“Bad things will pass, but not that fast…”  The Industrial Production Index (IPI, 2005=100) contracted further – but by a slower pace – of 14.7% YoY in Feb ’09 (Jan ’09: -19.8% YoY) amid continued drop in manufacturing output (-18.8% YoY), mining activities (-7.3% YoY) and power generation (-3.0% YoY).  Although the YoY drop in Feb ’09 eased – in tandem with the earlier released Feb ’09 external trade figures – we still expect industrial production and export growth to remain in the red at least until 3Q09, mainly as imports of intermediate goods i.e. mainly inputs for manufacturers/exporters continue to fall.  For Jan-Feb ’09 industrial production fell by 17.4% YoY (4Q08: -9.1% YoY; Jan-Feb ’08: +9.6% YoY), signaling a contraction in 1Q09 real GDP, which we currently expect to be -4% YoY (4Q08: +0.1% YoY) under our full-year forecast of -1.3%.

1. Equity Research
PP11072/03/2010 (023549)
ECONOMIC TRENDS 10 April 2009
Industrial Production, February 2009
“Bad things will pass, but not that fast…”
 The Industrial Production Index (IPI, 2005=100) contracted further – but
Suhaimi Ilias
by a slower pace – of 14.7% YoY in Feb ’09 (Jan ’09: -19.8% YoY) amid
suhaimi_ilias@maybank-ib.com
continued drop in manufacturing output (-18.8% YoY), mining activities
(603) 2297 8682
(-7.3% YoY) and power generation (-3.0% YoY).
Ramesh Lankanathan
 Although the YoY drop in Feb ’09 eased – in tandem with the earlier
ramesh@maybank-ib.com
(603) 2297 8685 released Feb ’09 external trade figures – we still expect industrial
production and export growth to remain in the red at least until 3Q09,
mainly as imports of intermediate goods i.e. mainly inputs for
manufacturers/exporters continue to fall.
 For Jan-Feb ’09 industrial production fell by 17.4% YoY (4Q08: -9.1%
YoY; Jan-Feb ’08: +9.6% YoY), signaling a contraction in 1Q09 real
GDP, which we currently expect to be -4% YoY (4Q08: +0.1% YoY)
under our full-year forecast of -1.3%.
Malaysia: Industrial Production Index
Dec-08 Jan-09 Feb-09 YTD ‘09 2008
96.8 92.9 89.5 91.2 107.8
Industrial Production
(15.9) (19.8) (14.7) (17.4) 0.6
% YoY
- -
(4.5) (4.0) (3.7)
% MoM
95.6 89.1 88.5 88.8 112.1
Manufacturing Production
(20.0) (26.3) (18.8) (22.7) 0.6
% YoY
- -
(7.1) (6.7) (0.7)
% MoM
98.1 99.3 89.4 94.4 98.2
Mining Production
(8.3) (5.8) (7.3) (6.5) (0.1)
% YoY
1.1 1.2 (9.9) - -
% MoM
102.8 100.0 99.8 99.9 110.5
Electricity Production
(6.2) (12.5) (3.0) (8.5) 1.2
% YoY
(3.6) (2.7) (0.2) - -
% MoM
Source: Department of Statistics
Malaysia: Industrial Output and Manufacturing (% YoY)
30
20
10
0
Jan‐07
Jan‐08
Jan‐09
Jan‐04
Jan‐05
Jan‐06
Sep‐07
May‐08
Sep‐08
Sep‐05
May‐06
Sep‐06
May‐07
May‐04
Sep‐04
May‐05
(10)
(20)
TOTAL Manufacturing
(30)
Source: Dept. of Statistics

2. Industrial Production, Feb 2009
Malaysia: Mining and Electricity Output (% YoY)
20
15
10
5
0
Sep‐04
Sep‐05
Sep‐06
Sep‐07
Sep‐08
Jan‐04
Jan‐05
Jan‐06
Jan‐07
Jan‐08
Jan‐09
May‐04
May‐05
May‐06
May‐07
May‐08
(5)
(10)
Mining Electricity
(15)
Source: Dept. of Statistics
The drop in industrial production continued in Feb ’09 but at a slower pace
of 14.7% YoY (Jan ‘09: -19.8% YoY). This was within our expectations of -15%
YoY while consensus estimate was -13.5% YoY.
... amid further falls in all three components. All three segments declined, led
by manufacturing (-18.8% YoY), mining (-7.3% YoY on a 4.5% YoY drop in crude
petroleum output and 2.8% YoY fall in natural gas output) and electricity (-3%
YoY).
First two months’ data signals contraction in 1Q09 real GDP… For the first
two months of this year, industrial production fell by 17.4% YoY vs. the 9.1% YoY
drop in 4Q08 and 9.6% YoY growth in Jan-Feb ’08, foretelling a contraction in
1Q09 real GDP growth. Our 2009 real GDP forecast of -1.3% assumes a 4%
YoY contraction in the economy in the first three months (4Q08: +0.1% YoY).
Malaysia: Quarterly Industrial Output & Real GDP (% YoY)
12
30
10
20
8
10
6
4
0
Jan-Feb 09
1Q00
3Q00
1Q01
3Q01
1Q02
3Q02
1Q03
3Q03
1Q04
3Q04
1Q05
3Q05
1Q06
3Q06
1Q07
3Q07
1Q08
3Q08
2
(10)
0
(20) (2)
Industrial Production (LHS) Real GDP (RHS)
Source: Dept. of Statistics
ECONOMIC TRENDS ▪ 10 April 2009 Page 2 of 6

3. Industrial Production, Feb 2009
Most key East Asian economies also recorded smaller YoY contractions in
Feb ’09, but the drop in major economies worsened… Like Malaysia, most of
the East Asian countries that have released industrial production figures for Feb
’09 (e.g. South Korea, Taiwan, Singapore, Thailand) recorded smaller YoY
contractions compared to the previous month’s figures. Major emerging
economies like Russia and Brazil also registered similar trends. Interestingly,
China’s Feb ’09 factory output growth rebounded by 11% YoY (Jan ‘09: -3.4%
YoY), fuelling speculation that the huge fiscal stimulus package is taking effect
on the economy. The rebound in China’s industrial output data coincided with an
improvement in the Purchasing Managers Index in the last four months to pass
the 50 mark to 52.4 in Mar ’09, after the sharp slump between Apr and Nov last
year. Meanwhile Vietnam ‘s industrial output growth for Mar ’09 eased to 2.4%
YoY after the rebound to 14.9% YoY in Feb ’09, from the 4.4% YoY contraction
in Jan ’09. Major advanced economies – US, Japan and UK – continue to see
worsening declines in industrial production.
Global Industrial Production (% YoY)
20 8
6
15
4
10
2
5
0
0
(2)
Apr‐08
Feb‐07
Sep‐07
Jul‐03
Jul‐06
Jun‐09
Mar‐01
Dec‐02
Mar‐04
Dec‐05
Oct‐01
Oct‐04
Aug‐00
Jan‐00
Nov‐08
May‐02
May‐05
(5)
(4)
(10)
(6)
(15) (8)
(20) (10)
Global Industrial Production (Weighted) (YoY) OECD LEI (RHS)
Source: Bloomberg, Maybank-IB
Global: Industrial Production (% YoY)
Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09
US (1.9) (6.2) (4.3) (5.9) (8.2) (10.7) (11.8)
EU (1.5) (3.1) (5.8) (8.8) (10.2) (13.8) -
Japan (6.9) 0.2 (7.1) (16.6) (20.8) (31.0) (38.4)
Germany 1.6 (1.8) (3.7) (6.9) (12.0) (19.3) -
UK (3.2) (3.5) (5.9) (7.9) (9.3) (11.4) (12.5)
France (2.6) (2.0) (7.7) (8.8) (10.2) (13.8) -
Italy (5.7) (5.8) (6.9) (10.1) (14.3) (16.7) -
Canada 8.6 8.3 9.5 5.8 2.4 1.4 1.6
China 12.8 11.4 8.2 5.4 5.7 (3.4) 11.0
Russia 4.7 6.4 1.7 (8.7) (10.2) (15.9) (13.2)
Brazil 2.0 9.7 1.1 (6.4) (14.8) (17.4) (17.0)
India 1.7 6.0 (0.3) 1.7 (0.6) (0.5) -
S. Korea 1.9 6.3 (1.9) (13.8) (18.7) (25.5) (10.3)
Taiwan 0.7 (1.2) (12.6) (28.3) (32.0) (43.3) (27.1)
Singapore (11.9) 3.2 (12.2) (6.6) (13.5) (29.8) (22.4)
Malaysia 1.2 (1.7) (2.8) (8.2) (15.9) (19.8) (17.7)
Thailand 7.8 4.3 2.4 (7.7) (18.5) (21.2) (19.8)
Indonesia 2.9 (0.8) 6.2 1.0 (2.8) (6.1) -
Philippines 6.3 12.4 8.7 0.1 (9.7) (16.9) -
Vietnam * 16.1 15.2 15.4 15.0 11.8 (4.4) 14.9
Source: Bloomberg, CEIC
* Mar ‘09 growth slowed to 2.4% YoY
ECONOMIC TRENDS ▪ 10 April 2009 Page 3 of 6

4. Industrial Production, Feb 2009
But expect Malaysia’s industrial production to remain in the red up to
3Q09… Based on the last two recessions in 1998 and 2001, industrial
production – specifically manufacturing output – fell continuously for 12-13
months (1998 recession: 12 months, from Feb ’98 to Jan ’99; 2001 recession: 13
months, from Mar ’01 to Mar ’02). So far, Malaysia’s IPI has recorded six
consecutive months of declines since Oct ’08, implying that industrial production
can be expected to stay in the red for the first three quarters of 2009. Moreover,
imports of intermediate goods fell YoY and MoM for the fifth consecutive month
in Feb ’09, indicating manufacturers are not re-building their inventories of raw
materials, parts, components and semi-finished goods, which implies further
declines in output in the next 1-3 months after Feb ’09. Moreover, the latest data
on the index of leading economic indicators of OECD, BRIC and East Asia,
showed that the global economic downturn is still in progress until early-3Q09.
Malaysia: Months of Continuous YoY Drop in Industrial Production
Sep 08 - Feb 09
Mar 01 - Mar 02
Feb 98 - Jan 99
0 2 4 6 8 10 12 14
Source: Department of Statistics
Malaysia: Imports of Intermediate Goods (% YoY)
80
60
40
20
0
Apr-99
Oct-01
Apr-04
Oct-06
Sep-99
Aug-02
Sep-04
Aug-07
Nov-98
Dec-00
Nov-03
Dec-05
Nov-08
Jan-98
Jun-98
Jan-03
Jun-03
Jan-08
Jun-08
Jul-00
Jul-05
May-01
May-06
Feb-00
Mar-02
Feb-05
Mar-07
(20)
% YoY % MoM
(40)
Source: Department of Statistics
ECONOMIC TRENDS ▪ 10 April 2009 Page 4 of 6

5. Industrial Production, Feb 2009
Index of Leading Economic Indicators (12-month rate of change)
20
15
10
5
0
Jan-96
Oct-96
Jul-97
Jan-99
Oct-99
Jul-00
Jan-02
Oct-02
Jul-03
Jan-05
Oct-05
Jul-06
Jan-08
Oct-08
Jul-09
Apr-98
Apr-01
Apr-04
Apr-07
(5)
(10)
BRIC East Asia ex Japan and China OECD - Total
(15)
Source: Bloomberg
ECONOMIC TRENDS ▪ 10 April 2009 Page 5 of 6

6. Industrial Production, Feb 2009
Definition of Ratings
Maybank Investment Bank Research uses the following rating system:
STRONG BUY Total return is expected to exceed 20% in the next 12 months; high conviction call
BUY Total return is expected to be above 10% in the next 12 months
HOLD Total return is expected to be between above 0% to 10% in the next 12 months
FULLY VALUED Total return is expected to be between -10% and 0% in the next 12 months
SELL Total return is expected to be below -10% in the next 12 months
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acquisition, corporate restructuring, and potential of obtaining new projects. However, the upside may or may not be
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ECONOMIC TRENDS ▪ 10 April 2009 Page 6 of 6