KUALA LUMPUR, Oct 22 — The ringgit closed lower against the US dollar today in tandem with other emerging market currencies due to external factors. At 6pm, the local note was quoted at 4.1870/1900 against the greenback, compared with…
BANGI, Oct 22 — Although the world’s two largest palm oil producers, Indonesia and Malaysia, are working together to challenge the European Union’s Delegated Act through the World Trade Organisation Dispute Settlement Body, Indonesia says…
GEORGE TOWN: SME Corporation Malaysia (SME Corp) is hoping that the government, which allocated RM2 billion for the small and medium enterprise (SME) sector in Budget 2019, will earmark the same amount in the upcoming budget to empower these enterprises.
Its chairman, Datuk Seri Syed Hussein Al Habshee, said given the current world economic situation, SME Corp would not be expecting an increase in budget allocation.
The International Monetary Fund, which in July lowered its global growth forecast for 2019 to 3.2 per cent, was reported as saying today that it would cut the forecast further next week.
“Given our country’s debt under the current situation, I am not expecting an increase in the budget for SMEs. What I hope from the government is not to reduce the budget — not a single sen (being) reduced from what had been given in the last budget,“ he told reporters after opening the Malaysia SME Congress 2019 here today.
He added although Malaysia was expected to sustain an economic growth of 4.5 per cent this year, the slowdown in the global economy would affect the country.
Budget 2020 will be tabled by Finance Minister Lim Guan Eng in Parliament tomorrow.
Syed Hussein said SMEs were the backbone of Malaysia’s economy, making up the majority or 98.5 per cent of business establishments in the country.
“SMEs are the driver of our economic growth, contributing significantly to the overall economy, including 38.3 per cent of gross domestic product (GDP) and 17.3 per cent of exports in 2018,“ he said.
According to him, the government recognised the importance of SMEs and entrepreneur development with the launch of National Entrepreneurship Policy 2030 by Prime Minister Tun Dr Mahathir Mohamad in July this year.
He said the policy targeted to boost SME contribution to 50 per cent of the national GDP, 90 per cent of jobs in the country and 30 per cent of exports while aiming to increase cooperatives turnover from RM40.3 billion to RM60 billion by 2030.
“Under the policy, the government aims to position Malaysia among the top 25 nations in the Global Entrepreneurship Development Institute’s (GEDI) Global Entrepreneurship Index,“ he said.
He added that currently, Malaysia ranked 58th among the 137 countries. — Bernama
PETALING JAYA: Maju Holdings Sdn Bhd has made a revised offer to the government to acquire PLUS Malaysia Bhd for RM34.9 billion, following Prime Minister Tun Dr Mahathir Mohamad’s comments saying the government would be willing to sell the toll highway operator if the offer received was suitable.
In a media statement today, Maju Holdings said that as part of the acquisition proposal, it would offer a 25% to 36% reduction in toll charges.
“We are proposing to bear the toll reduction in full and are in no way seeking financial compensation from the government for this.
In addition, Maju Holdings said it will absorb the RM2.7 billion toll compensation owed by the government to PLUS.
“If Maju Holdings takes over PLUS, we are pleased to inform that we will no longer hold the government responsible for these debts,” it said.
The spokesperson added that with this latest offer, existing PLUS shareholders would benefit from an estimated total equity internal rate of return of about 16%.
“This represents a return that far surpasses the cost of equity for a majority of other toll road concessions, both globally as well as across Southeast Asia.
“As part of our proposal and as we have reiterated on multiple occasions, we are committed to investing approximately RM5.3 billion which will include lighting up the entire length of the highway along with other much needed enhancements.”
Maju Holdings, controlled by businessman Tan Sri Abu Sahid Mohamed, made its first offer of RM36 billion to take over PLUS in 2017.
However, at that time, the Finance Ministry said the government had no plans to release its interests in PLUS to Maju Holdings and was concerned with the financial standing and capability of a private entity like Maju Holdings to pay for the acquisition.
In July this year, Works Minister Baru Bian confirmed it received a fresh offer from Maju Holdings, but this was ultimately rejected after Khazanah Nasional Bhd and the Employees Provident Fund (EPF) objected to the sale.
However, last week, EPF CEO Tunku Alizakri Alias echoed Mahathir’s comments saying that if there was a sensible takeover offer which would benefit its members in terms of returns and dividends, the fund would definitely study and consider the offer.
In its statement yesterday, Maju Holdings said it was confident that its offer this time was a compelling one and one that would help alleviate the government’s debt situation.
“Our operational track record in managing toll roads speaks for itself. We have successfully operated the MEX highway in a highly cost-effective manner compared with PLUS toll roads that should benefit from economies of scale.
“In fact, we have one of the lowest costs per kilometre in the country. As such, we are confident we will be able to reduce maintenance costs for PLUS.”
KUALA LUMPUR: Selling PLUS Malaysia Bhd to private entities would be a “huge moral hazard”, according to Khazanah Nasional Bhd’s managing director Datuk Shahril Ridza Ridzuan.
“We view PLUS as a strategic asset for the country. It’s an asset which, particularly, I think will be difficult to imagine in private hands, especially if a lot of the offers coming in are basically from private entities which just want to acquire the asset at a cheap price and still ask the government to guarantee them.
“I think that is a huge moral hazard in having private entities to hold such a strategic asset with the backing of government guarantees.
“We are not at liberty at this point in time to discuss what we put forward to the government, I think basically it is in line with the thought that it is a strategic asset and PLUS’ highways should really remain in ownership of the Malaysian people,” he said to the media on the sidelines of the Khazanah Megatrends Forum 2019 today.
During a TV interview over the weekend, Shahril said Khazanah had so far rejected all takeover offers it received from local and foreign private entities for the highway operator.
RRJ Capital, a Malaysian-led Hong Kong-based private equity firm, is reported to be one of the contenders for PLUS, having recently upped its takeover offer to RM3.5 billion.
Khazanah owns 51% of PLUS, while the Employees Provident Fund owns the remaining 49%, following a takeover exercise in 2011, in a transaction valued at RM32 billion.
However, at Parliament House today, Prime Minister Tun Dr Mahathir Mohamad appeared to contradict Shahril’s words, telling the media that the government will consider all acquisition offers for PLUS from private entities, provided the price is attractive.
“Yes, we can sell. Whatever offer is made on PLUS will be studied by the government to determine whether it is suitable to our needs,” he was quoted as saying.
Meanwhile, Shahril said the group hopes to achieve a profit of RM5 billion for the financial year ending Dec 31, 2019, following its first loss of RM8.65 billion in a decade last year.
“We are doing two things this year: divesting assets and improving our balance sheet. Hopefully we achieve our targets of reducing our debts and posting a profit of about RM5 billion this year,” he said.
Shahril also said the group’s debt target of RM35-40 billion was a medium-term plan for the group which would take place over the next three to five years.
“RM40 billion is what we consider a sustainable level of debt, and we are targeting an asset-to-debt cover about 3 to 3.5 times, as opposed to our current level of just over 2 times so it’s about providing a more sustainable balance sheet for Khazanah for the long term,” he said.
Shahril’s comments followed what Economic Affairs Minister Azmin Ali had said earlier in the day by which the sale of assets by Khazanah would be expected to reduce the group’s debt levels to between RM35 billion and RM40 billion.
Thus far, Khazanah’s debt level has been reduced from RM55 billion to RM47 billion.
“We must ensure that the assets sold generate money as well as new funds for us to reinvest into other assets and make more profits for Khazanah and also to eventually give dividends to the government,” said Azmin.
On the potential sale of Malaysia Airlines, Azmin said he was not able to comment on the potential bidders, but Khazanah would make the relevant announcement once the deal was completed.
KUALA LUMPUR: The Employees Provident Fund (EPF) will definitely consider divesting its stake in PLUS Malaysia Bhd if there is a good offer, says its chief executive officer, Tunku Alizakri Alias.
He said if there is any sensible takeover offer which benefits its members in terms of returns and dividends, the fund will definitely study and consider the offer.
“At this juncture, PLUS is an asset that is very positive, it gives really strong returns and it is a well-run organisation.
“In terms of services, it operates over 1,200 kilometres of highways and it gives really good service. So from the EPF’s perspective, we are very happy with the returns from PLUS and it is also a strong asset,” Alizakri told reporters on the sidelines of the Khazanah Megatrends Forum 2019 here today.
On Prime Minister Tun Dr Mahathir Mohamad’s comment that the government will study offers to take over PLUS, he said that the comment could have been made on behalf of Khazanah Nasional Bhd, the government wealth sovereign fund that is another shareholder of the toll concessionaire.
Earlier today, the prime minister said that the government will study offers to take over PLUS, including bids from abroad. He was commenting on the offer by Hong Kong and Singapore-based equity firm RRJ Capital to take over PLUS, reportedly for RM3 billion.
“Any bidding by firms (to take over PLUS) will be studied by the government. We will entertain the offer if it suits our needs,” he said.
Asked on dividends for the shareholders, Alizakri said that the fund cannot give the direction although he acknowledged the challenging economic performance moving forward both globally and domestically.
“All the data points to a challenging environment, (therefore) on our side we will ensure our assets are managed well, but we will make sure if we have to buy we will buy the best long-term asset, and if we must sell we will also make sure we get the best deal for any divestment,” he explained.
Alizakri said the fund is always on the lookout to buy and sell assets to give dividends to the shareholders.
“The question is, do we have a governance process that is sustainable? (We have to ensure) due diligence is properly done, so our members can rest assured that any divestment that we do is to benefit our members,” he added.
It was reported that EPF secured dividends of RM1.56 billion from 10 companies that paid the most dividends in its portfolio in the first half of 2019. The sum received was 5.4% higher than the RM1.49 billion a year ago. – Bernama
PETALING JAYA: A potential reintroduction of the previously scrapped goods and services tax (GST) could help in narrowing the budget deficit going forward, but it will fall on the government to prove that the system will be implemented properly.
Sunway University’s Professor of Economics Dr Yeah Kim Leng said that while the implementation would likely not take place in the immediate future, the government would have to be prepared to face the potential political backlash from the move.
“Before the general election, most economists were in favour of retaining the GST, but we had also recommended lowering the rate to about 3-4%. Now, however, that is water under the bridge, so the government should look at how to strengthen the sales and service tax (SST).
“They should also do a thorough review and address the past weaknesses of the GST system, and present it to the public to garner acceptance, given that one of the key issues in the past election was the removal of the GST,” he told SunBiz.
As for addressing the shortfall in revenue, Yeah said it could easily be met by the current SST regime. However if over the medium term, the government could show the benefits of returning to GST, then it could be useful in addressing the issue.
“I think the public will be more accepting of a broad-based system if the government shows it can raise taxes and spend efficiently and strengthen public finance administration. Once the government has proved itself, then we can look at widening the revenues,” he said.
The budget deficit for 2020 is estimated to be 3.2% of gross domestic product (GDP), a slight improvement from an estimated 3.4% of GDP in 2019, according to a report by the Socio-Economic Research Centre.
William Capital Plt chief investment officer William Ng also said the GST would technically help the government get more revenue, as it is a broad-based tax and therefore almost everyone would be subject to it.
“Objectively speaking, having the GST would mean no leakages and the government would not have losses on tax collection. However, it would really depend on who is managing the scheme and what tax rate is employed.
“I think 6% was the ideal rate, but perhaps it could start at 4% and then gradually increase so that people will not be impacted as greatly,” he said.
The government expects to collect RM22 billion in revenue from the SST this year. As of June 30, it had collected RM13.3 billion, based on data from Bank Negara Malaysia. In contrast, the GST collected was RM20.24 billion from January to May 31, 2018.
To recap, Prime Minister Tun Dr Mahathir Mohamad was reported as saying at an event last week that the government would look at the reintroduction of the GST if the people want it back.
However, last Friday, Finance Minister Lim Guan Eng said even if the government got incontrovertible evidence from the people, the decision must be made by the Pakatan Harapan Presidential Council.
“Not me alone to decide. Until that is made, we have to respect the mandate and will of the people when they voted for PH, which one of our promises was to abolish GST,” he was quoted as saying.
Lim said abolishing GST had its impact in managing inflation and cost of living with Malaysia enjoying one of the lowest inflation rate in the world at 1.5%.
On Tuesday, the Malaysian Institute of Economic Research suggested in its Budget 2020 wish list that the GST be brought back, saying it was more effective and fairer than the SST.
The GST of 6% was implemented in 2015 under the previous administration, but was scrapped last year following Pakatan Harapan’s victory in the 14th general election.
Separately, Yeah said one of the key issues of note in the upcoming Budget announcement would be the govern-ment’s spending on the low-income group.
“The government should focus more skills upgrading and giving them more entrepreneurial and other income genera-ting opportunities. Those programmes will be important because addressing the cost of living is an immediate term concern, but in the longer term, you need to raise the income level.”
KUALA LUMPUR, Oct 3 — The Domestic Trade and Consumer Affairs Ministry has taken the initiative to work with e-commerce industry players in promoting local products through the Buy Malaysia campaign, its minister Datuk Seri Saifuddin Nasution…
PETALING JAYA: The Federation of Malaysian Manufacturers (FMM) has welcomed news that the government would study the merits of reintroducing the goods and services tax (GST) to replace the current sales and service tax (SST) system.
In a statement, FMM president Tan Sri Soh Thian Lai said the GST was a more transparent and effective tax regime compared to the SST.
“Given the weak external environment and amid current global tensions, we believe that priority should be given to strengthen the economy and restore more favourable business conditions. Therefore we note this will be the opportune time to reintroduce the GST system.,” he said.
He further explained that under the GST system, prices of Malaysian exports will become more competitive on the global stage, which will in turn strengthen the export industry.
Soh also outlined a number of recommendations for the revision of the GST, which included reducing the GST rate from 6% to 3% to boost business conditions, zero-rating all essential goods and services and reducing the tax compliance burden by increasing the GST registration threshold to RM1 million.
Prime Minister Tun Dr Mahathir Mohamad said the government would study the merits of the GST if the people want it back.
He was responding to comments made by the Malaysian Institute of Economic Research (MIER) chairman Tan Sri Kamal Salih that the GST should be brought back in Budget 2020 but at a lower rate of 3%.
The GST of 6% was implemented in 2015 under the previous administration, but was scrapped last year following Pakatan Harapan’s victory in GE14.
For those who had already made the switch to the SST system, Soh said moving back to the GST system would not be difficult.
“For manufacturers, switching back to previous automated model under the GST Tax Payers Access Point system will not be difficult as GST compliance systems are already in place.
“We however look forward to be engaged in the study proposed by the government in order to provide manufacturers’ views on the possible reintroduction of the GST system,” he said.
KUALA LUMPUR: The ringgit further improved to end higher against the US dollar today as the greenback lost its shine amid worries over deepening US economic gloom.
At 6pm, the local unit stood stronger at 4.1860/1890 compared to yesterday’s close of 4.1930/1960.
Axi Trader Asia-Pacific market strategist Stephen Innes said despite trading a bit better today in the higher 4.18’s, the ringgit remained glued to 4.19 level as investors preoccupied with domestic events ahead.
“A Goods and Services Tax (GST) proposal by a domestic think tank is garnering lots of press as Prime Minister Tun Dr Mahathir Mohamad versus Datuk Seri Anwar Ibrahim’s succession talk move in motion in the background.
“However, with the Budget 2002 getting delivered on Oct 11, this is now being viewed as the next significant catalyst, which is likely keeping foreign investors cautious on local bonds, equities and currency,“ he told Bernama.
The greenback fell overnight after data showed hiring by US private employers had cooled in September, the latest indicator that the Sino-US trade dispute is hurting the world’s largest economy.
“Also, the US levied EU goods with new tariffs greenlighted by World Trade Organisation ruling adding another brick in the wall of worry for EU investors,“ Innes added.
Having said that, he said a faltering US economy was not a cause for celebration for export-oriented economies in Asia like Malaysia.
Overall, the ringgit was traded mostly lower against other major currencies.
It declined against the Singapore dollar to 3.0287/0320 from 3.0248/0274 at yesterday’s close and fell against the yen to 3.9059/9102 from 3.8950/8982.
The local note depreciated against the euro to 4.5820/5870 from 4.5775/5825 and was lower against the British pound to 5.1408/1462 from 5.1335/1388. — Bernama