Monday, October 1st, 2018
WASHINGTON, Oct 1 — International Monetary Fund Managing Director Christine Lagarde said today that trade disputes and tariffs are starting to dim the outlook for global growth, calling on countries to resolve their differences and reform global…
NEW YORK, Oct 1 — US stocks advanced today, led by gains in shares of technology and industrial companies, as a last-minute deal to save Nafta as a trilateral pact raised hopes for progress in talks with other countries at the start of the fourth…
NEW YORK, Oct 1 — Shares of Tesla Inc jumped nearly 16 per cent today after Chief Executive Elon Musk settled with the US Securities and Exchange Commission (SEC) over charges of misleading investors, heading off moves to force him out. Tesla…
WASHINGTON, Oct 1 — A new US trade pact with Canada and Mexico is “a great deal” for all three countries, President Donald Trump said today, hailing the replacement of the old Nafta deal which he had long railed against and threatened to…
KUALA LUMPUR: The Ministry of Finance (MoF) will not cancel public-private partnership (PPP) projects awarded through direct negotiations by the previous Barisan Nasional administration, particularly land swap deals, but will introduce a “clean” PPP model in line with its policy to conduct open tenders.
In a review process, the MoF found that 14 out of 17 PPP projects were directly negotiated.
“Most of the 17 projects were land swap projects, which essentially means the contractor will carry out a government project such as building affordable housing, schools, police stations, fire stations and army camps, and get pieces of government land in return, instead of being paid in cash. For the projects reviewed, the contractor would have negotiated directly with the government on the price of the project and the value of the government land at the same time.
“Such a direct negotiated process not only perverts the model of PPP into a piratisation exercise or crony capitalism, it also puts the federal government into deep debts. By direct negotiation, the real value of the government land is invariably underpriced whilst the cost of the public works project is overpriced,” Finance Minister Lim Guan Eng said in his keynote address at the launch of the Institute of Corporate Directors Malaysia (ICDM) here today.
He added that this is evidenced by the RM201 billion debt that has to be borne by the federal government as a result of the perversion of the PPP model.
Lim said the open tender process would ensure that all government projects are awarded to contractors who can deliver the best outcomes by getting the best value for money and that it does not add on debt but instead help to bring in revenue.
“This is one of the alternatives adopted by the Ministry to ensure that the projects will be carried out instead of taking the extreme approach of cancelling them altogether,” he added.
Lim said Penang's adoption of the clean PPP model by open tender is the basis for its annual budget surpluses, increase in cash reserves by more than 100% and reduction in state government debts by 90%.
“This new model will not only be applied to the 17 major projects which were reviewed, but for all PPP projects in the future,” he said.
Earlier, Lim launched ICDM, a dedicated body established by the Securities Commission Malaysia (SC) to enhance the professionalism and effectiveness of corporate directors in Malaysia.
Formed by directors for the benefit of directors, ICDM's main objectives are to promote excellence, integrity and the highest levels of skills and professional competence among corporate directors in Malaysia; represent the interests of its members and advocate the adoption and application of corporate governance practices.
Outgoing SC chairman Tan Sri Ranjit Ajit Singh said the ICDM will add to the already rich and diverse corporate governance ecosystem to enhance director effectiveness and board leadership in Malaysia.
ICDM will focus on building a sustainable pipeline of directors through education programmes that equip directors with essential skills to serve on listed boards. ICDM also maintains a directors' registration provide director-sourcing services to companies so that succession planning is competency-based.
PETALING JAYA: The fallout from the 1Malaysia Development Bhd (1MDB) scandal has shone a spotlight on corporate Malaysia which illuminated a spectrum of grey.
Not black or white, but a multitude of grey.
Grey because as we all digest the intricacies and enormity of the web which 1MDB weaved, the realisation dawns that there are really very few well-known personalities who can claim not to have crossed paths with, or at least brushed up against, the investment fund's business affairs.
Which brings us to the ongoing purge of a number of individuals whose guilt by association to the previous administration's personalities or policies, rather than the 1MDB scandal per se.
As to whether these casualties, so to speak, are warranted or not, they lie in myriad perspectives of grey.
Take the governor who resigned despite not backing down from his assertion that he had followed procedures, and done nothing that his predecessor had not – grey.
A corporate figure whose impeccable track record did not matter, for his alignment to the policies of the now disgraced administration – light grey.
A banker, whose blood ties to the previous administration worked against him in a government looking to wipe the slate clean – platinum.
An investigative journalist asking another making a buck from his work uncovering the most outrageous of personalities in the 1MDB case to reveal his source – jet.
Businessmen going all out to back the government of the day, only to later recant citing pressure – nickel.
And there are many other shades which go beyond corporate Malaysia.
Take the hit in popularity of a beloved actress, whose martial arts skills have wowed locals for years, for now being part of a much talked about film deal involving the former prime minister whom she had publicly supported prior to the change in government – ash grey.
And while it is easy to say that it is confined to an old palette, is it though?
Because as heads roll, the palette has been replaced but it appears to be tarred with the same brush.
For example, the appointment of a Democratic Action Party politician as a member of the Sustainable Energy Development Authority of Malaysia on Aug 2, 2018 – silver.
Today’s announcement by the Entrepreneur Development Minister of a Parti Keadilan Rakyat member, who was once considered as a candidate for the Tanah Merah seat in the last general election, as chairman of Tekun Nasional – charcoal.
These despite the “no political appointees” pledge. Who decides which political appointee is kosher?
The shades of grey paint a picture of a corporate Malaysia and, indeed, Malaysia, that is far too dominated by politicians and their allies.
A cause and effect to the state that we are currently in, driving home the need to decouple business and politics as far and as soon as possible.
Then maybe, the next time the spotlight is shone on corporate Malaysia, it will be less grey and reflect more shades of white.
PETALING JAYA: EA Technique (M) Bhd has started arbitration proceedings against Malaysia Marine Heavy Engineering Sdn Bhd (MMHE), a wholly owned subsidiary of Malaysia Marine and Heavy Engineering Holdings Bhd, claiming a sum of US$21.74 million (RM90 million).
In a filing with Bursa Malaysia today, EA Technique said the arbitration proceedings and claims are in relation to the conversion contract entered into by both parties for the provision of demolition, refurbishment and conversion of a donor vessel into a floating storage and offloading (FSO) facility dated June 9, 2015.
Pursuant to the conversion contract, EA Technique said, MMHE agreed to undertake the demolition, refurbishment and conversion of the vessel into the FSO facility, which formed a portion of the scope of works under the engineering, procurement, construction installation and commissioning contract.
“Disputes arose relating to change orders (variations) under the conversion agreement,” EA Technique added, noting it has appointed a law firm in Malaysia for the arbitration proceedings.
The US$21.74 million claim comprises US$8.7 million for recovery of overpayment in respect of contract price for the conversion contract, US$4 million being the backcharges under the conversion contract and US$9 million for recovery of payment pursuant to the letter of undertaking due to unsubstantiated change orders.
EA Technique said that at this juncture, it is unable to determine reliably the financial impact of the arbitration proceedings as it is subject to any counterclaim that may be raised by MMHE in the course of the proceedings.
PETALING JAYA: Malaysia’s manufacturing sector saw its strongest positive performance in September, after the headline Nikkei Malaysia Manufacturing Purchasing Managers’ Index (PMI) hit a 10-month high at 51.5, driven by strong rise in employment.
This is also the first time in three and a half years that the PMI had seen positive readings at above 50 in consecutive months.
The rate of job creation in the manufacturing sector was the strongest since the first month of the survey’s operation in July 2012.
Additionally, firms were also reportedly taking on more staff in preparation for expected workloads.
Manufacturers also saw their volume of work increase for the second month in a row in the month under review despite the introduction of the new sales and services tax (SST) at the start of the month.
“In fact, it was the first back-to-back rise in new business in the goods producing sector for nearly four years. New export orders increased for the third month running, albeit at a weak rate. Further growth of new work led to a third successive monthly gain in output in September,” said IHS Markit which compiles the report.
The rate of growth in output has not changed much since August, which saw workloads being boosted in advance of the SST implementation, and remained relatively solid compared with the trend over the six-year survey history.
“Malaysia’s manufacturing economy defied the challenges of the recently introduced SST to register its strongest rate of growth in ten months, led by the second sharpest gain in employment in the survey history,” said IHS Markit economics director Paul Smith.
He noted that the impact of the SST is already being felt on the pricing side, with input cost inflation jumping up to a six-month high in September and output charges being raised for a third successive month.
Firms mainly linked greater cost pressures to the introduction of the new SST on Sept 1.
The month-on-month acceleration in the rate of inflation was the largest observed in over a year-and-a-half – subsequently leading to manufacturers raising their own prices for the third month running, and at a stronger rate than in July and August.
Output expectations remained positive during September, with manufacturers generally expecting more business from customers over the next 12 months.
However, the sentiment has weakened, reflecting concerns among some firms that the implementation of the new SST will lead to slower orders.
Purchasing activity and input stocks both increased for the second month running in September, as manufacturers supported current workloads and planned for expected customer orders. Input price inflation, on the other hand, jumped to a six-month high in September.
Suppliers also saw their delivery times lengthened to the longest in three months.
Meanwhile, on a regional basis, Asean’s PMI improved further at the end of the third quarter, but at a slower pace, as headline PMI fell from 51.0 in August to 50.5 in September to signal another marginal improvement in the health of the manufacturing sector.
The overall manufacturing performance across the region remained uneven. Four of the seven monitored countries indicated an improvement in manufacturing conditions in September, unchanged from August.
PETALING JAYA: Foreign funds continued to buy into equities on Bursa Malaysia for the third week, the longest buying streak so far since the 14th general election, according to MIDF Research.
“Based on preliminary data from Bursa which excluded off market deals, international funds acquired RM212.3 million net of local equities last week, about half the net inflow in the previous two weeks. Malaysia was one of the two markets which attracted weekly foreign net inflow amongst the Asean markets besides Indonesia,” it said in a research note today.
MIDF Research said foreign investors first bought RM199.4 million net on Tuesday followed by RM72.3 million net on Wednesday.
“A highest weekly foreign net attrition worth – RM37.9 million was seen on Thursday as foreign investors reacted to the interest rate hike by the Federal Reserve. The same trend was seen across Asean markets namely Thailand, the Philippines and Indonesia, with the highest foreign outflow of US$53.6 million (RM221.7 million) recorded in Thailand.”
“Nevertheless, offshore funds paced down the outflow on Friday recording only – RM10.9 million net attrition.”
There was a foreign net inflow of RM66.3 million for the month of September, while the year-to-date outflow from Bursa as of last Friday stood at RM8.5 billion, the second lowest foreign outflow among the four Asean markets monitored by MIDF – namely Thailand, Indonesia, the Philippines and Malaysia.
Institutional investors were more active than the retail market and foreign institutions as its weekly average daily traded value (ADTV) was 7.3% higher at RM2.2 billion.
Meanwhile, the weekly ADTV of the foreign market declined more than 10% but still remain above the healthy level of RM1 billion. For the retail market, ADTV grew 5.6% to RM917.8 million.
KUALA LUMPUR: The rising tension between the US and China will not have an immediate impact on Asean’s economic growth as a majority of the countries in the grouping have a domestic demand-driven economy and are backed by sound economic and policy fundamentals.
S&P Global Ratings economist Vincent Conti said the movement of emerging currencies and trade tensions between the giant economies are two major factors affecting Asean economies.
As for Asean net import growth, the impact would likely be minimal.
“If trade takes a hit globally, the immediate growth impact on Asean will be mitigated and would really be felt, just not very significant in the net import trade growth.
“However, the second round of impact on onshore investors, as well as, businesses are much likely to be visible,” he told a media briefing on Asean Credit Spotlight today.
Explaining further on the impact of the trade war, Conti noted that Asean was not spared the negative impact, however, the depreciation of Southeast Asian emerging currencies was seen as diluted compared with Argentina, Turkey, Brazil and South Africa as markets recognised the stronger economic and policy fundamentals in the region.
“The gradual interest rates hikes by US Federal Reserve had alone generated a strong dollar environment and this punctuated emerging market stresses, particularly in Turkey and Argentina, and this generated capital outflow in weaker currencies across global emerging markets,” he added.
Narrowing down to Malaysia, Conti said more clarity on the administration’s direction, after a change in leadership, would generate confidence among investors.
“Malaysia’s current account surplus has helped in cushioning the impact of global uncertainties as the country doesn’t need external financing for any debt that it has at present, not to mention, there are plenty of domestic investors with ample liquidity to provide financing to domestic market if foreigners exit the market,” he explained.
Commenting on global economic growth, he said it was expected to moderate in the coming years, given the fact it has been a decade of recovery for global economic growth.
“The question right now is, how fast is the moderation pace and how sharp is the growth fall. It depends on the cycle of global credit growth and economic growth, which, if both elements turn out at the same time, might end up compounding each other,” he added. – Bernama