Sunday, November 12th, 2017
PETALING JAYA: The Trans-Pacific Partnership (TPP) has been resurrected as the Comprehensive and Progressive TPP (CPTPP) minus 20 provisions, including those in the intellectual property segment, specifically biologics, patent term adjustment and copyrights, which are of particular interest to Malaysia.
According to a statement issued by the Minister of International Trade and Industry on Saturday, the 11 members of the partnership have agreed on the text of the CPTPP agreement but a number of issues remain to be finalised before the signing of the deal.
The TPP member countries are Australia, Brunei, Chile, New Zealand, Peru, Singapore, Vietnam, Japan, Malaysia, Canada and Mexico. The US opted out in January this year.
“The agreement reached here in Da Nang, Vietnam, will be brought back for further engagement with the relevant stakeholders back home,” Minister Datuk Seri Mustapa Mohamed said in the statement following the summit of Asia-Pacific Economic Cooperation (Apec) countries in Vietnam.
He said the original TPPA which included the US was signed after considering all costs and benefits associated with the trade deal.
Despite the absence of the US now, Mustapa said, Malaysia still stands to gain benefits from market access to countries such as Canada, Peru and Mexico.
“Overall, we believe that the benefits from the CPTPP will outweigh its costs in the context of Malaysia. Our continued involvement in the CPTPP is a testament of Malaysia’s commitment to globalisation and multilateralism,” Mustapa said.
“Another consideration for Malaysia is the impact to our economy should we decide not to join the CPTPP, while the remaining 10 countries move ahead.
“We will not only miss out on the opportunities to strengthen our trade and investment ties with these 10 countries, but also with those countries that have registered their interest to join the CPTPP in future,” he added.
The statement said details of the CPTPP agreement have been made public and are available on the ministry’s website.
PETALING JAYA: Analysts have projected a 25 basis point (bps) increase in the Overnight Policy Rate (OPR) to 3.25% in the second half of 2018 (2H18), following signs of hawkishness at Bank Negara Malaysia’s Monetary Policy Committee (MPC) meeting last Thursday.
In its final meeting of the year, the MPC said it “may consider reviewing the current degree of monetary accommodation”.
“We take this as a signal that Bank Negara Malaysia (BNM) is getting ready to normalise interest rates should domestic demand growth pan out as expected,” Hong Leong Investment Bank (HLIB) Research said in a report last Friday.
Despite the hawkish stance in the monetary policy statement, HLIB Research said, a rate increase is not likely in 1H18 as the threat of financial imbalances is still largely absent, with moderate loan growth of 5.2% in September and the house price index increasing 5.6% in the first quarter amid expectations of milder inflation in 2018.
“We introduce 2018 interest rate forecast that BNM will hike the OPR by 25bps in 2H18, bringing the OPR to 3.25% by end of 2018,” it said.
Besides the MPC’s statement on “may consider reviewing the current degree of monetary accommodation”, Kenanga Research noted that the MPS conspicuously dropped any mention of core inflation remaining contained.
“This is MPC’s most hawkish statement yet and may be BNM’s earliest official statement communicating possible tightening down the road. However, we note that while hawkish, the MPC’s language sought to keep its options open but simply considered a review,” it said in its report.
It also noted that any timetable or specific economic variables of interest were not mentioned in the MPS’s statement but suspects that any further elevation of core inflation and sustained growth in 2018 will likely trigger a 25bps increase in the OPR to 3.25%.
On the flip side, it expects deterioration in 2018 manufacturing and service sector growth significantly below the Finance Ministry’s 5.3% and 5.8% respective target to reduce the case for a rate hike.
“Given the house view of a 4.9% growth target for 2018 instead, we believe that the timing that MPC will likely consider its first rate hike is in 2H18 as it awaits confirmation of sustained growth trajectory at least for 1H18,” it added.
Meanwhile, Affin Hwang Capital has maintained its view that BNM will likely increase the OPR by 25bps to 3.25% in 2H18, on expectations that the current strong economic momentum continues on a favourable global economic environment.
“However, we believe that any increase in the OPR in 2H18 would be at a measured pace, and the magnitude of increase would be gradual and dependent on macro growth and CPI data, following closely also the development in US monetary policy, direction of the Fed Funds rate and reduction in the Fed’s balance sheet,” it said in its report.
It believes the rationale for a rate increase, if it materialises, would be to prevent the economy from exceeding its potential output level, which would translate into higher inflationary pressure.
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PETALING JAYA: RAM Ratings has assigned a preliminary rating of AA3/Stable to Edra Energy Sdn Bhd’s proposed sukuk wakalah of up to RM5.28 billion in nominal value (2017/2037).
The preliminary rating reflects Edra Energy’s strong project economics, underscored by stable cashflow generation, resulting in a minimum finance service coverage ratio (with cash balances, post-distribution, calculated on payment dates) of 1.50 times under RAM’s sensitised case upon completion of the plant, commensurate with an AA3 rating.
“Given the technology used in the turbine is untested and no other plant of this scale is currently in commercial operation globally, the company is exposed to technology risk. As the plant is under construction stage and equity will be progressively injected into the project throughout the construction period, this also exposes the project to construction-related risk and uncertainty of funding,” RAM co-head of infrastructure and utilities ratings Chong Van Nee said in a statement last Friday.
Edra Energy, an independent power producer (IPP), signed a 21-year power purchase agreement (PPA) with Tenaga Nasional Bhd (TNB). It will design, construct, own, operate and maintain the largest gas power plant in Malaysia, with a capacity of 2,242MW combined-cycle, gas-turbine power plant in Alor Gajah, Malacca.
Proceeds from the proposed sukuk amounting to RM5.21 billion will mainly be used to fund the construction of the plant.
The company is entitled to earn full available capacity payments regardless of the quantum of electricity generated, as long as it meets performance requirements under the PPA.
“Edra Energy can also fully pass through fuel costs to TNB via energy payments received from selling electricity, provided that the plant operates within heat rates stipulated in the PPA. We derive further comfort from the sturdy credit profile of TNB,” said the rating agency.
It noted that the technology risk associated to General Electric Company’s (GE) 9HA.02-model gas turbine (GT) that can achieve an efficiency rate of over 60% will be largely addressed via Edra Energy’s long-term service agreement (LTSA) with GE for the operations and maintenance of the plant’s GTs, steam turbines and generators.
GE will provide further support in respect of the insurability of the plant and a special warranty to cover collateral damages. RAM views GE’s willingness and confidence in providing support as a positive, given its more than five-decade operating track record.
“The company’s debt servicing ability also withstood our conservative assumptions. This includes operational hiccups upon achieving commercial operations and at the end of each contract year block as well as higher operations and maintenance costs subsequent to the expiry of the LTSA,” it said.
PETALING JAYA: CIMB Group Holdings Bhd on Saturday announced it will triple its Corporate Social Responsibility (CSR) spend over the next three years, by committing 1% of the group’s profit before tax (PBT) to CIMB Foundation between 2018 and 2020 for initiatives throughout Asean.
This was announced by CIMB Group chairman Datuk Seri Nazir Razak during CIMB Foundation’s three-day 10th Year Anniversary celebration, graced by CIMB Foundation chairman Tan Sri Md Nor Md Yusof; CIMB Group CEO Tengku Datuk Seri Zafrul Aziz; CIMB Foundation’s Board of Trustees; as well as CIMB Foundation CEO Datuk Hamidah Naziadin.
The events hosted around 10,000 members of the public at the Curve, Mutiara Damansara, who got to know the beneficiaries and enjoyed up-close and personal sessions with Datuk Nicol David, CIMB’s brand ambassador, and other local top athletes and celebrities.
The monies pledge will be disbursed annually for the period 2018-2020 across CIMB’s operations in Asean, towards the foundation’s three core pillars i.e., community development, sports and education with the aim of empowering larger communities and changing more lives across the region.
“CIMB believes that corporates should commit more to CSR, especially in this age of rising inequality and uncertain, disruptive change. Our commitment to spend annually 1% of the group’s PBT in the preceding year will triple CIMB’s annual financial spend on CSR over the next three years, estimated to be about RM65-RM75 million annually. I’m happy to note that CIMB Foundation is also introducing ‘‘Diversity and Inclusion“ as the guiding principle for all its activities, to promote better communal relations, diversity and inclusion, and nurture cross-cultural understanding among beneficiaries,” Nazir said in a statement.
The additional allocation will enable CIMB Foundation to launch its financial literacy programme for youth called Be$MART in Indonesia, Thailand and Cambodia in 2018. Its community development and education pillars will not only be expanded in Malaysia, but also replicated in other Asean countries where CIMB operates.
Established in November 2007, CIMB Foundation has disbursed RM120 million through 962 initiatives benefitting 700,000 lives.
Malaysian palm oil futures edged down, weighed down by a stronger ringgit and weaker export data from cargo surveyor and industry regulator, MPOB. The benchmark crude palm oil futures (FCPO) contract inched down 0.18 per cent to RM2,799 on Friday, which is RM5 higher than RM2,804 during the previous week. The average daily trading volume […]
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