Eng - IOI Group

OPERATING BACKGROUNDThe Malaysian economy remained resilient throughout the four quarters that coincide with the Company’s financial yearunder review despite the underlying challenging environment.The overall economy continued its recovery in 2002 with a growth rate of 5.6% for the second half and ended the fullyear at 4.2% on the back of sustained domestic demand and a stronger than expected export performance. Despite theoccurrence of destabilising events such as the SARS outbreak and the IRAQ war, the growth momentum was sustained bygovernment’s monetary and fiscal measures and by higher commodity prices, including palm products, which benefited afairly wide section of consumers across the country.The property market recovered strongly in the second quarter of year 2003 as the stock market picked up steam, and in alow interest rate environment categorised by abundant liquidity. The stimulus package announced by the Government on1 June 2003 to help alleviate the negative impact of SARS on affected industries provided an added boost.These favourable conditions, together with our growth strategies, enabled the Group to yet again scale new heights.3IOI Corporation BerhadAnnual Report 2003