Sunday, July 1st, 2018

 

MDEC CEO on voluntary leave amid probe into ADAX project

PETALING JAYA: Malaysia Digital Economy Corp (MDEC) CEO Datuk Yasmin Mahmood (pix) has gone on voluntary leave pending an investigation into the organisation's Asean Data Analytics Exchange (ADAX) project.

The investigation was initiated by Communications and Multimedia Minister Gobind Singh Deo.

According to MDEC's website, ADAX enables the development of the entire data analytics ecosystem through building human capital, infrastructure, data aggregation and community.

At its launch on March 28, 2017, ADAX CEO Sharala Axryd had stated that its aim was to produce 20,000 data professionals by 2020, out of which 10% would be data scientists.

“Our CEO Datuk Yasmin is on voluntary leave starting yesterday as she believes this is necessary to ensure a completely transparent investigation and an independent outcome. I am sure that you will agree with the management that this gesture by Yasmin is commendable as she continues to hold MDEC up to the highest values,” an internal email signed off by MDEC COO Datuk Ng Wan Peng and sighted by SunBiz read.

The date of the internal email is not known.

Ng, who will lead the organisation in the interim, said MDEC would share an internal audit performed on the ADAX project in March this year with the Malaysian Anti-Corruption Commission (MACC) and relevant authorities.

“Kindly be informed that as part of upholding our commitment to the MACC Ikrar Bebas Rasuah earlier this year, an internal audit was performed on the ADAX project in March 2018. The complete internal audit report will be shared with the MACC and relevant authorities, and we are committed to working closely with the authorities to complete investigations into the allegations you may have heard about concerning ADAX,” she said.

An MDEC spokesperson declined to comment when contacted.

Gobind said on Saturday an investigation was called as a result of concerns raised over the project conceptualised to build critical mass of talent in the big data analytics segment and develop the ecosystem for it.

“I have called for a full investigation into the concerns raised over this project. A probe is currently being undertaken by MDEC into the matter.

“The questions raised relate to, among others, whether or not there was a conflict of interest between the programme managers and training providers,” he added.

Gobind expects the complete report on the project to be presented to him soon.


Sarawak gives oil & gas firms until end-March 2019 to obtain licences

PETALING JAYA: The Sarawak State government said today oil and gas players operating in the state could go about their business as usual until the end of 2019, as it gathers “the necessary information from all industry players, as well as more detailed and comprehensive engagement with them”.

In a statement, the state government said it will begin to exercise its powers under state laws relating to oil and gas activities in Sarawak from July 1, 2018, including the Gas Distribution Ordinance 2016, which came into force on that date.

According to a previous announcement by Chief Minister Datuk Patinggi Abang Johari Tun Openg, Sarawak assumes full regulatory authority over the upstream and downstream operations and activities of the oil and gas (O&G) industry from this month.

“Regulations made under the Ordinance on licensing have been approved by the state government and the process of implementing it will commence immediately. As for state laws which are already in force, like the Oil Mining Ordinance 1958 and the Land Code 1958, the relevant state authorities will also begin the process of ensuring compliance with these laws,” the state government said.

Acknowledging that the transition would take time, it said industry players would be permitted to conduct their business and operations as usual up to the end of 2019, while at the same time taking necessary steps to ensure compliance with state laws.

Less than two weeks ago, Petroliam Nasional Bhd (Petronas) failed in its attempt to get the country's highest court to declare it the exclusive owner of the petroleum resources as well as the regulator for the upstream industry throughout Malaysia, including in Sarawak.

Petronas, the national oil company, in a statement on June 22, 2018 said the Federal Court had declined its application for leave solely on technical grounds and that there was nothing to stop it from pursuing further legal action, with the intent to seek clarity on its rights and position under the Petroleum Development Act 1974.


Iran urges Opec members to refrain from unilaterial actions

DUBAI: Iran has asked fellow Opec members to “refrain from any unilateral measures”, warning that would undermine the unity of the Organisation of the Petroleum Exporting Countries, following reports that Saudi Arabia intends to raise its oil production to a record high this month.

As Teheran seeks ways to counter US sanctions that would restrict its exports and eat into its market share, Iranian Oil Minister Bijan Zanganeh wrote to his United Arab Emirates (UAE) counterpart, Suhail al-Mazrouei, who holds the Opec presidency in 2018, urging him to remind Opec members to adhere to last month's agreement.

“Any increase in the production by any member country beyond commitments stipulated in Opec's decisions … would constitute breach of the agreement,” Zanganeh wrote in the letter seen by Reuters and reported by Iranian state media.

“I hereby request your excellency to remind Opec member countries to adhere to their commitments … refrain from any unilateral measures undermining the unity and independence of Opec,” he added.

Opec agreed with Russia and other oil-producing allies on June 23 to raise output from July, with Saudi Arabia pledging a “measurable” supply boost, but giving no specific numbers.

Opec and non-Opec oil producers said they would raise supply by returning to 100% compliance with previously agreed output cuts, after months of underproduction. That would be roughly 1 million barrels per day of crude oil output increase according to Opec officials.

But since then sources familiar with Saudi oil thinking have briefed the market about an imminent rise in Saudi output to a record. Last week, a source told Reuters that Saudi output would rise to 11 million bpd in July, a whole 1 million bpd above May.

Iran had been pushing hard for oil producers to hold output steady as US sanctions are expected to hit its exports.

But Saudi Arabia, Opec's biggest producer, was keen to raise output to meet calls from US President Donald Trump and major consumers such as India and China to help cool oil prices and avoid shortages, according to Saudi officials including Energy Minister Khalid al-Falih.

Non-Opec Russia, meanwhile, was under pressure from its own energy companies to lift caps on output and fight a steep rise in domestic fuel prices that was hurting President Vladimir Putin's popularity, Russian sources have said.

In the end, Saudi Arabia and Russia pushed through a rise of about 1 million bpd at the Vienna meeting.

Washington said last week it was asking customers in Asia and Europe to reduce Iranian oil purchases to zero from November, and that it will not grant any waivers to sanctions.

In his letter, Zanganeh said that unilateral decisions by some Opec members were weakening the exporting group and that Opec should not let others take political measures against the group's unity and independence.

“Any unilateral production increase beyond member countries' commitments under the Opec's decisions would prompt US to take actions against Iran,” he wrote.

“Opecdecisions by no means warrant any action by some of its member countries in pursuit of the call for production increase by the U.S., politically motivated against Iran and publicly declared.” – Reuters


TM faces flat subscriber growth with broadband price cut: RAM Ratings

PETALING JAYA: Telekom Malaysia Bhd (TM) may see flat subscriber growth and further debt drawdown for capital expenditure and dividends following the expected reduction of broadband subscription rates by 25%, as per RAM Ratings initial assessment.

The rating agency maintained TM’s credit metrics at AAA/Stable/P1 ratings of the group’s sukuk programmes or the AAA/Stable rating of Hijrah Pertama Bhd’s sukuk, noting that it does not expect immediate impact.

It also expects TM’s gearing level to peak at 1.50 times, while its funds from operations debt coverage will thin to an average of 0.31 times in the next three years. (FY Dec 2017: 1.10 and 0.44 times).

“Our rating approach also considers TM’s strategic role and strong relationship with the government, which in our view renders the group privy to extraordinary government support, if required,” it said.

On June 20, 2018, the government announced that broadband subscription rates could be reduced by 25% by year-end pursuant to the implementation of the Mandatory Standard Access Pricing (MSAP).

The retail broadband segment constitutes the bulk of TM’s top line (FY Dec 2017: 44%) while as the sole owner and operator of the high-speed broadband (HSBB) network, the agency expect the move to have the most pronounced impact on TM’s financial position, as the implementation of the MSAP would lower wholesale prices on HSBB access for the other telecommunication companies (telcos).

This, it said, would allow the telcos to cut the prices of their broadband packages, thereby compelling TM to revise theirs accordingly to remain competitive.

Competition in the current backdrop as it is, is already intensifying with a noticeable shift in consumer preferences to mobile and wireless broadband.

At this juncture, TM and its counterparties are still in discussions to finalise wholesale prices, to be completed within the next one to two months.

RAM Rating said it will reassess its stance subject to changes in the government’s directive and/or the difference in pricing strategies of TM.


TM faces flat subscriber growth with broadband price cut

PETALING JAYA: Telekom Malaysia Bhd (TM) may see flat subscriber growth and further debt drawdown for capital expenditure and dividends following the expected reduction of broadband subscription rates by 25%, as per RAM Ratings initial assessment.

The rating agency maintained TM’s credit metrics at AAA/Stable/P1 ratings of the group’s sukuk programmes or the AAA/Stable rating of Hijrah Pertama Bhd’s sukuk, noting that it does not expect immediate impact.

It also expects TM’s gearing level to peak at 1.50 times, while its funds from operations debt coverage will thin to an average of 0.31 times in the next three years. (FY Dec 2017: 1.10 and 0.44 times).

“Our rating approach also considers TM’s strategic role and strong relationship with the government, which in our view renders the group privy to extraordinary government support, if required,” it said.

On June 20, 2018, the government announced that broadband subscription rates could be reduced by 25% by year-end pursuant to the implementation of the Mandatory Standard Access Pricing (MSAP).

The retail broadband segment constitutes the bulk of TM’s top line (FY Dec 2017: 44%) while as the sole owner and operator of the high-speed broadband (HSBB) network, the agency expect the move to have the most pronounced impact on TM’s financial position, as the implementation of the MSAP would lower wholesale prices on HSBB access for the other telecommunication companies (telcos).

This, it said, would allow the telcos to cut the prices of their broadband packages, thereby compelling TM to revise theirs accordingly to remain competitive.

Competition in the current backdrop as it is, is already intensifying with a noticeable shift in consumer preferences to mobile and wireless broadband.

At this juncture, TM and its counterparties are still in discussions to finalise wholesale prices, to be completed within the next one to two months.

RAM Rating said it will reassess its stance subject to changes in the government’s directive and/or the difference in pricing strategies of TM.


Iran urges Opec members to refrain from unilateral actions

DUBAI, July 1 —Iran has asked fellow Opec members to “refrain from any unilateral measures”, warning that would undermine the unity of Opec, following reports that Saudi Arabia has raised its oil production to a record high this month. As…


Iran eyes private oil exports to help beat US sanctions

DUBAI, July 1 — Iran will allow private companies to export crude oil, part of a strategy to counter US sanctions, First Vice President Eshaq Jahangiri said today. Iran is looking at ways to keep exporting oil as well as other measures to counter…


Foreign selling to continue on US-China trade friction

KUALA LUMPUR: Foreign selling is expected to continue hitting emerging-market equities, including Malaysia, until year-end, no thanks to US President Donald Trump's anti-China trade rhetoric and expectations of more US interest rate hikes.

Inter-Pacific Securities Sdn Bhd Head of Research Pong Teng Siew said US-China trade war fears had resulted in a high level of uncertainty for the global market, with emerging markets being hit the hardest and seeing a further sell-down.

“Trump's remarks would affect the global market, but he is so unpredictable. Even our Prime Minister, Tun Dr Mahathir Mohamad, described him 'mercurial'.

“Therefore, I expect that the selling could possibly continue but it may not be as high as during its peak in May,” he told Bernama.

Trump's trade flip-flops had put global markets on a roller-coaster ride recently.

On Thursday, the US President turned softer and backed down from the restrictions on China's investments after the recent threats of slapping tariffs on the latter's imports into the country.

Back home, Pong said, Bursa Malaysia saw the longest streak of uninterrupted outflows of over two months, since he started to track the fund flow record early 2011.

“The uninterrupted foreign selling began on May 2, 2018, and accumulated to RM1.079 billion as of June 28, mainly prompted by the selling in emerging markets,” he said.

However, he noted that the year-to-date foreign withdrawals from Bursa Malaysia was not the worst among the emerging markets, as news reports said India recently saw the biggest foreign outflows in a decade.

“No market has been spared from this kind of fund outflow; in fact, every market is taking turns being hit,” he said.

Nevertheless, Pong noted that the intensity of the selling on the local bourse had slowed down compared with three weeks ago, when the selling neared RM600 million.

“It has come down to RM200 million on Wednesday and Thursday,” he added.

Other than Trump's remarks, Pong opined that the local market would still be affected by external factors such as the US Federal Reserve (Fed) interest rate increases, whereby expectations of more hikes for this year were likely to further hamper fund outflows from emerging markets due to the weakened emerging currencies versus the greenback.

“One of the things that we can do is to increase our interest rate, but it is too late to do that as Indonesia, Turkey and Argentina have done that but to no avail. Once the selling momentum starts, it will remain hard for rate increases to slow down the selling,” he said.

Asked whether news of the government's intention to reduce the Federal debt level from over RM1 trillion to RM300 billion help boost investors' confidence and mitigate fund outflows from the equity market, Pong said a mere statement would hardly make a difference to the market.

“Investors are still waiting for further details on the matter,” he explained.

Echoing Pong's views, Bank Islam Malaysia Bhd Chief Economist Dr Mohd Afzanizam Abdul Rashid said the stock market and the ringgit would remain in a cautious mode in the near term.

He said the ringgit had been very volatile since April this year, mainly driven by the external sector, especially in the context of US rate hike uncertainties and the extent of trade friction between the US and other countries, including China and those in Europe.

He pointed out that uncertainties in the external environment gave investors the jitters as to what it might devolve into, especially with regards to the growth prospects in the second half of 2018 and beyond.

“The US Treasury yield curve has also been flattening, suggesting the risk of a recession in the US has also increased, albeit, still small at this juncture. Additionally, there is also policy uncertainty on the domestic front.

“So market participants have become risk-averse and, therefore, demand for safe-haven currencies have become more prevalent,” he told Bernama.

Mohd Afzanizam noted that from the technical point of view, the markets had been in an extremely oversold position and price-earnings multiples had also become attractive.

Similarly, he felt the ringgit was in an oversold position and foreigners might look at the Malaysian market again.

“However, the big unknown is the trade war. How will the affected countries retaliate? And how will this affect the global value chain business costs? To some degree, the slow progress in the Brexit negotiation will always be a source for market instability,” he added.

Asian stock markets rebounded from nine-month lows on Friday, as China eased foreign investment limits, but the underlying sentiment was dampened by worries over trade fiction ahead of the imposition of US and Chinese tariffs effective July 6.

On the corporate front, Tan Sri Abdul Wahid Omar retired as Group Chairman of Permodalan Nasional Bhd and Trustee of Yayasan Pelaburan Bumiputera with effect from June 30.

According to news reports, Abdul Wahid, who helmed PNB since Aug 1, 2016, was the latest casualty as part of a shakeup that is expected to see 100 senior officials from government-linked companies dropped under the new government.

It was speculated that his departure from PNB might be due to his support for the Goods and Services Tax (GST) ahead of the 14th General Election.

The GST was introduced on April 1, 2015, at six per cent and was reduced to zero per cent in June 2018 under the new government.

In addition to Abdul Wahid, Petronas Chairman Tan Sri Mohd Sidek Hassan clocked out from office, Datuk Seri Shazalli Ramly left his position as Group Chief Executive officer of Telekom Malaysia Bhd and Datuk Badlisham Ghazali retired as Malaysia Airports Holdings Bhd Managing Director. — Bernama


China further eases foreign investment curbs in free trade zones

BEIJING, July 1 — China yesterday further relaxed restrictions imposed on foreign investment in its free trade zones, in the latest step to fulfill its promise to open up the economy. Publishing a revised ‘negative list’ for investment in the…


Trump, Trudeau discuss trade, economic issues over phone call

OTTAWA, July 1 — US President Donald Trump spoke with Canadian Prime Minister Justin Trudeau late on Friday to discuss trade and other economic issues, White House Press Secretary Sarah Sanders said yesterday. The phone call between the two…