?

We are really contented with comparing between 'going down' and 'staying-put'. ...

Good morning.

If a factory does not have USD reserves and has been using the RM all this while in their dealings, only purchasing USD when there is a need to purchase from overseas, then that factory will experience higher cost when it needs to purchase raw materials denominated in the USD. An MNC has many overseas operations, eg production facilities everywhere, it would already have USDs in-hand, the negative effect may be less but will not be totally immune to effects from the exchange rate.

As in the report issued by Nikkei shown a few pages back, it keeps talking abt raw materials being the largest cost contributor. If we believed in the report and make effort to interpret the numbers, then it is fair to say that the majority of our manufacturing operations DO NOT have USD reserves in-hand.

We'll see how many of the factories close down moving fwd, then we'll know the 'combined' effect of what we are experiencing.

If we are going to do down the path as in the above and protect ourselves against the exchange rate, then it would look like all busniesses need to do their transactions in the USD already, and nobody would want to hold the RM anymore. We all know what tis means for the RM.

GST can be claimed back for export goods, aware of that - one of the three types of GST 'rated' categories. But the process of claiming back is time-consuming and hits on the cashflow of these operations, definitely incurring more finance expenses in the long run. I have clients exploring ways now to perform litigation against the Cistoms for delay in refund positions and policies associated with refunds. Some SME owners (who have acceptable tax-paying backgrounds) have even decided to terminate operations because of the GST-enforcement.

This was what I feared : numbers good but do not translate into desired results.

If we are talking abt locking-in profits from the USD-MYR exchange rate, then we should wait further. If this news does not create the desired effect that the MYR will 'turnaround', then the MYR is destined to fall further, due to whatever other 'overriding reasons' such as price of crude oil, world economy prospects, current commodity rout, etc,...

The MYR is just not able to 'turnaround' anymore,...

If you buy raw materials with USD in-hand, and then sell and collect USD and in-turn park it somewhere in the USD, you don't have a problem. If you do not convert and perform your acct'g treatments in RM, you don't have a problem. It is all about the acct'g treatment.

I have SME clients doing this, and they are not as badly affected as the others who delve into the RM.

Hence MNCs will not be affected so much in terms of raw material costing.

GST issue IS AN ISSUE, though not directly, but the indirect effects should not be ignored too. If the execution of the GST taxation process is not good, it will bring hardships to good operations which, as claimed (though I wouldn't concur is limited to this) have 'razor-thin profit margins'. Why should a strong cashflow company prosper and a company with lower cashflow capability suffer because of the GST ? If an SME operation is able to sell at a lower profit margin so that entities down the 'food-chain' can enjoy better cost savings, and finally benefitting the end-consumer, it will be good for the end-consumers. Furthermore, the percentage of GST charged against the end-consumer will be lower because of the lower pricing.

If the problem here is an entity which is not paying taxes or evading taxes, hence not respecting the law and the courts, that would be a problem. But if the problem resides with the tax-collection authorities, then it is not fair to eliminate the smaller guy which is trying to follow the rule-of-law.

There is a hiccup in the claiming process..., but it will soon be ironed out ? How long will it take to iron out, when we have a few tsunamis hitting us now in the face along with this GST thing ? Do we, then blame it on the timing of these issues coming together at the same time ? No,... blaming won't help the smaller guy who will be wiped out before the problems external to him are erased.

If we are going to go with the concept put up here, then many SMEs should close down, and MNCs alone will survive and prosper. Perhaps a few 'stronger' SMEs might survive too, and they will have the luxury of raising prices. We, as the end-consumers, will bear the brunt of this effect in the end. Perhaps we are already feeling that now, with the rising prices of 'everything' around us.

If your MNC (with good cashflow and dealing in the USD alone in and out) can suffer a revenue drop of approx. 30%-40% in these times, how do you think an SME (with razor-thin margins and not able to deal entirely in the USD) will be affected ? Is it fair to let the little guy go ? Is it fair for the end-consumers to pay more for products and services later on ?

Is it fair to let only MNCs survive ?

All should be given a chance to survive.

Tq, yes, I am moving-on from the ASx holdings, before it is too late to redeem at RM1.00 per unit.

I used to be afraid of the forex speculators more than anyone else and any other effects.

Forex speculators will always be there. But if those so-called 'forex speculators' start selling down your currency because you have a problem that makes them feel risky and feel uncomfortable with holding your currency (and your bonds), then we start to blame ourselves, our structural problems and our fundamentals instead of the 'forex speculators'.

It may not be the forex speculators anymore. After what happened last night, I could have been wrong to be afraid of the speculators. We need to clean up our house first, then only we can start to think of outside interference.

Right - the reserve number is up, and numbers don't lie. But round one says that the desired effect is not being produced here. Perhaps too early to tell,.. that would be fair to say....

Do you think raising the BLR on Sep 11 will help to stabilise the RM, at least a little bit ? Will our BNM be willing to take this step, to the detriment of the people ?

We all agree that if the RM continues to fall, the effects created will be hard on the majority of us. As we await the desired effects to kick-in, the more the RM will fall, and the more difficult it will be to reverse the effects. We will be stuck with a high cost-push inflation after the dust has settled, provided the dust can settle, if the country does not fall into a deeper hole.

I believed graduates who are not able to find jobs are : job-seekers who desire 'goyang kaki' type of jobs with high remuneration and benefits.

And employers who complain of hiring difficulties and employers who put up banners and buntings for hiring are : employers who are looking for hard-working candidates demanding lower pays and lower benefits.

Hence, there is a mismatch in the above two categories of people, creating more 'job-seekers' outside and more hiring advertisements everywhere.

So no reports of speculators fooling around with our RM. ...

If SMEs fail, the primary negative effects will be : job losses, more expensive goods for us end-consumers, less tax collection for lembaga, and more motion of no-confidence against the administrators (whose jobs and functions are to create jobs and opportunities for the people).

The above will trickle down to further secondary effects such as drop in GDP, drop in sentiment, etc, etc,.. countless...

Hmm,.. sometimes I'm thinking,... our lives are being made harder to cater for a chance to get higher figures in Trade Surplus and Int'l Reserves, as what we are witnessing now.

Is this a compulsory economic cycle event that everybody must go thourgh and suffer through ?

Or is it somebody's faulty decisions that cornered us into this ?