Bank Negara's rate decision risky, says analyst

BANK Negara Malaysia's decision to leave its Overnight Policy Rate (OPR) unchanged at 3.5 per cent is a risky one which could affect its credibility, an analyst said.HSBC Bank economist Robert Prior Wandesforde from the Asian economics team in Singapore said Bank Negara was taking risks with its credibility and he expects this to be reflected in the performance of its domestic asset markets.Currency dealers expect to see a further ringgit sell-off this week. The currency fell to its lowest level in a fortnight on Friday, losing 0.2 per cent to 3.2490 versus the US dollar.Bank Negara, at its monetary policy meeting on Friday, kept its OPR unchanged at 3.5 per cent, a position that has been maintained since April 2006. It bucked the trend by the central banks of Vietnam, the Philippines, Indonesia and India to combat inflation with rising energy and food prices globally.
The central bank also revised its average inflation outlook for the year to a range of 5.5 per cent to six per cent from 4.2 per cent year-on-year in June.Prior Wandesforde said he was puzzled over Bank Negara's move, given that the OPR is more than four percentage points below June's inflation rate of 7.7 per cent."If the highest headline inflation rate in 27 years, four consecutive quarters of double-digit real private consumption growth, the strongest year-on-year rise in bank credit since 1998 and signs that wage growth is picking up were not enough to prompt a hike, then it is hard to see what would."This is emphasised further when one considers that the central bank itself has previously suggested that its interest rate stance is accommodative," he said.Prior Wandesforde said the lack of action by Bank Negara indicated that it was concerned that growth would slow sharply although Malaysia is the "key beneficiary" in the region of strong commodity prices."Although export growth is likely to soften, it is not enough to derail the country's gross domestic product growth rate." -www.btimes.com.my

500km gas pipeline project on track

THE 500km gas pipeline project linking Sabah and Sarawak and 300-megawatt gas-driven power plant in Sabah are on, the chief of national oil corporation Petroliam Nasional Bhd (Petronas) says."At the moment, it (gas pipeline project) is on schedule," Petronas president and chief executive officer Tan Sri Mohd Hassan Marican told reporters after Petronas Gas Bhd's (PetGas) annual general meeting in Kuala Lumpur yesterday.A Sabah Barisan Nasional component party had asked the state government to insist that Petronas call off the project to channel gas from Kimanis to Bintulu in Sarawak.United Pasokmomogun Kadazandusun Murut Organisation president Tan Sri Bernard Dompok said it should be stopped to encourage downstream processing of gas pumped from offshore fields along Sabah's west coast.
Prime Minister Datuk Seri Abdullah Ahmad Badawi had reportedly told Sabah BN component party leaders at a meeting on May 31 that the project would be stopped.On June 11, however, Petronas vice-president of gas business Wan Zulkiflee Wan Ariffin was quoted as saying that the estimated RM390 million project would proceed and that it was due for completion by March 2011.Hassan said Petronas would operate the pipeline, while the project would be carried out by production-sharing contractors.The gas would be channelled to Petronas' liquefied natural gas complex in Bintulu.Hassan also said that the power plant in Kimanis would be jointly built with Yayasan Sabah."It is very much in line with the gas pipeline project," he said, adding that the plant's development cost could not be deter-mined as yet.On another note, Hassan (pic) said he did not foresee the gas price hike as having any major impact on PetGas since it is both a supplier and a user.He said PetGas would talk to its customers to defray some of the impact of costlier gas.PetGas expects things to be a bit more challenging financially as, according to Hassan, its effective tax rate is now on par with everybody's.The company enjoyed tax incentives in recent years, but its tax expense increased ninefold to RM301.2 million in the financial year ended March 31 2008 from RM34.2 million the year before.-www.btimes.com.my

All countries should be allowed to use nuclear power, says Ahmadinejad

KUALA LUMPUR, July 7 (Bernama) -Iranian President Mahmoud Ahmadinejad says all countries should be able to use nuclear energy and there should be no restrictions whatsoever.He said if all countries could use nuclear power, they would not have to face the current sharp increase in crude oil prices.Nuclear power, he said, was cheap and attractive.In an interview with Bernama's Editor-in-Chief Yong Soo Heong and RTM's Editor S. Ganesan here Monday, Ahmadinejad, who is here for the 6th D-8 Group of Eight Islamic Countries Summit, said nuclear technology could be applied in the industrial and agricultural sectors to help boost economic development.However, he said, there were a few Western powers which were opposed to Iran's quest for nuclear power."They are expecting the day will come when our crude oil and gas will be finished. When that happens, they hope to sell these commodities to us at very high prices," he said, adding that when that happens it would impinge on the sovereignty and independence of existing oil-producing countries.Ahmadinejad said it was important for countries to properly manage their energy sources and cited the case of Indonesia which at one time was a net exporter of oil but had become a net importer of oil.He questioned why countries like the United States or Britain, which had crude oil and gas resources, were allowed to develop their nuclear capabilities, while Iran was subjected to all kinds of scrutiny.Asked on the present situation in the Middle East, he said peace would prevail if only all the occupying forces withdrew from the region.Asked on recent developments in that region where Iran had been asked to go to the negotiating table with regard to its uranium enrichment programme while there were also threats of military strikes against Iran, he said these were aimed at making Iran go to the negotiating table with pre-conditions.He said Iran would not bow to such demands and had been used to such psychological warfare from the Western powers.Ahmadinejad questioned why there was a need for Iran to undergo inspection by the International Atomic Energy Agency while some countries in the region were not even subjected to it.Ahmadinejad said most countries in the world would be opposed to such a world order where a few big powers dictated terms and wanted others to obey them.But he said the circumstances of the world had changed and some countries should realise that.Ahmadinejad said the Middle East region should be left to the countries there to decide for themselves their future and there should not be any occupying force to dictate terms.On D-8, Ahmadinejad said Iran was committed to the grouping which he believed had strong potential and influence if they stayed united.He said there were a number of international issues to be discussed since such matters affected the D-8 members' economic and cultural affairs.He described D-8 as a young and very good movement and that Indonensia had done a good job in managing the grouping for the past two years.He believed Malaysia would also manage the grouping well as can be seen from the agenda it had prepared for the Kuala Lumpur D-8 Summit.Asked on what improvements he had brought to his people after becoming president in 2005, he said Iranians had been given a lot of opportunities to excel in various fields including science and technology.For instance, he said, Iran wuld soon send into orbit an Iranian-made satellite which would be launched by a rocket launcher that it had also built itself.

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