Maybank in Asia

Global Financial Environment & OBOR
Analysis to Malaysia’s Economy & Maybank
Dion Natanael 45 Amelinda Jane 66 Tania Aveline 26 Kathleen Kwarso 01

Ardy Susilo 02 Vincent Nattaniel 74 Bram Imantaka 18
Framework
Awareness
Alignment
Action
Adoption
Assurance
Anticipation
Framework
Awareness
Alignment
Action
Adoption
Assurance
Anticipation
Awareness
Global Financial Environment
China’s Strategic Thrust: OBOR
Malaysia’s Economic Condition

Awareness
Commodity &
United States China Japan Euro ZIRP/NIRP
Oil Price
US TPP Rising US Dollar Anticipation of FED Rate Hike
Known Unknown: US Trans-Pacific Partnership

What?
Help increase Made-in-America exports, grow the American economy,
support well-paying American jobs, and strengthen the American
Impact on middle class through global trade.
Malaysia
Eliminate over 18,000 taxes that various countries put on Made-in-
America products
Expand the export of Made-in-America goods

and services and support American jobs
Source: https://ustr.gov/tpp/
Awareness
Commodity &
Oil Price

What?
Australia United States
Canada Vietnam
Japan Chile
Impact on
Malaysia Malaysia Brunei
Mexico Singapore
Peru New Zealand
Awareness
Commodity &
Oil Price

What? 40% of the global
economy
Impact on
Malaysia Cumulative GDP of USD 30
trillion
Population of more than

800 million
Awareness
Commodity &
Oil Price
What?
The TPPA will provide Malaysia with market access to 4 trading
partners that Malaysia presently has no free trade agreements
Impact on with; Canada, Mexico, Peru and US.
Malaysia
Source: http://fta.miti.gov.my/miti-fta/resources/TPPA_PwC_CBA_-_Final_Report_021215_FINAL_(corrected).pdf
Awareness
Commodity &
Oil Price
1. Increasing Projected Export and Import

What?
Non-tariff barriers eliminated → Easier and Cheaper

Impact on
Malaysia Importation or Exportation of products → Import and Export↑
Export growth is projected to rise by 0.54~0.90 ppt in 2027 (higher manufacturing exports)
Import growth is projected to increase by 0.65~1.17 ppt in 2027 (higher imports of
intermediate and capital goods)
Awareness
Commodity &
Oil Price
1. Increasing Projected Export and Import

What?
Impact on
Malaysia
Increase in import growth will outpace the increase in export growth, as the
reductions in import tariffs and NTMs are larger for Malaysia (2.4%) relative
to the other TPPA countries (1.2%)
Awareness
Commodity &
Oil Price
2. Increasing Projected Investment

What?
Impact on
Malaysia
Investment is projected to rise by USD 136~239 billion over 2018-2027 as foreign

inflows (higher investment growth in textiles, construction and distributive trade)
Awareness
Commodity &
Oil Price
3. Increasing Projected GDP

What?
GDP= C+I+G+NX
Impact on
Malaysia If NX ↑ , I ↑ , GDP ↑
GDP is projected to increase by USD 107~211 billion over 2018-2027 (reduction

in non-tariff measures assuming all tariffs are eliminated and NTMs are reduced)
Awareness
Commodity &
Oil Price

What?
Impact on 90% of GDP gains are

Malaysia caused by reduction in
NTMs
Tariff ↓ & NTMs ↓ by 25-50% → GDP increase USD 107-211 B

Only Tariffs ↓ → GDP increase only USD 12 B
Awareness
Commodity &
Oil Price

What?
Impact on
Malaysia
Malaysia’s GDP growth is projected to increase by 0.60~1.15 ppt in 2027 (reflects a

10~23% increase in Malaysia’s growth potential in 2027)
Awareness
Commodity &
Oil Price
Known Unknown: Rising US Dollar

What?
USD HAS STRENGTHENED

Impact on dramatically against all of
Malaysia the world’s major currencies.
It is a direct result of its
strengthening economy
while other parts of the
world are struggling.
Source: https://research.stlouisfed.org/fred2/series/DTWEXM
Awareness
Commodity &
Oil Price
1. Government and Corporate Debts

What?
USD strengthens → Companies taking trillions of USD debt are

Impact on threatened
Malaysia
Awareness
Commodity &
Oil Price
1. Government and Corporate Debts

What?
However, Malaysia’s central government

Impact on
external debt is mostly denominated in
Malaysia MYR.
Malaysia’s foreign debt – both government

and corporate sector – is ringgit
denominated, it is actually not a big
problem for Malaysia’s debt if USD rises.
Awareness
Commodity &
Oil Price
2. Weaker Domestic Financial Market

What?
USD strengthens → Returns on US securities are higher →

Impact on Demand for Malaysian securities ↓ → Weak financial market
Malaysia
Deposit in Malaysian banks earns Malaysian ringgit depreciates in value.
3.25%, compared to US that is only The extra interest doesn’t offset the loss
0.25%-0.5% from the exchange
As investors get nervous, the higher interest on emerging market debt and
deposits becomes less alluring, and they flee to safe haven (US).
Awareness
Commodity &
Oil Price
3. Lower Tax for Malaysian Government

What?
Investment in domestic financial market ↓ , Offshore Investment ↑ →

Impact on Less reported domestic earning → Applicable tax on earnings ↓
Malaysia
Malaysians now prefer to invest in Many banks or investment firms in other
offshore banking which makes it countries do not report customer account
difficult for government to track it information to foreign tax authorities
Logically, many people want to avoid tax and might not report their funds offshore
Awareness
Commodity &
Oil Price
Known Unknown: Anticipation of FED Rate Hike

What?
Impact on
Malaysia
Janet Yellen on Fed rate Hike

Fed plans to raise interest rates again this year. the increase will occur in next some
months when targeted inflation rate is reached.
Source: http://www.nytimes.com/2016/06/07/business/economy/janet-yellen-fed-interest-rates.html?_r=0
Awareness
Commodity &
Oil Price
1. Capital Flight
What?
Malaysia has seen outflows in equities and bonds, totaling nearly US

Impact on
$7.6 billion after Fed raised its rate in December 2015
Malaysia
In the future, the same thing might happen as a result of Fed rate hike
However, according to S&P’s Ratings Services, Malaysia is less exposed

to capital flight since capital market in Malaysia is strong
Source: https://www.rsis.edu.sg/rsis-publication/rsis/c015177-malaysias-economic-challenges-implications-of-ringgits-fall/#.V1WOl5N97BI
Awareness
Commodity &
Oil Price
2. Weakening MYR
What?
Impact on
Malaysia
Anticipated Fed rate hike in September 2015 after the announcement made
by Janet Yellen has also made MYR dropped against the USD
Source: http://www.bloomberg.com/quote/USDMYR:CUR
Awareness
Commodity &
Oil Price
3. Other Impacts of Weakening MYR

What?
Companies deriving sales Private companies have incurred debt in a
domestically with imported currency that is not their own.
Impact on materials would be hurt by What is likely to follow: Bankruptcies, layoffs and
Malaysia weakening MYR (declining cost-cutting for individual companies that
profit) borrowed too aggressively.
Example: AirAsia X Bhd had recently reported its first quarter losses widening
by a huge margin to RM125.9mil from RM11.28mil a year ago
Source: https://vulcanpost.com/343181/positive-negative-effect-fall-ringgit/
Awareness
Commodity &
Oil Price
Known Unknown: Economy Recovery of China

What?
New Credit↑ Industrial Output ↑ Fixed-asset Investment ↑ Retail Sales ↑

Impact on
Malaysia
Exceeding economists estimates
China is experiencing recovery
Source: http://www.bloomberg.com/news/articles/2016-04-24/earliest-china-economic-data-show-recovery-gathers-pace-in-april
Awareness
Commodity &
Oil Price

What?
Minxin Gauge
Impact on -Manufacturing index rose to 46.9, the

Malaysia
highest in a year
-Non-manufacturing index increased to
44.2 from 40.1 in March
> 50 means the environment is improving

< 50 means the environment is
deteriorating
Awareness
Commodity &
Oil Price

What?
MARKET NEWS
INTERNATIONAL’S
Rose to 50.5 from 49.9
Impact on BUSINESS
Malaysia CONFIDENCE
SENTIMENT Brighter than the mood

AMONG SERVICES
COMPANIES in manufacturing
Sales has been

SALES
CONFIDENCE
stabilized and shows
more confidence
Awareness
Commodity &
Oil Price
1. MYR appreciates as China buys more Malaysian

What?
Government Securities
Impact on
Malaysia
The government of China decided to invest in Malaysia by buying MGS worth

RM 30 billions → contributing to the strength of Malaysian Ringgit recently
Source: http://www.bloomberg.com/QUOTE/BURSA:MK
Awareness
Commodity &
Oil Price
2. Export Opportunities for Malaysia

What?
Along with the recovery of China economic condition,
China’s sluggish domestic demand will finally pick up.
Impact on
Malaysia
Malaysia as China’s main trading partner will surely take
advantage of the economic recovery displayed by China.
Malaysia will enjoy the benefit of higher export to China since

China is transitioned towards a more consumption-led growth.
Awareness
Commodity &
Oil Price
Economy Slowdown Abenomic Failure
Known Known: Continued Deflation Stage

What?
Japan has fought deflation

Impact on for more than two decades
Malaysia
Growth remains weak despite
repeated attempts to
revitalize its economy.
Source: World Bank

Awareness
Commodity &
Oil Price
For Example: 2nd Arrow Failure

What?
Increased consumption tax
to 8% from 5% in 2015
Impact on
Malaysia
Government have a new
source of income
Support growth through

governmeny spending
Source: http://www.japantimes.co.jp/news/2014/05/30/business/economy-business/consumption-
Awareness
Commodity &
Oil Price
For Example: 2nd Arrow Failure

What?
Worsen the current stagnant domestic
consumption in part of deflation
Impact on
Malaysia Businesses have no room for growth
Exports expected to be picking up

demand from overseas
Source: http://www.japantimes.co.jp/news/2014/05/30/business/economy-business/consumption-
Awareness
Commodity &
Oil Price
Weaker Export to Japan

What?
Impact on
Malaysia
Japan: Malaysia’s 4th largest JPY keeps on depreciating for the

trading partner last 1 year
Exports to Japan decreased by 10.7% to 73.8 billion MYR (18 billion USD) in 2015.
Source: http://en.vietnamplus.vn/japan-malaysias-4th-largest-trading-partner/90407.vnp
Awareness
Commodity &
Oil Price
Known Known: Economic Slowdown Recovery

What?
• Eurozone is finally back
to levels reached before
Impact on
Malaysia the financial and debt
crises emerged.
• By one measure, the
economic crisis that has
long ravaged Europe is
According to EUROPEAN UNION, the overall
finally over.
economy advanced 0.6 percent for Q1 2016,
compared with the previous quarter.
Source: http://www.nytimes.com/2016/05/04/business/international/european-commission-spring-forecast-2016.html
Awareness
Commodity &
Oil Price
Known Known: Economic Slowdown Recovery

What?
Unemployment Rates
EU-28, EA-19, US, and Japan
Jan 2000 - Apr 2016
Impact on
Malaysia EUROSTAT FIGURES showed the
eurozone's unemployment rate fell
to 10.2% in March, the lowest rate
for 4,5 years
Source: http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Unemployment_rates_EU-28_EA-19_US_and_Japan_seasonally_adjusted_January_2000_April_2016.png
Awareness
Commodity &
Oil Price
What?
Known Unknown: Uneven Recovery
ACCORDING TO MCKINSEY, the
recovery is uneven and under
Impact on
Malaysia
threat from the continuing
eurozone debt crisis.
Some individual members of the 19-
country currency union surpassed
their 2008 economic levels sooner,
others have still not climbed back
to that plateau. For example,
Greece.
Source: http://www.mckinsey.com/global-themes/europe/european-growth-and-renewal-path-to-recovery
Awareness
Commodity &
Oil Price
What? Expected Increasing Export

Malaysia’s Exports Exposure to EU
Impact on Direct Exposure:
Malaysia Accounted for a relatively small share of
10.4% of total exports.
Indirect Exposure:
Estimated to be 3.8% of total exports.
Overall Exposure to EU:

Approximately 14.2% of total exports.
Source: http://www.bnm.gov.my/files/publication/ar/en/2011/cp04_001_whitebox.pdf
Awareness
Commodity &
Oil Price
What? 1. Expected Increasing Export

Malaysia’s Exports Exposure to EU
Impact on Direct Exposure:
Malaysia Accounted for a relatively small share of
EU Economy Recovers
10.4% of total exports.
Bigger export opportunity
Indirect Exposure:
Estimated to be 3.8% of total exports.
Overall Exposure to EU:

Approximately 14.2% of total exports.
Awareness
Commodity &
Oil Price
What? 2. Expected Increasing FDI

On average, net FDI flows from the
Impact on
EU accounts for about 29% of total
Malaysia net FDI flows into Malaysia
between 2008 - 2011
Awareness
Commodity &
Oil Price
What? 2. Expected Increasing FDI
In 2012-2013 EU FDI inflow to Malaysia↓

Impact on while Malaysia’s total net FDI inflows↑.
Malaysia
Roughly the FDI from EU contributed only
4.9% to Malaysia’s total FDI.
EU Economy Recovers
Bigger FDI inflows opportunity
Awareness
Commodity &
Oil Price
What?
Known Known: Japan, Eurozone, Swiss
The BOJ adopted negative rates in early

Impact on
Malaysia 2016, more than 18 months after the
European Central Bank became the first
major monetary institution to venture
below zero.
The ECB cut again in March, charging
banks 0.4% to hold their cash overnight
Source: http://www.bloomberg.com/quicktake/negative-interest-rates
Awareness
Commodity &
Oil Price
What?
Sweden, Switzerland and
Impact on Denmark have also adopted
Malaysia negative rates (The Swiss Central
Bank cut its policy rate, to -0.75%)
Encouraging investors to seek

higher returns elsewhere.
Weakening their currencies
Source: http://www.bloomberg.com/quicktake/negative-interest-rates
Awareness
Commodity &
Oil Price
What?
The Idea Behind NIRP
Impact on Encourage companies to deposit less
Malaysia in the bank and, ideally, invest more
and pay better wages.
Encourage bank lending because of
reduced borrowing costs for
companies and households
Source: http://thediplomat.com/2016/02/what-to-make-of-japans-new-negative-interest-rate/
Awareness
Commodity &
Oil Price
What?
Capital Flight to Malaysia
Financial service providers and
fund managers in the below-zero
Impact on
Malaysia rates countries seek for better
returns elsewhere
Turn around fortunes for emerging

markets like Malaysia.
The below-zero rates could have a

positive impact on Malaysia
despite its dim economic outlook
Source: http://www.theedgemarkets.com/my/article/investing-malaysia-benefit-negative-interest-rates-europe-and-japan
Awareness
Commodity &
Oil Price
What?
Capital Flight to Malaysia
Bank Negara Malaysia’s data shows that foreign investors

Impact on
Malaysia
purchased RM11.5 billion of ringgit-denominated debt
securities in March.
According to MIDF, combined with an estimated RM6.1 billion

foreign purchases of equity, the total external portfolio
capital that entered the local bond and equity markets stood
at RM17.6 billion in March, the highest since April 2011.
Source: http://www.theedgemarkets.com/my/article/investing-malaysia-benefit-negative-interest-rates-europe-and-japan
Awareness
Commodity &
Oil Price
What?
Known Known: Oil Price Decline
Since November 2014 The
Impact on world is producing more oil than
Malaysia it is consuming.
Price of Oil Goes Down
Oil took a massive plunge
from OVER $100 a barrel in
July to UNDER $50 in
January
Source: Wall Street Journal

Awareness
Commodity &
Oil Price
What?
Known Known: Commodity Price Decline
According to the Bloomberg

Impact on
Malaysia Commodity Index, commodity
prices have slumped to their
lowest level since the global
financial crisis, which is tracked
by billions of dollars of
investments.
Source:: http://www.thisismoney.co.uk/money/markets/article-2821119/The-commodity-crash-Prices-plunge-board-sugar-gold.html#ixzz47tWTA2IL
Awareness
Commodity &
Oil Price
1. Decrease Government Revenue

What?
• 1/3 of government revenues came
from Petronas
Impact on • World’s 2nd largest palm oil producer
Malaysia
Malaysia relies on exports of crude oil

and palm oil
“Each $1 drop in oil prices slashes RM

300 million [roughly $72 million] from
its annual revenue.” (Straits Times,
Malaysian government)
Source: http://www.straitstimes.com/asia/se-asia/oil-shock-sends-malaysian-economy-skidding
Awareness
Commodity &
Oil Price
2. Decrease Government Growth Forecast & Spending Plans

What?
On January 2016, Malaysia cut its 2016 growth forecast and slashed
Impact on spending plans as the economy continues to suffer from falling oil prices.
Malaysia
Growth Forecast Spending Plans
Najib Razak said economic Government had based the 2016 budget on
growth will be between 4 - oil prices averaging $48/barrel, but that
4.5 % this year down from estimate has been lowered to $30-
an earlier estimate of 4-5% $35/barrel
Source: http://www.worldpoliticsreview.com/articles/17800/malaysia-cuts-growth-forecast-cuts-budget-as-oil-slides
Awareness
Commodity &
Oil Price
What?
3. Imposed New 6% GST Tax
Government has tried to plug the Malaysian People Reaction:
Impact on hole in the state budget • The tax is not very popular
Malaysia • Has sparked significant protest
New 6% value-added tax, known as
the Goods and Services Tax (GST)
Source :http://blogs.cfr.org/asia/2016/02/23/plunging-commodity-prices-and-the-impact-on-malaysia/
Awareness

Awareness
What? Objective OBOR in Malaysia OBOR in Malaysia
One Belt One Road

Xi Jinping is trying to adapt and recreate the historical silk road for a new geopolitical era
OBOR focuses on connectivity &
cooperation among countries
between China & rest of Eurasia
2 main components which are “Silk

Road Economic Belt” & “Maritime
Silk Road”
Funded by AIIB & Silk Road Fund

Located on the original silk Road throughout
Central Asia, West Asia, Middle East, & Europe
Source: http://ies.orangefield.com/es/blog/a-silk-road-for-the-21st-century-about-the-impact-of-china-s-one-belt-one-road-project
Awareness
Maritime Road
Connecting China’s port facilities with the African coast up to the Mediterranean
These two routes will be the future of
both economic cooperation &
connectivity in the near future
OBOR seeks to shift certain industries
to outside of China by providing
infrastructure also services
Increase purchasing power of locals in
various countries & diversify China’s Maritime Road is the blue color
export markets (3 continents which are Asia, Europe, Africa)
Source: http://ies.orangefield.com/es/blog/a-silk-road-for-the-21st-century-about-the-impact-of-china-s-one-belt-one-road-project
Awareness
Overall Scale
Projected Investment will benefit
4.4 billion people in 65 countries
Total size could be more than

12 times America’s Marshall
Plan to aid post-second-world-
war Western Europe
Source: https://www.clsa.com/special/onebeltoneroad/
Awareness
Impact on
What? Objective OBOR in Malaysia
Malaysia
Increase Export
China needs to export excess capacity, resources,
and labor through foreign investment
China has a surplus capacity in steel production

which is bigger than the entire steel production
of Japan, America and Germany combined.
By OBOR initiatives, it will be easier for

China to export its excess capacity through
investment in infrastructure
Source: Economist.com
Awareness
Impact on
Malaysia
Increase the International Use of RMB
The most effective way to promote cross-border
circulation of the RMB is through regional
economic cooperation
Some number of China’s specialist state that

large-scale commodity trade between countries
involved in OBOR must be settled in RMB
China’s massive infrastructure

building investments promotes cross-country
payments in RMB
Source: https://www.leaprate.com/2016/02/swift-chinese-yuan-gains-share-as-world-payments-currency-in-january-2016/
Awareness
Impact on
Malaysia
Countering Rivals
OBOR may lower the solidarity of Asia-Pacific integration
organizations headed by the United States and Japan, such as APEC
OBOR allows China to foster bilateral integration with those members,

especially the ones which desperately need infrastructure
OBOR can undermine the significance of APEC and delay these states’
entry in the U.S.-led Trans-Pacific Partnership
OBOR limits the chance of forming of coalitions against China,

such as the U.S.-India and U.S.-South Korea coalitions in the past
Source: http://thediplomat.com/2016/02/how-chinas-belt-and-road-compares-to-the-marshall-plan/
Awareness
Impact on
Malaysia
In conclusion, OBOR will brings a win-win solution for all countries

participating, which is beneficial for a lot of countries
Improve Free flows of goods, Develop the

infrastructure of services, and information developing
most countries within Eurasia regions
Provide more job Boost economic

More attractive to More investment
opportunities and growth with China
investors funding inflows
consumption as the center
Awareness
Impact on
Malaysia
Infrastructure
One Belt, One Road in Malaysia
Transportation
OBOR in Malaysia is expected to create tremendous opportunities in various
industries including manufacturing sector, infrastructure, transportation, tourism,
Tourism trade and education sectors.
Trade
Iskandar Malaysia
Education
Financial
Awareness
Impact on
Malaysia
Infrastructure
Malaysia-China Kuantan Industrial Park in Pahang
Transportation RM 5.6 billion
Tourism
Sale of 1MDB subsidiary Edra Global’s power assets to China
General Nuclear Power Corp
Trade RM 1.8 billion
Education Chinese construction companies contracts

RM 15 billion
Financial
Source: http://www.theedgeproperty.com.sg/content/china%E2%80%99s-%E2%80%98one-belt-one-road%E2%80%99-initiatives-malaysia
Awareness
Impact on
Malaysia
Infrastructure
Kuala Lumpur station for the upcoming high-speed rail (HSR) to Singapore
Transportation RM 7.41 billion
Tourism
Gemas-Johor Baru electrified double-tracking rail project
RM 7 billion
Trade
Education
Financial
Awareness
Impact on
Malaysia
Infrastructure
Transportation
Tourism Melaka Gateway project

Malacca’s airport could be upgraded to allow direct flights from
Trade China to boost tourism and business travel.
Education
Financial
Awareness
Impact on
Malaysia
Infrastructure
Transportation Ports in Malaysia would be upgraded and more free trade zones and
industrial parks would be built near the ports
Tourism
Signing of seven MOUs (memorandum of understanding) in China,
Trade which will pave the way for the export of Malaysian durian, bird’s nest
and halal food produced by local small and medium enterprises
Education (SMEs) to China
Financial
Awareness
Impact on
Malaysia
Infrastructure
Transportation
Xiamen University China opened a new university in Sepang, Malaysia

Tourism
It is the first overseas expansion of the renowned Chinese university, with a
full range of offerings and a targeted student intake of 10,000.
Trade
Education
Financial
Awareness
Impact on
Malaysia
Infrastructure
Transportation
China Construction Bank announced the listing of the world’s first 21st
Century Maritime Silk Road bond on Bursa Malaysia
RMB1 billion (RM667.1 million)
Tourism
Trade Chinese Premier Li Keqiang pledged to buy Malaysian government bonds

When MYR was hit by foreign selling as crude oil prices have been falling
Education since late 2014 and by the1MDB crisis in 2015
Financial
Awareness
Impact on
Malaysia
Datuk Seri Liow Tiong Lai, Malaysian politician who has served in the
Cabinet of Malaysia say:
“Malaysia can also play the role of a coordinator for China to expand into
the markets of other ASEAN and neighboring countries.”
Source: http://www.thestar.com.my/news/nation/2015/08/02/belt-road-to-benefit-businesses
Awareness
Impact on
Malaysia
Uplift MYR China would step in to stabilize Malaysia’s financial markets
Increase BOP Malaysia became the second country in ASEAN (after

Singapore) to have a Renminbi clearing centre
Develop
Demand
Knee-jerk uplift in the value of the ringgit
Malaysia’s
Vision 2020
Awareness
Impact on
Malaysia
Uplift MYR
Capital Account
As there will be many investment project in infrastructure for
Increase BOP Malaysia, Malaysia will have a lot of capital inflow from Malaysia.
Develop Current Account

Demand As there will be many trade opportunities between China and
Malaysia, Malaysia will improve its current account.
Malaysia’s
Vision 2020
Awareness
Impact on
Malaysia
Uplift MYR
Increase BOP Develop industrial capacity and demand outside China

OBOR will be beneficial to Malaysia since it can develop demand
Develop and industrial capacity in Malaysia.
Demand
Malaysia’s
Vision 2020
Awareness
Impact on
Malaysia
Uplift MYR
Increase BOP
Malaysia is more attractive for FDI because it is located on OBOR Road
It will drive the Malaysian economy forward for years and will even help
Develop the country achieve its Vision 2020 despite current economic setbacks and
Demand other adversities
Malaysia’s
Vision 2020
Awareness

Awareness Summary
Current Account Capital Account GDP
Current Account Decreased in 2015

Year 2012 2013 2014 2015
Current Condition
Current Account 50,177 35,485 47,317 34,026
Capital Account 241 -15 272 -1151
Expected Impact Balance of Payments 50,418 35,470 47,589 32,875
Changes in % of BOP -29.65% 34.17% -30.92%
Awareness Summary
Current Account Decreased in 2015

In 2014 – 2015, export growth
Current Condition is slower than import growth
(unlike the previous period)
Trade balance growth is around

Expected Impact
-3%, a poor performance
compared to the previous
period.
Source: http://www.wsj.com/articles/falling-commodity-prices-hammer-malaysia-1416276586
Awareness Summary
Resulted from Global Economic Phenomenon
Current Condition
Expected Impact
Exported products which experiencing growth decline:

• Oil products (LNG, Crude Petroleum, and Petroleum products)
• Palm oil
Awareness Summary
Short-Term: United States  Export opportunity

Current Condition China  Export opportunity
Japan  Export challenge
Expected Impact Euro  Export opportunity
Long-Term: OBOR  Export opportunity
Conclusion: Global export opportunity for Malaysia.
Awareness Summary
Capital Account Decreased in 2015

Year 2012 2013 2014 2015
Current Condition
Current Account 50,177 35,485 47,317 34,026
Capital Account 241 -15 272 -1151
Expected Impact Balance of Payments 50,418 35,470 47,589 32,875
Changes in % of BOP -29.65% 34.17% -30.92%
Awareness Summary
Capital Account Deficit in 2015

Capital Account is
experiencing a deficit in
Current Condition
2015 instead of surplus
(one of highest deficit
since 2012)
Expected Impact
FDI of Malaysia keep
decreasing since 2012,
but there is a sudden
sharp drop in Q3 of 2015
Awareness Summary
Short-Term: United States  FDI opportunity

Current Condition China  FDI opportunity
Euro  FDI opportunity
Expected Impact ZIRP/NIRP  FDI opportunity

Long-Term: OBOR  FDI opportunity
Conclusion: FDI opportunity for Malaysia.

Awareness Summary
The GDP growth rate:

1st quarter ‘14:
Current Condition Declined from 1.9 to 1.4%
3rd quarter ‘14:
Declined from 1.6 to 0.8%.
Expected Impact
1. Oil price decline started on:
1st quarter of 2014
2. Commodity price decline
started on:
3rd quarter of 2014
Awareness Summary
Short-Term: United States  GDP increase opportunity
Current Condition
China  GDP increase opportunity
Japan  GDP increase opportunity
Euro  GDP increase opportunity
Expected Impact
ZIRP/NIRP  GDP increase opportunity
Long-Term: OBOR  GDP increase opportunity
Conclusion: GDP increase opportunity for Malaysia.

Framework
Awareness
Alignment
Action
Adoption
Assurance
Anticipation
Alignment Malaysia Finance Industry & Maybank
Malaysia Finance Industry Maybank Overview OBOR Impact to Strategy
Current Account Capital Account
Malaysia As One of The Country in OBOR

Capital Account Increase 
FDI inflows (project, joint venture) increase
Current Account Increase 

Export increase because of the free flow of
goods and services
Company
Export & needs People
Current financing Economy is saving and
import getting consumption
Account↑ (higher better
trade↑ transaction ↑
volume)
Specific Peoples
bank Malaysia Boosting and
services will look the
FDI inflow ↑ (acquisition, more economy of companies
investment) attractive Malaysia are better
needed off
Maybank Company Profile Maybank Strategies
Maybank Company Profile

• Established in 1960
• Offers a comprehensive range of products
• Vision is to be the regional leader in the
financial industry
Sources: http://www.maybank.com/en/about-us/corporate-profile/group-strategy.page
Sources: http://www.maybank2u.com.my/Islamic/en/about-us/corporate-profile/corporate-information.page
Sources: http://www.maybank2u.com.my/Islamic/en/about-us/corporate-profile/corporate-information.page
Rank Banks Rank Banks

1 Malaysian Banking 1 DBS Bank
2 Public bank Berhad 2 OCBC Bank
3 CIMB 3 United Overseas Bank
4 RHB Bank 4 Malaysian Banking
5 Am bank 5 Public Bank Berhad
6 Hong Leong Bank 6 CIMB
1st in Malaysia 4th in ASEAN
Sources: https://savemoney.my/funny-money/top-5-biggest-banks-in-malaysia & http://www.forbes.com/global2000/list/

No. 1 Retail Financial Services Provider in Malaysia

Aiming to maintain their top ranking (overall market share) across their core retail financing
products including mortgages, automobile financing, credit cards, and individual deposits by
committing to the value of Needs Based Selling and World Class Services.
Leading ASEAN Wholesale Bank linking Asia

Enhancing their corporate relationship model in terms of: Improving domestic and regional
market position for corporate and non-retail deposits, Building a regional investment bank,
and many more.
Sources: http://www.maybank.com/en/about-us/who-we-are/overview.page
Global leader in Islamic Finance

• Have one-third of our domestic financing backed by Islamic financial assets.
• Grow their Islamic business in markets like Indonesia and Singapore while delivering
innovative and globally accepted products and services that differentiate them
Sources: http://www.maybank.com/en/about-us/who-we-are/overview.page
Product and Services OBOR Impact
Maybank Islamic
• Malaysia has huge Muslim population (62%)
• It is a subsidiary of Maybank and currently the
largest Islamic banking player in Asia Pacific
region
Sources: http://www.maybank2u.com.my/mbb_info/m2u/public/personalDetail04.do?channelId=&cntTypeId=1&cntKey=HL07.12.02&programId=HI-Highlights&newsCatId=/mbb/Highlights/2007/12&bp=1&chCatId=/mbb/Personal
Maybank Islamic
• Aims to meet the challenging developments in
the Islamic Banking world and meet Islamic
financial needs with its wide range of
products and services.
• Services are revolving around the
combination of Islamic concept such as of
Wadiah (safe custody) and Mudharabah
(profit-sharing)
Sources: http://www.maybank2u.com.my/mbb_info/m2u/public/personalDetail04.do?channelId=&cntTypeId=1&cntKey=HL07.12.02&programId=HI-Highlights&newsCatId=/mbb/Highlights/2007/12&bp=1&chCatId=/mbb/Personal
Awareness Malaysia Finance Industry & Maybank
Region Islamic population Percentage

Middle East – North Africa 317,070,000 93%
Sub Saharan - Africa 248,110,000 30%
Opens up to Be the world

OBOR 500 million Align with their leading Islamic
potential strategy financial bank
customer
Sources: http://www.jewishvirtuallibrary.org/jsource/History/muslimpop1.html
Maybank Investment Banking

• One of Maybank subsidiary
• Operates in 10 countries: Malaysia, Singapore,
Thailand, Indonesia, Vietnam and the Philippines
• Services: corporate finance, investment banking,
debt markets, equity capital markets, derivatives,
venture capital, private equity, asset management
services.
Sources: https://www.powerbroking2u.com.my/webcms/Default.aspx
Maybank Investment Banking

They also help facilitate people who want to buy shares listed in Bursa Malaysia
Non Margin & Share Margin Islamic Financing EzyInvest
Cash Accounts Financing Shariah-compliant share Simple & more convenient
Share investing facility Share investing facility investing facility that lets way to invest in stock
that allows you to that allows you to you purchase shares in market regardless of age,
purchase shares quoted on purchase quoted on Bursa approved Shariah income or experience.
Bursa Malaysia using your Malaysia via a Share counters listed on Bursa From affordable and
own funds Margin Financing scheme Malaysia through your regular investment amount
own funds or a Share to the flexibility of
Margin Financing scheme managing your wealth.
Sources: https://www.powerbroking2u.com.my/webcms/Default.aspx
OBOR Impact to Maybank Investment Banking

Can turn
Many people Maybank
Transaction Capital becoming the
across will need
Account ↑(FDI Maybank leading
borders↑ Inflows) services wholesale
bank in the
region
Maybank Retail Banking

• Largest banking network in Malaysia: 393 branches,
2,568 ATMs with more than 12 million customers
• No. 1 in overall market share for Consumer Loans
(17.5%), Retail Deposits (20.2%), Unit Trust Loans
(51.6%), Retail Fixed Deposits (17.4%)
Sources: http://www.maybank.com/en/investor-relations/investing-in-maybank/why-invest.page
OBOR Impact to Maybank Retail Banking

Current account Better Increase People needs
and Capital economic welfare of more services
Account condition people from Maybank
increase
Maybank Business & SME Banking

• Offers financial needs and that are tailored
to suit businesses needs.
• Ready to advise business needs including
fixed deposits, corporate credit cards, trade
financing, cash management, payroll,
insurance and many other products and
services.
Sources: http://www.maybank2u.com.my/en/business/business-banking/index.page
Maybank Business & SME Banking

• Maybank is committed to SME growth
SME GDP • Its SME financing increased 43 percent becoming
363.5 7.5 billion in 2015.
Other GDP, 649 billion • They provide services and products revolving
billion
financing needed to buy property, machine,
capital in a fast and convenient way wherever
the businesses are.
Sources: http://www.maybank2u.com.my/en/business/business-banking/index.page
OBOR Impact to Maybank Business & SME Banking
Easier for business to

procure material at Increase the need of
Free flow of goods low price and export Maybank’s service to
and service increase at high price do international
especially medium transaction
enterprise
Alignment Conclusion: OBOR Impact to Maybank strategies
Expand
Expand
Business and
Islamic Bank
SME Bank
Malaysia is
on the route Malaysia FDI Inflows, Business Malaysian
(along with looks economy grows and people also
other attractive getting expand better
Muslim better
countries)
Expand
Expand
Investment
Retail Bank
Bank
Framework
Awareness
Alignment
Action
Adoption
Assurance
Anticipation
Action Maybank action
Maybank Maybank Business

Maybank Islamic Maybank Retail
Investment & SME
• Maybank should create more

innovative Islamic offers
OBOR provides Maybank with suitable with different kinds of
more than 500 million potential Islam from all around the region
Muslim customer • Advertise and expand branch
to those regions (Middle East and
Africa)

Investment & SME
• Maybank should actively

promote and advertise its
services in investment banking so
Malaysia as one of the gateway
of ASEAN to OBOR routes will it will became well known
increase its attractiveness to FDI • Expand its services / professional
teams in terms of advising mega
companies to do merger and
acquisition

Investment & SME
• Maybank should give interesting

With better economic condition offers so people would choose
because of OBOR, welfare of
Malaysian people will increase them instead of their competitor
therefore making retail banking • Build more branch to make it
services more needed than ever. more convenient for people do
to transaction across the globe

Investment & SME
• Actively advertise their services

in this area
• Build branches abroad to make it
OBOR will make business in
Malaysia can do international easier for businesses to do
transaction easier which will result international transaction
in better business condition. • Help SME (especially the Medium)
so they can take advantage of
this free flow of goods
Action Conclusion
Potential customer Maybank should

OBOR gives (Islamic, huge change strategy to be
opportunities to corporation and able to take the
Malaysia MNE’s, retail customer, advantage and
SME’s business) become leading bank
not only in Malaysia
In short, the major things that Maybank should do is to adjust their existing models:
OPTIMIZE TRADING, INCREASE DISTRIBUTION
Ex: Expand branches, product innovation to suit various customer, increase their overall strategy
Framework
Awareness
Alignment
Action
Adoption
Assurance
Anticipation
Adoption
Why? Reason Focus
21st Century Maritime Silk Road

Malaysia is located at the center of Southeast Asia and holds Straits of Malacca as an
incomparable advantage in the cooperation of the construction
Trading between Malaysia & China Malaysian & Chinese government have
registered USD 102 billion signed a 5-year plan to strive for USD
160 billion by 2017 (expanding rate,
China’s third biggest trading partner after investment, tourism, education, financial, &
Japan & South Korea infrastructure)
China’s largest ASEAN trading partner for

6 years since 2008
Source: http://www.mida.gov.my/home/why-malaysia/posts/
Adoption
Why? Reason Focus
Malaysia will be the perfect country as one of the OBOR gateway in ASEAN
Offers investors dynamic & vibrant Telecommunications network in Malaysia; digital &
business environment, such as fibre optic technology, 5 international airports,
attractive incentives for investors well-maintained highways & 7 international
seaports
One of the most technologically Conducive business environment:

developed countries among other fully developed industrial park, free industrial
country in ASEAN: zones, technology parks, Multimedia Super
Bring advantage to manufacturers in Corridor, MSC Cybercities/centres
Malaysia
Adoption
Why? Reason Focus
Seeing the opportunities from OBOR that can be adopted by Maybank, government needs to
fully support and focus on the railways/transportation infrastructure
Railways sector is the fastest-growing infrastructure sub-sector in Malaysia, averaging 8.9%
growth/annum between 2016 & 2020
(there will be a several large-scale railway projects)
Growth in the roads & bridges sector will also remain strong, averaging 8.6% between
2016 & 2020
Malaysia’s energy & utilities sector grow by 6.9% in 2016 & at annual average of 5.1%
between 2016 & 2025 (about 54% of electricity comes from thermal sources, such as gas-
fired plants & power plants)
Framework
Awareness
Alignment
Action
Adoption
Assurance
Anticipation
Assurance GOT
Goal
• Become the leading retail, Islamic,
Investment, Business and SME bank by
taking advantage of OBOR
Objective
• To be the no.1 bank in ASEAN
• To have at least 70% of market share in
EMEA in terms of Islamic bank
Target
• Placing branch in strategic countries that
are highly related to Malaysia
• Increasing awareness of their services
aside retail banking by advertising and
promoting to related parties
Framework
Awareness
Alignment
Action
Adoption
Assurance
Anticipation
Anticipation Malaysia’s New Basel III
Basel III New Capital Adequacy Rules Relevance to Maybank
Basel III is basically a set of reform measures designed to improve the regulation,
supervision and risk management within the banking sector.
These measures aim to:

Improve the banking sector's ability to absorb shocks arising from
financial and economic stress, whatever the source
Improve risk management and governance
Strengthen banks’ transparency and disclosures
Malaysia's new Basel III capital adequacy rules will extend to the financial
holding companies (FHCs) of most major banking groups such as Maybank
The aim is to boost banks' capital adequacy ratios and

give them an extra buffer against losses
It will be introduced in 2019
1. Minimum Capital Adequacy Ratio = 8% of total capital ratio

(ratio of a bank's capital to its risk)
2. 2.5 % Capital Conservation Buffer

(designed to ensure that banks build up capital buffers outside periods of
stress which can be drawn down as losses are incurred)
This is a potentially significant regulatory change, as many banking groups in

Malaysia are headed by FHCs with bank operating subsidiaries
Groups such as Maybank are less affected for now because their
parent banks are already subject to Bank Negara's regulatory requirements,
and the majority of issuance still originates from the parent
However, this issues may become more relevant for Maybank:

It prepares to locally incorporate its Singapore business. They are required to incorporate
locally because it has a big enough market share in Singapore (about 5%)
Its plan to expand its Indonesian subsidiaries, particularly as these subsidiaries issue
capital securities to meet regulatory requirements of their own
Lower Return Less income

on Equity of Maybank
Higher minimum Higher cost of Lower number of People reluctance to

capital requirement borrowings borrowers borrow money
Declining of
Businesses have less
Malaysia economic
capital to expand
condition
Conclusion
Awareness Acknowledge global financial environment trend and China’s Strategic Thrust
(OBOR) impact and Malaysia’s current & expected economic condition
Alignment Align Maybank’s strategy, product, and services to OBOR
Action Propose action plans for Maybank’s products & services

in accordance to OBOR
Adoption Use Malaysian government support for the adoption of OBOR
Assurance Assure the Goal, Objective, Target of Maybank
Anticipation Anticipate the challenges from Malaysia’s new Basel III

Maybank in Asia

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Maybank in Asia

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Global Financial Environment & OBOR

Analysis to Malaysia’s Economy & Maybank

Dion Natanael 45 Amelinda Jane 66 Tania Aveline 26 Kathleen Kwarso 01

Global Financial Environment

China’s Strategic Thrust: OBOR

Malaysia’s Economic Condition

US TPP Rising US Dollar Anticipation of FED Rate Hike

Known Unknown: US Trans-Pacific Partnership

Expand the export of Made-in-America goods

US TPP Rising US Dollar Anticipation of FED Rate Hike

Known Unknown: US Trans-Pacific Partnership

US TPP Rising US Dollar Anticipation of FED Rate Hike

Known Unknown: US Trans-Pacific Partnership

Population of more than

US TPP Rising US Dollar Anticipation of FED Rate Hike

US TPP Rising US Dollar Anticipation of FED Rate Hike

1. Increasing Projected Export and Import

Non-tariff barriers eliminated → Easier and Cheaper

US TPP Rising US Dollar Anticipation of FED Rate Hike

1. Increasing Projected Export and Import

US TPP Rising US Dollar Anticipation of FED Rate Hike

2. Increasing Projected Investment

Investment is projected to rise by USD 136~239 billion over 2018-2027 as foreign

US TPP Rising US Dollar Anticipation of FED Rate Hike

3. Increasing Projected GDP

GDP is projected to increase by USD 107~211 billion over 2018-2027 (reduction

US TPP Rising US Dollar Anticipation of FED Rate Hike

3. Increasing Projected GDP

Impact on 90% of GDP gains are

Tariff ↓ & NTMs ↓ by 25-50% → GDP increase USD 107-211 B

US TPP Rising US Dollar Anticipation of FED Rate Hike

3. Increasing Projected GDP

Malaysia’s GDP growth is projected to increase by 0.60~1.15 ppt in 2027 (reflects a

US TPP Rising US Dollar Anticipation of FED Rate Hike

Known Unknown: Rising US Dollar

USD HAS STRENGTHENED

US TPP Rising US Dollar Anticipation of FED Rate Hike

1. Government and Corporate Debts

USD strengthens → Companies taking trillions of USD debt are

US TPP Rising US Dollar Anticipation of FED Rate Hike

1. Government and Corporate Debts

However, Malaysia’s central government

Malaysia’s foreign debt – both government

US TPP Rising US Dollar Anticipation of FED Rate Hike

2. Weaker Domestic Financial Market

USD strengthens → Returns on US securities are higher →

US TPP Rising US Dollar Anticipation of FED Rate Hike

3. Lower Tax for Malaysian Government

Investment in domestic financial market ↓ , Offshore Investment ↑ →

US TPP Rising US Dollar Anticipation of FED Rate Hike

Known Unknown: Anticipation of FED Rate Hike

Janet Yellen on Fed rate Hike

US TPP Rising US Dollar Anticipation of FED Rate Hike

Malaysia has seen outflows in equities and bonds, totaling nearly US

However, according to S&P’s Ratings Services, Malaysia is less exposed

US TPP Rising US Dollar Anticipation of FED Rate Hike

US TPP Rising US Dollar Anticipation of FED Rate Hike

3. Other Impacts of Weakening MYR

Known Unknown: Economy Recovery of China

New Credit↑ Industrial Output ↑ Fixed-asset Investment ↑ Retail Sales ↑

Exceeding economists estimates

China is experiencing recovery

Known Unknown: Economy Recovery of China

Impact on -Manufacturing index rose to 46.9, the