Tuesday, October 3rd, 2017


US stocks add to records on bullish sentiment; Tesla falls

NEW YORK, Oct 3 — Wall Street stocks edged higher early today, adding to records on continued optimism about third-quarter earnings despite a disappointing production update from Tesla. All three major US stock indices ended at records…

Buffett bets on truck stops, to buy majority of Pilot Flying J

NEW YORK, Oct 3 — Warren Buffett’s Berkshire Hathaway Inc today deepened its commitment to the American economy, saying it bought a major stake in Pilot Flying J, the largest US truck stop operator, and will become majority owner in six years….

US stocks, dollar mixed as tax reform hits bump

LONDON, Oct 3 — US equities fluctuated near records, while the dollar’s rally stalled near a two-month high as investors assessed the prospects for tax reform after a Republican senator raised concern it could balloon the deficit. The S&P…

SSM to wind up 50% of dormant firms

KUALA LUMPUR: The Companies Commission of Malaysia (SSM) aims to wind up at least 50% of the 67,767 dormant companies incorporated between 2012 and 2014, said its chief executive officer Datuk Zahrah Abd Wahab Fenner.

She said the commission was offering a moratorium period of between Oct 1 and Dec 31 for applications to cancel the registration of company names and incentives to reduce compounds.

“We urge dormant companies to use the opportunity during the three-month moratorium period to cancel the registration and take advantage of the reduction of up to 80% for the compound offered,” she said after officiating at the National Insolvency Conference 2017 today.

The one-day conference, organised by SSM, attracted 260 participants, comprising lawyers, bank officers and insolvency advisers.

It aims to share information on the new provisions relating to insolvency in the 2016 Act.

Zahrah said SSM had also introduced new guidelines to facilitate the application to wind up the firms.

She said the applicants now did not have to issue a shareholders’ resolution to prove that all shareholders had no objection to the application.

“SSM is offering up to 80% discount for the compound incentives during the period, which is from RM1,000 to a flat rate of RM100, for every company or director’s fault.

“With the implementation of this moratorium, the application process is expected to be faster, from about nine months and sometimes reaching two years, to 60 days,” she said. – Bernama

Q3 GDP seen tapering off

PETALING JAYA: Kenanga Research foresees a relatively precarious growth trajectory for Malaysia, with the gross domestic product (GDP) projected to taper off to 5.3% for Q3, given the weakness in September’s manufacturing purchasing managers’ index (PMI).

GDP grew 5.8% in Q2, the highest since Q1 2015.

Malaysia’s PMI fell below the 50-point threshold to 49.9 points in September due to lower domestic new orders. While the 49.9 reading suggests that business conditions are largely unchanged, September’s readings represent a disappointing retreat after prior optimism in August.

Following that, Kenanga Research remains cautious on manufacturing sector expansion moving into Q3.

“Our house forecast on 2017 manufacturing industrial production index (IPI) growth is 5.7% (2016: 4.3%; Q2 17: 6.2%). This will likely translate to a 5.3% manufacturing GDP growth (2016: 4.4%; Q2 17: 5.9%),” said Kenaga Research.

While respondents are likely to see a squeeze from higher cost-push factors along with flailing demand, as represented by falling new orders, Kenanga Research expects cost considerations to ease somewhat moving forward, in part from seasonal factors, hence placing a cap on cost growth.

“However, even if cost pressures ease, we are cautious if this will translate into any meaningful decline in output prices as margin protection remains a concern for manufacturers.”

Kenanga Research is also mindful that September’s decline in export orders might represent a one-off moderation, given relatively strong PMI readings globally, and to an extent, regionally.

However, the research house is cognisant of possible monetary tightening among the advanced market economies and some of the emerging market economies; a more bullish outlook tends to lend support to policy tightening initiatives.

“As such, we reiterate our reservations on further external growth support to the region and by extension, the Malaysia economy.”

Despite IHS Markit anticipating IPI to expand 4.6% for 2017, which is higher than the 3.8% in 2016, Kenanga Research noted that the manufacturing PMI may not necessarily reflect overall industrial production, which includes a mining and electricity generation component that accounts for 34.1% of the headline IPI.

Khazanah’s KNeo entrepreneurship programme open to all

KUALA LUMPUR: Khazanah Nasional Bhd will be initiating an entrepreneurship programme open to all Malaysians above the age of 18, as part of its endeavour to catalyse the entrepreneurial ecosystem in Malaysia.

The sovereign wealth fund has apportioned RM3 million for a 28-week programme that ends in May 2018, known as Khazanah Nasional Entrepreneurship Outreach (KNeo) Programme. It is open for application until Nov 27.

Through the programme, Khazanah also aims to create a pipeline of potential investee companies that could be included in its portfolio in the future.

Speaking to reporters at the pre-launch media briefing, executive director of investments Tengku Datuk Seri Azmil Zahruddin (pix), said although Khazanah’s “normal mandate” entails being a shareholder in larger companies and has not been very much involved in the entrepreneurial space, it has started to do more in the last two or three years.

Previously, Khazanah had conducted similar programmes within the circle of its investee companies with the likes of Malaysia Airlines Bhd, Tenaga Nasional Bhd and others.

“It is not our bread and butter but we feel as an investment house particularly one that is owned by the Malaysian people it is our duty to look at it more holistically. It is part of what you would reasonably expect us to do given that we are a Malaysian government owned entity, therefore we have an interest on Malaysia as a country,” he said.

“It is not our core … it doesn’t deviate from our overall mandate, which is to serve the Malaysian people,” he added.

No specific target has been set on the number of sign-up’s Khazanah intends to attract and it plans to hold the programme on an annual basis should it receive a positive response.

The programme is open to startup’s across the board including technology (tech) based, non-tech and social enterprises on condition that the organisation is based in Malaysia.

KNeo will have five phases namely application, selection, incubation, acceleration and demo-day, which will see the three finalist present their business model to a panel of judges.

Khazanah will also be working with three accelerator partners namely 1337 Ventures, Code Ar.my and Watch Tower and Friends to incubate start-ups that make it to the acceleration phase of the programme. Selected teams will be able to learn from renowned industry experts ranging from traditional businesses to highly scalable tech solutions to social enterprises, while also being mentored by corporate leaders from major companies, successful start-up founders and other business leaders.

This will help them strengthen their business fundamentals, go-to-market and monetisation plans; as well as obtain lessons, new ideas and insights.

The Top 30 companies to be selected to the acceleration phase, will receive mobilisation funding of RM20,000 each, in exchange for a 2% stake in their startup to be held by Khazanah’s accelerator partners. The top three finalists on Demo Day will be awarded RM30,000 each.

Azmil said the 2% stake is relatively small compared with stakes held by investors in startups in the Silicon Valley.

UOB: Budget 2018 will remain expansionary

PETALING JAYA: Budget 2018, which will be announced on Oct 27, is expected to be an expansionary budget with focus on the lower and middle income segments, addressing cost of living, affordable housing issues and new technology to spur growth.

“We anticipate the coming budget will remain expansionary, yet in keeping with fiscal consolidation as further revenue enhancement measures will be introduced. The government is likely to maintain fiscal prudence with more targeted spending on the lower and middle income segments,” said UOB Bank economist Julia Goh in her Budget 2018 preview flash notes today.

Goh expects higher operating expenditure and development expenditure for 2018. Under the 11th Malaysia Plan for 2016-2020, the development expenditure ceiling is RM260 billion or RM52 billion per year.

Based on 2016-17 development expenditure allocation, only RM88 billion or 34% has been utilised, which leaves room to increase development expenditure allocation next year.

Goh expects a broadening in the tax base and an increase in tax compliance and enforcement efforts. Although the goods and services tax (GST) rate will remain at 6%, the government is studying ways to tax companies with business in Malaysia but book their revenues abroad.

In view of higher oil prices and stronger flow of GST revenues, Goh said there could be room to lower personal income tax rates for the middle-income brackets to ease the burden of high cost of living and enhance competitiveness.

On BR1M cash aid, under Barisan Nasional’s 2013 election manifesto, the target is RM1,200 for those with incomes below RM3,000 and the target has been met. Goh said it is reasonable that the government will maintain BR1M in the coming budget.

Meanwhile, the Employees Provident Fund (EPF) contribution cuts are not expected to be extended given robust private consumption growth and the issue of insufficient retirement savings. Note that the 3% cut in EPF contribution will expire at end-2017.

The government is expected to introduce measures to expand exports and improve the current account balance. Measures include promoting tourism, further extension of e-visas and encouraging companies especially SMEs to internationalise.

In terms of housing affordability, Goh expects more measures to address supply shortage of affordable homes and bridging the affordable housing gap, including savings programmes and rental support, rent-to-own and partial ownership programmes.

3,400 youths sought financial help in first 8 months

PETALING JAYA: The financial position of youths has taken a further beating with over 3,400 of youths aged 20-30 years seeking Credit Counselling and Debt Management Agency’s (AKPK) assistance from January to August this year, which is close to the 3,450 reported for the full year in 2016.

This commiserates with a study done by the Asian Institute of Finance in 2015, which found a majority of youth to be living on high borrowing costs – 38% of youths rely on personal loans, while another 47% engage in expensive credit card borrowings.

Bank Negara Malaysia deputy governor Abdul Rasheed Ghaffour shared the statistics in his keynote address at Fomca Conference 2017 today, which addressed the much-to-be-desired state of financial literacy in Malaysia and measures being done to elevate financial literacy.

He announced that work is underway to formulate a five-year national strategy to boost financial literacy which will focus on promoting responsible financial behaviour through collaboration of all stakeholders with full commitment.

Set up by BNM in 2006, AKPK helps borrowers who have financial problems to get back on their feet and manage their finances and debts. It also provides free financial education, counselling and debt management programmes. 

Citing more than 75% of Malaysians find it difficult to raise even RM1,000 of immediate cash for emergencies, which were the findings of BNM’s Financial Capability and Inclusion (FCI) Survey conducted in 2015, Abdul Rasheed highlighted that Malaysians tend to have low financial resilience and are vulnerable to financial shocks.

“An ideal situation is to have a financial buffer that is sufficient to cover living expenses of at least three to six months in the event of loss of income.”

Furthermore, Abdul Rasheed said majority of Malaysians do not practice long term financial planning, noting that only 40% of Malaysians consider themselves financially ready for retirement, despite the steadily increasing life expectancy of Malaysians.

He said the poverty line in Malaysia is at RM950 per month, and based on the Employees Provident Fund (EPF), a retiree would need RM228,000 upon retirement to generate sufficient investment income to live above the poverty line for the next 20 years.

However, he said the average EPF savings of those in the 51–55 age group is only about RM160,000, according to Khazanah Research Institute.

Abdul Rasheed said Malaysians still lack of understanding on risk and return, and are not able to make rational financial decisions while being prone to financial fraud and abuse, with the number of financial scams reported in the country rising to 1,883 cases from 2015 to the first quarter of 2017, which resulted in accumulated losses of RM379 million.

Mobile payment in Malaysia set to increase, says HSBC

KUALA LUMPUR, Oct 3 — With the growth of digital economy and the push by regulatory authorities for demonetisation, instant payment schemes are emerging across the Asean region, including Malaysia, where the mode of payment is increasingly…

EPF will not accept cash contributions for employees beginning next year

TAWAU, Oct 3 — Beginning Jan 2, the Employee Provident Fund (EPF) will no longer accept cash payments for employee contributions throughout the country, said its general manager Azmi Awang. He said this would allow the employers to make the…