Latest news with #BIMBResearch
The Star
11 hours ago
- Business
- The Star
Carbon tax could generate up to RM1bil a year for govt
BIMB Research said it believes Malaysia's carbon tax should start at a low rate and be gradually increased. PETALING JAYA: The introduction of a carbon tax next year could add close to RM1bil to the government coffers annually, analysts say. The sectors with high emissions are energy, and iron and steel, as these are among the largest contributors to the country's carbon footprint, said BIMB Research. The research house said it believes Malaysia's carbon tax should start at a low rate and be gradually increased. The research house said, based on Singapore's example of an introductory rate of S$5 per tonne (assuming S$1 equals RM3.40), Malaysia could potentially collect up to RM980mil in annual revenue. Carbon taxes have been adopted by more than 36 countries and imposes charges on emissions resulting from the consumption of fossil fuels such as coal, petroleum, and natural gas. The tax serves as an incentive for emitters to reduce their carbon footprint to avoid higher costs. The research house said starting modestly allows time to evaluate the economic and environmental impact, while giving industries room to adapt. In 2023, certain sectors in Malaysia, such as the power industry, transport, fuel exploitation, industrial combustion and industrial processes, collectively emitted an estimated 288 million tonnes of carbon dioxide equivalent. Malaysia as a whole emitted around 325 million tonnes of carbon dioxide equivalent, with the energy sector contributing more than 80% of the total. Per capita emissions stood at nine tonnes, reflecting high fossil fuel reliance. Though accounting for less than 1% of global emissions, the rising trend highlights the need to meet the country's 2030 carbon intensity and 2050 net-zero targets. The power industry was the largest contributor, emitting 117.3 million tonnes, accounting for over 36% of total emissions. This was followed by transport with 67.4 million tonnes, fuel exploitation 43.3 million tonnes and industrial combustion 36.1 million tonnes. Emissions from processes at 23.8 million tonnes, agriculture 14.6 million, waste 13.2 million and buildings 9.6 million were relatively smaller but still notable. Among Asean countries, only Singapore and Indonesia currently have operational carbon pricing systems in place, while Brunei, Vietnam and Thailand have announced similar plans. Malaysia's 2026 rollout of its carbon tax aligns with the commencement of the European Union's Carbon Border Adjustment Mechanism, which imposes a carbon tariff on high-emission imports to ensure a level playing field in global carbon pricing, the research house said. Introduced in 2019, Singapore's carbon tax is South-East Asia's first carbon pricing scheme, targeting facilities that emit 25,000 tonnes or more of carbon dioxide equivalent annually. Initially set at S$5 per tonne, the rate rose to S$25 last year and will increase to S$45 by 2026, with a projected range of up to S$80 by 2030. Covering approximately 80% of national emissions, the tax provides no exemptions or allowances. However, starting last year, emitters could offset up to 5% of their taxable emissions using approved international carbon credits. Tax revenues are allocated to green initiatives in support of Singapore's 2050 net-zero target, the research house said.
The Star
a day ago
- Business
- The Star
Room to improve in local inclusitivity standards
PETALING JAYA : Broader diversity, equity and inclusion (DEI) metrics such as ethnicity and disability remain overlooked in Malaysia, according to BIMB Research. The research house, however, said that board-level gender diversity has improved, with more women taking up spots as directors of listed companies. The improvement occurs as DEI is emerging as a strategic pillar within the 'social' component of environmental, social and governance (ESG) standards and is crucial for long-term value creation. BIMB Research said in a report that institutional investors now view DEI as material to risk management, talent retention, and sustainable financing. In an era where ESG performance has become a key determinant of long-term corporate resilience and investment attractiveness, DEI has emerged as vital, the research house said. 'For Malaysia – a fast-developing South-East Asian economy and an emerging-market investment hub – the strategic integration of DEI into corporate governance is no longer optional but essential.' BIMB Research said the regulatory environment has gradually evolved, as demonstrated by the Malaysian Code on Corporate Governance and the Securities Commission's Corporate Governance Monitor. These developments have led to improvements in gender parity on boards, equitable hiring practices, and inclusive workplace cultures, it said. 'For investors, DEI is not merely a social virtue – it is an emerging strategic lever for managing ESG risk and enhancing corporate sustainability,' it added. DEI basically encompasses fair treatment, access, opportunity, and advancement for all people, while striving to identify and eliminate barriers that have prevented the full participation of some groups. BIMB Research noted that, globally, ESG disclosure frameworks are evolving to include more rigorous DEI metrics. It said the Sustainability Accounting Standards Board and Global Reporting Initiative all integrate DEI-related indicators, particularly those concerning gender balance, fair wages, equal opportunity policies, and anti-discrimination. In response, stock exchanges and financial regulators – from the US Securities and Exchange Commission to the Hong Kong Stock Exchange – are now enforcing more stringent diversity. 'Malaysia is gradually aligning with these practices, and Bursa Malaysia's Sustainability Reporting Guide now encourages listed companies to adopt global best practices in DEI metrics.' It added that Malaysia continues to build momentum in aligning with global DEI norms. Malaysia's demographic diversity – comprising multiple ethnic, religious, and cultural groups – positions the country as a unique environment for developing inclusive DEI strategies, it said. It noted that Malaysia's alignment with global DEI norms may influence its representation in sustainability indices such as the FTSE4Good Bursa Malaysia Index, which includes companies with strong ESG practices. While DEI is not an explicit criterion for index inclusion, social sustainability factors such as labour standards, diversity policies, and stakeholder engagement are among those considered by FTSE Russell, BIMB Research added.
The Star
15-07-2025
- Business
- The Star
Distributive trade sales likely to grow
TA Research maintained a positive outlook on consumer activity. PETALING JAYA: The economy is expected to remain underpinned by resilient private consumption in the second half of 2025, despite a moderation in distributive trade momentum and global uncertainties, according to analysts. While growth in the distributive trade index (DTI) softened slightly in May, economists projected that favourable labour conditions, targeted policy measures and a recent interest rate cut would continue to support household spending and cushion downside risks to gross domestic product (GDP) growth. Malaysia's DTI expanded by 4.1% year-on-year (y-o-y) in May 2025 to 163.3 points, easing from April's 4.3% y-o-y growth. Distributive trade sales rose 4.4% y-o-y, also moderating from 4.7% in the preceding month. TA Research noted that the April-May DTI average of 4.2% y-o-y represented a marginal moderation from 4.3% y-o-y in the first quarter (1Q), suggesting 'a normalisation in spending patterns following steady momentum'. Nonetheless, the research house maintained a positive outlook on consumer activity, stating: 'We maintain the view that private consumption will remain resilient, underpinned by a favourable labour market, steady income gains and benign inflationary pressures, all of which support household purchasing power.' It added that Malaysia's Asean Chairmanship in 2025 could provide an additional uplift through heightened international engagements. 'These activities could spur urban consumption, particularly within the hospitality, transport and retail sectors, creating a positive spillover effect on domestic demand,' it said. TA Research forecasts private consumption expenditure (PCE) to grow by 4.7% y-o-y in 2Q25, slightly below the 5% y-o-y registered in 1Q25, due to a high base. Consequently, it expects GDP growth to moderate to 4% y-o-y in 2Q25 from 4.4% y-o-y in 1Q25. The recent 25-basis-point (bps) cut in the overnight policy rate (OPR) to 2.75% is expected to provide further stimulus. TA Research said: 'The recent 25-bps cut in the OPR is expected to reduce borrowing costs for households and businesses, making loans like mortgages, hire purchase and personal financing more affordable.' It cited a historical precedent, stating that a similar cut in 2016 had lifted GDP and PCE modestly in the subsequent quarter. BIMB Research, meanwhile, revised its 2025 distributive trade sales growth forecast downward from 6% to 5.2%, citing lacklustre motor vehicle sales. Nonetheless, the firm remained upbeat on the wholesale and retail trade segments, maintaining growth projections of 5% and 6.6%, respectively.
The Star
15-07-2025
- Business
- The Star
Axiata on track to pare debt, sustain dividends
PETALING JAYA: BIMB Research has maintained its 'buy' call on Axiata Group Bhd despite the recent surge in the telecommunications company's stock price. The research house told clients its target price has been raised to RM3 from RM2.50, based on a sum-of-parts valuation. 'We currently assume tower subsidiary Edotco Group Sdn Bhd's valuation at US$3.5bil or around RM14.9bil as our base case, which implies an enterprise value to earnings before interest, taxes, depreciation and amortisation multiple of nine times. 'We think this is fair as previous transactions also traded in the range of nine to 11 times. Key risk to our recommendation and target price is the failure to dispose of Edotco or if it is sold at a lower valuation than we have assumed,' the research house said. At last look, Axiata was trading at RM2.52. The research firm noted Axiata was getting closer to disposing of its 63% equity stake in Edotco following the completion of the disposal of Edotco's Myanmar tower operations for US$90mil recently. 'The upcoming disposal of Edotco is in line with its asset monetisation strategy to create a sustainable dividend company by next year. For now, the company is committed to paying annual dividends per share of 10 sen, which implies a dividend yield of 3.9%. 'The company plans to use the proceeds of any disposal to pare down the holding company's debt and thus allow it to progressively increase dividend payouts in future.' The research house said the debt reduction exercise was timely, given that Axiata had been benefiting from higher yields on US long-dated bonds. 'Last year, the company had realised a gain of RM306mil by making partial early redemption of European Medium Term Notes (EMTNs) for a principal amount of US$272.1mil for only US$200mil. 'We estimate that the company can realise a gain of another RM1bil from making full redemption on RM3.2bil of remaining EMTNs outstanding,' BIMB Research said.
The Star
15-07-2025
- Business
- The Star
Weaker industrial output weighs on growth
PETALING JAYA: The latest industrial production index (IPI) data tracking manufacturing, mining and electricity output released last week shows that the Malaysian economy is on course for slower growth, as external challenges centring around trade and geopolitics continue to weigh on industrial activities. The IPI registered a slight growth of 0.3% year-on-year (y-o-y) in May after a 2.7% expansion in April, which was below market expectations for an increase of 2.1% y-o-y, with analysts projecting moderate growth this year against a backdrop of global trade uncertainty and early indications of improvements in manufacturing-sector conditions. TA Research said the latest IPI data points to a likely moderation in overall economic growth for the second quarter of 2025 (2Q25) despite the manufacturing sector remaining a key driver of gross domestic product expansion, supported by domestic demand and front-loading activity to get ahead of tariffs. The data remained mixed, as manufacturing output, which grew an average 4.2% y-o-y in the April-to-May period, suggested sustained underlying momentum while the manufacturing purchasing managers index (PMI), which tracks the sector's market sentiment, improved to 49.3 in June from 48.8 in May. A reading below 50 signals a contraction. The research house believes the manufacturing PMI reading, the highest since late 2022, signals a gradual improvement in business sentiment despite the index remaining in contraction territory. Malaysia's manufacturing PMI has been in continuous contraction since last June. It maintained IPI growth of 2% y-o-y compared with the 3.7% expansion last year. 'Looking ahead, industrial activity is expected to remain highly sensitive to global trade dynamics, domestic demand conditions, and fluctuations in energy prices, particularly amid ongoing uncertainty over US trade policy. 'Ongoing trade tensions, particularly those involving the United States, pose notable downside risks for Malaysia's export-oriented industries by disrupting supply chain continuity and undermining export competitiveness,' it added. BIMB Research, which retained an IPI growth forecast of 2.9%, pointed to elevated risks for export-heavy categories such as electrical and electronics products, raw materials, and machinery, with the Aug 1 US tariff deadline and the possible expiry of China-related tariff suspensions on Aug 12 as key turning points.
