30
ANNUAL REPORT 2016
BUSINESS ENVIRONMENT
The Malaysia’s economic growth rate
slowed, for the fifth consecutive quarter,
to 4% in the second quarter of 2016 after
registering expansion of 4.2% in the first
quarter this year. The second quarter of 2016
lower growth was hardly surprising, given
the persistently weak external environment.
According to Bank Negara Malaysia report,
despite the stronger expansion in domestic
demand, growth was weighed down by
the continued decline in net exports and
a significant drawdown in stocks. On the
supply side, growth continued to be driven
by the major economic sectors. On a
quarter-on-quarter seasonally-adjusted basis,
the economy recorded a growth of 0.7% (1Q
2016: 1.0%). Private sector activity remained
the key driver of growth, expanding at a
faster pace of 6.1% in the second quarter
(1Q 2016: 4.5%).
Domestic demand grew by 6.3% in the
second quarter of the year (1Q 2016: 3.6%),
with private sector expenditure expanding at
a stronger pace of 6.1% (1Q 2016: 4.5%).
Private consumption growth expanded
by 6.3% (1Q 2016: 5.3%), supported by
continued wage and employment growth,
as well as the additional disposable income
from Government measures. Private
investment registered a higher growth of
5.6% in the second quarter (1Q 2016: 2.2%),
underpinned mainly by continued capital
spending in the services and manufacturing
sectors, amid some improvements in business
confidence. Public consumption recorded a
stronger growth of 6.5% (1Q 2016: 3.8%), as
a result of higher spending on supplies and
services. Public investment turned around
to register a positive growth of 7.5% (1Q
2016: -4.5%) driven by higher spending on
fixed assets by both the Federal Government
and public corporations. The wholesale and
retail trade sub-sector recorded a higher
growth of 6.7% (1Q 2016: 5.2%), in line with
the improvement in private consumption.
In ation, as measured by the annual change
in the Consumer Price Index (CPI), declined
to 1.9% in the second quarter of 2016 (1Q
2016: 3.4%) due mainly to the lapse of
the impact of the Goods and Services Tax
(GST), which was implemented in April
2015. The decline in in ation was observed
in all twelve CPI categories. The transport
category recorded the largest decline in
in ation to -6.6% in the second quarter (1Q
2016: -1.6%) due mainly to the base effect
from higher domestic fuel prices in the
corresponding period last year. The price of
RON95 petrol averaged RM1.70 per litre in
second quarter of 2016, which was lower
than the average price of RM1.98 per litre
recorded in second quarter of 2015.
According to the Retail Group Malaysia
(RGM) report, the expected retail recovery in
the second quarter of 2016 of 7.5% is not
within expectation as the severe decline in
same period a year ago was 11.9%, which
was the worst quarterly growth rate since
1999. For the first six months of 2016, the
retail sale growth rate was mere 0.5%, as
compared to the same period a year ago.
The estimated growth rates for the remaining
third and fourth quarter of 2016 are 5.0%
and 5.5% respectively. Full year sales growth
forecast for the Malaysian retail industry has
been revised downwards to 3.5% from 4.0%
CHIANG SANG SEM
Group Executive Chairman
cum Chief Executive Officer
On behalf of the Board of Directors, I
am pleased to present the Annual Report
and Audited Financial Statement of Bonia
Corporation Berhad (“Bonia”) and its
Group of Companies for the financial year
ended 30 June 2016.
CHAIRMAN’S STATEMENT
