Russia, Saudi Arabia seal key oil deal

RIYADH, Oct 14 — Energy superpowers Saudi Arabia and Russia today signed a key deal to bolster cooperation among the world’s oil giants, as visiting President Vladimir Putin sought to defuse political tensions in the Gulf. Putin’s visit…

Wall Street flat as US-China trade deal optimism fades

NEW YORK, Oct 14 — US stocks halted a three-day winning streak today, as oil prices dived 2 per cent and rising doubts over how quickly a partial US-China trade deal announced on Friday could be sealed. Energy majors such as Exxon Mobil Corp and…

Are US-Chinese tariffs on almost everything the ‘new normal’?

WASHINGTON, Oct 14 — US President Donald Trump called his Phase 1 trade deal with China “by far, the greatest and biggest deal ever made,” even though nothing was agreed on paper, and most of the tariffs set upon Chinese goods remain in place….

GDP growth target for 2020 realistic: Guan Eng

KUALA LUMPUR: The estimated gross domestic product (GDP) growth forecast of 4.8% for 2020 can be realised, according to Finance Minister Lim Guan Eng, despite some quarters saying that the projection looks to be high amid global headwinds and weak demand.

Speaking during a moderated panel session at the Budget 2020 Forum today, Lim said that while the figure was contingent on the country’s economic performance this year, the projection was made based on available data.

“If there is any necessity to revise the figures, then we will do so. We want to be transparent and open,” he said.

According to the 2020 Economic Report, GDP growth is projected to improve marginally to 4.8% in 2020 from 4.7% in 2019.

Lim also defended the government’s fiscal deficit target of 3.2% and tabling an expansionary budget.

“These figures are in line with what other institutions like Bank Negara Malaysia (BNM) have projected for next year. The fact that we have widened the deficit estimate from 3% will allow us fiscal room to make the necessary adjustments (if there is a slowdown in global trade).

“Malaysia is a trading nation, and the WTO (World Trade Organization) has lowered their trade projections to 1.2% from 2.6%, so we must offer ourselves that fiscal space. This is a necessary pre-emptive measure in case the worst happens,” he said.

As for the collection expected from the new 30% income tax band, Lim said that about RM100 million in revenue is expected to be raised.

“This proposal was actually made by the World Bank. The World Bank feels that our top marginal tax rate for the wealthy is too low compared to neighbouring countries. Even by increasing the income tax to 30%, we are still among the lowest.”

He said the wealthy should be able to afford the increase in tax, adding that this will contribute to economic growth, which will in turn grow the income of the wealthy and hence cover the marginal rise in tax.

Addressing concerns that the budget did not have many measures included to increase overall revenue collection, Lim said the government’s expectations for the coming year still stood.

“The projections we made are based on stress-tested figures. We have kept within the projections for the last two years, and we will maintain that for next year. If there are any contingencies, then we will make the necessary revisions, but at the moment, no,” he told the media on the sidelines of the forum.

According to the 2020 Economic Report, revenue for next year is expected at RM244.53 billion, down 13.1% from RM263.3 billion this year.

On the second issuance of yen-denominated bonds (also known as samurai bonds), Lim said the low rate was a sign of the Japanese government’s confidence in Malaysia.

“I was informed that the Japanese government has not offered such a low rate to other countries. The offer given is at 0.5% and we are still continuing discussions on how we can get a better deal. Of course, the size of the bond issuance is dependent upon these discussions,” he said.

Commenting on the proposed merger of Bank Pembangunan Malaysia, Danajamin Nasional, SME Bank, and the Export-Import Bank of Malaysia, Lim was tight-lipped on who would be leading the merger, but said the proposal was made by BNM.

“The central bank is independent, so when they make a proposal they want to study it and we have to give due consideration to them. Depending on the outcome of this study, only then the government will consider it,” he said.

On the privatisation of highways owned by Gamuda Bhd and PLUS Malaysia Bhd, Lim reiterated that the government will consider acquisition proposals that do not add to its debt burden.

Digital service tax right move for Malaysia: World Bank economist

KUALA LUMPUR: The implementation of the Digital Service Tax, which will take effect from Jan 1, 2020, is the right move towards helping the government increase its revenue base from the sales and service tax (SST), said the World Bank lead economist for Malaysia, Richard Record (pix).

Speaking during a panel session titled “Harnessing Economic Opportunities for Growth in a New World Order” at the Budget 2020 Forum today, Record was expanding on his comments last week where he recommended that the government broaden the coverage of items under the SST regime.

“Malaysia is moving in the right direction, and even ahead of many other countries in levelling the playing field between service providers that are incorporated in Malaysia and those that are not.

“Currently if you purchase digital services from Malaysian providers, you pay SST, whereas the tax is not levied on services bought from foreign providers which puts the local companies at a disadvantage and over time, could potentially erode the SST base,” Record said.

In a pre-budget briefing last week, Record reportedly said Malaysia needed to diversify its sources of revenue and reduce the number of items that are currently zero-rated or not taxed under the SST.

However, Axcelasia Taxand non-executive chairman Veerinderjeet Singh said it remained to be seen how successful this would be.

“The challenge is getting offshore, online providers to voluntarily register but I think if you look at what has happened in Australia and a few other countries, they have actually come forward and started complying.

“Perhaps Malaysia is hopeful that we can do that, but I think we cannot hope to get substantial amounts of revenue. Some have projected that we can get about RM2 billion if all the big players do register and pay a service tax on the total transactions from Malaysian that are made on that particular offshore platform, but I’m not sure if that will come true,” he said.

Another initiative being studied by government is the direct taxation of profits of foreign companies that are active in the Malaysian market, said National Budget Office director Johan Mahmood Merican.

“This is something that is proving to be a bigger challenge, but the government is seriously studying this. They still need more time,” he said at the session.

Record agreed that this could be a tough move for Malaysia, as it still looks to foreign firms for investment.

“For a small economy like Malaysia, it can be tough since big players like the EU (European Union) can impose a direct levy on revenues and not worry about investment. However, it seems like we are getting there in terms of the global consensus on apportioning taxing rights.

“Work is being done on the OECD (Organisation for Economic Cooperation and Development) level and once that comes along, there’s an opportunity to decide what Malaysia’s share of those revenues and profits are, and how they can be booked and accrued accordingly to the authorities,” he said.

Grand-Flo firm plans Kampar project with RM88m GDV

PETALING JAYA: Grand-Flo Bhd’s wholly owned subsidiary, Innoceria Sdn Bhd, has entered into a joint venture agreement with Pembinaan Maka Cemerlang Sdn Bhd (PMC) to develop 13.23 acres of leasehold land in Kampar, Perak.

The project will be a mixed development comprising 352 units of single-storey terrace houses and 24 units of double-storey shop houses, with an estimated gross development value of RM88.2 million.

The group currently has two ongoing development projects in Batu Kawan and Bukit Mertajam which are almost completed.

“The proposed joint venture represents a strategic opportunity for the group to replenish its existing property development projects.

“The Kampar project is expected to improve the revenue and profit contribution from the property development segment as well the overall financial performance of the group moving forward,” it said in a filing with Bursa Malaysia.

The proposed joint venture is expected to generate an estimated gross development profit of RM14.13 million.

The project will be financed via a mix of internally generated funds, borrowings and part of the proceeds raised from a proposed private placement.

In the same filing, Grand-Flo said it would undertake a private placement of up to 47.04 million new shares to independent third-party investors, which is expected to raise gross proceeds of RM11.76 million for its property development activities.

Grand-Flo said a private placement had been deemed to be the best option for fund raising as it would not have to incur interest expense or service principal repayments.

The proposals are expected to be completed by the fourth quarter this year.

Barakah calls off deals with Lecca

PETALING JAYA: Barakah Offshore Petroleum Bhd and its potential white knight, Singapore’s Lecca Group Ptd Ltd, have mutually called off two agreements that were part of the Practice Note 17 (PN17) company’s proposed regularisation plan.

“Due to the suspension of the licence held by its wholly owned subsidiary PBJV Group Sdn Bhd from Petroliam Nasional Bhd (Petronas), the board is of the view that it will be challenging for Barakah to implement its proposed regularisation plan,“ Barakah explained in a stock exchange filing on its decision to terminate the agreements.

This includes PBJV’s disposal of the pipe lay barge for a US$21 million (RM88 million) cash to Lecca and the placement of 375 million shares to Lecca at four sen per share under tranche 1 placement and RM25 million in nominal value of redeemable convertible unsecured loan stocks on a five-for-three basis.

“The board will continue to explore other avenues to formulate a plan to regularise its financial conditions. Further announcement will be made as and when necessary to Bursa Securities with regards to the development of the matter in accordance with the requirements under PN17 of the Listing Requirements,“ it said.

In July, Petronas suspended the licence of PBJV for three years as there was an adverse report from Petronas Carigali Sdn Bhd pertaining to the non-performance of PBJV in relation to the contract relating to provision of underwater services for PCSB.

UK to expand powers to block foreign takeover deals

LONDON, Oct 14 — Britain plans to strengthen its powers to block or intervene in the foreign purchase of any company that could affect national security, it said today. Currently the British state can intervene in the foreign takeover of any…

HB Global uplifted from PN17 status

PETALING JAYA: HB Global Ltd will be uplifted from the Practice Note 17 (PN17) status effective tomorrow.

It has been a PN17 company since May 2013 after its external auditors raised a red flag on its audited financial statements.

The group said in a filing with Bursa Malaysia that the decision was arrived at after taking into consideration all facts and circumstances of the matter including amongst others, that it no longer triggers any prescribed criteria under Paragraph 2.1 of PN17 of the Main Market Listing Requirements.

HB Global recorded net assets of RM201.3 million as at June 30, 2019 with two consecutive quarters of net profit up to the quarter ended June 30, 2019, which have been subjected to a limited review by an external auditor.

Enra unit buys oil & chemical tanker

PETALING JAYA: Enra Group Bhd’s 60%-owned subsidiary Enra SPM Labuan Ltd (ESPML) has proposed to acquire an oil and chemical tanker known as Maersk Edgar from Denmark’s Maersk Product Tankers A/S for US$9.3 million (RM38.87 million) cash.

ESPML is a wholly owned subsidiary of Enra SPM Sdn Bhd, which is 60% held by Enra Oil & Gas Services Sdn Bhd, a wholly owned subsidiary of Enra. The remaining 40% is held by SPM Terminals Pty Ltd.

Maersk Product Tankers is involved in the business of carrying refined oil products worldwide for customers and has its headquarters in Copenhagen, Denmark.

The purchase consideration will be financed via a combination of internally generated funds and bank borrowings.

In a stock exchange filing, Enra said each shareholder of Enra SPM will provide their respective contributions to the proposed acquisition in proportion to their effective shareholdings in ESPML. As such, Enra’s 60% portion of the purchase consideration is US$5.58 million.

Enra, via SPM and ESPML, is the provision of storage and offloading solutions to oil & gas fields.

“The proposed acquisition is in line with this core business and is part of Enra SPM’s business strategy to expand its offshore services and enhance its capabilities in offshore oil and gas operations. The ownership of the vessel will also position Enra SPM and ESPML to be more competitive in pursuing new contracts in this core business area,“ Enra said.