Tranglo minority shareholders sue TNG Fintech for oppression

PETALING JAYA: Minority shareholders of Malaysian fintech company Tranglo Sdn Bhd have filed an oppression suit against TNG Fintech, which acquired a 60% stake in Tranglo from Ekuinas Nasional Bhd for RM114.9 million in October 2018.

The other defendants named in the suit are Alexander Kong King Ong (also known as Alex Kong), Wong Wing Chi (also known as Takis Wong), co-founder of Tranglo Sia Hui Yong and Tranglo Sdn Bhd.

Both Kong and Wong were approved by Bank Negara Malaysia (BNM) to sit on the board of Tranglo as TNG Fintech’s representatives after the acquisition.

According to a statement released today, the suit was brought about by Impiro Asia Ltd and Mohammad Hassan Rasheed Gharaybeh, who collectively hold 13.6% equity in Tranglo.

Impiro Asia Ltd director Simon Landsheer alleged that Tranglo was in danger of missing its US$3 billion processing value target by 2020, as a result of the situation with the company.

“The situation at Tranglo has worsened to the extent that the management and staff time are tied up responding to requests from Kong under the claim of executing his fiduciary duty on Tranglo. Requests such as for information to be supplied and in specific format in a short turnaround time do not contribute to productive operations,” he said in the statement.

“In addition to impeding business operations, the negotiations to acquire our minority stake were not conducted in good faith. All five proposals received require the minority shareholder to relinquish board representation the moment the share sales agreement is signed,” he added.

The minority shareholders are seeking for dividends to be paid and Tranglo to be wound up due to the untenable working relationship with TNG Fintech.

The lawsuit follows a series of events that materially impeded business operations, including TNG Fintech’s rejection of Tranglo’s approved financing plan and an unreasonable delay in signing up new bank partners, according to the statement.

“During the acquisition process, TNG Fintech via Kong, had given commitment and assurances to BNM that it will acquire the minority stake by February 1, 2019, and business operations of Tranglo face challenges as TNG Fintech attempts to wrestle control without fulfilling its commitment..

“Whilst TNG Fintech had issued a statement on September 11, 2017 on its completion of a US$115 million Series A funding, Kong admitted in an email on April 8, 2019 to BNM that this funding never materialised.”

The statement claimed that Kong’s previous business ventures, Next Millennium Sdn Bhd and Asia Travelmart Sdn Bhd, were wound up by the Malaysian government and Technology Park Malaysia Sdn Bhd for non-payment of taxes and rental respectively.

It also alleged that Kong has a track record of two personal bankruptcies, one in Malaysia and another in Hong Kong.

TNG Fintech is registered in the British Virgin Islands, based in Hong Kong and controlled by Alex Kong.

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.

BNM’s international reserves slip 0.48% to US$103b

PETALING JAYA: Bank Negara Malaysia’s (BNM) international reserves fell 0.48% to US$103 billion (RM431.58 billion) as at September 30, 2019 from US$103.5 billion (RM433.67 billion) as at September 13, 2019.

According to a statement by the central bank, the reserve position is sufficient to finance 7.6 months of retained imports and is 1.1 time total short-term external debt.

MNRB reshuffles board to comply with BNM requirements

PETALING JAYA: MNRB Holdings Bhd unveiled a new composition for its board effective today to ensure compliance with Bank Negara Malaysia’s requirement that limits the number of common directors allowed to serve on the board of a company and its subsidiary.

MNRB told Bursa Malaysia that it also undertook review to further strengthen the composition of the board of MNRB’s subsidiary companies.

With that, MNRB have appointed three new independent non-executive directors namely Khalid Sufat, Zaida Khalida Shaari and Junaidah Mohd Said.

Consequently, four existing independent non-executive directors who are common directors on other boards within the MNRB group, namely Mustaffa Ahmad, Arul Sothy Mylvaganam, Rosinah Mohd Salleh as well as two other directors Hijah Arifakh Othman and Noor Rida Hamzah have also resigned.

The group said the resigning directors will remain or be appointed as board members of MNRB’s subsidiaries.

“With their breadth of experience and expertise, the board of MNRB is confident that they will be able to provide good counsel and direction to steer the subsidiaries towards further growth and success, in line with the aspiration of MNRB.”

It is confident that the appointment of the new directors will certainly set the tone towards strengthening MNRB group’s prospects moving forward.

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Malaysian bonds still attractive despite global index ‘watch list’ status

PETALING JAYA: Malaysian bonds remain attractive to international investors despite the uncertainties due to its watch list status in FTSE Russell’s World Government Bond Index (WGBI) according to Sunway University Business School professor of economics Dr Yeah Kim Leng.

“In the light of the current low yield environment in the bond market, Malaysian bonds still retains a positive yield differential that will attract international investors seeking to increase their yield,” he told SunBiz.

He said there has been a call for government to employ fiscal stimulus rather than resorting to unconventional monetary policy such as negative interest rate or zero-bound rates.

“Until those issues are addressed, the search for a higher yield in the fixed income market will prove to be a positive for emerging markets including Malaysia.”

Although the fate of Malaysian Government Securities (MGS) in the index remains unclear until the next review in March 2020, Yeah said the decision has lifted the concerns of bond market players.

“Even though Malaysia remains in the watch list, it is still positive development for Malaysia, at least in the short term,” he said.

On the other hand, UOB Malaysia senior economist Julia Goh pointed out that FTSE Russell and index users are encouraged by the efforts and engagement of Malaysian authorities to address concerns on market liquidity and accessibility.

Bank Negara Malaysia (BNM) said earlier that it has had positive engagements with the index provider, following further liberalisation of the foreign exchange administration rules to improve market liquidity and accessibility.

“These measures have helped to sustain Malaysia’s position in the WGBI for now, FTSE retains Malaysia on the watch list to ensure sufficient progress of reforms,” said Goh.

However, JF Apex head of research Lee Chung Cheng is not so optimistic on the latest development as it could lead to sell-off on Bursa Malaysia.

“This will translate into an increase in volatility for MGS and ringgit until the next review in March,” said Lee.

AmInvestment Bank Research also highlighted the overhanging concern on potential US$8 billion (RM33.6 billion) foreign outflows from the Malaysian bond market in the event of a downgrade.

“Apart from Malaysian bonds, a downgrade would hurt the ringgit, and in turn, the appetite for Malaysian equities as well.”

The FBM KLCI declined 8.86 points or 0.56% to 1,584.14 points last Friday, while the ringgit appreciated 0.18% to 4.1955 against US dollar.

BNM, BI strengthen bilateral monetary, financial cooperation

PETALING JAYA: Bank Negara Malaysia (BNM) and Bank Indonesia (BI) entered into agreements to further strengthen bilateral monetary and financial cooperation between the central banks.

The two central banks inked a local currency bilateral swap agreement (LCBSA), which will enable the two to access foreign currency liquidity from each other if needed.

According to a press statement, the LCBSA allows for the exchange of local currencies between the central banks of up to RM8 billion or IDR28 trillion with an effective period of three years, which can be extended by mutual agreement of the central banks.

“This will complement efforts to support the wider usage of local currencies to facilitate cross-border economic activity between Malaysia and Indonesia,”

Furthermore the bilateral meeting also saw the signing of a memorandum of understanding (MoU) to forge closer cooperation on innovation in payments and digital financial services, as well as surveillance on anti-money laundering and counter financing of terrorism.

In the MoU, the two central banks reaffirmed the commitment in supporting the development of payment systems and digital financial innovation as part of initiatives to advance financial development and integration between the two countries.

The meeting also discussed recent economic and financial developments, including in the areas of Islamic finance, social financing and financial market development.

In addition, the central banks expressed their commitment in strengthening cooperation between both nations to further enhance financial sector development in achieving sustainable economic progress

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