Tuesday, July 28, 2015

Keeping calm: Malaysia lets ringgit fall below 1998-2005 peg

KUALA LUMPUR: For the past three weeks, Malaysian authorities have allowed the ringgit to trade below levels that in 1998 prompted them to impose a dollar peg and capital controls. Economists expect more downside, with the Federal Reserve set to raise U.S. interest rates.

The ringgit has traded around 3.81 per dollar since July 6, exceeding the 3.80 level of the peg set by the government between 1998 and 2005. Economists warn against intervention to shore up the ringgit, as Malaysia's international reserves have already dropped to near five-year lows of $100.5 billion, data released by the central bank last week shows. While that is sufficient to fund 7.9 months of retained imports, it is just 1.1 times short-term external debt.

The ringgit has fallen against the dollar since the third quarter of last year as weak energy prices threaten Malaysia's oil-and-gas revenues. Political uncertainty arising from the investigations surrounding debt-laden state fund 1Malaysia Development Bhd has further hurt sentiment. Foreign investors were net sellers of shares on the Malaysian bourse for 13 weeks until July 24.

The central bank's governor said in January - when the ringgit was around 3.550 per dollar - that the authority had "moved on" from using controls to manage capital flows. The ringgit has declined 5.1 percent since then. A U.S. interest rate hike this year would spur further capital outflows from emerging markets such as Malaysia, pressuring the currency.

"You can try to stabilise the ringgit, but ultimately I don't think it can stand the correction," said Chua Hak Bin, Singapore-based head of emerging Asia economics at Bank of America Merrill Lynch. "The ringgit will have to adjust to whatever new equilibrium... we are forecasting the ringgit to weaken to 3.86 by end-2015 and 4.05 by end-2016 against the dollar." - Reuters

Friday, July 3, 2015

DRB-Hicom targets RM100m revenue from air freight business.

PORT KLANG: DRB-Hicom Bhd which recently completed the acquisition of air freight operator Gading Sari Aviation Services Sdn Bhd, aims to rake in revenue of RM100 million a year from its new business by increasing its aircraft utilisation.

The integrated logistics services provider, under its wholly-owned subsidiary KL Airport Services Sdn Bhd (KLAS) bought over the local air cargo service company for RM72 million, in a deal which was completed on February 2015.

"Overall now it is already a profitable entity, but if we fly for more hours we will obviously make more money," KLAS group CEO Datuk Mohd Shukrie Mohd Salleh, who is also the CEO of Konsortium Logistik Bhd (KLB) told reporters after launching its first roll-on/roll-off (ro-ro) vehicle carrier vessel, named "MV Zarah Sofia" yesterday.

For the financial year ended Dec 31, 2013, Gading Sari recorded a net profit of RM2.21 million from RM1.71 million in 2012. Revenue for the same period stood at RM72.53 million from RM69.38 million previously.

"We plan to expand the aircraft flying hours to 14 hours a day from less than 10 hours a day currently. In terms of the aircraft utilization, I would say it is still fairly low," Shukrie said, adding that the air freight operator is now called DRB-Hicom Asia Cargo Express (ACE).

He said currently ACE provides air freight services to Pos Malaysia for its Pos Laju service between Peninsular and East Malaysia cites of Kuching, Miri and Kota Kinabalu, with two aircraft.

"Because we have just started, the business for now is solely dedicated for Pos Malaysia. And because we have a long-term commitment with Pos Malaysia, it is our base customer and we can expand from the existing place that we have," he noted.

"Going forward, we are also looking at further acquisition of new aircraft," Shukrie added, without elaborating further.

He also noted that long-term targets include looking at opportunities to enter the regional market.

"The intention is to expand the (air freight operator) business further. (As part of our long term plan, we are not just looking at the Malaysian market, but also the regional market," he said.

DRB-Hicom previously said the acquisition is in line with its plan to develop KLAS into a leading centralized integrated logistics services provider in Malaysia by providing a one stop solution.

Speaking at the launch, Shukrie said the ro-ro vehicle carrier vessel has a capacity of 2,500 vehicles per shipment, and operates two to three shipments per month. It made its maiden voyage on Dec 6, 2014. Yesterday marked its fourteenth shipment.

"She sails from Port Klang to Kota Kinabalu Port, makes her way to Kuching Port and back to Port Klang. A complete return shipment takes about 12 days," he added, explaining that "MV Zarah Sofia" is estimated to sail 28 times a year.

KLAS provides air logistics services which includes ground handling, cargo handling, in-flight catering, aircraft maintenance and engineering services to commercial airlines in the country.

Meanwhile KLB, a fully owned subsidiary of KLAS under the DRB-Hicom group, provides integrated logistics solutions in automotive, haulage, logistics, distribution and warehousing, freight forwarding and project logistics. - the sun daily

Tuesday, June 30, 2015

No more fuel price change notice to public, only to retailers - Hasan Malek

KUALA LUMPUR: There will no longer be any notification on fuel price change to the public and such a notice will only be issued to retailers at midnight on the last day of the month.

Domestic Trade, Cooperatives and Consumerism Minister Datuk Seri Hasan Malek said this will be done irrespective of whether the price changed or not.

He said this was due to the fact that this had become a routine affair following the implementation of the Managed Float System for the prices of RON95 petrol and diesel from Dec 1 last year.

He told this to reporters after attending the Goods and Services Tax (GST) Open Day organised by UMNO Youth here today.

Also present were UMNO Youth chief Khairy Jamaluddin, who is also Youth and Sports Minister and Deputy Finance Minister and UMNO Information chief Ahmad Maslan.

Prior to this announcement, changes in the prices of RON95 petrol and diesel under the system are announced on the ministry's website.

The price of RON97 petrol is subject to market prices.

The managed float system was introduced after fuel subsidies were removed when world oil prices dropped towards the end of last year.

On June 1, the prices of both RON95 and diesel went up by 10 sen to RM2.05 a litre. RON97 retailed at RM2.35 a litre.

On another matter, Hasan denied that the ceiling price for chicken during the Aidilfitiri festive period would be increased.

He said that the Price Control Scheme for the Aidilfitri season would be announced on Friday.

He added that the government would be announcing more GST zero-rated items in Budget 2016 to ease the people's burden.- Bernama  

Wednesday, June 24, 2015

Man in BMW full of illegal curry puffs, kueh fails to stop at Tuas checkpoint .

Despite being directed to another area for further checks, he continued driving his luxury car past Tuas Checkpoint, sparking a manhunt by the police. They found the man and his 7-series BMW sedan almost two hours later at Pioneer North Road and arrested him. The police officers found more 100 boxes and plastic bags packed in the boot and on the passenger seats. But instead of contraband such as drugs or illegals, they contained such foodstuff as curry puff and kueh-kueh (local pastries). An Immigrations & Checkpoint Authority spokesman said the 47-year-old suspect arrived at the checkpoint from Malaysia at 12.15pm on Tuesday. The New Paper understands that he had a valid permit to import food from Malaysia, but had underdeclared the quantity in his car. He was directed to a designated bay area for further inspection but apparently misunderstood the instructions and drove away.

Saturday, June 20, 2015

Malaysian firms welcomed to invest in China’s Lanzhou bonded zone

BEIJING: Malaysian-run Massino Resources (M) Sdn Bhd hopes to draw some 300 Malaysian companies to invest in the newly established International Brand Centre (IBC) in west China’s Lanzhou New Area Comprehensive Bonded Zone, Gansu province.

IBC, the five-storey commercial building covering 24,430 sq m, is aimed at bringing in quality foreign products, such as halal products, luxury products, cafe restaurant, franchise brands, bird’s nest, fast-moving consumer goods (FMCGs), home appliances, green energy products, automotive products and textiles, said Massino Resources managing director Sim Yuqi.

The company had poured in some 200 million yuan (about RM121mil) into the IBC and expected to generate an annual return of two billion yuan (RM1.21bil), he told Bernama after signing an agreement with Lanzhou New Area Bonded Zone Development Co Ltd, represented by its person-in-charge Sun Xiaowei, here on Friday.

The signing was witnessed by Malaysian Investment Development Authority (Mida) consul (investment) Simon Lee Yew Weng and Lanzhou New Area Committee deputy director Wang Hui.

Despite hoping for more foreign investors to invest in the IBC, we are looking forward to dealing with Malaysian authorities, including the Islamic Development Department Malaysia (Jakim) over Malaysian halal products, Sim said.

The 50-year-old Malaysian, who has been residing in China for about a decade, said he hoped to receive assistance from the Malaysia External Trade Development Corp (Matrade) to introduce more Malaysian products into the bonded zone.

Construction of the IBC commercial building is expected to be completed in October this year, while operations would begin by year-end.

Also present were agriculture counsellor at the Malaysian Embassy in Beijing Aszmy Mahmood Yusof Mohamed and the embassy’s second secretary (economy) Kiew Chia Meng.

Earlier, Wang said in his opening speech that the Lanzhou New Area comprehensive bonded area had attracted 305 projects with a total investment value of 380 billion yuan (RM230bil).

The 3.39 sq km Lanzhou New Area, whose establishment was approved by the State Council, China’s cabinet, on July 15 last year, aims to become an inland import and export distribution centre, industrial clustering area and strategic economic centre in Middle and West Asia.

It also aims to become an important industrial base covering electronic information, petrochemical engineering, bio-medicine, high-end equipment manufacturing and agricultural product processing. - Bernama

Thursday, June 18, 2015

Malaysian navy in contact with pirates on hijacked tanker

A Malaysian naval vessel has made contact with the pirates onboard hijacked tanker Orkim Harmony and is trying to persuade them to surrender, a maritime official said on Thursday.

The tanker as of noon (0000 ET) was in Vietnamese waters headed south with the Malaysian navy vessel KD Terengganu and a maritime ship in pursuit.

Both the crew and the cargo onboard the tanker are safe, and the navy is negotiating with the robbers through the captain of the Orkim Harmony, said Vice Admiral Ahmad Puzi, deputy director general of the operations unit of the Malaysia Maritime Enforcement Agency (MMEA), in a press briefing.

"From our experience, as long as there's no situation that alarms the criminals, the crew will be safe," Ahmad Puzi said.

"We are using a soft approach first, trying to advise them to surrender," he said, adding that the mood of the negotiations is "good".

The 7,300 deadweight tonne (DWT) Orkim Harmony was hijacked on June 11 about 30 nautical miles from the Johor port of Tanjung Sedili carrying around 50,000 barrels of RON95 gasoline, in the second such incident in the same area this month.

The Orkim Harmony is operated by Malaysia's Orkim Ship Management. On board is a crew of 22, including 16 Malaysians, five Indonesians and one Myanmar national.

After the tanker was hijacked, the pirates repainted the ship and changed the name to Kim Harmon.

Malaysia's Chief of Navy Admiral Abdul Aziz Jaafar said on his Twitter account that at least eight perpetrators were on board the Orkim Harmony armed with pistols and machetes.

Malaysian state oil firm Petronas [PETR.UL] told Reuters that the Orkim Harmony was carrying 6,000 metric tonnes of product from its Malacca refinery to the port of Kuantan on the east coast of Peninsular Malaysia for distribution.

It said "all necessary measures are being taken to ensure undisrupted fuel supply to consumers in the East Coast region."

Earlier this month, a 7,100 DWT oil tanker, Orkim Victory, carrying diesel loaded from Petronas was hijacked on June 4 in the same area and on the same route.

The Orkim Victory was later released by the hijackers after about 770 metric tonnes (6,000 barrels) of its cargo had been siphoned off.

It will, however, be difficult for the pirates to siphon off the gasoline from the Harmony as it is highly flammable and they are likely looking for proper facilities to do a ship-to-ship transfer, Ahmad Puzi had told reporters on Monday.

The two hijackings have raised further concerns over piracy in Southeast Asia, maritime officials said on Monday.- REUTERS

Wednesday, June 17, 2015

CIMB Research lowers Gas Malaysia target price to RM2.25

KUALA LUMPUR: CIMB Equities Research has lowered Gas Malaysia’s target price from RM2.89 to RM2.25 on news that the introduction of incentive-based regulation (IBR) for the gas sector is well under way.

It said on Thursday it is negatively surprised that IBR could be implemented by as soon as January 2016.

“This is negative for Gas Malaysia as its earnings could drop under the IBR’s pricing framework. We cut our FY15-17 EPS by 2%-19% as we factor in the potential impact of IBR.

“We lower our target price to RM2.25 as we change our valuation method to sum-of-parts from 22 times CY16 P/E to better reflect its earnings composition. We also downgrade to Reduce from Hold as IBR could lead to a sharp earnings erosion.

“The key de-rating catalysts are the introduction of IBR by the end of the year and weaker earnings in 2016. We prefer Petronas Gas for more stable earnings,” it  said.

CIMB Research said it attended an analyst briefing hosted by Gas Malaysia’s CEO Ahmad Hashimi Abdul Manap.

The key takeaway is that the government is likely to introduce IBR to regulate natural gas tariffs in Peninsular Malaysia. The IBR, similar to the one that regulates Tenaga’s electricity tariff, aims to compensate Gas Malaysia a fair return on its pipeline assets.

“The introduction of IBR is not unexpected but its timing is earlier than expected. IBR is expected to have a huge impact on Gas Malaysia as its pipeline assets contributed 99% of its revenue last year,” it said.

The research house said under the IBR, Gas Malaysia’s earnings from its pipeline assets will be a product of 1) value of the assets and 2) WACC of these assets as determined by the government.

“We understand that the current value of Gas Malaysia’s pipeline assets is around RM1.1bn. Its WACC, however, is still being determined by the government. If the IBR is implemented on Jan 1,  2016, our best case scenario estimates that the company’s net profit in 2016 will be 7% lower than that in 2014 while the worst case estimates a much larger decline of 40%,”  it said.

CIMB Research said its  earnings forecast and target price assume that the government will allow Gas Malaysia to earn a return on its pipeline assets that is higher than its actual WACC.

“This is not unreasonable because the government has also allowed Tenaga to earn a premium over its actual WACC on its transmission and distribution assets. However, should the final WACC used in the IBR match Gas Malaysia’s actual WACC, Gas Malaysia’s market value may fall close to its book value. This represents a 70% downside from its current share price,” it said. - THESTAROLINE

Tuesday, June 16, 2015

Weaker ringgit good for tourism and exports, say Ministers.

KUALA LUMPUR: Minister for Culture and Tourism Nazri Aziz claimed that in the short term the weaker ringgit would have a beneficial impact on the local tourism industry,
He, however, acknowledged that he was among a minority who could see positives in the currency’s recent plunge.
According to Bank Negara, the ringgit closed yesterday at RM3.7345 to the US Dollar and RM2.7799 to the Singapore Dollar.
“One of the few people who are happy that the ringgit has gone down is me,” he told reporters yesterday, because it would allow tourists to stretch their currency.
He said that the lower ringgit would make Malaysian goods cheap, leaving the tourists feeling rich, with a lot of money to spend.
“Certainly they will feel like rich tourists,” he said.
Nazri also said that because the ringgit has gone down Malaysians will think twice about travelling overseas given that the exchange rate will become less favourable, which will in turn spur domestic tourism.
“I think in the next few months domestic and foreign tourism can improve a lot,” he said.
A weaker ringgit will also boost exports and foreign investments, but will make imports more expensive, Minister of International Trade and Industry Mustapa Mohamed said yesterday.
“However, this situation won’t be long,” he added according to The Malaysian Insider, saying that Malaysia’s economic fundamentals remain strong which would allow the local currency to strengthen.

Wednesday, June 3, 2015

AirAsia is top Malaysian brand in Asia’s Top 1000 Brands survey

KUALA LUMPUR: AirAsia is the highest ranked Malaysian brand in the 2015 Asia’s Top 1000 Brands survey done by Campaign Asia-Pacific and Nielsen.

According to the latest annual study, AirAsia rose from 43rd spot last year to number 34 now, its highest ranking in the poll’s 12-year history. Market research firm Nielsen estimated the low-cost carrier’s advertising spending in the region at US$146.67mil (RM540.8mil) last year.

AirAsia is not only the top Malaysian brand but also the top overall airline brand in the region. And it has occupied that coveted spot every year since overtaking Singapore Airlines back in 2010.

There are about 25 other Malaysian brands on the Asia’s Top 1000 list. The reason for us using the word “about” here is due to ambiguity as to whether some are Malaysian, such as brands that were founded by Malaysians but owned or said to originate abroad (including Jimmy Choo and Shangri-la) or brands whose beginnings straddle both Malaysia and Singapore (e.g. Cold Storage).

The survey itself is about consumer perception. The brand-image poll, spanning 13 Asia-Pacific markets from China to Malaysia, covered 14 product/service categories and asked two questions:

1) “When you think of the following category, which is the best brand that comes to your mind? By best, we mean the one that you trust the most or the one that has the best reputation in this category.”

2) “Apart from the best brand that you entered, which brand do you consider to be the second best brand in the category?”

The “Malaysian” brands that made the list include Shangri-la (number 133), Jimmy Choo (271), Old Town White Coffee (332), Mister Potato (385), Maybank (397), Peel Fresh (453), Malaysia Airlines (508), Petronas (511), Maxis (543), Spritzer (552), Poh Kong (657), Mamee (690), Boh (691), Celcom (716), Marigold HL (717), DiGi (759), Habib Jewels (781), PosLaju (798), Firefly (852), CIMB Bank (856), Bonia (861), Cold Storage (888), Mydin (963), Takaful Malaysia (966), Caring (985), and Public Bank (987).

In the inaugural survey 12 years ago, Proton was the highest ranked Malaysian brand at number 80, followed by Petronas (91) and Telekom Malaysia (92).

Malaysia Airlines, whose brand image had recently taken a beating after years of winning international awards, is now ranked 22 among all airlines, down from 7th spot five years ago and from 16th last year.

The top 10 overall brands this year are the same top 10 brands in 2014, except for minor place swaps.

They are, in order of rankings, Samsung (with an estimated advertising spending of US$1.43bil or RM5.3bil in Asia-Pacific last year), Sony, Nestle, Apple, Panasonic, Nike, LG, Canon, Chanel and Adidas. All of them spent above US$190mil (RM700mil) on advertising in the region except for Nike (US$98.56mil).

Campaign Asia-Pacific said in a statement in conjunction with the survey findings' release: “Beyond the headline of Samsung’s hold on the top spot, there is an overall trend in this year’s ranking of luxury names falling almost across the board. In Asia this may be one of the biggest signifiers of an emerging markets becoming more mature - it could also signal the end of a luxury boom that seemed to have no end in sight.”

Among the biggest gainers this year are Milo, which surged 143 places to reach number 72, and Acer, which leaped 45 spots to reach number 78.

Major declines included Singapore Airlines’ slumping 20 places to number 83 and Omega’s 43-notch plunge to number 235.


Tuesday, June 2, 2015

Getting the house back in order

MALAYSIA Airlines Bhd (MAB) will have to undergo a “harsh” turnaround plan over the next three years before the national carrier reclaims its position as a leading airline in the region. Chief executive officer Christoph Mueller acknowledged that the company, which officially commenced business yesterday, was “technically bankrupt”, and the current focus was to stop the bleeding. “That will be the more painful exercise. There’s overcapacity in the market. We have to prune our network, frequency pattern and aircraft size accordingly, and eliminate losses. “The headcount rightsizing is happening today,” he said, referring to the issuance of retrenchment letters to 6,000 staff throughout the group. Mueller said key contracts that previously ate into the airline’s profits were also being renegotiated. It recently concluded a fresh deal with its main caterer, Brahim’s, on more favourable terms. “The most important factor in our turnaround plan is cost structure. We assume that our costs are 20 per cent too high,” he said, adding that this was also due to an inefficient procurement process. “At last count, we have about 20,000 suppliers. An airline of our size should get along with just 2,000 to 2,500 suppliers”. Mueller, whose track record of successful turnarounds includes Ireland’s Aer Lingus and Lufthansa, was speaking at a media briefing here yesterday on the way forward for the new Malaysia Airlines. The briefing was held in what will be MAB’s new corporate headquarters here. “Today, Malaysia Airlines, as we know it, is leaving its cruising altitude and is about to prepare the cabin for a very safe landing. At the same time, the new Malaysia Airlines is preparing for the first flight and it’s getting ready to take off,” he said. Mueller said more than 40 projects had been identified to transform Malaysia Airlines into a sustainable operation. These would be implemented in stages, beginning this year. For example, there needs to be a new manpower and rostering system to better manage human resources in the operational units. “We either have too many people and they are idle, or not enough and then incur high overtime costs. A human brain cannot do that any longer in an entity this size. There are IT solutions available that can help us,” he said. Other improvement projects include better pricing yield management (offering a wider range of prices to cater for different passenger needs), paperless cockpits (pilots currently carry up to 15kg of manuals and documentation on flights) and streamlining catering (consistency in quality throughout flights and in premium lounges). The new MAB group will have at least 12 subsidiaries spread out over three main activities — operations; support functions; and learning and development. This structure could potentially generate enormous third party revenues for the new entity. “The entrepreneurial spirit was slightly curbed previously because these different units were residing as divisions in the airline. For example, we operate a set of simulators for flight training. It can be a business in its own right. We can train pilots of other airlines,” Mueller said. He said there would be minor changes in the network in the next few months, but there would not be any capacity reduction in domestic routes. On the contrary, flights to Sabah and Sarawak may be increased, and MASwings may be utilised entirely for rural air services. “It is an important element of our mission, to connect remote parts of the country to the world. Air travel is an enabler to the economy, and, as a national carrier, we have to provide people with cheap travel to make the gross domestic product grow.” Talks with aircraft leasing companies are ongoing, and their outcome could determine the final make up of the company’s fleet, which comprise Airbus (A380, A330 and A330 freighters), Boeing (B777, B737 and B747 freighters) and Viking (ATR and Twin Otter) aircraft. Mueller said future plans, included refurbishing the business class on all planes in the fleet, upgrading the in-flight entertainment system and a new online booking engine and mobile app. The group’s information technology infrastructure would also be overhauled to incorporate new advances and streamline overall operations. “We will do the best we can without any disruption to the customers,” he said. On the possibility of tie-ups with other companies, Mueller said there were areas where the company could benefit from firms with more expertise, such as in maintenance, repair and overhaul, and ground handling, but it needed to get its house in order first. Mueller said while brand loyalty towards Malaysia Airlines remained strong domestically, in important overseas markets — Australia, China and Europe particularly — it has suffered badly due to the overexposure of the flights MH370 and MH17 incidents in the media. “Our responsibility is to embark on discussions with shareholders, the public, tour operators and others on how we want to position the new Malaysia Airlines. Under no circumstances can we lose the loyalty of our home market, but we have to do something about it in foreign markets.” Mueller said the final phase of the turnaround plan in 2017/18 will see a new airline emerge that is a leader in Southeast Asia, and regain market share through improved network, competitive cost and revenue management, and industry-leading technology.- NST ONLINE

Saturday, May 30, 2015

Indonesia a top destination for Malaysian businesses, says global poll

KUALA LUMPUR: Some 34% of Malaysian businesses owners are planning to expand their businesses to new international markets in the year ahead, according to the latest Grant Thornton’s International Business Report (IBR).

“A total of 22% of Malaysian businesses with international ambitions last entered or are next planning to enter Indonesia, 15% other Asia-Pacific countries, 15% the Middle East or North Africa, and 11% the United States,” Grant Thornton Malaysia country managing partner Datuk NK Jasani said in a statement.

The 2015 study, conducted in February, covers over 2,500 senior executives worldwide. In Asia-Pacific, the company interviewed 423 business leaders from China, India, Philippines, Indonesia, Malaysia and Thailand,

The IBR research also uncovers a worldwide trend for businesses to be spurred on by a “fear of missing out” (colloquially known as ‘FOMO’) than by a positive desire for growth when expanding abroad.

Businesses in the emerging Asia-Pacific region, however, buck this global trend.

The consulting firm said when provided with a scenario, whether the opportunity is framed positively or negatively, business leaders in this region are left unaffected.

“This contrasts with nearly all other regions where negatively-framed opportunities significantly boost the likelihood for business leaders to opt to expand,” it said.

The study also shows this ‘fear of missing out’ is most pronounced in developed markets, including Australia and Japan, where negative framing has more than five times the impact that it does in emerging economies such as Malaysia, Thailand and the Philippines.

The survey also found that business leaders in the emerging Asia-Pacific region are more than willing to admit the role that gut feel or instinct can play in their decisions.

The report said that executives in this region are most likely to expand abroad simply because it ‘feels’ good.

Nearly two-fifths (37%) cite this gut feel as a key driver behind their expansion decisions, ahead of proximity to key clients (36%), and access to a key market (31%).

“This instinct is developed from many years of experience, overseas business visits, learning from the successes or failures of others. Where it differs from objective decision is that much less emphasis is placed on market research and statistics,” Grant Thornton said.

Friday, May 29, 2015

Container shipping industry buoyed by rising Asia-Europe transport fees

May 1 marks a grand day for the container shipping industry, as the transportation prices for each 20-foot equivalent unit will go up from US$700 to US$1,300 in the Asia-Europe shipping line, according to reports yesterday. Evergreen Marine Corp. and YangMing Marine Transport are the major benefactors in this wave of price increases.
The Asia-Europe shipping route prices slid in March, and once the industry realized it was not performing well, companies cut down their shipping schedules and increased the cargo capacity of each transport.

The industry saw the beginnings of a positive shift for two weeks in April. The next recent two weeks will bring a continuous 10 percent growth with Europe implementing quantitative easing and a recent rise in consumer spending.

Businesses are confident that money will come rolling in this year as long as the European shipping line prices rise, along with a positive performance from the U.S and near-sea shipping line.
On the other hand, even though oil prices are rising, it is still only at US$314 per ton, a 25 percent slide from the previous quarter, which benefits both Evergreen Marine and YangMing as long as the prices do not rise past US$80.

EVA Airways’ board of directors announced yesterday that it will be paying US$99 million to settle charges from the U.S. over alleged violations of United States antitrust law.
The U.S government had begun an investigation in 2006 on 28 airlines’ fuel surcharges between 2000 and 2006. Charges were brought to court in 2007 by the U.S government, which then sued the 28 airlines.

The company had already included US$80 million in last year’s annual report, while the remaining US$19 million will be listed in this year’s first-quarter reports, which totals around NT$580 million, with a NT$0.15 impact on its earnings per share.

EVA Airways is positive about the company’s earnings this year as it had paid off the problematic lawsuit. Even though the company’s earnings were affected, it is still possible for EVA Airways to see a surplus gain because of low oil prices in the first quarter. - THE CHINA POST

Wednesday, May 27, 2015

Money Changers Report Growing Demand For Malaysian Ringgit

SINGAPORE: Money changers said there has been growing demand for the Malaysian ringgit, as the exchange rate continues to hover at around 2.7 to the Singapore dollar.

They said customers are also exchanging their Singapore dollars for Malaysian ringgit in larger amounts.

Mr Danny Yoong, second vice president at Money Changers Association, Singapore, said: "You can see people are starting to change more (money) - some of them will keep for future use. Now the Singapore dollar is strong, so for those who always go to Malaysia to buy groceries and for the December holidays, they worry that the price will go up."

In late Asian trade on Friday (May 22), the ringgit was quoted at about 2.69. The Singapore dollar has been holding its own against the Malaysian unit and other regional currencies in recent months. Analysts said one reason is the decision by Singapore's central bank in April to maintain its policy of allowing a modest appreciation of the Singapore dollar against a basket of currencies. There are also external factors, such as the outlook for US interest rates and oil prices.

"In the last few months, a lot of it has got to do with expectations of US rates normalisation,” said Mr Jimmy Koh, Head of Research and Investor Relations at UOB. “The other thing that drives the Sing-ringgit exchange rate, are the economic differentials between the two countries.

"One of the main things is the collapse in oil prices. If you look at the whole of Asia, I think, one thing that is being flagged out is Malaysia's dependence on oil; 30 per cent of the fiscal revenue comes from oil-related revenue. I think that has been one of the factors that has depressed the ringgit versus the Singapore dollar."

Market watchers have also predicted that as US policymakers normalise rates in the long term, both currencies could lose ground against the greenback. But the Malaysian ringgit is likely to weaken more, relative to the Singapore dollar . - Channel News Asia

Monday, May 25, 2015

Palm ends higher as strong exports lift

Malaysian palm oil futures ended higher on Monday after touching their lowest level this month, lifted by strong exports in the No.2 grower, but a delay to export levies in the world's top producer Indonesia mounted some pressure onto the contract.

Cargo surveyor Intertek Testing Services (ITS) reported exports of Malaysian palm oil products for May 1-25 rose 52.9% to 1,382,782 tonnes from 904,112 tonnes shipped during April 1-25. Shipments of crude palm oil surged to 528,143 tonnes during the period, from 58,500 tonnes a month ago.

"Prices recovered in the afternoon on the back of very good export numbers," said a trader with a foreign commodities brokerage in Kuala Lumpur.

But palm will likely remain rangebound between RM2,100 and RM2,170 as weak comparative markets dampen sentiment, the trader added.
"Local sentiment for export is very good but overseas the Dalian and other edible oil markets are weak."

The benchmark August contract on the Bursa Malaysia Derivatives exchange had edged up 0.3% to RM2,141 (US$592.50) a tonne by Monday's close. It earlier touched RM2,121, its lowest level since April 30.

Total traded volume stood at 35,654 lots of 25 tonnes each, above the average 35,000 lots.

A delay to the implementation of a levy by the world's No.1 producer Indonesia also turned investors uncertain.

"The delayed levy is creating lots of uncertainty, which equals delay in buying," said second palm trader in Malaysia.

"Stiff competition from Indonesia is the reason behind the lower prices."

Indonesia's finance minister said the regulation, which will force exporters in Indonesia to pay a levy of US$50 per tonne on shipments of crude palm oil and US$30 for processed palm oil, could only come in two weeks after public body that will collect the palm levy is ready.

The Indonesian Palm Oil Association on Friday told Reuters that delays in establishing guidelines and a new biodiesel fund or agency meant the implementation date would be pushed back as far as August, from earlier announcements that the levy would be introduced in the fourth week of May.

In other markets, crude oil futures dipped below US$65 a barrel as the dollar strengthened on Monday, with a public holiday in the United States and much of Europe keeping oil trading volumes muted.

Palm traders are also keeping a watch on the US soy crop progress – bigger supplies of the oilseed for crushing into rival soyoil could water down demand for the tropical oil.

Warmer temperatures have been forecast in the coming days in the US Midwest crop belt which are seen as favourable for developing corn and soybean plants.

The most active September soybean oil contract on the Dalian Commodity Exchange was down 0.8% in late Asian trade.

The US July soy markets were closed for the US Memorial Day holiday. – Reuters, May 25, 2015.

Sunday, May 24, 2015

MASkargo to discontinue cargo flights to Frankfurt

After Malaysia Airlines' (MAS) recent announcement that it would discontinue its passenger flights to Frankfurt effective May 29, the airline's cargo arm, MASKargo, has also decided to stop its three times a week cargo flights to Frankfurt.

MASKargo, which plans to stop its freighter flights to Frankfurt from May 31, also operates three flights to Amsterdam.

With the cancellation of the Frankfurt flights, the cargo carrier plans to add two freighter flights to Amsterdam, thus increasing the total number of cargo flights a week to Amsterdam to five from May 31.

"MAS operates a daily passenger flight to Amsterdam which also carries belly-hold cargo. The total cargo capacity to Amsterdam presently is around 370 tons a week, transported both on passenger planes and freighters.
"With the addition of the two freighter flights a week, the tonnage is expected to increase from 370 to roughly 570 tons a week," Keesjan de Vries, the regional cargo manager in Amsterdam, said in an interview with Bernama at the Transport/Logistics 2015 Fair held in Munich on May 5-8.

Rated as the world's largest and most important show for the global logistics industry, the biennial fair attracts large crowds of exhibitors and visitors from around the world.

"Yes, this is the best fair for cargo carriers and is of interest to anyone that has anything to do with the logistics industry," de Vries said.

"We have been busy here receiving visitors at our booth but I have also been visiting other halls and calling on companies and visitors of interest to our business. As you can see, the entire industry is here from shippers, general sales agents, handlers, forwarding agents, etc." he added.

Despite the rail strike that has all but paralysed the country's economic activity, organising agency Messe Munchen said the fair drew more than 55,000 visitors (up from 52,308 in 2013) from 124 countries, and 2,050 exhibitors (compared to 2,013 previously) from 62 countries.

The companies attending Air Cargo Europe, the world's biggest airfreight industry event and an integral part of the Transport/ Logistics Fair, were also satisfied.

For David Kerr, Vice President of Etihad Cargo, the trade fair had "opened up new economic opportunities for our freight business and we appreciate the event for the results we have achieved."

Many aviation consultants at the show, in private conversations with Bernama, felt that both MAS and MASKargo would do well to profile themselves at international trade fairs and conferences which could help the two sister carriers polish their international image after last year's two major tragedies. – Bernama, May 10, 2015.


Friday, May 22, 2015

Aiming to be top 10 in World Bank Logistics Index by 2020

Kuala Lumpur: Malaysia aims to be the preferred logistics gateway to Asia and improve its ranking in the World Bank Logistics Performance Index from among the top 25 in 2014 to be among the top 10 by 2020.

By 2020, Malaysia aims to achieve an annual growth of 8.5 per cent for the transport and storage sub-sector, creating an additional 146,000 jobs, mostly high-skilled, said the Economic Planning Unit (EPU) of the Prime Minister's Department in the Eleventh Malaysia Plan (11MP).

EPU said the aims would be met through strengthening the institutional and regulatory framework through the National Logistics Task Force (NLTF) and regulating other functions such as off-dock depots, warehousing activities and commercial vehicle registrations.

Other strategies include enhancing the trade facilitation mechanism, building freight infrastructure efficiency and capacity, deploying technology in the logistics chain, and strengthening the capabilities of logistics service providers through training and accreditation programmes.

EPU said unleashing growth of logistics and enhancing trade facilitation are among the key initiatives in strengthening infrastructure to support economic expansion.

Efficient and high-performing logistics and trade facilitation are important determinants of a country's competitiveness, as well as an important source of employment, it said.

Malaysia will upgrade the freight and logistics infrastructure and increase container handling capacity to position the country strategically in the region, while trade will be facilitated through simpler, paperless and business-friendly procedures, according to the 11MP.- DAILY EXPRESS

Thursday, May 21, 2015

11th Malaysia Plan: Productivity-driven economic growth

KUALA LUMPUR: Economic growth in the five-year plan will be driven by significant increases in productivity as the Government seeks to reduce dependence on inputs from capital and labour.

Under the Government’s plan, it wants to see higher productivity where the contribution of multi-factor productivity to GDP growth is to increase to 40%, while that of capital is expected to reduce to 44% and labour to 16%. (Multi-factor productivity refers to output per unit from a combined set of inputs.)

Higher productivity growth will be achieved through comprehensive initiatives at all levels and championed by industry players.

To raise industrial productivity, there will be greater adoption of automation and upgrading of skills. The innovation ecosystem will be enhanced to elevate productivity through new or improved processes and technologies.

Malaysia Productivity Blueprint

At the national level, the Government will put in place a nation-wide productivity agenda and implementation plan with a five-year Malaysia Productivity Blueprint.

This blueprint will strengthen the governance and institutional mechanism for implementation of productivity strategies and establishing a dedicated national productivity portal.

The blueprint seeks to boost public sector productivity by introducing productivity enhancement key performance indicators (KPIs), accelerating regulatory reforms and rationalising government institutions.

It will encourage up-skilling (teaching new skills) and re-skilling (retraining staff) as well as research through increased industry-academia collaboration, more targeted skills training programmes and increased support for industrial and social innovation activities.

At the industry level, the plan will emphasise on productivity across industries and also draw up industry-level productivity programmes.

At the enterprise level, there will be enterprise-level productivity assessments and targets. This will be achieved by promoting productivity performance targets, introducing firm level interventions, promoting health check mechanisms and fostering a productivity-based culture.

Aggregate demand

On the demand side, real private consumption is expected to increase at an average rate of 6.4% per annum.

Underpinning this growth will be higher household income due to stable labour market conditions, increased employment in high-paying jobs, favourable commodity prices, and continued direct assistance by the government to the targeted groups.

It expects public consumption to grow moderately by 3.7% per annum, in line with greater prudence and commitment to achieve a balanced budget by 2020, without compromising on the quality of public service delivery.

As for the private sector, it will continue to play a significant role to help Malaysia become an advanced economy and inclusive nation.

Private investment is expected to grow at 9.4% per annum, with an average annual investment of RM291bil in current prices.

The plan will promote domestic direct investment (DDI) and FDI. As for DDI, small and medium enterprises (SMEs) will be given special focus as they made up 98.5% of total establishments and 59% of total employment in the economy in 2015.

Efforts to increase FDI will focus on attracting investments in higher value added and knowledge intensive employment activities.

The Government will take on more of a regulatory and facilitative role to raise private investment through targeted strategies such as improving access to financing and improving regulations to be more business-friendly.

To ensure these investment targets are met, the five strategies to be implemented are:

Reducing the cost of doing business through increased provision of basic infrastructure and facilities, and reviewing bureaucratic regulations.

Providing performance-based incentives for high-income and knowledge-intensive economic activities by reviewing the current investment incentive programme.

Addressing the talent gap and mismatch by establishing a labour market data warehouse, improving the labour market clearance mechanism as well as re-skilling and multi-skilling programmes.

Public investment

The plan targets public investment to grow at 2.7% per annum, or an annual average of RM131bil in current prices, driven by the Federal Government development expenditure and capital spending of non-financial public enterprises (NFPEs).

These investments are particularly in the infrastructure, transport, utilities as well as oil and gas industries.

Some of the major public sector projects that will be undertaken, include the Pengerang Integrated Complex (PIC) in Johor; Pan-Borneo Highway; KVMRT Line 2 and the roll-out of the High Speed Broadband project phase 2.

The Government will take steps to sequence project implementation to ensure sustainable economic growth.

Sectoral output

The services sector will continue to be the key driver of growth in the plan. The Government expects growth in the sector to increase significantly by 6.9% per annum and its share to the GDP to rise from 53.8% in 2015 to 56.5% in 2020.

Expectations are that the sector will record broad-based growth across all sub-sectors.

The wholesale and retail subsector will continue to be the main contributor, expanding by 5.8% per annum, supported by strategies to modernise the subsector as well as enhance the efficiency and effectiveness of the supply chain.

As for the real estate and business services sub-sector, growth is expected at 7.9%, followed by the finance and insurance sub-sector by 6.1%.

Manufacturing sector will be given a boost with the production of more complex and diverse products and improving productivity by adopting greater automation and upgrading skills. The sector is expected to record a growth of 5.1% per annum during the Plan period, led by the domestic-oriented subsector, which is expected to increase by 4.4% in line with better business confidence and consumer sentiments.

Key industries that will drive growth are food, beverages and tobacco; fabricated metal products; and machinery and equipment.

Given improvements in external demand, the export-oriented subsector is also expected to expand at 5.5%, including the electrical and electronics, petroleum and chemicals, plastic products, and non-metallic mineral products industries.

The construction sector is estimated to expand by 10.3% per annum during the Plan period. This is attributed to continued civil engineering works and a growing residential sub-sector to fulfil the demand for housing, particularly from the middle-income group.

The Government expects demand for affordable housing by the low-income group will also remain favourable. This will be supported by several Government initiatives, such as Program Perumahan Rakyat 1Malaysia (PR1MA), Rumah Idaman Rakyat and Rumah Mesra Rakyat.

Other subsectors such as civil engineering and non-residential will remain robust in line with the development of major projects such as the Tun Razak Exchange, KL118 Tower, Refinery and Petrochemicals Integrated Development (RAPID), and the Pan-Borneo Highway.

The agriculture sector is projected to expand by 3.5% per annum. Emphasis will be on increasing productivity through the modernisation of the sector, supported by greater innovation and research and development.

Focus will be given to the agro-food subsector to ensure the targeted self-sufficiency level of food commodities, such as rice at 100%, vegetables at 95.1%, and beef at 50% are met by 2020.

The oil palm subsector is expected to expand by 2.8% with an increasing number of matured plantations, particularly in Sabah and Sarawak. The rubber subsector is also estimated to grow by 7.6% due to the expected price recovery.

The mining sector is expected to rebound with a 1.3% growth rate per annum during the Plan period. The production of crude oil and condensates is expected to be at a sustainable level of 612,000 barrels per day, while the production of LNG will increase to 29.3 mtpa with the operation of Train 9 in the Petronas LNG Complex in Bintulu, Sarawak beginning by 2016.

The production of crude oil will be supported by anticipated oil discoveries, and marginal fields as well as revival of mature fields made possible with the adoption of new technologies, such as enhanced oil recovery and improved oil recovery, subject to economic viability.

The production of natural gas is expected to expand further on account of increased demand, particularly from petrochemicals.

Based on 2015 estimates, the reserve life for crude oil will be a further 28 years and for gas 42 years.- Thestaronline

Wednesday, May 20, 2015

Oil prices to face selling pressure

PETALING JAYA: The recent oil price rally doesn’t seem to have legs as prices came under pressure on stronger dollar and growing stockpile.

Oil prices have been hovering around the US$65 (RM235) level since beginning of the month but a 3% slip on Tuesday caused jitters among investors.

The worry is not baseless.

There is no indication that the 12-member Organisation of the Petroleum Exporting Countries will be cutting down on production in a June meeting while shale producers continue to improve efficiency.

That is despite rig count falling for close to half a year in North America.

A local report from North Dakota, where one of the biggest reserves in US from, said the number of rigs there had stabilised.

“I think US$65 is the ceiling in the short term. Once oil prices get higher than that, the shale oil operators will start drilling again,” an analyst told StarBiz.

One of the reasons oil prices have recovered from a low of US$46.59 per barrel in January was the fall in the production from shale oil and gas operators as indicated by the drop in the number of shale rigs utilised in the United States.

The efficiency among shale operators, however, has outstripped the number of rigs, bringing in more supply.

Another analyst also said oil prices wouldn’t sustain at those levels for too long as fundamentals appeared negative at large.

Petronas projects Brent crude to average at US$55 per barrel for the whole year and the assumption is 18% lower than current prices.

Deutsche Bank AG, Citigroup Inc and Goldman Sachs Group Inc said the recovery of oil prices from a six-year low earlier this year would not go on.

Deutsche estimated Brent to average US$62.50 a barrel while Goldman expected prices to fall to US$45 by October.

Goldman’s prediction was on the back of excess supply and the ease of getting loans in a liquid market.

On a brighter note, Japan and Australia’s stronger-than-expected economic data lifted oil prices yesterday. Japan is a major importer of crude oil and the latest data might indicate that demand ahead could be stronger.

Australia, on the other hand, saw better consumer sentiment after it lowered interest rates and taxes for small businesses.

But analysts said fundamentals in the medium term had not changed.

Energy companies including oil majors were shelving investments close to US$100bil worldwide, the Financial Times reported.

There are about 26 projects in 13 countries that are affected. These projects are located in countries like Canada, the United States, Norway, Kazakhstan, China and Australia.

“Factor in reduced spending on US shale and total upstream investment in countries outside Opec is expected to fall by about 22% this year compared with 2014,” the newspaper reported.

While Malaysia was not one of the 13 countries mentioned in that report, AffinHwang Research had downgraded the oil and gas sector to “underweight” on the opinion that the oil price rally would not sustain.

It said the strengthening of the greenback, weak global demand, and US inventory would pressure oil prices. As a result, oil and gas stocks listed on Bursa might track the movement of oil prices after a recent rally.

The research house has downgraded Petronas Chemicals Group Bhd and SapuraKencana Petroleum Bhd from “hold” to “sell” after the stock prices of both companies climbed.

PetChem lost 8 sen or 1.27% to RM6.21 while SapuraKencana shed 6 sen or 2.21% to RM2.65.- THE STAR ONLINE

Tuesday, May 19, 2015

Malaysian Economy Beats ASEAN Peers in Q1

Malaysia’s economy expanded by 5.6% during the first quarter of 2015, falling short of some estimates but beating out most of its regional peers in Southeast Asia.

“Despite uncertainties in the global economy, we manage to perform better than others in terms of economic growth, led by domestic demand and supported by strong private consumption and investments,” said Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah.

The minister said that the country’s economic growth was higher than other countries in ASEAN, such as Indonesia’s 4.7%, Singapore’s 2.1%, and Thailand’s 0.3%.

New Tax Supports Short Term Growth

Maybank’s statistics department estimated earlier last week that the Malaysian economy grew by a strong 6.2% during the first quarter of 2015, helped by positive numbers for the industrial production and services indices.

Maybank Kim Eng Research reported a rise of 7.1% cent in their services index, compared to 6.8% during the fourth quarter of 2014. In addition, the distributive trade sector increased to 8.8% in the first quarter of 2015, helped by a surge in trading activity.

The bank’s research department said that plans for a new Goods and Services Tax (GST) spurred growth in ASEAN’s third largest economy as businesses tried and get orders completed, and necessary purchases made before its implementation.

“The pre-Goods and Services Tax has boosted activities like distributive trade, professional and computer and information services,” explained Maybank Kim Eng Research.

Malaysian consumers have also been spending more ahead of the GST, as people get large purchases out of the way to save money before the tax hike comes into effect.

The new tax was implemented as the Malaysian government seeks to reduce its dependency on state-oil company Petronas, which has historically contributed as much as 30%-50% to all tax revenue. The GST took effect on April 1st, 2015 at a rate of 6%. - Investasian

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