Get documents about "CIMB-Minimum_wage_policy–Curse_or_Cure
Shared by: SanieAzahari
-
Stats
- views:
- 12
- posted:
- 8/29/2012
- language:
- Unknown
- pages:
- 10
Document Sample
May 2, 2012
REGION AL
MALAYSIA
SINGAPORE
ECONOMIC UPDATE
INDONESIA
THAILAND
PHILIPPINES
CHINA, HONG KONG
CIMB Analyst Minimum wage policy – Curse
or cure?
Malaysia’s minimum wage of RM900 per month for the peninsula and
RM800 for East Malaysia will benefit some 3.2m private sector
workers and arguably, boost productivity by increasing worker
satisfaction. Higher wages will release pent-up consumption, albeit
Lee Heng Guie with some inflationary impact. Our view is that an appropriate
T (60) 3 20849667
E hengguie.lee@cimb.com minimum wage could over time achieve a big push, i.e. move the
low-wage, low-consumption and informal labour market to a
high-wage, high-consumption and formal labour market.
“We have prepared a
mechanism whereby some
allowances or fixed cash Minimum monthly wage of RM900
payments are allowed to As recommended by the National Wage Consultative Council (NWCC), the
government has set a minimum wage of RM900/month for Peninsular
be absorbed in the Malaysia and RM800/month for Sabah, Sarawak and Labuan. This will benefit
calculation for minimum 3.2m private sector workers (25.8% of total employment) other than those in
wage.” domestic services. The minimum wage will take effect six months from the date
of the Minimum Wages Order is gazetted. Small firms with no more than five
─ Datuk Seri Najib Tun Razak,
workers will be allowed to defer it for a further six months.
Prime Minister of Malaysia
Why RM900?
The RM900 minimum wage is 49.9% of the national mean wage of
RM1,804.43 in 2010. In setting the minimum wage, the government took into
account social and economic considerations: cost of living, productivity,
competitiveness and employment. In Malaysia, almost 33.8% of about 1.3m
private sector workers still earned less than RM700/month in 2009, well below
the RM800/month that is considered the poverty line. Wages have been
lagging behind productivity growth, rising 2.6% p.a. versus productivity growth
of 6.7% p.a. over the past decade. The new wage rate will have a bigger impact
in Sabah (RM800 vs. the current average salary of RM577), followed by
Sarawak (RM800 vs. an average of RM758). For Peninsular Malaysia, the new
rate of RM900 is 20.4% below the current average salary of RM1,131.
Net positive impact on the economy
Arguably, the higher wage will have a net positive impact on the economy as
any potential small loss of jobs will be more than covered by its multiplier effect
as it puts more money in the hands of workers, thereby releasing pent-up
consumption, albeit with some inflationary impact. There is strong empirical
evidence that countries which implement a minimum wage tend to see a
positive wage effect and a small negative employment effect among workers
covered by the minimum wage legislation.
Figure 1: Minimum wages for Peninsular, Sabah and Sarawak (RM/month)
State Minimum wage Current average salary* 2010 mean wage 2009 poverty line income
Peninsular 900.00 1,131.00 1,739.16 763.00
Sabah/Labuan 800.00 577.00 1,565.93 1,048.00
Sarawak 800.00 758.00 1,630.48 912.00
*For low-paid workers.
SOURCES: MINISTRY OF HUMAN RESOURCES (MOHR), 10MP, CIMB RESEARCH
IMPORTANT DISCLOSURES. INCLUDING ANY REQUIRED RESEARCH CERTIFICATIONS, ARE PROVIDED AT THE END OF THIS REPORT.
Designed by Eight, Powered by EFA
ECONOMIC UPDATE
May 2, 2012
1. Malaysia’s minimum wage policy
1.1 How it started
In Malaysia, there are three mechanisms that determine the wages of workers in
the private sector 1) the Wages Council Act 1974 (WCA), 2) collective bargaining
(CA), and 3) market forces. The WCA and CA fall under the definition of
minimum wage. But these minimum wages do not provide a decent standard of
living and cover only a small number of workers. The existing CAs do not cover
the majority of low-paid workers. As a result, wages in Malaysia are largely
determined by market forces. Real wages have been low or stagnating because
of price controls, subsidies and the influx of cheap unskilled foreign workers.
Figure 2: Distribution of collective agreement (CA) with productivity-linked wage system (PLWS) by sector in 2008-2010
Total number of CA No. of CA deposited and taken cognisance by Industrial Court
Sector ◄-------------- 2008 -------------► ◄-------------- 2009 -------------► ◄-------------- 2010 -------------►
2008 2009 2010
No. % with PLWS No. % with PLWS No. % with PLWS
Manufacturing 153 159 195 108 70.59 116 72.96 144 73.85
Services 112 108 116 81 72.32 80 74.07 88 75.86
Agriculture 5 9 17 5 100.00 9 100.00 15 88.24
Others - - 2 - - - - 2 100.00
Total 270 276 330 194 71.85 205 74.28 249 75.45
SOURCES: MALAYSIA PRODUCTIVITY CORPORATION (MPC)
The Malaysian Trades Union Congress (MTUC) has been asking for a wage
policy for decades. The minimum wage policy was announced by the Prime
Minister cum Finance Minister in the Oct 2010 budget speech. On 30 Mar 2010,
the New Economic Model (NEM) proposed the formulation of a minimum wage
policy to meet the inclusiveness agenda of the NEM. The objective is to rectify
the dysfunctional wage-setting mechanism for low-paid workers. In Jul 2011,
the National Wages Consultative Council Act 2011 (Act 732) was passed by the
Parliament and gazetted on 15 Sep 2011, repealing the WCA 1947 (Act 195).
1.2 Market conditions favour a minimum wage
Various measures showed that Malaysia’s labour market is characterised by 1) a
high presence of low-skilled workers (70% of labour force), significantly higher
than in Singapore (51%), Taiwan (67%) and South Korea (65%), and 2)
over-reliance on low-cost, unskilled foreign workers, which have sustained the
profitability of low-value-added business activity, giving businesses no incentive
to move up the value chain. It also largely contributed to a dampening effect on
wages.
The National Employment Returns 2009 study initiated by the Human
Resources Ministry revealed that 33.8% (Peninsular Malaysia=27.2%,
Sarawak=48.1% and Sabah=63%) of around 1.3m private sector workers in
Malaysia still earned less than RM700/month. Wages lag behind productivity
growth. A study by the World Bank that shows that wage growth was 2.6% p.a.
in the past 10 years compared to productivity growth of 6.7% p.a., suggesting
suppression of wages, especially for low-paid workers, and also an inefficient
labour market.
2
ECONOMIC UPDATE
May 2, 2012
Figure 3: Highest mean salary for mining and ICT sectors Figure 4: Highest median salary for education and ICT sectors
Mining & quarrying Education
Information & communication Title:
Information & communication
Financial & insurance/takaful Source:
Real estate
Education Mining & quarrying
Electricity, gas & air conditioning supply Financial & insurance/takaful
Real estate Public administration & Please fill
defence in the values above to have them entered in your rep
Professional, scientific & technical Electricity, gas & air conditioning supply
Public administration & defence Human health & social work
Human health & social work Professional, scientific & technical
Transportation & storage Transportation & storage
construction Water supply, sewerage & waste mgmt
Manufacturing Arts, entertainment & recreation
Arts, entertainment & recreation construction
Water supply, sewerage & waste mgmt Manufacturing
W/sale, retail trade & repair of vehicles W/sale, retail trade & repair of vehicles
Administrative & support services Administrative & support services
Accomodation & food service Accomodation & food service
Agriculture, forestry & fishing Agriculture, forestry & fishing
Other service Other service
RM/month 0 1,000 2,000 3,000 4,000 RM/month 0 1,000 2,000 3,000
Mean of monthly salaries and wages by industry in 2010 Median of monthly salaries and wages by industry in 2010
SOURCES: DOS, MOHR, CIMB RESEARCH SOURCES: DOS, MOHR, CIMB RESEARCH
1.3 Minimum wages – Helping or hurting workers?
There are arguments for and against a minimum wage. The implementation of a
minimum wage policy signals the government’s commitment to greater
inclusiveness and reduces poverty as the income of at least 30-40% of workers
currently puts them below the poverty line. Better wages arguably boost
productivity growth, which is positive for employers. Meanwhile, those against
the minimum wage argue that it interferes with market forces in wage setting,
increases business costs and leads to some inflationary impact as higher costs
will be passed to consumers.
Figure 5: Better wages boost productivity growth Figure 6: Productivity growth was supported by manufacturing
and services
% %
16 15 Title:
Source:
10
12
Please fill in the values above to have them entered in your rep
5
8
0
4 -5
-10
0
-15
-4 2006 2007 2008 2009 2010 2011
2006 2007 2008 2009 2010 2011
Agriculture Mining Manufacturing
National productivity growth National wages growth* (RHS) Construction Services Overall
*Median of monthly salaries and wages in Malaysia as a proxy. SOURCES: MPC, CIMB RESEARCH
SOURCES: DOS, MOHR, MPC, CIMB RESEARCH
3
ECONOMIC UPDATE
May 2, 2012
Figure 7: Services sub-sector’s productivity growth Figure 8: Personnel cost as % of total cost by sector
% % of OPEX
12 50 Title:
Source:
8 40
40
Please fill in the values above to have them entered in your rep
4
30
0
20
-4
<10 9
-8 10
5-7 6
2006 2007 2008 2009 2010 2011
0
Utilities Wholessale and retail Plantation Construction Rubber glove Automotive Breweries
Accomodation and restaurant Transport and storage
Communication Finance and insurance
Real estate and business services Other services Labour cost as % share of total company's OPEX
SOURCES: MPC, CIMB RESEARCH SOURCES: CIMB RESEARCH
Figure 9: Productivity growth outpaced wage growth across all sectors in 2010
Healthcare
Private education
Tourism
Business & professional services
Services
Wholesale & retail sub sector
ICT
Logistic services
Basic metal
Motor vehicles
Chemicals Manufacturing
sub sector
Refined petroleum
E&E
Food & beverages
Overall Manufacturing
Growth (%) -12 -6 0 6 12 18 24
Labour cost per employee Productivity Unit labour cost
SOURCES: MPC, CIMB RESEARCH
1.4 Why RM900 per month?
In setting the minimum wage, the National Wages Consultative Council (NWCC)
took into account social and economic considerations: cost of living,
productivity, competitiveness and employment. Other points that it considered
include geographic (different states, regions), economic sectors/industries as
well as demographic. The extent to which these factors are balanced can be
approximated by some rough indicators such as the level of the minimum wage
relative to the median or mean wage or the proportion of workers whose wages
are affected by the statutory minimum. As stipulated under the National Wages
Consultative Act 2011, minimum wage means the basic wage, i.e. the lowest
hourly, daily or monthly wage that employers legally pay employees. Part of
allowances or fixed payments will be allowed in calculating the minimum wage.
The NWCC set a minimum wage of RM900, which is around 49.9% of the
national’s mean wage of RM1,804.43 in 2010. In the UK, for example, the
minimum wage corresponds to about half the median wage, lower than 60% of
median wages in France but considerably higher than the 32.4% of median
wages in the US.
4
ECONOMIC UPDATE
May 2, 2012
2. FAQ
2.1 How regularly will it be reviewed?
The NWCC will recommend the minimum wage to the government once every
two years. We think that a periodic adjustment which takes into account
changes in labour market conditions and productivity growth is the key
principle of a prudent minimum wage policy. To allow for flexibility as well as
unexpected economic shocks, the country should not be locked into a rigid
formula for regular adjustments of the minimum wage. Going forward, the
government hopes that within the next two to three years, the minimum wage
for Sabah, Sarawak and Labuan can be streamlined with that of the Peninsular
Malaysia.
2.2 What is a “safe” level for the minimum wage?
There is no universal answer as minimum wage effects depend on a host of
country-specific factors such as labour market conditions and variation in
worker productivity across regions, industries and occupations. The RM900
minimum wage is a reasonable threshold, being 49.9% of the national mean
wage. A minimum wage that is too high or above the market-clearing level
would lead to employment reduction and an increase in unemployment. The
minimum wage should not be increased when unemployment is high or rising
and is concentrated among low-skilled workers. As a rule of thumb, in
developing countries, the national minimum wage should be probably less than
40% of the average wage and roughly not more than one-third of the average or
mean wage. The proposed increase in minimum wage should take into account
inflation, productivity as well as employment growth.
Figure 10: A reasonable minimum wage range
RM/month
2,500
1,833 1,987
2,000
1,804 1,739
1,630
1,500
1,500 1,310
1,300 1,290 1,299 1,200
800 1,000
1,000 900
Minimum
wage
range set
500
0
Malaysia Peninsular Sabah Labuan Sarawak Urban area Rural area
Mean wage Median wage
SOURCES: DOS, MOHR, CIMB RESEARCH
2.3 Who will benefit?
Some 3.2m private sector workers or about 25.8% of total employment will
benefit. Many will be from low-to middle-income households. The wage rate will
be distributed unevenly, with a RM100 difference between the Peninsular
Malaysia and Sabah, Sarawak as well as the Labuan Federal Territory. The new
rates will have a bigger impact in Sabah (RM800 vs. the current average of
RM577), followed by Sarawak (RM800 vs. average of RM758). For Peninsular
Malaysia, the new rate of RM900 is 20.4% below the current average salary of
RM1,131.
5
ECONOMIC UPDATE
May 2, 2012
Figure 11: Median monthly salaries and wages paid by state
RM/month
2,000
1,600
1,200
800
400
0
Salaries and wages by state in 2010
SOURCES: DOS, MOHR, CIMB RESEARCH
2.4 Which are the groups or sectors will be affected?
All the formal private sector employees will be stipulated under the Minimum
Wage Order. Domestic services such as domestic helpers and gardeners will be
exempted.
2.5 How will the government enforce it?
A grace period will be given to employers to restructure their wage schemes
once the new minimum wage is implemented. The minimum wage will take
effect six months from the date the Minimum Wages Order is gazetted. Most
firms with five workers or fewer, so-called small-time employers or
micro-enterprises will be allowed to defer it for a further six months. The
12-month grace period does not cover professional outfits such as dental and
medical clinics and legal, architecture and consultant firms. SMEs will be given
the opportunity to apply to the wage council for an extension before the
commencement date.
In practice, there are several reasons why the effectiveness of minimum wages
may be limited. One obvious factor which can limit the impact of minimum
wages is weak enforcement. Other factor is simply the risk of mismanagement –
when minimum wages are set at an unrealistically high level, leading to either
non-enforcement or displacement of low-paid workers into unemployment or
informal employment.
In Malaysia, employers which do not comply with the minimum wage policy risk
a maximum fine of RM10,000 per worker. For continuous offenders, they will
be fined RM1,000 per day and repeat offenders would face a RM20,000 fine or
five years’ jail or both.
2.6 Will it affect the cost of doing business and hurt
Malaysia’s competitiveness?
We do not think that the minimum wage will hurt Malaysia’s competitiveness as
some 90% of the countries in the world have minimum wage policies. They
include Malaysia’s regional peers such as China, Taiwan, South Korea, Thailand
and Indonesia. Furthermore, the minimum wage scheme will only applicable to
low-paid workers.
6
ECONOMIC UPDATE
May 2, 2012
Figure 12: In Asia, Taiwan and Hong Kong have the highest minimum wage
US$/month
2,500
2,000
1,500
1,000
500
0
Monthly minimum wage for private sector
SOURCES: NATIONAL SOURCES, CIMB RESEARCH
Malaysia’s competitiveness is a function of a conducive investment climate,
predictable economic policies, an array of business-friendly incentives as well as
the provision of good infrastructure and skilled workers.
The impact on the cost of doing business will be manageable as 1) wages
constitute 9.2% of the total cost of doing business, and 2) the minimum wage
covers lower-income category, which represents about 20% of total manpower
in a company. If labour productivity rises faster than wages, capital and stock
owners will benefit. Companies may increase the budget for the training of their
workers.
3. Economic impact
3.1 Pent-up consumption
Arguably, the multiplier effect is greater as the minimum wage puts more
money in the hands of workers, thereby releasing pent-up consumption. A
back-of-envelope calculation shows that an adjustment of RM200 per month for
3.2m workers amounts to an estimated annual income of RM7.7bn. Assume a
marginal propensity to consume (MPC) of 0.5, this translates into annual
disposable income of RM3.9bn or 0.5% of GDP. As shown in Figure 13, these
low-wage workers spend 68-75% of the total household income on basic needs -
food and beverages (32-35%), housing, utilities and other fuels (28-37%), as
well as transportation (3-8%).
Figure 13: Household expenditure by income group Figure 14: Household expenditure by occupation of household
> RM5000 Others
Title:
RM4000 - RM4999 ElementarySource:
occupations
RM3000 - RM3999 Plant/machine-operators & assemblers
RM2000 - RM2999 Please fill
Craft & related trade workers in the values above to have them entered in your rep
RM1000 - RM1999
Skilled agricultural & fishery workers
RM900 - RM999
Services workers & shop/mkt sales workers
RM800 - RM899
Clerical workers
RM700 - RM799
Technicians & associate professionals
RM600 - RM699
Professionals
RM500 - RM599
Legislators, senior officials & managers
< RM500
% of total monthly % of total monthly 0 20 40 60 80 100
expenditure 0 20 40 60 80 100 expenditure
Food & beverages Alcoholic beverages & tobacco Food & beverages Housing, utilities & other fuels
Housing, utilities & other fuels Transport Transport Restaurants & hotels
Restaurants & hotels Others Others
SOURCES: DOS, CIMB RESEARCH SOURCES: DOS, CIMB RESEARCH
7
ECONOMIC UPDATE
May 2, 2012
3.2 A small negative employment and investment impact
There is strong empirical evidence that countries which implement a minimum
wage tend to see a positive wage effect and a small negative employment effect
among workers covered by the minimum wage legislation if the wage is set
above the market equilibrium level. The precise magnitude of the negative effect
on employment is a subject of debate and is likely to vary depending on time,
place and the type of job.
The NWCC/MOHR studies showed that a minimum wage is expected to reduce
the demand for migrants workers by 0.4-6.1% over next four years (2012-15)
under monopsony and competitive models if the minimum wage is set at
RM900/month and above. Under perfect competition market, the
RM900/month minimum wage is expected to increase the country’s
unemployment rate by an average 0.4% pt in 2012-14. The impact on
investment is very mild with an estimated less than 0.05% decline in total
investment rate during 2012-14 when the minimum wage is set at
RM900/month.
Figure 15: A minimum wage is expected to reduce demand for migrants workers
Hypothetical wage ◄------- Monopsony model (%) ------► ◄------- Competitive model (%) ------►
level (per month) 2012 2013 2014 2015 2012 2013 2014 2015
RM700 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0
RM800 -0.1 0.0 0.0 0.0 -0.1 -0.1 -0.1 -0.1
RM900 -0.6 -0.4 -0.5 -0.4 -0.9 -0.7 -0.6 -0.4
RM1000 -0.8 -1.8 -1.6 -1.3 -2.5 -2.2 -2.0 -1.7
RM1100 -1.0 -1.8 -1.2 -1.7 -4.3 -4.0 -3.7 -3.4
RM1200 -3.9 -3.9 -2.3 -3.0 -6.1 -5.6 -5.3 -4.9
SOURCES: MOHR, CIMB RESEARCH
Figure 16: Forecasted increase of unemployment rate by level Figure 17: Forecasted change in the investment rate by level of
of minimum wage under perfect competition market minimum wage
% %
3.0 0.2 Title:
Source: Minimum wage level (RM/month)
0.0
2.5
700 800 900 1000 1100 1200
-0.2 Please fill in the values above to have them entered in your rep
2.0
-0.4
1.5
-0.6
1.0 -0.8
-1.0
0.5
-1.2
0.0
600 700 800 900 1000 1100 1200 1300 -1.4
Minimum wage level (RM/month)
% change in unemployment rate (average 2012-2014) % change in total investment rate (average 2012-2014)
SOURCES: MOHR, CIMB RESEARCH SOURCES: MOHR, CIMB RESEARCH
3.3 A big push over the medium term
In our opinion, an appropriate minimum wage level would over time achieve a
big push, i.e. move the low-wage, low-consumption and informal labour market
to a high-wage, high-consumption and formal labour market. As the adjustment
of the minimum wage will be carried out on a staggered basis, the inflationary
impact, i.e. the cost pass-through to consumers, is likely to be manageable. If
the rise in productivity growth matches the rise in wages, this will result in a
lower cost of production and companies may absorb the rise in unit labour cost.
8
ECONOMIC UPDATE
May 2, 2012
DISCLAIMER
This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where
such distribution, publication, availability or use would be contrary to law or regulation.
By accepting this report, the recipient hereof represents and warrants that he is entitled to receive such report in accordance with the restrictions set forth below and agrees to be bound by
the limitations contained herein (including the “Restrictions on Distributions” set out below). Any failure to comply with these limitations may constitute a violation of law. This publication is
being supplied to you strictly on the basis that it will remain confidential. No part of this report may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means
or (ii) redistributed or passed on, directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMB.
CIMB, its affiliates and related companies, their directors, associates, connected parties and/or employees may own or have positions in securities of the company(ies) covered in this
research report or any securities related thereto and may from time to time add to or dispose of, or may be materially interested in, any such securities. Further, CIMB, its affiliates and its
related companies do and seek to do business with the company(ies) covered in this research report and may from time to time act as market maker or have assumed an underwriting
commitment in securities of such company(ies), may sell them to or buy them from customers on a principal basis and may also perform or seek to perform significant investment banking,
advisory or underwriting services for or relating to such company(ies) as well as solicit such investment, advisory or other services from any entity mentioned in this report. The views
expressed in this report accurately reflect the personal views of the analyst(s) about the subject securities or issuers and no part of the compensation of the analyst(s) was, is, or will be
directly or indirectly related to the inclusion of specific recommendations(s) or view(s) in this report. CIMB prohibits the analyst(s) who prepared this research report from receiving any
compensation, incentive or bonus based on specific investment banking transactions or for providing a specific recommendation for, or view of, a particular company. However, the
analyst(s) may receive compensation that is based on his/their coverage of company(ies) in the performance of his/their duties or the performance of his/their recommendations and the
research personnel involved in the preparation of this report may also participate in the solicitation of the businesses as described above. In reviewing this research report, an investor
should be aware that any or all of the foregoing, among other things, may give rise to real or potential conflicts of interest. Additional information is, subject to the duties of confidentiality,
available on request.
The term “CIMB” shall denote where applicable the relevant entity distributing the report in that particular jurisdiction where mentioned specifically below shall be a CIMB Group Sdn Bhd’s
affiliates, subsidiaries and related companies.
The information contained in this research report is prepared from data believed to be correct and reliable at the time of issue of this report. This report does not purport to contain all the
information that a prospective investor may require. CIMB or any of its affiliates does not make any guarantee, representation or warranty, express or implied, as to the adequacy,
accuracy, completeness, reliability or fairness of any such information and opinion contained in this report and accordingly, neither CIMB nor any of its affiliates nor its related persons shall
be liable in any manner whatsoever for any consequences (including but not limited to any direct, indirect or consequential losses, loss of profits and damages) of any reliance thereon or
usage thereof.
This report is general in nature and has been prepared for information purposes only. It is intended for circulation amongst CIMB and its affiliates’ clients generally and does not have
regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this report. The information and opinions in this report are
not and should not be construed or considered as an offer, recommendation or solicitation to buy or sell the subject securities, related investments or other financial instruments thereof.
Investors are advised to make their own independent evaluation of the information contained in this research report, consider their own individual investment objectives, financial situation
and particular needs and consult their own professional and financial advisers as to the legal, business, financial, tax and other aspects before participating in any transaction in respect of
the securities of company(ies) covered in this research report. The securities of such company(ies) may not be eligible for sale in all jurisdictions or to all categories of investors.
Australia: Despite anything in this report to the contrary, this research is provided in Australia by CIMB Research Pte. Ltd. (“CIMBR”) and CIMBR notifies each recipient and each recipient
acknowledges that CIMBR is exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001 (Cwlth) in respect of financial services provided
to the recipient. CIMBR is regulated by the Monetary Authority of Singapore under the laws of Singapore, which differ from Australian laws. This research is only available in Australia to
persons who are “wholesale clients” (within the meaning of the Corporations Act 2001 (Cwlth)) and is supplied solely for the use of such wholesale clients and shall not be distributed or
passed on to any other person. This research has been prepared without taking into account the objectives, financial situation or needs of the individual recipient.
France: Only qualified investors within the meaning of French law shall have access to this report. This report shall not be considered as an offer to subscribe to, or used in connection with,
any offer for subscription or sale or marketing or direct or indirect distribution of financial instruments and it is not intended as a solicitation for the purchase of any financial instrument.
Hong Kong: This report is issued and distributed in Hong Kong by CIMB Securities (HK) Limited (“CHK”) which is licensed in Hong Kong by the Securities and Futures Commission for
Type 1 (dealing in securities), Type 4 (advising on securities) and Type 6 (advising on corporate finance) activities. Any investors wishing to purchase or otherwise deal in the securities
covered in this report should contact the Head of Sales at CIMB Securities (HK) Limited. The views and opinions in this research report are our own as of the date hereof and are subject
to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient
therein are unaffected. CHK has no obligation to update its opinion or the information in this research report.
This publication is strictly confidential and is for private circulation only to clients of CHK. This publication is being supplied to you strictly on the basis that it will remain confidential. No part
of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in
whole or in part, for any purpose without the prior written consent of CHK. Unless permitted to do so by the securities laws of Hong Kong, no person may issue or have in its possession for
the purposes of issue, whether in Hong Kong or elsewhere, any advertisement, invitation or document relating to the securities covered in this report, which is directed at, or the contents
of which are likely to be accessed or read by, the public in Hong Kong (except if permitted to do so under the securities laws of Hong Kong).
Indonesia: This report is issued and distributed by PT CIMB Securities Indonesia (“CIMBI”). The views and opinions in this research report are our own as of the date hereof and are
subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such
recipient therein are unaffected. CIMBI has no obligation to update its opinion or the information in this research report.
This publication is strictly confidential and is for private circulation only to clients of CIMBI. This publication is being supplied to you strictly on the basis that it will remain confidential. No
part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person
in whole or in part, for any purpose without the prior written consent of CIMBI. Neither this report nor any copy hereof may be distributed in Indonesia or to any Indonesian citizens wherever
they are domiciled or to Indonesia residents except in compliance with applicable Indonesian capital market laws and regulations.
Malaysia: This report is issued and distributed by CIMB Investment Bank Berhad (“CIMB”). The views and opinions in this research report are our own as of the date hereof and are subject
to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient
therein are unaffected. CIMB has no obligation to update its opinion or the information in this research report.
This publication is strictly confidential and is for private circulation only to clients of CIMB. This publication is being supplied to you strictly on the basis that it will remain confidential. No part
of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person in
whole or in part, for any purpose without the prior written consent of CIMB.
New Zealand: In New Zealand, this report is for distribution only to persons whose principal business is the investment of money or who, in the course of, and for the purposes of their
business, habitually invest money pursuant to Section 3(2)(a)(ii) of the Securities Act 1978.
Singapore: This report is issued and distributed by CIMB Research Pte Ltd (“CIMBR”). Recipients of this report are to contact CIMBR in Singapore in respect of any matters arising from,
or in connection with, this report. The views and opinions in this research report are our own as of the date hereof and are subject to change. If the Financial Services and Markets Act of
the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such recipient therein are unaffected. CIMBR has no obligation to update
its opinion or the information in this research report.
This publication is strictly confidential and is for private circulation only. If the recipient of this research report is not an accredited investor, expert investor or institutional investor, CIMBR
accepts legal responsibility for the contents of the report without any disclaimer limiting or otherwise curtailing such legal responsibility. This publication is being supplied to you strictly on
the basis that it will remain confidential. No part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on,
directly or indirectly, to any other person in whole or in part, for any purpose without the prior written consent of CIMBR.
Sweden: This report contains only marketing information and has not been approved by the Swedish Financial Supervisory Authority. The distribution of this report is not an offer to sell to
9
ECONOMIC UPDATE
May 2, 2012
any person in Sweden or a solicitation to any person in Sweden to buy any instruments described herein and may not be forwarded to the public in Sweden.
Taiwan: This research report is not an offer or marketing of foreign securities in Taiwan. The securities as referred to in this research report have not been and will not be registered with
the Financial Supervisory Commission of the Republic of China pursuant to relevant securities laws and regulations and may not be offered or sold within the Republic of China through a
public offering or in circumstances which constitutes an offer within the meaning of the Securities and Exchange Law of the Republic of China that requires a registration or approval of the
Financial Supervisory Commission of the Republic of China.
Thailand: This report is issued and distributed by CIMB Securities (Thailand) Company Limited (CIMBS). The views and opinions in this research report are our own as of the date hereof
and are subject to change. If the Financial Services and Markets Act of the United Kingdom or the rules of the Financial Services Authority apply to a recipient, our obligations owed to such
recipient therein are unaffected. CIMBS has no obligation to update its opinion or the information in this research report.
This publication is strictly confidential and is for private circulation only to clients of CIMBS. This publication is being supplied to you strictly on the basis that it will remain confidential. No
part of this material may be (i) copied, photocopied, duplicated, stored or reproduced in any form by any means or (ii) redistributed or passed on, directly or indirectly, to any other person
in whole or in part, for any purpose without the prior written consent of CIMBS.
United Arab Emirates: The distributor of this report has not been approved or licensed by the UAE Central Bank or any other relevant licensing authorities or governmental agencies in the
United Arab Emirates. This report is strictly private and confidential and has not been reviewed by, deposited or registered with UAE Central Bank or any other licensing authority or
governmental agencies in the United Arab Emirates. This report is being issued outside the United Arab Emirates to a limited number of institutional investors and must not be provided to
any person other than the original recipient and may not be reproduced or used for any other purpose. Further, the information contained in this report is not intended to lead to the sale of
investments under any subscription agreement or the conclusion of any other contract of whatsoever nature within the territory of the United Arab Emirates.
United Kingdom: This report is being distributed by CIMB Securities (UK) Limited only to, and is directed at selected persons on the basis that those persons are (a) persons falling within
Article 19 of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (the “Order”) who have professional experience in investments of this type or (b) high net
worth entities, and other persons to whom it may otherwise lawfully be communicated, falling within Article 49(1) of the Order, (all such persons together being referred to as “relevant
persons”). A high net worth entity includes a body corporate which has (or is a member of a group which has) a called-up share capital or net assets of not less than (a) if it has (or is a
subsidiary of an undertaking which has) more than 20 members, £500,000, (b) otherwise, £5 million, the trustee of a high value trust or an unincorporated association or partnership with
assets of no less than £5 million. Directors, officers and employees of such entities are also included provided their responsibilities regarding those entities involve engaging in investment
activity. Persons who do not have professional experience relating to investments should not rely on this document.
United States: This research report is distributed in the United States of America by CIMB Securities (USA) Inc, a U.S.-registered broker-dealer and a related company of CIMB Research
Pte Ltd solely to persons who qualify as "Major U.S. Institutional Investors" as defined in Rule 15a-6 under the Securities and Exchange Act of 1934. This communication is only for
Institutional Investors and investment professionals whose ordinary business activities involve investing in shares, bonds and associated securities and/or derivative securities and who
have professional experience in such investments. Any person who is not an Institutional Investor must not rely on this communication. However, the delivery of this research report to any
person in the United States of America shall not be deemed a recommendation to effect any transactions in the securities discussed herein or an endorsement of any opinion expressed
herein. For further information or to place an order in any of the above-mentioned securities please contact a registered representative of CIMB Securities (USA) Inc.
Other jurisdictions: In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is only for distribution to professional, institutional or sophisticated investors
as defined in the laws and regulations of such jurisdictions.
CIMB Research Pte Ltd (Co. Reg. No. 198701620M)
10
