PUTRAJAYA: The country’s commodities, particularly palm oil, are expected to enjoy higher prices in 2017, with the increase in export revenue set to reach up to 8%.
Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong said the average price of crude palm oil (CPO) for this year would range between RM2,700 and RM2,800 per tonne, slightly higher than the average RM2,653 per tonne last year.
Rubber prices for the first three months of the year are expected to be around RM8 per kilo, double the price recorded during the same period in 2016.
“Despite challenges and uncertainty in the global economy, exports of our commodities rose 3.2% last year, securing RM110.6bil as of November.
“We believe we can maintain the upward trend record because we are exploring new potential markets to sell our commodities, not only palm oil and rubber, but also other products including furniture,” he said after addressing the ministry staff.
Malaysia is eyeing Africa, Iran and southern countries in Europe, with Africa’s potential being tremendous, given its high population growth rate and with more nations now practising free market.
Mah said his ministry would continue to tap the Indian and Chinese markets, adding that among the outcome of the Prime Minister’s visit to China last year was a further boost in trade, including the export of oil palm products.
“This will certainly have a positive impact not only on our economy, but also on the livelihood of about a million smallholders,” he said.
On rubber, the minister said the price of the commodity went up following lower output in Thailand due to floods, as well as stronger demand from China.
“The decision by Malaysia, Thailand and Indonesia under the international tripartite rubber council to limit rubber export has also helped boost the price,” said Mah.
Last year, Malaysia, Thailand and Indonesia, which together produce around 70% of the world’s rubber, announced plans to cut rubber exports by 615,000 tonnes for six months to boost the commodity’s price. The move came as rubber prices depressed amid excess supply.
The average price for SMR20 for 2016 was RM5.64 per kg, but the price shot up to RM8.36 per kg in December.
Banking sector expected to outperform the market once again in 2017
PETALING JAYA: Although interest rates are not likely to go up anytime soon in Malaysia, it has not stopped some form of renewed enthusiasm for the banking sector.
The Kuala Lumpur Finance Index (KLFIN), which tracks the performance of banks, is up more than 2% since Nov 8 when Donald Trump was elected as the new president of the United States.
On a comparison basis, the benchmark FBM KLCI has remained flat over the same period.
Last Friday, the KLFIN hit a nine-month high while for the whole of 2016, the KLFIN outperformed the benchmark index by 4.6%.
Observers reckon local sentiment is being helped by a spillover in optimism from the US banking sector, which is set to do better in view of rising interest rates and a less regulated environment as promised by Trump.
Specifically, the expectation of a rising US interest rate environment would tend to discourage banks from giving discounts on their loans.
This is because consumers and corporations themselves will tend to chase for loans with the view of locking in their borrowing costs if they anticipate interest rates to rise in the short term.
At the same time, financially strong corporations could also undertake deleveraging exercises to reduce their debts.
“Whatever the case, banks will benefit from rising rates. Their earnings have been compressed for the longest time due to ultra-low interest rates,” said a banker.
In the US, Wells Fargo & Co, JPMorgan Chase & Co and Bank of America have all started to report good results, sending the S&P 500’s banking sub-sector to its highest level since February 2008 last Friday.
Having said that, not all fund managers here are positive on the sector yet.
“I am not positive on the sector yet, but I am buying selectively because banks being part of the index can’t really be ignored,” Danny Wong, fund manager at Areca Capital, said.
Wong, who manages some RM700mil in funds, said he had accumulated some CIMB Group Holdings Bhd shares following the banking group’s massive cost-reduction programme over the past couple of years, and also has some Malayan Banking Bhd (Maybank) shares as part of Areca’s strategic holdings.
“But for most banks, I need a couple of quarters more to see how they perform.”
Thomas Yong, fund manager at Fortress Capital Asset Management, said he would still be staying away from banks for now.
Banks both here and in the region have generally been hit in recent times by a confluence of factors, including a slowing economy, weak commodity prices and weak stock markets.
Most hit were lenders with exposure to Indonesia due to the fall in commodity prices and steep rise in interest rates there that caused a spike in bad loans.
As such valuations of banking stocks have come down in the past few years, with many financial institutions trading at below one times book value, which means that their intrinsic value is much higher than their liabilities.
In good times, banking transactions are generally done at between 1.5 to two times book value.
Valuations-wise, the five largest banks in Malaysia currently trade at a price-to-book (P/B) ratio range of between 0.8 times and 1.27 times, with one trading at a P/B ratio of around 2.3 times.
Generally, a P/B ratio of less than one is thought of as compelling enough for investors to buy in.
Meanwhile, in its report to clients yesterday, UOB Kay Hian said as the market here begins to price in the upcoming 14th General Election (GE14), the larger-cap banking stocks may be seen as indirect proxies to improved election-driven market sentiment.
On Maybank specifically, the research house said drawing parallels to GE13, it is clear that Maybank’s share price could continue to outperform in the run-up to GE14.
“Assuming valuations were to stretch towards the historical five-year mean P/B of 1.40 times (lower than the 10-year mean of 1.80 times), we believe a positive election-driven sentiment could drive the share price to the RM9 level,” it said.
CIMB Research in a report yesterday predicted a better year ahead for the financial sector. It said that although loans growth is expected to be weak at between 5% and 6% this year, the margins of banks are expected to improve.
KUALA LUMPUR: Goodbye, Putra Stadium. From now, it will be known as Axiata Arena.
Yesterday, Youth and Sports Minister Khairy Jamaluddin announced that Axiata Arena would be the iconic venue at the KL Sports City for the Kuala Lumpur SEA Games in August – on par with the Staples Centre in Los Angeles, O2 Arena in London and Mercedes Benz Arena in Shanghai.
The KL Sports City is a redevelopment of the Bukit Jalil Sports Complex.
But more than a change of name, Khairy promised that the KL Sports City would be an international sporting destination made accessible to all walks of life in Malaysia.
The Axiata Arena and other venues at the KL Sports City are expected to be opened for use in July.
Khairy said he was thrilled to strike a RM55mil deal over 10 years with telecommunications conglomerate Axiata in a bid to create Malaysia’s own sports hub.
He added that more stadiums within the KL Sports City would be named after corporate firms.
“This is our first stadium partnership with a corporate name. I’ve always wanted an iconic and inspiring venue for Malaysians. Today, I’m proud. We could not have grabbed a better partner than Axiata,” enthused Khairy.
“Axiata Arena will be the crown jewel of the KL Sports City. It’ll be equipped with the latest technology with world class facilities. The users will enjoy a good experience.
“We built the Bukit Jalil Sports Complex for the 1998 Commonwealth Games. But let’s face it ... it didn’t measure up as a sporting destination. It was under-utilised. We’re changing all that.
“Sports followers can now go to the stadium without worrying about sub-standard facilities. The toilets will be clean.
“They can upload Instagram photos without having to deal with congestions. The venue will be supported with good transportation system. And they can even watch their athletes in training.
“From outside, the building may look the same but it’s different. It’s so much better.”
Khairy also said that the KL Sports City would eventually be a hype of activities for all.
There will be spaces for people to work out, to jog, to swim and to spend time in open spaces. There are also plans to build futsal and basketball courts and facilities for X-Games under the second phase of renovations after the SEA Games.
“All these things are missing. There are only huge spaces for car park and monuments. Sports fan only come here for major sporting events and concerts and they rush back home,” said Khairy.
“We’ll have all these facilities and it’ll be open 24/7. I’ve also asked Axiata to come out with events for the public like runs, cycling races ... ideally, this will be the home of Malaysian sports.”
SINGAPORE: Come Feb 15, all foreign-registered cars will have to pay a Reciprocal Road Charge (RRC) of S$6.40 per entry when they enter Singapore via the Tuas or Woodlands Checkpoint.
The new charge mirrors Malaysia’s Road Charge of S$6.40 (RM20) per entry for non-Malaysia-registered cars entering Johor, which was implemented on Nov 1, 2016.
The Land Transport Authority (LTA) said yesterday the road charge would be collected together with the Vehicle Entry Permit, toll charges and fixed Electronic Road Pricing fees upon departure at the Tuas or Woodlands Checkpoint.
Signs have been put up to remind motorists to pay the charges by inserting their Autopass Card or CashCard into card readers at immigration booths. The LTA has imposed stiffer penalties on motorists who evade payment of tolls, fees and charges since Aug 1, 2016.
First-time offenders are liable to pay a composition sum of $50 (RM156), while repeat offenders will have to pay $100 (RM312).
Motorists who do not pay the composition sum may be charged in court and if found guilty, can be fined up to S$1,000 (RM3,122), or imprisoned for a term not exceeding three months for the first offence. — The Straits Times/Asia News Network
PETALING JAYA: Employees Provident Fund (EPF) savings should be used to finance a member’s post-retirement needs, the retirement fund has reiterated.
It said pre-retirement withdrawal facilities were introduced to cover basic needs such as buying a house, paying for medical costs and for education.
It said the computer purchase withdrawal scheme introduced in 2001 was discontinued the following year due to cases of abuse.
“The EPF would like to stress that EPF savings are to fund members’ retirement,” its corporate affairs department said in a statement yesterday.
This was in response to a report quoting Deputy Finance Minister Datuk Lee Chee Leong as saying that a proposal to resume EPF withdrawals for computer purchases under Account Two would be discussed by the ministry.
Lee was reported to have said that the re-introduction of the scheme would benefit the people.
The fund said it had not received any proposal to “reactivate” the withdrawal facility.
“As of now, there is no change to the current types of EPF withdrawal,” it said.
Several computer retail outlets are, however, backing such a proposal.
SNS Network PJ Solutions showroom manager Soh Yow Ting said computers “are a good investment”.
“It is a good idea. If people say computers are cheap, maybe they can use their savings to buy.
“If they withdraw from their EPF savings, it is the same. A computer is always a good investment,” said Soh.
iStore by C-Zone senior salesman Cheah Kar Fai said computers were a necessity.
“I think personally if I am given the option to utilise the scheme to get a computer, I would. This scheme will make it easier for people to own computers,” he added.
KUALA NERUS: Eastern Pacific Industrial Corporation Bhd (EPIC), a subsidiary of the Terengganu government, has signed a memorandum of understanding (MoU) with CMC Engineering Sdn Bhd to explore business opportunities in the East Coast Rail Line (ECRL) project.
EPIC chairman Datuk Tengku Mahamad Tengku Mahamut said the MoU was aimed at expanding and diversifying the company’s business as it saw potential and opportunities in the ECRL project and related services, particularly along the route in the state.
“This project will help strengthen the transportation sector in Terengganu with the infrastructure development creating competitive cost advantage, mainly on the types of cargo in large quantities,” he said.
He was speaking to reporters following the signing ceremony of the MoU at TH Hotel, Gong Badak here yesterday.
The RM55bil project would be launched in phases and would connect townships such as Port Klang, ITT (Integrated Transport Terminal) Gombak, Bentong, Mentakab, Kuantan, Kemaman, Kerteh, Kuala Terengganu, and Kota Baru before ending in Tumpat.
Construction of the five-year project is scheduled to start this year.
Tengku Mahamad expects rapid growth of small towns along the route, while the local economy would thrive with increased population.
Meanwhile, CMC Engineering chief executive officer Hazwan Alif Abdul Rahman said the ECRL project would open a new chapter in the manufacturing industry, innovation and urbanisation, as well as boost the downstream industry.
“As a local company that has been operating for 21 years in the national and global rail industry, CMC Engineering sees ECRL as a catalyst that will help boost economic growth, particularly in Terengganu,” he said. – Bernama
JOHOR BARU: Property developer Iskandar Waterfront City Bhd (IWCITY) plans to undertake a mixed development project on its newly acquired land bank within Sungai Danga vicinity in Iskandar Malaysia.
Chief executive officer and executive director Calvin Wong said the strategic location off Jalan Sungai Danga here fronting the Johor Baru Coastal Highway would be a strong selling point for the proposed mixed development project.
Located about 10km northwest of Johor Baru city centre, the property is also accessible via Jalan Tun Abdul Razak, Skudai Highway and Perling Expressway before heading to the Johor Baru Coastal Highway.
“We are most fortunate to get the much sought after land within the Sungai Danga vicinity at below market price,’’ he told StarBiz after the company’s EGM last Thursday.
At the EGM, shareholders approved the proposal to issue 30,333,333 and 56,666,667 new ordinary shares at RM0.90 each to part finance and finance the purchase of the two pieces of lands.
Proceeds from the 30,333,333 million shares will be utilised to part finance the acquisition of the 1.72ha land priced at RM39mil, of which RM11.70mil will be paid in cash.
While proceeds from the issuance of 56,666,667 million shares will be used to finance the purchase the other 2.17ha land valued at RM51mil.
IWCITY’s wholly-owned subsidiary Success Straits Sdn Bhd (SSSB) has proposed to buy the 1.72ha land from Malgold Construction Sdn Bhd and the 2.17ha land from Eight Danga Sdn Bhd.
“We expect that it will take about one year to come up with the development plan as well as for submission to the relevant authorities,’’ added Wong.
The demand for for landed properties in Iskandar Malaysia was still good, Wong said adding that the company would not be competing with big developers from China as “we are offering a different type of products.”
“We still have about 404.68ha land bank mostly water fronted in the Tebrau-Plentong growth corridor and this will keep us busy for the next 20 to 30 years,’’ explained Wong.
Wong added that the company was cautiously optimistic on the property outlook in Iskandar Malaysia in the Year of the Rooster due to uncertainties in the global economic growth.
Nevertheless, he said Iskandar Malaysia would continue to be the driving factor to attracting domestic and foreign investors into south Johor despite the challenges.
Wong said the progress and development in south Johor in the past decade was a testimony of Malaysia’s first economic growth corridor.
Iskandar Malaysia which was launched on Nov 4, 2006, had received RM218.84bil cumulative committed investments as at Sept 30, 2016 and targeted to achieve about RM383bil when the economic growth corridor reaches maturity in 2025.
They include new phases in La Promenade and Vista Industrial Park
KUCHING: Hock Seng Lee Bhd (HSL) has lined up for launches several residential and industrial property projects in Kuching and Samarahan Divisions with combined gross development value (GDV) of some RM160mil in the coming months.
Corporate affairs director Sonja Gan said the forthcoming launches would include new phases in the company’s flagship mixed development of La Promenade, established residential suburb in Samariang Aman, Highfields estate as well as Vista Industrial Park.
She said to be launched in La Promenade, off Kuching-Samarahan Expressway, is Precinct Luxe (phase 1), which will have 32 double-storey superlink homes with GDV of RM30mil. Precinct Luxe will have a total of 112 units to be built in phases.
Gan said the company had raked in close to RM80mil in sales from La Promenade’s first component – Precinct Premiere - which features luxurious homes offered for between RM1.35mil and RM3.1mil, making them the most expensive homes in a private housing development in Kuching and Samarahan Divisions.
“About 70% of the units offered under Precinct Premiere phase 1 & 2 have been sold. The first phase homes are expected to be delivered to the buyers in mid-2017,” she told StarBiz. These include 12 lavish bungalows and 32 units of luxury duplex.
“These high-end homes are the premium products offered in La Promenade. Covering 200 acres,it is among the most innovative and exciting mixed developments in Sarawak, featuring a modern lifestyle with two-tiered manned security points, electrical perimeter fencing and distinctive landscaping and parklands,including a (man-made) lake,” she added.
La Promenade, which is slated for development over 10 to 15 years, has a GDV of RM2bil. HSL’s new corporate building project is currently under construction there and is expected to be ready for occupation in about two years.
Gan said another planned new launch would feature 84 units of double-storey terraced and semi-detached houses with GDV of about RM45mil in Samariang Aman 2 along Kuching-Damai Road.
“We have completed 642 units of houses for Samariang Aman 1 and 150 units for Samariang Aman 2. The project now is an established residential suburb,” she said.
According to Gan, the forthcoming launch at Highfields,Batu Kawa Road would comprise 22 units of double-storey semi-detached houses with GDV of RM17mil.
Asked if the weak property market is affecting high-end home sales, she replied: “Fiscal cooling measures have dampened the property market somewhat.
“However,innovative products,for example, a total lifestyle concept of green,healthy and secure living, are still finding a market as are well-designed value-for-money products in strategic locations.”
For the Vista Industrial Park at Muara Tabuan here, Gan said another phase comprising 55 industrial buildings with GDV of RM68mil would be launched.
The first phase, which features 56 semi-detached buildings and launched recently, has recorded about 70% in sales. The Vista Industrial Park is located near to the Samajaya Industrial Park that caters for high-tech industries.
When fully completed under a six-phase development with a GDV of some RM250mil, the industrial park will have nearly 200 buildings for the small and medium enterprises (SMEs).
Gan said the property segment under wholly-owned subsidiary Hock Seng Lee Construction Sdn Bhd was expected to make an increased contribution to HSL’s group revenue and profits.
HSL’s core business is in marine engineering and infrastructure projects like construction of roads, water supply, flood mitigation and reclamation works.
According to Gan,the company secured RM1.94bil worth of contracts last year,the biggest among them are the Pan Borneo Highway work package and Kuching centralised wastewater management system project (phase 2).
In the first nine months to Sept 30,2016, HSL recorded group pre-tax profit of RM59.5mil on revenue of RM385.3mil.
PGA says decline to RM7bil from RM7.77bil in 2015 due to payment requirement
GEORGE TOWN: The Penang Goldsmith Association (PGA) is projecting the value of Malaysia’s gold jewellery exports to hit about RM7bil in 2016, lower by about 10% from RM7.77bil in 2015.
PGA adviser Joeson Khor told StarBiz the decline was not surprising because of the requirement by the Government for local gold jewellery exporters who have registered for Approved Traders Scheme (ATS) or Approved Traders and Manufacturers Scheme (ATMS) to accept only LBMA (London Bullion Market Association)-certified gold bars as payment.
Since April 1, 2015, gold jewellery manufacturers have to register with the Finance Ministry for the ATS or ATMS to import gold bars.
“The exporters have to accept only LBMA-certified gold bars as payment, should they want exemption from GST for the export of their finished gold products.
“Since there is a shortage of LBMA-certified gold bars in the market, this has led to the delay of purchase and payment of gold jewellery products from Malaysia, affecting the value of jewellery exported,” he said.
From January to November 2016, the value of gold jewellery exported was RM6.35bil.
“We expect the final figure to be about RM7bil for the whole year of 2016,” he said.
The price of gold per ounce is about US$1,187, compared to US$1,130 last month, which was the lowest in December 2016.
The price of gold is expected to stay stable for the rest of the year, which would spur more buying from the consumer market, according to Khor.
Khor added that the buying trend from overseas is expected to resume in the second half of 2017.
“As the global economic uncertainties are seen to persist in 2017, we can see investors turning once again to gold as a safe haven to park their money and to hedge against inflation.
“We foresee more buying this year from the Middle-East.
“This is why PGA urged the government to soften its stand on the use of LBMA-certified gold bars as payment for gold jewellery products from Malaysia,” he added.
On the domestic sales of gold jewellery products, Khor said the retail sales has dropped by more than 30% in 2016.
“The value of gold products imported for 2016, which was RM2.75bi from January to November 2016.
“The figure should be around RM3bil for the whole of 2016, compared to RM3.01bil in 2015.
“Due to the drop in retail business, the import of gold products has also remained flat,” he added.
Since the implementation of the goods and services tax (GST) a year ago, small and medium-sized gold jewellery manufacturers and exporters have found it hard to give competitive credit terms to overseas buyers.
“Small and medium-sized gold jewellery manufacturers and exporters have to spend between RM700,000 and RM1mil in GST to import the gold bars used to make the jewellery products.
“A small-sized company needs to spend between RM100,000 and RM200,000 to import the gold bars, which impacts the small and medium size gold manufacturers’ capability to export and stay competitive in the market, influencing the volume and value of gold jewellery products exported.
“About 80% of the gold jewellery products exported from Malaysia come from Penang-based gold jewellery manufacturers and exporters,” Khor said.
Khor said more than 60% of the 650 PGA members were small and medium-sized companies with an annual turnover of less than RM25mil.
The LBMA is an international trade association, representing the London market for gold and silver bullion which has a global client base.
This includes the majority of the gold-holding central banks, private sector investors, mining companies, producers, refiners and fabricators.
The on-going work of LBMA covers a number of areas, among them refining standards, trading documentation and the development of good trading practices.