Tuesday, July 17th, 2018


Awer calls for audits of all power projects awarded from 2011 onwards

PETALING JAYA: The Association of Water and Energy Research Malaysia (Awer), which had consistently called on the Barisan Nasional government to abandon direct negotiations for power plant projects, has asked the Pakatan Harapan government to audit all approval processes and awards of power plant in KeTTHA, the Energy Commission and the Sustainable Energy Development Authority (Seda) from 2011 onwards.

KeTTHA is the Ministry of Energy, Green Technology and Water during the Barisan Nasional government.

Heartened by the recent announcement of the cancellation of four power plant projects that were awarded through direct negotiations and the review of others, Awer president S Piarapakaran urged the government to launch detailed investigations into power plant construction and costing to reduce overall cost impact on electricity tariff.

Investigations should include an audit of Planning and Implementation Committee for Electricity Supply and Tariff decisions, meeting minutes, documentations and presentations from 2012 onwards; the handling of competitive bidding process for new power plants and documentation including how nodal points and land requirements (greenfield and brownfield) are set should be looked into; waiver of 49% foreign equity limitation for power plant; extension process of old power plants and its bidding process; failure of Seda and FiT (Feed-in-Tariff) to meet renewable energy mix target; and Seda's mysterious set-up process and lack of transparency in the FiT mechanism.

Seda is a statutory body formed under the Sustainable Energy Development Authority Act 2011 (Act 726), to administer and manage the implementation of the feed-in tariff mechanism which is mandated under the Renewable Energy Act 2011 (Act 725).

Piarapakaran reiterated that power plant construction and its costing pose huge cost impact on electricity tariff, competitiveness, goods and services affordability, and investors' confidence.

He said direct negotiations of several gas power plants and large scale solar caused additional cost of over RM25 billion, when compared with projects awarded through competitive bidding, and this cost is paid by consumers. Electricity tariff has a multiplier impact on prices of goods and services. Any unfair increase in electricity cost will hamper the government's effort to manage the increase in cost of living.

“Awer stands firm in its belief that the country can only achieve affordable and equitable electricity tariff via fair and transparent competitive bidding. More than two thirds of electricity cost comes from generation sector,” Piarapakaran said, adding that building new power plants via competitive bidding was a promise stated clearly in 10th and 11th Malaysia Plans.

“Cancellation of power plants awarded via direct negotiation will only reflect the correct policy implementation,” he said in a statement.

SST simpler, has less impact on low-income group than GST: Lim

PETALING JAYA: Finance Minister Lim Guan Eng, in defending the government's decision to implement the Sales and Services Tax (SST) regime, promised that the structure will be simpler and tweaked to ensure that the impact on the lower income group will be proportionately less compared with the Goods and Services Tax (GST).

Lim said the Finance Ministry has undertaken a comprehensive review of the SST with the help of accounting firm PricewaterhouseCoopers (PwC) tax consultants to simplify the process.

“PwC will help rationalise tax collection and reporting requirements to ensure that the SST will be even more efficient and less bureaucratic than the GST and the old SST system. PwC will ensure the SST imposed from Sept 1 to be simpler, less cumbersome, prevent leakages and loopholes.”

He said the details of the improvements will be announced when the new SST bill is tabled in Parliament during the current sitting.

Lim said in a statement today that the SST, which will come into effect on Sept 1, will be less of a burden to the people compared with the GST introduced by the previous administration.

“How could the SST burden the people more than the GST when the expected collection from the SST is estimated at only RM21 billion for a full year, while the GST had expected to collect RM44 billion in 2018, according to the previous government's projection?” he asked.

In rebutting claims made by former prime minister Datuk Seri Najib Abdul Razak that the SST will be more burdensome to the people, Lim said the transition from SST to GST will indeed “return” RM23 billion to the rakyat.

Unlike the GST era, Lim said, not all products will be subjected to the SST as the 10% sales tax rate only applies to selected manufactured and imported products. Similarly, the 6% service tax applies to only selected services.

On claims that reverting to the old tax system would result in a higher tax rate of 16% (10% sales tax and 6% services tax) is higher than the 6% GST, Lim said one can't simply add up the sales tax and services tax, which would be equating apples with oranges.

“The sales tax is imposed on manufacturers' and importers' price, while the GST is imposed on the final consumer price. Hence it is wrong to claim that a '10% sales tax is higher than a 6% GST',” he said.

“For example, a manufacturer imposes a 10% sales tax (RM0.10) on a can of soft drink manufactured for RM1.00. However, when the same can is sold to a consumer at 7-Eleven for RM2.00, a 6% GST of 12 sen would have been imposed. In this case, it is clear that a 6% GST at RM0.12 would be higher than a 10% SST,” he added.

India to impose import duty on solar cells, modules from Malaysia and China

NEW DELHI: India will impose a 25% duty on imports of solar cells and modules from Malaysia and China, a move the government says is designed to protect domestic manufacturers.

India's Directorate General of Trade Remedies, which is part of the Ministry of Commerce, recommended the duty to be imposed for two years.

“The request made by the domestic industry for imposition of provisional safeguard duty was examined and, prima facie, found that there existed critical circumstances which warranted imposition of provisional safeguard duty in order to provide interim relief to the domestic industry from suffering irreparable damage, which could have been difficult to repair,” it said in a report.

Levying the new import tax is likely to escalate the cost of producing solar energy in India, which aims to have a capacity 100-gigawatt solar power by 2022.

Cheaper imports have boosted solar projects in the country, but domestic manufacturers have complained that they are losing sales and cannot invest in raising output despite growing demand for solar cells and modules.

The directorate general's report noted that the market share of the domestic industry declined from 8% to 3% in the last few years.

The 25% will be imposed in the first year, 20% in the following six months and 15% for another six months. – Bernama

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Greater clarity on SST needed for consumers

KUALA LUMPUR: The government needs to provide more details on the implementation of the Sales and Services Tax (SST) and inform the private sector (an indication) on its action with SST, to ensure that consumers continue to spend post the tax holiday, according to retail consulting firm Retail Group Malaysia (RGM).

The government announced on Monday that the Sales and Services Tax (SST) rate will be reintroduced on Sept 1 at 10% for sales and 6% for services. No further details were given.

RGM managing director Tan Hai Hsin said the government needs to release more concrete guidelines and information to educate consumers; while private sector operators and trade associations need to communicate their intention to consumers, if they are hiking prices.

“We need more information, what kind of coverage, so we know how it will impact the market and whether retailers will increase their prices? Are we having SST on essential items? Trade associations should also get consensus from members and tell whether prices are going to increase or not, and why. A price increase or reduction does not matter, just say it clearly.

“The public needs that information to decide on what to do or people will stop buying for the next two months. That’s what we’re worried about and it will affect the retail industry and the economy,” he said at a press briefing on the retail outlook of the second half of 2018 today.

He said the government is currently still doing lots of fire-fighting and has not come up with new policies on improving the economy.

Tan pointed out that a change in ruling party has direct impact on consumers’ confidence level and consumers’ propensity to spend.

He explained that consumers still have the same amount of money but is shifting the way they spend, with more being spent on services and dining out compared to fashion and groceries, in line with global trends.

Despite all the doom and gloom, Tan said there is always opportunities, citing that food & beverage and fashion retail are still growing amid some closures. Up to June this year, he noted the entry of 25 foreign brands in Malaysia while last year saw the entry of 71 foreign brands into the country.

He said it will not be difficult for retailers to change to the SST system and noted that this round will be easier compared to the time when GST was implemented. The investment for the change to the SST system will be low compared to GST, while SST is also something that retailers have experienced before.

RGM today maintained its projected sales growth rate for the local retail industry in 2018 at 5.3% following the SST announcement. It had revised upwards the projection to 5.3% in June from 4.7% estimated in March.

On the retail outlook for 2019, Tan said new economic policies to support economic growth are needed in the next few months. The benefits of these policies must be made known to and understood by the public and this will support consumer spending in 2019.

“Consumers remain cautious on retail spending. At the same time, they are always looking for value-for-money goods and services, which is not defined by the prices of the goods and services.”

Poh Huat to buy warehouse-cum-office showroom in Australia

PETALING JAYA: Furniture producer Poh Huat Resources Holdings Bhd is acquiring a detached warehouse cum offices showroom in Cranbourne West, Victoria, Australia with JSNJ Investment Pty Ltd, Australia for A$4.94 million (RM14.84 million).

The project developed and owned by JSNJ Investment comprises of a 2,912 sqm single storey high clear span warehouse with a 300 sqm office with retail/showroom facilities at the front of the property.

It is situated on a 5,214 sqm parcel of subdivided commercial land at Lot 41, No.17, Whitfield Boulevard, Cranbourne West, Victoria 3977, Australia.

Poh Huat is also negotiating to lease the first warehouse to one of its existing customers for a net lease payment of between A$320,000-340,000, (RM10.66 -11.32 million) which will give it a net yield of 7.5-8% against our original costs of investment or 6.4-6.8% based on a a potential market value of about A$5 million (RM16.65 million).

“The group intends to hold the subject property as investment property for rental to third parties. The board is of the view that the subject property has good potential in terms of capital appreciation and rental yield given the demographic and commercial potential of the Cranbourne area,” said its board of directors.

Prices of properties (all categories) in Cranbourne have registered double-digit growth over the last five years and the strong population growth is leading to a significant requirement for employment land (land for industrial, retail and commercial/office use) across all industries and skill sets. According to the local draft precinct structure plan, Cranbourne West has been identified as an important area for providing local employment opportunities for residents in the Cranbourne area,” it added.

Poh Huat plans to raise the funds for the acquisition internally. The stock fell 0.77% to RM1.29 with 59,800 shares done.