Thursday, October 18th, 2018


Agriculture Ministry staff urged to explore innovative ideas to boost agricultural productivity

PUTRAJAYA, Oct 18 — The staff of the Ministry of Agriculture and Agro-based Industry (MOA) have been urged to allocate time from their daily tasks to explore innovative ideas that can increase the income of farmers, breeders and fishermen as well…

SAP to stay in Saudi Arabia, hopes for clarity on missing journalist

WALLDORF, Oct 18 — SAP, Europe’s most valuable tech company, will continue to do business in Saudi Arabia, a top executive told Reuters, saying he hoped the circumstances of the disappearance of journalist Jamal Khashoggi are clarified. “We…

11MP mid-term review – fiscal deficit to linger beyond 2020, govt to trim development spending

PETALING JAYA: The remainder of the Eleventh Malaysia Plan (11MP), which runs from 2016-2020, will see the government cut back on development expenditure, consolidate operating expenditure and prolong the fiscal deficit, which was to have been balanced by 2020.

This will occur as the government undertakes comprehensive reforms to strengthen the administrative capacity and improve governance, which will require amendments to the Federal Constitution and respective legislation.

Part of the reforms include enforcing prudent public finance management, with efforts intensified to ensure government matches policy priorities with budget allocation, and that targeted outcomes are achieved.

According to the mid-term review of the 11MP document presented by Prime Minister Tun Mahathir Mohamad today, the development expenditure ceiling for the overall 2016-2020 period will be cut by 15% to RM220 billion from an initial RM260 billion, to consolidate its fiscal position.

The government said the move is necessary taking into account lower government revenue contributed by volatile crude oil price during the review period and abolishment of the goods and services tax (GST) in 2018.

The government expects the private sector to pick up the slack from the drop in public sector investments, with the government focusing spending on strengthening public infrastructure and developing economic enablers. It expects to continue with over 4,000 ongoing projects among others, the building of affordable houses, schools, hospitals and roads.

The fiscal deficit to gross domestic product (GDP) is expected to remain at 3% by 2020, up from the initial target of 0.6% by 2020.

On consolidation of operating expenditure, measures include reforming government agencies, securing procurement process of all supplies, and services including through open tenders as well as restructuring debt. The management of projects will be reviewed, in particular the governance structure of project appraisal and selection to reduce risk of delays and cost overruns.

Some RM92 billion was allocated for development expenditure during the 2016-2017 period, but only RM86.9 billion was disbursed due to delays in securing land and finalisation of project design despite initiatives to improve the project management process. A total of RM427.9 billion operating expenditure was expended during the review period.

With spending curtailed to a certain extent, growth will be spearheaded by productivity improvements and sustained domestic demand by productivity improvements and sustained domestic demand as reflected by the revised macro multidimensional goals. This is expected to achieve GDP growth of between 4.5% and 5.5% annually for the 2018-2020 period, slightly lower than the original target of 5-6%.

This time around, the mid-term review was divided into two parts, the first a report on progress made during the first two years of the plan, and the other was in acknowledgement of the change in government, with new priorities and emphasis for the remaining period of the 11MP.

The document is the first policy document to be produced under the Pakatan Harapan government, and encapsulates 57 of the 60 promises in the Pakatan Harapan election manifesto.

Capital controls pressure only if reserves fall to US$80b level: AmBank Research

PETALING JAYA: Currency peg pressure will only kick in if and when the reserves level approaches US$80 billion (RM332.1 billion) or six months of retained imports, AmBank Research opined.

“Our estimation suggests the threshold is around five months retained imports or about US$70 billion (RM290.6 billion) in reserves for the currency to be pegged,” the research house said in a note yesterday, in response to Bank Negara Malaysia (BNM) governor Datuk Nor Shamsiah Mohd Yunus' remarks that capital controls should be an option for Asian markets to pre-empt financial crises.

As at Sept 28, BNM's international reserves amounted to US$103 billion (RM427.5 billion), which is sufficient to finance 7.4 months of retained imports and is 0.9 times the short-term external debt.

Some RM17.7 billion was used for liquidity management via short position for forward and futures as at end-August.

While the option to use capital controls at the moment could be fairly premature, AmBank Research said the market should be mindful of it, especially if global volatility remains strong or becomes stronger, resulting in a huge capital outflow.

“Added pressure on Malaysia will be the risk of rising fiscal deficit/GDP and the challenge to lower the public debt/GDP. Should the depreciation of the currencies turn out to be drastic, it will exert a strong pressure on countries exposed to high USD-denominated debt, including Malaysia. Such pressure may potentially provide justification for capital controls.”

AmBank Research said the reserves level plays a crucial role in determining the need to peg a currency, which will reduce uncertainties regarding the value of the currency and improve competitiveness, thus benefiting the export-oriented sectors more.

However, it noted that the potential setback is that an undervalued ringgit makes imports of capital and intermediate goods more expensive and this has deleterious effects for the country's medium- and long-term capacity expansion and growth.

“Besides, it will not augur well for short-term foreign players in the local bourse and global pension funds with restrictions to invest in markets with capital controls.”

Malaysia introduced capital controls on Sept 1, 1998, during the height of the 1997/98 Asian financial crisis, with the ringgit being pegged at 3.80 against the US dollar.

The move was widely criticised by the International Monetary Fund (IMF) which advised countries to liberalise their capital accounts and avoid imposing capital controls.

The currency peg was only removed on July 21, 2005 after China ended the yuan peg to the greenback.

In 2012, the IMF adopted a more flexible approach by accepting temporary controls on capital flows if these are used to stem a crisis and in conjunction with sound fiscal and monetary policies.

Still, the IMF is cautious on capital controls and believes that controlling capital outflows in “non-crisis situations” can fuel capital flight while tarnishing a country's credibility.

In 2016, Malaysia introduced some capital flow management measures in a move to clamp down on ringgit trading in the offshore non-deliverable forwards market. It was aimed at containing the currency's fall amid an emerging market sell-off following the election of Donald Trump as US president.

Boustead, unit deny claims in businessman Deepak’s lawsuit

PETALING JAYA: Boustead Holdings Bhd and its wholly-owned subsidiary Bakti Wira Development Sdn Bhd, who are being sued alongside former prime minister Datuk Seri Najib Razak and his wife Datin Seri Rosmah Mansor by businessman Deepak Jaikishan, have denied allegations made in the suit, calling them “baseless, frivolous, vexatious and unjustifiable”.

In a filing with Bursa Malaysia today, the group said it has at all times observed good corporate governance and ethical business practices in the companies' dealings and given due commercial considerations before entering into the transactions mentioned in the statement of claims.

“The directors of both Boustead and Bakti Wira believe that the plaintiff's claims are untenable and are therefore positive that the companies will prevail in this litigation,” Boustead told Bursa Malaysia.

Deepak is suing for damages of more than RM676 million over alleged conspiracy in land transactions.

Boustead is the third defendant and Bakti Wira the fourth defendant in the suit, which was filed in the Court on Oct 12.
In the writ of summons, Deepak is alleging tort of conspiracy, conspiracy to defraud, tort of conversion and/or undue influence by the defendants in some past acquisitions of shares and land.

He is also claiming for the return of the shares in a company Astacanggih Sdn Bhd, which was acquired by Boustead and Bakti Wira; declaration that certain past transactions are null and void; and declaration of his rights over certain land.

Boustead and Bakti Wira have 14 days from the date of receipt of the writ of summons to enter their appearance in the suit. The matter has been fixed for case management on Nov 14, 2018.

On Bursa Malaysia today, Boustead ended 1 sen or 0.6% lower at RM1.71 on 12,600 shares done.

Wall St drops after weak industrial earnings, hawkish Fed

NEW YORK, Oct 18 — US stocks fell today as weak earnings reports from industrials raised worries over rising expenses and the impact of tariffs, adding to concerns of higher borrowing costs after hawkish commentary in the Federal Reserve’s…

Malaysia lets go of high income nation by 2020 dream

PETALING JAYA: Malaysia will drop its long time dream to hit US$15,000 (RM62,300) per capita income by 2020 to meet its high income nation aspirations, as it now looks to ensure high income levels commensurate with higher purchasing power.

The mid-term review of the 11th Malaysia Plan presented a two-prong approach to address the disparity of household income levels in the country, first by intensifying measures to uplift lower middle income households from the Bottom 40 (B40) group and increasing purchasing power for all; and secondly with comprehensive regional development strategies to focus on narrowing the economic gap for less developed regions, in particular six states.These states are Sabah, Sarawak, Kelantan, Terengganu, Kedah and Perlis.

According to the document, the government seeks to improve overall income inequality by uplifting the B40 to a middle class society, address the needs of specific target groups, enhance bumiputra economic community opportunities to increase wealth ownership and increase the purchasing power for all.

Increasing purchasing power for all will be executed by addressing market distortion with promotion of greater competition, provide more avenues offering affordable and competitive prices of goods and services, enhancing enforcement of price control regulations, and advocating consumerism.

Under its plan for the bumiputra economic community, the government wants to ensure at least 60% participation of bumiputras in skilled occupation category, at least 75% of bumiputra has a residential unit and at least 11% annual growth of bumiputra corporate equity ownership.

The mid-term review found that the economic disparity between states, despite the increasing trend of gross domestic product (GDP) per capita in the states, was a result of the different economic activities in the state.

Therefore besides enhancing the role of state economic development corporations, the government is encouraging investments for high impact programmes and projects in identified niche cluster activities in the states.

Regions will be encouraged to modernise and diversify the economic base to boost high value added activities and spur higher growth in particular regions which are highly dependent on agriculture.

The states of Kelantan, Kedah, Perlis and Sabah, which were dominated by traditional sectors, recorded substantial gap in GDP per capita as compared to the national average of RM42,228 in 2017. Kelantan recorded the lowest GDP per capita, with a gap of 67.8% below the national average.

Disparity of GDP per capita between Kelantan and Kuala Lumpur, the state with the highest GDP per capita, widened by 8.2 times in 2017 as compared to 7.9 times in 2015.

Income disparity between the regions remain a concern despite the continuous increase in the national median monthly household income at RM5,228 in 2016. The central and southern regions continued to record notable achievement of RM6,616 and RM5,652 respectively. The Eastern region recorded the smallest median monthly household income at RM3,917, where Kelantan registered the lowest among states at RM3,079. Kedah in the Northern region was the second lowest, at RM3,811.

Country Heights subsidiary seeks tie-up with AsiaAuto Venture

PETALING JAYA: Country Heights Holdings Bhd’s subsidiary Mines International Exhibition Centre Sdn Bhd (MIEC) is vying for a potential tie-up with AsiaAuto Venture Sdn Bhd (AAV) to set up a joint venture entity to expand into the automotive lifestyle or other automotive-related industry.

AAV is involved, among others, in the business of conducting automotive-related programmes such as Asia Automotive Award event and the Asia Automotive Ambassador Pageant event.

The group told the stock exchange that the two parties have entered into a memorandum of understanding (MoU), which would be valid for a year.

Both will have an equity stake in the new company, with AAV holding 60% and MIEC, the remaining 40%.

The execution of the MoU is in line with the group’s business strategy to develop its own automotive lifestyle centre and other automotive industry related businesses.

On Bursa Malaysia today, Country Heights fell 1.53% to close at RM1.29 on volume of 1,000 shares.

Government settles interest due on 1MDB Energy bond

PETALING JAYA: The government has made the coupon payment amounting to US$50.31 million (RM208.80 million) due today as part of a settlement agreement with International Petroleum Investment Co (IPIC), due for the US$1.75 billion 1MDB Energy (Langat) Ltd (1MELL) bond.

According to a table of 1Malaysia Development Bhd (1MDB) debt commitments released, US$52.41 million is due on Nov 11, for the 1MELL bond under the settlement agreement, and a RM143.75 million payment on Nov 29, for a government-guaranteed RM5 billion Islamic medium-term note.

The Finance Ministry said Malaysia is committed to meeting its debt commitments.

This year alone, the Malaysian government has paid RM1.11 billion for bonds issued by 1MDB, excluding the payment made today.

India asks Fortis to recover RM228m from founders, firms

MUMBAI: India’s capital markets regulator has asked Fortis Healthcare to recover 4.03 billion rupees (RM228.3 million) from its founder brothers and firms related to them, pending an investigation into loans made by the company.

Tycoon brothers Shivinder Singh and Malvinder Singh and eight firms related to them should jointly pay the sum with due interest to Fortis within three months, the Securities and Exchange Board of India (SEBI) said in its order on Wednesday.

“A detailed investigation of the entire scheme employed in this case is necessary to find out the role of each entity in the alleged routing of funds,” SEBI said.

SEBI will carry out a detailed investigation, but said it was issuing an interim order to protect the interests of Fortis Healthcare shareholders and prevent any further “deterioration” of company funds or assets.

It also barred the Singh brothers and the firms from selling any assets or from diverting any funds except for meeting daily expenses till such a probe was completed.

Reuters could not reach the Singh brothers for comment, while Fortis did not immediately respond to a request for comment outside regular business hours.

The eight firms and the Singh brothers, who have also been ordered not to associate themselves with any Fortis-related business, have 21 days to file a reply from the day they receive the order, SEBI said.

Cash-strapped Fortis, which operates about 30 private hospitals in India, accepted an investment offer from Malaysia’s IHH Healthcare Bhd in July after an extended bidding war for control of the company.

It is unclear whether the SEBI order will affect the timing of the closing of that deal. – Reuters