RE Boosting FDIs

July / August 2008

Global energy scarcity is spurring foreign investor interest in Malaysian renewable energy projects. According to the Malaysian Industrial Development Authority (MIDA), increased FDIs have been channeled to renewable energy projects, particularly biomass and solar, in addition to oil and gas and aerospace projects. Concluded investment deals in the solar energy sector in May 2008 stood at approximately RM7 (USD2.15) billion. Despite challenging global economic conditions, MIDA reported no reduction in FDIs. For the first four months this year, MIDA had approved RM23.9 (USD7.35) bil of investments, of which nearly 60% or RM16.6 (USD5.11) bil consisted of FDIs.

Sime Sacks Finance Officers

July / August 2008

In a move lauded for corporate accountability and transparency, the world's largest plantation group Sime Darby Bhd terminated the services of its group chief financial officer Razidan Ghazalli and vice-president Muhammad Mohan Kittu Abdullah in June over RM120 (USD36.9) million in trading losses. Sime's Board of Directors moved to terminate the duo following an in-depth inquiry into the losses at Golden Jomalina Food Industries, a subsidiary of Golden Hope Plantations. The losses were discovered in August 2007, several months before Golden Hope, Guthrie Plantations and Sime Darby were merged into a single entity.

Fuel Woes

July / August 2008

Malaysians got a shock to the system when the government slashed the fuel subsidy in early June, raising the price of petrol by about 41% from RM1.92 (USD0.59) per litre to RM2.70 (USD0.83) per litre. Despite the price increase, the price of gasoline in Malaysia is still the lowest in the region apart from Brunei.

Without the cut, the fuel subsidy would have ballooned to RM33 billion (USD) from last year's RM8.8 (USD) billion. To cushion the impact of this politically unpopular move and dampen public disquiet over the fuel price hike, the government announced a one-off cash rebate of RM625 (USD192.5) for owners of vehicles with an engine capacity of up to 2000cc and a rebate of RM150 (USD46.2) for owners of motorcycles up to 250cc, among other palliatives.

However, the rebate has been widely criticised since it ignores the financial distress of the rural and urban poor who don't own private transport but need extra cash to pay for food and other basic necessities that have gone up in price.

Although there have been calls to ditch the car and take public transport, the state of Malaysian public transport means that many Malaysians will be sticking to their cars despite the new pressure on their budgets. The public transport network is not well-integrated and buses, subways and trains are known for congestion and lack of reliability. To remedy this, the government has said it will make improving the public transportation system nationwide one of the major focuses in the 2009 Budget in order to persuade more people to use public transport. Currently, about 16-20% of people use public transport in Malaysia compared to between 50-70% in developed countries.

Apart from affecting the overall quality of life, higher fuel prices will be a drag on the economy.
In particular, higher fuel and food prices will reduce disposable income and crimp consumer spending among lower and middle-income groups. Since domestic demand is a key growth driver, economic growth is projected to slow to about 5% for 2008.

Superbank in the Making?

July / August 2008

Malaysia's largest lender, Malayan Banking Bhd or Maybank, was singled out as a potential superbank by London-based Retail Banker International.

A string of back-to-back acquisitions recently has enabled the bank to expand its regional presence, in line with its goal of further diversifying its earnings outside Malaysia. Its acquisitions of a 15% stake in Pakistan's MCB Bank Ltd, 15% in Bank Internasional Indonesia (BII) and up to 100% in Vietnam's An Binh Bank will cost about RM11.5 (USD35.4) billion, to be funded by a mix of internal and external funds. Maybank projected that the three acquisitions will boost overseas revenue contributions from 19% to 31% eventually.

However, many investors and analysts' perception of the bank soured given the 'pricey' acquisitions in weak economic conditions, which could in turn affect the bank's return on equity and dividend payout, even though the bank has said that it will maintain its dividend payout rate of 60-65% over the long term. Maybank is paying an 11.4% premium to the market price for the MCB stake, which will cost RM2.17 (USD0.67) billions, with an option to purchase an additional 5% for RM785.5 (USD241.9) millions. It won the bid to buy up to a 100% stake in Bank Internasional Indonesia for RM8.6 (USD2.65) bil or 4.65 times book value, setting a new benchmark for Indonesian banking M&As since the average price-to-book valuation previously was about 2.5 times.

Although its plate is currently full, Maybank has indicated that it will not stop blazing the regional acquisition trail in future; the bank reportedly has Thailand and South Asia, particularly India, in its sights.

Folks want access to road

Friday August 8, 2008

Story by GEETHA KRISHNAN

THE scene near Taman Bukit Permai in Bandar Sungai Long on Wednesday was reminiscent of the Bandar Mahkota Cheras incident.

The Bandar Mahkota Cheras incident was the fight for a toll-free access road while residents who had converged near Taman Bukit Permai to state their case simply want access to a road that would shorten their journey.

The closure of Jalan Syahbandar 24/6 a few months ago has been inconveniencing road users, especially those from Taman Bukit Permai, Desa Permai and Taman Makmur.

The road was closed after owners of bungalow lots in the area appealed to the Kajang Municipal Council (MPKj). Their reasons were that the traffic on the road was heavy and their security threatened.

Kong Kim Pah of Taman Makmur said the gantry was installed in May while the council put up a signboard informing road users that the road would only be open from 6am to 9am and 5pm to 7pm daily.

“This road is a short cut from Bandar Sungai Long to Bandar Mahkota Cheras and leads to the Cheras-Kajang Highway. We save 5km by using Jalan Syahbandar,” he said.

A Desa Permai resident, who only identified herself as Sylvia, said it was unfair of the bungalow owners to place their needs above that of the community.

“What if there is an emergency and an ambulance or fire engine has to rush through? Can the owners be held responsible for the loss of lives?” she asked.

Dusun Tua assemblyman Ismail Sani said many residential roads in the constituency now functioned as main thoroughfares and cited the example of Taman Cuepacs Cheras.

“We hope the road users and bungalow owners can reach an amicable understanding in which both parties are satisfied.

“If certain groups are allowed to block roads, it would be setting a precedent for others to take matters into their own hands. There has to be give-and-take in this situation,” he added.

Meanwhile, Bandar Sungai Long Residents Association secretary Jeff Tung said the short- cut should remain open to ease the congestion in Jalan Sungai Long.

MPKj councillor Tan Boon Wah said road users unhappy with the council’s decision to only open the road for a few hours each day could seek a meeting to state their case.

“The doors are always open for discussion. We have held two meetings so far with representatives from both parties,” he said.

About 70 people gathered for the peaceful protest.

Kuantan folks flock there for recreation and exercise

Monday August 4, 2008

Story by SIMON KHOO

KUANTAN residents have a lot of choice when it comes to going for a jog or a stroll.

The Taman Gelora park, located in the affluent Jalan Teluk Sisek area, is a favourite place for those who want to exercise or relax.

On every afternoon except rainy days, the park is packed with people wanting a workout.

Elderly couples and pensioners have found that a leisurely walk in the park keeps their minds and bodies in shape.

Among the main attractions is a lotus pond with blossoming flowers.

It is a sight to behold as the public take walks along the jogging track around the pond.

Security is not a concern as the territorial army camp and Ikip College are located opposite the park.

Keen runners make use of a separate jogging track which offers a view of the sea.

Children are not left out as there is a big playground with a lot of facilities.

Alternatively, they can stroll on a wooden bridge which oversees a man-made lake.

They can even pester their parents to take them on a boat ride or enjoy a family picnic at rest huts or gazebo.

Food is not a problem as there are many eateries and hawker stalls offering dishes ranging from goreng pisang to fried rice and noodles.

Other facilities include a foot reflexology path, a hibiscus park and outdoor exercise equipment.

In the vicinity are futsal and football fields, tennis and volleyball courts, a bicycle track and an aerobic stage.

There are also camping sites for those who want to spend a night at the park.

Teruntum assemblyman Chang Hong Seong said he had highlighted the damaged facilities at the park during a local council meeting in May.

He said, as a result, the state approved an allocation of RM80,000 to replace the damaged items.

“I hope the public will cooperate by using the facilities with care once they are replaced.

“Let’s treat public amenities like our own to minimise replacement costs,” he said.