Economy/Biz/Finance

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Business Times: 24th. Sept. 2004

PSC Industries Bhd (PSCI) has announced that PSC-WEC International Co Ltd has secured a letter of acceptance from the National Housing Authority of Thailand for a RM61.2 million land development and housing project in Bangkok.

PSC-WEC is a company set up in Thailand with Penang Shipbuilding & Construction Sdn Bhd (PSCSB) holding a 49 per cent equity interest while the balance of 51 per cent is owned by Thailand investors.

PSCSB is a subsidiary of PSCI.

The project entails the construction of 1,375 units of low-cost houses under Project 1 and 726 units of low cost houses in Project 2.

Project 1 is scheduled for completion within 630 days while Project 2 is expected to take 600 days.

PSCI said the project will complement the existing construction activities of the group and enhance its earnings base.

It will also allow the PSCI group, whose principal activities include shipbuilding, ship repairs, heavy engineering and construction, to tap into a new construction market and business opportunities in Thailand.

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The Star: 28th. Sept. 2004

PUTRAJAYA: Tourist arrivals are expected to surpass the original target of 13.3 million this year, generating some RM30bil income for local businesses and hotels.

Deputy Prime Minister Datuk Seri Najib Tun Razak said Malaysia was already ahead of its forecast by attracting more than 10.4 million tourists between January and August.

“In the same period in 2002, there were 8.7 million tourists but only 6.1 million last year due to the outbreak of SARS in the region and the Iraq war.

“It is only August now and at this rate, we can go beyond our target.

“This is very encouraging for us because the whole travel and tourism sector contributes some 10% to our gross domestic product,” he told reporters after launching the World Tourism Day on Sports and Tourism at Marriott Hotel here yesterday.

The Tourism Ministry was also carrying out various efforts to further boost tourist spending. Aggressive promotion, especially marketing campaigns overseas, were already bearing fruit.

“Tourists are also reassured by the high level of security shown by the authorities in countering terrorism and we are considered a low-risk destination,” Najib said.

“Tourists may come to our country on eco-tourism packages or to watch a sports event but they may stay back to shop at our shopping malls or sample our culinary delights,” he said.

Earlier, Najib said besides drawing in visitors, major sports events could help to transform the long-term image of the host country.

“This is done through improvement of sporting facilities brought about by the investments made in conjunction with the hosting of these events.

“So long as the returns outweigh the costs of these investments and tourist receipts pay for better facilities, such large sporting events remain increasingly sought after,” he said.

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The Star: 8th October 2004

PETALING JAYA: Seremban Hospital gained international recognition when it was named the winner of the “Governance or Social Responsibility” category of the 2004 Asian Hospital Management Awards held in Bangkok, Thailand yesterday.

The award was one of eight that went up for grabs, which included categories like customer service, human resource and development, quality medical care, patient safety, information technology and e-commerce, technical services and marketing and brand management.

Asian Hospital Federation (AHF) president Datuk Dr Ridzwan Bakar said in a statement that the award won by Seremban Hospital was for an undertaking that made a difference in the improvement of corporate governance or in responsible leadership, including that of healthcare in the community.

He said Seremban Hospital’s “Volunteer Service Programme” received praises from the panel of judges as it had illustrated that it was possible to present such an initiative at minimal expenditure in today’s landscape of ever increasing costs, utilising a comprehensive pool of volunteers.

A total of 165 entries from 11 countries had been received for the eight categories.

Dr Ridzwan said the panel of judges comprised hospital management “gurus” from the United States, Europe and Asia.

Seremban Hospital director Datin Dr Zailan Adnan represented the hospital in accepting the award.

The award ceremony was held in conjunction with the Hospital Management Asia Conference held by the AHF, which was attended by delegates from 72 hospitals from 25 countries.

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The Star: 8th October 2004

NOTWITHSTANDING volatile external conditions and rising competition, a unanimously upbeat assessment of Malaysia's economy and business environment was given by four corporate chiefs at a business forum in Kuala Lumpur yesterday.

Hosted by Bloomberg LP, the forum featured Telekom managing director and chief executive officer Datuk Abdul Wahid Omar, YTL Corp managing director Tan Sri Francis Yeoh, Malaysia Airlines (MAS) managing director Datuk Ahmad Fuaad Dahlan, and Bursa Malaysia chief executive Yusli Mohamed Yusoff.

Yeoh said Malaysia was about to experience a “second renaissance” under the leadership of Prime Minister Datuk Seri Abdullah Ahmad Badawi. The current political and economic conditions, he said, were just right for companies of all sizes and origins to do business in.

Wahid concurred, saying foreign investors' perception of Malaysia had further improved since Abdullah succeeded Tun Dr Mahathir Mohamad as prime minister. “Dr Mahathir set the stage right for the economy, and Abdullah implemented the much needed reforms,'' he said.

He said the change in investor sentiment had also reduced the country's perceived risk premium. As a result, local companies were now able to reduce their borrowing costs when issuing bonds in the international market.

“Gone are the days when Malaysian companies had to pay a premium of 200 basis points above US Treasury bills when issuing international bonds,” he said. “Telekom concluded its recent US$500mil 10-year bond issue at 112 basis points above the 10-year US Treasuries, and the market now settles at a premium of about 109 basis points.''

Yusli said the various reforms introduced by the Government, including the revamp of government-linked companies (GLCs), had been well received by international investors, and many had started to re-invest in Malaysian stocks.

He noted, however, the low trading volume still being seen on Bursa Malaysia needed to be addressed. “To that end, we are in talks with Singapore Stock Exchange (SGX) and looking at ways to bring in more trades across the Causeway,'' he said.

Yusli believes that going forward the private sector is likely to play a greater role in nation-building given that the Government has to work on other social development objectives, such as industrialising the agricultural sector and reducing deficit spending.

On market liberalisation, Yeoh said Malaysian companies had become more receptive to the Asean Free Trade Area (Afta) agreement, adding: “Most Malaysians are not afraid of Afta.”

Fuaad said MAS was ready for market liberalisation under Afta, when regional airlines would be allowed to fly within Asean from 2008.

“We believe Malaysia Airlines is poised for greater growth post-Afta. We are looking forward to after 2008,'' he said.

Fuaad also said the national carrier wanted to gain greater global recognition via active branding, and one way of doing that would be to join a mega alliance programme.

Yusli said the local stock exchange, too, was looking forward to market liberalisation, especially in the banking and financial sector, as the entry of more global players would bring in further expertise and make Malaysia more competitive.

“Maybe local players will not be too happy about opening our market to foreigners, but really, this is for the benefit of the nation,'' he added.

All the participants at the forum agreed that China should be seen as an opportunity for Malaysian companies rather than a threat.

They said a strong China economy was good for Malaysia and Asean, as prosperity in the world's most populous nation would mean a bigger market for all.

As for the ringgit peg, they agreed that the current peg of RM3.80 to US$1 would stay for a while, as it gave Malaysian companies stability when engaging in foreign currency transactions.

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Business Times Singapore: 8th October 2004

Move aimed at simplifying cross-border share trading and bolstering liquidity

(KUALA LUMPUR) Bursa Malaysia Bhd, which runs the country's stock exchange, says it is seeking links with the stock exchanges of Indonesia and Thailand to let investors trade securities listed in the region.

The joint trading, in addition to a tie-up with Singapore Exchange Ltd (SGX), will be completed within two years, part of a long-term plan to connect all the equity exchanges in South-east Asia, said Bursa Malaysia's chief executive Yusli Mohamed Yusoff yesterday.

'In the future, all the markets within the Association of South-east Asian Nations, or Asean, could be joined through trading links,' Mr Yusli said in an interview here. 'It's just a matter of technology and making sure that the relevant rules are in place.'

Joint stock trading in South-east Asia, with a combined population of 500 million people, could provide easier access for foreign investors to the shares of Singapore Airlines Ltd, PT Astra International and some of the region's biggest publicly traded companies.

The larger combined market will also bolster liquidity, or the extent to which stocks can be traded or converted into cash, Mr Yusli said, making stocks traded in the Kuala Lumpur, Singapore, Bangkok and Jakarta exchanges more attractive.

The plan will be attractive if cross-border transaction fees are cut and the trading rules could be simplified, said Stephanie Lee, who helps manage US$10 billion worth of equities at Aberdeen Asset Management in Singapore.

'It should increase investors' interest in cross-border opportunities,' Ms Lee said. 'The offer of variety in a single bourse is a good thing for local and overseas investors because stocks trading across borders can be quite difficult.'

The link is a second attempt at tying up South-east Asia's stock markets since 1998, when Malaysia barred its shares from being traded on Singapore's Clob International over-the-counter exchange. As much as US$3.8 billion worth of Malaysian shares were frozen by the ban, trapping 170,000 share owners, after Malaysia's government imposed capital controls and pegged its currency to the US dollar.

'Our discussions with Singapore could be the first step towards such a move,' Mr Yusli said.

Bursa Malaysia signed a preliminary agreement with SGX to let investors trade securities on both exchanges by the end of 2005. Mr Yusli said a 'workable' plan for the tie-up has been completed.

'We will be presenting our case to the Securities Commission and Bank Negara Malaysia shortly,' Mr Yusli said. He is confident the connection will be established by the end of 2005 as both exchanges introduce new, aligned trading systems. Bank Negara, Malaysia's central bank, is the enforcer of the country's restrictions on foreign currency transactions.

'With the linkage with Singapore Exchange, we hope to see a lot more Singapore investors invest in our market, like they used to,' Mr Yusli said.

Foreign investment has not picked up significantly since Malaysia ushered in new Prime Minister Abdullah Ahmad Badawi a year ago, replacing Mahathir Mohamad, who held power for 23 years.

Foreigners held 19 per cent of the market in 2003, compared with 23 per cent in 1998. Offshore investors currently hold about 20 per cent of the market by value, Mr Yusli said.

'This includes the long-term holdings like Nestle Malaysia Bhd and British American Tobacco Malaysia Bhd, which do not change much, while foreign trades range between 26 per cent and 34 per cent,' he said. Foreign fund managers 'like the measures being taken to improve efficiency and cut down on things like corruption and red tape' and are waiting for them to take effect. 'It's getting back to basics,' he added.

Mr Yusli hopes the changes will return overseas shareholding percentages to the 'high 20s' held before the 1997 financial crisis led to Malaysia's currency being pegged to the US dollar.

'Most foreign fund managers have been underweight on Malaysia. They're now beginning to build up to either less underweight or neutral or even in some cases slightly overweight,' Mr Yusli said. 'As that happens, we would expect the level of foreign shareholding to move up.'

Bursa Malaysia plans to sell shares in an initial public offer (IPO) by the first quarter of 2005, Mr Yusli said.

The Kuala Lumpur Stock Exchange (KLSE) was transformed into a company in January, joining regional exchanges such as SGX and Hong Kong Exchanges & Clearing Ltd (HKEx) in raising money through selling shares. The reorganised exchange was renamed Bursa Malaysia.

Bursa Malaysia in July named CIMB Bhd, Malaysia's biggest investment bank, and UBS AG to manage the initial share sale. - Bloomberg

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Business Times Singapore: 8th October 2004

Growth boosted by surging oil and gas exports and higher product prices

(KUALA LUMPUR) Malaysia's industrial production grew 10.6 per cent in August from a year earlier as oil and gas exports by companies such as state-run Petroliam Nasional Bhd (Petronas) surged and electronics shipments grew.


The increase in output at factories, mines and utilities compares with July's revised 10.9 per cent growth, the Statistics Department said. The median forecast of 12 economists in a Bloomberg survey was for a 10.9 per cent gain. Production fell 3.2 per cent from July.

Record crude oil prices may help Malaysia accelerate economic growth this year as rising interest rates in the US and credit restrictions in China temper demand for electronics. South-east Asia's second-largest oil producer expects to increase crude oil output by 2 per cent in 2004 and 3.1 per cent in 2005 as companies such as Petronas pump more from new fields to take advantage of oil's 71 per cent surge over the past year.

'I expect mining to do well with the rise in crude oil prices and provide some buffer against a slowdown in manufacturing,' said Suhaimi Ilias, an economist at Affin Securities in Kuala Lumpur. 'Generally the momentum is slowing, especially in manufacturing.'

Mustapa Mohamed, minister in the Prime Minister's Department, on Sept 28 said Malaysia's gross domestic product showed 'good' growth in the third quarter and will meet a government forecast of 7 per cent growth this year. The US$115 billion economy, South-east Asia's third largest, grew 5.3 per cent last year.

'The government's forecast this year may be achieved,' Wong Chee Seng, an economist at DBS Group Holdings said before the report was released.

Malaysian exports grew 24 per cent in August from a year earlier after surging 29 per cent in July, the trade ministry said on Oct 4.

Crude petroleum exports surged 80 per cent and shipments of liquefied natural gas advanced 34 per cent. The spot price of Malaysia's benchmark Tapis crude rose 40 per cent in the first eight months of the year.

Industrial output growth in August was led by a 10.8 per cent gain in manufacturing, which makes up two thirds of industrial production. Manufacturing rose a revised 12.3 per cent in July.

Electricity production by state-controlled Tenaga Nasional Bhd and other power producers expanded 8.8 per cent, faster than the revised 7.9 per cent gain in July. Mining output by Petronas and other companies rose 11 per cent after gaining 4.7 per cent the previous month.

Industrial production expanded 13 per cent in the first eight months of the year. July's industrial output growth was raised from a previous estimate of 9.9 per cent. - Bloomberg