Wednesday, October 3rd, 2018


Country Heights: EGM first, nod later for cryptocurrency issue

PETALING JAYA: Country Heights Holdings Bhd (CHHB), which plans to issue its own asset-backed cryptocurrency, said it will engage with the relevant authorities for approval, if needed, once shareholders vote for the appointment of consultants at the Nov 8 EGM.

“These consultants will prepare all the necessary documentation for submission and engagement with the relevant authorities for approval, if any. As there is no regulation specifically regulating this, the founder/chairman (Tan Sri Lee Kim Yew) wishes for the relevant authorities to be kept well informed with the company's initiative,” it said in a filing to the stock exchange in apparent response to questions on whether it had obtained approval from the authorities to proceed with its plans.

On Sept 21, CHHB announced it would be holding an EGM to get shareholders' approval to proceed with the appointments of technology partners and other external consultants to give back-end support to the exercise, particularly the implementation process.

Minority Shareholders Watch Group CEO Devanesan Evanson, however, told SunBiz it is preferable that CHHB obtain the green light from regulators before calling an EGM to get shareholders' nod for the issuance of the cryptocurrency due to the lack of regulatory guidelines by authorities, unlike other fundraising exercises such as right issues and initial public offerings.

“It is better if they got the clearance of SC first, simply because there is no guideline and the Securities Commission has been very cautious when it comes to cryptocurrency and bitcoins,” he added.

On another note, Devanesan said it is also costly for the company to hold the EGM in the off chance the appointment is not passed.

As at press time, the SC did not respond to SunBiz's request for comment on the issue of approvals.

According to CHHB's plan, the “Horse Currency” will mainly be used as a utility token, reward token and royalty programme with businesses, products and services under the group's new strategies.

CHHB proposes to issue 1 billion units, of which an initial 300 million units will be made available to the public. The issuance is backed by the group's existing assets worth RM2 billion.

CHHB highlighted that it will be taking very “patient and prudent” steps in the issuance of the cryptocurrency.

“As this is a very new field in the country, and with CHHB being the first public-listed company to come up with such initiative, this may be very sensitive to those who do not understand blockchain technology and are confused on too many cryptocurrencies.”

CHHB said once the board has decided to proceed with the ICO, another general meeting will be called for the final endorsement for the launch of the ICO, its structure, mechanism and the exchange centre.

In addition, the group will set up a chair with a local university to educate and promote the importance of blockchain technology for the future of this country.

Lee believes that one of the benefits of the blockchain technology, besides reducing cost, is that it is regarded as a trusted machine of integrity as there is no room for corruption or money laundering.

His view differs from the perspective of central bankers who have flagged money laundering as a key concern of cryptocurrencies.

“The founder/chairman believes that blockchain technology is also in tandem with the Islamic values as it does not charge interest which is not permitted under Islamic values. Through blockchain technology, CHHB will share the potential business benefit with the currency holders.”
On Bursa Malaysia today, CHHB was up 2 sen or 1.4% to RM1.42 on volume of 29,500 shares.

Bank Negara issues guidance papers on value-based intermediation, seeks feedback

KUALA LUMPUR: Bank Negara Malaysia (BNM) today issued two guidance documents to facilitate the practical adoption of the value-based intermediation (VBI) initiative, in conjunction with the Global Islamic Finance Forum 2018 (GIFF 2018).

BNM, in collaboration with the Islamic finance industry in July last year introduced the VBI concept paper, which is aimed at strengthening the role and impact of Islamic banking institutions towards a sustainable financial ecosystem.

The initiative also aims to position Islamic finance as a leading agent of change by incorporating holistic business practices, conduct and offerings that have positive and sustainable impact on the economy, community and environment.

BNM governor Datuk Nor Shamsiah Mohd Yunus said the two guidance documents, namely the VBI Impact Assessment Framework and the VBI Scorecard, are open for public consultation.

She said the VBI assessment framework will provide guidance on the assessment of financing and investment applications taking into consideration economic, social and environmental impacts. The scorecard will support the implementation of performance measurement frameworks for Islamic financial institutions that drive positive value and impact on society as well as the environment.

“I look forward to receiving constructive feedback from the industry and interested parties, and to further strengthen these frameworks to drive a renewed focus on sustainable financial solutions,” she added.

Shamsiah said the central bank expects that VBI adoption will have significant impact on business models of Islamic financial institutions, including the drivers of profitability and risks.

Therefore, the industry needs to make a choice to either continue to ignore social and environmental issues or embrace a philosophy of finance beyond profits.

“For example, in the agriculture sector, resources can be channelled towards building flood defences, and developing local structures and facilities that are more resilient to harsh weather conditions. Takaful solutions also have an important role in strengthening resilience against climate events,” she noted.

According to Association of Islamic Banking and Financial Institutions Malaysia president Datuk Adissadikin Ali, currently, nine out of 27 Islamic banking institutions in Malaysia have adopted VBI practices. They include Bank Islam, Bank Muamalat, CIMB Islamic, Agrobank, HSBC Amanah, Maybank Islamic, AmBank Islamic, Alliance Islamic and Standard Chartered Saadiq.

“The adoption of VBI is on voluntary basis, but we're all agreed to adopt it,” Adissadikin said.

The two-day GIFF 2018, hosted by AIBIM, focuses on ways to strengthen the roles and impact of Islamic banking institutions towards a sustainable financial ecosystem and promotes the application of VBI practices.

HPMT to use listing proceeds for buying new machinery

PETALING JAYA: Cutting tools manufacturer and distributor HPMT Holdings Bhd, which is planning to list on Bursa Malaysia Securities' Main Market, is looking to use proceeds from its initial public offering (IPO) to purchase new machinery and equipment and working capital.

The group's core businesses are divided into trading, coating and manufacturing.

HPMT in its draft prospectus exposure said it will be using 70.3% of the proceeds for the purchase of machinery and equipment. In addition to that, 9.3% will be spent on inventories, 9.2% on general working capital and 11.2% on listing expenses.

The IPO will entail the issuance of 16.42 million shares to the Malaysian public, 8.30 million shares to eligible directors and employees, 59.04 million to institutional and selected investors and 32.84 million shares to bumiputra investors approved by the Ministry of International Trade and Industry.

Heroz Mechanical is currently HPMT's substantial shareholder, with 97% interest. After the IPO, the shareholding will be diluted to 62.6%.

HPMT recorded a revenue of RM14.89 million and revenue of RM85.15 million for FYE17.

Its revenue is driven both domestically and from overseas as its products have been sold to more than 30 countries (including Malaysia). They include those in Europe (such as Germany, Italy, Czech Republic, Denmark and Portugal), Asia (such as China, Japan, Turkey, Thailand and Indonesia) and others (such as Australia, United States of America and New Zealand).

Elite N.Korean hacker group tied to bank attacks, researchers find

WASHINGTON, Oct 3 — An elite group of North Korean hackers has been identified as the source of a wave of cyberattacks on global banks that has netted “hundreds of millions” of dollars, security researchers said today. A report by the…

Wall Street climbs with support from financials, tech stocks

NEW YORK, Oct 3 — US stocks rose today, with the Dow Jones Industrial Average at an all-time high, driven by gains in financial and technology stocks. Ten of the 11 major S&P sectors were higher. Financials led with a 0.6 per cent gain,…

Ex-investment banker jailed, fined for insider trading

PETALING JAYA: Former senior manager of CIMB Investment Bank Bhd Lim Bun Hwa has been sentenced to six months jails and fined RM1 million after being convicted for insider trading.

The Securities Commission Malaysia (SC) said in a statement today that the Kuala Lumpur Sessions Court had convicted Bun Hwa after he pleaded guilty to five charges of insider trading in the shares of PacificMas Bhd.

Bun Hwa, 42, had acquired 145,000 units of PacificMas shares while in possession of inside information between Dec 18 and 31, 2007, when he was a senior manager in the corporate finance department of the bank.

The inside information referred to in the charges is related to the proposed takeover offer of PacificMas by Overseas Chinese Banking Corporation (OCBC), which was announced to Bursa Malaysia on Jan 4, 2008.

“At the material time, CIMB had been engaged by OCBC to advise it on the proposed takeover. Bun Hwa had pleaded guilty following a plea bargaining application under Section 172C of the Criminal Procedure Code,” said SC.

Last year, Bun Hwa was charged together with his brother Lim Boon Cheng and Ewe Lay Peng with respect to the insider trading activities in this case. Ewe was also a senior manager in the corporate finance department of CIMB.

Following the plea of guilt by Bun Hwa, the charges against Boon Cheng were withdrawn. The court has fixed Oct 11 for trial dates to be fixed in the case involving Ewe.

Datasonic, Fima advised to attempt mediation

PETALING JAYA: The Kuala Lumpur High Court has advised Datasonic Group Bhd and Fima Corp Bhd to attempt mediation with regards to a RM24.98 million suit.

In a filing with Bursa Malaysia today, Datasonic said the High Court Judge advised the parties to attempt mediation.

To recap, Datasonic’s wholly owned subsidiary Datasonic Technologies Sdn Bhd (DTSB) had on Aug 1 received a writ of summons with a statement of claim dated July 30 filed by Fima’s wholly owned subsidiary Percetakan Keselamatan Nasional Sdn Bhd (PKN).

The suit is in relation to a disagreement between DTSB and PKN on the pricing of the 1.5 million Malaysian passport booklets supplied for the interim period of six months from Dec 1, 2016 till May 31, 2017, before the passport booklets were fully printed by DTSB.

According to Datasonic, PKN had voluntarily delivered the booklets to DTSB with full knowledge that the terms of the agreement had not been agreed to and the agreement had not been executed, while the price was still subject to negotiation.

It also said that the final settlement sum will be far less than what is claimed by PKN based on meritorious defences against the claim. However, it disclosed a contingent liability of about RM5 million in the event that the court decides wholly in PKN’s favour.

Datasonic had said that it will pursue an amicable settlement with Fima and will leave it to the court to determine the fair price should it fail to come to an agreement with PKN.

Datasonic has a five-year Malaysian passport booklets contract with the government. It commenced producing and supplying the new design of the booklets since September 2017.

PKN is a sub-contractor appointed for an interim period of six months.

Datasonic’s share price fell 0.69% or half sen to close at 71.5 sen today with 1.43 million shares traded while Fima’s share price fell 1.62% or 3 sen to close at RM1.82 with 13,000 shares traded.

PUNB targets to lower non-performing loans

KUANTAN: Perbadanan Usahawan Nasional Bhd (PUNB) targets to reduce its number of non-performing loans (NPL) which are due for settlement by year-end to 3%.

CEO Datuk Azhar Ahmad said the target was set as the repayment rate have been encouraging compared with previous years.

“Initially, our target was set at 6%, but since the number of NPLs have reduced to 6.35%, we are confident with the 3% target by year-end.

“This is better compared with 2016 and 2017 where NPLs stood at 20% of the total loans,” he told reporters after PUNB handed over RM100,000 in business tithe to the Pahang Zakat Collection Centre today.

As part of its effort to ensure loan settlements, Azhar said his officers would meet with the debtors personally to identify their problems in servicing the loans.

“We will then assist them in terms of rescheduling or restructuring their repayments in order to lessen their burden,” he said.

Azhar said NPLs in Pahang was under control at 4.7% out of RM146 million worth of loans involving 623 entrepreneurs, adding that as of Sept 28, PUNB had approved RM290.9 million in financing to 1,307 entrepreneurs nationwide. – Bernama

Cut unnecessary spending in Budget 2019: UOB Research

PETALING JAYA: For Budget 2019, which will be tabled next month, UOB Research opined that it will be more productive for the government to trim unnecessary expenditure as opposed to introducing new taxes, which are deemed unpopular and likely to raise the cost of doing business at this juncture.

“The introduction of zero-based budgeting across the ministries and government could help yield savings of up to RM20 billion or 9% of total revenue. However, the savings are more likely to materialise over a few years given that certain components that the government spends on particularly supplies and services are quite rigid,” UOB Research’s senior economist Julia Goh said in a note today.

She expects the new government to stay the course of fiscal and debt consolidation, while the size of the budget deficit will depend on a large extent on the sales and services tax (SST) revenues collected, size of goods and services tax (GST) input tax credits, income tax and RPGT refunds are repaid, asset monetisation, higher oil revenues, and degree of cuts in operating expenditure.

She said the cash aid and fuel subsidies are likely to be reviewed to make them more targeted.

On the tax side, Goh does not foresee any adjustments in the corporate and individual income tax rates. She noted that the proposed inheritance tax and capital gains tax on share transactions should only be considered under a comprehensive tax reform programme, rather than as piecemeal stop-gap measures.

“New taxes such as soda or digital economy taxes are possible but we think bulk of efforts would focus on trimming unproductive spending.”

Given lingering risks on the global front and signs that the domestic economy is moderating, Goh expects the new government to announce measures to spur investments and growth. This includes initiatives to incentivise automation and modernisation, industry 4.0 and higher value-added segments. Areas of focus are likely to be affordable housing, automotive, transportation, tourism, e-commerce, and renewable energy.

Goh is projecting a higher fiscal deficit of 3% of GDP for 2019 from the estimated 2.8% for 2018, premised on the real GDP growth of 4.8% in 2018 and 2019.

“This year’s fiscal deficit is likely to meet the budgeted RM40.3 billion or -2.8% of GDP, given the cumulative fiscal shortfall at RM32.9 billion or 2.3% of GDP in Jan-Aug 2018.”