Sunday, May 13th, 2018

 

Trump says working with Xi to get China’s ZTE back into business, fast

WASHINGTON: US President Donald Trump said Sunday that he and Chinese President Xi Jinping are working to give Chinese telecom company ZTE Corp “a way to get back into business, fast”.

“President Xi of China, and I, are working together to give massive Chinese phone company, ZTE, a way to get back into business, fast. Too many jobs in China lost. Commerce Department has been instructed to get it done!” Trump wrote on Twitter.

The Chinese technology company earlier this month suspended its main operations after the US Commerce Department banned American supplies to its business.

The ban is the result of ZTE's failure to comply with an agreement with the US government after it pleaded guilty last year to conspiring to violate US sanctions by illegally shipping US goods and technology to Iran, the Commerce Department said.

As one of the world's largest telecom equipment makers, ZTE relied on US companies such as Qualcomm Inc and Intel Corp for components.

American companies are estimated to provide 25% to 30% of the components used in ZTE's equipment, which includes smartphones and gear to build telecommunications
networks. – Reuters


EPF remains optimistic on economy in the long term

PETALING JAYA: The Employees Provident Fund (EPF) remains optimistic of the long-term outlook of the Malaysian economy following the formation of a new government after the 14th general election, anticipating that any potential short-term market dips would provide opportunities for further investments into the domestic markets.

CEO Datuk Shahril Ridza Ridzuan said: “We have been investing here for a very long time and believe the strong fundamentals of the Malaysian economy remain intact. Short-term volatility is natural given this is the nation’s first experience of a power transition, but the smooth process seen so far will assure investors that Malaysia is a mature democracy and economy.”

The new government’s call for greater enhancements to local institutions’ corporate governance practices and independence, together with greater scrutiny by strong
regulators would bode well for the local business environment, he said.

Shahril reaffirmed that the EPF would continue to invest in accordance with its existing principles and stated risk parameters, adding that the pension fund is focused on providing a return to its members of at least 2% above the inflation rate.

“We are further heartened that the manifesto of the new government supports the EPF’s vision of providing a better future for our 13.7 million members. In particular, we welcome the focus on continuously improving the minimum wage framework and encouraging more voluntary savings, especially for housewives.”


Review of mega projects crucial, timely: Economists

PETALING JAYA: Economists view the review of big-ticket mega projects as timely and crucial in ensuring that Malaysia strikes a better deal as well as being able to curb leakages and wastage from lopsided contracts that may hurt the country’s finances.

Big-ticket projects lined up include the Kuala Lumpur-Singapore High Speed Rail (MyHSR) and the East Coast Rail Line (ECRL).

Prime Minister Tun Dr Mahathir Mohamad announced upon taking office after leading Pakatan Harapan to a historic win in the 14th general election last Wednesday that the new government will review mega projects and contracts and, if warranted, deals will be renegotiated.

This was echoed by newly appointed Finance Minister Lim Guan Eng.

Senior research fellow at the Malaysian Institute of Economic Research Dr Shankaran Nambiar said a review is necessary as it is unclear on what basis some of the contracts were awarded.

“There have been claims that these projects were slated with a bill that is far above the market value; that is not acceptable, if true. That’s why a review is necessary. More than that, the principles of transparency and economic efficiency have to be firmly established as criteria in the award of contracts. This has to be a part of the tender and award process,” he said.

“Going further, aggrieved parties should have the right to question why they are not awarded projects. If these processes are put in place as standard practice, we can be sure that leakages and inefficiencies will be weeded out. This problem gets complicated in the case of projects coming from China,” he added.

However, Shankaran opined that the premier’s undertaking of reviewing contracts with China does not mean that he is averse to Chinese investment in Malaysia, but instead it means that he will not tolerate lopsided deals that do not benefit Malaysia.

“His statements on the review of mega projects may sound alarming, but they should be viewed as a more careful evaluation of projects that will benefit Malaysia in the long run. I see this as a positive, although the immediate consequence would be one that generates uncertainty. I think there will be more confidence from investors who will be evaluated on the basis of what they can bring to the country than for the political deals that can be offered,” he explained.

Sunway University Business School Professor of Economics Dr Yeah Kim Leng said the review is timely and is important for Malaysia in terms of striking a better deal and ensuring that the government does not overpay for certain deals and capitalise on savings in order not to get caught in a debt trap.

“Importantly, we are likely to see improved governance standards and confidence, especially when it is undertaken by professionals objectively as well as thoroughly reviewing the costs and benefits for the country both in the present and the future to ensure it is within our financial means, and that the debt level does not overshoot,” he added.

According to Yeah, the federal government debt is likely to hover around 51-52% to gross domestic product (GDP), which is still lower than the debt ceiling of 55% to GDP. However, he said this excludes new projects, such as the RM55 billion ECRL, which have not been factored in. Inclusive of these projects, the contingent liabilities could be up by 15-20%.

“The larger projects have not been factored into our contingent liabilities, which some estimate will rise between 15% and 20% if they are included. So this will be a good opportunity to undertake a full disclosure of all our contingent liabilities.

“That will strengthen confidence in the government and its ability to review some of the projects that are in the pipeline and if the government is not able to fund them then find the best feasible means to fund them with foreign loans or private public financing schemes where private sector actually contribute to the financing as well,” he added.

According to Bank Negara Malaysia’s figures, the government’s current liabilities totalled about RM686.8 billion at the fourth quarter of 2017.


Review of mega projects crucial, timely:Economists

PETALING JAYA: Economists view the review of big-ticket mega projects as timely and crucial in ensuring that Malaysia strikes a better deal as well as being able to curb leakages and wastage from lopsided contracts that may hurt the country’s finances.

Big-ticket projects lined up include the Kuala Lumpur-Singapore High Speed Rail (MyHSR) and the East Coast Rail Line (ECRL).

Prime Minister Tun Dr Mahathir Mohamad announced upon taking office after leading Pakatan Harapan to a historic win in the 14th general election last Wednesday that the new government will review mega projects and contracts and, if warranted, deals will be renegotiated.

This was echoed by newly appointed Finance Minister Lim Guan Eng.

Senior research fellow at the Malaysian Institute of Economic Research Dr Shankaran Nambiar said a review is necessary as it is unclear on what basis some of the contracts were awarded.

“There have been claims that these projects were slated with a bill that is far above the market value; that is not acceptable, if true. That’s why a review is necessary. More than that, the principles of transparency and economic efficiency have to be firmly established as criteria in the award of contracts. This has to be a part of the tender and award process,” he said.

“Going further, aggrieved parties should have the right to question why they are not awarded projects. If these processes are put in place as standard practice, we can be sure that leakages and inefficiencies will be weeded out. This problem gets complicated in the case of projects coming from China,” he added.

However, Shankaran opined that the premier’s undertaking of reviewing contracts with China does not mean that he is averse to Chinese investment in Malaysia, but instead it means that he will not tolerate lopsided deals that do not benefit Malaysia.

“His statements on the review of mega projects may sound alarming, but they should be viewed as a more careful evaluation of projects that will benefit Malaysia in the long run. I see this as a positive, although the immediate consequence would be one that generates uncertainty. I think there will be more confidence from investors who will be evaluated on the basis of what they can bring to the country than for the political deals that can be offered,” he explained.

Sunway University Business School Professor of Economics Dr Yeah Kim Leng said the review is timely and is important for Malaysia in terms of striking a better deal and ensuring that the government does not overpay for certain deals and capitalise on savings in order not to get caught in a debt trap.

“Importantly, we are likely to see improved governance standards and confidence, especially when it is undertaken by professionals objectively as well as thoroughly reviewing the costs and benefits for the country both in the present and the future to ensure it is within our financial means, and that the debt level does not overshoot,” he added.

According to Yeah, the federal government debt is likely to hover around 51-52% to gross domestic product (GDP), which is still lower than the debt ceiling of 55% to GDP. However, he said this excludes new projects, such as the RM55 billion ECRL, which have not been factored in. Inclusive of these projects, the contingent liabilities could be up by 15-20%.

“The larger projects have not been factored into our contingent liabilities, which some estimate will rise between 15% and 20% if they are included. So this will be a good opportunity to undertake a full disclosure of all our contingent liabilities.

“That will strengthen confidence in the government and its ability to review some of the projects that are in the pipeline and if the government is not able to fund them then find the best feasible means to fund them with foreign loans or private public financing schemes where private sector actually contribute to the financing as well,” he added.

According to Bank Negara Malaysia’s figures, the government’s current liabilities totalled about RM686.8 billion at the fourth quarter of 2017.


Airbus, Boeing muscling into lucrative services market

SINGAPORE: Airbus and Boeing may have built their global success on the back of the transcontinental airliners but they are now eyeing a lucrative if rather less glamorous side of the aviation sector in their battle to dominate the skies – parts and repairs.

While booming demand for air travel across has seen the world’s top plane makers ramp up production, it is the multi-billion-dollar after-sales service market that is taking an increasing amount of their attention.

The aircraft titans are aggressively expanding their presence in the sector, which is dominated by maintenance, repair and overhaul of aircraft but also covers other services, from training to parts supply.

The European and American firms have long done some business in after-sales support, but they are now moving to win greater market share and take on other players like Germany’s Lufthansa Technik and US-based AAR.

“The services market is more lucrative than actual aircraft sales because it has more potential and it covers many different spectrums,” said Shukor Yusof, an analyst with aviation research firm Endau Analytics in Malaysia.

“Boeing and Airbus – they have to be part of it. When you sell an aircraft, it’s in your interest to have a full package of after-market services.”

Boeing predicts that the value of the approximately 41,000 planes that will be delivered worldwide over the next 20 years will be around US$6 trillion (RM24 trillion) while the demand for services to support this fleet will be worth around US$8.5 trillion (RM34 trillion).

In Singapore, Airbus’ wholly owned subsidiary Satair Group has an 11,000 square metre (118,000 square foot) warehouse to house spare parts.

They are arranged on towering shelves in brown, yellow and orange boxes, and range from a main landing gear for an A380, the world’s biggest passenger plane, worth hundreds of thousands of dollars, to a washer worth one cent.

They can be dispatched from the warehouse – Airbus’ biggest such facility in Asia, and second-biggest in the world – within four hours of receiving an order, with plans to further slash the waiting time.

Airbus, whose revenues from services hit US$3.2 billion in 2017, 18% higher than in the previous year, plans to expand the facility by 8,000 square metres next year.

Both Airbus and Boeing also have major pilot training centres in Singapore.

The fierce rivals play up their intimate knowledge of the aircraft they produce as an advantage in providing after-sales support over others who could provide the services, including the airlines themselves.

“We know best our aircraft because we designed it,” Airbus head of services Laurent Martinez told AFP.

“We have all the capabilities to support the airlines’ operations and to have the competitive edge in terms of spare parts.”

Randy Tinseth, vice-president of marketing at Boeing Commercial Airplanes, said the US firm currently only has a 7% market share in the sector, and there was plenty of room for growth.

“The products we have today can only address about 30% of this market,” he said at the recent Singapore Airshow.

“So if this market grows about 5% per year as we focus more on developing new products, we expect to see dramatic growth in our business.”

The Singapore Airshow highlighted the growing importance of the sector.

The largest deals at the show, the biggest in Asia, were not plane orders but contracts worth nearly US$1 billion signed by Boeing’s dedicated global services unit, which was launched last year as its vehicle to expand into the after-sales market.

Both companies are focusing on Asia-Pacific due to explosive growth of the aviation sector in an increasingly affluent region where many people are flying for the first time.

Airbus’ Martinez said Asia-Pacific is expected to account for 40% of the services market over the next two decades, with the region’s aircraft fleet set to almost triple by 2036.

The fight for after-sales services market share between Boeing and Airbus will likely be every bit as fierce as their battle for aircraft orders.

Competition “is going to be very, very tough – very intense”, said analyst Shukor. – AFP


We want to reduce debt and maintain growth, Eminent Persons assure investors

KUALA LUMPUR: Former finance minister Tun Daim Zainuddin, who is now part of the five-member Council of Eminent Persons under the new Pakatan Harapan (PH) government, has assured investors and fund managers that they are going to address all the problems affecting the country’s economy and are not going to increase the debt.

“There is no reason to put the economy into a state that is much worse (than before),” he told Bernama after chairing a meeting late Saturday night with other members of the team.

Daim was responding a question on investor jitters over the impact on the ringgit and stock market following the surprise win by PH in the 14th general election which saw the fall of the Barisan Nasional.

He pointed out that investors were more concerned on the proposed removal of the Goods and Services Tax (GST), which they said would likely impact government revenue and in turn widen the fiscal deficit.

“We are not going to increase the debt anymore. We are not stupid.
“This is a lot of speculation, unnecessary fear. This is a normal reaction when a new government takes over,” he said.

Daim assured investors that the team has experts who can handle this issue.
“For 57 years there was no GST and there was no problem,” he pointed out.

The important thing is to get rid of corruption, Daim stressed.

Present at the meeting were three other members of the team – former Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz, former Petronas president and CEO Tan Sri Mohd Hassan Marican and economist Prof Jomo Kwame Sundaram. Tycoon Tan Sri Robert Kuok, the other member of the team, was not present as he is currently overseas.

Newly elected Prime Minister Tun Dr Mahathir Mohamad on Saturday announced the setting up of the team which, among others, will assist the new government in implementing its 100-day promises as spelled out in Pakatan Harapan’s manifesto.


13/05/2018 23:13:45

KUALA LUMPUR: Former finance minister Tun Daim Zainuddin, who is now part of the five-member Council of Eminent Persons under the new Pakatan Harapan (PH) government, has assured investors and fund managers that they are going to address all the problems affecting the country’s economy and are not going to increase the debt.

“There is no reason to put the economy into a state that is much worse (than before),” he told Bernama after chairing a meeting late Saturday night with other members of the team.

Daim was responding a question on investor jitters over the impact on the ringgit and stock market following the surprise win by PH in the 14th general election which saw the fall of the Barisan Nasional.

He pointed out that investors were more concerned on the proposed removal of the Goods and Services Tax (GST), which they said would likely impact government revenue and in turn widen the fiscal deficit.

“We are not going to increase the debt anymore. We are not stupid.
“This is a lot of speculation, unnecessary fear. This is a normal reaction when a new government takes over,” he said.

Daim assured investors that the team has experts who can handle this issue.
“For 57 years there was no GST and there was no problem,” he pointed out.

The important thing is to get rid of corruption, Daim stressed.

Present at the meeting were three other members of the team – former Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz, former Petronas president and CEO Tan Sri Mohd Hassan Marican and economist Prof Jomo Kwame Sundaram. Tycoon Tan Sri Robert Kuok, the other member of the team, was not present as he is currently overseas.

Newly elected Prime Minister Tun Dr Mahathir Mohamad on Saturday announced the setting up of the team which, among others, will assist the new government in implementing its 100-day promises as spelled out in Pakatan Harapan’s manifesto.


Malaysia to see short-term volatility in foreign capital investments

PETALING JAYA: Malaysia is likely to see a short-term volatility in movement of foreign capital investments in view of the temporary lack of clarity in the new government’s economic policies and direction.

RHB Research Institute Sdn Bhd chief Asean economist Peck Boon Soon told SunBiz that while Pakatan Harapan’s leadership experience in forming and running a government along with the smooth transition of power are positive when it comes to assuring foreign investors, the lack of clarity in economic policies for the time being may result in some volatility.

Echoing a similar sentiment, Sunway University Business School Professor of Economics Dr Yeah Kim Leng said there could be a short-term “hot money” movements and there may be pullouts as investors react to developments in the wake of the elections results.

However, he said the inflows and outflows are not a matter of concern as it is a norm for countries with open capital markets to experience.

“(The) more important focus is we should focus on building the resilience of the economy and that will mean attracting long-term capital flows and foreign direct investments rather than be concern about the short-term outflows … as long we can manage that without affecting our financial markets and domestic liquidity,” he said.

Yeah noted that investments in high value technology will facilitate in transforming Malaysia into a high income nation.

Upon being sworn in as the seventh prime minister of Malaysia, Tun Dr Mahathir Mohamad said the government will remain a business friendly economic nation.
He added that the new ruling government intends to build the nation’s economy with the help of investors from in and outside the country.

PH made history after winning the mandate to form the government during the May 9 polls after defeating Barisan Nasional, which ruled the nation for over six decades.


FMM, ACCCIM pledge to work with new govt to boost economy

PETALING JAYA: Two major industry bodies, the Federation of Malaysian Manufacturers (FMM) and the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), have expressed their desire to work hand in hand with the new Pakatan Harapan government to come up with policies that both strengthen the economy and promote ease of doing business.

In congratulating Tun Mahathir Mohamad on becoming the seventh prime minister of Malaysia, ACCCIM said it looks forward to providing views and recommendations on economic policies to the new government through consultations and interaction sessions.

“In particular, the ACCCIM is keen to work alongside the new government in creating a business friendly environment, reducing the cost of doing business as well as encouraging more foreign direct investment in order to further enhance national economic development,” it said in a statement.

ACCCIM said it is confident that the new government will formulate more policies that are open, equal and fair to all rakyat and that it is committed to working closely with the government to strive for national unity and harmony, and mutual cooperation for the development and advancement of the country.

FMM, in pledging its continued cooperation with the government, expressed its hope that there will be a closer relationship between the public and private sectors to reduce regulatory burdens so that Malaysian industries can be more competitive in the global market.

“FMM welcomes new initiatives to strengthen the governance and economy of our country. We pledge our support to work closely with the new government for a better and more prosperous Malaysia,” it said in its statement.


UAE’s Dana Gas agrees US$700m sukuk restructuring deal

DUBAI, May 13 — Dana Gas has reached agreement with creditors on restructuring US$700 million (RM2.7 billion) of sukuk, it said today, potentially ending a protracted legal battle that unsettled the global Islamic finance industry. The United Arab…