Wednesday, September 19th, 2018


EU weighs new anti-trust offensive against Amazon

BRUSSELS, Sept 19 — The EU’s powerful anti-trust authority launched a preliminary investigation today into Amazon’s use of data it collects from other retailers on its platform, which could give it an unfair advantage. Amazon is best known as…

EU warns Britain it must ‘rework’ Brexit plans

SALZBURG, Sept 19 — EU Council President Donald Tusk issued a stark warning to Britain on today that its Brexit position must be “reworked”, as Prime Minister Theresa May prepared to address European leaders at a key summit. Tusk said the…

Economists confident Malaysian sovereign bonds will continue to be a hit

PETALING JAYA: Economists are confident that the Malaysian government will pass the litmus test of investor confidence with any sovereign debt issuance, citing the continued attractiveness of the country's debt notes with greater fiscal prudence, transparency and commitment to reducing the fiscal deficit.

Finance Minister Lim Guan Eng announced today that the government would be looking to issue debt notes and monetise non-critical and non-strategic assets by selling shares and land, as well as by leasing of idle assets and buildings.

Malaysian Institute of Economic Research senior research fellow Dr Shankaran Nambiar told SunBiz investor confidence is expected to be positive and there would be ready buyers for Malaysian bonds especially with the government's openness to the state of debt in the country, its fiscal position and its determination to keep the fiscal deficit under control.

“Debt issuance is a very sensible thing to do under the circumstances, i.e. when the level of debt is high, there is a shortfall in tax revenue and the government may not be able to tighten its belt beyond a point. The last reason makes more sense in the face of a possibly contracting global market,” he noted.

Sunway University Business School professor of economics Dr Yeah Kim Leng noted that investors are often on the lookout for high-quality bond yields and given the recent decline on foreign holdings on Malaysian bonds, there is still room to further increase the holdings without an undue concern of high foreign holdings.

Besides just being a cost-effective way to raise funds as opposed to borrowings, he opined that the government could also utilise this opportunity to convert its outstanding debts to bonds.

Ratings on the debt security will also play a role in determining the attractiveness of the government's debt security, especially in a backdrop of stricter fiscal discipline by the government.

Yeah said the rule of thumb for investors when it comes to sovereign bonds is when a country's debt stands between 60% and 80% of the gross domestic product, for which he said Malaysia has not reached an alarming level.

“A more concrete plan and further forward guidance on fiscal management strategies are well sought-after by investors in Malaysia's sovereign bonds, and so so this along with more details unveiled in Budget 2019 will act as a positive for the bond market,” RAM Rating Service Bhd head of research/economist Kristina Fong told SunBiz.

On asset monetisation, Yeah said any sale made should be done on the basis of competitive bidding with a reserve price and valuation established by independent experts.

“It shouldn't be rushed; when we rush, it can be considered a forced sale. Normally, the value of a forced sale will be much lower, so potential buyers will unlikely pay the full price,” he added.

Meanwhile, Lim gave an assurance that any asset monetisation will be carried out in compliance with the highest standard of governance and transparency without disruption to the business community and the people.

“A mixed policy strategy has many stakeholders and we will ensure that they are all engaged and considered to ensure a thorough and balanced fiscal strategy that minimises negative impacts.

“At the same time, these stakeholders must realise the goal of the government in achieving a strategy that benefits the nation and the rakyat as a whole,” he said.

Canada minister wears ‘Keep calm and negotiate Nafta’ to Washington talks

OTTAWA, Sept 19 — Canada’s Foreign Minister Chrystia Freeland, showing off her waggish side, wore a t-shirt with the words “Keep calm and negotiate Nafta” on it to Washington for high level continental trade talks today. The minister was…

PanPages reappoints CEO, ousted directors

PETALING JAYA: PanPages Bhd, which saw the entry of MMAG Holdings Bhd with a 26.37% stake on Wednesday, has reappointed CEO Fong Wai Leong and independent director Wong Mun Wai, as well as two other directors booted out at its AGM last week.

Fong and Wong resigned their posts last week, citing personal reasons, after an AGM shock that saw shareholders voting against paying the board of directors.

PanPages also announced that major shareholder Innofarm Sdn Bhd had sold all its holdings in the company and ceased to be a shareholder.

In separate filings on Bursa Malaysia today, the group said it reappointed Fong as group CEO and Wong as independent non-executive director, effective immediately.

Wong was also reappointed as chairman of the audit committee as well as member of the nomination and remuneration committee.

Wong first assumed the position on May 28, 2012 while Fong has been with the company since Jan 30, 2009. Both resigned last week after shareholders voted against five out of seven ordinary resolutions tabled at its AGM.

Tengku Farith Rithauddeen and Yap Kien Ming, two directors voted out by shareholders at the AGM, were also reinstated. Tengku Farith and Yap were reappointed as chairman and independent non-executive director of PanPages respectively, effective immediately.

At the AGM last week, 99.37% of Panpages' shareholders rejected five resolutions – to approve the payment of directors' fees of up to RM240,000 for their services from Sept 13, 2018 until the next AGM; to re-elect directors Tengku Farith and Yap; to appoint Messrs Grant Thornton Malaysia as auditors of the company; to authorise the directors to determine their remuneration; as well as to give directors the authority to allot shares in the company.

On Bursa Malaysia today, PanPages closed unchanged at 24 sen on volume of 153,100 shares.

SC eases retail investors’ access to sukuk, bond market

PETALING JAYA: The Securities Commission Malaysia (SC) has liberalised its regulatory framework to facilitate greater retail access to the RM1.3 trillion bond and sukuk market, which is currently the third largest in Asia and the world's largest sukuk market.

The liberalised framework consists of the new Guidelines on Seasoned Corporate Bonds and Sukuk and amendments to Guidelines on Issuance of Corporate Bonds and Sukuk to Retail Investors, the Guidelines on Sales Practices of Unlisted Capital Market Products, as well as Division 2 of the Prospectus Guidelines, which will come into effect on Oct 11, 2018.

The SC said in a statement today that the liberalised framework will allow a more efficient issuance process for corporate bonds and sukuk to be offered to retail investors.

“Qualified issuers no longer need to make disclosures through a prospectus, and are only required to issue a product highlight sheet. The range of corporate bonds and sukuk that can be offered to retail investors has also been expanded beyond plain vanilla bonds,” it said.

The SC is also introducing a new seasoning framework to enable retail investors to access existing corporate bonds and sukuk that are traded by sophisticated investors in the over-the-counter (OTC) market.

Under this framework, corporate bonds and sukuk that are eligible for retail investment must have been in the market for at least 12 months and have a minimum credit rating of 'A', among other requirements.

In tandem with these measures, distributors of corporate bonds and sukuk in the OTC market are required to observe the sales practices prescribed by the SC.

The regulator noted that the liberalised framework for retail investors is complemented by the centralised online information platform, Bond+Sukuk Information Exchange Malaysia (BIX Malaysia), established by the SC in November 2017.

BIX Malaysia enables investors to obtain information on ringgit bonds and sukuk to assist them in making investment decisions.

EU unveils Asia infrastructure plan, denies rivalry with China

BRUSSELS, Sept 19 — The European Commission proposed today a foreign policy plan to improve transport, energy and digital infrastructure links with Asia but denied seeking to counter China’s ambitions that have raised suspicion in Western…

US stocks mostly higher as trade fights churn

NEW YORK, Sept 19 — Wall Street stocks were mostly higher early today, taking a broadly benign view of lingering trade fights, including the escalating US-China battle. About 15 minutes into trading, the Dow Jones Industrial Average was up 0.5 per…

Germany mulls fund to fend off Chinese tech takeovers, says source

BERLIN, Sept 19 — The German government is taking steps to counter a surge in Chinese bids for stakes in German technology companies, including the creation of a billion-euro fund that could rescue such firms in financial trouble, a government…

New digital tax will increase costs, prices: Ideas

PETALING JAYA: A new direct digital tax in Malaysia would increase the costs of digital goods and services, which would in turn, increase prices for consumers and businesses, said the Institute for Democracy and Economic Affairs (Ideas).

In a brief titled “Tax in The Digital Age” published by Ideas, it said that a direct digital tax could increase revenue in the short term but could slow the development of the digital economy, particularly for new start-ups and small and medium enterprises (SMEs).

“If Malaysia introduces a “direct digital tax” that might encourage other countries to do the same, which would be damaging for Malaysian firms looking to export to those markets. As an open trading nation, Malaysia stands to benefit more from a pro-trade, pro-innovation approach to the digital economy,” it added.

According to Ideas, the case for an “indirect tax” on digital activity, that is applying sales and services tax (SST) to digital purchases from abroad, is less controversial than a new “direct tax” and many countries have already taken this approach.

“Doing so in Malaysia would also level the playing field between foreign and Malaysian companies, as local digital firms are already subject to SST. It would however still increase the cost of digital goods and services in Malaysia and drive up prices.

“Also, with the recent switch from goods and services tax (GST) to SST, implementation would have to be handled with care,” it said.

In the brief, Ideas argued that there is no definitive evidence that digital companies pay less tax than traditional companies, but noted disagreements over where that tax should be paid.

It highlighted the importance of a collective agreement by all countries on this issue, to avoid double taxation whereby companies are taxed on the same profits twice, and a slow down in the digital economy.

The brief, which was presented to the Deputy Finance Minister Datuk Amiruddin Hamzah at a roundtable discussion on the topic hosted by Ideas on Tuesday, considers the current global debate around tax and the digital economy and assesses the implications of Malaysia introducing a new digital tax.

New taxes fall into two categories namely, new “direct taxes” that target the profits of foreign digital companies doing business in Malaysia, and “indirect taxes” that apply consumption taxes (like SST) to foreign companies selling digital goods and services into Malaysia, paid by the users.

Ideas CEO Ali Salman said it is important to strike the right balance between tax and growth in the digital economy.

“The government rightly has great ambitions for the digital economy, including supporting new start-ups and encouraging SMEs to export online. New taxes which increase the costs of digital goods and services could deter growth in the digital economy. The world is not united on this issue, and Malaysia should advocate for a pro-trade and pro-innovation approach,” he said.

“Modifying SST so that it covers digital purchases from abroad is less contentious and would level the playing field between foreign and domestic firms. But it would still increase prices for Malaysian businesses and consumers and would need to be implemented very carefully given the recent transition from GST to SST,” he added.