Tuesday, August 28th, 2018

 

GLC reform – start with transparent political financing, govt urged

KUALA LUMPUR: The government should kick off its agenda to reform government-linked companies (GLCs) by enacting laws that promote transparency in the financing of political parties.

“This is important because you can see a link here, where the board of directors are getting money which may be going into party coffers. It's those kinds of issues that we need to look at very carefully and put a stop to.

“The most important thing is transparency and disclosure about the sources of financing of parties. That is the fundamental thing that we need to address,” University of Malaya professor of political economy Edmund Terence Gomez told reporters at the launch of the “Malaysia GLC Monitor 2018 – Government in Business: Diverse Forms of Intervention” report today.

Gomez, who authored the report with his team of students, applauded the new government on reforms implemented, such as the devolution of power, whereby key institutions such as the Malaysian Anti-Corruption Commission and the Election Commission are placed under the control of Parliament.

“But now we need a new law, a new legislation on political financing, to look into this matter properly, to check all the loopholes so that there is greater transparency in terms of who is financing the parties,” he said.

The report, which reveals the involvement of Cabinet ministers and state governments in GLCs, calls for the establishment of an independent GLC review committee to undertake an assessment of all GLCs in the country, essential towards promoting the right type of policies to reform the economy.

The report is a follow up on Gomez's book entitled “Minister of Finance Incorporated: Ownership and Control of Corporate Malaysia” that was published in August last year.

“I was quite surprised about the silence of Pakatan Harapan on the book, considering that they were making a big hue and cry about 1MDB, and 1MDB is a GLC. And the book is about Minister of Finance Incorporated which is one of the key companies involved in the 1MDB scandal. The question then arose, why is it that even they have not spoken about this?” he questioned.

Gomez said a possible reason could be that the then opposition also had control of GLCs in states such as Selangor and Penang, hence the reluctance to discuss GLCs despite Prime Minister Tun Dr Mahathir Mohamad referring to the GLC system as a “monster” and linking it to political financing.

“GLCs are closely linked with public policies, therefore we call on the government to set up a review committee to look into this monster and get it right,” he said.

Gomez also called for transparency in the current government's divestment of assets, including disclosures on asset transfers from various ministries to the Economic Affairs Ministry.

“They should tell us. Has there been any disclosure about which ministries control which GLCs?

“Why aren't they telling us which ministries have charge of which GLC? I would like to know,” he said, adding that GLCs are key players in the economy and also deal with many social issues.

Gomez said any divestment must be preceded with proper research and the divestment process must be transparent to avoid selective distribution of assets and wealth concentration in the hands of the minority.

He added that divestments should be done via open tender to ensure that private investors who are taking over government equity have the capacity and financing to develop the assets and companies.


Govt urged to disclose bumiputra equity distribution figures

KUALA LUMPUR: University of Malaya professor of political economy Edmund Terence Gomez wants the government to disclose the bumiputra equity distribution figures, which have not been published post-2008.

“I want them to disclose the equity distribution figures which the (previous) government stopped distributing after 2008. That is extremely important because the Bumiputera Economic Congress is coming up and we have to look at these figures and study what went right and what went wrong, before we start debating where we move from here,” he told reporters at the launch of the “Malaysia GLC Monitor 2018 – Government in Business: Diverse Forms of Intervention” report today.

Gomez said the current government should make public the figures as the implementation of bumiputra policies are closely linked to the issue of government-linked companies (GLCs).

“When we saw these GLCs set up, that was the justification. The statutory bodies set up GLCs because they said, if we set up these GLCs, we let these GLCs grow; once these GLCs are firm and independent, we pass them off to bumiputras who will then have ownership of these companies.

“That's why this 'monster' was created. That's why they did it, that's how they justified it. It's so closely related to the BCIC (Bumiputera Commercial and Industrial Community) policy, but did they really transfer it? And did poor bumiputras really get these firms?” he questioned.

Gomez said some of these bumiputras sold off the assets instead of building on the assets towards establishing a dynamic bumiputra business community while some dynamic and competent bumiputra businessmen have been sidelined.

“I am not surprised because the policy of affirmative action was based on the principle of patronage, selective patronage. Even bumiputras who are competent, who can take these companies and build them up, are not getting it. That is the reality. That is what the Bumiputera Economic Congress should discuss,” he added.

The congress, which will be held on Saturday, will look into improving current policies for developing positive values, education and other strategies that would benefit bumiputras.


FGV in the red in Q2 on lower CPO prices, higher cost

PETALING JAYA: FGV Holdings Bhd swung into the red in the second quarter ended June 30, 2018, registering a net loss of RM23.23 million versus a net profit of RM37.26 million in the previous corresponding quarter, dragged down by lower crude palm oil (CPO) prices and productivity, higher production cost as well as higher share of losses from joint ventures and associate companies.

Its revenue went down 18.4% to RM3.44 billion from RM4.21 billion.
The plantation firm said in a filing with the stock exchange today that the average (CPO) price realised was RM2,419 a tonne for the quarter under review, 13.5% lower than the RM2,796 a tonne previously.

CPO sales volume stood at 480,738 tonnes, 14.18% higher than the 421,045 tonnes in the previous corresponding quarter, while fresh fruit bunch production was marginally lower at 993,505 tonnes compared with 1.04 million tonnes.

The CPO oil extraction rate improved to 20.61% from 19.77%.
Given the poor performance, FGV acknowledged that further steps needed to be taken by the management to enhance operational effectiveness and efficiencies.

Meanwhile, the group is reviewing the findings of its investigations into six transactions and investment decisions and it has sought legal advice on the possible legal recourse.

For the first half of 2018, FGV reported a net loss of RM21.9 million against a net profit of RM38.96 million in the same period last year, while revenue dropped 17.5% to RM7.04 billion from RM8.53 billion.

FGV fell 5 sen or 2.9% to RM1.65 today on 2.87 million shares done.


Indonesia’s biodiesel mandate can help Malaysia cut palm stockpile: Analyst

KUALA LUMPUR: Indonesia's plans for more widespread use of biodiesel could reduce its exports and global palm oil supplies, leaving Malaysia to fill in the gap in the export market, said industry analyst James Fry today.

“That (Indonesia's biodiesel mandate) is quite a significant help towards taking surplus palm oil out of the market, and that will eventually mean that stocks come down,” Fry said to reporters on the sidelines of an industry conference.

“You will find the rise in stocks in Malaysia would be slower than it would have been otherwise.”

Fry also said Indonesia's implementation of its biodiesel mandate from Sept. 1 will be felt in global markets.

“Very quickly if Indonesia has less to export, it will tighten the Indonesian market and it will leave a gap for Malaysia to fill.”

Indonesia earlier this month announced plans to require all diesel fuel used in the nation to contain biodiesel starting from the beginning of September. Indonesia is trying to boost palm oil consumption to cut expensive fuel imports and narrow its current account gap.

Indonesia's current mandate requires a 20% bio-content in biodiesel but that is only mandatory for subsidised diesel users.

Malaysia's palm oil stocks rose 1.3% to 2.2 million tonnes at end-July. – Reuters


Wall Street edges further into record territory as trade fears lessen

NEW YORK, Aug 28 — US stocks were up in early morning trading, advancing further into record territory as Washington pressed ahead with talks to rewrite the North American trade pact. The slender advances briefly pushed the broad-based S&P 500…


Why Americans are making less money despite Trump’s promises

WASHINGTON, Aug 28 — President Donald Trump heads into a midterm referendum on his presidency showing no real progress on a core promise: To raise the wages of America’s “forgotten man and woman.” Once the impact of inflation is included,…


Heineken Malaysia to increase prices

PETALING JAYA: Heineken Malaysia Bhd, which saw lower earnings for the six months ended June 30 from a year ago, has confirmed that a price increase to its products will take effect on Sept 17 in line with the implementation of the sales and service tax (SST).

Finance director Szilard Voros said the quantum of increase will be announced then, but noted that the price levels are expected to be below the previous prices when the 6% goods and services tax (GST) was in place.

“We don’t expect SST to have a big impact but it will still open up the gap compared with contraband, so this is something we need to be careful about and we will continue to monitor,” he told reporters at a media and analyst briefing today after announcing its financial results.

Citing the last price increase was in April 15, he said there is a need to pass on the cost to consumers in view of rising cost of business, including input cost, packaging materials as well as a weaker ringgit.

“It’s in our interest to minimise the consumer price increase impact driven by the SST,” Voros added.

Heineken’s net profit for the second quarter ended June 30 fell 11% to RM54.9 million from RM61.58 million a year ago mainly due to higher advertising and promotional expenses.

Revenue rose 6.4% to RM421.57 million compared with RM396.27 million in the previous corresponding on the back of the execution of the month long football campaign and increase in sales volume as a result of trade loading in early April 2018 prior to the price adjustment on April 15.

For the six months period, its net profit fell 6.2% to RM103.66 million from RM110.55 million a year ago, dragged by higher commercial spending for the festive period in Q1 and the football campaign in Q2.

Meanwhile, its revenue strengthened 8.4% to RM855.38 million from RM788.87 million.


Heineken Malaysia to hike prices

PETALING JAYA: Heineken Malaysia Bhd, which saw lower earnings for the six months ended June 30 from a year ago, has confirmed that a price increase to its products will take effect on Sept 17 in line with the implementation of the sales and service tax (SST).

Finance director Szilard Voros said the quantum of increase will be announced then, but noted that the price levels are expected to be below the previous prices when the 6% goods and services tax (GST) was in place.

“We don’t expect SST to have a big impact but it will still open up the gap compared with contraband, so this is something we need to be careful about and we will continue to monitor,” he told reporters at a media and analyst briefing today after announcing its financial results.

Citing the last price increase was in April 15, he said there is a need to pass on the cost to consumers in view of rising cost of business, including input cost, packaging materials as well as a weaker ringgit.

“It’s in our interest to minimise the consumer price increase impact driven by the SST,” Voros added.

Heineken’s net profit for the second quarter ended June 30 fell 11% to RM54.9 million from RM61.58 million a year ago mainly due to higher advertising and promotional expenses.

Revenue rose 6.4% to RM421.57 million compared with RM396.27 million in the previous corresponding on the back of the execution of the month long football campaign and increase in sales volume as a result of trade loading in early April 2018 prior to the price adjustment on April 15.

For the six months period, its net profit fell 6.2% to RM103.66 million from RM110.55 million a year ago, dragged by higher commercial spending for the festive period in Q1 and the football campaign in Q2.

Meanwhile, its revenue strengthened 8.4% to RM855.38 million from RM788.87 million.


Hong Kong’s FWD said to buy HSBC’s stake in Malaysian insurer

HONG KONG: Hong Kong-based insurer FWD Group has agreed to buy HSBC Holdings Plc’s stake in a Malaysian insurance joint venture as part of a plan to expand its presence in Asia, three people familiar with the matter said.

FWD, owned by tycoon Richard Li, is acquiring the British lender’s 49% stake in HSBC Amanah Takaful (Malaysia) Bhd initially, with plans to ultimately own a majority by buying some shares from the existing partners, they said.

The deal shows that foreign insurers are keen on Malaysia, drawn by its strong economic growth, rising middle-class income and low insurance penetration, despite lingering regulatory uncertainty over the insurance sector’s foreign ownership rules.

The exact value of the deal was not immediately clear, with one of the people putting it at less than US$100 million (RM409.6 million). It is expected to be completed by end of this year, subject to approval by Bank Negara Malaysia (BNM).

A foray into the Southeast Asian country by FWD will add to its Asian market footprint that already covers Indonesia, Japan, Singapore, the Philippines, Thailand, and Vietnam, besides its home market.

HSBC, which has a strong Asian insurance business presence, has been looking to exit the Malaysian insurance joint venture in the last one year to focus on its core banking offerings, two of the people said.

Last year, the Malaysian unit of German insurer Allianz SE said it had discontinued talks with the shareholders of HSBC Amanah Takaful to acquire up to 100% stake in the company.

Malaysia’s JAB Capital Bhd owns 31% in the venture, while Employees Provident Fund Board of Malaysia (EPF) controls 20%, according to HSBC Amanah Takaful’s website.

FWD and HSBC declined to comment. A spokesman for BNM, which is also the country’s central bank, said it does not comment on individual firms, while JAB Capital and Malaysia’s largest pension fund EPF did not reply to requests for comment.

The people declined to be named as the deal was not public yet. – Reuters


HK firm to buy HSBC’s stake in M’sian insurance venture

HONG KONG: Hong Kong-based insurer FWD Group has agreed to buy HSBC Holdings Plc’s stake in a Malaysian insurance joint venture as part of a plan to expand its presence in Asia, three people familiar with the matter said.

FWD, owned by tycoon Richard Li, is acquiring the British lender’s 49% stake in HSBC Amanah Takaful (Malaysia) Bhd initially, with plans to ultimately own a majority by buying some shares from the existing partners, they said.

The deal shows that foreign insurers are keen on Malaysia, drawn by its strong economic growth, rising middle-class income and low insurance penetration, despite lingering regulatory uncertainty over the insurance sector’s foreign ownership rules.

The exact value of the deal was not immediately clear, with one of the people putting it at less than US$100 million (RM409.6 million). It is expected to be completed by end of this year, subject to approval by Bank Negara Malaysia (BNM).

A foray into the Southeast Asian country by FWD will add to its Asian market footprint that already covers Indonesia, Japan, Singapore, the Philippines, Thailand, and Vietnam, besides its home market.

HSBC, which has a strong Asian insurance business presence, has been looking to exit the Malaysian insurance joint venture in the last one year to focus on its core banking offerings, two of the people said.

Last year, the Malaysian unit of German insurer Allianz SE said it had discontinued talks with the shareholders of HSBC Amanah Takaful to acquire up to 100% stake in the company.

Malaysia’s JAB Capital Bhd owns 31% in the venture, while Employees Provident Fund Board of Malaysia (EPF) controls 20%, according to HSBC Amanah Takaful’s website.

FWD and HSBC declined to comment. A spokesman for BNM, which is also the country’s central bank, said it does not comment on individual firms, while JAB Capital and Malaysia’s largest pension fund EPF did not reply to requests for comment.

The people declined to be named as the deal was not public yet. – Reuters