BCM634 MANAGEMENT IN CONSTRUCTION II

An evaluation of economic, social, political and technological trends in Malaysia.

Malaysia Background Capital City Population Peninsular Malaysia Sabah Sarawak W.P. Labuan Population Growth Rate % Life Expectancy at Birth Age Structure

: Kuala Lumpur : 28.3 million : 22.6 million : 3.2 million : 2.5 million : 0.1 million : 1.3 % : Male - 71.9 Female - 77.0 : 0 -14 years - 7.8 million : 15-59 years - 18.3 million : > 60 years and above - 2.3 million

ECONOMIC

Malaysia economic overview

registered a stronger growth of 5.4% in the second quarter of 2012 (Q1 2012: 4.9%)

Services growing 6.3% manufacturin g growing 5.6% (Q1 2012: 5.3%; 4.4%),

construction sector 22.2% (Q1 2012: 15.5%)

mining sector 2.3% (Q1 2012: 0.3%)

agriculture sector 4.7% (Q1 2012: 2.1%)

Factors effecting gross domestic product 1. Vibrant domestic activities

Domestic economic activity - doubledigit growth of 13.8% (Q1 2012: 9.7%) strong consumer spending and higher capital outlay by the private sector and NonFinancial Public Enterprises (NFPEs)

imports of consumption goods and sales of motor vehicle - 11.1% and 16.2% (Q1 2012: 20.3%; -13.8%)

consumption credit and credit card - positive growth of 7.5% and 4.6% (Q1 2012: 7.8%; 6.6%)

higher expenditure on supplies and services for maintaining and improving the public delivery system

 Gross Fixed Capital robust growth of 26.1% (Q1 2012: 16.1%) - by public sector capital spending and private investment activities

Public investment registered growth of 28.9% mainly in transport equipment and oil and gas industries

private investment 24.6% led by investment in the construction, manufacturin g and services sectors.

investment indicators imports of capital goods and bank lending to businesses 27.3% and 14% (Q1 2012: 21%; 13.4%).

Services spearhead growth

The services sector - , increasing 6.3% in the second quarter of 2012 (Q1 2012: 5.3%) and contributing 3.4 percentage points to overall GDP growth

The intermediate and final services groups grew 7.2% and 5.5%(Q1 2012: 5.1%; 5.7%) wholesale and retail trade, finance and insurance, and real estate and business services subsectors.

The wholesale and retail trade sub-sector grew 5.9% (Q1 2012: 6.4%) retail sales in non-specialised stores which rose 13.5% (Q1 2012: 10.6%).

retail trade sales increased 9.3% to RM70.2 million (Q1 2012: 10.5%; RM69 million)

Lower plantation output

Value-added of the agriculture sector contracted 4.7% (Q1 2012: 2.1%) due to lower production of the plantation sub-sectors, particularly oil palm, forestry and rubber Value-added of the oil palm sub-sector declined sharply by 17.5% (Q1 2012: 3.5%) , value-added of the rubber sub-sector was lower at 2.1% (Q1 2012: -9.4%) The forestry sub-sector declined 2.1% (Q1 2012: 5.4%) due to slower logging activities in Peninsular and Sabah value-added of the livestock sub-sector grew 7.7% (Q1 2012: 11.0%) backed by higher output of poultry, cattle, goats and swine the other agriculture sub-sector strengthened 9.6% (Q1 2012: 3.8%) supported by higher output of fruits, vegetables and paddy fishing sub-sector improved with a smaller contract ion of 0.2% (Q1 2012: -4.4%) on account of higher output of aquaculture

Strong crude oil production

Value-added of the mining sector grew 2.3% (Q1 2012: 0.3%) supported by higher production of crude oil The production of crude oil (including condensates) rebounded strongly by 5.7% to 554,930 barrels per day (bpd) (Q1 2012: 0.2%; 612,640 bpd) , production of natural gas contracted 4.4% to 5,495 mmscfd (Q1 2012: -0.2%; 6,258 mmscfd).

Government budget balance

referred to as general government balance, public budget balance, or public fiscal balance budget balance is the difference between government revenues (e.g., tax) and spending data for Malaysia from 1996 to 2010 average value for Malaysia during that period was -3.16 percent with a minimum of -6.13 percent in 2009 and a maximum of 2.92 percent in 1997 budget balance in Malaysia and other countries is calculated as the difference between the taxes collected by the government and the government spending Most governments try to keep their deficits below 3 percent of GDP

Robust construction activities

The construction sector continued to register a second consecutive quarter of double-digit growth of 22.2% (Q1 2012: 15.5%) With 3.4% share to GDP, the sector contributed 0.7 percentage point to real GDP growth in Q2 2012. The civil engineering sub-sector expanded 39.8% (Q1 2012: 15.5%) the residential sub-sector posted a strong growth of 20.1% (Q1 2012: 24.1%) supported by higher housing starts non-residential sub-sector continued to grow strongly by 11.7% (Q1 2012: 14%)

Prices
Headline inflation, as measured by the annual change in the Consumer Price Index (CPI), abated further to 1.7% in the second quarter of 2012 (Q1 2012: 2.3%) Prices in the food and non-alcoholic beverages group continued to ease and recorded a smaller growth of 2.7% (Q1 2012: 3.6%), contributing 0.8 percentage point to the CPI increase. The slower increase in food prices was attributed to the decline in the prices of vegetables (-3.9%) and meat (-1.9%) subgroups, following improved market supplies the fish and seafood sub-group increased 7.6% due to weather-induced supply shortage prices in the food at home and food away from home categories increased 2% and 4%, respectively (Q1 2012: 3%; 4.6%). The slower pace of the CPI increase - the housing, water, electricity, gas and other fuels (1.6%); miscellaneous goods and services (2.3%), and restaurants and hotels (3.1%) groups (Q1 2012: 1.9%; 2.9%; 3.9%). Collectively, these three groups contributed 0.6 percentage point to the CPI.

 The transport group recorded a marginal increase of 0.5% (Q1 2012: 1.5%) moderation in global oil prices and contributed 0.1 percentage point to the CPI. As in the previous quarter, the increase in inflation continued to be partly mitigated by price declines in the clothing and footwear, and communication groups at 0.4% and 0.6% (Q1 2012: -0.4%; -0.6%), respectively, due to market competition among the retailers. [Inflation eased further to 1.4% year-on year in July 2012 (June 2012: 1.6%). The moderation in inflation was attributed to lower price increase in the food and non-alcoholic beverages, and housing, water, electricity, gas and other fuels groups by 2.6% and 1.5%, respectively. Following the downward adjustment in the pump price of petrol RON97 by 20 cent on 5 July 2012 to RM2.60 per litre, the transport group declined marginally by 0.2%, the first time since December 2009. Consequently, the inflation for the first seven months of 2012 was lower at 1.9% (January July 2011: 3.1%)]

 The Producer Price Index (PPI), which measures changes in the prices of commodities charged by domestic producers and those paid by importers, registered a marginal increase of 0.8% in the second quarter of 2012 (Q1 2012: 3.8%). This was on account of slower price increase in local production and import components, with both recording an increase of 0.8% (Q1 2012: 4.8%; 1.4%). The lower index in the local production components was mainly attributed to the slower price increase in the mineral fuels, lubricants group of 7.4% (Q1 2012: 27.1%), which contributed 2 percentage points. In terms of stage of processing, the intermediate materials, supplies and components, and the finished goods stage recorded an increase of 1.5% and 0.8%, respectively. The lower PPI for import was mainly due to the price decline in four groups with the animal and vegetable oils and fats declining the most, by 5.4%. However, the lower import price was partly offset by the 3.8% increase in the price of the mineral fuels, lubricants group (Q1 2012: 11%).

Malaysia Consumer Spending

Consumer Spending in Malaysia decreased to 97077 MYR Million in the fourth quarter of 2012 from 99812 MYR Million in the third quarter of 2012. Historically, from 2005 until 2012, Malaysia Consumer Spending averaged 77514.48 MYR Million reaching an all-time high of 99812 MYR Million in August of 2012 and a record low of 56768 MYR Million in May of 2005.

Malaysia Bank Lending Rate

Bank Lending Rate in Malaysia decreased to 4.69 percent in January of 2013 from 4.70 percent in December of 2012. Bank Lending Rate in Malaysia is reported by the Central Bank of Malaysia. Historically, from 1996 until 2013, Malaysia Bank Lending Rate averaged 7.02 Percent reaching an all-time high of 13.53 Percent in May of 1998 and a record low of 4.69 Percent in January of 2013. In Malaysia, the bank lending rate is the average rate of interest charged on loans by commercial banks to private individuals and companies.

Malaysia Interest Rate

The benchmark interest rate in Malaysia was last recorded at 3 percent. Interest Rate in Malaysia is reported by the Bank Negara Malaysia. Historically, from 2004 until 2013, Malaysia Interest Rate averaged 2.92 Percent reaching an all time high of 3.50 Percent in April of 2006 and a record low of 2 Percent in February of 2009. In Malaysia, the interest rate decisions are taken by The Central Bank of Malaysia (Bank Negara Malaysia). The official interest rate is the Overnight Policy Rate. This page includes a chart with historical data for Malaysia Interest Rate.

Malaysia Unemployment Rate Unemployment Rate in Malaysia remained unchanged at 3.30 percent in January of 2013 from 3.30 percent in December of 2012. Unemployment Rate in Malaysia is reported by the Department of Statistics Malaysia. Historically, from 1998 until 2013, Malaysia Unemployment Rate averaged 3.33 Percent reaching an all time high of 4.50 Percent in March of 1999 and a record low of 2.70 Percent in August of 2012. In Malaysia, the unemployment rate measures the number of people actively looking for a job as a percentage of the labour force. This page includes a chart with historical data for Malaysia Unemployment Rate.

Social

Population and Health, (Lit, 2012) Later marriages and smaller families More spending per child Working women and childcare issues More divorces Rural to urban migration and growth of cities More Malaysians living and working overseas: Brain Drain Illegal immigration Better health Ageing of the population Change in disease patterns to more chronic diseases Challenge of paying for healthcare for the aged More demand for services for the aged

 The number of people living in Malaysia - 28 million - includes an estimated 1 million foreigners . Population growth has slowed down in Malaysia as the people begin to marry at older ages, have children later in their marriages and also have fewer children per family. People marry later and postpone having children because they spend more years in school nowadays and also because they wish to spend more time on building up their careers. This is especially true of women who are highly educated .

 People have fewer children - the difficulties of balancing a career outside the home with the domestic duties of being a good wife and being a good mother to the children. As women become better and better educated and they begin to rise higher and higher in the working world, their work responsibilities would increase and their working hours would also get longer and longer. easier on a career woman if she has only one or two kids rather than a large number of kids. Another reason - people are having fewer children - people migrate from the countryside and the small towns to live and work in the big towns and cities, it becomes more and more expensive to bring up their children.

Labour force Employment

Labour market remained stable Despite the challenging external environment, the Malaysian labour market remained stable in the second quarter of 2012. The number of unemployed persons in the economy increased 2.2% to 386,300 in the second quarter of 2012 (Q1 2012: 1.1%; 385,500), while the labour force increased 3% to 12.9 million (Q1 2012: 2.4%; 12.8 million). Accordingly, the unemployment rate remained stable at 3.0% during the same period (Q1 2011: 3.0%)

 The favourable labour market conditions - reflected in the number of vacancies reported to Jobs Malaysia, which increased further to 419,636 in the second quarter of 2012 (Q1 2012: 316,016). The manufacturing sector reported the highest number of vacancies with 163,664 jobs, followed by the services (96,642) and agriculture (83,784) sectors. In terms of job categories, elementary occupations accounted for the largest share of vacancies at 258,610 (61.6%). job seekers registered with Jobs Malaysia increased slightly to 347,873 as at end-June 2012 (end-March 2012: 346,877). number of retrenchments declined to 1,516 workers (Q1 2012: 3,388) mainly from the services (788), followed by manufacturing (694) and construction (23) sectors.

Political Malaysia political overview

The Federation of Malaya - established on 31 August 1957. 16 September 1963 the Federation was enlarged by the accession of the states of Singapore, Sabah (formerly British North Borneo) and Sarawak. The name Malaysia was adopted from that date. Singapore left the Federation on 9 August 1965. federal constitutional monarchy and a parliamentary democracy- Head of State is the Yang di-Pertuan Agong (King) - Head of Government is the Prime Minister/head of the Cabinet. 9 of the 13 states have hereditary rulers - who share the position of King on a five-year rotating basis. The Kings functions - constitutional amendments in 1993 and 1994. Legislative power - federal (bicameral) / state (unicameral) legislatures. House of Representatives has 222 members elected for five year terms in single seat constituencies. The governing Barisan Nasional (National Front) coalition comprises the United Malays National Organisation (UMNO), the Malaysian Chinese Association, the Malaysian Indian Congress, plus a number of other parties including some based in East Malaysia. In 2009 Mr Badawi steps down as prime minister and is replaced by his deputy, Najib Abdul Razak.

Political Environment in Malaysia Malaysias political stability - main attraction for foreigners to invest in the country since independence. independent for 54 years. Malaysia is still governed by the National Front Party. Despite a Strong Showing By the Opposition in the Last Elections, The Country Remains Free of Public Unrest & Trouble. Political Stability is a Critical Factor to Consider as You Would not Want Policies Affecting Your Business To Change Every Few Years. The Government of Malaysia has given a slogan to their peoples SATU MALAYSIA - UNITED MALAYSIA and the peoples of Malaysia follow this slogan accordingly. Peoples live with harmony and mutual respect with a freedom of speech that opens the door for discussions and negotiations for any sort of problems if there is any.

Effect politic in business Politics - affect businesses on a variety of levels. The main area to look at is the tax benefits. On one level some politicians may offer tax incentives to companies while others may increase their burden. Politicians may go against party beliefs to benefit a business if they think their constituents will be harmed. Pollution and product safety are also areas where politics can favour or hurt a business. It depends on the party and their stance but politics always affects business.

Technological trends Stronger manufacturing activities Value-added of the manufacturing sector increased 5.6% (Q1 2012: 4.4%). Output expanded at a stronger pace of 5.7% (Q1 2012: 4.6%) supported by both domesticoriented (7.5%) and export-oriented industries (5.1%) during the quarter. The encouraging performance was also reflected in the sales of manufactured goods which expanded 6.8% to RM157.1 billion (Q1 2012: 6.6%; RM153.6 billion) and higher overall capacity utilisation rate at 82.8% (Q1 2012: 82.3%).

 Production of export-oriented industries expanded 5.1% (Q1 2012: 3%) led by higher output of chemicals and chemical, petroleum and wood products as well as an improvement in the E&E sub-sector. output of chemicals and chemical, petroleum and wood products grew strongly by 10.4%, 11.6%, and 6.2%, respectively. Similarly, production of E&E improved further to 2.8% during the quarter, with semiconductor devices registering a stronger growth of 17.3%. In contrast, off-estate processing contracted 15.5% due to weatherrelated factors which affected palm oil production. output of domestic-oriented industries continued to increase 7.5% (Q1 2012: 10%), with most sub-sectors registering favourable growth. Transport equipment surged 12.1% following higher production of motor vehicles (22.7%). In line with robust construction activities, output of the non-metallic mineral and fabricated metal sub-sectors expanded 4.7% and 7.4%, respectively. In addition, output of food, beverages and tobacco also posted a healthy growth of 11.3%, 4.1% and 20.9%, respectively.

Company Profile
Johawaki Group of company was setup in a

construction business with the formation of Hawaki Enterprise on April 1, 1979. Located at WISMA JOHAWAKI Lot 3669, Jalan Batu Tiga-Sungai Buloh, Section U6 Shah Alam Selangor, 40150 Malaysia. Through hard work and entrepreneurial dynamism under the stewardship of Dato Johari Bin Mat and Dato' Abdul Rahim Bin Ahmad, this reputable Class A contractor grew steadily in tandem with the Malaysian growing economy. Three years later, the company was converted into Johawaki Sdn Bhd on September 6, 1982.

Johawaki Group
Vision To be a respectable and ethical leading organiasation by providing sustainable quality products. Mission To provide good quality product and professional services consistent with passion and dedication. To be the worlds premier project management company. Customers and partners will see us as integral to their success. We will anticipate their needs and deliver on every commitment we make. Employees will be proud to work at Johawaki Group of Companies. We will create opportunities to achieve the extraordinary, and we will reward success. Communities will regard us as responsible and responsive. We will integrate global and local perspectives, promote sound management of resources, and contribute to a better quality of life. By aspiring to be the most respected company in Malaysia and Asia renowned for: excellence; leadership; and unsurpassed value.