Monday, March 18th, 2019
KUALA LUMPUR: InvestKL, which attracted 12 multinational companies (MNCs) in 2018 with approved and committed investments of RM2.3 billion, aims to attract 13 MNCs from the US, Europe, China, Japan and South Korea in 2019.
InvestKL CEO Datuk Zainal Amanshah said these countries are strong in the six sectors that the investment promotion agency is pursuing, which are smart technologies, consumer technologies, e-commerce, medical devices, industrial automation as well as energy and renewables.
He said the optimism for the year stems from seeing companies engaging in e-commerce and digital business, which are new activities for existing companies moving up the value chain. Confidence to attract more MNCs also comes from the country’s track record and strong fundamentals.
“When we engage with MNCS, we encourage them to have their hubs here that incorporate activities like regional management hubs, centres of excellence, business hubs, ideation hubs… moving up the value chain, which is a key agenda; and working with the ecosystem to support talent, logistics, business collaboration and facilitation,” Zainal told a media briefing here today.
InvestKL’s 2018 performance that saw the creation of 1,339 jobs was similar to 2017’s investments by 12 MNCs worth RM2.2 billion that created 1,689 jobs. Zainal attributed its flat performance in 2018 to external factors as opposed to domestic reasons.
“When the US decided to change their tax codes, a number of companies have to re-evaluate the benefits of expansion into the region because these tax codes encouraged US companies to invest in the US, therefore companies have to delay their decision-making. The trade war, uncertainties and (events like) Brexit also caused delays in decision-making.”
The 12 MNCs secured in 2018 are Fortune 500 companies, which are Orange (France), MetLife (US), Electrolux (Sweden), EY (UK), Accenture (Ireland), PersolKelly (Japan/US), China Pacific Construction Group (China), Wood (UK) and hidden champions such as Pickles Auctions (Australia), United Imaging (China), Bertling (Germany) and Zalora (Germany).
Zainal said the country’s economic growth, talent pool, ecosystem, as well as the growth of Asean are among factors high on the MNCs’ evaluation list when investing in a country.
“Various reforms by the government in terms of transparency, procurement, removal of corruption are well received by investors,” he added.
He noted that InvestKL remains focused on attracting high-value, high-skilled and innovation-led investments to create quality jobs for Malaysians. Despite a slower global economy and US-China trade tensions, its investment pipeline is resilient as investment decisions are made over a longer period. Investors are also positive about Industry 4.0 which aims to make the country the prime destination for the manufacturing and services industry.
To date, InvestKL has attracted 78 MNCs with approved and committed investments of RM11.7 billion, as well as the creation of 11,693 regional high-skilled jobs since 2011.
From 2011 to 2018, 57% or RM6.63 billion of the RM11.7 billion investments have been realised. In addition, 64% or 7,516 of the 11,693 high skilled regional jobs are already on the payroll. Of these 7,516 jobs, 80% employed are Malaysians with an average annual income of RM110,124.
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PUTRAJAYA: Malaysia is willing to consider issuing another Samurai bond if it can obtain rates similar to the 0.63% per annum achieved in the earlier issuance of ¥200 billion (RM7.3 billion) last week, says Finance Minister Lim Guan Eng.
“If the Japan Bank for International Cooperation (JBIC) is willing to give a similar low rate, we will definitely consider it very seriously,” he told reporters after the commemoration on the successful completion of the Samurai bond issuance here today.
Lim said strong interest from Japanese investors had enabled the samurai bond to be competitively priced at a full cost of 0.63% per annum, lower than the initial projection of 0.65%.
“This is a testament to confidence of Japanese investors in the Malaysian economy and the government’s fiscal reforms,” he said.
Lim said the government was firmly committed to fiscal sustainability in order to strengthen Malaysia’s economic resilience and achieve sustainable, as well as equitable growth.
He said proceeds from the Samurai bond issuance will provide breathing space for the government to honour its debt obligations.
“The proceeds will be used to finance infrastructure development and not for debt repayment. This will free up the government revenue sources that can be used to pay its debts,” he added.
Japanese Ambassador to Malaysia Makio Miyagawa said Japan is willing to provide the assistance should Malaysia decide to issue another Samurai Bond in the future.
“Japan is ready to assist Malaysia to issue other bond with similar terms,” he said.
Miyagawa said the assistance with the bond issuance would hopefully help Malaysia reduce its debt obligations and grow its economy.
“The Malaysian government is now moving towards the right direction in reducing debts and cleaning up all the dust. For this purpose, we are very happy to help Malaysia,” he said.
A Samurai bond is a yen-denominated bond issued in Tokyo and subject to Japanese regulations.
The government successfully issued its Samurai bond last week with an oversubscription of more than 1.6 times at ¥324.7 billion against ¥200 billion offered.
The bond was guaranteed by JBIC with a maturity tenure of 10 years with a full cost to the government at 0.63% per annum.
Proceeds from the bond issuance would be used to fund infrastructure developments, including the construction of schools, hospitals, roads and utilities.
PETALING JAYA: Berjaya Sports Toto Bhd’s (BToto) net profit for the third quarter ended Jan 31, 2019 fell marginally to RM59.07 million from RM59.23 million a year ago due to lower results of Philippine Gaming Management Corp (PGMC) and Sports Toto Malaysia Sdn Bhd.
In a filing with Bursa Malaysia, BToto said Sports Toto’s pre-tax profit fell 6.2% due to higher prize payout during the quarter while PGMC’s pre-tax profit fell 65.8% due to lower lease rental income earned from the Philippine Charity Sweepstakes Office (PCSO).
However, this was mitigated by H.R. Owen Plc’s 36.4% growth in pre-tax profit mainly contributed by higher profit attained from higher sales in the new car sector.
BToto’s revenue for the quarter fell 3.04% to RM1.36 billion from RM1.4 billion a year ago due to lower revenue reported by H.R. Owen and PGMC.
For the nine months ended Jan 31, the group’s net profit rose 5.62% to RM206.25 million from RM195.28 million a year ago mainly driven by the improved results of H.R. Owen.
Revenue for the period fell 1.06% to RM4.21 billion from RM4.26 billion a year ago.
BToto declared a third interim dividend of 3.5 sen per share in respect of the financial year ending April 30, 2019 (FY19), payable on May 10. The entitlement date has been fixed on April 12.
The third interim dividend distribution for FY19 amounts to RM47.1 million. The total dividend distribution for the nine months ended Jan 31 is 11.5 sen per share amounting to about RM154.9 million, which represents 75.1% of the attributable profit of the group for the period.
BToto expects Sports Toto’s performance to be satisfactory and the group is confident that it will continue to maintain its market share in the number forecast business for the remaining quarter.
SHAH ALAM: Loss-making intelligent building management systems specialist Metronic Global Bhd is eyeing for US$1 billion (RM4.08 billion) market share of smart city projects across Malaysia, Europe, the US, Middle-East and South East Asian regions in the next three years, according to its CEO, Brian Hoo Wai Keong.
“Our aim is not too far fetch. US$1 billion market share is less than 1% of global investments in smart city technologies, which is expected to rise to US$135 billion by 2021, on the back of rapid telecommunications connectivity and hyper urbanisation,” he told reporters at a media briefing today.
Hoo said the group’s subsidiary Metronic Engineering Sdn Bhd recently inked a three-year memorandum of understanding (MoU) with Hong Kong Exchange-listed China Singyes New Materials Holdings Ltd’s unit Zhuhai Singyes New Materials Technology Co Ltd to secure smart city technology solutions projects.
Singyes is a specialised smart city solutions provider with green building technology, renewable/solar energy solutions and fully integrated ecological agricultural products, having export, manufacturing and research and development base in Zhuhai, China.
“Metronic stands to gain from this collaboration with Singyes, to offer world-class proven smart city technology solutions, connecting infrastructures with Internet of Things and 5G capabilities, to support 11th Malaysia Plan’s smart city initiative, coupled with other local councils, township develop-ments, community parks and integrated government departments, just to name a few.
Currently, Hoo said, Metronic is ifinalising tenders of several potential engineering projects worth up to RM300 million in Malaysia and across the region. The group’s tender book stands at around RM90 million.
Additionally, Hoo said, the group’s ongoing cash call of up to RM42 million from its renounceable rights cum warrants issue will be put to good use to generate more profits for the company by increasing its project tender success rates.
The rights issue will involve the issuance of up to 645.34 million rights shares at an issue price of 6.5 sen per share and up to 484.01 million free warrants.
The bulk of the proceeds raised will be allocated for Phase 1 of its mixed housing development in Kuala Krai, Kelantan, which has an estimated gross development cost of RM29.2 million, and an estimated gross development value of RM34.3 million, with the remainder to be used for working capital for its engineering projects.
For the second quarter ended Dec 31, 2018, the group reported a net loss of RM1.82 million, with a revenue of RM6.79 million. Its net loss for the first six months of the financial year stood at RM3.4 million. The group has changed its financial year end from March 31 to June 30.
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PETALING JAYA: Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) has received a notice of arbitration from Kebabangan Petroleum Operating Company Sdn Bhd (KPOC) for alleged breach of contract and estimated losses of RM125.1 million.
In a filing with Bursa Malaysia, MHB said its wholly owned major subsidiary Malaysia Marine and Heavy Engineering Sdn Bhd (MMHE) received the notice dated March 13 via its solicitors on March 14.
The notice of arbitration is in relation to claims arising from a contract for the fabrication of Kebabangan (KBB) Topsides between KPOC and Sime Darby Engineering Sdn Bhd and a novation agreement between KPOC, Sime Darby Engineering and MMHE.
According to MHB, MMHE was responsible to carry out and complete certain works for KPOC, including to construct, engineer, procure, fabricate, inspect, test and pre-commission, load-out and sea-fastening of the KBB Topsides and associated appurtenances.
MHB said the works were completed in June 2014. Note that the KBB field is located about 135km NW of Kimanis, Sabah. The KBB platform was developed as a hub for development of deepwater oil and gas assets in the North Sabah area.
In its notice of arbitration, KPOC claims that MMHE was and is in breach of the express and/or implied terms of the contracts in respect of the supply of certain valves.
“KPOC has included an indicative amount of its alleged loss as part of the notice of arbitration, at about RM125.1 million, and has claimed that it continues to allegedly suffer losses,” the company said.
It said that MMHE will vigorously defend the claims made by KPOC and is exploring its options to pursue a counterclaim against KPOC.
“Apart from the arbitration proceeding, MMHE reserves its right to pursue any other legal actions as may be permitted under the Malaysian laws, including, if appropriate, to seek indemnity from the ultimate supplier of the said valves,” it added.
The financial impact of the arbitration initiated by KPOC on the group is dependent on the outcome, with expected loss, if any, of about RM125.1 million or more. However, it does not expect any operational impact to arise from the claim.
PETALING JAYA: RAM Ratings expects general takaful contributions to expand at a slower pace of 6-7% while family takaful new business growth is expected to decelerate to 7-9% this year.
The credit rating agency said general takaful contributions will see slower growth with the progressive impact of tariff liberalisation and moderating economic growth.
Family takaful new business growth, on the other hand, will be hit by weaker consumer sentiments and rising cost of living concerns.
“Despite near-term moderation, the long-term growth prospects for the industry remain anchored by Malaysia’s supportive demographics, low penetration rates and awareness initiatives targeted at the Muslim-majority mass market,” it said in a statement today.
RAM Ratings has a stable outlook on the Malaysian takaful industry for 2019.
Last year, general takaful contributions rose 8% to RM2.8 billion with all major business lines charting growth. Motor took the lead with a 13.4% growth, followed by medical and personal accident coverage with 7.3% growth, and fire plans with 1.4% growth.
RAM Ratings said the lack of significant catalysts for motor sales and property transactions may limit growth going forward.
“In the previous environment of fixed pricing, the unique ability of general takaful operators to offer cashback incentives to customers from takaful fund surpluses was a source of product differentiation.
“This competitive advantage has been curtailed with risk-based pricing, as all general insurers and takaful operators can now offer upfront reductions of premium or contributions for ‘favourable’ risks,” it noted.
Meanwhile, family takaful new business contributions grew 13.1% to RM4.9 billion last year, spurred by the growth of ordinary family products. However, the sector’s profitability was affected by soft investment conditions.
“An anticipated moderation in private consumption growth may tamper with near-term demand, but the recently announced mySalam national health protection scheme which provides takaful coverage to the B40 lower-income group may act as a catalyst for future purchases of individual protection plans. The family takaful penetration rate is currently low, at about 15%,” it said.
According to RAM Ratings, the takaful sector in Malaysia represents a small 17% of the combined insurance and takaful segment’s total premiums and contributions. Upcoming regulatory changes for the industry include enhancements to the existing Takaful Operational Framework.
For family takaful operators, revisions to investment-linked product guidelines will take effect in 2020. These revisions aim to ensure high standards of governance and better safeguards for consumers.
As at end-June 2018, the combined general and family takaful sector’s capital adequacy ratio stood at 227.5% compared with 213.7% as at end-December 2017, above the minimum regulatory requirement of 130%.