1. Session 1: GOLF AND THE ECONOMIC ENVIRONMENT - MEETING THE GLOBAL CHALLENGE Steven C.M. Wong Assistant Director General ISIS Malaysia steve@isis.org.my

2. OUTLINE 1.How does the global economic crisis impact leisure activities? 2.What are the immediate and medium-term prospects for the global economy? 3.What are the immediate and medium-term prospects for the Malaysian economy? 4.What are some implications for golf managers?

3. 1.How does the global economic crisis impact leisure activities? HouseholdsCorporations Government

4. 1. How does the global economic crisis impact leisure activities? Income effects, i.e. nominal (money) discretionary incomes – prices matter; bonus payments; gross national income Wealth effects, e.g. share portfolios, unit trusts, bonds, land value (esp. retirees) Changed employment status – unemployment; part-time; emigration/immigration Personal & corporate expense curbs, decline in corporate sponsorships Government policies – positive/negative fiscal impulses; borrowings

5. 2.What are the immediate and medium-term prospects for the global economy? 20082009(f)2010(f) US1.1-2.80.0 EU0.9-4.2-0.4 Japan-0.6-6.20.5 China9.06.58.0 India7.35.17.5 ASEAN-54.90.02.3 World3.2-1.31.9 International Monetary Fund, 22 April 2009

6. 2.What are the immediate and medium-term prospects for the global economy? Greatest economic crisis in modern history probably averted through financial bail-outs and demand management But ‘V’-shaped recovery? -Depends on effectiveness of government stimulus packages -Height of the ‘bounce’? Many problems still not resolved Toxic financial assets Income and wealth destruction Record budget deficits, debt overhang & excess liquidity levels, etc.

7. 3.What are the immediate and medium-term prospects for the Malaysian economy? - GDP - 3Q08: +4.7% 4Q08: +0.1%; Official 09: +1.0%-1.0% Personal 09: -3.0% - Industrial Production – 3Q08: -1.6% 4Q08: -15.6% 1Q09: -14.7% (Feb) - Exports – 3Q08: +15.1% 4Q08: -14.9% 1Q09: -22.2% (Jan-Feb)

8. 3.What are the immediate and medium-term prospects for the Malaysian economy? - Active Job Seekers - 3Q08: +88.7% 4Q08: +109.0% 1Q09: +130% (Est.) - Bank Loans Approved - 3Q08: -1.2% 4Q09: -23.7% 1Q09: -26.6% (Jan-Feb)

9. 3.What are the immediate and medium-term prospects for the Malaysian economy?

10. Second Stimulus Package – RM60b

11. 4.What are some implications for golf managers? Economy has declined sharply as expected. Expectations are for recovery but no clear evidence that it will bottom-out soon Recovery will first be signalled by pick-up in exports and this is not expected for at least 2 - 3 quarters RM60bn mini-budget is seen by most to have positive but limited cushioning effect on economic growth (bet. RM5-7b of additional fiscal stimulus must be injected in 2009)

12. 4.What are some implications for golf managers? Challenging business environment through most of 2009 and possibly into 2010; ‘V’-shape recovery is possible but not likely Business consolidation and rationalisation are underway in many sectors; (Are golf clubs vulnerable?) Top-end facilities will probably be cushioned by players’ affluence but others could find it very tough and unrewarding Like most leisure (discretionary) activities, new and creative marketing strategies will probably be needed

13. 4.What are some implications for golf managers? Club finances need to be strong; be realistic - more debt is not the answer; maintain positive net equity Manage business cash inflows & outflows; do not overtrade (maintain profit margin-asset turnover-gearing balance) Use down-time to sharpen competencies and master new skills (e.g. IT, language, etc); invest in new relationships Demonstrate ownership in the workplace; put in more than you take out; offer help where needed, not when asked

14. 4.What are some implications for golf managers? Is cutting back on course & service quality counter-productive given the high income market segment being catered to? Can more be done to increase revenue yields through direct & cross-selling and promotion strategies? Would increased value-added services, say through ICT, be a viable way of attracting and retaining client communities? What about packaging memberships with Malaysia My Second Home (MM2H) programme? Should more be done to introduce developmental aspects such as golfing as an elective subject in universities?

15. SAUJANA GOLF MANAGEMENT THANK YOU!