Sunday, September 23rd, 2018

 

Pompeo on China trade war: ‘We are going to win’

NEW YORK, Sept 23 — Secretary of State Mike Pompeo vowed that the United States would emerge victorious in an intensifying trade war with China, a day before Washington imposes US$200 billion (RM827 billion) worth of tariffs. “We are going to…


China’s CCCC hopes review of East Coast Rail Link project will not take long

BEIJING: China Communications Construction Co (CCCC), the contractor for the 688km East Coast Rail Link (ECRL), hopes the review by the Malaysian government would not take long, says its vice-president, Sun Ziyu.

He said the ECRL is the one project that has been significantly affected since the new Malaysian government took office, adding that the value of the contract is high due to the long and complex alignment of the track via tunnels and bridges.

“It is understandable for the new government to review such a big project, but they should not take too long to come to a decision,” he told a Malaysian media delegation, led by the Chinese Embassy in Kuala Lumpur, at the group's headquarters here on Saturday.

Sun said CCCC had already started earth works, excavating tunnels, building road foundations, procuring bridge construction equipment and materials, hiring workers, as well as establishing partnerships with over 700 local subcontractors, suppliers and consultants.

“Ever since the suspension of work, losses are incurred every day. As a contractor, this is upsetting and impacts us negatively,” he added.

Sun said while CCCC understands the need to review major infrastructure projects after a change in government, the suspension should not be for long because it is not a win-win situation for both sides.

Citing an example, he said the Colombo Port City Project that CCCC invested in Sri Lanka was suspended for one year due to a change in the political environment, but it has now resumed and is progressing well.

Sun said the ECRLis a key foreign trade project between China and Malaysia and it originated from the idea of the Pan-Asia Railway Network. Under the Belt and Road Initiative, China and Malaysia are strategic partners, making communication between the two governments crucial.

“As we signed the contract with asset owner Malaysia Rail Link Sdn Bhd (MRL), so our discussion is with the asset owner. We will follow the contract and we believe that the issue could be resolved by negotiation.

“However, we are suffering losses every day as long as the suspension is still in effect. Therefore, we cannot afford for it to be suspended and leave the issue unresolved for too long,” he explained.

Sun said CCCC believes the problem can be resolved amicably as the ECRL is a key infrastructure project that will offer long-term benefits to Malaysia.

“We fully understand the new government's concern about the debt crisis, but as a public company we are also accountable to our shareholders,” he said.

On the question of whether CCCC would consider being an equity partner in ECRL, Sun said: “We are open to discussion. We can adopt the transit-oriented development concept in the railway project.” – Bernama


China’s CCCC actively seeking investment opportunities in Malaysia

BEIJING: China Communications Construction (CCCC) is transforming itself from an engineering, procurement, construction and commissioning contractor into an investor, developer and operation service provider, says its vice-president, Sun Ziyu.

“We are actively seeking investment opportunities to help develop Malaysia. For example, we are exploring transit-oriented development along the East Coast Rail Link (ECRL).

“We plan to invest in targeted industries along the ECRL and lead investments from China and other countries as well,” he told a Malaysian media delegation, led by the Chinese Embassy in Kuala Lumpur, at the group's headquarters here on Saturday.

Sun said besides infrastructure development, CCCC also hopes to participate in other fields such as property development and urban development.

He said infrastructure development plays a key role in a nation's economy and serves as a major driver for economic development.

He added that CCCC's participation in mega projects in Malaysia gives particular attention to the livelihoods of the locals and localisation of its projects, while dismissing claims that mega infrastructure projects involving foreign contractors are a major strain on the local people and businesses.

Giving an example, Sun said CCCC's participation in the Mass Rapid Transit and the Light Rail Transit projects in Kuala Lumpur will help ease traffic congestion, while the Port Klang and Kuantan Port projects will lead to further development in the area.

“For ECRL, 50% of our workforce are locals and could reach up to 70 per cent%. Except for some special technicians who were from China, all other staff were locals.

“We have also launched the industrial training programme plan to train and develop 3,600 railway experts. So far, we have hired and trained 447 local graduates,” he pointed out.

Sun said CCCC is committed to procuring locally as much as possible to reduce delivery time and cost, adding that local subcontracting also improves its management efficiency.

“So far, 500 local suppliers, 157 local subcontractors and 91 local consultants are working with CCCC. We only consider buying from other countries when there is no such material or equipment in the local market, such as tunnel boring machine and rolling stock.

“At the same time, we subcontract substantial work to local companies. CCCC's mega projects in Malaysia could drive economic growth, create jobs, enhance local talent, make full use of local resources and benefit the local community,” he said.

Sun said Malaysia will remain as a preferred market for CCCC's overseas business and its commitment to developing partnerships with Malaysian companies remains unchanged despite previous financial crises and trade uncertainties.

“We set up our Southeastern Asia Regional Management Centre in Kuala Lumpur, which oversees CCCC marketing and project management work for Southeast Asia. So far, we have over 20 ongoing projects in Malaysia and they are proceeding well,” he said. – Bernama


Asian firms shuffle production around the region as US tariffs hit China

SEOUL/TOKYO: A growing number of Asian manufacturers of products ranging from memory chips to machines tools are moving to shift production from China to other factories in the region in the wake of US President Donald Trump's tariffs on Chinese imports.

Companies including SK Hynix of South Korea and Mitsubishi Electric, Toshiba Machine Co and Komatsu of Japan began plotting production moves since July, when the first tariffs hit, and the shifts are now under way, company representatives and others with knowledge of the plans told Reuters.

Others, such as Taiwanese computer-maker Compal Electronics and South Korea's LG Electronics, are making contingency plans in case the trade war continues or deepens.

The company representatives and other sources spoke on condition of anonymity because of the sensitivity of the issue.

The quick reactions to the US tariffs are possible because many large manufacturers have facilities in multiple countries and can move at least small amounts of production without building new factories. Some governments, notably in Taiwan and Thailand, are actively encouraging companies to move work from China.

The United States imposed 25% duties covering US$50 billion (RM206.5 billion) of Chinese-made goods in July, and a second round of 10% tariffs covering another US$200 billion of Chinese exports will come into effect this week. The latter rate will jump to 25% at the end of the year, and Trump has threatened a third round of tariffs on US$267 billion of goods, which would bring all of China's exports to the United States into the tariff regime.

The tariffs threaten China's status as a low-cost production base that, along with the appeal of the fast-growing China market, drew many companies to build factories and supply chains in the country over the past several decades.

At SK Hynix, which makes computer memory chips, work is under way to move production of certain chip modules back to South Korea from China. Like its US rival Micron Technology, which is also moving some memory-chip work from China to other Asian locations, SK Hynix does some of its packaging and testing of chips in China, with the chips themselves mostly made elsewhere.

“There are a few DRAM module products made in China that are exported to the United States,” said a source with direct knowledge of the situation, referring to widely used dynamic random-access memory chips. “SK Hynix is planning on bringing those DRAM module products to South Korea to avoid the tariff hit.”

Most of SK Hynix's production won't be affected, the source added, since China's dominance in computer and smartphone manufacturing makes it by far the largest market for DRAM chips.

Toshiba Machine Co says it plans to shift production of US-bound plastic moulding machines from China to Japan or Thailand in October.

The machines are used for making plastic components such as automotive bumpers. “We've decided to shift part of our production from China because the impact of the tariffs is significant,” a spokesman said.

Mitsubishi Electric, meanwhile, says it is in the process of shifting production of US-bound machine tools used for metal processing from its manufacturing base in Dalian, in northeastern China, to a Japanese plant in Nagoya.

In Taiwan, an executive at notebook PC maker Compal, who declined to be named, said the trade war's impact had been limited so far, but the company was studying its options.

“We can also use facilities in Vietnam, Mexico and Brazil as alternatives,” the person said. “It won't be easy because our majority production is in China; no other country can replace that at this moment.”

Smaller companies are exploring their options too. South Korean medical equipment manufacturer IM Healthcare, which makes products including air purifiers, is studying a move to Vietnam or South Korea if the trade conflict intensifies, a source with direct knowledge of the matter said.

Some Asian governments hope for an economic and strategic boost from the US-China conflict. In Taiwan, the government is actively encouraging companies to move production out of China, pledging last month to speed up its existing “Southbound Policy” to reduce economic reliance on China by encouraging companies to move supply chains to Southeast Asia.

Taiwan economics ministry official William Liu told Reuters that the trade war was “a challenge and an opportunity” for the self-ruled island. Taiwan depends on China as an export market, he noted, but at the same time could see a boost in jobs from companies moving operations back home.

Thailand also hopes to benefit from the “flow of technology and investment leaving China during the trade war”, said Kanit Sangsubhan, secretary-general of the Eastern Economic Corridor (EEC) Office of Thailand, which is coordinating a US$45 billion project to attract investment into the country. The EEC last month took some 800 representatives of Chinese companies on a tour around the eastern industrial heartland, and the country's Board of Investment has done seven roadshows in China this year to woo investors. – Reuters


Apex Equity proposes to merge with Mercury Securities

PETALING JAYA: Apex Equity Holdings Bhd has proposed a merger with Mercury Securities to expand into the full-fledged corporate advisory business.

Apex said in a filing with the stock exchange that it had entered into a heads of agreement (HoA) for the transfer of Mercury's stockbroking, corporate advisory and other related businesses together with the requisite business assets and business liabilities, to Apex for RM140 million.

Apex will pay for the transaction through a combination of RM48 million cash and 100 million new Apex shares at an issue price of 92 sen per share, a 0.97% premium to its five-day volume weighted average price of 91.12 sen.

Upon completion, Mercury will hold about 31% of Apex.
Apex will finance part of the cash portion via a private placement of 20 million Apex shares at an issue price to be determined later. The exclusivity period for the HoA is three months.

“A detailed announcement will be made upon execution of the agreement for the proposed merger.”

Apex said the proposed merger will enable the group to leverage on the expertise and experience of the management team and employees in the stockbroking and corporate advisory business of Mercury.

Mercury, which has been in operation for 26 years, is one of the three non-bank backed players licensed by the Securities Commission Malaysia that can undertake full-fledged corporate advisory services which include initial public offerings, mergers and acquisitions, takeovers and privatisations, equity fund raising, underwriting and placement of securities.

On Bursa Malaysia last Friday, Apex closed unchanged at 90 sen on 25,000 shares done.


Automotive sales in September to be lower than in August: Kenanga

PETALING JAYA: Kenanga Research expects sales volume for the automotive sector in September to be lower than the August 2018 level with the end of the tax holiday, despite certain makes seeing reduction in prices under the sales and service tax (SST) regime.

“With the new SST gazetted on September 1, 2018, vehicles are charged 10% sales tax. Nevertheless, from the recent announcement by certain car makers, the prices for the locally-assembled and completely-knocked-down (CKD) units have dropped by 1% to 3% (compared with 6%-rated goos and services tax), whereas the prices for the completely-built-up (CBU) units have increased by 1% to 3%,” it said in a research note last Friday.

Kenanga Research believes the unexpected price decrease in locally-assembled and CKD units was attributed to the better compliance of Industrial Linkage Programme regulation, which provides incentives and duty exemption to the original equipment manufacturers that use local components under the National Automotive Policy 2014.

The research house is maintaining a “neutral” rating on the automotive sector, with Tan Chong Motor Holdings Bhd being the top pick for its turnaround in earnings after two consecutive years of losses with focus on high-margin vehicles, and expected expansion of its Indochina operations for larger market share volume.

“Our other top pick for the sector is MBM Resources Bhd, which is trading at an undemanding 6.3 times FY18 PER (price-to-earnings ratio) compared with the five-year forward average of 11 times.”

According to the Malaysian Automotive Association, Malaysia's vehicle sales increased 27% year-on-year to 65,551 units in August, ending the historic three-month zero-rated tax holiday.

However, on a month-on-month basis, car sales dropped 4% due to Perodua's supply disruption and run-out of popular passenger vehicle models during the first two months of the tax holiday.


MNRB gets six-month extension to repay RM320m credit line

PETALING JAYA: MNRB Holdings Bhd, which recently raised RM400 million through a rights issue, has secured a six-month extension to repay a RM320 million revolving credit facility to AmBank (M) Bhd.

Repayment of the credit line, obtained in 2017 to refinance a RM200 million commodity murabaha financing and a RM120 million sukuk murabahah, was to have been made by Sept 22, 2018.

The facility carries a floating interest rate that is reviewed quarterly, and is unsecured.


CIMB in Top 100 of Thomson Reuters’ Global Diversity & Inclusion Index

PETALING JAYA: CIMB Group Holdings Bhd has been ranked top 100 most diverse and inclusive organizations globally by Thomson Reuters’ Diversity & Inclusion (D&I) Index 2018, which measures more than 7,000 companies globally on their environmental, social, and governance (ESG) strategy.

Thomson Reuters D&I Index provides an additional lens to investment professionals and investors alike to evaluate companies for their ESG strategies, which have a bearing on long-term opportunities and investment risks, as more and more investors value the societal and business benefits of investing in diverse and inclusive organisations.

“The recognition in Thomson Reuters D&I Index affirms our efforts to create a positive impact not only
economically, but also socially and environmentally. CIMB takes its commitment to all our stakeholders seriously. In terms of our people, we have consciously transformed CIMB into a workplace that attracts and retains a team of talents, currently comprising 34 nationalities spread across 15 countries. As for ESG-related efforts, our corporate social responsibility arm, CIMB Foundation, has expended over RM120 million to benefit about 700,000 lives since its inception in 2007. All these factors have contributed to the group’s journey in becoming a leading ASEAN bank, and I’m pleased that these efforts are being recognised by the Thomson Reuters D&I Index,” CIMB Group CEO Tengku Datuk Seri Zafrul Aziz said in a statement today.

Over the years, CIMB has demonstrated great leadership in the banking industry and corporate world by transforming its people policies, as well as strengthening its ESG aspirations. This includes extended maternity leave; flexible work arrangements for parents to young children; 30-day paid paternity leave; and even up to six months’ staff rejuvenation leave, with the staff’s job and seniority assured. Currently, CIMB has a 56% ratio of women in its workforce, with close to 42% representation at senior management level.


CIMB among top 100 most diverse and inclusive organisations

KUALA LUMPUR, Sept 23 — CIMB Group Holdings Bhd, Malaysia’s second largest financial services provider by assets, has been ranked among the top 100 most diverse and inclusive organisations globally by Thomson Reuters’ Diversity…


China Premier Li says to reduce import-export costs, red tape

SHANGHAI, Sept 23 — China will cut import and export costs for foreign firms, Premier Li Keqiang said in comments posted by the central government today, as the world’s second largest economy looks to promote an image of being open for business….