Tuesday, 31 July 2018

(NST) YTL REIT returns to profitability in FY18

KUALA LUMPUR: YTL Hospitality Real Estate Investment Trust (YTL REIT) returned to the black in the financial year ended June 30, 2018, (FY18) with a net profit of RM236.56 million compared with a loss of RM12.12 million in the preceding year.

In a filing with Bursa Malaysia, the company attributed the surge in profit to unrealised foreign currency translation gain on Australian dollar-denominated term loan of RM107.27 million, a gain on fair value of properties of RM58.23 million and additional net property income of RM22.73 million, mainly contributed by its Malaysian properties.

Revenue, meanwhile, rose 11.4 per cent to RM500.95 million against RM449.68 million previously.

YTL REIT said its Australian properties contributed 71.84 per cent of total revenue or RM359.92 million while Malaysian properties accounted for 24.89 per cent or RM124.70 million.

The increase in revenue was also due to cost saving initiatives, it added.

(NST) Naza TTDI upbeat about high end property market

KUALA LUMPUR: Naza TTDI Sdn Bhd is still optimistic about the high end property market and unperturbed by the strong competition from Bukit Bintang City Centre, Bandar Malaysia and Tun Razak Exchange.

Executive director and chief operating officer Datuk Idzham Mohd Hashim said the property arm of Naza Corp Holdings Sdn Bhd sees strong demand for its flagship development – KL Metropolis – as it focuses on basic fundamentals of property development. This includes having the right location, good planning and competitive pricing. 

"We recognise that the current sentiment has slightly affected the growth of real estate market in Malaysia. However, it will not matter in the long run if we continue to take into account of the three key aspects or basic fundamentals.

"If we are able to sell units that have the best value to buyers, there would still be demands," Idzham said when met after the launch of the Met Galleria, here.

KL Metropolis, which is expected to command RM20 billion in gross development value, will not saturate the market as it sells in phases for about 15 to 20 years until completion, he added.

Idzham said the property developer still registered satisfactory take-up rates currently.

"For example, the launch of our office tower recorded 70 per cent take-up rate, residency unit also posted 75 per cent rate and our small office house office (SOHO), currently being developed, is now 85 per cent taken up.

"So for me, we (real estate sector) should return to fundamentals. I am confident and still believe that the main catalyst for the real estate market is the right location," he said.

Commenting on the launch of the Met Galleria, he said it was the first retail component of property development mixed with KL Metropolis, involving a gross development value of RM160 million.

He said Met Galleria comprises a retail gallery featuring colonial and modern international lifestyle encompassing the element of quality and sophistication in every design.

"The double-storey 80-foot double-storey shopping mall targets buyers and visitors with a more calm, comfortable and harmonious atmosphere," he said.

Idzham said 40 per cent of Met Galleria retail space is dedicated to food and beverage retailers, 20 per cent is for concept shops, while the remaining 40 per cent will be allocated for key tenants, service providers and kiosks.

(NST) Headline inflation drops 0.8pct in June

KUALA LUMPUR: The reduction in prices of goods and services has reduced headline inflation to 0.8 percent in June 2018 1.8 per cent recorded in May.

Further, this following the zerorisation of the Goods and Services Tax (GST) rate, said Bank Negara Malaysia adding that the decline in inflation was broad-based, with 11 of the 12 categories registering lower inflation.

Core inflation, which excludes the impact of zero-rated GST, remained stable at 1.5 per cent in June, Bank Negara said in a statement today.

Index of Distributive Trade (IODT) growth moderated in May at 5.8 per cent, from 6.4 per cent in April due to decline in the motor vehicles segment as consumers delay purchases to benefit from the zerorisation of the GST rate that commenced on June 1, 2018.

Wholesale and retail segments however improved amid continued strength in trade activity and better consumer sentiment.

Bank Negara said net financing growth was sustained at 6.9 percent in June, from 6.8 per cent in May, supported by the steady growth in both outstanding corporate bonds and outstanding banking system loans.

“The outstanding loan growth remained stable for both businesses and households.

“The growth of household loan applications and approvals for the purchase of passenger cars increased significantly in June to 15.3 per cent and 21.9 per cent, respectively, due mainly to higher demand for financing during the tax holiday period,” it said.

Bank Negara said in June, domestic financial markets continued to experience non-resident outflows amid renewed trade war concerns and expectations of a faster pace of US monetary policy normalisation.

The FBM KLCI declined by 2.8 per cent and the ringgit depreciated by 0.5 per cent against the US dollar.

The domestic bond market, however, was supported by strong demand by domestic institutional investors.

During the month, MGS (Malaysian Government Securities) yields declined by between 0.4 to 8.8 basis points.

Asset quality of the banking system remained sound in June, where the level of net impaired loans ratio and total provisions to total loans ratio remained unchanged at one per cent and 1.5 per cent, respectively.

“Given the stable credit condition and its benign outlook, the remaining impact of MFRS 9 on banks is expected to be manageable,” it said.

(The Star) 100,000 affordable homes over next five years for Johoreans

JOHOR BARU: The state government will provide 100,000 affordable homes over the next five years under the Johor Affordable Housing Scheme (RMMJ), said Johor Local Government, Science and Technology Committee chairman Tan Hong Pin.

He said about 3,000 units of the RMMJ houses would be built this year. “We hope this will benefit those who are eligible and also boost Johor’s economy,” he said in his speech during the Johor Real Estate Practitioners Dinner 2018.

Tan said real estate agencies in the state have played a vital role in ensuring the sustainability of Johor’s economy.

Malaysian Institute of Estate Agents (MIEA) president Eric Lim hopes the new government would look into ways to resolve issues related to property financing.

“Many of our clients are facing problems related to financing as most of the deals are aborted due to loans being rejected,” he said.

“This has been a key issue in the industry as many in the market are keen to buy properties but face problems with financing,” he said.

(The Star) Mall turns one with Melawati folk

It has been a year since Melawati Mall in Ampang opened its doors to serve residents in the 40-year-old Taman Melawati neighbourhood.

Measuring 87,793sq m, the eight-storey mall houses some 200 retail outlets ranging from fashion, home and living to health, fitness, food and groceries.

“This area was formerly a rubber plantation before Taman Melawati came about,” said Sime Darby Property Bhd chief operating officer (integrated) Quek Cham Hong during the launch of the mall’s first anniversary celebration.

He said five years ago, the developer thought the neighbourhood needed a facelift with urban renewal so the mall was established on July 26 last year.

Quek said Melawati Mall, developed by Sime Darby Property and CapitaLand Mall Asia, has rejuvenated the township.

To date, it has managed to secure 90% committed leases and sees an average of 700,000 visitors a month.

“We hope it can be a place for Taman Melawati residents to call home,” said CapitaLand Retail chief executive officer Wilson Tan.

He said the mall represented a new milestone for CapitaLand’s journey in Malaysia, which currently houses about 180 local and international brands.

Melawati Mall’s month-long Spend and Win campaign aims to reward customers.

The company has more than 85 malls throughout Asia. Seven of them are located in Malaysia.

“We are also always committed to bringing in reputable local and overseas retailers to the mall,” he said.

In conjunction with the anniversary celebration, the mall will reward shoppers with its month-long “Spend and Win” campaign, in which prizes worth over RM180,000 are up for grabs.

Shoppers only need to spend RM500 from now until Aug 26 to be entitled to one lucky draw entry.

Winners stand a chance to drive home a Nissan X-Trail 2.5L worth RM150,000. Other prizes up for grabs include family holiday packages.

In addition to this, there will be various activities and performances held every weekend at the mall’s centre court in August.

Shoppers can post their best selfie or wefie onto their Facebook or Instagram with the campaign hashtag campaign #MMCelebrates.

Photos must include elements of the Melawati Mall signature colours – orange, red and green – to be in the running to win cash vouchers.

Shoppers can also enjoy RM5 off two Grab rides between Monday and Thursday until Aug 31 by using the promo code MMCELEBRATES.

Competition winners will be announced on Aug 31 during a special concert featuring local artists, beginning at noon.

For details, visit

(The Star) Economy expected to accelerate in quarter two

PETALING JAYA: Malaysia’s second quarter (Q2) gross domestic product (GDP) growth should be better than the first (Q1), underpinned by several macro key data, according to AmBank Group. 

Its chief economist Anthony Dass said the group’s preliminary estimate suggested that GDP for Q2 could expand between 5.5% and 5.7%, versus 5.4% in Q1. 

For the full year, GDP growth could remain at 5.5% with the lower end at 5.3%, he added. 

“May Leading Index (LI) suggests some signs of softening are evident in Q3 after it fell by 0.7% year-on-year (y-o-y) to 117.8 points. 

“Meanwhile, the Coincident Index (CI), which grew 2.2% y-o-y to 133.7 points in May, indicates the second quarter GDP performance should be stronger than Q1. 

“Factoring in the key macro data for the first two months of Q2 such as industrial production, manufacturing sales, exports, imports and loans approved, we are optimistic that Q2 GDP should perform better than Q1,’’ Dass noted. 

On another note, he said banking group’s projection would be that the US Federal Reserve (Fed)’s policy rate will normalise around 2.75%–3.00% with room reach 3.25%–3.50% by end-2019. 

“Under the previous US president, we found several spikes in the GDP. We believe the overall GDP is projected to grow around 2.8% for the full-year of 2018, with the upside around 3.0%. 

“Hence, we reiterate our view of two more rate hikes by the Fed in the second half of this year – one in September and the other in December, each by 25 basis points (bps),’’ Dass said. 

The US Q2 GDP grew at a faster pace of 4.1% q-o-q from 2.2% q-o-q in Q1. The reading turned out to be the best pace since Q3 2014 of 4.9%. 

This brings the the first half GDP to 2.8% y-oy. 

Strong consumer and business spending, added with strong exports ahead of retaliatory tariffs from China helped drive GDP, he said. 

Personal consumption expenditures rose 4% y-oy while business investment expanded 5.8% y-oy and federal government outlays increased by 2.7% y-o-y. 

Source : The Star 31.07.2018

(The Star) EcoFirst targets RM240mil in sales for FY19

KUALA LUMPUR: Property development group EcoFirst Consolidated Bhd 

is targeting to chalk up RM240mil in sales for the financial year ending May 31, 2019 (FY19), up from FY18’s target of RM180mil. 

Group chief executive officer Datuk Tiong Kwing Hee said the main contributors to the target would be its mixed residential and retail development, Liberty@Ampang Ukay, and condominium project, Kondominium Kelab Golf Ipoh, previously known as Upper East @ Tiger Lane. 

“Our sales achieved in FY18 was about RM181mil, almost close to what we targeted,” he told a press conference on EcoFirst’s FY18 performance here yesterday. 

As at June 2018, Tiong said the company had sold 95% of Liberty project, which contributed RM158mil to FY18’s results. 

“We expect the income from the remaining 5% (unsold units) of Liberty and about 13% of Kondominium Kelab Golf to add to FY19’s revenue,” he added. 

To date, 41% of the Liberty project has been completed and the remaining 59% was expected to be handed over to buyers in November 2020. 

Meanwhile, Tiong said shareholders could expect a dividend payout as soon as in the next six months after FY18’s bullish performance. 

He said a committee would be formed to decide on a dividend policy and determine the payout to be based on annual profit. 

“Once we have all the details in place, we will have a dividend policy for the long-term. 

“I think the shareholders can expect some dividends from us in the very near future, which can be as soon as next the six months,” Tiong said. 

On the impact expected from the implementation of the Sales and Services Tax on Sept 1, he said the company would wait for further details from the government before commenting. 

Meanwhile, Tiong said the EcoFirst hoped to acquire more prime land in the Klang Valley and explore joint-venture opportunities for FY19. 

“Currently, we have 35.21ha, where over 2.43ha have been developed,” he said. 

On the property sector’s outlook, Tiong said overall sentiment remained challenging due to buyers being unable to secure end-financing. 

However, he remained optimistic of the company’s outlook based on the 95% sales clinched for the Liberty project. – Bernama 

(The Star) Ministry: Compensation not needed over delay in RTS Link project

ISKANDAR PUTERI: Malaysia does not have to pay a single sen to Singapore as compensation for the delay in the Johor Baru-Singapore Rapid Transit System (RTS Link) project, says the Transport Minister. 

Anthony Loke said this was because no joint venture company (JV) was formed by the two sides on the project. 

“The initial agreement that both countries signed previously is just a memorandum of understanding, so the issue of compensation does not arise,” he told reporters after paying a visit to Johor Mentri Besar Datuk Osman Sapian at Kota Iskandar here yesterday. 

He said Malaysian officials already informed their Singapore counterparts about the delay of between one and two months, which was caused by the general election and the forming of the new government. 

However, he was hopeful that the project would proceed as planned. 

He stressed that the Federal Government had agreed in principle and was committed to continuing with the project linking Bukit Chagar in Johor Baru to Woodlands North in the island republic. 

“The project must get approval first, pending cost and other details, but I will bring a memorandum about RTS to the Cabinet as soon as possible,” he added. 

Loke said if the Cabinet gave its approval, then the first process was to set up a JV company between Malaysia and Singapore as the RTS Link involved two nations. 

“Despite the delay, RTS Link will be completed by 2024,” he said. 

In January, Malaysia and Singapore signed the agreement for the new 4.2km RTS Link to transport some 10,000 passengers an hour, or 72,000 passengers a day, in four coaches travelling at 70kph. 

The link, with co-located Customs, Immigration and Quarantine (CIQ) complex, will provide seamless connectivity between Johor Baru and Singapore. 

The RTS Link will run above ground in Johor and on a 25m-high bridge track across the Straits of Johor before travelling underground to Woodlands North. 

The June 30 deadline for Prasarana Malaysia Bhd and Singapore’s SMRT Corporation Ltd to form a JV company to operate the RTS Link was missed, as Prasarana Malaysia suspended discussions with SMRT after the general election in May. 

Meanwhile, on the Gemas to Johor Baru electrified double-track rail project, Loke said the 197km track was 20% completed. 

“The project, to be completed by Oct 31, 2021, will connect the whole west coast from Johor Baru to Padang Besar,” he said. 

He said any proposal to add more stations in Johor would need the Cabinet’s approval, as it would bring about a cost hike, which the Federal Government was sensitive about. 

(The Star) RM10 tourism tax to be maintained

THE flat rate of RM10 per room per night on foreign tourists will be maintained, says Tourism, Arts and Culture Minister Mohamaddin Ketapi. 

“Under the new government, the Tourism, Arts and Culture Ministry has reviewed implementation of the tourism tax. 

“From the review, the implementation of the tax by countries such as the United States, the Netherlands, Italy, Singapore and Thailand, proved that the tax has brought positive growth to the tourism sector in the long term,” he said in a written reply to Datuk Danyal Balagopal Abdullah (PH-Port Dickson). 

Mohamaddin noted that Japan and Saudi Arabia had recently implemented the tourism tax. 

He said the tax is expected to bring positive impact to the tourism industry through the financing of infrastructure, arts and culture. It is only applicable to foreign tourists. 

(The Star) MyBrain15 not axed, says Maszlee

PUTRAJAYA: The MyBrain15 programme has been suspended, not axed, said Education Minister Dr Maszlee Malik 

He said the ministry cannot continue the programme until it received the budget allocation for it. 

“The previous government allocated RM90mil for the programme but this money never reached the Education Ministry,” he told reporters after launching the 2017 Annual Report of the Malaysia Education Blueprint 2013-2025. 

“This is a political gesture from the previous government.” 

Dr Maszlee also said there were more than 10,000 scholars in the programme and RM90mil was not enough to support their studies. 

He revealed the actual amount needed for the scholars was RM612mil. 

He added that the decision to provide RM612mil for the programme lies with the Finance Ministry and the Economic Planning Unit (EPU). 

“The allocation is a huge sum and needs the approval of the EPU and Finance Ministry,” he added. 

Dr Maszlee said until a decision is made by the two entities, My­Brain­15 would remain suspended. 

He said he is committed to helping the recipients receive their scholarships and would try his best to help them. 

“I hope you (scholars) will be patient,” he added. 

Dr Maszlee came under fire after he said in an interview with RTM that MyBrain15 had been suspended due to the country’s overwhelming debt. 

Under Budget 2018, former prime minister Datuk Seri Najib Tun Razak announced that a sum of RM90mil had been set aside for the MyBrain15 Programme for 10,600 individuals to further their studies through Masters and PhD. 

The MyBrain15 programme, which was under the higher education ministry, was introduced in 2008 with the aim of producing 60,000 PhD holders by 2023. 

On another matter, Dr Maszlee said that history experts must be consulted and a study be done to determine if school history textbooks were being used as propaganda material for the previous government. 

He said he would not make any comments until the ministry gets input from history experts. 

He was commenting on Fahmi Reza’s “challenge” to the Pakatan Harapan on whether they would allow history books to be used as propaganda material. 

According to an online news portal on Sunday, the prominent activist said: “So under the new government, if they want to revise the history books, will they follow in the footsteps of the previous administration and turn history books into propaganda tools?” 

(The Edge Financial Daily) EcoFirst targets M240m sales for FY19


KUALA LUMPUR: EcoFirst Consolidated Bhd aims to achieve a sales target of RM240 million for the financial year ending May 31, 2019 (FY19), driven by sales from two ongoing developments the company has in Selangor and Perak.

The two developments are Phase 1 of Ampang Ukay, known as Liberty @ Ampang Ukay, and Kondominium Kelab Golf — formerly known as Upper East @ Tiger Lane — in Ipoh, Perak.

Speaking to reporters at a media briefing yesterday, its group chief executive officer Datuk Tiong Kwing Hee said the property developer achieved RM158 million sales from Liberty @ Ampang Ukay in FY18.

As at June 30, 2018, Liberty @ Ampang Ukay was about 95% sold. Hence, the property developer is confident that the remaining 5% would be sold in FY19. At present, Liberty @ Ampang Ukay is about 41% completed and is on track to meet its full completion in November 2019.

Additionally, Tiong said EcoFirst is planning to launch the second phase of Ampang Ukay in the second half of 2019.

“We are planning three blocks of larger-sized condominium units which we believe will be priced to offer excellent value to the target market,” Tiong added.

Still in planning stage, the second phase of Ampang Ukay units will range from 1,600 sq ft to 2,300 sq ft, and will be priced at about RM450 per sq ft. The entire Ampang Ukay project carries a gross development value of over RM5 billion, which is expected to be realised over 12 to 15 years.

Currently, property development contributes to 88% of EcoFirst’s revenue, while property investment and management contribute 10% and 2% respectively.

EcoFirst’s net profit for the fourth quarter ended May 31, 2018 grew 8.7% year-on-year (y-o-y) to RM9 million from RM8.28 million due to lower marketing cost, though revenue fell 7.4% y-o-y to RM60.71 million from RM65.55 million.

For its full FY18, EcoFirst’s net profit soared 176.5% y-o-y to RM44.6 million from RM16.13 million, as revenue jumped 42.5% y-o-y to RM181.23 million from RM127.21 million.

However, excluding the one-off gain from a compulsory land disposal of RM28.4 million to the government, EcoFirst would have only seen a marginal 0.4% increase in net profit. The disposed land is for the upcoming Sungai Besi-Ulu Klang Elevated Expressway.

When asked if EcoFirst will be able to maintain the same margin in the next financial year, Tiong said: “Hopefully we can. We will definitely work very hard.”

On the proposed exemption of building materials such as bricks, steel and cement from the new sales tax, Tiong said EcoFirst will wait for further details from the government. These materials were previously taxed 6% under the goods and services tax.

Nevertheless, Tiong said any savings from lower building material costs shall be passed back to the purchasers to make house prices more competitive. However, EcoFirst will first have to “relook into the numbers”, to maintain a similar margin.

Moving forward, Tiong said EcoFirst is in discussion on a potential joint venture and is eyeing possible land deals in the Klang Valley, but he did not elaborate.

While the company has yet to decide on a fixed dividend policy, he said shareholders can expect dividends as soon as the next six months.

EcoFirst shares closed half a sen or 1.64% higher at 31 sen yesterday, with a market capitalisation of RM240.95 million.

(The Edge Financial Daily) ‘Scrapping of MRT3 saved RM66b’


KUALA LUMPUR: The finance ministry said the government has managed to save a project cost of RM66 billion, excluding interest cost, with the cancellation of the mass rapid transit line 3 (MRT3).

“For the MRT3 project, the government has basically decided to cancel this megaproject to reduce the country’s debt load,” it said in a written reply dated July 26 to Batang Sadong member of parliament Datuk Seri Nancy Shukri, who wanted to know whether the government would continue with the plan to build the MRT3.

The ministry said works on the Sungai Buloh-Serdang-Putrajaya MRT line’s second phase (MRT2) will continue after the scope and project specifications are reviewed, while the Sungai Buloh-Kajang MRT line’s first phase (MRT1) operates as usual.

The MRT3, estimated to cost up to RM40 billion, is the final alignment of the MRT series of urban rail networks, intended to link with the MRT1 and MRT2.

Monday, 30 July 2018

(NST) Developer EcoFirst targets RM240m property sales

KUALA LUMPUR: EcoFirst Consolidated Bhd is targeting RM240 million sales in the current year ending May 2019 from its Liberty @ Ampang Ukay and Kondominium Kelab Golf (formerly known as Upper East @ Tiger Lane) projects.

"Last year, we achieved RM180 million sales. It shows we’re able to tap under-served segments of the market, despite the general slowdown in property,” said group chief executive officer Datuk Tiong Kwing Hee.

“This year, we’re optimistic of RM240 million sales from phase two of Liberty @ Ampang Ukay and remaining units of Kondominium Kelab Golf,” he told reporters at a briefing here today.

Also present were EcoFirst financial controller Tan Hun Lim and EcoFirst general manager Janice Loh.

Liberty @ Ampang Ukay straddles between two affluent areas, namely Ukay Heights and Kelab Golf Darul Ehsan. Kondominium Kelab Golf is located along Persiaran Brash, off Lorong Tun Dr. Ismail, in Ipoh. This is a freehold high-rise apartment of 529 units.

Phase one of Liberty @ Ampang Ukay comprised three towers of residential small office home office units and 32 retail units, with gross development value (GDV) of RM606.8 million, over 2.63ha. The second phase comprise of 378 units of affordable homes, with a RM500 million GDV, on 3.24ha.

“The strong demand for phase one of the Liberty @Ampang Ukay is indicative that our products represent good value to first-time buyers, especially young professionals working in the city. Sales of phase two units, which caters to small families, are now available,” Tiong said.

In its filing to the stock exchange, EcoFirst said its fourth quarter net profit expanded 7 per cent to RM8.99 million from RM8.28 million previously, thanks to contribution from the first phase of its RM5 billion Ampang Ukay development.

This brings the company's full-year net profit to RM44.60 million, almost triple that of RM16.13 million, posted a year ago.

Revenue for the quarter was RM60.71 million, bringing full-year revenue to RM181.23 million, 42 per cent higher than RM127.21 million, posted previously.

Other contributions to the group's full-year performance included recurring income from its two retail malls and RM28.4 million compulsory land acquisition by the government for the construction of Sungai Besi-Ulu Klang Elevated Expressway (SUKE) highway.

When asked on growth prospects, Tiong said the group will be exploring strategic joint ventures with landowners in the future, particularly in Klang Valley.

On EcoFirst constructing RumahKu Selangor homes for sale to low and medium income earners, Tiong said his team is seeking mutually beneficial arrangements with the Selangor state government on provision of land at more affordable areas.

“We would like to consult Selangor government to provide government land to build affordable homes,” said Tiong.

(The Star) Financial clout in PM’s hands

It seems like Azmin will be tasked to oversee agencies that are centred on bumiputra shareholding and wealth distribution.
It seems like Azmin will be tasked to oversee agencies that are centred on bumiputra shareholding and wealth distribution. 

PETALING JAYA: With the restructuring of government agencies presently under way, it is now becoming clearer that Datuk Seri Azmin Ali’s Economic Affairs Ministry will not be controlling the most important government agencies in the country. 

Rather, the Prime Minister’s Office (PMO) will continue to retain a lot of direct influence as the three most important agencies – Khazanah Nasional Bhd, Permodalan Nasional Bhd (PNB) and Petroliam Nasional Bhd (Petronas) are likely to be under the PMO’s jurisdiction, according to sources. 

The proposed structure would mean that while the Prime Minister is not the Finance Minister, he can influence the economic roadmap of the country via Khazanah, PNB and Petronas. 

There are now also deliberations to dissolve the Minister of Finance Inc (MoF Inc). 

This is not surprising considering the extraordinary power wielded by MoF Inc. 

the previous government structure, the concentration of power was with the PMO, as the Prime Minister was also the Finance Minister, who in turn controls MoF Inc. 

Through this arrangement, MoF Inc had a whole lot of control on the Malaysian economy. 

It has more than 150 companies under its jurisdiction with direct major shareholdings in 68 companies. Khazanah, Petronas and PNB were under MoF Inc previously. 

Considering the criticism Prime Minister Tun Dr Mahathir Mohamad has on Khazanah deviating from its original role of being a strategic investment fund and developing bumiputra entrepreneurs, it is perhaps not surprising why Khazanah will be placed under the PMO. 

Khazanah was the brainchild of Tun Dr Mahathir Mohamad, who was also the strategic fund’s first chairman when it commenced operations in 1994. 

In the early days, Khazanah played the role of a strategic investor. 

It invested in sectors which the government wanted to develop, say, for example, the steel industry. 

It would step in to invest as those companies involved would not be able to get bank loans on their own. 

Then, when Tun Abdullah Ahmad Badawi became the prime minister in 2004, Khazanah’s role changed. 

Its role has been more to help transform GLCs into becoming high-performing and commercially driven entities providing critical services to the public and private sectors. 

Since then, Khazanah has become more of an investment holding company. 

Interestingly under the restructuring, it seems that five economic and development corridors are also currently being studied for liquidation. 

The five economic and development corridors under review are Iskandar Regional Development Authority (Irda), Northern Corridor Implementation Authority, East Coast Economic Region Development Council (ECERDC), Regional Corridor Development Board, and Sabah Economic Corridor Development and Investment Authority. 

These corridors have secured investments worth billions of ringgit and created jobs for the locals in the respective states and regions. 

For example, Irda is responsible for attracting investments into the Iskandar Malaysia region in Johor and has raised total committed investments of RM263.95bil since 2006. 

Besides that, as of January this year, ECERDC’s investments had created 150,700 new jobs and 31,200 business opportunities in key economic sectors as well as small and medium enterprises. 

Meanwhile, despite not overseeing GLCs, Azmin will still be in control of the powerful Economic Planning Unit (EPU) and Federal Land Development Authority, which were previously under the PMO. 

It seems like Azmin will be tasked to oversee agencies that are centred on bumiputra shareholding and wealth distribution. 

The EPU determines the short and long term development plans of the nation and allocates resources accordingly. 

The EPU has been tasked to look into the review of the New Economic Policy to ensure that the NEP fulfills the needs of the people and the direction of socioeconomic development of Malaysia. 

To name a few, the MEA shall spearhead agencies such as Felda Global Ventures Holdings Bhd, Ekuiti Nasional Bhd, Felcra Bhd, Bank Pembangunan Malaysia Bhd, the business arm of Mara, as well as the business and investment arm of Lembaga Tabung Haji. 

MEA will also be in charge of MyHSR Corp Sdn Bhd, the firm responsible for the development and implementation of the high speed rail project. 

(The Star) Fiscal deficit to be off target

Malaysian Rating Corp Bhd (MARC) economist Nor Zahidi Alias reckoned the overall deficit to remain at last year’s level of 3% of gross domestic product.
Malaysian Rating Corp Bhd (MARC) economist Nor Zahidi Alias reckoned the overall deficit to remain at last year’s level of 3% of gross domestic product. 

PETALING JAYA: The government is likely to miss its fiscal deficit target of 2.8% this year due to a shortfall in revenue from changes in the tax system and fuel subsidies, economists said. 

Malaysian Rating Corp Bhd (MARC) economist Nor Zahidi Alias reckoned the overall deficit to remain at last year’s level of 3% of gross domestic product (GDP) due to a reduction in revenue due to the zerorisation of the Goods and Services Tax (GST). 

“Going forward, in order to continue its fiscal consolidation effort, MARC expects the government to introduce medium-term revenue-generating measures and continue to rationalise operating and development expenditures,” he said in a recent report. 

Meanwhile, JF Apex said other populist measures likely to be implemented including the reduction of tolls in stages, abolishment of Felda settlers’ debts and deferment of repayment for higher education loans are expected to strain government coffers. 

On a positive note, it said the government is striving to contain its rising operating expenditure by reducing the Cabinet size, reviewing remunerations for government-linked companies’ (GLCs) top-ranked officials, cutting unnecessary political appointees in the civil workforce, and reviewing ongoing and future mega projects and their related financing terms. 

The research house expected GDP growth for this year to slow down to 5.0%-5.3% following a surprisingly strong 5.9% growth recorded in 2017. 

Nonetheless, UBS Investment Bank economist Alice Fulwood said she was confident the government could reduce the country’s fiscal deficit to 2.8% next year as it makes greater headway in cutting wasteful spending. 

The government had targeted to reduce its fiscal deficit to 2.8% in 2018, from 3% in 2017. 

Nor Zahidi expects the government to issue RM100bil to RM105bil worth of securities, of which RM62.8bil will be to service maturing debt papers and RM37.2bil to RM42.2bil to finance the budget deficit. 

“While the new government measures such as the zero-rating of GST and stable prices of RON95 could exert some upward pressure on Malaysia’s budget deficit, the increase in government bond issuance will be capped given the new government’s focus to reduce overall fiscal liability,” he said. 

Nor Zahidi did not rule out the possibility of continuing foreign outflows from local government bonds (govvies) in the second half of the year but at a lower magnitude. 

This is because of resilient global crude oil prices, greater clarity from the current government on its medium-term fiscal plan, and expectation of improved medium-term economic fundamentals for Malaysia, he pointed out. 

As at the end of the first half of 2018, total foreign holdings of local govvies amounted to RM167.6bil, down from RM186.3bil a year ago. 

“Malaysia will likely experience short-term volatility in the financial market due to both external and internal factors,” Nor Zahidi said. 

Externally, he said, the global financial market would continue to go through a roller-coaster ride due to uncertainties with regard to the threat of the trade war and investors shying away from emerging markets. 

Back home, he expected investors to still pay close attention to the sovereign rating outlook of the country as credit rating agencies seek to get greater clarity on the medium-term revenue-generating measures. 

On the demand of govvies, Nor Zahidi said Malaysia could face the risk of a contagion effect if recent financial market turbulence in some emerging markets such as Argentina, Brazil and Turkey intensifies. 

“Foreign demand for govvies could also be hit by global central banks’ expected plans to end their post-global financial crisis stimuli by the end of the year. 

“The unresolved trade spat between the US and China would continue to strengthen the demand for the dollar and safe-haven assets from developed markets, decreasing foreign demand for assets from emerging markets,” he said. 

(The Star) Blame game in LRT3 project

PETALING JAYA: Syarikat Prasarana Negara Bhd and the project delivery partner (PDP) are blaming each other for the cost escalation in the Light Rail Transit 3 (LRT3) project. 

In a report to the Finance Ministry, Prasarana contended that the PDP of Malaysian Resources Corp Bhd and George Kent Bhd (MRCB-GK) failed to carry out its duties extensively resulting in awards being given out that cumulatively resulted in the project exceeding the budget of RM9bil. 

Prasarana also noted in the report that the previous management failed to monitor the PDP’s performance closely and proceeded to award contracts despite the project exceeding the cost. 

The report stated that the previous management did not notify their board of directors about the escalating cost of the LRT3 project until the end of November last year, when most of the work packages were already awarded. 

By that time, the construction cost of the LRT3 had already blew past its government approved budget of RM9bil, according to sources familiar with the matter. 

The LRT3 project is the first undertaken by Prasarana via the PDP model. Under the model, the PDP would deliver the project within cost and schedule in return for a fee. 

“The deficiency of PDP and the failure by the previous management of Prasarana in managing cost and time have jointly contributed to the poor management of the LRT3 project,” according to a source. 

However, MRCB-GK contends that the cost escalation was due to changes to the design that Prasarana requested after having awarded the job of PDP in September 2015. 

It had been reported that there were more than 22 instances where Prasarana had requested changes to the design and specifications to the project. Prasarana is disputing at least 12 of the changes. 

MRCB-GK is said to have alleged that the number of stations were increased to 30 from 26 and that the total cost of the project was not finalised before the PDP contract was awarded in 2015. 

The project cost was capped at RM9bil. By June this year, the figure had ballooned to RM15.6bil. 

Sources said the weakening of the ringgit exchange rate against the US dollar from 3.10 to 4.40 at the time when most of tenders were awarded last year contributed to more than RM1.8bil in additional cost. 

A total of 29 work packages worth RM15.2bil had been awarded for the LRT3 project, before the board at Prasarana was made aware in November of the project’s massive cost increase. 

Sources said the previous management at Prasarana could have alerted its board as early as in February 2017 about the potential budget burst. 

Sources said the previous management at Prasarana, led by former president and CEO Datuk Seri Azmi Abdul Aziz, had relied heavily on the PDP to manage the cost and progress of the project. 

They proceeded to award another RM4.4bil worth of contracts despite exceeding the RM9bil cap. 

“The previous management did not update the board that the budget had burst and the board was only aware of the gravity of the situation in November after the management had tabled the budget requirement for LRT3 for 2018,” a source said. 

The board then proceeded to instruct the management to immediately reduce the cost. 

Azmi left Prasarana at the end of December last year after his contract expired. He was replaced by president and current CEO Masnizam Hisham, who had been with Prasarana since 2004. 

The board of Prasarana last week said Masnizam has their backing to continue leading the company amid reports suggesting that she will be replaced. 

Finance Minister Lim Guan Eng, on July 10, said poor management by Prasarana had caused the total cost of the project – including land acquisitions, fees and interest – to increase to a massive RM31.45bil. 

The Cabinet had since directed Prasarana to cut this by almost half to RM16.62bil by reducing the number of train-sets, shelving five stations and extending the timeline to complete the project from 2020 to 2024. 

In addition, the construction of the LRT3 project will be restructured from a PDP model to a “fixed price contract” with the MRCB-GK joint venture (JV). 

A final decision on how the project will be implemented and which party will be in charge is expected to be made this week. 

Meanwhile, over the weekend, it was reported that Prasarana and its PDP partner MRCB-GK JV have separately said they will cooperate with any investigation related to the LRT3 project by the Malaysian Anti-Corruption Commission. 

(The Star) SST to benefit house buyers more, say Penang contractors

GEORGE TOWN: The re-introduction of the Sales and Service Tax (SST) may benefit house buyers more compared to the Goods and Services Tax (GST), said the Penang Electrical Merchants Association. 

Its president Khaw Tatt Siew said the 10% SST is a one-off charge which only applies to the manufacturer, supplier or contractor. 

In comparison, he added, the 6% GST was applied at all stages, from the raw materials to the manufacturer, supplier and contractor. 

“An example is the price of a RM100,000 property, which would cost RM106,000 with the addition of GST for buyers, but the 10% SST does not apply to the RM100,000 price tag. 

“Our members, comprising many contractors, have calculated a 1% to 2% increase in our total contract sum when the SST is reinstated. 

“The contract is for work such as wiring, light installations or the laying of cables for the construction of condominiums, hospitals and other buildings,” he said during the PEMA Academic Awards 2018 presentation yesterday. 

Khaw said the SST is unlikely to affect the end user much. 

“The developers will possibly absorb the increase to boost their sales in view of the slow property market,” he said. 

This year’s academic awards saw a total of 47 scholarship recipients. 

PEMA education fund committee vice-chairman Datuk Seri Hong Yeam Wah said this included primary, secondary and pre-university recipients. 

On July 16, Finance Minister Lim Guan Eng announced that the provision of services would be taxed at 6% while the sales of goods would incur a 10% tax under the SST. 

The new SST starts on Sept 1. 

(The Star) Road closure in KL city centre

Tunneling works for the MRT Sungai Buloh-Serdang-Putrajaya (SSP) Line in Kuala Lumpur is currently in progress.

Over the next two weeks, the Variable Density Tunnel Boring Machine (TBM) will be traversing below Jalan Sungai Besi – the main gateway that connects to the city centre and other suburbs in Kuala Lumpur.

The current section being mined consists mainly of weathered limestone formations.

Weathered limestone is a geological formation known for its complexity and intrinsic challenges to TBM operations.

This complexity could possibly lead to above-ground sinkholes, which would inadvertently result in unplanned road closures.

“While the TBM is equipped for the challenging terrain, further measures have been taken to safeguard the public from any untoward incident,” said Gamuda Engineering Managing Director Datuk Ubull Din Om.

“One preventive measure is ground treatment, which is done progressively ahead of the TBM’s arrival where the ground investigation shows anomalies.”

Ground treatment involves pumping significant amounts of concrete/mortar into targeted areas underground to strengthen the ground before mining.

This would give the TBM greater stability as it mines against solid blocks of concrete instead of the natural karstic elements of weathered limestone which can be unpredictable and unfavourable to mining operations.

However, not all areas along the TBM travel paths are accessible for ground treatment works, hence giving rise to hidden risks.

“Apart from more intensive monitoring of the TBM as it makes its way through these highly sensitive zones, a team has been put together for on-ground monitoring 24/7.

“Known as the ‘bull gang’, the team comprises personnel who are constantly on the lookout for the smallest of inconsistencies on the ground.

“The bull gang goes on foot patrol, allowing for immediate investigation and action to be taken to treat the ground in time,” Ubull said.

Despite the extensive soil investigation and the ground treatment carried out, the risk of road settlement or a sinkhole appearing cannot be totally dismissed.

As a contingency, Jalan Sungai Besi will have lane closures in stages between now and Aug 10.

The scheduled closures covering a total of 50m across 13 lanes will happen in stages over two weeks.

However, should any emergency situation arise requiring full traffic closure, road closures will be immediately announced.

From Aug 28 to Sept 10, a second TBM will trail the same path to cross Jalan Sungai Besi. As such, the same lane closures will be implemented.

Roads users are advised to use alternative routes to Jalan Istana, Jalan Tun Razak and to Seremban during peak hours to reduce traffic build-up during the two weeks when each machine crosses Jalan Sungai Besi.

Road users can call 1800-82-6868 for further information.

Saturday, 28 July 2018

(The Star) Group: Hold public meeting before highway project starts

GEORGE TOWN: Penang Citizen Awareness Chant Group (Chant) has called for a public consultation this year to clear the confusion before the proposed 19.5km Pan-Island Link (PIL) I that links Gurney Drive to the Penang International Airport takes off.

Its adviser Yan Lee said the state should hold a town hall and invite the public.

This came after Chief Minister Chow Kon Yeow told non-governmental organisations (NGOs) in a statement on Thursday that the use of inaccurate visuals and description by the NGOs had provoked unnecessary negative sentiments among the public.

Chant responded yesterday by urging the state government to get the relevant parties involved in the project to participate in the town hall to clarify any misconceptions.

“Has anyone gone to the ground and engaged or spoken to the people about PIL I?

“The photos in the EIA (Environmental Impact Assessment) report are aerial shots and they don’t show what is happening on the ground or how the highways and interchanges will affect homes or businesses.

“I wish to plead with the Chief Minister to get SRS and Zenith to hold a public discussion on how the project will affect the community,” he said at a press conference yesterday, adding that the state government had expressed a willingness to engage the people.

He said the Gurney Wharf project, through public engagement, gained strong support in their feedback.