Government revises its 2009 real GDP growth forecast. The Prime Minister (PM) announced yesterday that the official real GDP growth forecast for this year is now between -4% and -5% from +1% to -1% announced by Bank Negara Malaysia (BNM) in Mar 09. This is due to the impact of the global recession on external demand which also weakened domestic demand, especially private investment (1Q09: - 26% YoY), including FDI (1Q09: -50% YoY). However, apart from mentioning a 25% drop in exports, no detailed breakdown of the revised forecast was provided.

1. Equity Research
PP11072/03/2010 (023549)
Economics 29 May 2009
2009 Real GDP Official growth forecast revised
Government revises its 2009 real GDP growth forecast. The Prime
Suhaimi Ilias Minister (PM) announced yesterday that the official real GDP growth
suhaimi_ilias@maybank-ib.com forecast for this year is now between -4% and -5% from +1% to -1%
(603) 2297 8682 announced by Bank Negara Malaysia (BNM) in Mar 09. This is due to
the impact of the global recession on external demand which also
Ramesh Lankanathan weakened domestic demand, especially private investment (1Q09: -
ramesh@maybank-ib.com 26% YoY), including FDI (1Q09: -50% YoY). However, apart from
(603) 2297 8685
mentioning a 25% drop in exports, no detailed breakdown of the
revised forecast was provided.
Malaysia: Annual Real GDP Growth
% chg 2008 2009E 2009E 2009E 2010E 2009E 2010E
ACTUAL OFFICIAL MAYBANK INVESTMENT BANK
Revised Previous Revised Previous
Real GDP 4.6 (4.0) - (5.0) 1.0 - (1.0) (3.8) 4.2 (1.3) 3.0
Manufacturing 1.3 NA (8.0) (12.5) 4.8 (10.0) 3.0
Services 7.2 NA 4.5 1.3 5.0 3.5 5.0
Agriculture 4.0 NA (2.0) (3.5) 3.0 0.5 1.3
Mining (0.8) NA (0.4) (4.0) 2.0 (1.0) 1.5
Construction 2.1 NA 3.0 1.1 3.0 1.1 2.3
Domestic Demand 6.8 NA 2.9 (0.5) 6.3 1.7 5.6
Private Consumption 8.5 NA 3.5 1.0 3.0 2.0 3.8
Public Consumption 10.9 NA 7.3 7.7 10.0 8.2 10.0
Gross Fixed Capital Formation 0.8 NA (1.0) (8.6) 7.9 (3.5) 7.0
Exports of Goods & Services 1.3 NA (16.6) (15.0) 9.0 (11.9) 5.9
Imports of Goods & Services 1.9 NA (14.9) (19.8) 7.8 (13.0) 6.1
Source: Dept. of Statistics, BNM, Maybank IB, PM’s Press Statement
Quarterly GDP declining YoY until 3Q09 before a rebound in 4Q09.
PM added that Malaysia’s economy will contract further in 2Q09 and
3Q09 after the 6.2% decline recorded in 1Q09 real GDP, to be followed
by a possible expansion in 4Q09. The guidance is in line with our
projected quarterly real GDP growth of -5.9% YoY in 2Q09, -4.8% YoY
in 3Q09 and +1.5% in 4Q09 that will result in a 3.8% full-year
contraction in the economy.
Consistent with latest trends in leading economic indicators.
Global and local leading economic indicators showed that the
downturns which started in 2H08 and deepened in 1H09 appear to be
bottoming and turning around in 3Q09.

2. 2009 Real GDP
Malaysia: Quarterly Real GDP Growth (% YoY)
10
8 7.2 7.4
6.5 6.6
5.4 5.6
6 4.8
4
2 1.5
0.1
0
2Q09E
3Q09E
4Q09E
1Q07
2Q07
3Q07
4Q07
1Q08
2Q08
3Q08
4Q08
1Q09
(2)
(4)
(6) (4.8)
(6.2) (5.9)
(8)
Source: BNM, Maybank-IB
Global: Leading Economic Indicators
20
15
10
5
0
Jan-96
Jan-99
Jan-02
Jan-05
Jan-08
Jul-97
Jul-00
Jul-03
Jul-06
Jul-09
Oct-96
Apr-98
Oct-99
Apr-01
Oct-02
Apr-04
Oct-05
Apr-07
Oct-08
(5)
(10)
BRIC East Asia ex Japan and China OECD - Total
(15)
Source: Bloomberg
Malaysia: Leading Economic Indicators & Real GDP
25 20
20 16
15 12
10 8
5 4
0 0
Jan-92
Jan-95
Jan-98
Jan-01
Jan-04
Jan-07
Jul-93
Jul-96
Jul-99
Jul-02
Jul-05
Jul-08
Oct-92
Apr-94
Oct-95
Apr-97
Oct-98
Apr-00
Oct-01
Apr-03
Oct-04
Apr-06
Oct-07
Apr-09
(5) (4)
(10) (8)
(15) (12)
Leading Economic Indicators (% 6-mth chg, LHS)
Quarterly Real GDP (% YoY, RHS)
Source: Bloomberg, Dept of Statistics
29 May 2009 Page 2 of 5

3. 2009 Real GDP
Time to “crack the whip” on the fiscal stimulus, plus providing
more “consistent” data on the implementation status. So far,
based on the information in the official website on the economic
stimulus packages, “on-the-ground” implementation of the two
packages appears to be very slow. Of the RM7b in the first package
(Nov ’08), RM6.37b or 91% has been distributed to the Ministries,
Agencies and GLCs as of 12 May 2009, but only RM0.79b or 11% was
actually spent. As for the second package (Mar ‘09), RM14.408b of the
RM15b earmarked for Government spending in 2009-2010 has been
disbursed but none has been spent yet.
However, PM said that a total of RM5.4b involving 42,000 projects
under the two packages have been implemented and awarded –
RM3.4b (39,316 projects under the first package and RM2.2b (2,745)
under the second package. Meanwhile, the Director General of EPU,
Tan Sri Sulaiman Mahboub mentioned that the Government has
already spent RM3.9b under the first package and RM3.7b under the
second package. The Government targets to award all projects under
the first package by the end of the month.
On the Ninth Malaysia Plan (9MP, 2006-2010), only RM124.458b or
55.4% of the RM230 gross development expenditure allocated under
the Plan has been spent up to 1Q 2009.
Malaysia: Implementation Status of the Economic Stimulus Packages
(RMb)
18
16 15.0
14.4
14
12
10
8 7.0
6.4
6
4
2 0.8
0.0
0
Govt Spending Allocation Disbursed to Actually Spent
Ministries, Agencies, GLCs
1st Package (Nov 08) 2nd Package (Mar 09)
Source: www.rangsanganekonomi.treasury.gov.my
Malaysia: Implementation Status of the RM230b Development
Expenditure Allocation under 9MP (2006-2010)
Sp en t in 2006-2008
102.542
119.219 Sp en t in 1Q 2009
Balance
8.239
Source: BNM, 9MP Mid-Term Review
29 May 2009 Page 3 of 5

4. 2009 Real GDP
The Government is aggressively raising the money. RM39.977b of
MGS and GII (+73.8%) has been issued year-to-date, a 73.8% jump
from the same period last year. Therefore, there should be strong
fiscal impulse in late-2009 and 2010 as the Government starts to spend
the money raised and disbursed for implementation of the annual
budgets and stimulus packages.
And there are signs that things are moving. Major infrastructure
projects are on the move, including the recent announcement that
tunnelling works for the Pahang-Selangor raw water transfer project
that will start next month. This will be followed by bidding processes for
other works related to the project such as the Kelau dam and Langat
water treatment plant next month – both are scheduled to start
construction late this year. Local companies have been invited to
submit “expressions of interest” for the Klang Valley LRT extension and
upgrading works. We are also seeing signs of small- and mid-size
projects (<RM500m) taking off, especially in East Malaysia.
Malaysia: Gross Issuance of MGS & GII
70,000 140
120
60,000
100
50,000
80
40,000 60
30,000 40
20
20,000
0
10,000
(20)
0 (40)
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
YTD
Gross MGS & GII Raised (RMm, LHS) Growth (% chg)
Source: BNM
Notable Large-scale Domestic Infrastructure Projects in the Pipeline
Estimated (RM’m)
Low cost carrier terminal (LCCT) 2,000
New Klang Valley LRT line 30,000
Klang Valley LRT extension (15km x 2)
Pahang-Selangor water transfer (tunneling works) 1,200
Langat 2 water treatment plant 5,000
West Coast Expressway 3,000
High Speed Broadband 11,300
Sabah Oil Gas Terminal (SOGT) 3,000
Bakun Undersea Cable 9,000
Total 64,500
Source: Maybank-IB
Further steps to liberalise the investment environment “soon”. In
addition to announcing the change in the Government’s 2009 real GDP
forecast, PM said that the Government will unveil new Foreign
Investment Committee (FIC) rules soon without providing any details or
hints. We believe this is to complement last month’s liberalisation
measures on the 27 non-financial services sectors and the financial
services sector. Announcement on the new FIC rulings could be made
during the “Invest Malaysia” event at the end of June.
29 May 2009 Page 4 of 5

5. 2009 Real GDP
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Adex = Advertising Expenditure FCF = Free Cashflow PE = Price Earnings
BV = Book Value FV = Fair Value PEG = PE Ratio To Growth
CAGR = Compounded Annual Growth Rate FY = Financial Year PER = PE Ratio
Capex = Capital Expenditure FYE = Financial Year End QoQ = Quarter-On-Quarter
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29 May 2009 Page 5 of 5