Sunday, November 25th, 2018


Sabah to woo manufacturers from Peninsular Malaysia

KOTA KINABALU, Nov 25 — The Sabah government is intensifying efforts to attract more furniture manufacturers from Peninsular Malaysia to set up their branches in the state through a meeting with the industry players in Kuala Lumpur tomorrow. Chief…

Malaysia to raise minimum bio content in biodiesel to 10% from Dec 1

KUALA LUMPUR: Malaysia will increase the minimum bio content local producers must add to its biodiesel fuel for certain sectors to 10% from 7% starting on Dec 1.

Primary Industries Minister Teresa Kok said in a radio interview with national news agency Bernama on Wednesday that the government had given the approval to implement the so-called B10 biodiesel mandate.

“The Cabinet has approved the use of B10 and it will be implemented from Dec 1. We also have the agreement from the Federation of Malaysian Manufacturers that the industrial sector will use B7,” she said in the interview which was posted on Bernama Radio’s Facebook page.

Fuel stations in Malaysia currently use B7 biofuel.

Kok said with these measures, the use of palm oil locally was expected to double, without elaborating.

The B10 biodiesel programme will be implemented in the transport sector and other subsidised sectors in stages and will be mandatory from February 2019, Bloomberg News said on Thursday citing a letter from the Primary Industries Ministry to petroleum companies.

CIMB Research analyst Ivy Ng said the move would be positive for the palm oil market on expectations of increased consumption for biodiesel purpose in Malaysia. “This could help reduce current high palm oil stock levels over time,” she said.

Inventories in Indonesia and Malaysia, the top producers of the tropical oil, are expected to rise in the next two months on slower demand from key buyers in winter months as palm oil solidifies. – Bernama

Malaysian economy could pick up after 2020: Moody’s Analytics

KUALA LUMPUR: Malaysia’s economic growth could accelerate beyond 2020 if commodity prices were to pick up on the back of a recovery in global economic expansion.

Moody’s Analytics chief Asia-Pacific economist Steven G. Cochrane said Malaysia’s economic growth would likely slow down in the next two years as weak global economic outlook could weigh on commodity prices.

“Malaysia, as an open economy, is susceptible to global trends. Every region in the world could see slower growth in 2019 and 2020,” he told Bernama at the Moody’s Analytics Economic and Credit Risk Forum recently.

Cochrane projected that Malaysia’s real gross domestic product (GDP) growth may slow down from 5.9% in 2017 to 4.8% in 2018, 4.4% in 2019 and 3.6% in 2020.

“The lower commodity prices because of slower global economic growth will hurt emerging markets and Malaysia. We don’t see any acceleration in commodity prices until the global economy picks up,” he said.

Crude palm oil (CPO) prices have seen significant weakness since the start of this year, with CPO futures hovering near RM2,000 a tonne, due to high stock level and weak demand.

Cochrane said the US fiscal stimulus, which has been supporting the US economy, is expected to end in 2020 and this may slow down the US’ economic growth and weigh on the global economy and the commodity markets.

“If we can get to 2020 without a recession in the US and Europe, then there could be a rebound in global growth in 2021 and 2022,” he said.

Cochrane said the US-China trade war could also have an impact on global trade and economy and, in the worst-case scenario, disrupt the supply chain and lead to recession in the US and hurt other economies.

“A lot depends on US President Donald Trump and President Xi Jinping’s meeting at the G20 summit in Buenos Aires at the end of this month.

“All eyes will look for signals coming from Trump and Xi if there could be some settlement on the trade war and if the Trump administration were to allow tariffs to rise to the schedule 25% by next year,” he said.

If tariffs were to rise and expand to include all trade between China and the US, he said, it would add friction to the Malaysian and global economy.

As for Malaysia, he said, the risks are clearly on the downside, as they are for the rest of the regio

n as the expectation of a weaker global economy has dampened oil prices, as well as export orders.

“As a net oil exporter, falling oil prices means the dollar volume of exports will be reduced. The price for crude oil has fallen because global demand has slowed and production out of the US shale producing areas has accelerated quickly over the past year.

“The fact that US production has risen so quickly meant that the Organisation of the Petroleum Exporting Countries has less ability to control prices,” he said.

Cochrane said Malaysia’s efforts to improve transparency and the peaceful transition of power to the new government this year are positive in terms of investors’ confidence, and in the longer term good debt management would support economic growth as there would be less budget for debt servicing.

“As the government tightens fiscal policy to improve debt management amid slower export growth, Malaysia’s economic growth is expected to slow during the next two years,” he said.

China to crack down on corrupt stock market regulators

SHANGHAI: China’s corruption watchdog will work with the country’s stock market commission to combat graft and abuse of power following a spate of violations in which companies pay officials to gain regulatory approvals, it said today.

China is stepping up efforts to fight corruption in the securities market as part of a campaign to reduce financial risks following a number of irregularities involving the misuse of vetting power, according to an article published by the Central Commission for Discipline Inspection (CCDI) today.

It said one official was recently found to have received large cash bribes in exchange for helping a listed company win approval from the China Securities Regulatory Commission (CSRC) to apply for financing.

China’s top securities regulator Liu Shiyu said during a recent meeting that the entire supervisory system should learn from past cases of corruption and defend the disciplinary “red line”, the CCDI said.

CCDI and the Communist Party Committee of the China Securities Regulatory Commission will work to strengthen oversight over the use the vetting power in the securities market and ensure financial markets serve the real economy rather than personal interests, the article said.

Regulators with vetting power are particularly prone to corruption because decisions like the issuing of shares or the granting of business licences have a direct impact on the interests of market players, the report said, citing a CCDI official.

The graftbusting body uncovered 135 individual cases of disciplinary violations at the CSRC in the five years leading up to the 19th Communist Party congress in late 2017, and it has identified another 33 cases since then, it said.

Agrobank launches micro-financing for women agropreneurs

KUALA LUMPUR, 25 Nov — Agrobank has launched the Agro Nisaa’-i  Micro-Financing Programme specifically for women agropreneurs, especially those in the bottom 40 per cent income group (B40) to help improve their livelihood. Its President/…

‘Departure levy negative for aviation sector’

PETALING JAYA: The proposed airport departure levy announced in Budget 2019 will have a negative impact on the local aviation industry, said RHB Research analyst Stephanie Cheah.

“What is unclear now is who will bear the brunt of the negative impact, be it Malaysia Airports Holdings Bhd (MAHB) or the airlines. On one end of the spectrum, if airlines decide to absorb the cost and lower airfares, this will translate negatively to airlines’ yields and profitability,” she said in her report last Friday.

Cheah said if airlines decide to maintain fares, they may still be hit in terms of load factor while MAHB will see its passenger volume growth decline.

According to her, the airlines are likely to absorb a portion of the departure levy, balancing between the impact on yields and load factors while the airport operator will be negatively affected by lower passenger volumes but to a less extent.

The departure levy, which comes into effect on June 1, is set at RM20 per passenger for Asean destinations and RM40 for others.

Meanwhile, Cheah said the establishment of an airport real estate investment trust (REIT) will reduce the capital expenditure burden on MAHB. “But at the same time it could also compete with MAHB in terms of financing choices for its projects, which could limit MAHB’s growth potential under the Regulated Asset Base (RAB) framework.”

Cheah said the higher cost of funding from the REIT giving rise to higher user fee is not a major red flag for MAHB as the cost will be accounted for in determining the necessary aeronautical tariffs to recoup its fair return under the RAB framework.

“However, the same cannot be said for the airlines, which will be impacted by resulting higher aeronautical tariffs.”

Last Thursday, the Malaysian Aviation Commission said in a commentary that the two proposals, if not designed carefully, could materially constrain the development of the RAB framework and the renegotiation of the operating agreement between the government and MAHB.

The key issues highlighted in relation to the proposed REIT include the complexity of land ownership of the land on which the airports are located and the possible risk of airport charges being subjected to artificial upward pressure by the REIT’s yield requirements. It also said the government risks contravening the International Civil Aviation Organisation guidelines and international good practices with the proposed departure levy, if the proceeds are not ploughed back into the industry and a similar tax is not imposed on other modes of transport.

Domestic Trade Ministry to facilitate franchise deals in Indonesia, says Saifuddin

JAKARTA, Nov 25 — The Malaysian Ministry of Domestic Trade and Consumer Affairs (KPDNHEP) will act as a facilitator to Malaysian franchise companies who are keen to penetrate the Indonesian market. Minister Datuk Seri Saifuddin Nasution Ismail…

Report: Former Nissan chairman Carlos Ghosn denies allegations against him

TOKYO, Nov 25 — Former Nissan chairman Carlos Ghosn, arrested last Monday on suspicion of financial misdoing, has denied the allegations against him, Japanese public broadcaster NHK said today. Ghosn, who has not spoken publicly, has told…

Ex-IMF chief Rato in dock again in major Bankia trial

MADRID, Nov 25 — A mega-trial harking back to the dark years of Spain’s economic crisis kicks off today over the alleged fraudulent 2011 listing of financial giant Bankia, with former IMF leader Rodrigo Rato in the dock. The Spanish state was…

Malaysia's economic growth could rebound beyond 2020, economist says

KUALA LUMPUR, Nov 25 — Malaysia’s economic growth could accelerate beyond 2020 if commodities prices were to pick up on the back of a recovery in global economic growth. Moody’s Analytics Chief Asia-Pacific Economist Steven G….