Harimau Capital

 PETALING JAYA: A sustained outflow of foreign funds from the equity and debt markets continued to pile pressure on the weakening ringgit as the local currency fell to a nine-year low against the US dollar.

KUALA LUMPUR, Sept 2 — Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz says the creation of a mega Islamic bank should serve the objective of supporting international trade and cross-border investment activities.
 “Malaysia needs a mega Islamic bank to internationalise Islamic Finance. But, we do not want a mega bank for the sake of having one.

 “That is why we would like (to have) a mega bank which has the scale and ability to do that,” she told reporters after officiating the Global Islamic Finance Forum (GIFF) 2014 here today. Zeti said large institutions, through the mega bank, would expand the national economy via internationalisation, as well as, enhance financial and economic connectivity with other countries.

She was commenting on the license for the proposed mega Islamic bank by CIMB Group, RHB Capital Bhd and Malaysia Building Society Bhd (MBSB). - See more at:Malaysia Insider

Mega Islamic bank’s creation should meet objective, says Zeti 

Services, a major contributor of most economies in the world, have only become an integral part of trade negotiations in recent times as the focus had previously been on merchandise goods.

The TPP, which did not meet the December 2013 dateline for conclusion of talks, had resumed negotiations in Singapore on Monday and is scheduled to continue until next Tuesday. 

Malaysia is engaged in the TPP talks with 11 other countries, namely Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam.

"Our wish list is for our concerns to be addressed sufficiently and for our partners to understand Malaysia's concerns and provide enough safeguards. If those are addressed, we will come out smiling and if not, it would be difficult to reach any agreement.

"On a balance, if our concerns and challenges are addressed adequately, the chances of getting through will be good. We have an open mind," he said.

Of the 29 chapters drawn up for the negotiations in the TPP, eight are almost finalised. They are development, regulatory coherence (best practices), competitiveness and business facilitation, small and medium enterprises, temporary entry (preferential), cooperation and capacity building, administration, institutional arrangement and competition policy.

Mustapa is concerned with the additional tariffs that Malaysian exporters are subject to following the withdrawal of the Generalised System of Preferences (GSP), which provides preferential access to markets.

The European Union has withdrawn its GSP effective this year, while the GSP for Malaysian products to enter Canada will expire next year. The TPP will help to mitigate the withdrawal of the GSP.

"The elimination of import duties by TPP countries on Malaysian exports are expected to result in savings in import duties of about US$1.2 billion (RM3.9 billion) upon entry into force of TPP."

The minister did not want to speculate if the talks could be concluded this year or in conjunction with President Barack Obama's planned visit to the region in April.

"We have to ensure that whatever compromises or agreements reached are comfortable in the context of core policies, Constitution, issues on federal-state relations as well as cost-benefit analysis and debate in Parliament," he said.

Read more: 'Extra care' on TPP talks http://www.btimes.com.my/Current_News/BTIMES/articles/rup20cd/Article/#ixzz2tv5Mfvpf

KUALA LUMPUR: The government, which is facing shrinking current account surplus and growing contingent liabilities, has decided not to roll out and fund new mega infrastructure projects, according to officials familiar with the public policy.

“Any new projects will not be approved unless they are undertaken fully by the private sector... there won’t be any PFI (private finance initiative) awards as well,” said a source.
The sources said apart from approved infrastructure projects, it was unlikely that the government would fully fund new mega jobs that would add to the country’s debt burden.  The government, in future, will also also stop providing guarantee to back debts secured for new infrastructure projects.

Already, Idris Jala (pic), minister in the Prime Minister’s Department has been quoted by the media as saying that public building projects with high imported content are most likely to be rescheduled.

There are indications that the government is slowing down on big budget projects, such as rescheduling the high-speed rail (HSR) between Malaysia and Singapore as well as the refinery and petrochemical integrated development (Rapid) project in Pengerang, southern Johor.

Petroliam Nasional Bhd (Petronas) had last month announced that the Rapid project would be pushed forward to 2017 from late 2016 initially.

Some 33 new projects, with an investment value of RM7.04 billion, were launched in the first half of this year, according to the Performance Management and Delivery Unit (Pemandu). This brings the total projects under the Economic Transformation Programme (ETP) to 182 with an investment value of RM218.3 billion since the programme was launched in late 2010.

Nonetheless, there is easily another RM36 billion worth of projects that were announced but not included in the ETP list.
These include the RM26 billion Tun Razak Exchange, the multi-billion ringgit Bandar Malaysia project in Sungai Besi, RM5 billion Pudu Jail redevelopment project, RM5 billion Warisan Merdeka skyscraper project and the massive development of the Rubber Research Institute land in Sungai Buloh.

Analysts said the government has little choice but to take on this balancing act given the rising contingent liabilities and the country’s current account surplus, which has shrunk to almost RM2.6 billion in the second quarter of the year (2Q13) from RM8.7 billion ringgit in the preceding quarter amid the slump on exports.

The federal government is looking to switch to accrual accounting from cash accounting by 2015 in an attempt to consolidate its assets and liabilities.

An auditor said if proper accounting is used, the government will be forced to reveal its actual borrowings. This is because in cash accounting, there is no compulsion to reveal all transactions.

The federal government’s debts plus guarantees soared to 69% of GDP in 1Q13 — some economists expect this to increase further.

In absolute terms, government guarantees on private debt reached RM147.8 billion in 1Q13, up from RM143.1 billion at end of 2012.

Economists, including RAM Holdings Bhd group chief economist Dr Yeah Kim Leng, view the tightening of the federal government’s belt positively.

Yeah believes that infrastructure spending should not exceed 5% of the GDP and can be further spaced out without jeorpadising Malaysia’s competitiveness.

“The key now is to shift towards private investment, creating an investment climate and strengthening the foundation that includes ensuring that the cost of doing business is low and facilitating a conducive environment.”Yeah said the total investment numbers in the first half is an indication that Malaysia is shifting towards getting more private investment rather than largely depending on oil and gas tax revenues.

“If the (federal) government sustains this shift, at the same time cutting public spending, it should not affect growth,” he added.
As a whole, total investment approved by the Malaysian Investment Development Authority rose by 30.3% year-on-year (y-o-y) in the first half (1H) of 2013 driven by a pick up in investment approvals in the services and primary sectors.
Analysts attribute the growth to the implementation of ETP projects as well as economic corridors, namely Iskandar Malaysia in Johore and the Sarawak Corridor of Renewal Energy (Score).

Yeah said the introduction of the Goods Services Tax (GST), expected to be proposed in the 2014 Budget, will help broaden the government revenue base as it helps to enhance the efficiency of the tax system.

“We are expecting the 2014 Budget to be tight, at the same time with measures in place to reduce the burden on the lower income group. Those who are better off will bear the tax without affecting their lifestyle,” he said.


This article first appeared in The Edge Financial Daily, on September 02, 2013.

Construction work on the MRT along Jalan Duta, Kuala Lumpur.

TO most commuters in the Klang Valley, the sight of barricades and heavy machinery is common along the busy roads of the city.

The inconvenience of squeezing roads and the resulting crawling rush hour traffic is the short-term price to pay for the country's most costly infrastructure project the Klang Valley My Rapid Transit (MRT) which is building the MRT line from Sungai Buloh that snakes its way through the city centre to Kajang.

The 51km project is being built at a cost of RM22.2bil and will be ready by either end-2016 or middle of 2017. Tunnelling work, where the big tunnel boring machines will chew through rock, limestone and earth has started. Once completed, the Sungai Buloh-Kajang (SBK) line will ferry 460,000 passengers a day.

By all accounts, work is on schedule and for now appears to have escaped any hiccups.

But now, it's decision time for further expansion of the MRT network. Feasibility studies on the second line has been completed by consultant Halcrow and is reported to be waiting the go-ahead by the newly formed Cabinet.

Analysts have penned in the continuation of building more lines for the MRT network in their assessment of the construction sector. The Government too has said it will continue to expand the MRT network but some economists wonder if the nod will be given now considering the huge bill the Government is now faced with to fulfil various election pledges in its manifesto.

Timing the approval

On Tuesday, the investment fraternity released a slew of reports on the second line of the MRT project. Those reports were issued after a meeting over lunch with Gamuda Bhd group managing director Datuk Lin Yun Ling where a case to proceed with the second line was made.

Maybank Investment Bank analyst Wong Chew Hann in her report says she came away feeling upbeat about the prospects of approval chances of expanding the Klang Valley MRT (KVMRT) project.

“Datuk Lin believes that the Government is highly committed to implementing KVMRT 2 and 3, as the socio-economic benefits that could be reaped from the KVMRT far outweigh its costs as compared to the Government's other development plans,” she says in her report.

Lin, in a interview with StarBizWeek, says the timing of approval for Line 2 is important as there is a lead time for regulatory processes to be satisfied before actual construction work can start.

“I am not sure when that will happen but when I say July this year, it's coming from this angle: If I look at the construction of the first line, bear in mind that the SBK line was approved in December 2010, it took almost two years for us to get it on the ground.

“And after Cabinet approval, what happened was that we did the land acquisition and engage with the stake holders like DBKL and the Selangor Government, come up with the alignment studies, put the railway scheme for public display and get their feedback and address their complaints if justified.

“These processes would take 2 years. And of course to call tenders as well. So to get Line 1 ready on the ground it took two years,” he says.

As it will take two years to get the shovels and tractors moving for Line 2, the timing of a Cabinet decision by July this year is important from another standpoint.

Civil work on the first MRT line is expected to be completed in July 2015 and approval by July this year will allow contractors who are already engaged on the first line to take their machines and staff onto the second line.

A long delay in approving the second line might see those contractors sell unused machines and even let go employees that have worked on the first line.

For Lin, that will be a waste.

“If I look at the civil works that is ongoing for Line 1, most of the contractors, even for the underground/tunnelling works, will finish the work by middle of 2015.

“If we want continuity onto Line 2, approval should be granted by the middle of this year,” says Lin, whose company is engaged in the tunnelling work for Line 1 and is the overall project delivery partner (PDP) for the Government.

He feels if approval is now granted according to timelines, then it can pose some problems when it comes to continuity of the project.

“That means that their plants and equipment, workers and staff who have all been trained in this kind of work will not be able to continue.

“Ideally, if we want continuity but not overlapping, the timing of the Cabinet approval should come around July so that by mid-2015, we can get the line on the ground already,” he says.

Details on Line 2

By all accounts, Line 2 will be even bigger than the first line. The new line is longer than the predecessor, it will have a longer underground section and more stations. That means it will cost more too.

Initial estimates peg the cost of Line 2 at RM24.9bil once the line is extended from Serdang to Putrajaya. Construction of the proposed second line will be done in two stages with the first stage up to Serdang. The cost of that will be similar to that of the first line.

The main difference between the first and second line though will be ridership.

Estimates show that 20% more people, or 550,000 passengers a day, will traverse through line 2 as opposed to 460,000 a day for Line 1.

In terms of passengers per km, Line 2 is expected to ferry 11,100 passengers per km compared with 10,000 passengers per km for Line 1.

Projections also show that Line 2 will carry 40% more people than Line 3, or the circle line, upon completion.

The reason for the higher ridership is that Line 2 will cut through more densely populated and lower income areas. Neighbourhoods such as Damansara Damai, Kepong, Batu Kampung Pandan, Kampung Baru, Sentul and Serdang are large catchment areas of people.

The alignment of Line 2 will also cut near to areas where PR1MA is expected to build affordable housing for Malaysians. Areas such as Sungai Buloh, Kentonmen and Serdang where PR1MA is expected to build mass affordable housing

“This line is probably more needed if you ask me. It is important in terms of ridership and the nature of the lower income catchment,” says Lin.

Both Line 1 and 2 are expected to converge at the Tun Razak Exchange which will enable passengers to interchange onto other lines.

Line 2 will also serve the KLCC area as it will cut through the middle of the city centre as opposed to the Light Rail Transit line that serves the northern part of the development.

A decision to proceed with Line 2, which is a radial line instead of the circle comes down to catchment and ridership.

“Normally, like in the case of Singapore, the circle line will come last. They will do the radial lines first. It's because the radial lines will help you build up the catchment and ridership. The circle line just connects the lines for you,” says Lin.

“The priority is to first build the network and its catchment.”

Ringgit and sen wise, Gamuda points to the study by Halcrow on the economic internal rate of return (EIRR). It claims that the consultant had put an EIRR at 27% which captures the social benefits of the project, value of time and the multiplier impact of the MRT project.

“Given the cost, it is worth spending. It is for the sustainability of Klang Valley development. We'll need an infrastructure like this. I mean just look at our daily traffic in Klang Valley and you know that we really need this. We cannot sustain any more growth,” says Lin.

Does Gamuda have an edge?

Analysts seem to think that Gamuda has the edge of being appointed the PDP for Line 2.

“So far, the consortium has received positive feedback from the clients and authorities (i.e. MRT Corp, SPAD, and Pemandu), thanks to its good track record on the MRT1 project,” says Kenanga Research in its note on Tuesday.

For Lin, it's more down to the work it has done as the PDP for Line 1 that should be weighed upon when deciding the winner of the PDP for Line 2.

“Because the concept is quite new and if you look at how we are able to cut out the works to 90 packages, that means that we have created a good spread to the local contractors. I think that carries immense benefits,” says Lin.

A PDP is like a conductor of an orchestra. It has to handle all issues and disputes, and standardise the entire project according to specification.

“It's an undertaking to the Government that it will be done within budget and time, otherwise fees will be slashed. I think this is what we have achieved.”

Gamuda won the tunnelling job for Line 1 and is surely interested for that scope of work for the second line.

Lin feels the company will have to bid for that job like everybody else and does welcome a Swiss challenge for the tunnelling portion for Line 2 if it is thrown at the company. He feels local companies should be given the preference for jobs involving construction of the MRT.

Can the Government afford Line 2 or Line 3 now?

Although the paperwork is now before the Cabinet for the endorsement of Line 2, economists wonder if the Government will be able to bankroll the project without putting more strain on its fiscal position.

“The Government needs to work within its fiscal constraints. A lot of promises were made in the run-up to the general election and there is always the question of financing,” says an economist.

“Something has to give.”

It's reported that the cost of fulfilling the Barisan Nasional manifesto will be around RM12.5bil. With government revenue expected to rise a shade over RM1bil in 2013 and expenditure by less than that, giving the nod to a RM25bil project together with other election promises will likely cause a strain on the fiscal deficit.

“Spinoffs and the benefits of a better transportation system has to be weighed against such constraints,” says an analyst.

Lin feels the Government will be able to finance construction of Line 2, but he makes certain assumptions on his opinion.

“Very few countries can offer this level of public transport service and still keep fuel subsidy to this level. Any Government will spend until what they can afford or slightly more than that.

“If you do not spend on something which is of a high social economic benefit, the money will be spent on something else with a lower economic return. At the end of the day, the Government has to prioritise,” says Lin. - The Star Biz

A SOUND and well-planned rail network inclusive of the upcoming Klang Valley Mass Rapid Transit (KVMRT) Line 2 will form the spinal cord of Kuala Lumpur's public transportation system that will not only improve the liveability of the Greater Kuala Lumpur (KL) dwellers, but more importantly support the sustainability of the city's future development.

Saturday May 18, 2013

隆新高铁计划有谱，然而，这项大型基建计划一旦落实，除了可以带动一些领域之外，也可能会冲击某些行业，堪称有人欢喜有人愁。

此外，在成本高昂、能否永续经营的疑虑笼罩之际，隆新高铁会否落得“雷声大雨点小”的局面？

隆新高铁喜VS愁

马新两国政府宣布兴建隆新高铁，有人欢喜有人愁。

欢喜者垂涎工程大饼、高铁经济效益；忧愁者深怕市场被侵蚀，盈利走下坡。

至于高铁可能带来的“溢出效益”，在成本高昂及能否永久经营的疑虑笼罩之际，马新两的国民众最终是否能享用高品质的建设成果，还是个未知数。

Growth will be underpinned by the domestic demand, with low unemployment and subdued inflation.

In its latest medium-term outlook, which was released following its Article IV Consultation recently, IMF projected growth until 2017 to be between 5.1 per cent and 5.2 per cent.

"Although the domestic demand growth pace is lower than that recorded in 2012, it is still sizeable at over six per cent from 11.6 per cent last year," IMF resident representative Dr Ravi Balakrishnan told the Business Times from Singapore yesterday.

Higher spending by households, firms and the government on consumer and capital goods has offset weak exports to Europe and the rest of the world.

吉隆坡7日訊）“新興市場教父＂麥莫比（Mark Mobius）認為，馬股估值並不昂貴，加上首次公開售股活動（IPO）持續活躍，漲潮有望延續，縱然大選結果恐對市場帶來衝擊，效益也將屬暫時性，不會對市場長期前景帶來重創。 鄧普頓新興市場集團（Templeton）首席執行董事麥莫比在媒體匯報會上指出，馬股前景良好，雖然富時綜合指數已站上歷史新高，但整體估值仍不昂貴，而政府貫徹親投資政策，更有望吸引更多投資者目光，並延續現有漲勢發展。 “我們現持有馬股1億4千萬美元，而固定收入資產則為股市的一倍，將繼續加大在馬投資規模。＂ 不過，他不願透露今年增持大馬資產規模，但透露將與2011至2012年成長15%持平或更多。 他稱，雖然市場憂慮全國大選將對馬股走勢帶來衝擊，相信馬股只會出現短期震盪局面，縱然政權更替，新政府也將貫徹現有經濟、社會福利等政策，對馬股長期展望前景影響不大。

同時，麥莫比認為，牛市將使得更多企業藉機進場籌資，因此IPO活動將持續活躍，但隨著監管單位對IPO採取更嚴謹的態度，料今年新股數量將難現去年輝煌。 “我相信馬股今年將繼續有更多的IPO，但相信數量將不及去年。＂ 詢及馬股吸引力所在，麥莫比說，首先是估值，馬股本益比雖較區域國家高，但股市成長仰賴企業盈利成長等利好因素推動，若以個別領域或公司估值來看，馬股估值並不昂貴。

“大馬地理位置理想，既是東盟核心國家，又近新加坡、泰國等市場，在貿易和經濟成長方面擁有許多機會，而國家經濟結構多元化至工業、農業環節，整體狀態非常良好。＂ 他認為，雖然原棕油價格現因供過於求陷入調整格局，但相信這只是暫時性狀態，隨著市場需求增加和供需趨向平衡，長期看漲前景不變。 若印鈔活動持續 熱錢料續流竄 麥莫比指出，美國只能透過減赤、增稅或持續印鈔在內的3大方法，避免國家陷入財政懸崖，但政客礙於選舉考量，增稅架構變得異常複雜，實際稅務增加將不足以填補削減開銷的缺口，而減赤也不會有太顯著的改變，唯有國際評估機構下調美國主權債務評級才能為國會或白宮帶來警惕。

 “雖然市場傳出聯儲局可能不會延長量化寬鬆（QE）政策，但市場對政府持續開銷的壓力仍大，相信利率將持續偏低，以提振經濟成長，降低失業率，料印鈔活動將持續進行，開銷也不見減緩趨勢。＂ 他認為，若印鈔活動持續，市場流動性將繼續流竄，更多股市將交出更好的表現，其中新興市場在低債務水平、高外匯儲備、低債務和高成長等利多支撐下，這些國家股市的前景將十分亮眼。

 “2013年貨幣供應量很可能繼續大幅增長，加上股市在當前利率水平下，變得非常誘人，更多資金注入全球經濟體系，股市就有更多機會上漲空間。＂ 新興市場強勁成長 未反映在估值上 另一方面，他說，新興市場強勁成長前景仍未被反映在估值上，許多上市公司料可為投資者帶來長期誘人回酬，其中消費類股和能源類股為兩大投資主題。 “隨著新興市場民眾日趨富裕，加上宏觀經濟政策開始從出口導向轉為內需推動，將推動消費相關領域成長；原產品主題則反映出我們對新興國家工業化，將提高對原產品需求。＂

麥莫比認為，金磚國家基金表現有起有落非常正常，但重點是長期方向依舊正確，將繼續專注石油、礦業等原產品和消費者類股投資。 此外，他說，雖然市場看好東亞股市今年將跑贏東南亞，但別忘了東南亞國家也將從中國等東亞國家強勁經濟成長中受惠，東南亞股市表現將不遜色，甚至會青出於藍。 全球經濟成長放緩、失業率居高不下、貨幣供應和股市日趨波動等風險仍環繞，但麥莫比認為，以往記錄顯示，牛市壽命往往比熊市漫長，因此不會影響對新興市場長期看好的觀點。（星洲日報／財經）

美國財政懸崖前“勒馬＂，一些經濟學家認為只是局部渡過財崖難關，美國兩黨最新達成的協議意味著今年財政政策將明顯收緊，另外預料2月底再面臨上調債務上限的難題，且將到來的債務上限談判或更加艱難和更具爭議性。

 “波動＂仍然是未來經濟“基調＂，大馬企業已做好風雨中前進的準備，雖然偶而有“江闊雲低斷雁叫西風＂蕭殺氛圍，偶有暗潮洶湧或驚濤駭浪，但也誓齊心協力帶領企業與員工渡過彼岸。

大馬企業更深識“危＂中有“機＂之道理，只要善於洞察先機，即使外圍環境多麼艱難嚴峻，亦各有各精彩……。