Cheap Malaysia lures Singaporeans as ringgit falls: KUALA LUMPUR, Sept 5 — The ringgit’s descent to a 15-year low against the Singapore dollar is luring tourists and property-buyers from the city-state, providing relief as Malaysia’s economic growth slows. In the past three months, the ringgit has lost 5.8 per cent against the greenback and 4.1 per cent versus the currency of Singapore, which accounted for 52 per cent of overseas visitors last year. Malaysia’s current-account surplus shrank 70 per cent in the second quarter, while Singapore’s widened 28 per cent, helping fuel a selloff in the nation’s assets by overseas investors preparing for the Federal Reserve to reduce stimulus. The falling ringgit has played a part in a rising number of enquiries from Singaporeans in Iskandar, an economic development zone in the southern state of Johor that borders the city-state, according to real-estate company CBRE Group Inc Overseas passengers passing through airports run by Malaysia Airports Holding Bhd rose 14 per cent to 3.2 million in July from a year earlier, an Aug 30 stock exchange filing by the company shows. “The weaker ringgit presents opportunities for us,” Tan Kok Liang, a vice-president of the Malaysian Association of Tour and Travel Agents, said in an interview last week. “Singaporeans will find the dive and mountain-climbing packages a lot cheaper,” said Tan, referring to tours offered by his company in Kota Kinabalu on the Malaysian part of Borneo island. Property Rules Arrivals from Singapore dropped 2.7 per cent to 13 million in 2012, the first decline since 2003, although they have rebounded 8 per cent in the first half of this year, according to data from Tourism Malaysia, the government’s travel body. The industry accounted for 7 per cent ofMalaysia’s gross domestic product in 2012, a World Travel & Tourism Council report shows. Singapore introduced rules to curb property speculation as residential prices increased 62 per cent in the past four years, according to an Urban Redevelopment Authority index, making the city-state the most expensive market in Asia after Hong Kong. Around 90 per cent of the 130,000 foreigners that own properties in Johor are Singaporeans, according to a June 3 report in the Straits Times newspaper. Taxes on real estate owned by non-Malaysians will be raised by the end of the year, Johor chief minister Datuk Seri Mohamed Khaled Nordin said in the report. Iskandar’s proximity to the city-state makes daily commuting to Singapore for work a possibility. “A lot of the Singaporean interest is in the Iskandar area, which has seen an uptick in development activity over the past 12 months,” Nabeel Hussain, an associate director at CBRE Malaysia in Kuala Lumpur, said in an Aug 30 e-mail interview. “The amount of queries from Singaporeans has naturally risen as well in line with this. While currency factors play a part, it should be noted that Malaysian property is already heavily discounted to Singapore.” ‘More Attractive’ The ringgit reached 2.6037 per Singapore dollar on Aug 29, the weakest level since 1998, and was trading at 2.5758 late yesterday, according to data compiled by Bloomberg. The Malaysian currency has dropped 8 per cent versus the greenback since May 22, the day the Fed said it could taper bond-buying that’s inflated emerging-market asset prices, while the Singapore dollar fell 0.7 per cent. “Many foreign investors, including Singaporeans, look at Malaysia as a very good destination,” Vishnu Varathan, a senior economist at Mizuho Bank Ltd in Singapore, said in an Aug. 26 interview. “For those that are already looking at it, the ringgit’s drop will make the proposition a lot more attractive.” The divergence between the nation’s currencies reflects “a widening gap in economic fundamentals,” according to a research note from DBS Group Holdings Ltd released last week. “Pressure on the ringgit will remain until the external balance improves or somehow domestic demand cools by itself,” analysts including Singapore-based Philip Wee and Jens Lauschke wrote in the report. Current Accounts Malaysia’s current-account surplus was RM2.6 billion in the second quarter, the closest the country’s come to recording a deficit in data compiled by Bloomberg going back to 1999. The excess in Singapore’s broadest measure of trade was S$18 billion (RM46 billion). Exports from Malaysia fell for a fifth month in June and the central bank cut its forecast for 2013 growth last month to 4.5 per cent to 5 per cent from a previous prediction of as much as 6 per cent. The economy expanded 5.6 per cent in 2012. Foreign ownership of Malaysian corporate and government debt fell 5.7 per cent to RM216 billion in July, the biggest decline since September 2011, central bank data show. Fitch Ratings lowered its outlook on the country’s A- credit rating, the fourth-lowest investment grade, to negative from stable on July 30, citing weaker prospects for budgetary and fiscal reform following elections in May that returned Prime Minister Datuk Seri Najib Razak to power. “The weaker ringgit will help increase property investment, tourism and exports,” Tsutomu Soma, the manager of the fixed- income business unit at Rakuten Securities Inc. in Tokyo, said in an Aug 28 interview. “Although it won’t be enough to boost growth significantly. The Singapore dollar’s gradual appreciation versus the ringgit will probably continue.” – Bloomberg dlvr.it/3vyPJR
Posted on: Thu, 05 Sep 2013 04:26:22 +0000
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