Tuesday, April 23rd, 2019
NEW YORK, April 23 — US stocks edged higher today, as upbeat results from Coca-Cola, Twitter and a host of industrial companies allayed investor concerns about slowing profits. Wall Street’s main indexes hovered below record levels as investors…
LONDON, April 23 — Sterling slid to a two-month low today as hopes for a breakthrough in Brexit talks between the ruling and opposition parties faded and British Prime Minister Theresa May faced growing pressure to quit. Britain’s parliament…
NEW YORK, April 23 — Oil prices jumped to near six-month highs today as the Trump administration cracked down on Iranian oil exports, announcing it would no longer grant waivers from US sanctions. The announcement came on an otherwise quiet day…
KUALA LUMPUR: The Socio-Economic Research Centre (SERC) has urged the government to draw up a National Investment Strategy Plan to revitalise private investments, which are critical to sustain economic growth.
SERC executive director Lee Heng Guie said reinvigorating private investment is a key priority to sustain economic growth, raise future growth potential, create high income jobs and increase exports.
He said government policies should focus on how to improve competitive edge, which kind of economic policies should be adopted and mapping up the voyage to higher and more sustainable economic growth.
“For the short term, policies should focus on some quick fixes that we can look into to enhance our investment climate,” he told reporters at a briefing on SERC’s quarterly economy tracker today.
Lee said an example of a quick gain for the government is tourism, citing the Visa on Arrival requirements for tourists from China and India which may be relaxed.
He said policymakers need to focus on reforms that will help Malaysia catch up with its regional peers in terms of supply of skilled and creative workforce, adapting to a rapid shift in technological advancement, state-of-the-art infrastructure, industrial development as well as good governance and best business practices.
Lee said the National Investment Strategy Plan must have equal emphasis on direct domestic investment, especially for small and medium enterprises and high quality foreign direct investments.
SERC recommends that the government examine factors restraining business investment decisions, such as economic and investment prospects, domestic policy uncertainty, regulatory and investment policies and the “crowding out” effect from the participation of government-linked companies (GLCs).
Lee applauded the government’s effort to remove ineffective GLCs, which he said would free up resources for public use and provide more room for the private sector.
“The most important function of private investment determinant is profitability, cost of capital, rate of return, equity return to investment and opportunities. People want to know where are we heading,” he said.
He said the government needs to be an effective facilitator by creating the right environment for investments while continuing to invest in sectors that will raise the economy but stressed that the government has limitations as it needs to contain its debt.
“The new government says it needs three years to fix the economy so the private sector has to step up to fill up the void or else the overall economy will be affected,” he said, adding that the private sector should not be overly cautious as the economy is still growing, albeit not as strong as expected due to the government’s transition period.
“The private sector needs to take the lead and step up. Don’t always rely on the government to kick start investments. The government’s role is to create a conducive environment,” he said.
PETALING JAYA: Barakah Offshore Petroleum Bhd is looking for a fresh start after the completion of its restructuring exercise by year-end.
Acting group CEO Abdul Rahim Awang said the integrated oil and gas (O&G) solutions provider was in the advanced stage of its restructuring process, while talks with major large creditors were in favour of its revamp scheme.
“We have secured a white knight. We are under a non-disclosure agreement, we can’t reveal who the white knight is. That is the first we need as we require fresh capital injection, so the white knight is important,“ he told reporters after announcing the signing of a memorandum of understanding (MoU) with Singapore-based Vallianz Holdings Ltd today.
As at Dec 31, 2018, Barakah Offshore’s total liabilities stood at RM335.6 million.
Abdul Rahim expects the company to finalise its restructuring scheme by next month and resolved its issues with creditors in the next two to three months.
“We need to get at least 75% of creditors to support and approve the scheme for us to move forward. We are fairly confident that we can get that 75%,“ he added.
Abdul Rahim said with the completion of the restructuring scheme, Barakah would be cash flow positive at the project level and also its bottom line.
Meanwhile, the group and Vallianz will form a strategic alliance to explore business opportunities in Malaysia and the Middle East.
By joining forces, both parties are able to leverage on each other’s strengths to expand their scope of services, technical capabilities and geographical reach along the O&G value chain.
Under the MoU, Barakah Offshore will offer its established engineering and operational capabilities to support Vallianz’s existing and future projects, including technical consultations and feasibility studies.
“The MoU with Vallianz will open up new markets for us and also allow us to have access to assets that they have.
“These assets will allow us to bid more competitively because a lot of time when we bid for projects especially for offshore operations, we bid as a package as it comes with varying spread that include other vessels as well,“ said Abdul Rahim.
Barakah Offshore has identified one project in the Middle East and will come up with a proposal.
SERC executive director Lee Heng Guie said the revision takes into account the moderating global growth and weakening exports amid cautious domestic sentiments.
“I’m looking at about 4.4% for first quarter based on the two months numbers from exports. I think exports will be a drag. The one that will still be supporting the economy is consumer spending but I think the growth will not be as strong as the fourth quarter 2018 consumer spending. That’s why overall I’m looking at about preliminary 4.4% for first quarter,” he told reporters at a briefing on SERC’s quarterly economy tracker today.
Last month, Bank Negara Malaysia lowered the GDP projection to 4.3% to 4.8% on the back of external headwinds.
Lee expects exports growth to fall to 3.3% this year from 6.8% last year due to slowing global demand, weak global semiconductor sales and moderate commodity prices.
Private consumption is expected to grow 6.8% this year, higher than Bank Negara Malaysia’s (BNM) 6.6% projection while private investment is expected to grow 4.3%, which Lee said is not very robust growth.
He said public sector spending remains a drag despite the revival of the East Coast Rail Link and Bandar Malaysia projects, with public consumption projected to grow 1.8% and public investment to shrink 4.8% this year.
He said the outlook for the first half of the year is still quite cautious as suggested by indicators such industrial production and export growth as well as the softening growth of business and households loan outstanding, but is hopeful of a better second half of the year, driven by consumption and some increases on the investment side.
SERC expects headline inflation to average between 1% and 1.5% this year due to some cost pass-through from domestic cost factors such as the lapse in consumption tax policy, higher minimum wage and electricity surcharges for businesses and potential increases in food prices.
On the Overnight Policy Rate (OPR), Lee said there is a chance of BNM cutting the rate at the Monetary Policy Committee meeting on May 7. SERC expects the OPR to reach 3% by year-end from 3.25% currently.
“With inflation risk being put on the back burner, BNM is expected to focus on sustaining domestic demand to counter the impact of moderating global growth on exports. The monetary policy decision will be data dependent,” he said.
Lee’s year-end forecast for the ringgit to the US dollar is between RM4 and RM4.15, supported by strong fundamentals, including current account surplus, reserves above US$100 billion (RM412 billion) and acceptable GDP growth of 4.3% to 4.8% as projected by BNM.
As the first anniversary of Pakatan Harapan in government draws near, Lee noted that the government has done quite a lot but the messaging is not there.
“I did a quick audit on some of the things they have done, I am quite happy with that. I think it’s a lack of communication. I hope that they continue to give us consistent narrative about what they are going to do and be consistent in what they are planning for the country. That will help to restore confidence about what they can deliver going forward.”
NEW YORK, April 23 — Procter & Gamble and Coca-Cola reported higher quarterly profits today, lifted by premium consumer items at Procter and new beverage offerings at Coca-Cola. P&G, whose brands include Bounty paper towel and Crest…
LONDON, April 23 — European Union regulators are refusing to cut British-based banks any slack over bulking up in the bloc in preparation for Brexit, despite an extension to the process which some have taken as an opportunity to drag their feet….