Nestle Bhd Q1 net profit rises to RM231m

KUALA LUMPUR, April 24 — Nestle (M) Bhd’s net profit for the first quarter ended March 31, 2018, increased slightly to RM231.21 million from RM230.687 million recorded in the same period last year. In a statement today, Nestle said, revenue rose…

Clouds over Indian hospital chain Fortis keep suitors from making higher bids


MUMBAI/BENGALURU (April 23): India’s Fortis Healthcare Ltd has received as many as five offers for control of its private hospital business, but suitors have so far held back from making bold bids for the group as it faces rising debt and a regulatory probe. Fortis, one of the country’s largest hospital chain operators, is evaluating offers from domestic and international firms including Malaysia’s IHH Healthcare Bhd, which runs hospitals in India, Turkey, Malaysia and Singapore, and China’s Fosun International Ltd. Analysts, bankers and consultancy firms say Fortis, with around 30Read More

The Chinese car invasion is coming


(April 24): On a bright spring day in Amsterdam, car buffs stepped inside a blacked-out warehouse to nibble on lamb skewers and sip rhubarb cocktails…

US dollar stands tall as 10-year bond yield nears 3pc

SINGAPORE, April 24 — The dollar set a three-month high against a basket of currencies today, having gained a boost as the US 10-year Treasury yield climbed toward the psychologically key 3 per cent level. The US 10-year Treasury yield hit its…

HK-listed Razer proposes to take over MOL Global

HONG KONG: Hong Kong Exchange-listed lifestyle brand for gamers Razer today announced plans to take a 65.1% interest in MOL Global Inc for US$61 million (R238 million) by way of a statutory merger.

While the merger is subject to the approval of shareholders of MOL Global, Razer has already secured irrevocable undertakings from other major shareholders of MOL Global to vote in favour of the merger, which together with the 34.9% interest Razer holds, is enough for the merger to be approved.

MOL Global will then be a wholly owned subsidiary of Razer.

Tan Sri Vincent Tan is a majority shareholder of MOL Global.

“This acquisition will combine Razer zGold and MOL Global’s MOLPoints virtual credits creating one of the largest virtual credit platforms for gamers in the world ,” Razer co-founder and CEO Tan Min-Liang said in a statement today.

Southeast Asia represents one of the highest gross domestic product growth regions with one of the youngest demographics in the world. Additionally, given that MOL Global already runs one of the largest e-payments networks in Southeast Asia, the integration of MOL Global's businesses represents an exciting new business segment with boundless potential that Razer can extend into, he said.

“Over and above, we will be able to leverage on MOL Global's leading technologies, as well as its massive network of content, customers and partners built over 17 years, and existing businesses by capturing the fast growing southeast region for Razer,” he added.

Given the low credit card penetration in Southeast Asia, MOL Global's unique offline-to-online payment model, with about one million offline payment points already makes it the largest virtual credits platform gamers in the region.

Upon completion of the merger, Razer's current zGold virtual credit business will be combined with MOLPoints under a single entity.

Guocoland’s Q3 profit surges

PETALING JAYA: Guocoland (Malaysia) Bhd’s net profit jumped over six times to RM55.69 million for the third quarter ended March 31 against RM8.34 million in the previous corresponding period, mainly driven by gain on disposals of JB Parade Sdn Bhd and PD Resort Sdn Bhd to GuocoLand Hotels Pte Ltd for RM104.8 million.

Its revenue, however, went down 55.9% to RM35.83 million from RM81.17 million.

Guocoland’s nine-month net profit fell 51.7% to RM57.72 million from RM119.42 million, while revenue almost doubled to RM289 million from RM152.31 million.

It expects the domestic property market to remain lacklustre in the subsequent period of year 2018 due to the continued weak market and consumer sentiments and the rate hike by Bank Negara Malaysia.

“The overall momentum and prospects of the property market in the next one to two years is expected to remain soft and challenging.”

However, Guocoland said the group will remain steadfast to launch its project according to prevailing market sentiments.

The stock was down 3 sen or 3.1% to close at 95 sen today, with some 5,100 shares changing hands.

Assessing Asean’s economic performance

ASEAN finance ministers have just concluded their 22nd meeting in Singapore, as Asean embarks on the second half of its journey toward its centennial. Having come this far to be the longest serving grouping in the developing world, it is timely to ask: How has it fared economically?

Assessments of Asean as a regional integration endeavour often fail to separate the bloc’s underlying objectives from those that appear on the surface. Analysts assume, quite understandably, that the primary purpose of regional cooperation agreements is to increase regional integration.

If this were the case, traditional quantitative measures of integration – such as shares of intra-regional trade and investment – would be the right metrics for assessing performance.

On these metrics, Asean would be judged a failure. Intra-regional trade has remained low and stagnant at 25% for almost two decades. Similarly, barely one-fifth of foreign direct investment (FDI) flowing into Asean countries originates from within the region. The regional share of other forms of capital flow has also stayed tepid.

What if there are broader objectives on which Asean should be judged? What if regionalism is only a means towards greater ends?

Asean is indeed pursuing broader objectives. The implementation of the Asean Free Trade Area (AFTA) provides a clear example. Asean’s original members used this agreement as a stepping-stone to broader liberalisation, and, in turn, to promote globalisation.

The evidence lies in the deliberate decision by original members to offer preferential tariffs to non-members on a most favored nation (MFN) basis, meaning that to be part of Asean means to be open to trade not just with other members – but with all countries.

More than 90% of Asean countries’ tariff lines have a preference margin of zero, where preferential tariffs are no lower than the MFN rate. Over 70% of intra-Asean trade is also conducted at MFN rates at zero. Asean rarely uses preferences because there are hardly any preferences to use.

Multilateralisation of preferences has minimised welfare-reducing trade diversion effects, and in part accounts for the stubbornly low intra-Asean trade shares. These are a sign of success, not failure.

Most intra-Asean trade is supply chain-related trade in parts and components. These parts mostly travel duty free because of product-specific arrangements such as the WTO’s Information Technology Agreement, or general ones like duty drawback schemes, bonded warehouses, or Special Economic Zone privileges.

The decision to multilateralise the AFTA tariff reductions have supported value chain-driven trade due to the fact that final markets for the finished goods lie predominantly in industrial country markets outside the region.

Though multilateralisation has subdued intra-regional trade, it has promoted rapid growth in overall trade. Asean is the fourth largest exporting region in the world, trailing only the European Union, North America and China.

Although Asean accounts for just 3.3% of global gross domestic product, it produces more than 7% of exports. If intra-Asean trade is to increase in the future, it should be driven by factors other than preferences. Reducing non-tariff barriers (NTBs) in a non-discriminatory manner has the potential to increase trade in services. Reversing the rise in non-tariff impediments to trade, which increased from 1,634 to 5,975 between 2000 and 2015, is the primary new challenge for Asean.

NTBs are not only likely to be more restrictive than tariffs, but they are opaque and more difficult to dismantle. In addition, NTBs are moving targets because they can take on new forms as soon as they are targeted or dismantled.

While NTBs may be more difficult to identify, track, and dismantle, this does not discount the effectiveness of the multilaterisation strategies. Unlike tariffs, it is either difficult or costly to exchange concessions in NTBs in a preferential manner, given the “public goods” nature of a lot of the reforms required and the consequent ease of free riding.

Whether it is tariffs or NTBs, the multilateralisation approach remains Asean’s best way forward- for dealing with the problem, and for delivering the greatest benefits in terms of outcomes.

In the original design of the Asean Investment Area, the bloc flirted with the idea of providing preferential treatment to investors from member countries. It however quickly abandoned the idea and reaffirmed its commitment to a non-discriminatory and open foreign investment climate, mirroring the regimes in individual member countries.

FDI inflows have flourished, even if intra-Asean flows remain little changed.

As with trade, it is not where FDI comes from that matters, but rather its volume and form. The massive economic transformations that the world has witnessed in Asean’s original members—and continues to observe in the newer ones – would not have been possible if Asean had chosen the preferential route.

This is Asean’s defining achievement, and this is how it should be judged.

Jayant Menon is lead economist at the Asian Development Bank.

Most Asian currencies weaken as rising US yields bolster dollar


SINGAPORE, April 23 — Most emerging Asian currencies slipped today as rising US bond yields buoyed the US dollar, a move that particularly hurt sentiment toward countries where foreign investors have large domestic bond holdings. The dollar's…

Ringgit opens lower against US dollar


The ringgit is marginally down to the US dollar in a quiet opening. — File pic KUALA LUMPUR, April 23 — The ringgit opened marginally lower against the US dollar today on a lack of market demand, a dealer said. At 9.21am, the local unit was quoted at 3.8980/9010 from 3.8950/8000 recorded at Friday’s close.  OANDA Head of Trading Asia-Pacific, Stephen Innes said the US 10-year yields are approaching three per cent and resulting in a broadly firmer greenback. “With the higher US yields, the ringgit sentiment will remain weakRead More

AirAsia to step up flights within Sabah and Sarawak to grow domestic operations

SEPANG: Low-cost carrier AirAsia Bhd sees room for expanding its domestic operations, which contribute about 40% to its revenue currently, with intercity flights within Sabah and Sarawak.

The airline’s CEO Riad Asmat (pix), who recently took over the reins of the Malaysian unit, told SunBiz in an exclusive interview that the airline has a strong foothold in Sabah and Sarawak, but there are areas where it could “still serve”.

He said its domestic market share ranges between 50% and 60% depending on the state it operates in.

According to international aviation research entity Centre of Asia Pacific Aviation (CAPA), AirAsia’s share in the domestic market has significantly increased “over the past six months, benefiting from capacity reductions by both of its competitors at Kuala Lumpur International Airport (KLIA)”.

“AirAsia’s share of the domestic traffic at KLIA is now 66%, compared to 55% a year ago. KLIA accounts for 65% of total domestic traffic in Malaysia, which increased by 4% in 2017, to 25 million,” CAPA said.

Domestic flights account for 31% of the flight breakdown based on the number of routes and international 69%. AirAsia Malaysia’s total number of routes stands at 114.

“So we are working with authorities and state governments to see how we can get more rights to fly internally within the state … that is work in progress,” Riad, who marked his 100th day in office last week, said.

“We have also committed ourselves to aircraft that we are likely to put into Sabah and Sarawak and that is to increase our frequency, again because the current ones will serve a certain expectation … what we have learnt and what we have studied now is that there are still a lot more passengers who want our services,” he explained.

AirAsia, which has hubs in state capitals Kuching and Kota Kinabalu, its busiest routes, will look into timings, putting in the right aircraft and rescheduling flights once it obtains approvals for the routes, which Riad declined to reveal.

According to the Malaysian Aviation Commission, airports which can accommodate passenger jets in Sabah are Kota Kinabalu International Airport, Sandakan Airport, Tawau Airport and Labuan Airport while in Sarawak, it is the likes of Kuching International Airport, Sibu Airport, Bintulu Airport and Miri Airport.

Statistics provided by the commission showed Kota Kinabalu-Tawau as the busiest transcity route in Sabah while Kuching-Miri was the busiest for Sarawak. The least busiest are Kota Kinabalu–Lahad Datu and Miri–Sibu respectively.

Malaysia Airports Holdings Bhd noted that passenger traffic from Kota Kinabalu to Tawau rose to 630,864 in 2017 from 586,570 in 2016, while Tawau to Kota Kinabalu rose to 630,949 from 586,567.

As for Sarawak, Miri to Kuching increased to 546,235 from 543,295, and Kuching to Miri to 549,646 from 546,351.

The route with the highest increase in passenger traffic is Bintulu-Kuching which saw a passenger traffic growth of 50,859, to 343,081 from 292,222.

The airline has also been strategising its asset and resources utilisation, by releasing capacity from certain segments and increasing flights to routes with good pickup in terms of load factor and better earnings potential.
Terengganu is one of the routes to have seen an increase in flights, to 24 weekly flights from 21 previously.

On whether there are any untapped markets, Riad said the group is constantly on the lookout for new destinations.