Sunday, December 27, 2009
The number of passengers flying via Jakarta's Soekarno Hatta airport increases by 15 percent in 2009 to 36 million people, Tempointeraktif.com reported Sunday.
By the end of November, the number of passengers already reached 33.78 million people, already surpassing the 2008 number of around 32 million, according to Endang Supriadi, head of the airport's data administration division.
Endang said that the number of passengers flying via the airport's Terminal I, II and III now had already reached over 100,000 people daily, and therefore, by the end of this year, the number could reach 36 million.
"Looking at this trend, we expect that the number could increase by 15 percent by the end of the year," Endang told Tempointeraktif.com, adding that the increase was exceeding the airport's earlier projection of 10 percent increase.
Endang noted that the increase was made possible with the availability of more flights to new destinations in the country and the relatively low fares as well as fewer accidents.
By Morgan Housel
December 24, 2009 Comments (16)
(From The Motley Fool. http://www.fool.com/)
It all started with a panic …
Y2K Ripple Effect Could Spell Doom for Many Businesses
Business Wire, Dec. 28, 1999
That never happened …
First Business Day of Y2K Uneventful
The Associated Press, Jan. 3, 2000
So the party continued …
Analysts Agree Market Has Only Witnessed Start of Internet fever; No End in Sight for Tech Craze
Morning Post, March 26, 2000
The crazies showed up …
Dow 36,000? Why Stop There? Some Wall Street Pundits Say There's No Limit to How High it Can Go
National Post, Oct. 2, 1999
Lured by riches …
Bill Gates Net Worth Draws Close to $100 Billion
USA TODAY, Jan. 21, 1999
Drowning in denial …
The Stock Market Bubble That Is Likely To Go On Floating
Scotland on Sunday, March 26, 2000
Until sanity prevailed …
Bubble Bound to Burst When the Cash Fails to Materialize
Guardian, March 24, 2000
And the fun ended …
Bubble Bursts: Iron Laws of the Market Bring a Sharp Dose of Reality
Guardian, Dec. 30, 2000
Amazon.com (Nasdaq: AMZN). Cisco (Nasdaq: CSCO). Microsoft (Nasdaq: MSFT). Yahoo! (Nasdaq: YHOO) shares crash. Hangover ensues.
But just when we thought it was over …
Two Planes Crash into World Trade Center in Apparent Terrorist Attack; Tower Collapses to the Ground
AP Newswire, Sept. 11, 2001
Markets panicked …
Wall Street to Remain Closed in Wake of Terrorist Strikes
The Times, Sept. 13, 2001
Adding insult to injury …
•Enron Admits to Overstating Profits by About $600 Million
New York Times, Nov. 9, 2001
•WorldCom Says Nearly $3.8 Billion Hidden in its Books
The Associated Press, June, 2002
•Adelphia Files for Chapter 11 Bankruptcy Protection After Scandal
The Associated Press, June 25, 2002
How'd that all happen?
Enron Was Standard for Deregulation
Copley News Service, Nov. 29, 2001
Oh, that's right.
By now, investors are disillusioned with stock market shenanigans. But no need to worry …
Cure for a Burst Bubble: Another Bubble
National Post, Dec. 20, 2001
O ... K. Where?
New Home Buyers, Don't Fret!; Economy Slows, But Home Sales Are Hot
Toronto Sun, Nov. 2, 2001
Hmm. Tell me more …
Weathering Recession, Housing Market Continues to Roar
The Associated Press, March, 2002
I'm listening …
Fannie Mae Sees No End to Housing Boom
United Press International, Jan. 22, 2002
Sold! And it kept going …
Housing Market Surges to Record Levels
World Markets Analysis, Aug. 27, 2002
and going …
More People are Looking to Remortgage Their Property
Money Management, July 1, 2003
and going …
Home Construction Soars to 17-Year High; October Figures Defy Predictions of Decline
Washington Post, Nov. 20, 2003
And it can't be stopped …
Median Home Price Up 9.1%
USA TODAY, Aug. 27, 2004
Creating all sorts of wealth …
Buyers Turn Rising Equity into Major Spending Tool
Washington Times, Sept. 27, 2005
Fueling all sorts of fun …
'Tis the Season to go Shopping: 5% Surge Expected
FP Investing, Dec. 7, 2005
Until people got nervous …
Steep Rise in Prices for Homes Adds to Worry About a Bubble
New York Times, May 25, 2005
Even this guy spoke up:
Greenspan Is Concerned About 'Froth' In Housing
New York Times, May 21, 2005
(He's extremely observant.)
Home Sales Drop 3rd Month in Row; Market Cooling Off Faster Than Expected
USA TODAY, Jan. 26, 2006
The dam breaks …
Desperation Sets In While Homes Sit for Months With No Offers
USA TODAY, Oct. 26, 2006
And some people asked …
When Does A Housing Slump Become A Bust?
New York Times, June 17, 2007
Maybe when this happens:
Rising Defaults Shut Down Two Hedge Funds; Bernanke Says Subprime Fallout Will Hurt Economy
Washington Times, July 19, 2007
Yeah, that's when you panic …
Mortgage-Backed Securities Spread U.S. Subprime Woes Abroad
USA TODAY, Aug. 14, 2007
And panic we did …
1907 Panic: Subprime Fallout Draws Comparisons
The Gazette, Aug. 10, 2007
Until Ben Bernanke flew in …
Fed Cuts Interest Rate Half Point, Stock Markets Soar
New York Times, Sept. 19, 2007
And before long …
Dow Soars Past 14,000 To Register New All-Time High
The Frontrunner, Oct. 2, 2007
Sweet! Crisis averted.
Cayne Out As Bear Stearns CEO
The Associated Press, Jan. 9, 2008
What … the … heck is going on here?
Bear Stearns Responds to Rumors, Says Balance Sheet, Liquidity, Capital Remain Strong
The Associated Press, March 10, 2008
Phew. Had me worried there.
Shares of Bear Stearns Plummet on Fears Bank is in Danger of Insolvency
The Associated Press, March 13, 2008
Uh … oh …
Bear Stearns Bailed Out by Fed, JPMorgan
The Associated Press, March 14, 2008
Thank you, JPMorgan Chase (NYSE: JPM). Now carry on like nothing happened.
U.S. Stock Rally Fuels Dow Close Above 13,000
MarketWatch, May 1, 2008
See how easy that is?
Taxpayers Take on Trillions in Risk; Fannie, Freddie Placed Under Conservatorship
USA TODAY, Sept. 8, 2008
Crap. Time to stock up on toilet paper …
•Wall Street Chaos: Lehman Bankrupt, Bank of America Buys Merrill
AP Newswire, Sept 15, 2008
•Government Bails Out AIG with $85 Billion Loan
The Associated Press, Sept. 17, 2008
Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS) prepare to get flushed, when …
Bush Asks Congress for $700 Billion for Bailout
The Associated Press, Sept. 20, 2008
Panic ensues …
U.S. Stocks Slide, Dow Plunges 777 Points
MarketWatch, Sept. 29, 2008
Neurosis ensues …
Dow Ends Up Almost 900 points
The Associated Press, Oct. 29, 2008
We all give up …
Investors Throw In the Towel
Slate Magazine, March 3, 2009
Before long, hope returns …
Stocks Move Higher as Industrial Production Rises
The Associated Press, Sept. 16, 2009
Barriers are reclaimed …
Dow Crosses 10,000
MarketWatch, Oct. 14, 2009
And we end this story …
Dow Jones Industrial Average, Dec. 23, 2009: 10,466
About where we started …
Dow crosses 10,000
Associated Press Worldstream, March 16, 1999
Here's to a more prosperous decade. Happy Holidays, Fools.
Fool contributor Morgan Housel doesn't own shares in any of the companies mentioned in this article. Amazon.com is a Motley Fool Stock Advisor selection. Microsoft is a Motley Fool Inside Value pick. Motley Fool Options has recommended diagonal calls on Microsoft. The Fool has a disclosure policy.
For the government’s economic team, 2010 will be a decisive year to demonstrate its competence in settling the accumulation of five years of homework resolving the protracted problems that are stifling infrastructure development.
A set of policies aimed at expediting key infrastructure projects, notably highway and power projects, were unveiled in late October for all levels of government to work on.
Among the policies widely expected next year is a revision of a 2006 presidential decree on land clearance for public interest and a law on the revocation of land ownership rights.
According to Public Works Minister Djoko Kirmanto earlier this month, a revision to the presidential decree would include the halving of the land price negotiation period from 120 days to 60 days. The private sector will also be allowed to start construction of government-initiated projects as soon as 51 percent of the required land has been cleared.
Djoko is optimistic that all land-purchase policies, especially those for toll road projects, can be passed by the end of January. However, revisions to land clearance laws, he said, would take longer as they would need to be deliberated among lawmakers.
According to Djoko, the government’s negotiation team for land clearance will also be overhauled because its members are made up of incompetent officials working for local administrations.
Most infrastructure projects have hit roadblocks as landowners refuse to sell their land at market prices, demanding prices that often reach irrational levels.
Of the 1,000 kilometers of toll road projects linking the Eastern and Western tips of Java, planned in 2004, only around 40 kilometers have been constructed thus far, according to the Public Works Ministry. (Ha ha ha - blogger)
The Central Statistics Agency reveals growth in highway capacity, excluding toll roads, only reached an average of 3 percent annually between 2002 and 2007.
As of the end of 2007, Indonesia only has 421,535 kilometers of road linking its 1.91 million square-kilometers of land.
Analysts have voiced concerns that limited highway capacity — including toll roads — has already created a bottleneck in logistics and distribution of goods, undermining the nation’s competitiveness.
In order for the private sector to feel secure in building more highways, toll roads and power plants, the government is slated to form a company next year that will cover all risks when participating in government-initiated infrastructure projects.
The company, dubbed as PT Penjamin Infrastruktur Indonesia, will function as an insurer to any risk exposed to the private sector.
The company will complement the already established state-run financing company PT Sarana Multi Infrastruktur in managing the construction of infrastructure.
Aside from highway and toll road projects, the government has also pledged to accelerate the development of its first and second phases of 10,000-megawatt (MW) power plants.
Nearly half of the projects included in the first phase could be ready by the second half of 2010, falling short of the target of being entirely operational in 2009.
Among the policies proposed to accelerate construction is a revision to a set of regulations that will eventually enable state-run power company PT Perusahaan Listrik Negara (PLN) to have flexibility in determining the electricity prices purchased from independent power producers (IPPs).
Under the existing regulations, the government is setting a price cap for PLN when negotiating an electricity purchase with the private sector, regardless any impact from inflation and unexpected soaring costs of plant construction.
According to the Energy and Mineral Resources Ministry, only 18 percent of 50 private companies willing to construct power plants have so far secured a deal with PLN and licenses from the government.
Due to the difficulties, several resource-rich provinces are currently under a protracted plague of electricity shortage.
Aside from limited electricity supplies, the business community is also concerned with interruptions in power distribution due to PLN’s already overstretched facilities.
The company, which has a monopoly in electricity distribution, has recently suffered problems in its storage and transmission networks, which has resulted in rotating blackouts in many parts of the country, most notably in Greater Jakarta.
PLN will need an investment of US$933 million to overhaul and expand its transmission networks next year, according to the company’s president director Fahmi Mochtar.
The company, he said, could only provide 78 percent of the funds, with sourcing for the outstanding amount still being worked out.
Critics have said problems in the company’s sagging facilities had actually been noticed by policy makers as long as five years ago. However, no measures have been proposed.
A combination of stiff bureaucratic mentality and poor coordination among ministries and agencies have contributed to sluggish infrastructure development.
Doubts are lingering in the business community over the ability of economic ministers and bureaucrats to resolve the coordination problems, exacerbated by overlapping regulations.
Several key policies to watch for:
1. Policy synchronization for spatial planning.
2. Revision in land clearance regulations and laws.
3. Reform at the National Land Agency.
4. The forming of the risk-mitigating company for infrastructure PT Penjamin Infrastruktur Indonesia.
5. Regulation issued on forest conversion.
6. Revision to government regulations on the use of idle land.
7. Revision to government and ministerial regulations to increase the portion of coal allocated for the domestic market.
8. Revision to regulations related to PLN’s purchase of electricity from the private sector.
Source: The Office of the Coordinating Minister for the Economy
The author is a staff writer at The Jakarta Post.
Sunday, December 20, 2009
Sunday December 20, 2009
PETALING JAYA: Land clearing work for the main Putra Heights LRT station has started.
A check at the proposed site of the station, which will act as an interchange for commuters using the Kelana Jaya and Ampang lines, showed that the area has been cleared of undergrowth.
Construction of the extended LRT lines is scheduled to begin in March next year.
At least 90% of the public have responded positively towards the proposal since it was first announced three months ago.
The proposed extension plan was displayed for a three-month public viewing at the Department of Railways, the Kuala Lumpur City Hall (DBKL), Subang Jaya Municipal Council, Shah Alam City Council (MBSA) and Petaling Jaya City Council (MBPJ).
The deadline for the public to give feedback on the 34km extension ended on Dec 14.
Syarikat Prasarana Negara Berhad (SPNB) communications general manager Ebi Azly Abdullah said some resident associations wanted some of the new routes and stations to be reviewed, but none objected to the extension.
“Overall, the public agreed that we should build this extended line. Some resident associations from Taman Bunga Negara, Subang Alam, Section 2 and 3 of Putra Heights objected, but not against the extension as a whole. They want the route and location of stations at some parts to be reviewed,” he told The Star.
The Kelana Jaya-Putra Heights extension, estimated to cost about RM6bil to RM7bil, will have 13 stations, starting with Kelana Jaya/Subang Valley, Subang, Subang Jaya, USJ, and Alam Megah before ending at Putra Heights.
The Sri Petaling-Putra Heights line, also with 13 stations, is estimated to cost RM8bil and cuts across Puchong and Kinrara.
Ebi said construction would begin early next year and expected to complete by the end of 2012.
“However, this would depend on the changes that need to be made to some routes based on the feedback and suggestions received from local authorities,” he said.
Friday, November 13, 2009
Oleh ZULKIFLI JALIL, HELMI MOHD. FOAD dan THOMAS CHONGpengarang@utusan.com.my
PUTRAJAYA 11 Nov. – Malaysia dan China hari ini bersetuju untuk meningkatkan perdagangan dan pelaburan dua hala terutama dalam bidang kelapa sawit dan kayu-kayan.
Perkara itu dinyatakan Perdana Menteri, Datuk Seri Najib Tun Razak hari ini, hasil rundingan bersama dengan Hu Jintao di Bangunan Perdana Putra di sini sempena lawatan rasmi dua hari Presiden China itu ke Malaysia. Pada sidang akhbar bersama dengan Jintao, Najib berkata, China yang merupakan rakan dagangan terbesar Malaysia berharap perdagangan dua hala akan berkembang pada masa depan.
‘‘Beliau menyatakan hasrat China untuk meningkatkan permintaan melibatkan minyak sawit dan kayu-kayan.
‘‘Kedua-dua pihak juga bersetuju projek Jambatan Kedua Pulau Pinang akan dilaksanakan dengan lancarnya dan kemungkinan lain melibatkan komitmen Malaysia untuk memberi projek pembinaan kepada syarikat China dalam membangunkan Empangan Mengkuang (di Seberang Perai) serta kerjasama dalam projek kilang kertas dan kilang melebur aluminium di Sarawak.
‘‘Malaysia juga bersetuju pada prinsipnya untuk memberi projek landasan berkembar dari Gemas ke Johor Bahru kepada (syarikat) China,” kata beliau.
Sebanyak lima memorandum persefahaman (MoU) berkaitan perbankan, pengajian tinggi dan pembetungan ditandatangani antara beberapa kementerian dengan syarikat China sempena lawatan Jintao itu.
Ketika ini pelaburan China di Malaysia bernilai AS$134 juta sementara pelaburan Malaysia di republik berkenaan berjumlah AS$1.36 bilion.
Sebanyak 67 peratus eksport Malaysia ke China terdiri daripada barangan elektrik dan elektronik serta komoditi terutama minyak sawit.
Pada masa sama, 65 peratus import Malaysia dari China juga melibatkan barangan elektrik dan elektronik, mesin dan alat ganti.
Sambil menyifatkan pertemuan dengan Jintao berlangsung dalam suasana amat baik, Perdana Menteri berkata, mereka berkongsi pandangan betapa hubungan Kuala Lumpur-Beijing telah memasuki fasa lebih menarik.
‘‘Kita komited untuk melonjakkan hubungan ini ke tahap lebih tinggi,” kata beliau.
Friday, November 6, 2009
Malaysian Mirror Wed 4/11/09
THE Government has identified three major railway lines to improve the national rail network services.
Deputy Transport Minister Robert Lau said the projects outlined were the
Gemas-Johor Baru double tracking project, the
Serendah-Port Klang-Seremban track and the
East Coast railway line.
“The transport authorities need to find out whether there is a priority to provide rail services in the East Coast states first before it is ready to construct rail networks,” he told Kamaruddin Jaafar (PAS-Tumpat).
Lau said KTM Berhad manages 1,658km of railway lines. This included 1,328km-long single track line and 330km-long double track lines covering the Seremban-Ipoh and Sentul-Port Klang lines.
“To improve capacity of the railway transport services, the Government has approved the implementation of double-tracking projects for the Ipoh-Padang Besar (329km), Seremban-Gemas (98km) and Sentul-Batu Caves (7.5km) routes,” he added.
Lau also told Alexander Nanta Linggi (BN-Kapit) that the Government is studying the need to provide railway lines in Sarawak.
KUCHING: The open international tender for the proposed submarine cable project to transmit electricity from Bakun hydro dam in Sarawak to Peninsular Malaysia is expected to be called in three months. Sarawak Hidro Sdn Bhd managing director Zulkifle Osman said a German consultant was now helping the special purpose vehicle set up by the Tenaga Nasional Bhd-Sarawak Energy Bhd consortium to prepare the tender documents. Sarawak Hidro, a wholly-owned subsidiary of Finance Ministry Inc, is the dam’s developer and manager.
Zulkifle said submission for the tender was expected to close in August next year. The tenders are for the fabrication and laying of cables across the South China Sea. “The first of the two submarine cables is expected to be completed by 2016 and the second a year later,’’ Zulkifle told a media briefing on the Bakun project here on Wednesday night, adding that each of the two submarine cables would transmit 800MW.
He said the actual route for the laying of the undersea cables, from Tanjung Pueh, Sematan in Sarawak to the southernmost tip in Johor, had yet to be determined. The cables, ranging from 670km to 700km, have to go through Indonesian waters.
The Bakun electricity will first be transferred through Syarikat Sesco Bhd lines to Bintulu and then Kuching before being linked to the submarine cables. Syarikat Sesco is a wholly-owned subsidiary of listed Sarawak Energy Bhd. The company was formerly known as Sarawak Electricity Supply Corp before it was privatised in July 2005.
Zulkifle said the dam, which has an installed capacity of 2,400MW, would be fully operational by 2011. The first of the dam’s eight turbines, which could each generate 300MW, is expected to be commissioned in October or November next year. However, he said the amount of electricity to be generated from Bakun initially would depend on the demand as Sarawak now have an excess of some 200MW.
Power from Bakun is also expected to be exported to neighbouring Brunei.
Zukifle said the dam’s civil as well as electrical and mechanical packages were more than 90% completed.
He added that the project’s actual development cost had not been determined, noting that Sarawak Hidro has not fully utilised the RM4.3bil it had borrowed to finance the Bakun dam construction.
Sunday, November 1, 2009
ISTANBUL: Malaysia Airports Holdings Bhd (MAHB) (5014) expects revenue from foreign markets to make up one-tenth of group revenue in 10 years, as it expands globally.
Currently, foreign sales contribute less than 2 per cent of group revenue. Last year, the group made RM1.5 billion in revenue.
According to MAHB chairman Tan Sri Dr Aris Othman, growth does not solely depend on the number of airports it operates, but on the number of businesses it is involved in each of the airports.
"You need to depend on other businesses like hotels, car parks, ground handling and others. Of course, we would like to get more opportunities in these areas," Aris said here yesterday.
Aris and a group of senior management team members of MAHB are in Istanbul to take part in the launch of Istanbul's Sabiha Gocken International Airport (ISG).
The new terminal will be launched by Turkish Prime Minister Recep Tayyip Erdogan this evening.
Aris added that the company is in talks with a few airport operators for the possibility of joint bids and partnerships.
Nevertheless, the MAHB chairman expects the firm's next overseas venture to be within the next two to five years.
TOLL road operator SILK Holdings Bhd will start seeing positive contribution from its recently acquired oil and gas services unit this financial year ending July 31 2010.
However, it will continue to post an accounting loss.
"We'll start seeing positive contribution from AQL Aman Sdn Bhd, but amortisation of the tolled road assets is still a big factor," said executive chairman Datuk Mohammed Azlan Hashim.
"The highway operation is still a large part of SILK's business so it will be another year showing accounting loss," he told reporters after the company's annual general meeting in Kuala Lumpur yesterday.
The 37-km SILK Highway in southeast of Klang Valley links Balakong, Serdang, Sungai Long, Bangi, Kajang, Putrajaya and Semenyih.
Earlier, SILK shareholders approved a proposal that preferential shares be converted to ordinary shares when they mature in three years.
"Instead of coming up with RM20 million cash, we'll see an expanded capital base then," he said.
Following the purchase of the oil and gas business, SILK's gearing level has swelled to 7.8 times from 5.5.
Mohammed Azlan said once the ICULS (or irredeemable convertible unsecured loan stock) is converted to shares in three years, gearing should drop to 5.8 times.
He believes that SILK's prospects in the oil and gas sector is promising, given that the industry requires about 60 to 70 new platforms in the next three years.
Two or three anchor handling tug supply vessels and straight supply vessels are required for each platform for the purpose of transportation and logistic support. This translates to an additional demand of at least 120 new offshore support vessels.
"AQL Aman's 70 per cent subsidiary (Jasa Merin (Malaysia) Sdn Bhd) is operating 12 vessels in the South China Sea on long term service contracts with oil majors such as Petronas, Esso and Murphy Oil," Mohammed Azlan said.
ISKANDAR Investment Bhd (IIB), the catalytic developer of Iskandar Malaysia in Johor, is expected to reveal numerous investments in the south economic region over the next few months. "We continue to have growing interest from potential investors worldwide, who see potential in Iskandar Malaysia," said Khazanah Nasional Bhd managing director Tan Sri Azman Mokhtar.
IIB, a unit controlled by the state-owned Khazanah, is on track to surpass the US$13 billion (RM43.94 billion) foreign direct investment target for its first phase of development.
Yesterday, Education@Iskandar Sdn Bhd, a subsidiary of IIB, signed a landmark agreement to develop Marlborough College Malaysia, as part of a long-term plan to establish EduCity - located within Iskandar Malaysia - as a world-class education hub.
The signing was witnessed by Deputy Prime Minister Tan Sri Muhyiddin Yassin, who is also Education Minister.
"Malaysia is an emerging contender to attract international students and the agreement between Iskandar Investment and Marlborough College is testament that we are moving in the right direction to become a global education hub in Asia," Muhyiddin said.
There are some 16,000 international students studying in private and international schools in Malaysia.
Marlborough College Malaysia is the first international venture for the leading British independent, co-educational boarding school for pupils aged between 13 and 18.
MUHIBBAH Engineering (M) Bhd (MEB) has filed a lawsuit against Gerbang Perdana Sdn Bhd (GPSB) over unpaid contracts totalling RM32.7 million. GPSB was the main contractor for the Gerbang Selatan Bersepadu project in Johor Baru. It had appointed MEB as the subcontractor to execute part of works in the bridge project. MEB was instructed to cease works by GPSB in 2006, following the cancellation of the project by the government.
Monday, October 26, 2009
A further RM50 million will be spent by the end of the year, to complete expansion works.
The new terminal and apron, which was completed in 18 months, some 12 months ahead of schedule, will be officially launched by Turkey's prime minister on October 31
The airport operator will fund the investment from its own coffers. "At the moment, due to its initial stages, the revenue contribution is quite minimal, mainly coming from technical and consultancy fees. We don't expect revenue from dividends to come in until at least five years after completing the expansion works," MAHB managing director Tan Sri Bashir Ahmad told Business Times via e-mail recently.
In 2008, the Istanbul Sabiha Gocken Uluslararasi Havali-mani Yatirim, Yapim Ve Isletme As (ISG), a joint venture among three companies - MAHB, Limak Holding and GMR Infrastructure Ltd - won the bid for the project.
The ?343 million (RM1.7 billion) project, comprises the completion of a new international terminal building, a car park building as well as the construction of a hotel and a VIP annexe.
MAHB's 20 per cent stake in the joint-venture company entitles it to have two representatives on the board of ISG, currently held by Bashir and MAHB's chief financial officer Faizal Mansor. A few of MAHB's senior officials, who include Bashir, are also heading airport working committees.
The international terminal building project concession is for a period of 20 years.
"With two international airports in Istanbul, Ataturk on the European side and Sabiha Gocken on the Asian side, we see great potential in the airport," Bashir said.
MAHB's analysis shows that Ataturk has growth constraints due to space limitations while Sabiha is the second largest airport with a growing surrounding population and plenty of space for future expansion.
As at August 20009, Sabiha Gokcen was the fastest growing airport in Turkey and, maybe, Europe with 35 per cent growth in passenger traffic compared to the same period last year.
The venture is the third of its kind for MAHB, which already has equity stakes in two other airports overseas - Hyderabad International Airport and New Delhi International Airport.
On whether there are any plans for similar investments, Bashir said while it is looking at a few possibilities, no decisions have been made.
Sunday, October 25, 2009
AFTER 20 years of feasibility and technical studies, the long-awaited power connectivity between Peninsular Malaysia and Indonesia is set to become reality by 2015.
Tenaga Nasional Bhd (TNB) (5347) president and chief executive officer Datuk Seri Che Khalib Mohd Noh said the power connection project will comprise about 200km of 250-kilovolt submarine cables and two sets of 57km submarine cables.
"The interconnection will have a capacity of 600 megawatts and is scheduled to be operational by 2015. Both TNB and PLN (Perusahaan Listrik Negara, Indonesia's national utility company) will have to meet again to discuss contract formalisation, costing, working details.
"In financing, the World Bank will be involved due to the significance of this project," Che Khalib told reporters in Kuala Lumpur yesterday after signing a heads of agreement with PLN president director Fahmi Mochtar.
Che Khalib said this will be the second power connection between the two nations after the first agreement covering Bakun and West Kalimantan.
The power link will allow both countries to assist and support each other's power requirements during peak hours, which is during the day in Peninsular Malaysia and during the night in Sumatra.
Che Khalib said the connectivity is part of the Asean power grid, of which Malaysia already has connections with Myanmar, Thailand, Singapore and Laos.
THE government has allocated RM9 billion to finance infrastructure projects.
More than half of the money, or RM4.7 billion, will go to roads and bridges construction and RM2.6 billion to upgrade water supply and sewerage services.
Another RM899 million is for railway facilities construction, RM820 million for seaports and RM276 million to upgrade airports.
Master Builders Association of Malaysia hopes the government will speed up the project implementation.
"This year, the construction sector is expected to grow 3.5 per cent," said its president Ng Kee Leen.
With the setting up of the National Green Technology Centre, the association looks forward to new guidelines and specifications in the design of sustainable homes, office blocks and structures.
Green buildings can be built via modular system, using renewable building materials, incorporating lighting and air-conditioning systems that are energy efficient and fitted with dual flush toilets.
* Malaysia economy to grow 2-3 per cent in 2010
* Mining to grow 1.1 per cent, manufacturing sector 1.7 per cent, agriculture 2.5 per cent, construction 3.2 per cent and service 3.6 per cent.
* Private consumption expand 2.9 per cent while private investment 3.4 per cent
* Per capita income to increase by 2.5 per cent to RM24,661
* TNB to spend RM5 billion to implement electricity generation, transmission and distribution projects in 2010.
* Individual tax relief on broadband subscription fee up to RM500 a year from 2010 to 2012.
* Public-private collaborations to include an integrated immigration, customs and quarantine complex in Bukit Kayu Hitam, construction of six UiTM campuses and the development of MATRADE centre
* 1Malaysia Development Bhd (1MDB) will establish a corporate social responsibility fund totalling RM100 million as a start to finance community activities
* Government to allocate RM899 million to intensify tourism industry.
* Government to enhance tax incentives for healthcare service providers who offer services to foreign health tourists with income tax exemptions of 100 per cent on the value of increased exports from 50 per cent previously.
* Individual taxpayers to be given tax relief on broadband subscription fee up to RM500 a year from 2010 to 2012
* Civil servants are eligible to apply for computer loans once in every three years and up to a maximum of RM5,000 from the government once in every five years
* Formulate Halal Act in collaboration with State Islamic Religious Councils.
* To corporatise the Halal Industry Development Corporation as an agency under MITI
* Intensify Halal Certification by the Islamic Development Department of Malaysia (JAKIM) by collaborating with international institutions to obtain standards certification such as HACCP ad GMP.
* To provide RM24 million to develop halal products anti-smuggling system at three entry points and three main ports.
* Allocate RM137 million to upgrade and improve drainage and irrigation infrastructures in paddy fields involving 180,000 farmers.
* To provide RM70 million to build the Paya Peda Dam Project in Terengganu to increase water supply capacity to paddy irrigation scheme in Besut.
* Allocate RM82 million to modernise aquaculture industry and conduct entrepreneurship training scheme for aquaculture breeders with focus on production of fish fry and ornamental fish.
* “The stock market will be further liberalised to enhance its efficiency as well as attract domestic and foreign investment. For this purpose, the government will undertake the following measures: First, liberalise the commission sharing arrangements between stockbrokers and remisiers in 2 stages to encrouage retail participation in the stock market. The first stage, which takes effect immediately, allows flexible brokerage sharing at a minimum rate of 40 percent for remisiers. The commission sharing will be fully liberalised in the second stage, effective 1 January 2011.
* “Allow 100 per cent foreign equity participation in corporate finance and financial planning companies compared with the present requirement of at least 30 per cent local shareholding.
* “Islamic banking assets account for 18.8 per cent of Malaysia’s total banking assets while takaful industry assets contribute 7.7 per cent of total insurance and takaful industry assets. To ensure rapid development of financial services, particulalrly in Islmaic finance, the government proposes that the existing tax incentives be extended to 2015.
* “The government is currently at the final stage of completing the study on the implementation of goods and services tax (GST), particularly to identify the social impact of GST on the people. The purpose of this study is to ensure that if GST needs to be implemented to stabilised Government finance, it will not burden the population. “If the government implements GST, it will replace the current sales tax and service tax as well as exemption will be granted to the low income group. The GST rate to be imposed will be lower than the current sales tax and service tax rates.
* “The government needs to ensure that the Malaysian tax system is equitable and able to generate revenue for development purposes. In line with this, the government proposes that a tax of five per cent be imposed on gains from the disposal of real property from 1 January 2010.
* Effective Jan 1 2010, government agrees to allow agencies to retain 50 per cent of rentals received while the remaining 50 per cent will be remitted to the government as revenue.
* The Government will implement fuel subsidy management system in early 2010.
* The Government proposes the maximum income tax rate to be further reduced to 26 per cent from 27 per cent effective from the 2010 year of assessment.
* Maximum tax rate for cooperatives will be reduced to 26 per cent while the fixed tax rate for non-resident individuals will be cut to 26 per cent.
* Personal tax relief will be increased to RM9,000 from RM8,000 effective from the 2010 year of assessment.
* The Government also proposes income tax on employment income of Malaysians and foreign knowledge workers residing and working in Iskandar Malaysia be imposed at 15 per cent compared with the maximum 26 per cent for the rest of the country.
* Government to launch a scheme in January 2010 that enables EPF contributors to utilise current and future savings in Account 2 to promote house ownership.
* RM14.8 billion is allocated to manage, build and upgrade hospitals and clinics.
* The Government will issue 1Malaysia Sukuk totalling RM3 billion.
* The Government will establish the 1Malaysia Retirement Scheme to be administrated by EPF.
* Employees EPF contributions will be raised again to 11 per cent on a voluntary basis with immediate effect. However, from Jan 1, 2011 employees' EPF contribution will revert to 11 per cent.
* The Government proposes existing personal tax relief of RM6,000 for EPF contributions and life insurance premiums be raised to RM7,000.
* Government allocates RM2.3 billion to build and upgrade infrastructures in rural areas.
* Government provides RM41 million to improve income and quality of life of the Orang Asli Community by implementing various projects.
* Budget 2010 allocations totalled RM191.5 billion, of which RM138.3 billion is for operating expenditure and RM53.2 billion for development expenditure.
* Federal Government revenue in 2010 to decline by 8.4 per cent to RM148.8 billion.
* Budget deficit at 5.6 per cent of GDP compared with 7.4 per cent in 2009. - Bernama/Reuters
Sunday, October 18, 2009
MALACCA: Eight projects worth almost RM7.5 billion have been proposed by the Indonesian, Malaysian and Thai governments to enhance physical connectivity and better linkages between the three countries.
Minister in the Prime Minister’s Department Tan Sri Nor Mohamed Yakcop said of the eight projects, four would be built in Indonesia, three in Thailand and one in Malaysia.
The projects include the development of
Sumatra ports and toll roads,
Malacca-Dumai Economic Corridor transportation system,
Malacca- Pekan Baru power inter-connection network,
Southern Thailand ports development, and the construction of the
Pak Bara cargo port and
Hat Yai-Sadoa toll road.
“Enhancing physical connectivity and better linkages between the three countries are a key and critical role in the Indonesia-Malaysia-Thailand Growth Triangle’s (IMT-GT) development strategy, ” Nor Mohamed said after the three-day 16th IMT-GT Ministerial Meeting ended here on Thursday.
Besides the proposed projects, Nor Mohamed said he also proposed the IMT-GT could venture into halal products and medical tourism.
“These are among the areas which have tremendous growth potential and would also benefit the three countr ies.” IMT-GT was established in 1993 with the aim of boosting economic growth. Its programmes are private sector driven and facilitated by the relevant ministries in each member country.
Some 200 delegates attended the meeting. Also present were Indonesian Ministry for Economic Affairs senior officer, Raidi Hendro Koestoer, Thailand National Economics and Social Development Board deputy secretary-general Porametee Vimolsiri and representatives from Japan, the Asean Secretariat, Asian Development Bank, Economic Research Institute for Asean and East Asia and IMT-GT Joint Business Council.
The meeting, among others, deliberated on the progress and implementation of the IMT-GT Roadmap to Development 2007-2011 which includes development in tour - ism, halal products and services, agriculture, transportation and human resources development, and the future direction of IMT-GT beyond 2011.
The six countries in the Gulf Cooperation Council (GCC) — a loose economic bloc that comprises Saudi Arabia, the UAE, Kuwait, Qatar, Oman and Bahrain — are spending more than US$100 billion (RM336.6 billion) on various rail projects to ease congestion in the face of poor public transport networks and a growing population.
The Gulf Arab rail network alone will cost US$20-US$25 billion as the six oil producers seek to create a similar model to Europe’s high speed rail system.
The 1,940-km railway would connect the six Gulf states, each of which would contribute a share of the start-up capital. Yemen had asked for the railway be extended over its border with Oman.
‘“The GCC has accepted in principle to extend the railway link to Yemen from Oman,’“ said the official, who was attending a meeting of Gulf policymakers in Oman.
Yemen, which is not in the GCC, is facing an insurgency in the north where Zaidi Shi’ite Muslims took up arms against the government in 2004, as well as frequent clashes with separatists in the south.
Gulf officials also agreed on Saturday to appoint a single authority for the rail project and approved its design.
Dubai opened the initial phase of its US$7.62 billion metro project in September. Other cities including Riyadh, Mecca and Kuwait are also planning rail systems. — Reuters
Sunday, October 11, 2009
Oleh Zukri Aksah
TEMERLOH, 9 Okt — Projek Taman Industri Minyak, Gas Dan Maritim di Tanjung Agas, Pekan, Pahang telah dirasmikan melalui upacara pecah tanah oleh Ke Bawah Duli Yang Maha Mulia Sultan Pahang pada bulan Jun yang lepas. Projek yang bernilai RM2 bilion ini turut melibatkan kerajaan di bawah Pelan Pembangunan Ekonomi Wilayah Pantai Timur (ECER). Diberitakan bahawa kerajaan turut mempertimbangkan untuk memberi status zon perdagangan bebas kepada Tanjung Agas.
Pemaju induk projek ini ialah Tanjung Agas Supply Base & Maritime Services Sdn Bhd (TASBMS) yang dipunyai 30 peratus saham anak syarikat Perbadanan Kemajuan Negeri Pahang (PKNP) dengan usaha sama tujuh syarikat multinasional dalam dan luar negara, melibatkan kawasan seluas 1,658 hektar.
Projek berimpak tinggi itu merupakan pusat sehenti dan pengkalan mencari gali dan pengeluaran minyak mentah dan gas asli. Apabila siap nanti ia dipertimbangkan untuk diberi status zon perdagangan bebas dengan menempatkan limbungan kapal, limbungan fabrikasi, pangkalan bekalan dan kemudahan perkhidmatan dan terminal petroleum, kawasan kediaman serta perdagangan dan perindustrian.
Tuesday, September 15, 2009
KUALA LUMPUR: Syarikat Prasarana Negara Bhd, the state-owned public transport operator, expects to start construction on the extension of its two light rail transit (LRT) lines in the Klang Valley early next year at a total estimated cost of RM7bil.
Expected to be completed in three years, the exercise will see the extension of the Kelana Jaya Line and Ampang Line by 17km and 17.7km respectively.
Group managing director Datuk Idrose Mohamed said the company had internally generated RM2bil and issued RM2bil Islamic bonds or sukuk to raise funds last week to part finance the project. The RM2bil Islamic bond issuance was reported to be more than three times oversubscribed, with an order book of RM6.6bil.
“Our initial intention was to issue a total of RM4bil of Islamic bonds. But now, the remaining RM2bil issuance will be next year or in the course of three years. “This depends on our cashflow requirements and some of the payments will only be issued after the project is completed for defect liability. Our immediate need is RM2bil for land acquisition and some initial works,” he said after a media briefing on the public display of the proposed alignment for the LRT line extensions yesterday.
The three-month display starting tomorrow at the Department of Railways, Kuala Lumpur City Hall, Petaling Jaya City Council, Subang Jaya Municipal Council and Shah Alam City Council is to get public feedback on the project. Alternatively, the public can view and channel feedback on the project via the Department of Railway website.
Idrose said Prasarana would publicise the pre-qualification of contractors to participate in the project in the newspapers next month.
“The various contracts for the project will be awarded via open tender for companies that have been pre-qualified and at the moment we have neither decided on the number of contractors nor contract packages. They will only be decided after we consider the response from the public as required by law and the final approval from the Government,” he said.
In line with the extension of LRT lines, Prasarana will also embark on fleet (train) expansion. For Ampang LRT, the fleet expansion involves an additional 13 train sets of six cars per set while the Kelana Jaya LRT extension requires 35 more train sets of four cars per set. Idrose said the funds for its the fleet expansion had been raised earlier.
Prasarana projected to double its current daily passenger volume with the lines extension.
Ampang LRT now has daily passenger volume of 170,000 while Kelana Jaya LRT has 180,000.
OSK Investment Bank analyst Jeremy Goh listed four construction companies with the potential of bagging the main contracts due to their experience in LRT.
“The first two are UEM Builders Bhd and IJM Corp Bhd as they have the experience as main contractors of the two existing LRT lines. IJM Corp wholly-owned subsidiary Road Builder (M) Holdings Bhd also has a bright chance to be involved as IJM Corp had sub-contracted many of the existing LRT works to Road Builder. Gamuda Bhd is also on the list due to its experience in the construction of Kaohsiung’s mass rapid transit in Taiwan. Malaysian Resources Corp Bhd also has high chances as it was the main contractor for the Kelana Jaya Line in the KL Sentral portion,” he said.
Goh said there would “definitely” be a lot of sub-contracts to build the stations or sound barriers that would benefit companies like Mudajaya Group Bhd.
He said funding should not be an issue as Prasarana was a state-owned company under Ministry of Finance Inc. AmResearch in its sector report said this latest development validated its earlier stance that domestic contract flows were gaining momentum and reaffirmed its overweight position on the construction sector. Apart from LRT projects, tenders for the Bakun transmission cable project – estimated to cost RM10bil – could be out by the first quarter next year,” said the report.
Master Builders Association Malaysia president Ng Kee Leen said the RM7bil project was great news for the construction sector that had suffered from fewer projects awarded in the first half of this year. It is good for the sector to be involved in the improvement of our transportation system. And there should be more transportation projects for the betterment of our public transportation system. The third and fourth quarters should chart better industry growth than the first half year, and next year should be better as we are seeing more construction projects coming in. Among the big projects are the low-cost carrier terminal, dam projects such as in Terengganu and Penang as well as works in the Eastern Corridor Economic Region,” he said.
Wednesday, August 26, 2009
IJM Corp Bhd (3336), the country's second biggest construction company, expects to maintain an order book of more than RM4 billion as it bids for sizeable government contracts locally and abroad.It aims to bid for infrastructure projects that will be rolled out under government stimulus packages in Asia. Governments around the world are spending more money to pull their economies out of recession."We would replenish the order book so that we maintain about RM4 billion plus at any one time. Since our chewing rate is about RM200 million a month, we have to (replenish) about RM2 billion plus a year," said IJM Corp managing director and chief executive officer Datuk Krishnan Tan Boon Seng.He was speaking to reporters after the group's annual and extraordinary general meetings in Subang Jaya yesterday.
Some projects IJM Corp is eyeing include the new permanent low-cost carrier terminal in Sepang and the light rail transit (LRT) extension works in Kuala Lumpur."We do a broad range of work from civil engineering works to building. You will see us participating where there are sizeable jobs," said Tan, adding that the company was bidding for works here and abroad.Tan said tenders for both the LCCT and LRT projects have yet to be called."For the LCCT, the pre-qualification process has been called and we have also submitted. We will look to bid for the sizeable packages (once the tender is open)," he said. Tan also said that there will be other tenders from the Pahang-Selangor Water Transfer project, including the dams, intakes, ancillary infrastructure and the treatment plant.
On IJM Corp's property division, Tan said there are strong property sales yet to be billed and expects the division to perform decently given the wide range of products - retail, industrial, medium- and high-cost developments - in high density locations.Meanwhile, the group saw its first quarter net profit decline 22.5 per cent to RM70.8 million while revenue slipped 5 per cent to RM1.16 billion.In a Bursa Malaysia announcement, it said the lower earnings for the three-month period to June 30 2009 was due to lower contributions from its plantation division as crude palm oil prices fell.Also, the construction division suffered lower margins from old contracts affected by higher costs in the previous year and higher financing costs incurred in India.The plantation division earnings dipped as the group expedited its fertiliser application and repair cost for infrastructure due to heavy rainfall and floods."We don't think that the first quarter is reflective of the following quarters," said Tan. He added that the current fiscal year ending March 31 2010 would be similar to 2007, where the first quarter was lower but later quarters showed improvements.
Friday, July 31, 2009
By ZAZALI MUSA
ULU TIRAM: Senai-Desaru Expressway Bhd (SDEB), the concessionaire of Senai-Pasir Gudang-Desaru Expressway, recently submitted to the Government its proposal on the toll rates for the highway. Chief executive officer Mustaza Salim hoped the Government would approve the proposed rates as soon as possible, as it planned to open the expressway before the start of the fasting month on Aug 22.
SDEB’s majority shareholder is Ranhill Bhd with an investment of RM430mil, or 65.6% stake. Islamic Development Bank Bhd holds 29% stake or RM190mil investment while Rancak Bistari Sdn Bhd and YPJ Holdings Sdn Bhd with RM24.5mil and RM10.5mil respectively.
“We assure motorists that our toll rates are much lower than the current rates at the North-South Expressway,’’ he told reporters during a media familiarisation tour yesterday.
The RM1.4bil expressway links Senai to Desaru in the eastern part of Johor and connects users to Pasir Gudang at the Tanjung Langsat industrial area via the Pasir Gudang interchange. The 77km stretch will have six interchanges, four toll plazas and two rest and service areas. Mustaza said next month’s opening would involve the 50km stretch from Senai to Cahaya Baru with a connection to Pasir Gudang. He said the partial opening would reduce travel time from Senai to Pasir Gudang from one hour to only 23 minutes.
“We are looking at some 30,000 vehicles using the 50km stretch daily,’’ he said.
Mustaza said the remaining 27km of the expressway from Cahaya Baru to Desaru would be opened early next year. This include the 1.7km single-plane cable-stayed bridge across Sungai Johor which is one of the longest single-plane cable-styled bridges in the world with 500m span.
He said when fully opened, the expressway would boost tourism activities in Desaru, a popular holiday spot for locals and Singaporeans in early 1970s and mid-1980s.The popularity of Desaru dwindled as it took over two hours to get to the 27km white sandy beaches from Johor Baru. The new highway will cut the journey to 45 minutes.
Tuesday, July 28, 2009
MERAPOH Resources Corp Sdn Bhd says its refinery in Kedah may be linked to a pipeline that will run from Yan in the state to Songkhla in Thailand, an idea that's being floated by its Chinese backers."The Chinese have proposed the idea of the pipeline connecting Yan and Songkhla. They (the Chinese) have already conducted a study and spoken to China, Thailand and Malaysia about it," Merapoh executive chairman Md Nazri Ramli told Business Times in an interview.Chinese investors are also keen to fund the pipeline's construction which will cut across the peninsula, he said.
This means that there are now about three separate proposals to build such a pipeline, which has been touted as a faster way to transport crude oil or its refined products from the Middle East to the Far East.
Prior to this, an oil pipeline running from Kota Perdana in Bukit Kayu Hitam to Songkhla has been proposed by SKS Development, a company owned by businessman Tan Sri Syed Mokhtar Al-Bukhary.SKS has also proposed to build its own refinery.This proposal was brought up during a meeting between Prime Minister Datuk Seri Najib Razak and his Thailand counterpart Abhisit Vejjajiva during the latter's official visit to Malaysia last month.
There is also another US$7 billion (RM24.6 billion) oil pipeline project known as the Trans-Peninsular Pipe-line, connecting Yan to Bachok in Kelantan. How-ever, its progress is unclear.
Md Nazri is confident that this Yan-Songkhla pipeline would become a reality as the Chinese will do anything to meet its energy demand."It is projected that China needs 3 million barrels of oil per day (bpd) by 2015 from the current consumption of 7 million bpd. Currently, their disparity of energy consumption against its population is very low compared to the US, which consumes about 24 million bpd," he said.Merapoh chose Yan because it will create another petroleum hub for the country."Yan will be the first entry point for crude oil from the Middle East. Yan is not a busy route, and a wide span, which is easy for vessels to manouvre. It is a good point to catch the crude and go back," he said.
Apart from the pipeline, he said the Chinese investors are also looking at transporting the refined petroleum products using the Singapore-Kunming Rail Link."This is another mode of transportation that will cut short transporting time to China. It would just take about 72 hours to transport the products using this rail services to China."All these developments of turning Malaysia, especially the northern states, as the petroleum hub of the region are the vision of our former prime minister Tun Dr Mahathir Mohamad," he said.
Merapoh Resources Corp Sdn Bhd, which will develop a US$10 billion (RM35 billion) refinery in Kedah, expects to break even in as early as eight years after production starts, helped by demand and a 10-year tax holiday.
To be located in Sungai Limau, Yan, the 350,000 barrels a day refinery is due to start production by 2013 or early 2014.Merapoh founder and executive chairman Md Nazri Ramli said the company will make money from fees for processing the crude oil."Clients will pay a fee that is controlled per barrel to make sure there is enough money to pay to the bank or the investment, and enough to pay to operators and profit margin or dividends to the shareholders."We are also blessed with tax relief for 10 years by the federal government whereby the profit that we make will not be taxed until we recover our cost. This will enable us to pay dividends. It is a good incentive," he told Business Times in an interview in Kuala Lumpur last week.
Md Nazri explained that the gross profit margin for a refinery is normally about 20 per cent of the current price of crude oil."Anything below US$25 (RM88) per barrel of crude oil, then we will not make money. But our consultants have made a forecast that the price of crude oil will be in a stable range between US$75 and US$100 per barrel (RM265 and RM353)," he said.
On July 15, Merapoh signed a memorandum of agreement with the Kedah state government for the site, including an area to be reclaimed, and with South Korea's SK Group of Companies to build the plant.It has lined up China National Petroleum Co (CNPC) to buy the refined crude, while Saudi Aramco will be the crude supplier.Two other Chinese companies, the Hong Kong-listed Hong Kong Beijing Star Ltd and Winson Investment Ltd, will put up US$5 billion (RM18 billion) each to help fund the project.Beijing Star and Winson will hold 40 per cent each of the project, while Merapoh will have 20 per cent.
However, Md Nazri stressed that Merapoh will not be exposed to the swings in crude oil price as CNPC will buy the crude oil from Saudi Aramco. It will also ferry the oil to Kedah and ship the refined oil back to China.Md Nazri also did not rule out the possibility of floating the company, either on Bursa Malaysia or other exchanges in the region, but said it would only do so when the refinery was fully operational."But we cannot rule out if our financiers and partners want to do the IPO (initial public offering) early. We never know. But at this point in time, they said not yet."Merapoh, formed on September 9 2005, was set up as a special purpose vehicle for the refinery. Md Nazri owns 84.2 per cent of the company, while executive director Mohd Hassan Mansor holds 5 per cent. The remaining 10.8 per cent is held by Saiful Aswad Abu Bakar.
Friday, July 24, 2009
The first phase of an ambitious Taman Sari waterfront city project at the former Pekeliling flats area in Kuala Lumpur is expected to generate RM4.77 billion in gross development value (GDV), its owner said.
The owner, Asie Sdn Bhd, expects to spend nearly RM1.5 billion to develop the phase, which will include a centrepiece 60-storey revolving tower costing RM1.1 billion.Asie chairman Datuk Khalil Akasah said works on the first four parcels sprawling 3.24ha should start in early September, with the entire first phase expected to be completed in 48 months.The whole project itself, encompassing 24 parcels on 23.08ha at the intersection of Jalan Pahang and Jalan Tun Razak, should be fully developed in seven to 10 years.
"We will work on parcel K first. After six months, parcels X and L will be simultaneously launched. The following six months, we will launch parcel M, which will boast the 60-storey revolving tower.
"Each parcel should take about 36 months to complete," Khalil told reporters after signing an agreement with Thailand's CH Prosper Co Ltd in Kuala Lumpur yesterday.Prior to this, Asie has tied up with another Thai firm, Saha Regal Best Co Ltd, to provide some funds for the project.The latter will also own a 20 per cent share in the joint-venture company, Taman Sari Development Corp, which was set up to develop the project.Other Thai investors in the project include Virginia Corp and Islamic Bank of Thailand. A RM417 million loan has been secured from Bank Pembangunan Malaysia Bhd, while some other fundings came from the sale of condominium units under parcel K, Khalil said."We have sold 30 per cent of the 178 units of condominiums under parcel K," he added.Asie won a 99-year concession about 10 years ago to redevelop the one-room Pekeliling flats area built in the 1970s. In return, it will provide new houses for the affected owners at new locations.The company had so far built about 3,000 units, or 40 per cent of the total houses required, costing RM150 million.Parcel M with the unique tower, will be built on the banks of the Gombak River. Other parcels within the Taman Sari project will include hotels, condominiums, office and commercial blocks, government and public housing and a medical centre.Asie is controlled by Khalil, who was an aide to the late Tun Abdul Razak Hussein, Malaysia's second prime minister.
Thursday, July 23, 2009
KUALA LUMPUR: The Terengganu Investment Authority (TIA) is being expanded to a federal entity called 1Malaysia Development Bhd (1MDB) with the aim of investing billions of ringgit in energy, real estate and hospitality sectors in the country, according to a statement from the Prime Minister’s office.
It was earlier proposed that the TIA would raise RM11bil for investments, of which RM5bil were to be government-guaranteed bonds while RM6bil were bonds to be collateralised by oil royalty payments to the state of Terengganu.
The King, who is also the Sultan of Terengganu, has consented to the arrangement. The new entity will be wholly-owned by Ministry of Finance Inc and will report directly to the Prime Minister. The Cabinet has also given its approval in principle.
The statement said more details would be released in the coming weeks.
Meanwhile, 1MDB will invest in collaboration with Abu Dhabi’s Mubadala Development Co, which has expressed interest in investing US$1bil in those sectors.
According to the statement, Prime Minister Datuk Seri Najib Tun Razak said he had fruitful talks with Abu Dhabi Crown Prince General Sheikh Mohamed Zayed Al-Nahyan during his one-day private visit to Abu Dhabi. In the meeting, Sheikh Mohamed Zayed, who is also chairman of Mubadala Development, a sovereign wealth fund wholly-owned by the Government of Abu Dhabi, expressed interest to invest US$1bil in energy, real estate and hospitality sectors across Malaysia via Mubadala, in partnership with a Malaysian sovereign wealth fund.
“To advance further and make this investment work, the Government has decided for TIA to be expanded into a federal-based sovereign wealth fund to be known as 1Malaysia Development Bhd for its benefits to be felt across Malaysia,’’ Najib said in the statement.
“1MDB is to drive sustainable, long-term economic development for Malaysia by forging strategic global partnerships and promoting foreign direct investment (FDI) for Malaysia to further enhance the multiplier effects for the Malaysian economy.”
1MDB, which will be run on the concept of matching FDIs, will be a fund that in essence looks to invest in companies that have equity value on a stock exchange but have a high mulitiplier effect on growth.
By becoming a sovereign wealth fund, 1MDB will have Malaysia as its priority instead of just one state, according to a source. It puts all states on equal footing at a time when there are a couple of states that are tinkering with the idea of establishing their own state-based investment funds. Establishing the 1MDB will also do away with the Government to provide further guarantees for other state-based funds. 1MDB would take over the cash already raised by TIA and allow Terengganu to continue using its oil royalities in its traditional manner, the source added.
Although 1MDB reports directly to the Prime Minister, the sovereign fund will still have an eight-member board of advisors and a five-member board of directors.
The directors would be from established statutory bodies and would allow those funds to participate in investments made by 1MDB if they chose to do so, the source said.
BUKIT MERTAJAM: Penangites can heave a sigh of relief as the shelved RM1.2bil Mengkuang Dam expansion project has been reinstated in the Ninth Malaysia Plan.
Energy, Green Technology and Water Minister Datuk Peter Chin Fah Kui said the project was expected to begin as early as this October and be completed by 2013.
“It will proceed once all necessary tender and documentation processes are sorted out in the next three months,” he said after visiting the dam here yesterday.
Chin said the project, which would be carried out in two phases, was vital to increase the state’s water capacity, which was approaching a critical stage.
He added that the expansion would increase the dam’s capacity from 23 million cubic metres now to 78 million cubic metres, which would be able to meet the state’s water needs until 2020.
“The Federal Government felt it was necessary to carry out this project with the co-operation of the state, especially the Penang Water Supply Corporation Sdn Bhd,” he said.
Chin said the
first phase would cover the principal work to widen and increase the dam’s height, while the
second phase involved the construction of a 13km-long dual-flow steel pipe between the dam and the Sungai Dua water treatment plant.
He said raw water from the Muda River would be pumped into the dam for storage via the pipe, at about 440 million litres a day, during the rainy season between April and December. Chin added that raw water from the dam would be pumped through the pipe at a maximum capacity of 1.114bil litres a day, back to the Sungai Dua treatment plant during the drought from January to March to make up for the low water supply from the Muda River. He said an additional 9km-long perimeter road would be built around the dam, similar to the one at the Air Itam Dam, for public recreation.
Last August, Chief Minister Lim Guan Eng had said the state would face a water crisis by 2012 if the Mengkuang Dam expansion project did not start by this year.
The dam’s expansion was among three mega projects in Penang worth a total of RM4.7bil shelved during the mid-term review of the Ninth Malaysia Plan in June last year because of the global economic slowdown. The other two projects were the RM1.5bil Penang Outer Ring Road and the RM2bil Penang monorail.
Wednesday, July 22, 2009
JAKARTA-based airline, Batavia Air, plans to introduce direct flights between the Indonesian capital and Penang this September.Deputy Transport Minister Datuk Abdul Rahim Bakri said details have yet to be finalised and the company was still in talks with Malaysia Airport Holdings Bhd (MAHB) (5014). "Once realised, the move is set to benefit Penang's tourism landscape in particular, and Malaysia in general," he told reporters after a briefing session with MAHB at the Penang International Airport in Bayan Lepas, Penang, yesterday. Batavia Air is set to be the third low-cost carrier to have direct flights to Penang this year.Two other carriers, Jetstar and Tiger Airways, have separately introduced direct flights between Singapore and Penang respectively. So far, at least 15 airlines are operating at the airport here.
Meanwhile, Abdul Rahim said the first phase of the airport expansion, at a cost of RM250 million and expected to be completed by 2010, would be able to accommodate more passengers.The airport aims to handle at least 15 million passengers a year from 2016 when the second phase of the airport expansion is done.The expansion works include upgrading the passenger terminal, constructing a new multi-storey carpark and the upgrading of security system.
Last year, the airport handled 3.4 million passengers, 193,000 metric tonnes of cargoes and 39,798 flights.
Tuesday, July 21, 2009
PRIME Minister Datuk Seri Najib Tun Razak has announced a major initiative by the Abu Dhabi government whereby a sovereign wealth fund it wholly owns is set to make a US$1 billion investment in Malaysia in the energy, real estate and hospitality sectors.
Najib said the proposed investment would be carried out in partnership with a new Malaysian sovereign wealth fund to be known as "1Malaysia Development Berhad" (1MDB), which is the result of the government's decision to expand the Terengganu Investment Authority (TIA).
Najib was speaking to Bernama Monday night after talks with Abu Dhabi Crown Prince General Sheikh Mohammed bin Zayed Al-Nahyan, during a brief stopover in the Emirate of Abu Dhabi en route to Kuala Lumpur after visiting Egypt and Saudi Arabia earlier.
"I had a very productive meeting with the Crown Prince. He has agreed that Abu Dhabi, through its sovereign wealth fund, increase its investments in Malaysia starting with a fund of US$1 billion," said Najib, who is also Finance Minister.
Sheikh Mohammed is chairman of the Mubadala Development Company which, since its establishment in 2002, represents the main investment vehicle for the government of Abu Dhabi to achieve sustainable social and economic benefits for the emirate.
Abu Dhabi's proposed investment ties in neatly with Najib's recent announcement to liberalise conditions for foreign investors and woo investments to help the economy recover faster from the global and regional slowdown.
Najib said: "We're going to identify sectors that they can co-invest with our sovereign wealth fund, especially in areas like energy, real estate and hospitality."
Elaborating, the Malaysian leader said 1MDB would be a fund created on the basis of transforming the TIA into a federal-based sovereign wealth fund instead of a state-based entity.
"I've had discussions with the Yang di-Pertuan Agong (DYMM Tuanku Mizan Zainal Abidin). His Majesty has consented for the TIA to be restructured and federalised to become 1MDB which will be wholly-owned by the Ministry of Finance, reporting directly to the Prime Minister," said Najib.
The prime minister said the Malaysian Cabinet had also given its approval in principle for the TIA to be federalised.
"We'll be issuing further details in the coming weeks," said Najib who was joined by his wife Datin Seri Rosmah Mansor at a private dinner with Sheikh Mohammed, who is also Deputy Supreme Commander of the United Arab Emirates' Armed Forces, at the Emirates Palace hotel.
In a statement obtained by Bernama, the Prime Minister's Office said 1MDB would drive sustainable, long-term economic development for Malaysia by forging strategic global partnerships and promoting foreign direct investment for Malaysia to further enhance the multiplier effects for the Malaysian economy.
To a question, Najib said 1MDB was in the process of being finalised and he expected it to be up and running "very soon".
The prime minister had earlier presided over a dialogue session with representatives from Malaysian companies operating in the United Arab Emirates which was also attended by Malaysian ambassador to the UAE Datuk Yahaya Abdul Jabar and consul-general in Dubai Syed Mohamad Hasrin Tengku Hussin.
Najib told Bernama that he was pleased with the companies' achievements thus far.
"And I mentioned this to the Crown Prince, that the Malaysian companies have a level of comfort being present here.
"All they want is an opportunity to participate in bidding on a level playing field, and they're looking at new opportunities in Abu Dhabi," he said.
He said Sheikh Mohammed had mentioned that Malaysian companies had done well in Abu Dhabi, singling out the Malaysian firm involved in the construction of the Formula One circuit in Abu Dhabi -- WCT Engineering.
"I'm confident that they will continue to do well in this country," added Najib.
Monday, July 13, 2009
Monday July 13, 2009
By YAP LENG KUEN
PETALING JAYA: The transformation process at KUB Bhd, which was once a highly-politicised and loss-making company, is gathering steam.
“Prominent players are approaching us for joint ventures in two of our core businesses – information and communications technology (ICT) and power, engineering and construction (PEC),’’ managing director Datuk Nazar Samad told StarBiz.
In fact, starting from last year, the company was able to attract new talent and people with expertise as contracts came in for the ICT and PEC divisions while a major rebranding and refurbishment of its A&W chain of restaurants had commenced.
“We are building businesses with recurring income and strengthening our cashflow,’’ Nazar said, pointing out that businesses purely based on projects would not ensure sustainable income.
KUB has an ongoing RM300mil schools construction project for which 32 additional blocks and four new schools in Selangor, the Federal Territory and Negri Sembilan will be built by April next year. “Awarded in October last year, this is the first industrialised building system (IBS) project under KUB,’’ Nazar said. “We hope to bid for more such projects in line with our aim to be on the government supply panel for IBS.’’ KUB has targeted the IBS business, relating not just to construction but also supply of pre-fabricated components, to be a pillar for the group as the bulk of government projects are based on this modern and cost-saving technology.
Within the PEC division, which has RM500mil worth of contracts in hand, facilities management is another area that KUB intends to target aggressively. After 12 consecutive years of losses, KUB reported its first net profit of RM36.9mil for the financial year ended Dec 31 (FY08) and declared a 6% dividend to the delight and disbelief of many of its long-time shareholders.
“At our recent AGM, we were bombarded with questions from frustrated shareholders, and even a few had come in wheelchairs and from as far as Kedah and Johor,’’ said Nazar. About 970 shareholders had turned up.
Within the ICT sector, the new focus is on building inherent skills based on a recurring income model for managed services and system integration in the long term. It will no longer be based just on trading and supply of equipment. KUB, which has RM120mil worth of ICT contracts in hand, is bidding for projects worth RM150mil to RM200mil.
KUB Telekomunikasi Sdn Bhd completed the RTM digital pilot project in March last year after being overdue for two years. As a result, it managed to secure a new project – RTM’s digital migration – last year which was completed in March. The company is aiming for more projects with the Government’s latest aim for a national rollout.
When Nazar joined KUB in 2007, he saw that A&W with its 32 outlets could be a stable business for the group. “I convinced the board not to sell the food business and we have been slowly investing in assets,’’ he said. Another five outlets are coming up and the target is for 100 each in Malaysia and Thailand by 2015. “The A&W brand, which has been around for 45 years in Malaysia, can be good brand-building platform for KUB. It took us a year to convince the franchise holder Yum! Brands that KUB was the right partner and, last year, it agreed to our 10-year plan,’’ said Nazar.The food division under the A&W chain of restaurants recorded RM42mil in revenue in FY08. Up to June 30, it had seen a 20% growth in revenue compared with last year. KUB is targeting for A&W, which was incurring losses when KUB took over in 2001, to break even this year.
Nazar also convinced the board to keep the plantation business which gave good returns last year and represents a source of stable income for the group. KUB owns 2,655ha in Johor and 4,680ha in Sarawak. (tot=5,335ha)
So far, only the food-related business has been retained and represents one of the three core areas that include the ICT and PEC divisions. “When we joined KUB in 2007, it had a lot of businesses all over and management was spread very thin,’’ he said. KUB sold its non-core businesses that were mostly housed under 70 companies and landed with cash and cash equivalents of RM215mil as at end-2008.
Nazar’s focus is to strengthen the operations of these three core areas so as to reap the growth and margins, while seriously tackling costs. “We have moved into a much simpler office in Petaling Jaya and our senior management staff drive their own cars to work,’’ he said. In April last year, the company had sold its KUB.com building in Kuala Lumpur to Park Residence Sdn Bhd for RM86.5mil as part of its efforts to unlock the value of its assets and use the proceeds to repay borrowings.
To retain talent, an employee performance share scheme was introduced last year, while bonus payments were also based on performance.To ensure staff support for the turnaround plan, Nazar, who was previously running a public-listed building materials and manufacturing company in Johannesburg, implemented a fully hands-on approach to personally inspect work progress and other facilities on the ground. He meets up with staff to listen to their grouses and organises motivation monthly sessions for them.
“We hope to build more credibility,’’ he said, noting the completion of two projects – Institut Latihan Memperkasa Umno in March at Janda Baik, which was overdue for two years, and the RTM digital pilot project.
Nazar aims to make KUB an attractive company that counts non-bumiputras and funds such as Citigroup and HSBC Nominees among its top shareholders.
On the non-reelection of audit committee chairman Omar Ahmad at the recent AGM, he said: “That is a shareholder issue and we, as professional managers, do not get involved. Following that, Bursa Malaysia had come and looked at our processes as part of its surveillance work.’’
Bursa’s corporate surveillance activity covers resignation or non-reelection of audit committee chairman, audit committee member or independent director.
KUB chairman Datuk Nordin Baharuddin had said that Umno-linked Gaya Edisi Sdn Bhd, which owns 29.6%, had asked for a ballot counted by the number of shares. “When a major shareholder did not vote for him, he lost. There is nothing wrong,’’ he had said.
Tuesday, June 23, 2009
THE joint venture between IJM Corp Bhd and LFE Corp Bhd has received a AED318.38 million (AED100 = RM99.28) contract from Tamouh Investments LLC of United Arab Emirates for reinforced concrete substructure and superstructure works.
The project, under the first phase of Plot 1, Zone E2 hotel development at Al Reem Island, Abu Dhabi, is expected to be completed on February 28 next year.The joint-venture company is 70 per cent owned by IJM Corp’s wholly-owned subsidiary, IJM Construction Sdn Bhd (Abu Dhabi Branch), and 30-per cent owned by LFE Corp's wholly owned subsidiary, LFE Engineering Sdn Bhd (Abu Dhabi Branch).
Wednesday, June 17, 2009
THE government yesterday appointed Datuk Noriyah Ahmad as director-general of the Economic Planning Unit (EPU) at the Prime Minister's Department.
The appointment, to be effective from tomorrow, is to replace Tan Sri Dr Sulaiman Mahbob who completes his service today.In a statement released yesterday, Chief Secretary to the Government Tan Sri Sidek Hassan said Noriyah, 57, was appointed based on her wide experience in the economic field during her time in public service.She was involved in Malaysia's economic planning and development while holding various posts.
Among others, she was deputy director-general of strategic programme and allocation in the EPU from August 1 2007.Noriyah was also deputy director-general (macro) in the EPU from 2005 to 2007, apart from holding other strategic posts prior to that.She holds a master's degree in economics from the University of Kent and also a graduate in economics from the Universiti Malaya. Noriyah started work in the civil service in August 1975."I believe her wide experience and deep knowledge in developmental economics and management will enable her to lead the EPU in advising the government on socio-economic issues and ensure that the EPU contributes towards achieving the '1Malaysia' concept, Nasional Mission and also Vision 2020," Sidek said in the statement.
Wednesday, June 10, 2009
There are other reasons for the rekindled interest including the fact that construction firms have returned to the black: infrastructure builder IJM, for example, posted RM290 million in net profit for its 2008 financial year from a loss of RM421 million the year earlier. In addition, falling materials’ prices also imply larger margins.
But the key driver is the accelerated spending which seems to be driven by Prime Minister and Finance Minister Datuk Seri Najib Razak. In late May, for example, the government awarded a RM1.3 billion tunnelling project to a Japanese-Malaysian consortium of companies, including IJM, to kick-start the Pahang-Selangor interstate water transfer project that was first announced five years ago.
The RM5-8 billion project is an ambitious, and environmentally contentious, project to transfer water from a newly created dam in Pahang through a tunnel in the Main Range of mountains and piped from a newly created water treatment plant to end-users in Selangor.
It was deemed necessary in 2004 after studies showed that the demand for water in the Klang Valley, Malaysia’s most industrialised hub, would outstrip supply by 2014.
Malaysia’s poor fiscal situation put the project on ice but the downturn and the ascendancy of Najib, who is from Pahang, seems to have given the project a new urgency.
The new emphasis on accelerated spending is partly driven by the need to prevent a hard economic landing for Malaysia which entered recession in its first quarter.
But it’s also political: the ruling Barisan Nasional is under severe pressure from the opposition and needs to shore up public support by demonstrating a firm hand on the economy ahead of general elections in 2013.
On the water project, the construction industry is interested because only the tunnelling works have been awarded.
The Pahang portion of the contract — the dam, piping and the tunnelling — are likely to be dominated by Japanese contractors as it is being funded by a US$1 billion (RM3.51 billion) loan from the Japan Bank for International Cooperation. Even so, AMMB Banking Group picked Loh and Loh (a Malaysian dams’ specialist) and JAKS Resources (a pipes supplier) as likely beneficiaries for sub-contract work.
There is an estimated RM2.3 billion worth of contracts still to be handed out on the Pahang portion of the works.
Around RM4-5 billion worth of work is up for grabs on the Selangor side, which will have to be awarded soon, so that both sides can meet the 2014 deadline seamlessly. This portion, however, is to be government-funded so all the work will go to local contractors. For this, AMMB picks infrastructure specialist IJM, Gamuda, Loh and Loh and, once again JAKS as the major beneficiaries.
But water isn’t the only thing Malaysian construction firms are eyeing.
Under government plans to improve urban transport, state agency Prasarana has been tasked with spending RM35 billion to improve public transport in the Kuala Lumpur area by extending Light Rail Transit and bus networks.
So far it is still in the design state but Prasarana has announced that it will go to the market to raise an initial RM4 billion to kick things off. Cumulatively, the news-flow has caused a buzz in the industry. — Business Times Singapore
Friday, June 5, 2009
Now Southeast Asia is getting whacked again, a victim of sins on the other side of the globe. Last autumn the region's exports plunged as the US, and then China, slumped. Foreign investment, meanwhile, has plummeted as multinationals rein in spending. "It's frustrating that we are in a crisis that is not of our own making," says Thai Prime Minister Abhisit Vejjajiva.
Yet this downturn is hardly a full-blown repeat of the Asian crisis. That's testament to the surprising strength of the 10 countries that belong to Asean. The region's banks are virtually free of toxic assets and haven't needed government bailout money. Years of trade surpluses and high savings rates have contributed to record foreign reserves. Debt loads — for governments, corporations, and consumers — are a fraction of those in the US and Europe, and inflation and interest rates have fallen dramatically. "Of course there is a slowdown, but [these countries] are well prepared to weather the storm," says Mark Mobius, president of Templeton Emerging Market Funds. "They have outperformed global markets, which is telling us they are going to do quite well." Asean bourses have led the recovery in emerging-market stocks, with Jakarta's benchmark index up 70 per cent and Vietnam's up 80 per cent from recent lows.
Some companies operating in the region continue to do well, as demand for everything from computers to discount airline tickets remains strong. Unilever Indonesia has sold so much Pepsodent toothpaste, Lifebuoy shampoo, and other goods that its first-quarter revenue jumped 18 per cent, to US$412 million (RM1,442 million), boosting earnings 9 per cent, to US$70 million. "The impact from the global crisis is minimal," says Franky Jamin, Unilever Indonesia's corporate secretary. And London's Standard Chartered Bank, which gets two-thirds of its revenue in Asia, says first-quarter profits were its best ever, indicating that the region's slump will be shallower and shorter than elsewhere. Consumer banking and lending to small companies are strong, while the mortgage business continues to grow, says Ray Ferguson, the bank's CEO for Southeast Asia. Foreclosures, he adds, "are not a feature of the market."
Southeast Asia's strength is an encouraging sign that the region is still a player. Though it may have been half-forgotten by many investors since the crisis, its educated workers, natural resources, and — in some countries, at least — first-class infrastructure make it worth paying attention to. Asean has a total population of 560 million, and its combined gross domestic product of US$1.3 trillion is greater than India's.
Indonesia, Thailand, Malaysia, the Philippines, Vietnam, and Singapore — which account for about 95 per cent of the region's economy — attracted nearly US$50 billion in foreign direct investment last year, vs China's US$92 billion.
General Electric, for instance, has committed more than US$1 billion to Southeast Asia in the past 18 months. Those investments include expanded aircraft maintenance facilities in Kuala Lumpur and a water-technology research centre in Singapore. And in May, GE broke ground on its first project in Vietnam, a US$61 million plant in the port city of Haiphong to produce wind turbine generators for export. "We wanted to put the GE footprint into a high-potential country," says Stuart Dean, the company's Southeast Asia president.
That's not to say the region doesn't pose significant challenges for investors. Red tape and corruption are rampant; Indonesia is ranked 126 out of 163 by Transparency International, behind Nigeria and Nepal. Jakarta's opaque laws have prevented a country rich in gold and copper from attracting a single new foreign mining project in a decade. In Vietnam, traffic moves at a snail's pace along roads that can barely handle motorbikes, let alone the growing number of cars. And in Thailand, tourists and investors alike have been spooked by instability as anti-government demonstrators in recent months have forced the cancellation of an Asean summit and closed Bangkok's airport for days.
Those troubles, combined with the global crisis, are weighing on growth. Singapore and Thailand — which depend on exports — are contracting. The Asian Development Bank expects Vietnam to expand 4.5 per cent this year, Indonesia 3.6 per cent, and the Philippines 2.5 per cent — near-recession levels for those countries. And new foreign investment in Malaysia fell 79 per cent, to US$931 million, in the first quarter, while in Vietnam investment inflows dropped 71 per cent, to US$2.8 billion.
Governments are fighting back by formulating stimulus plans. In Thailand, where the economy could shrink as much as 4 per cent, retail sales have held up thanks to US$58 cheques mailed to 10 million low-income workers as part of a three-year, US$45 billion stimulus package. Chipmaker Intel expects stimulus-driven spending on health care and education to boost sales of computers that use its chips. Retail PC sales for the five biggest economies in Asean grew 17 per cent year-on-year in the first quarter, more than twice as fast as in China, research firm GFK Asia estimates.
The region is also growing fast as an outsourcing centre. In the Philippine city of Cebu, nestled between emerald hills and luminous coral reefs, the seven-year-old Asiatown IT Park is home to two dozen call centres and software outsourcing shops. "It's not an easy job, but the salary is pretty good," says 29-year-old Leyland Canoy, who earns US$470 a month at locally owned eTelecare, where he provides tech support to customers of Internet phone company Vonage.
The Philippine outsourcing industry has been operating for years, but now it has big plans to grab as much as 10 per cent of the global IT outsourcing market. Wipro, Accenture, HSBC, and others have opened scores of new back-office and tech-support centres in the country, helping to build an industry that saw US$6 billion in revenue and employed more than 370,000 in 2008. "We are growing like crazy," says Marife Zamora, Philippines chief for Cincinnati-based Convergys, which hopes nearly to double its Philippines staff, to 20,000, this year. By 2010, industry leaders expect the sector to employ 900,000 and generate sales of US$13 billion.
That's an ambitious target, but the country is just starting to move up from call centres. "There's work in finance and accounting, and corporate back offices have yet to be tapped," says Oscar Sanez, CEO of the Business Process Association of the Philippines. Accenture, which employs about 16,000 in the country, is helping clients upgrade IT systems to keep up with financial regulatory changes in the recession-racked US. JPMorgan Chase, S.C. Johnson & Sons, and Siemens are expanding their back-office work there. And Wipro is doubling its Philippine staff, to 1,550, by October. "The talent is really good," says Sanjeev Bhatia, vice-president for international operations at Wipro BPO. "We are really bullish."
Global corporations still come to Southeast Asia-to find manufacturing alternatives to China. First Solar, of Tempe, Arizona, has chosen Kulim, Malaysia, for a US$680 million solar panel manufacturing plant. British motorcycle maker Triumph is building a US$73 million plant in Thailand. And Volkswagen this summer is launching a joint venture to produce Touran minivans in Indonesia.
Vietnam, though, is the primary beneficiary of the move to diversify away from China. Its proximity to the mainland and the low tariffs it enjoys in Southeast Asia thanks to Asean trade agreements are big pluses, as are its productive labour force and entrepreneurial culture. In April, Samsung Electronics opened a US$50 million mobile-phone plant outside Hanoi. Some 700 miles to the south near Ho Chi Minh City, Jabil Circuit is building a US$100 million circuit board plant in the Saigon Hi-Tech Park. Nearby, across former rice paddies muddied by afternoon rains, workers are readying a US$1 billion Intel plant that will open next year. "We expect more high-tech companies to follow," says Rick Howarth, general manager of Intel Products Vietnam. "The global crisis may have dampened companies' desire to invest, but they are also being forced to look at new markets for growth."
One of the region's greatest strengths is also a weakness: a growing reliance on exports, especially to China. The mainland's coastal factories use countless parts made in Southeast Asia for goods that are ultimately destined for the US and Europe. When those Chinese exports get slammed, Asean economies suffer. "The region is excessively dependent on China, which does assembly, while Asean does components," says Charles Adams, a professor at Singapore's Lee Kuan Yew School of Public Policy. "What's needed is more intraregional trade in final goods."
There are few signs Southeast Asia will wean itself from that dependence anytime soon. Philippine outsourcers work primarily with US customers. Intel plans to export most of its production from Ho Chi Minh City, since Vietnamese will buy just 3 million or so computers this year, while the Intel plant will be able to turn out hundreds of millions of chips annually. And Canon's US$100 million laser printer facility outside Hanoi, its largest anywhere, ships its products overseas.
An Asean agreement that allows free trade in autos around the region may help reduce the importance of China and the West. Ford Motor, for example, ships sport-utility vehicles from Thailand to Vietnam, Indonesia, and the Philippines. The free trade "gives us enough volume," says David N. Alden, president of Ford's operations in Southeast Asia, where auto sales are about the same as in India. "Thailand's market alone could not have made this a business base."
AirAsia, a scrappy budget airline based in Malaysia, shows the potential of the regional market. In 2001, entrepreneur Datuk Tony Fernandes took a bankrupt carrier and relaunched it with just two planes flying out of Kuala Lumpur. Thanks to liberalisation of air travel in much of the region, Fernandes has ramped up to 81 aircraft and 122 destinations in 16 countries — often smaller cities others had ignored. He expects to carry 24 million passengers in 2009, up 30 per cent from last year. "We focused on building an Asean brand," says Fernandes. "We saw a huge opportunity no one was exploiting." — Forbes