Business Times (Malaysia Finance/Economy News)
Tuesday, August 06, 2013, 12.53 AM
Updated: 18 weeks 5 hours ago
THE RHB banking group's planned purchase of a stake in Indonesia's PT Bank Mestika Dharma, first proposed in 2009, is still in the works but may take longer than expected to complete. "At this stage, RHB Capital Bhd (RHBCap) is still drafting its acquisition plans for Bank Mestika, and will resubmit the proposals to Bank Indonesia in the second quarter of 2013," said Maybank Investment Bank Research (MIB) in a report on Wednesday. The group, which is about 40 per cent owned by the Employees Provident Fund, had expected to conclude buying a stake in the Medan-based lender by June this year, RHBCap group managing director Kellee Kam told reporters last month. The country's fifth largest banking group had first proposed buying 80 per cent of Bank Mestika for RM1.16 billion in October 2009 but faced numerous challenges, including on deal structure and regulatory changes. A major spanner was thrown in the works last year when Indonesia announced new banking rules, li-miting single ownership in its banks at just 40 per cent. RHBCap, which last November completed its RM1.95 billion purchase of OSK Investment Bank, is seeking control over Bank Mestika, even if it initially has to buy just a 40 per cent stake. "The management has been redrafting its proposal to acquire Bank Mestika, and hopes to be able to consolidate the bank's accounts even with an initial 40 per cent stake. Otherwise, the acquisition could be quite punitive on the group's capital ratios; the outcome of the purchase could hinge on the verdict with regards to this accounting treatment," MIB said, adding that "it may be a while" before the deal is concluded. It sees a neutral impact to RHBCap's earnings this year from the OSK merger. "Nevertheless, RHBCap's valuations are still decent and we expect an ongoing re-rating of the group," it said. It maintained a "buy" call on RHBCap's stock and raised the target price by 30 sen to RM9.00. Of at least 24 analysts that tracked the stock, most (or 13) have a "buy" call on it, Bloomberg data shows. The stock, which has gained 0.9 per cent so far this year, compared with the stock market benchmark index FBM KLCI's 3.1 per cent fall, last closed five sen higher to RM7.76. With OSK, the banking group now has a presence in seven of the ten Asean countries, including Indonesia. It expects its overseas operations to account for 30 per cent of group profit by 2017 from about eight per cent now. "With the potential acquisition of Bank Mestika, RHBCap estimates its offshore contributions would rise to 13 per cent," MIB said. It also observed that RHBCap's foreign shareholding level is relatively low at 10.4 per cent (excluding Middle Eastern shareholder Aabar's 24.75 per cent stake) as at end-September last year, which provides some cushion to the stock's downside should there be a selldown of the market by foreign investors.
KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) has decided not to proceed with the award of the Small Field Risk Service contract for the "Tembikai and Chenang Cluster". The national oil corporation said that it would not reopen the cluster for bidding. "There is uncertainty over the status of the Tembikai and Chenang cluster following reports early this month that the bid by frontrunner Scomi Group-Cue Energy Resources Ltd is said to have faced some problems," it said in a statement yesterday. Bernama
PLANS by Japan's new government to reflate the country's economy may reduce the motivation for Japanese companies in invest abroad but Asean countries will not likely see a slowing in foreign direct investments. This was because costs of production in Asean are still lower than in Japan, especially in countries with well-established industrial clusters plus Japanese firms will be keen to keep their production facilities geographically diversified amid more frequent natural disasters. Credit Suisse economist Santitarn Sathirathai, in a report, described Asean economies as generally better positioned. "Being 'downstream producers' for Japan, Asean economies' exports are unlikely to be negatively affected by a weaker yen and may even benefit from cheaper intermediate goods imports. " In addition, countries that export a large share of 'end-user products' to Japan like Indonesia and Malaysia are likely to benefit from stronger Japanese domestic demand growth," he added. Newly-elected Prime Minister Shinzo Abe's plan to reflate Japan's economy could have two main effects, he said. This could be a structurally weaker yen and stronger Japanese domestic demand. Santitarn said a pick-up in Japanese domestic demand growth could happen via a monetary and sizeable fiscal stimulus and an improvement in export growth which would have a positive knock-on impact on Japan's domestic economy. "We found that Indonesia is best positioned while South Korea is most vulnerable to a combination of stronger Japanese domestic demand and a weaker yen. "Indonesia and Malaysia are most leveraged to Japanese domestic demand, largely reflecting these countries' exports of fuel and lubricant products," he added. In terms of percentage of GDP, however, Malaysia and Thailand are more leveraged to benefit from stronger exports to Japan given that they are more export-dependent than Indonesia. The winners would be countries which have Japan as both their "suppliers" and "consumers" while the losers would be those exports that are similar to and compete with those from Japan. Although South Korea is more vulnerable to a weak yen than other Asian economies, other factors such as a global growth recovery and Korean exporters' price adjustments could offset some of the negative impact on exports, added Santitarn.
KUALA LUMPUR: The inflation rate is expected to accelerate to 2.5 per cent in 2013, driven by the subsidy rationalisation programme and a potential recovery in demand in the later part of this year. Alliance Research said the overnight policy rate is likely to remain unchanged at three per cent this year, ensuring an accommodative monetary policy stance and adequate levels of price stability, given low levels of inflation risks to recovery. Its economist Manokaran Mottain said Malaysia's inflation has been easing gradually in tandem with global commodity prices, in particular crude petroleum prices. The country's pump prices for petroleum and other related products have been unchanged since the pause in the implementation of the subsidy rationalisation programme proposed by Pemandu. The inflation rate recorded its peak of 3.5 per cent in June 2011. "Moving ahead, while we expect a slower pace of inflation in the first half-year, potential subsidy cuts post-general election 13 could likely pressure a reversal in price pressures in the second half of 2013. "Overall, we expect inflation to accelerate to 2.5 per cent, driven by a recovery in demand in the later part of this year, both internally as well as externally," Manokaran said in a research note yesterday. Headline inflation eased slightly in December 2012, as the consumer price index grew moderately by 1.2 per cent year-on-year versus 1.3 per cent year-on-year in November. This was the lowest level since February 2010, while edging lower than the market forecast of 1.38 per cent and Alliance Research's estimate of 1.3 per cent. Overall, the inflation rate had persisted below 1.5 per cent in the second half of 2012, remaining at 1.3 per cent over the September-November period. Bernama
KUALA LUMPUR: Gamma Solution Sdn Bhd - an importer, distributor of surveillance systems solution - expects sales of its products and services to reach about RM10.5 million in 2012. The company also plans to increase its overseas contributions by spreading its business presence in Thailand and Indonesia this year. Gamma Solution managing director Wan Yat Hon said the company currently has some business transactions for the close-circuit television (CCTV) solutions in Brunei, Myanmar and Singapore. "Currently, overseas contribution accounts for only around five per cent of our sales, but we see the potential over there. This year, we are going to enter Thailand and Indonesia. It would be good for us," he told Business Times last month. In 2011, Wan said the company achieved some RM10 million in sales of its products and services, including sales generated from overseas. "2012 is expected to be slightly better, a few per cent better than the previous year. In fact, we have registered a five per cent increase in sales as of last November," he said. In tandem with the increasing trend of using high definition (HD) or megapixel video surveillance system, Wan said he expects a large bulk of the company's sales to come from this latest product in Malaysia and the region in the next few years. "My company is actually selling a lot of megapixel video cameras now. In fact, megapixel contributes half of the company's total turnover. We are on the right track by going to this market. Sales of the conventional or analogue systems are going down as we move forward towards the HD surveillance system," he said. Megapixel video surveillance systems allow users to gain maximum benefit from high resolution cameras that can typically generate better quality of image than analogue cameras. A megapixel camera is able to capture image at a resolution of one million pixels or more. Further benefits of using megapixel videos include higher video resolution, cost-effective planning, minimise maintenance workload, and alternative for PTZ (pan, tilt, zoom) cameras in terms of seamless wide area surveillance capabilities. Wan attributes Gamma Solution's success, particularly in the megapi-xel camera segment of the surveillance industry partly through its collaboration with Intel Malaysia under the latter's embedded technology programme.
MAHINDRA Satyam, a leading global consulting and information technology company, aims to double the headcount at its Malaysian operations to 1,100 by 2015 from about 600 currently. Its vice-president and head of sales (Asean), Ram Ramachandran, said the Malaysian business has grown 250 per cent in the last two years, the fastest within the Asean region. Ram said that nurturing and recruiting local talent is a top priority and noted that about 80 per cent of the team in Cyberjaya are Malaysians. "We will go as local as possible. We feel the talent here is good enough," he told Business Times in an interview recently. Mahindra Satyam is part of the US$15.9 billion (RM48.36 billion) Mahindra Group, a global industrial federation of companies and one of the top 10 business houses based in India. Mahindra Satyam is the soon-to-be concluded merger between Satyam Computers and Mahindra Group's IT arm, Tech Mahindra Ltd. Satyam was India's fourth largest IT services company until it almost collapsed after founder B. Ramalinga Raju admitted to fraud in January 2009. Tech Mahindra then took control in April 2009 after winning a government-managed auction. The IT sector contributes between 20 per cent and 25 per cent to the Mahindra Group. According to Ram, it will account for a substantial portion in two to three years. Last year, Tech Mahindra set out an ambitious plan, dubbed Mission 2015, to double its revenue of the combined entity to US$5 billion by 2015 from around US$2.4 billion presently, with Malaysia to play a role in that expansion. One of the mission's target is for the rest of the world, including Malaysia (excluding the United States and Europe), to account for 33 per cent, or US$1.6 billion, of the group's revenue by 2015 from 23 per cent presently. "It is a very ambitious plan and a substantial part will come from locations like Malaysia," Ram said. He said the strategy is to be in the top five in any of its chosen verticals and with Malaysia selected as one of the key focal location to serve both regional and global customers. Back in 2009, Mahindra selected Malaysia to launch its international expansion, a move that underscores the faith it continues to have in Malaysia's advanced infrastructure, rich ICT talent pool and competitive cost environment. The Global Solution Centre (GSC) operations in Cyberjaya is a state-of-the-art campus that has 18 configurable offshore development centre blocks, a 1,100-seat development block and a data centre to host 1,100 servers. The GSC, spread over 6.07ha, serves as Mahindra Satyam's largest technology development and delivery facility outside of India, Ram said. Ram identified banking and financial services, manufacturing, travel, transportation and logistics, and the government sector as core verticals areas which offer great potential for growth. He said the company, already faring well in these sectors globally, wants to emulate them in Malaysia. Mahindra Satyam acknowledges the huge potential in Islamic financial services, both banking and takaful, and Malaysia's ambition to be the global hub in the sector. "We are seeing a lot of advanced Islamic banking or insurance that is happening out of Malaysia. "The idea is if we can either create collaboratively or by ourselves intellectual properties and take them to both local and overseas markets such as Indonesia or the Middle East," he said. He also noted a number of Malaysian banks that have been aggressively expanding their base in the region and the company wants to be part of that journey as well. "Our advantage is that we can offer those financial institutions best-in-class services and regional services from a local base." The banking and financial services sector is the largest portfolio for Mahindra Satyam in Malaysia, followed by travel, transport and logistics and manufacturing.
KUALA LUMPUR: Subway Malaysia plans to expand its reach in Malaysia by expanding the number of outlets from 123 to 150 by the end of the year. "Our goal this year is to identify potential prospects nationwide and widen our reach to other states," said Subway Malaysia development agent Datuk Vincent Choo. He noted that the brand value of Subway has been growing steadily in the past three years with customer satisfaction exceeding the company's expectations. Subway president and co-founder Fred DeLuca said he remained confident that Asia will experience the biggest expansion this year. In 2012, Subway added 365 outlets throughout Asia, making it the world's biggest contributor in terms of growth. From an overall business perspective, North America, Latin America, and Europe are the biggest markets for Subway. "We work with the best partners globally and Malaysia is not an exception," said DeLuca. " He added that Malaysians have acquired a taste for Subway's wide mix of nutritious meals, from made-to-order sandwiches, salads and its famous five-footlongs. "It is encouraging to note that they have become regular and loyal customers," DeLuca said. Subway, which is a privately owned by DeLuca and his partner Peter Buck, has 38,633 restaurants in 100 countries. It is currently ranked the world's biggest fast food franchise.
KUALA LUMPUR: Asian countries, once the main region for the exports of electronics, now have a diverse industry mix which will impact the performance of the sector. Credit Suisse, which did a study on the competitiveness, product mix and future performance within each product segment in the electronics industry, concluded that Taiwan will emerge as the winner with the strongest growth in electronics exports, followed by Thailand, Malaysia and South Korea. "The structural shift away from PCs (personal computers) towards smart phones and tablets suggests that Taiwan and South Korea should generally perform better than Asean in electronics exports this year, which is less plugged into smart phones and tablets exports compared to North Asia," said Michael Wan, its analyst. Thailand's strength in many products such as radios, TVs and printers should continue to support its exports in 2013. It described the Philippines and Singapore as likely to underperform as their focus is on slower growing industries such as hard disks, PCs, and semiconductor production. In addition, the elevated real exchange rate for both should have a negative impact on their electronics exports this year. Thailand and South Korea have done their best over the past 15 years, capturing a significant market share. Taiwan, which lost share from 2001 to 2005, has gained from 2006, most notably from 2009 until the present, due to its structural shift away from PCs towards smartphones and tablets. In the case of Ma-laysia, it gained share in electronics exports from 2004 to 2006, but has subsequently more than lost these gains. The improvement in competitiveness in the early 2000s was driven by disk drives and PCs supported by printed circuit board assembly and soundcards, but the net shift in telecommunication electronics (which includes smartphones) has turned negative. "The industry mix effect has been weak in recent years, highlighting that the country's electronics sector has failed to adapt to the shifts in demand for tech products," added Wan. As for the Philippines, its electro-nics exports trended sideways through most of the period, but lost quite a bit of share from 2009 to 2011. Singapore's electronics exports, meanwhile, have failed to recoup the losses suffered between 1997 and 2000. For export performance for 2013, Credit Suisse said semiconductors will be strong in Singapore and Taiwan; disk drives and PCs in Singapore and Thailand, mobile tablets in Taiwan and South Korea; telecommunication electronics including smartphones in Taiwan, printed circuit board assembly and soundcards in Thailand and South Korea; radios and televisions in Malaysia and Thailand; and printers in Malaysia and Thailand.
MALAYSIAN National News Agency (Bernama), which celebrates its 45th anniversary this year, has many plans in the pipeline to improve the quality of news stories and presentations in its news wires, Bernama TV and Radio24. Subscribers, TV audience and radio listeners can anticipate more indepth news and features, industry-centric TV programmes as well as attractive programmes that appeal to a much broader population. The agency plans to optimise and mobilise all of its platforms and#8212; wires, television, radio and social media and#8212; to enhance its image and reach out to a wider audience. Bernama editor-in-chief Datuk Yong Soo Heong said efforts are ongoing to ensure Bernama's bigger footprint in the media industry. He said the rebranding exercise aims at reaffirming Bernama's role as the country's national news agency as well as creating greater awareness of Bernama as an authoritative and efficient news provider. Bernama hopes that the new initiatives will generate greater return on investment by the government in the agency. "This will be done by being more productive and creative through monetising opportunities in our various news platforms," he said in an interview recently. Bernama, which commenced operations on May 26 1968, provides real-time local news including politics, business, economy, commodities, executive reports and sports. It currently delivers news content via four platforms, namely news wires, television, radio and social media, including news portal. Yong said advertisers are not that familiar with Bernama TV as unlike other TV stations, Bernama TV does not have a mix of dramas, documentaries and news. "We have mainly news, talk shows and documentaries. That has to change and we are now revitalising and strategising the content," he said. He said Bernama wants to assume a more significant role in portraying the image and strength of the corporate sector in Malaysia. There are plans to come out with TV programmes that feature specific industries such as commodities, automotive and SMEs. Also in the pipelines are programmes focusing on youth and women. Yong said the content of Bernama TV, which can be accessed on Astro Channel 502, will be posted on YouTube, so that the TV content can be optimised. He said Bernama will also produce two coffee-table books comprising Bernama photos of former prime ministers Tun Dr Mahathir Mohamad and Tun Abdullah Ahmad Badawi. Later, it will produce books on other former prime ministers. "We are also embarking on several book projects, one of them is a book featuring the oil industry in Borneo, to be done in collaboration with Brunei government," he said. "We'll use existing resources and in areas that we don't have expertise, we can enter into strategic partnership with content providersand#8230; there's no need to increase the manpower," Yong said when asked if Bernama needs to hire more people to implement its plans. To ensure that all plans materialise, he said, Bernama will prioritise the welfare of its staff, supply better equipment for TV and radio stations and provide continuous training. "We want to harness people's potentialand#8230; we want to use creativity of our people," he noted. Staff exchange programme is also on the card. For a start, there will be an exchange programme for photographers from Bernama and Antara, the Indonesia news agency, Yong said. Bernama, which currently has overseas correspondents in Singapore, China, India, Indonesia and Thailand, plans to have correspondents in other Asean countries.
KUALA LUMPUR: MSM Malaysia Holdings Bhd plans to ramp up capacity as part of of its plan to consolidate its position as Malaysia's biggest sugar refiner as well as become one of the world's major sugar players. MSM is the sugar business arm of Felda Global Ventures Holding Bhd (FGV). MSM president and chief executive officer Chua Say Sin said the company has set aside RM100 million from the proceeds of its initial public offering in 2011 for strategic acquisitions in the region and another RM220 million for its internal expansion. "We are allocating RM85 million this year to expand our capacity and warehouse. "Additionally, we are also building our infrastructure, warehouse storage and handling capacity in line with our plan to expand capacity," Chua told Business Times in an email interview. Chua said as part of its initiative to enhance cost-competitiveness, it plans to raise the automation level at its production facilities, especially at the Kilang Gula Felda Perlis Sdn Bhd in Chuping, Perlis, which also includes upgrading the existing boilers and processes. "We hope to enhance our economies of scale by expanding our annual production capacity by 36 per cent from 1.1 million tonnes to 1.5 million tonnes by 2016." Chua said the company is also reviewing plans to gradually raise the production capacity of the MSM (Malayan Sugar Manufacturing Co Bhd) facility by 340,000 tonnes to 1.3 million tonnes by 2016. "All these moves will boost the group's current capacity of 1.1 million tonnes by 36 per cent over the next five years. "On top of these, we intend to increase the raw sugar storage capacity at MSM." The storage capacity for refined sugar at MSM's warehouses has been increased to 27,000 tonnes which will be raised further to 37,000 tonnes. "We are moving aggressively into the export markets in preparation for the capacity expansion," said Chua. MSM conducts its business mainly through two operating subsidiaries which are Malayan Sugar Manufacturing Co and Kilang Gula Felda Perlis Sdn Bhd. It operates refineries in Prai and Chuping with a combined annual production capacity of over 1.1 million tonnes of refined sugar products. In 2011, MSM produced 958,377 tonnes of refined sugar products, accounting for about 57 per cent of total sugar production in Malaysia. MSM is 10.9 per cent owned by Felda Global Ventures Holdings Bhd, Felda Global Ventures Sugar Sdn Bhd (40.0 per cent), Koperasi Permodalan Felda (20.0 per cent) and other shareholders (28.9 per cent).
KUALA LUMPUR: Advertising and branding agency People 'N Rich-H registered a 20 per cent growth last year from new business wins. Last year was a significant year for the agency, said its client management director Victor Chen, adding that this would allow the agency to implement its plans to provide its clients with holistic and fully integrated services. Among its key new business wins were National Gas Company, KL Metropolis by Naza TTDI, Saito Academy of Security Management, Saito College, Astalift and Meditag. While its expanded scope of services for existing clients ranged from Fujifilm's launch of Fujifilm Instax, Fujifilm X-Pro1 and Fujifilm X-E1 Premium interchangeable lens camera. He noted that People 'N Rich-H also spearheaded the launch of a series of Hitachi home appliances, from refrigerators to air-conditioners and washing machines and the Suzuki Nex, a spirited scooter targeted at younger generation. He said one of the more exciting new business wins was Astalift, an internationally renowned anti-ageing skincare brand from Japan, by Celsius, a People 'N Rich division. Chen said the agency last year had a restructuring with some high profile new hires and the business divisions were consolidated to work as an integrated entity. "These initiatives translated to a 70 per cent pitch conversion rate leading to the acquisition of some highly sought after new clients," he said. This year, the agency plans to expand its investments in digital, integrated media offering and promoting Enrich Media, its media planning unit with distinctive tools that enable tracking and return-on-investment research. It also launched THINK, a customised training programme developed jointly with 95 per cent the Advertising Academy, to equip the agency's staff across all divisions to guide them in leading conversations, originate and express fresh ideas meaningfully and sharpen their skills in new competencies. "Our priority in training is to teach our people to recognise that as ideators, we must be part of the brand journey, own and manage that proposition across the geographies of media, digital, social engagement, activation and all other relevant consumer touch points," said chief executive officer Datuk Rishya Joseph. People 'N Rich is part of the worldwide Hakuhodo Group, Japan's second largest agency network and has 68 offices in 18 countries.
BRAHIM'S Holdings Bhd has shortlisted two turnkey contractors from Southeast Asia to help build its RM130 million sugar refinery in Kuching, Sarawak. They are Kunming Light Industrial Engineering Co Ltd of China and Sutech Group, which has built more than half the sugar mills in Thailand. Kunming's partner in the bid is a low-profile Sarawak-based company, people familiar with the matter said. It is understood that a company from Germany, BMA Technology GmBH, had also made a bid but was voted out in the final selection. Brahim's director Datuk Howard Choo remained tight-lipped when asked to comment on the status of the project. "We have shortlisted a few parties and expect to award the job soon. We are targeting for construction to start in the current quarter and the plant to be operational by mid-2014," Choo told Business Times. Brahim's, through its 60 per cent- owned unit Admuda Sdn Bhd, has a licence from the Ministry of International Trade and Industry (Miti) to produce refined sugar and molasses for Sabah and Sarawak. As sugar is a regulated commodity, the licence to Admuda was the third by Miti in 37 years. The licence is important to Brahim's as it will help reduce its dependence on airline catering, and restaurant businesses. For fiscal 2011, Brahim's posted net profit growth of 42.4 per cent to RM9.37 million on higher revenue of RM184.46 million. Some 75 per cent of the earnings were driven by in-flight catering services at the Kuala Lumpur International Airport and Penang Airport, and the rest from its restaurant business. Brahim's expects earnings to surge significantly from next year when it starts selling the refined sugar under the Borneo Sugar brand. Brahim's executive chairman, Datuk Ibrahim Ahmad Badawi had said he expected 10 per cent to 15 per cent contribution in net profit and RM250 million in revenue from the refinery in its first year of operation. Annual demand for sugar in Sabah and Sarawak is about 350,000 tonnes, met via imports from the peninsula. Currently, the sugar market in Malaysia is controlled by Felda Global Ventures Holdings Bhd's unit MSM Malaysia Holdings Bhd and Tan Sri Syed Mokhtar Al-Bukhary's Central Refinery Sdn Bhd, with two sugar refineries each in Peninsular Malaysia. Brahim's is aiming to dominate Sabah and Sarawak by taking 30 per cent of the market share at the initial stage. Its sugar refinery will have capacity to produce 100,000 tonnes a year with a potential for expansion to 400,000 tonnes per year.
THE International Monetary Fund (IMF) expects global growth to strengthen gradually in 2013 with the United States, emerging markets and developing countries as the main sources of growth. In its latest economic outlook, it projected Asean-5, which includes Malaysia, Indonesia, the Philippines, Thailand and Vietnam, to grow by 5.5 per cent in 2013 and picking up further to 5.7 per cent. The growth forecast for 2013 is 0.2 per cent lower than its projection in October. In the October data, it projected Malaysia to post a 4.7 per cent in 2013. China is projected to grow by 8.2 per cent in 2013 and 8.5 per cent next year while India is also expected to improve to 5.9 per cent and 6.4 per cent in 2013 and 2014, respectively. But it has not downgraded the near-term growth outlook for Japan despite renewed recession and activity is expected to expand by 1.2 per cent in 2013. A sizeable fiscal stimulus package and further monetary easing will give growth at least a near-term boost, with support from a pickup in external demand and a weaker yen. Global growth is projected to strengthen to 3.5 per cent in 2013 and be better if financial conditions continue to improve and crisis risks do not materialise. "But downside risks remain significant, including prolonged stagnation in the euro area and excessive short-term fiscal tightening in the United States." For emerging market and developing economies, the latest repprt stressed on the need to rebuild policy room for manoeuvre, adding that "the appropriate pace of rebuilding must balance external downside risks against risks of rising domestic imbalances." It does not expect growth to rebound to the high rates recorded in 2010-2011. But weakness in advanced economies will weigh on external demand, as well as on the terms of trade of commodity exporters, given the lower commodity prices in 2013. In terms of the world trade volume for goods and services for the emerging markets, it has forecast that exports will bounce back while imports will continue to sustain growth.
KUALA LUMPUR: The inflation rate in Malaysia remained stable in 2012 but it is expected to edge up in 2013, said economists. They have projected the Consumer Price Index, which is the official barometer to measure the inflation rate, to grow by an average 1.38 per cent for December. The Statistics Department will release the details today. TA Research economist Patricia Oh said the modest inflation for the year has been supported by the government's subsidies on essential goods. For the month of December 2012, the petrol subsidy for RON95 was RM0.74 per litre based on the pump price of RM1.90 per litre. "Going forward, we do expect the reduction in subsidies in tandem with the government's reformation and transformation plans." The government has proposed to reduce its overall spending on subsidies during 2013 as part of its initiative to lower the budget shortfall and the budget allocation for subsidy bills has been reduced to RM37.6 billion (or -11.3 per cent year-on-year) this year. "While prices of goods will surge accordingly and inflation could rise in 2013, nonetheless, this will be compensated by the improved fiscal credibility in the long run." OCBC Bank also thinks that inflation should return to about three per cent in 2013 (from below two per cent in 2012), a level that is more in sync with Malaysia's medium-term inflation trend. Meanwhile, UOB Bank economist Ho Woei Chen expects inflation to rise to an average of 2.5 per cent in 2013 on the back of some recovery in the global outlook. Higher wages and consumption demand will put upward pressure on the prices, she added. DBS Bank economist Irvin Seah warned that the December's figure will mark the turn in inflation for Malaysia. "Expect a broad-based gradual increase in inflation readings in the coming months as the effect of strong domestic demand, rising property prices and wage costs start to dig in." Although DBS Bank expects Bank Negara Malaysia to hold the overnight policy rate steady at 3.00 per cent right through the year, the risk of a rate hike to anchor inflation expectation is rising.
LAST week, opposition leader Datuk Seri Anwar Ibrahim outlined Pakatan Rakyat's policy in taking care of oil palm planters' interests, should the opposition come into power at the federal level. In his bid to win the hearts of oil palm planters, which make up a significant vote bank, Anwar unwittingly struck a raw nerve when he lobbied Malaysia to stop planting oil palms on peat soil, pending studies on carbon emissions and sequestration. When met at Putrajaya yesterday, Plantation Industries and Commodities Minister Tan Sri Bernard Dompok rejected Anwar's lobby. "This is not acceptable. Anwar's lobby for a moratorium seems to be echoing that of western environment non-governmental organisations' (WENGOs) mantra," he told Business Times after officiating at the close of "Branding of Malaysian Palm Oil" workshop yesterday. Time and again, WENGOs like Greenpeace and Wetlands International, and their local affiliates, have claimed that oil palm planting on peatland causes tremendous pollution in the form of greenhouse gas (GHG) emission when water is drained from the soil. These groups, however, fail to provide any credible scientific evidence to support their allegations. "For Anwar to lobby a move that echoes the WENGOs' shows that he is not guided by logic. How can planting oil palms be highly pollu-ting when these trees, like any other forest species, produce oxygen for us to breathe?" he asked. "Sarawak is Malaysia's final frontier in oil palm planting. If Anwar is a responsible lawmaker serving the best interest of the rakyat, he should go to Sarawak and see how oil palms, nurtured with good agricutural practices, are thriving on peatland," Dompok said. The minister also said GHG emission is not really an issue as Malaysia is a net carbon sink country with more than 80 per cent of tree cover provided by permanent forests and plantation crops, including oil palms, rubber, cocoa and coconuts. Dompok then sought tighter support from media practitioners to convey the facts and figures of sustainable practices by oil palm planters to quash baseless claims by irresponsible people who have vested interests to lobby against oil palm planting in Sarawak's 1.6 million hectare of peatland. In a separate telephone interview from Sarawak, Kapit Member of Parliament, Datuk Alexander Linggi, concurred with Dompok that it is of national economic interest that progress studies of sustainable peatland farming is communicated to the relevant channels and done in a timely manner so that investors understand how best to optimise what is available in Sarawak. Linggi spoke of higher economic potential of oil palm planting compared with other cash crops. "Nobody criticises pineapple planting on peatland. "So, why are there unfair attacks from environment activists when my people want to plant oil palms?" he asked. "The oil palm is an economic security crop for Sarawak and the country," he said, in reference to Malaysia's annual US$20 billion (RM60.8 billion) palm oil exports which support some two million jobs and livelihoods along the sprawling value chain. Tan Sri Shahrir Abdul Samad, chairman of the Malaysia Palm Oil Board, noted that zero burning, good water management and palm nutrition are imperative when planting oil palms in peat soil. "The intensity of drains depends on the topography of the field and planting density but the primary objective is to keep the water levels at 50 cm to 75 cm from the surface at most times," he said. This is achieved through a series of stops, weirs and watergates. Periodic flushing of the acidic and excessive storm water during the rainy season is also carried out, he added. Shahrir highlighted that in Peninsular Malaysia, oil palms planted on peat soil by United Plantations Bhd is being carried out in an environmentally sustainable manner, even after three generations.
KUALA LUMPUR: The automotive industry is expected to see another record-breaking performance in 2012, says Malaysian Automotive Association president Datuk Aishah Ahmad. "2012 was beyond expectations and far better than what we had forecast,"she said at a media briefing held to announce the Kuala Lumpur International Motor Show 2013. The numbers will be released by MAA today. 2010 was a record-breaking year as the number was an all-time high of 605,156 units sold. In 2011, sales were affected by supply chain disruptions caused by natural disasters in Japan and Thailand.
KUALA LUMPUR: Naza Kia Malaysia Sdn Bhd, the local distributor of Kia Motors vehicles, will kick off its 2013 offering with the launch of the all-new Kia Rio on January 30. The Rio is set make a bold statement in the B-segment of the automotive market with its award-winning design along with class-leading features, safety ratings and fuel economy. "2012 was a strong year for Kia in Malaysia with sales growing 13 per cent to 12,309 units," Naza Kia chief operating officer Datuk Hafiz Syed Abu Bakar said. He expects Naza Kia's sales volume to expand by double digits, with the new Rio playing an integral part. "The all-new Rio was Kia's best-selling model outside Korea in 2012, with 466,826 units sold and we are confident that it will be just as successful in Malaysia," Hafiz added. Among the key features are LED daytime running lights, a sunroof, LED rear combination lamps, Arkamys audio system, motor-driven power steering, electronic stability control and six airbags. The new Rio will be targeted at consumers under 35 years, seeking a youthful and trendy driving lifestyle that does not compromise on fuel economy and safety. Among the awards won by the all-new Rio are the International Design Excellence Award in the United States and the Product Design Award at the 2012 Red Dot Design Awards in Europe.
KUALA LUMPUR: Axis REIT Managers Bhd's (ARMB) portfolio will swell to RM2.2 billion by the end of 2014 as it plans to buy nine assets worth RM660 million. These include warehouses, factories and a hypermarket in the Klang Valley, Johor and Malacca. Chief executive officer Datuk Steward LaBrooy said ARMB is negotiating with the asset owners. ARMB is planning to buy three to five assets worth RM350 million, way above the RM219 million worth of properties it bought last year, he added. "It will be majority financed by placement of new shares. We have the capacity to raise RM270 million and with the cash we have, we can leverage and buy up to RM350 million worth of assets this year," he said yesterday at a media briefing. LaBrooy said the placement will take place when ARMB has a cluster of investors ready to buy, and when negotiations for the properties are final. ARMB, the manager of Axis Real Estate Investment Trust (Axis REIT), which is the world's first office/industrial Islamic REIT and Bursa Malaysia's first listed REIT - now has 31 properties worth RM1.52 billion. Axis REIT posted strong performance last year, attributable to contribution from five new assets acquired during the year, improved overall portfolio occupancy, and positive rental reversions. Net profit grew 22.9 per cent to RM79.7 million from RM64.8 million in 2011 as there were no exceptional expenses incurred during the year and because of lower Islamic financing cost. Total revenue increased by 15.9 per cent to RM132.9 million versus RM114.7 million in 2011 while income available for distribution was RM84.8 million, inclusive of gain from selling Kayangan Depot. A dividend of 5.6 sen (including the 1.30 sen special distribution from the gains on the disposal of Kayangan Depot) was declared, bringing total fiscal dividend to 18.60 sen, a 8.1 per cent rise over 2011. LaBrooy said gearing stood at a manageable level of 34.5 per cent in the fourth quarter of 2012. He said Axis REIT also recorded a fair value gain for its portfolio of investment properties amounting to RM24.3 million, which demonstrated the strength of the assets the trust had invested in. Meanwhile, RHB Research is maintaining a neutral "call" on Axis REIT, with revised fair value of RM3.10 (from RM3) after the earnings revision and updating the cost of equity assumptions. The research house revised upwards its fiscal year 2013 and 2014 forecast on earnings by 7.4 per cent to 8.1 per cent after updating its fiscal 2012 full-year figures on Axis REIT.
KUALA LUMPUR: The pre-package customised incentives to support the development of energy-efficient vehicles (EEVs) sub-sector are likely to be announced by June, says International Trade and Industry Minister Mustapa Mohamed. Malaysia is keen to take pole position for this sub-sector in the Asean region ahead of the single integrated market by 2015. "We should make the production and marketing of EEVs the future focus of the industry and we should establish leadership position," he said at the soft launch of the Kuala Lumpur International Motor Show 2013 yesterday. The new segment saw increased investments last year from Honda and Perodua and a number is expected from car manufacturers from China and Japan as well. The EEV forms an important thrust of the yet-to-be-released review of the National Automotive Policy (NAP), which will transform and integrate the local automotive industry into the regional and global industry networks. "We believe that we are the only country in Asean focusing on EEV and we like to fill up the space as there is a lot of potential for us to move forward in fuel efficiency and lower carbon emission." He admitted that there has been delay due to cost issues related to technology with regards to making Euro 4 diesel available, but Miti is working closely with the Transport Ministry as well as the Energy, Green Technology and Water Ministry. 2013, he pointed out, marks a transition period for the automotive industry, ahead of the opening of a single economic community, called the Asean Economic Community in 2015 and the phasing out of tariffs under bilateral agreements with Japan and Australia in 2016. The local automotive industry, he said, are aware that they have to find a way to deal with the new reality in 2016. Meanwhile, the government has completed the NAP review after intensive discussions with the stakeholders over the past two years. "The bottom line is we want to develop a sector that is competitive with regards to price and quality for our cars, whilst providing consideration for the existing and new manufacturers and consumers, as well as technology-related issues." The trade minister hoped that Malaysia would be able to up the current exports of RM 1 billion worth of motor vehicles as well as auto components, which is now in deficit at RM5 billion versus imports at RM8.5 billion. "Malaysia may not be able to close the gap completely, but we have to reduce the deficit,"he said, adding that the biggest deficit came from the import of completely built up vehicles mostly from Japan, Germany and Thailand. On the motor show, Malaysian Automotive Association president Datuk Aishah Ahmad said 93 per cent of the floor exhibition space has been snapped up ahead of the event, which is to be held at the PWTC, Kuala Lumpur, from November 15-24. The event, which is being held every three years, is expected to see the participation of 150 exhibitors.
MORE than RM130 million will be spent on refurbishing and expanding KFC outlets in the country, said Triple Platform Sdn Bhd managing director Datuk Ahmad Zaki Zahid. Triple Platform, the owner of KFC Holdings (M) Bhd and QSR Brands Bhd, hopes that the investment will be able to propel KFC Malaysia to double-digit growth this year. "The economy is expected to remain strong this year and consumer sentiment likely to be good. "We will take this year to expand the business aggressively as well as to improve our services. "Hopefully, we will be able to see a nine per cent to 10 per cent sales growth this year," said Ahmad Zaki after the launch of KFC's new Golden Wrap Chicken yesterday. The RM133 million will be spent on opening 37 new restaurants (including those that would be relocated), as well as refurbishing at least 30 outlets this year. Ahmad Zaki said the money allocated for refurbishment and expansion is just a part of the group's overall capital expenditure, which include the expansion of its Pizza Hut business as well as production facilities. "Being private allows us to be more aggressive in terms of expansion as well as to be more flexible and quick in terms of restructuring," he said. Triple Platform is a wholly-owned unit of Massive Equity Sdn Bhd - a special-purpose vehicle owned by Johor Corp (JCorp), private equity firm CVC Capital Partners and the EPF. In December 2011, CVC teamed up with JCorp and the EPF in a massive RM5.2 billion buyout offer for KFC and QSR. The privatisation exercise was completed on Monday. KFC and QSR shares, which have been suspended, are expected to be delisted soon. Ahmad Zaki added that the company will announce new members to its board of directors after the completion of the delisting of the two companies. "Currently, we are evaluating several candidates whom we feel can strengthen the company's operations, taking into account their expertise. "Besides, the company is also open to taking in new directors, including foreign experts, as we are confident this move is able to increase the operations of KFC in the future," he added. He added that a new name to replace Triple Platform will also be announced shortly.