By Zurinna Raja Adam
Published: 2008/11/29
DESPITE its status as a financially-troubled group, Putera Capital Bhd (2895) has bid for construction jobs worth about RM9 billion in Malaysia.The group, which had its first restructuring proposal rejected by the authorities, is awaiting response to its second revamp plan."If all goes well, than we can embark on these projects with our strategic partners," chief executive officer Wan Azman Wan Salleh said after the group's annual general meeting in Kuala Lumpur yesterday.However, he declined to comment further on the revamp plan.
The group has not made money in seven years and it faces the threat of having its shares taken off the stock exchange.For the financial period ended May 31 2008, the group posted a loss of RM9.2 million on revenue of RM1.5 million.Putera Capital has closed its loss-making textile division and it wants to focus on the construction and infrastructure business.
It holds a 20 per cent stake in the West Coast Expressway, a multi-billion-ringgit project that has yet to take off.On its partnership with Melewar Industrial Group Bhd to build a proposed RM2.2 billion monorail system in George Town Penang, Wan Azman said the group remains hopeful of the project.They are still waiting for a response from the state government, he added.
Saturday, November 29, 2008
Sime Darby posts 44pc surge in Q1 net profit
By Rupinder Singh
Published: 2008/11/29
SIME Darby Bhd (4197) , the world's largest listed palm oil producer, said first quarter net profit jumped 44 per cent but it halved its full year earnings forecast due to lower palm oil prices and concerns of an economic slowdown.It now expects net profit for the year ending June 30 2009 to reach RM1.9 billion, from its initial target of RM3.7 billion.Chief executive officer Ahmad Zubir Murshid said the current year will be "very challenging", as global economic growth is expected to weaken significantly.
The lower full year earnings is based on the assumption that CPO price is traded at RM1,700 per tonne, he told reporters after announcing the company's results in Kuala Lumpur yesterday.Currently, CPO price is about RM1,500 per tonne or about half the average CPO price of RM2,962 per tonne which the group realised for the quarter ended September 30 2008."The sharp decline in CPO prices and the current economic uncertainty are expected to adversely affect the performance of the plantation, property and motors divisions," it said.
For the first quarter, net profit to September 30 rose mainly because of higher palm oil prices.Operating profit from the industrial division was also up by 39 per cent, but profits from the property division fell by 30 per cent.
Published: 2008/11/29
SIME Darby Bhd (4197) , the world's largest listed palm oil producer, said first quarter net profit jumped 44 per cent but it halved its full year earnings forecast due to lower palm oil prices and concerns of an economic slowdown.It now expects net profit for the year ending June 30 2009 to reach RM1.9 billion, from its initial target of RM3.7 billion.Chief executive officer Ahmad Zubir Murshid said the current year will be "very challenging", as global economic growth is expected to weaken significantly.
The lower full year earnings is based on the assumption that CPO price is traded at RM1,700 per tonne, he told reporters after announcing the company's results in Kuala Lumpur yesterday.Currently, CPO price is about RM1,500 per tonne or about half the average CPO price of RM2,962 per tonne which the group realised for the quarter ended September 30 2008."The sharp decline in CPO prices and the current economic uncertainty are expected to adversely affect the performance of the plantation, property and motors divisions," it said.
For the first quarter, net profit to September 30 rose mainly because of higher palm oil prices.Operating profit from the industrial division was also up by 39 per cent, but profits from the property division fell by 30 per cent.
Friday, November 28, 2008
Parking and Putrajaya
1. I got a parking summon near Parcel B in Putrajaya recently.
2. Parking woes in some parts of Putrajaya has been well known for at least two years. By some parts, I mean the EPU, MOT, MOHE areas. I remember in 2006 when I went to JPA to enquire about students scholarship, there was not a single parking space in the complex. Then I saw an empty space left vacant by a bus and I park there. Before long I was involved in an exchange with a very rude security guard.
3. JPA staff then told me stories of difficulties by people especially sickly pensioners who had to walk form the road side to Jabatan Pencen. But this was in 2006. It may not happen now.
4. MOT - almost all my colleagues who went there complained of not only lack of parking space, but rudeness of security guards. The cars in the underground park are double parked, almost without order.
5. The question that keeps haunting me as I drove back from Pj to KL that day was - what have PPj done to alleviate these parking problem. It seems to be getting from bad to worse.
5. The question that keeps haunting me as I drove back from Pj to KL that day was - what have PPj done to alleviate these parking problem. It seems to be getting from bad to worse.
6. My simple suggestion is just build two six-storey car park blocks; one near Parcels B and C and another one near D and E. These four blocks are the most visited. The car park blocks can be half underground and clad in Moorish architecture to blend in with the prevailing design of existing buildings.
7. But of course Perbadanan Putrajaya (PPj) has other ideas and tied by the policies of the government. PPj wants to have a 70:30 ratio of public to private mode of transport. So they have introduced "park and ride" and they have mentioned "Putrajaya Sentral" when I called up.
8. If I knew that Putrajaya Sentral and park and ride existed and running well, I would certainly opt for those. Are there signboards or gantries telling me how to go Putrajaya Sentral, like what they did for KL Sentral? I normally enter Pj through Maju Expressway. There is one little sign that says "park and ride", then nothing. Can we have a logo of Putrajaya Sentral posted on signboards going back as far as immediately after Maju Expressway exit?
9. People like me has to go to Pj for obvious reasons. It's not that I like to go there. The comparison may be unfair, but look at Genting Highlands and how they provide car parks. For another example, look at Ampang Jaya Council - they converted every available space in commercial areas into parking lots. Now if I opt to park on non-parking areas, I am truly recalcitrant and deserve to be issued a ticket. But when there was no available pakling lots in the vicinity, and still I got the ticket, it's only natural that I muttered "all you know to do is to issue parking tickets".
10. Putrajaya is a beautiful city. When people in Berlin were rebuilding their city, some of them told our city planners that "we want to beat your Putrajaya". Putrajaya by itself is a world class benchmark. Let us keep it that way.
Thursday, November 27, 2008
Pahang-Selangor water transfer hangs in balance
KUALA LUMPUR, Nov 27 – The Pahang-Selangor water transfer project hangs in the balance over the question of whether the Malaysian government or Japan has the final say on which consortium is awarded the lucrative contract to bore a 45km tunnel through the Titiwangsa Range. At stake also is a RM2.5 billion soft loan from the Japan Bank for International Cooperation (JBIC).
The Malaysian Insider has learnt that the Cabinet and officials from the Ministry of Energy, Water and Communications are resisting attempts by the Japanese International Cooperation Agency to influence the choice of the successful bidder for the contract. Government officials have been tight-lipped about the behind-the-scenes wrangling but Datuk Joseph Salang Gandum’s comment in Parliament last week gave a hint of the seriousness of the issue.
When asked to give an update on the soft loan from Japan Bank for International Cooperation (JBIC) and the status of the water transfer project, he remarked: “Malaysia is a sovereign country and will not sell its dignity and name…the government already has plans if the money is not channelled to us due to certain reasons.”
Checks show that three bids for the project were received from: Shimizu-Nishimatsu-UEM-IJM; Taisei-HRA Teguh and Kajima Construction. From the start, the government made it clear that tender for the water transfer project should be a benchmark for open tenders in the country. The Ministry of Energy, Water and Communications came up with an international competitive bidding scheme to select a international consultants who would scrutinise the bids. It is understood that two of the bidders submitted conditional bids.
Under the international tender process, any company or party that submits a conditional bid should be disqualified. This is because the price quoted in the conditional bid could change substantially. For example, the lowest bidder for the 45-km tunnel job submitted a conditional bid that was based on a particular rock strength of the tunnel. But independent reports obtained by the government suggest that the rock strength is higher than what the cost estimates are based on.
As such, the government believes that it could be saddled with a variation order of several hundred million ringgit if it awards the contract to the consortium with the lowest bid.
It is in favour of awarding the contract for the project to the company which had submitted the second lowest bid, which was also the only bidder who did not submit a conditional tender.
But JICA is insisting that the contract be awarded to the lowest bidder.
The Malaysian Insider understands that the Cabinet was briefed on the stand off and supports the decision of the Energy, Water and Communications ministry to award the contract to the second bidder.
A government official told The Malaysian Insider: “The terms in the bid documents state clearly that we are not bound to accept the lowest bid but must take into account all factors in the tender. Accepting a conditional bid could be disastrous for the government. Based on our research, there is every chance of a variation order between RM200 million to RM400 million.” It is understood that the difference between the lowest and second bid is RM150 million. JICA has apparently asked the government to negotiate with the party with the lowest tender and get them to remove the “variable component” of the bid.
Government officials believe that going down this path could lead to suits by the two other companies that took part in the tender process. The reason: there is a clause which states that no party can alter, correct or withdraw anything from their bid documents once it has been opened and evaluated.
So the standoff continues. But it is learnt that government officials are willing to forego the Japanese loan. “This is an issue of sovereign rights. Malaysia will be a joke if we have a open tender but don’t follow the rules of the game.” It is unclear how the government plans to raise the RM1.5 billion for the tunnel project if the loan falls through.
The Malaysian Insider has learnt that the Cabinet and officials from the Ministry of Energy, Water and Communications are resisting attempts by the Japanese International Cooperation Agency to influence the choice of the successful bidder for the contract. Government officials have been tight-lipped about the behind-the-scenes wrangling but Datuk Joseph Salang Gandum’s comment in Parliament last week gave a hint of the seriousness of the issue.
When asked to give an update on the soft loan from Japan Bank for International Cooperation (JBIC) and the status of the water transfer project, he remarked: “Malaysia is a sovereign country and will not sell its dignity and name…the government already has plans if the money is not channelled to us due to certain reasons.”
Checks show that three bids for the project were received from: Shimizu-Nishimatsu-UEM-IJM; Taisei-HRA Teguh and Kajima Construction. From the start, the government made it clear that tender for the water transfer project should be a benchmark for open tenders in the country. The Ministry of Energy, Water and Communications came up with an international competitive bidding scheme to select a international consultants who would scrutinise the bids. It is understood that two of the bidders submitted conditional bids.
Under the international tender process, any company or party that submits a conditional bid should be disqualified. This is because the price quoted in the conditional bid could change substantially. For example, the lowest bidder for the 45-km tunnel job submitted a conditional bid that was based on a particular rock strength of the tunnel. But independent reports obtained by the government suggest that the rock strength is higher than what the cost estimates are based on.
As such, the government believes that it could be saddled with a variation order of several hundred million ringgit if it awards the contract to the consortium with the lowest bid.
It is in favour of awarding the contract for the project to the company which had submitted the second lowest bid, which was also the only bidder who did not submit a conditional tender.
But JICA is insisting that the contract be awarded to the lowest bidder.
The Malaysian Insider understands that the Cabinet was briefed on the stand off and supports the decision of the Energy, Water and Communications ministry to award the contract to the second bidder.
A government official told The Malaysian Insider: “The terms in the bid documents state clearly that we are not bound to accept the lowest bid but must take into account all factors in the tender. Accepting a conditional bid could be disastrous for the government. Based on our research, there is every chance of a variation order between RM200 million to RM400 million.” It is understood that the difference between the lowest and second bid is RM150 million. JICA has apparently asked the government to negotiate with the party with the lowest tender and get them to remove the “variable component” of the bid.
Government officials believe that going down this path could lead to suits by the two other companies that took part in the tender process. The reason: there is a clause which states that no party can alter, correct or withdraw anything from their bid documents once it has been opened and evaluated.
So the standoff continues. But it is learnt that government officials are willing to forego the Japanese loan. “This is an issue of sovereign rights. Malaysia will be a joke if we have a open tender but don’t follow the rules of the game.” It is unclear how the government plans to raise the RM1.5 billion for the tunnel project if the loan falls through.
Tuesday, November 25, 2008
Malaysia to start giving out RM600m jobs soon
Published: 2008/11/25
BT
By March 2009, about 80 to 90 per cent of the people-centric infrastructure projects will have been awarded to contractors, says the Implementation Coordination Unit
THE government will, from next month, start awarding to contractors RM600 million worth of small infrastructure projects identified under the RM7 billion economic stimulus package.Tan Sri Khalid Ramli, director-general of the Implementation Coordination Unit (ICU), said the projects are people-centric, involving the building of basic infrastructure such as roads, jetties and drains.As such, he said, it is vital that they be implemented immediately."Speed is of the essence. You're talking about stimulating domestic growth, so it's very urgent that the projects are implemented fast.
"I'm determined to see part of this RM600 million kick off in December," Khalid said in an interview yesterday.He anticipates that by March next year, about 80 to 90 per cent of these projects would have been awarded to contractors.The ICU, which falls under the Prime Minister's Department, has specifically been tasked to ensure implementation of these projects."We're talking about a vigorous pace of implementation. So perhaps after December, January, February, all these projects must be awarded by this time. Then only you get the effect," he said.Projects will be awarded in several ways, including procurements, tenders and quotations, he added.
BT
By March 2009, about 80 to 90 per cent of the people-centric infrastructure projects will have been awarded to contractors, says the Implementation Coordination Unit
THE government will, from next month, start awarding to contractors RM600 million worth of small infrastructure projects identified under the RM7 billion economic stimulus package.Tan Sri Khalid Ramli, director-general of the Implementation Coordination Unit (ICU), said the projects are people-centric, involving the building of basic infrastructure such as roads, jetties and drains.As such, he said, it is vital that they be implemented immediately."Speed is of the essence. You're talking about stimulating domestic growth, so it's very urgent that the projects are implemented fast.
"I'm determined to see part of this RM600 million kick off in December," Khalid said in an interview yesterday.He anticipates that by March next year, about 80 to 90 per cent of these projects would have been awarded to contractors.The ICU, which falls under the Prime Minister's Department, has specifically been tasked to ensure implementation of these projects."We're talking about a vigorous pace of implementation. So perhaps after December, January, February, all these projects must be awarded by this time. Then only you get the effect," he said.Projects will be awarded in several ways, including procurements, tenders and quotations, he added.
Malaysia to start giving out RM600m jobs soon
Published: 2008/11/25
BT
By March 2009, about 80 to 90 per cent of the people-centric infrastructure projects will have been awarded to contractors, says the Implementation Coordination Unit
THE government will, from next month, start awarding to contractors RM600 million worth of small infrastructure projects identified under the RM7 billion economic stimulus package.Tan Sri Khalid Ramli, director-general of the Implementation Coordination Unit (ICU), said the projects are people-centric, involving the building of basic infrastructure such as roads, jetties and drains.As such, he said, it is vital that they be implemented immediately."Speed is of the essence. You're talking about stimulating domestic growth, so it's very urgent that the projects are implemented fast.
"I'm determined to see part of this RM600 million kick off in December," Khalid said in an interview yesterday.He anticipates that by March next year, about 80 to 90 per cent of these projects would have been awarded to contractors.The ICU, which falls under the Prime Minister's Department, has specifically been tasked to ensure implementation of these projects."We're talking about a vigorous pace of implementation. So perhaps after December, January, February, all these projects must be awarded by this time. Then only you get the effect," he said.Projects will be awarded in several ways, including procurements, tenders and quotations, he added.
BT
By March 2009, about 80 to 90 per cent of the people-centric infrastructure projects will have been awarded to contractors, says the Implementation Coordination Unit
THE government will, from next month, start awarding to contractors RM600 million worth of small infrastructure projects identified under the RM7 billion economic stimulus package.Tan Sri Khalid Ramli, director-general of the Implementation Coordination Unit (ICU), said the projects are people-centric, involving the building of basic infrastructure such as roads, jetties and drains.As such, he said, it is vital that they be implemented immediately."Speed is of the essence. You're talking about stimulating domestic growth, so it's very urgent that the projects are implemented fast.
"I'm determined to see part of this RM600 million kick off in December," Khalid said in an interview yesterday.He anticipates that by March next year, about 80 to 90 per cent of these projects would have been awarded to contractors.The ICU, which falls under the Prime Minister's Department, has specifically been tasked to ensure implementation of these projects."We're talking about a vigorous pace of implementation. So perhaps after December, January, February, all these projects must be awarded by this time. Then only you get the effect," he said.Projects will be awarded in several ways, including procurements, tenders and quotations, he added.
Contruction boom is over for Dubai
Published: 2008/11/25
DUBAI:The United Arab Emirates (UAE) began to bail out and consolidate Dubai's rattled banking sector and curb a building frenzy yesterday as the former boomtown started cutting state spending in the face of the global crisis. In a major policy shift, the federal government will inject capital into Emirates Development Bank, a newly created rescue vehicle preparing to absorb merging Islamic lenders Amlak and Tamweel. And in what marks the end of an era for Dubai, Mohamed Alabbar, a member of the emirate's ruling council, said the emirate would now pare its construction ambitions back in anticipation of waning demand after spending the past five years building as much property as fast as possible. He assured investors the Gulf's regional financial hub of Dubai was able to meet its sovereign obligations. - Reuters
DUBAI:The United Arab Emirates (UAE) began to bail out and consolidate Dubai's rattled banking sector and curb a building frenzy yesterday as the former boomtown started cutting state spending in the face of the global crisis. In a major policy shift, the federal government will inject capital into Emirates Development Bank, a newly created rescue vehicle preparing to absorb merging Islamic lenders Amlak and Tamweel. And in what marks the end of an era for Dubai, Mohamed Alabbar, a member of the emirate's ruling council, said the emirate would now pare its construction ambitions back in anticipation of waning demand after spending the past five years building as much property as fast as possible. He assured investors the Gulf's regional financial hub of Dubai was able to meet its sovereign obligations. - Reuters
Wednesday, November 19, 2008
Changi wins 6-year Saudi contract
Changi wins 6-year Saudi contract
Published: 2008/11/19
Changi Airports International Pte, a unit of the owner of Singapore’s main airfield, said it won a S$65 million (US$43 million) contract to operate and manage an airport in Saudi Arabia, its second success in the Middle East.The agreement to run the King Fahd International Airport for six years is the largest it has won in terms of value, the Singapore-based company said in a statement yesterday. Changi Airports beat nine competitors in a bidding process that started in June, it said. - Bloomberg
Blogger's note : That's USD7 million a year to run an airport.
Published: 2008/11/19
Changi Airports International Pte, a unit of the owner of Singapore’s main airfield, said it won a S$65 million (US$43 million) contract to operate and manage an airport in Saudi Arabia, its second success in the Middle East.The agreement to run the King Fahd International Airport for six years is the largest it has won in terms of value, the Singapore-based company said in a statement yesterday. Changi Airports beat nine competitors in a bidding process that started in June, it said. - Bloomberg
Blogger's note : That's USD7 million a year to run an airport.
Tuesday, November 18, 2008
Malaysian builders plan RM11b China development
Malaysian builders plan RM11b China development
By Hamisah Hamid
Published: 2008/11/18
BTimes
A GROUP of Malaysian builders plans to build commercial and residential properties with development value of up to RM11 billion in Shenyang, China.The consortium signed a memorandum of understanding with the Shenyang Province authorities in Kuala Lumpur yesterday.A special purpose vehicle, known as Shenyang-Malaysia Development Sdn Bhd (ShenMas), has been formed to undertake the conceptual planning, land acquisition, funding issues and feasibility studies.The project will take place in the Shenyang Finance and Trade Development Zone (SYFTD).
The proposed development, themed "Modern Islamic Lifestyle", is expected to be completed within five years.ShenMas executive director Datuk Lim Kim Wah said a definitive agreement was expected to be signed in June next year."The project is expected to start by the end of next year. We will form a consortium and Bina Puri will be one of the companies," he told a news conference after the signing between ShenMas and the Administrative Committee of Shenyang Province.At the signing, ShenMas was represented by its chairman, Senator Tan Sri Tee Hock Seng, and the Shenyang authority, by vice-director of SYFTD administrative committee, Sui Zhong Qing. The signing was witnessed by the Economic Planning Unit's head of special unit for overseas project, Tan Sri Zaini Omar, and the Chinese embassy's head of mission, Gu Jing Qi.
The project will be developed on a 17.96ha site in one of the most centralised Muslim community living areas in China.Shenyang is the capital city of Liaoning Province. The province is located south of northeast China, which has about 100,000 Muslims.Lim, who is the former group chief executive officer (CEO) of Bandar Raya Development Bhd and Magnum Corp Bhd, said that about 30 per cent of the commercial properties will be sold to foreigners and the rest to locals when the development is completed.
Meanwhile, Islamic Banking and Finance Institute Malaysia (IBFIM) managing director and CEO Datuk Dr Adnan Alias said he did not expect any problems in financing the project.He said the project will use syariah-compliant financing. To date, AmInvestment Bank Group and CIMB Islamic Bank Bhd have issued letters of support for the project.IBFIM is the syariah adviser to the proposed development.The project was made possible because of the close rapport between the Kuala Lumpur Chinese Assembly Hall (KLCAH) and the Shenhe district authority in Shenyang.In August this year, the KLCAH organised a trip to Shenyang, which was led by Adnan.The Shenhe authority said it chose the Malaysian group instead of groups from Singapore and Hong Kong which had approached the authority to develop the land because of Malaysia's leadership in the international Islamic finance sector.
By Hamisah Hamid
Published: 2008/11/18
BTimes
A GROUP of Malaysian builders plans to build commercial and residential properties with development value of up to RM11 billion in Shenyang, China.The consortium signed a memorandum of understanding with the Shenyang Province authorities in Kuala Lumpur yesterday.A special purpose vehicle, known as Shenyang-Malaysia Development Sdn Bhd (ShenMas), has been formed to undertake the conceptual planning, land acquisition, funding issues and feasibility studies.The project will take place in the Shenyang Finance and Trade Development Zone (SYFTD).
The proposed development, themed "Modern Islamic Lifestyle", is expected to be completed within five years.ShenMas executive director Datuk Lim Kim Wah said a definitive agreement was expected to be signed in June next year."The project is expected to start by the end of next year. We will form a consortium and Bina Puri will be one of the companies," he told a news conference after the signing between ShenMas and the Administrative Committee of Shenyang Province.At the signing, ShenMas was represented by its chairman, Senator Tan Sri Tee Hock Seng, and the Shenyang authority, by vice-director of SYFTD administrative committee, Sui Zhong Qing. The signing was witnessed by the Economic Planning Unit's head of special unit for overseas project, Tan Sri Zaini Omar, and the Chinese embassy's head of mission, Gu Jing Qi.
The project will be developed on a 17.96ha site in one of the most centralised Muslim community living areas in China.Shenyang is the capital city of Liaoning Province. The province is located south of northeast China, which has about 100,000 Muslims.Lim, who is the former group chief executive officer (CEO) of Bandar Raya Development Bhd and Magnum Corp Bhd, said that about 30 per cent of the commercial properties will be sold to foreigners and the rest to locals when the development is completed.
Meanwhile, Islamic Banking and Finance Institute Malaysia (IBFIM) managing director and CEO Datuk Dr Adnan Alias said he did not expect any problems in financing the project.He said the project will use syariah-compliant financing. To date, AmInvestment Bank Group and CIMB Islamic Bank Bhd have issued letters of support for the project.IBFIM is the syariah adviser to the proposed development.The project was made possible because of the close rapport between the Kuala Lumpur Chinese Assembly Hall (KLCAH) and the Shenhe district authority in Shenyang.In August this year, the KLCAH organised a trip to Shenyang, which was led by Adnan.The Shenhe authority said it chose the Malaysian group instead of groups from Singapore and Hong Kong which had approached the authority to develop the land because of Malaysia's leadership in the international Islamic finance sector.
Monday, November 17, 2008
GOVT looking at assets to raise revenue
Malaysian Insider
Government looking at assets to raise extra revenue
KUALA LUMPUR, Nov 11 - Desperate times call for unusual measures of raising revenue and drumming up investment. This appears to be the mantra of the Economic Council as it readies the country for slower growth and tougher times, and revisits areas and policies long considered sacred.
For a start, the government is:
# Surveying all the assets it owns – lands, shares in government-linked companies, infrastructure – and assessing which can be monetised.
# Planning to overhaul the Malaysia My Second Home programme to make it easier for foreigners to buy property here. It is also considering allowing those with professional qualifications and above 50 years old to work on a part-time basis. In this way, Malaysian industry can benefit from the skills and knowledge of some of these foreigners who have settled here under the programme.
# Going to make it easier for knowledge workers and their spouses to obtain permits to work in Malaysia. This move will address the lack of talent in several fields including biotechnology which has held back the inflow of investments from abroad.
The Economic Council, which consists representatives from the Cabinet, public sector and corporate captains, was set up a few months ago to come up with strategies to cushion the impact of the global economic turmoil on Malaysia. The 40-member council met yesterday to discuss the state of the economy and structural changes that the country needs to make.
The Malaysian Insider has learnt that the Finance Ministry is conducting an audit of assets that it owns or has a stake in. This will not be the first time that the government is mulling the possibility of raising cash by disposing of its assets. In the past, senior government officials also raised this possibility but it was shot down by more conservative elements who argued that there was little need for such a drastic approach given the steady flow of revenue from Petronas and other sources of growth.
But with crude oil prices slumping, revenue from palm oil likely to be flat and the budget deficit slated to become the highest the in the region at 4.8 per cent of the Gross Domestic Product (GDP), the administration has little choice but to generate revenue from idle assets.
In the stimulus package unveiled by Finance Minister Datuk Seri Najib Razak last week, the government said that it would develop several tracts of land in Sungai Buloh, Jalan Cochrane and Jalan Ampang Hilir. Under this plan, private developers or government-linked companies can bid for parcels of land and then develop it according to a masterplan for the whole area.
Only after the first parcel has been developed, will the government consider selling or leasing the second parcel, presumably at a much higher price than the first parcel. At a roundtable discussion organised by The Edge last week, Datuk Azman Yahya, a member of the Economic Council, said that the government should have a listing of the assets it owns.
“Monetising these assets means many things… it could include selling and leasing back of buildings, sale of property or through leases, you know…It also can be done in a way that the government does not lose ownership in the long run,’’ he said.
Apart from land, the Finance Ministry, Khazanah Nasional and Perbadanan Nasional Berhad also own stakes in companies and government-linked companies including Sime Darby, Tenaga Nasional Berhad and Maybank.
Government looking at assets to raise extra revenue
KUALA LUMPUR, Nov 11 - Desperate times call for unusual measures of raising revenue and drumming up investment. This appears to be the mantra of the Economic Council as it readies the country for slower growth and tougher times, and revisits areas and policies long considered sacred.
For a start, the government is:
# Surveying all the assets it owns – lands, shares in government-linked companies, infrastructure – and assessing which can be monetised.
# Planning to overhaul the Malaysia My Second Home programme to make it easier for foreigners to buy property here. It is also considering allowing those with professional qualifications and above 50 years old to work on a part-time basis. In this way, Malaysian industry can benefit from the skills and knowledge of some of these foreigners who have settled here under the programme.
# Going to make it easier for knowledge workers and their spouses to obtain permits to work in Malaysia. This move will address the lack of talent in several fields including biotechnology which has held back the inflow of investments from abroad.
The Economic Council, which consists representatives from the Cabinet, public sector and corporate captains, was set up a few months ago to come up with strategies to cushion the impact of the global economic turmoil on Malaysia. The 40-member council met yesterday to discuss the state of the economy and structural changes that the country needs to make.
The Malaysian Insider has learnt that the Finance Ministry is conducting an audit of assets that it owns or has a stake in. This will not be the first time that the government is mulling the possibility of raising cash by disposing of its assets. In the past, senior government officials also raised this possibility but it was shot down by more conservative elements who argued that there was little need for such a drastic approach given the steady flow of revenue from Petronas and other sources of growth.
But with crude oil prices slumping, revenue from palm oil likely to be flat and the budget deficit slated to become the highest the in the region at 4.8 per cent of the Gross Domestic Product (GDP), the administration has little choice but to generate revenue from idle assets.
In the stimulus package unveiled by Finance Minister Datuk Seri Najib Razak last week, the government said that it would develop several tracts of land in Sungai Buloh, Jalan Cochrane and Jalan Ampang Hilir. Under this plan, private developers or government-linked companies can bid for parcels of land and then develop it according to a masterplan for the whole area.
Only after the first parcel has been developed, will the government consider selling or leasing the second parcel, presumably at a much higher price than the first parcel. At a roundtable discussion organised by The Edge last week, Datuk Azman Yahya, a member of the Economic Council, said that the government should have a listing of the assets it owns.
“Monetising these assets means many things… it could include selling and leasing back of buildings, sale of property or through leases, you know…It also can be done in a way that the government does not lose ownership in the long run,’’ he said.
Apart from land, the Finance Ministry, Khazanah Nasional and Perbadanan Nasional Berhad also own stakes in companies and government-linked companies including Sime Darby, Tenaga Nasional Berhad and Maybank.
RM350m boost for Danga Bay
RM350m boost for Danga Bay
By Sim Bak Heng
Published: 2008/11/17
BTimes
Johor Baru's iconic development at the Danga Bay will be given another boost with a marina, an international convention centre, a boutique hotel, a budget hotel and an office block scheduled to be completed by 2011.
Announcing this yesterday, Datuk Lim Kang Hoo of Limbongan-Ekovest Management Sdn Bhd, the project manager of Danga Bay, said the company has pumped in RM350 million for this latest development which will take place mainly at the existing sites of the International Restaurants and the Bay Leaf Restaurant.The project, once completed, is set to transform the waterfront into both a business and recreational hub.He said the marina development could provide berthing facility for about 250 yachts, making it the largest marina in Johor and the nearest to the Johor Baru city centre.Boasting strategic location and competitive pricing, this development, scheduled for completion by middle of next year, is set to become a new spot for international sailing boats.
It will stretch for 500 metres along the seafront."Level One of the existing double-storey International Restaurants will be transformed into a Marina Club with a bistro. Level Two and a piece of land just beside the building will be the site of a 60-room boutique hotel offering lifestyle accommodation for tourists with a taste for class."This seafront boutique hotel is the first of its kind in the south. It will be ready in two years."To make Johor Baru a convention hub in the south, we are transforming the existing Bay Leaf Restaurant into a three-hall Bay Leaf International Convention and Exhibition Centre with a capacity for 3,600 people."Also to be featured at the convention centre are meeting rooms, seminar rooms, VIP rooms and a mini-theatre. It is expected to be ready by next January," he said.
Another project coming up at Danga Bay is a 120-room Tune Hotel, a budget hotel, which will be built next to the existing Danga Bay sales office.Following land acquisition as a result of coastal road construction, a multi-storey car park with a capacity for 1,000 vehicles will be built at the existing Celebration Square. An office block to house Danga Bay Sdn Bhd's corporate office will also be built in the vicinity.Danga Bay is a Johor privatisation project involving the state government's development arm Kumpulan Prasarana Rakyat Johor which is the landowner, and the developer Danga Bay Sdn Bhd.It is jointly managed by Ekovest and Pembinaan Limbongan Setia Bhd.To be developed in phases over 15 years, the massive project covers over 562ha of waterfront land at the estuary of three rivers - Sungai Danga, Sungai Skudai and Sungai Melayu.
By Sim Bak Heng
Published: 2008/11/17
BTimes
Johor Baru's iconic development at the Danga Bay will be given another boost with a marina, an international convention centre, a boutique hotel, a budget hotel and an office block scheduled to be completed by 2011.
Announcing this yesterday, Datuk Lim Kang Hoo of Limbongan-Ekovest Management Sdn Bhd, the project manager of Danga Bay, said the company has pumped in RM350 million for this latest development which will take place mainly at the existing sites of the International Restaurants and the Bay Leaf Restaurant.The project, once completed, is set to transform the waterfront into both a business and recreational hub.He said the marina development could provide berthing facility for about 250 yachts, making it the largest marina in Johor and the nearest to the Johor Baru city centre.Boasting strategic location and competitive pricing, this development, scheduled for completion by middle of next year, is set to become a new spot for international sailing boats.
It will stretch for 500 metres along the seafront."Level One of the existing double-storey International Restaurants will be transformed into a Marina Club with a bistro. Level Two and a piece of land just beside the building will be the site of a 60-room boutique hotel offering lifestyle accommodation for tourists with a taste for class."This seafront boutique hotel is the first of its kind in the south. It will be ready in two years."To make Johor Baru a convention hub in the south, we are transforming the existing Bay Leaf Restaurant into a three-hall Bay Leaf International Convention and Exhibition Centre with a capacity for 3,600 people."Also to be featured at the convention centre are meeting rooms, seminar rooms, VIP rooms and a mini-theatre. It is expected to be ready by next January," he said.
Another project coming up at Danga Bay is a 120-room Tune Hotel, a budget hotel, which will be built next to the existing Danga Bay sales office.Following land acquisition as a result of coastal road construction, a multi-storey car park with a capacity for 1,000 vehicles will be built at the existing Celebration Square. An office block to house Danga Bay Sdn Bhd's corporate office will also be built in the vicinity.Danga Bay is a Johor privatisation project involving the state government's development arm Kumpulan Prasarana Rakyat Johor which is the landowner, and the developer Danga Bay Sdn Bhd.It is jointly managed by Ekovest and Pembinaan Limbongan Setia Bhd.To be developed in phases over 15 years, the massive project covers over 562ha of waterfront land at the estuary of three rivers - Sungai Danga, Sungai Skudai and Sungai Melayu.
Builders: Don’t make us wait
Builders: Don’t make us wait
By Ooi Tee Ching
Published: 2008/11/17
Late payments in construction jobs may be a thing of the past as contractors are pushing for Parliament to pass a law to ensure faster payments and quick resolution of disputes.
Currently, although payments should be made within 30 to 60 days, which is the industry practice, it is often not the case.Contractors are now worried that as the economy is expected to slow further, they may have to wait longer for their money.They are now banking on the Construction Industry Payment and Adjudication (CIPA) Bill. Unfortunately, the draft, which was given to the Attorney General's Chambers in early 2007, has not made its way to Parliament.
Clients like government agencies and property developers, architects, engineers, and surveyors have all given their backing.However, the Bar Council, which is not a direct stakeholder in the construction industry, has yet to give its consensus.
"We've initiated this in June 2003 but until now the Bill has yet to be presented to lawmakers in Parliament," said Master Builders Association of Malaysia president Ng Kee Leen.Payment default is still a major problem because payment terms are usually on credit rather than on delivery. This means payment will be made after a certain period, after work is done.Ng said it is ironic that Malaysia has world-class construction standards and yet "mundane" things like timely payments are still not being practised.
"When there is late payment, projects are delayed, squeezing profits along the way. In the case of financially weak contractors, they may face bankruptcy," he told Business Times in an interview."Chronic problems of late and non-payments affect the entire delivery chain of consultants, contractors, building material suppliers, transporters and financiers. A rough calculation will show claims running up to billions of ringgit," he said.On average, construction jobs run into the millions and span over three years. With each progress payment involving big sums, Ng said the enactment of the CIPA Bill is vital to protect contractors' interests."This law will help to minimise payment defaults via timely and cost-efficient recourse to adjudication," he said.
Similar laws are already in practice in the region. Among them are Australia's Building and Construction Industry Security of Payment Act 2002, New Zealand's Construction Contracts Act 2002 and and Singapore's Building and Construction Industry Security of Payment Act 2004.In a separate interview, Malay Contractors Association, representing some 7,000 Bumiputera contractors, strongly support the CIPA Bill to be enacted as soon as possible.The association secretary general Datuk Osman Abu Bakar said traditionally payment disputes have been resolved via arbitration.Although the intent of arbitration was for a fast, cheap and binding resolution, the reality is different."A typical arbitration on construction dispute could take from a year to five. Payment disputes are rarely solved in less than a year," he said.
The CIPA Bill provides for contemporaneous resolution via adjudication within 14 to 42 days.Pending enactment of the CIPA Bill, the association appeals to banks and financial institutions not to take drastic action against Bumiputera contractors."Credit lines are vital to facilitate completion of construction projects. We appeal to the banks to be more understanding," he said.
By Ooi Tee Ching
Published: 2008/11/17
Late payments in construction jobs may be a thing of the past as contractors are pushing for Parliament to pass a law to ensure faster payments and quick resolution of disputes.
Currently, although payments should be made within 30 to 60 days, which is the industry practice, it is often not the case.Contractors are now worried that as the economy is expected to slow further, they may have to wait longer for their money.They are now banking on the Construction Industry Payment and Adjudication (CIPA) Bill. Unfortunately, the draft, which was given to the Attorney General's Chambers in early 2007, has not made its way to Parliament.
Clients like government agencies and property developers, architects, engineers, and surveyors have all given their backing.However, the Bar Council, which is not a direct stakeholder in the construction industry, has yet to give its consensus.
"We've initiated this in June 2003 but until now the Bill has yet to be presented to lawmakers in Parliament," said Master Builders Association of Malaysia president Ng Kee Leen.Payment default is still a major problem because payment terms are usually on credit rather than on delivery. This means payment will be made after a certain period, after work is done.Ng said it is ironic that Malaysia has world-class construction standards and yet "mundane" things like timely payments are still not being practised.
"When there is late payment, projects are delayed, squeezing profits along the way. In the case of financially weak contractors, they may face bankruptcy," he told Business Times in an interview."Chronic problems of late and non-payments affect the entire delivery chain of consultants, contractors, building material suppliers, transporters and financiers. A rough calculation will show claims running up to billions of ringgit," he said.On average, construction jobs run into the millions and span over three years. With each progress payment involving big sums, Ng said the enactment of the CIPA Bill is vital to protect contractors' interests."This law will help to minimise payment defaults via timely and cost-efficient recourse to adjudication," he said.
Similar laws are already in practice in the region. Among them are Australia's Building and Construction Industry Security of Payment Act 2002, New Zealand's Construction Contracts Act 2002 and and Singapore's Building and Construction Industry Security of Payment Act 2004.In a separate interview, Malay Contractors Association, representing some 7,000 Bumiputera contractors, strongly support the CIPA Bill to be enacted as soon as possible.The association secretary general Datuk Osman Abu Bakar said traditionally payment disputes have been resolved via arbitration.Although the intent of arbitration was for a fast, cheap and binding resolution, the reality is different."A typical arbitration on construction dispute could take from a year to five. Payment disputes are rarely solved in less than a year," he said.
The CIPA Bill provides for contemporaneous resolution via adjudication within 14 to 42 days.Pending enactment of the CIPA Bill, the association appeals to banks and financial institutions not to take drastic action against Bumiputera contractors."Credit lines are vital to facilitate completion of construction projects. We appeal to the banks to be more understanding," he said.
Saturday, November 15, 2008
Why China's Stimulus Plan Will Change the World
Why China's Stimulus Plan Will Change the World
By Bill Mann and Tim Hanson
November 12, 2008
Brazil's President Lula told his country in September, "People ask me about the [financial] crisis, and I answer, go ask Bush. It is his crisis, not mine."
Fifty days later, British Treasury Secretary Stephen Timms told a conference of G-20 nations gathered in Sao Paulo, Brazil: "We are in extraordinary times, the global economy is facing shocks which are wholly without precedent and we need a new approach. … It is a global crisis. It therefore requires an international response."
In other words, what goes around, comes around. Global schadenfreude toward a stupid and greedy United States and its subprime mortgage meltdown has rapidly become global concern about how to rescue the world from an all-encompassing financial disaster. Here's just a smattering of companies large and small that recently announced lowered outlooks for the year: Under Armour (NYSE: UA), News Corp. (NYSE: NWS), Starbucks (Nasdaq: SBUX), Vodafone (NYSE: VOD), Electronic Arts (Nasdaq: ERTS), ADP (NYSE: ADP), and Hormel (NYSE: HRL). (Yes, in these tough times, even the outlook for Spam is grim.)
And if that were not enough, the International Monetary Fund (IMF) recently lowered its outlook for the entire global economy.
One country's plan to step up
Against that backdrop, China announced a 4-trillion-yuan ($586 billion) stimulus package for its domestic economy this past Sunday. It plans to fund extensive infrastructure construction, aid poor farmers, and cut export taxes.
While China's plan has clear beneficiaries, and should help keep more laborers in their jobs and prop up domestic consumer spending, the most important (and underreported) aspect of the plan is how it will fundamentally change the economic relationship between the U.S. and China.
Here's how it was
One of the big debates over the past half-decade was whether China had reached a point in its economic development at which its internal economic gravity would allow it to "decouple" from the global economy. If so, it could continue along its fantastic growth trajectory, even as growth in the U.S. or Europe ceased or reversed.
That may sound like gobbledygook, but it's important. The U.S. has a $20 billion monthly trade deficit with China. It's funded by China's willingness to hold U.S. treasuries in its Central Bank (essentially, we're borrowing the money). China manages the arrangement by pegging its currency (the yuan) to the dollar at an artificially low rate, and by not worrying so much about certain niceties like environmental regulation and labor protection.
It's a mutually beneficial arrangement -- a weak yuan supports Chinese exporters, helping the country industrialize and quickly integrate rural migrants into its urban workforce, with the salutary effect of keeping inflation and potential political unrest low. For its part, the U.S. has gotten dirt cheap financing, by virtue of China parking more than a trillion dollars in U.S. government securities. That has supported the dollar and allowed the Federal Reserve to fuel consumer spending by keeping interest rates low.
China's stimulus package heralds the unwinding of this relationship.
Here's how it will be
This is why the decoupling argument matters. Many analysts have pointed to the thousands of factories that have shut down in China in these past few months as evidence that a slowdown in American spending will cause a depression in China -- potentially even leading to regime change. But in fact, our trade imbalance with China is artificially preserved by the aforementioned currency peg, and by the decision of China's state-run banks to make uneconomic loans to businesses it deemed worth propping up.
China has paid heavily for this relationship. Rather than invest its surplus cash in its own country, the Chinese poured money back into the U.S. to further spur our debt-fueled consumption. (Put less artfully, some poor Chinese guy in Shaanxi province was essentially helping you pay your mortgage.)
The announced stimulus package reverses that. Hundreds of billions of dollars that would have gone to propping up the greenback are now being reinvested in China, helping it to transition from its reliance on exports to a self-sustaining economy. So while China isn't yet decoupled from its export markets, this new spending plan will help it along that path.
What you need to do to survive China's huge currency reserves are about to be put to use, and while there will be some real and perhaps severe bumps along the way, the China that comes out on the other side will be a heck of a lot stronger, more independent, and more decoupled than the one we've seen up to now.
Chinese premier Wen Jiabao called his country's stimulus the "biggest contribution to the world." We don't know whether that's true, but we do know that China's ability to reach deep into its huge coffers to finance further growth gives it a significant advantage over the rest of the world's struggling economies. This is why we continue to believe in the Chinese miracle, and why we think more American investors should be taking advantage of this current temporary downturn to diversify their portfolios into previously expensive Chinese stocks.
We've recommended some Chinese companies at our Motley Fool Global Gains service that can help you do just that. A few of them are now poised to profit mightily from China's domestic bailout plan. You can read all about them by clicking here to join Global Gains free for 30 days.
Starbucks is a Motley Fool Inside Value recommendation. Vodafone is a former Inside Value selection. Starbucks and Electronic Arts are Stock Advisor picks. Under Armour is both a Rule Breakers and a Motley Fool Hidden Gems selection.
Bill is the advisor of Motley Fool Global Gains. Tim is a Global Gains senior analyst. Bill does not
own shares of any company mentioned. Tim own shares of Starbucks. The Fool owns shares of Starbucks and Under Armour. Since the fantasy football playoffs are approaching, the Fool's disclosure policy not-so-humbly requests that Braylon Edwards stop dropping the dang ball. Seriously, a fourth-grader could have caught some of those passes, dude.
By Bill Mann and Tim Hanson
November 12, 2008
Brazil's President Lula told his country in September, "People ask me about the [financial] crisis, and I answer, go ask Bush. It is his crisis, not mine."
Fifty days later, British Treasury Secretary Stephen Timms told a conference of G-20 nations gathered in Sao Paulo, Brazil: "We are in extraordinary times, the global economy is facing shocks which are wholly without precedent and we need a new approach. … It is a global crisis. It therefore requires an international response."
In other words, what goes around, comes around. Global schadenfreude toward a stupid and greedy United States and its subprime mortgage meltdown has rapidly become global concern about how to rescue the world from an all-encompassing financial disaster. Here's just a smattering of companies large and small that recently announced lowered outlooks for the year: Under Armour (NYSE: UA), News Corp. (NYSE: NWS), Starbucks (Nasdaq: SBUX), Vodafone (NYSE: VOD), Electronic Arts (Nasdaq: ERTS), ADP (NYSE: ADP), and Hormel (NYSE: HRL). (Yes, in these tough times, even the outlook for Spam is grim.)
And if that were not enough, the International Monetary Fund (IMF) recently lowered its outlook for the entire global economy.
One country's plan to step up
Against that backdrop, China announced a 4-trillion-yuan ($586 billion) stimulus package for its domestic economy this past Sunday. It plans to fund extensive infrastructure construction, aid poor farmers, and cut export taxes.
While China's plan has clear beneficiaries, and should help keep more laborers in their jobs and prop up domestic consumer spending, the most important (and underreported) aspect of the plan is how it will fundamentally change the economic relationship between the U.S. and China.
Here's how it was
One of the big debates over the past half-decade was whether China had reached a point in its economic development at which its internal economic gravity would allow it to "decouple" from the global economy. If so, it could continue along its fantastic growth trajectory, even as growth in the U.S. or Europe ceased or reversed.
That may sound like gobbledygook, but it's important. The U.S. has a $20 billion monthly trade deficit with China. It's funded by China's willingness to hold U.S. treasuries in its Central Bank (essentially, we're borrowing the money). China manages the arrangement by pegging its currency (the yuan) to the dollar at an artificially low rate, and by not worrying so much about certain niceties like environmental regulation and labor protection.
It's a mutually beneficial arrangement -- a weak yuan supports Chinese exporters, helping the country industrialize and quickly integrate rural migrants into its urban workforce, with the salutary effect of keeping inflation and potential political unrest low. For its part, the U.S. has gotten dirt cheap financing, by virtue of China parking more than a trillion dollars in U.S. government securities. That has supported the dollar and allowed the Federal Reserve to fuel consumer spending by keeping interest rates low.
China's stimulus package heralds the unwinding of this relationship.
Here's how it will be
This is why the decoupling argument matters. Many analysts have pointed to the thousands of factories that have shut down in China in these past few months as evidence that a slowdown in American spending will cause a depression in China -- potentially even leading to regime change. But in fact, our trade imbalance with China is artificially preserved by the aforementioned currency peg, and by the decision of China's state-run banks to make uneconomic loans to businesses it deemed worth propping up.
China has paid heavily for this relationship. Rather than invest its surplus cash in its own country, the Chinese poured money back into the U.S. to further spur our debt-fueled consumption. (Put less artfully, some poor Chinese guy in Shaanxi province was essentially helping you pay your mortgage.)
The announced stimulus package reverses that. Hundreds of billions of dollars that would have gone to propping up the greenback are now being reinvested in China, helping it to transition from its reliance on exports to a self-sustaining economy. So while China isn't yet decoupled from its export markets, this new spending plan will help it along that path.
What you need to do to survive China's huge currency reserves are about to be put to use, and while there will be some real and perhaps severe bumps along the way, the China that comes out on the other side will be a heck of a lot stronger, more independent, and more decoupled than the one we've seen up to now.
Chinese premier Wen Jiabao called his country's stimulus the "biggest contribution to the world." We don't know whether that's true, but we do know that China's ability to reach deep into its huge coffers to finance further growth gives it a significant advantage over the rest of the world's struggling economies. This is why we continue to believe in the Chinese miracle, and why we think more American investors should be taking advantage of this current temporary downturn to diversify their portfolios into previously expensive Chinese stocks.
We've recommended some Chinese companies at our Motley Fool Global Gains service that can help you do just that. A few of them are now poised to profit mightily from China's domestic bailout plan. You can read all about them by clicking here to join Global Gains free for 30 days.
Starbucks is a Motley Fool Inside Value recommendation. Vodafone is a former Inside Value selection. Starbucks and Electronic Arts are Stock Advisor picks. Under Armour is both a Rule Breakers and a Motley Fool Hidden Gems selection.
Bill is the advisor of Motley Fool Global Gains. Tim is a Global Gains senior analyst. Bill does not
own shares of any company mentioned. Tim own shares of Starbucks. The Fool owns shares of Starbucks and Under Armour. Since the fantasy football playoffs are approaching, the Fool's disclosure policy not-so-humbly requests that Braylon Edwards stop dropping the dang ball. Seriously, a fourth-grader could have caught some of those passes, dude.
Thursday, November 13, 2008
West Coast Highway shelved
The RM3.12 billion West Coast Highway project has been shelved as the consortium involved failed to secure financing in the stipulated time.
The Talam/Europlus Bhd consortium had been awarded the project to build a 250km road linking Taiping in Perak to Banting in Selangor."We will probably need to re-tender because the company offered the job could not finalise the deal as the financial (part was not done) in time, which is after almost 15 months," Economic Planning Unit (EPU) director Tan Sri Dr Sulaiman Mahbob said yesterday.He was speaking at a question-and-answer session at the briefing and panel discussion, "Towards Sustained Economic Growth to Counter the Global Economic Slowdown", in Kuala Lumpur.On the Selangor-Pahang water transfer project, Sulaiman said that tenders were being called. - Bernama
The Talam/Europlus Bhd consortium had been awarded the project to build a 250km road linking Taiping in Perak to Banting in Selangor."We will probably need to re-tender because the company offered the job could not finalise the deal as the financial (part was not done) in time, which is after almost 15 months," Economic Planning Unit (EPU) director Tan Sri Dr Sulaiman Mahbob said yesterday.He was speaking at a question-and-answer session at the briefing and panel discussion, "Towards Sustained Economic Growth to Counter the Global Economic Slowdown", in Kuala Lumpur.On the Selangor-Pahang water transfer project, Sulaiman said that tenders were being called. - Bernama
Wednesday, November 5, 2008
IJM set to ride on pump-priming measures
Wednesday November 5, 2008
IJM set to ride on pump-priming measures
SUBANG: IJM Corp Bhd sees potential of replenishing its present order book of RM4.6bil as governments around the world pump prime their economies.
“Apart from putting money directly into the people’s pockets via tax reduction and rebates, governments will stimulate construction activities. If that happens, there will be more construction projects,” managing director Datuk Krishnan Tan said after the company EGM yesterday.
IJM will continue to scout for opportunities in its existing markets including India, Malaysia, United Arab Emirates and Bahrain. “We’re talking about 66,000km of roads to be created in India and only 13,000km of that had been completed. The key is the availability of funding.
Private participation will be difficult because of scarcity of cash, so it must be via government spending,” Tan said.
The Middle Eastern countries were likely to maintain their level of investments as “they’re still making a lot of money with oil price at US$70 per barrel,” he added.
“We have a fairly sizeable order book of about RM4.6bil and a chewing rate of RM200mil per month. Our businesses are still very strong even if there is margin comprehension issue relating to construction.”
While domestic fuel prices have been re-adjusted and steel prices come off from almost RM4,000 per tonne to RM2,850, prices of other materials like cement have seen little change.
Prices of oil, bitumen and cement in India were unchanged, hence keeping pressure on margins, he said.
Meanwhile, Industrial Concrete Products Bhd (ICP), a subsidiary of IJM which provides pretensioned-spun concrete piles and ready-mixed concrete for Malaysia, India and China, is enjoying relatively strong pricing. Tan said demand for concrete piles and ready-mixed concrete was still positive, driven by regional port expansions and major infrastructure works. However, if material prices were to dip, ICP’s pricing would have to decline too. “We don’t think there will be major impact in margins as it’ll be driven by reduction in input cost,” he added.
Given the credit tightening in various markets that the group operates in, IJM may see a delay in payments for its construction jobs. “So far, we have not seen the situation (of delayed payments) but, considering that liquidity may be an issue in some of our markets going forward, I won’t be surprised if we see a level of difficulty in some of our clients,” Tan said.
Contractors were usually the first to be hit by credit tightening, he said, given that the construction sector tended to be a high risk one.
“We are very careful with whom we deal and, therefore, we do not see defaults as far as payments are concerned but we can expect some delays,” he said, adding that progress of existing construction projects, however, would be on schedule. Building material transactions in India, meanwhile, were mostly in cash, hence limiting payment risks, Tan said. Meanwhile, the group’s property segment may delay launches for medium-cost housing in the cities due to pressure on disposable income.
Yesterday, IJM secured shareholders’ approval to proceed with the privatisation of ICP. It is offering to buy the remaining ICP shares it does not own via a combination of cash and issuance of new IJM shares. As at Monday, it had already increased its ICP stake to 83.9%. Today is the deadline for ICP shareholders to accept IJM’s offer.
IJM set to ride on pump-priming measures
SUBANG: IJM Corp Bhd sees potential of replenishing its present order book of RM4.6bil as governments around the world pump prime their economies.
“Apart from putting money directly into the people’s pockets via tax reduction and rebates, governments will stimulate construction activities. If that happens, there will be more construction projects,” managing director Datuk Krishnan Tan said after the company EGM yesterday.
IJM will continue to scout for opportunities in its existing markets including India, Malaysia, United Arab Emirates and Bahrain. “We’re talking about 66,000km of roads to be created in India and only 13,000km of that had been completed. The key is the availability of funding.
Private participation will be difficult because of scarcity of cash, so it must be via government spending,” Tan said.
The Middle Eastern countries were likely to maintain their level of investments as “they’re still making a lot of money with oil price at US$70 per barrel,” he added.
“We have a fairly sizeable order book of about RM4.6bil and a chewing rate of RM200mil per month. Our businesses are still very strong even if there is margin comprehension issue relating to construction.”
While domestic fuel prices have been re-adjusted and steel prices come off from almost RM4,000 per tonne to RM2,850, prices of other materials like cement have seen little change.
Prices of oil, bitumen and cement in India were unchanged, hence keeping pressure on margins, he said.
Meanwhile, Industrial Concrete Products Bhd (ICP), a subsidiary of IJM which provides pretensioned-spun concrete piles and ready-mixed concrete for Malaysia, India and China, is enjoying relatively strong pricing. Tan said demand for concrete piles and ready-mixed concrete was still positive, driven by regional port expansions and major infrastructure works. However, if material prices were to dip, ICP’s pricing would have to decline too. “We don’t think there will be major impact in margins as it’ll be driven by reduction in input cost,” he added.
Given the credit tightening in various markets that the group operates in, IJM may see a delay in payments for its construction jobs. “So far, we have not seen the situation (of delayed payments) but, considering that liquidity may be an issue in some of our markets going forward, I won’t be surprised if we see a level of difficulty in some of our clients,” Tan said.
Contractors were usually the first to be hit by credit tightening, he said, given that the construction sector tended to be a high risk one.
“We are very careful with whom we deal and, therefore, we do not see defaults as far as payments are concerned but we can expect some delays,” he said, adding that progress of existing construction projects, however, would be on schedule. Building material transactions in India, meanwhile, were mostly in cash, hence limiting payment risks, Tan said. Meanwhile, the group’s property segment may delay launches for medium-cost housing in the cities due to pressure on disposable income.
Yesterday, IJM secured shareholders’ approval to proceed with the privatisation of ICP. It is offering to buy the remaining ICP shares it does not own via a combination of cash and issuance of new IJM shares. As at Monday, it had already increased its ICP stake to 83.9%. Today is the deadline for ICP shareholders to accept IJM’s offer.
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