Tuesday, October 9th, 2018

 

Trump repeats threat of more tariffs if China retaliates on trade

WASHINGTON, Oct 9 — President Donald Trump today repeated his threat to impose tariffs on US$267 billion (RM1.1 billion) worth of additional Chinese imports if China retaliates for the recent levies and other measures the United States has taken…


Comcast becomes majority shareholder of Sky

LONDON, Oct 9 — US cable giant Comcast today said it is now the majority shareholder of pan-European TV satellite company Sky after purchasing 21st Century Fox’s 39-per cent holding in the group. It follows a long-running battle to take control…


Guan Eng unmoved by MMC Gamuda JV plea

KUALA LUMPUR: Finance Minister Lim Guan Eng was unmoved by MMC Gamuda Joint Venture's assertions of job losses, stating that it is welcome to place a fresh bid for the underground portion contract of the Mass Rapid Transit 2 (MRT2) project and to communicate its views.

“Until the open tender is called for, anyone can give their views. We have taken the position because we feel we can get better cost rationalisation and they have made an offer which we find inadequate,” he told reporters on the sidelines of the Malaysia: A New Dawn Investors' Conference.

“We have got the AG (Attorney-General's) Chambers' views that (for) any work done of course they will get the necessary recompense but this is all provided for … let the lawyers work it out,” he said when asked if there will be compensation to the contractors.

Lim said the government is of the view that it can achieve the best price by way of open tender compared to direct negotiations and gain extra savings.

His comments come against a backdrop of a growing outcry against the government's move to axe MMC Gamuda's contract for the underground portion of MRT2, which will lead to the loss of more than 20,000 jobs in a supply chain of over 600 local companies.

In response to the number of jobs on the line, Lim said as the underground portion is expected to continue there will still be a need for manpower, and these workers can be gainfully employed, whether under the previous contractor or a new one.

“Bear in mind the above-ground portion continues, so you cannot say that everyone will be dismissed. They will still be needed to complete the above-ground portion,” he said.

In a statement on Monday, MMC Gamuda urged the Ministry of Finance (MoF) to reconsider its decision to terminate its underground works contract for MRT2 citing a possible flood of lawsuits, the loss of more than 20,000 jobs and a review by a local engineering consulting firm which lacked the relevant experience to do so.

In an attempt to get the ministry back to the negotiation table, MMC Gamuda said that if the target figure of cost savings expected by the government was made known together with the components of the savings as individual items, both parties would be placed in a better position to re-examine these components from where savings could be derived and narrow the differences.

“Our perception of the latest cost gap is that it is an amount which is not unbridgeable. MMC Gamuda believes that MoF's aim of achieving savings is best done by both parties reaching an acceptable compromise instead of terminating the contract and retendering the remainder of the underground works,' it said in its statement.

MMC Gamuda has offered a RM2.3 billion reduction to the RM9.6 billion bill for the remaining underground works for MR2, by reducing the scope of works, the number of entrances to stations and the number of stations from 10 to six.

Meanwhile, on the upcoming US$50.3 million (RM209 million) payment as part of the financial settlement package that the previous administration entered into with Abu Dhabi, Lim said the government will honour its commitments and pay its dues for the interest on the bond issue by 1Malaysia Development Bhd.

“We will not allow the Malaysian government to go into default … we have taken advice from the AG that we have to honour the commitments legally. Of course, there is a financial consequence. If you default than you will get an automatic downgrade on your ratings,” he explained.


US dollar touches seven-week high, Italy worries weigh on euro

NEW YORK, Oct 9 — The dollar rose today, boosted by rising US bond yields to a seven-week peak against a basket of currencies, as the euro weakened further on worries about the tension between the European Union and Italy over that country’s…


Developers of affordable housing may enjoy lower compliance costs by 2019

PETALING JAYA: Developers of affordable housing are expected to see a reduction in their compliance costs by 2019, including for utility, water and telecommunications, if the affordable housing policy is approved by the Cabinet.
Housing and Local Government Minister Zuraida Kamaruddin wants utility companies to construct their own utility base in the housing areas and other agencies their own amenities so that it reduces the cost for developers.
“At the ministerial level, principally, they (the respective ministries) have agreed to take up the costs,” she told reporters at the Housing Conference 2018 organised by Rehda Institute today.

Zuraida said her ministry has proposed that prices of affordable houses be capped at RM500,000, depending on the location and the median income of the people in the area, but noted that the units should be bigger at over 850 sq ft, from 650 sq ft previously, with facilities.

Currently, developers bear the cost of constructing the Tenaga Nasional Bhd (TNB) substation in a particular housing area.

She said different states will have to comply with the propodrf ew rule and the Housing and Local Government Ministry will ensure that it is in line with the federal government's policy.

Zuraida said the high cost of houses is a result of the imposition of premiums to land, development cost and compliance cost. Land and compliance cost make up about 25% of the overall cost of the house. The ministry wants to reduce the cost of development for developers so that house prices can be lowered.

“By 2019, the new housing concept will have this cost reduction (if approved). The (compliance) cost will not be imposed on affordable housing developers.”

Rehda Institute chairman Datuk Jeffrey Ng Tiong Lip said over the years corporatised public utility companies have loaded the infrastructure costs onto developers, and if they can bear their own infrastructure costs, it is one sure way that development cost will come down.

Rehda Malaysia deputy president Khor Chap Jen opined that private utility companies such as Syarikat Bekalan Air Selangor Sdn Bhd, Indah Water Konsortium Sdn Bhd, TNB and Telekom Malaysia Bhd should not be imposing capital contribution charges on developers as they are already required to lay infrastructure and bring in new customers to utility companies.

“These utility companies should revise their own capital to be recovered via tariff based on consumption or through federal funding from general taxation.
“Similarly, requirements for huge amounts of deposits should be reviewed as such deposits are adversely impacting project cash flow of small, medium and bigger sized developers alike. The impact is especially felt more severely by the bigger player as they undertake projects with bigger gross development value and they may have many ongoing projects at any particular time,” said Khor.

He added that these resources could have been productively and efficiently utilised for new investments instead.

“While many are advocating that construction technology such as the Industrialised Building Systems can help reduce cost, input costs which have been on the rise in recent years must also be looked at. Ideally, the overall costs of doing business must be lowered to facilitate the supply of more houses.”


Nestle to sell chilled dairy business, PJ factory to finance world’s largest Milo plant

PETALING JAYA: Nestle (Malaysia) Bhd is selling its chilled dairy business – which retails the Bliss brand of yogurt drinks, in Malaysia, Singapore and Brunei – and its Petaling Jaya factory, to Lactalis Manufacturing Malaysia Sdn Bhd for RM155.3 million, as part of plans to set up the largest Milo factory in the world in Chembong, Negri Sembilan.

The group said it would be using RM100 million, or the bulk of the proceeds from the sale, by end of 2019, for the Milo manufacturing centre of excellence in Chembong.

Nestle Malaysia plans to move all existing Milo manufacturing assets in the Petaling Jaya factory to the Chembong factory.

The disposal is on a going-concern basis, with Lactalis offering continuous employment to a majority of the affected employees based on the purchasers' evaluation of their business and operational requirements. For roles that will no longer be available, termination benefits will be accorded to those who qualify.

The group expects a one-time gain of RM27 million from the disposal, split over 2018 and 2019.

The deal comes with a “no compete” clause for five years, from Jan 1, 2019, forbidding Nestle Malaysia from going into the chilled dairy business.
Trading in Nestle Malaysia's shares was suspended today, and will resume tomorrow.


Dept: Set up panel to monitor house prices

PETALING JAYA: The Valuation and Property Services Department (JPPH) has proposed to form a committee to monitor house prices.

National Property Information Centre (Napic) deputy director of property inventory division Khalid Abdul Mutalib said a proposal has already been submitted to the Finance Ministry about two weeks ago.

He said JPPH, which has been proposed to be part of the committee, will conduct checks on new housing projects and provide advice on whether the projects are overpriced or not, before approvals are given by the National Housing Department (JPN).

“For instance, when a developer wants to sell property at RM1 million, they will submit their plans to JPN. JPN has data but don’t have the manpower to check, thus they will just accept the price. We have manpower and we can check the price, based on market value and advise the committee,” he told reporters at the sidelines of the Housing Conference 2018 today.

He said this will help the government monitor house prices. However, the proposal is still at the initial stage.

Meanwhile, property developers can expect a simplified data submission process next year following a collaboration between JPPH and JPN.

Khalid said the two departments began discussions early this year to streamline the data submission process whereby property developers would only have to submit one form to either department.

He said the process will be easier and less time consuming, given that developers have to submit comprehensive data on every project it is working on. At present, developers must submit various data to both JPPH and JPN.

“This will eliminate double work for the developers and we hope there will be better cooperation from them in the future,” he added.

On affordable housing, Khalid said state governments should monitor approvals for affordable housing projects according to market demand in order to avoid oversupply.

He said in every state, 40% of approvals in a year should comprise affordable housing based on affordability in specific areas.

He also said that more incentives or tax reliefs could be given to developers who build more than 30% affordable housing in a year.


Anwar: Economic policy should be inclusive, NEP done away with

KUALA LUMPUR: Malaysia should look at crafting economic policies which are inclusive and dismantle obsolete policies such as the New Economic Policy, according to PKR president-elect Datuk Seri Anwar Ibrahim.

In addition to that, he noted that a sustainable economy is not one that is mainly driven by consumer spending fuelled high level household debts. He said that there have not been enough good jobs created and have heavily relied on debts.

“The important explanation for this situation is the increasing disparity of income. We are not immune to the negative impacts of the global crisis ,” he said, during his special address at “Malaysia: A New Dawn” jointly organised by CIMB Holdings Group Bhd, Malayan Banking Bhd and RHB Banking Group.

“We cannot build a better life for our people if they need two to three jobs just to make ends meet. That is bad economics… even worst social policy,” he added.

In that light, he said affirmative actions taken must be based on needs.

The prime minister-in-waiting also said it is important to enhance the investment, trading and economic ties with China and India which are the engine of growth for global economy.

He added that social protection and poverty eradication remains central to the government’s effort to ensure a better life for all.

“We must avoid the pitfalls of many other developing countries including Malaysia where programs for poor are many in number and generously funded but has not achieved the results,” Anwar added.

He called for greater transparency and public participation as key in ensuring efficiency of social programs, to identify dubious program, reduce duplication and waste of resources.


Guan Eng: Fiscal targets by previous govt unrealistic

KUALA LUMPUR: Finance Minister Lim Guan Eng said the fiscal targets set by the previous administration are unrealistic in the short term and it would be “foolish” of the current government to maintain.

“Over the medium term however, we will remain strictly on the path of fiscal consolidation as we reform our institutions and processes, increase our revenues, optimise our expenditures as well as rationalise our debts,” he said during his speech at “Malaysia: A New Dawn” investors conference.

He said the RM 1 trillion debt and liability is the consequence of the previous administration’s escalating ingenuity in adopting off- balance sheet financing for government expenses and financing over the past decade.

“While the creative off-balance sheet debts and spending by the previous administration were not entirely a surprise, we were taken completely off-guard to discover that government revenues had also been overstated in the previous financial budgets to present a false picture of prudent fiscal consolidation,” he said.

Lim added that the new government is determined to clean-up its accounts and make the public sector more transparent in its finances, by committing to a shift from cash-based to accrual accounting standards by 2021 that will inculcate the necessary fiscal discipline in the current and future governments. The transitionary period is likely to take about 5-7 years.

Citing the establishment of the Public Finance Committee (PFC) as part of efforts to strengthen fiscal reforms, he said the PFC’s mandate is to strike a balance between the government’s commitments to fiscal consolidation and its need to make continuous productive spending and investments.

The PFC is chaired by Lim with Minister of Economic Affairs Datuk Seri Azmin Ali and Bank Negara Malaysia governor Datuk Nor Shamsiah Mohd Yunus as members.

Additionally, the government’s direct participation through equity ownership in companies will be reduced, which in the case of companies listed on the local bourse, will help improve liquidity in the capital markets.

“We have heard numerous complaints from investors and businessmen alike that our capital markets is too illiquid, controlled effectively by several government linked investment corporations,” he noted.

This he said, had led to a lower MSCI emerging market weightage of the Bursa Malaysia which stood at 2.48%. – By V. Ragananthini


PLS Plantations to cash in on the king of fruits

KUALA LUMPUR: PLS Plantations Bhd’s unit, Brighthill Synergy Sdn Bhd is venturing into durian businesses by taking a majority stake of 70% in Dulai Fruits Enterprise Sdn Bhd for RM21 million, to be paid with new shares in PLS and a cash payment of RM3 million.

The shares are to be issued at 75 sen a piece.

PLS is 23.42% owned by tycoon Tan Sri Lim Kang Hoo.

Dulai Fruits is one of the pioneers in exporting durians, with a 10-year track record. To date, Dulai Fruits has successfully penetrated close to 10 countries around the world including China, Hong Kong, Australia and US.

“Acquisition of Dulai Fruits is part of the key diversification business strategies of PLS group which will provide a new viable stream of revenue to the group. Taking into account the strong growth prospects of the durian business in Malaysia as well as China huge potential market, we are optimistic that this strategic acquisition will bring forth positive earnings contribution to the group in the long run,” said executive director Lee Hun Kheng.

Soaring demand for Malaysia durians especially in the Chinese market has led to increased interest in large-scale durian farming in the country. The Malaysia king of fruits selling price can go up to US$73 (RM300) per kilogram in China.

According to Mintel’s The Chinese Consumer 2017 report, over half of all consumers are willing to pay a higher price for better product performance (e.g. better taste), and this translates to durian as well.

Both PLS and Dulai Fruits are working towards enhancing and improving durian plantation for upstream capabilities to meet the growing trend of durian demand which consistently outstrip supply.

The stock was untraded today.