2023 was a year of reconciliation and consolidation after the uncertainties in all aspects: health and medical, economic, social and political over the last few years. This had helped to restore stability and confidence in our country and the economy.
However, the disruptions to the global economy and supply chain caused by the pandemic continued to affect our local economy with shortages, inflationary pressures, high cost of living and rising cost of doing business. The Middle East crisis and continuing geopolitical tensions between Russia and Ukraine added to the disruptions including gas supply and raised energy costs.
Our businesses in the various sectors are coping with the many challenges resulting from changes in the industries’ landscape. We continue to operate although scaling back on our steel operations to ensure consistent supply to our customers and retain market presence. With the freeze on issuance of manufacturing licence by the Ministry of Investment, Trade & Industry under its 2 years moratorium, our Steel Division will capitalize on this timeout to review our operations in terms of future plans and strategies.
Our Mining Division had started to export its tin ore and silica sand earlier and maintained its sand exports in 2023 while striving to export more tin ore in 2024.
Our Property Division managed to sell some industrial lots in its Banting Industrial City (BIC) in Selangor to foreign and local investors to set up their manufacturing facilities here. This will help to attract investment which will boost economic growth and create job opportunities for the local people. In the residential segment, the division had launches to meet the demand for housing especially in the Klang Valley.
Parkson ceased its operations in Vietnam in 2023 to cut its losses due to the tough business environment during the Covid-19 years, and to focus on its Malaysia and China operations where it has 36 and 42 stores respectively, with the latter including supermarkets too. The Group is optimistic about the overall market prospects in Malaysia and China with the improving consumer sentiments and arrival of foreign tourists, especially with the conditional visa-free travel policy between the 2 countries.
We opened the first Parkson shopping mall in Yichun City in Jiangxi, China in January 2023 and focus on engagement with shoppers by working with key partners like brand owners, banks and other merchants. The Group will continue to enhance its operating efficiencies and cost improvement strategies, and identify new sites with potential for opening of new outlets.
Parkson Credit which provides credit financial services such as purchasing products via instalment payments, obtained its digital money lending license from the Ministry of Local Government Development, marking a digitalization milestone for the company and paving the way for a more accessible and efficient lending landscape.
Our other businesses namely SECOM which offers electronic and physical security services, POSIM which supplies building materials and automotive and industrial lubricants under the HI-REV and T-Trax brands, and LIKOM in Melaka which provides mechanical and electronic manufacturing services, are stable and carrying on with their operations.
Bank Negara reported that the local economy is projected to expand close to the lower end of the 4.0% to 5.0% range in 2023 with growth supported by domestic demand amid improving employment and income as well as implementation of multi-year projects. Tourist arrivals are expected to continue rising which augurs well for tourism-related activities including the retail sector.
Global developments and financial market sentiments with the continued monetary policy tightening in advanced economies and the weaker than expected rebound in China’s economy have however, affected domestic financial conditions and the ringgit’s depreciation.
Our economy is expected to grow between 4 and 4.5% in 2024, supported by resilient private consumption, a stronger labour market and global trade diversion according to MARC Ratings. The Services sector has consistently been the top commodity in Malaysia's economy, generating over 50% of the country's total GDP the last few years. Services sub-sectors include transportation and storage, food and beverage, and accommodation, as well as wholesale and retail trade. This is followed by Manufacturing, Mining & Quarrying, Agriculture and Construction with their contribution to GDP.
The 2024 budget of RM393.8 billion with the theme of `Economic Reforms, Empowering the People’ is the largest in the nation’s history with RM303.8 billion for operating expenditure and RM90 billion for development expenditure. It has 3 key thrusts, namely delivering reforms to enhance governance and public delivery system, transforming the economy and businesses, and elevating the well-being of the raykat. The budget introduces structural and tax reforms such as the introduction of a capital gains tax and the increase in service tax as well as tax incentives which will impact businesses and individuals.
I wish to express my sincere thanks to all staff for your continuing hard work and dedication throughout the past few years and call upon everyone to be prepared to meet the greater challenges ahead.
My appreciation goes to all our customers, business partners and associates, financiers, shareholders, directors and the government authorities for their continuing support and cooperation.
TAN SRI DATUK SERI UTAMA WILLIAM CHENG
GROUP EXECUTIVE CHAIRMAN