20100330 1021 Malaysia Corporate News.

Sarawak Energy is expected to export 1,600MW of electricity to Peninsula Malaysia by 2019. Senior Manager (power systems planning) Dr Lee Hau Aik said this would increase by another 1,600MW by 2024. However, he said power sales to the peninsula would depend on the completion of the submarine cables that would be laid across South China Sea. It was reported earlier that the first submarine cable would be completed in 2016, followed by the second a year later. (Starbiz)
While not entirely surprising, the delayed timing for the transmission of power from Sarawak to Peninsula Malaysia is a slight negative for Tenaga who is depending on cheaper hydropower sources from Sarawak to diversify its generation mix away from gas and coal options.

The Sarawak Corridor of Renewable Energy (SCORE) has attracted many investors with 20 direct negotiations held with potential investors so far. “As of now, SCORE has received RM30bn investments and many more are expected to come,” Sarawak Second Planning and Resource Management Minister Datuk Amar Awang Tengah Ali Hassan said. (Bernama)

SP Setia has bought a piece of land in Melbourne, Australia, for A$30m (RM90m). The company acquired the 4,340sq m land and plans to develop a high-density inner city integrated residential and commercial project on the land. "Barring unforeseen circumstances and subject to Australia's Foreign Investment Review Board approval, the proposed acquisition is expected to be completed in Oct-FY10," said SP Setia. The group targets to launch the project within 18-24 months of the date of acquisition.

• The land is strategically located in the central spine of Melbourne's central business district, between A'Beckett Street and Franklin Street and between Elizabeth and Queen Streets. "The site is a short walk to Melbourne's central shopping centre and railway station, and is close to the Queen Victoria Market. (BT)

Sabah Softwoods, a plantation subsidiary of state government agency Innoprise Corporation, is drawing up a new five-year plan to optimise the use of its resources. CEO Mohd Hattah Jaafar said the old masterplan would expire soon. On oil palm, Hattah said Sabah Softwoods hoped to produce 31.5 metric tonnes of fruit per hectare for all its mature plantation areas covering 26,000 hectares by 2015. Last year, oil palm contributed more than 90% to the company's profit of RM55m and by 2015, Sabah Softwoods expected timber plantation to contribute 30%, he said. The company's long term target was for timber and oil palm plantations to contribute 50% each, he added. "Sabah Softwoods' profit will not fall below RM100m by 2011, Provided that the price of crude palm oil is at the RM1,800-level, Sabah Softwoods will record a profit of above RM100m," he added. (Bernama)

Unilever says it will not cancel palm oil supply contracts with IOI Corp and that it is confident the planter will address concerns over logging forests raised by a green group. IOI earlier dismissed the report by Friends of the Earth that it cleared rainforests on Borneo island to expand, saying the allegations were inaccurate. "We believe IOI is a very responsible supplier and are confident that if there is truth in the current allegations, IOI will address them," Unilever head of sustainability Jan-Kees Vis said. Unilever, the world's top palm oil buyer, has so far blacklisted two Indonesian suppliers after verifying reports of the firms felling forests and clearing peatlands to expand - practices that release global warming emissions. (Reuters)

The Japan Bank for International Cooperation (JBIC) will, through regional banking group CIMB Group Holdings, provide US$300m (RM984m) in long-term financing to small- to mid-sized businesses in Southeast Asia. The two parties formalised the arrangement, said to be the largest the Japanese government-run JBIC has ever provided to a commercial institution.

• The funds are meant to support firms in the region that have Japanese links. Loans will be channelled through CIMB Bank in Malaysia, CIMB Niaga in Indonesia and CIMB Thai. "This is particularly for small- to medium-sized enterprises which continue to face difficulty obtaining long-term financing," JBIC's resident executive officer for Asia and Oceania, Ryuichi Kaga, said. 
• Dato’ Sri Nazir Razak, CIMB group chief executive said that the largest loan size for a company is expected to be up to US$25m (RM82m). Nazir believes that two-thirds of the funds may flow into Indonesia given the current favourable rates and the country's strong growth outlook. (BT)

CIMB Group Holdings has applied for new banking licences in Vietnam and Cambodia in a bid to strengthen its regional presence. The group already operates in Indonesia, Thailand and Singapore. "We've applied for new banking licences in Vietnam and Cambodia," group chief executive Dato’ Sri Nazir Razak said.

• The Malaysian-listed lender, which owns CIMB Thai Bank, has also been eyeing a listing in Thailand and this may happen by mid-June this year, Nazir said. "The process under the FRS139 accounting standard requires us to announce our first quarter earnings before the submission. That is why the timing is such," he added. CIMB Thai will remain listed even after the group's dual listing, its CEO Subhak Siwaraksa said. 
• Nazir also noted that CIMB Group has a strong capital base and would be "comfortable" supplying capital to CIMB Thai and Indonesian banking unit CIMB Niaga if the need arose. Both units are also capable of funding their growth via bonds, he said.
• CIMB Niaga president director Arwin Rasyid said the Indonesian lender planned to sell sub-debt of US$300m by June to boost capital and pay debt. CIMB Niaga has US$100m (RM328m) of sub-debt maturing this year and US$200m (RM656m) next year. The bank is also considering a rights offer, Arwin was reported to have said.
• This follows hot on the heels of CIMB Thai's move last week in announcing plans to raise about 9bn baht (RM910m) via rights and bonds issues.
• Meanwhile, Arwin said that he expected CIMB Niaga's loans to expand in the range of 20% or higher this year on the back of strong economic growth in Indonesia. Loans grew 12% last year. CIMB Niaga is Indonesia's fifth largest lender with 5% market share of loans. (BT)

The government has no intention of divesting its equity in Proton Holdings as it does not want the national car manufacturer to be controlled by foreign parties, the Dewan Rakyat was told. Deputy FM Datuk Chor Chee Heung said Proton was currently negotiating assembly and product JV possibilities with several OEMs. However, he said the discussions did not involve equity participation but a strategic partnership. (Malaysian Reserve)

Market talk had it that Proton Holdings had firmed up some sort of collaboration deal with Volkswagen AG (VW) of Germany. Details were scarce but according to auto sources, the deal hinged around Proton undertaking contract assembly of certain VW models for the German auto giant, but this remains unsubstantiated. (Financial Daily)

Edaran Otomobil Nasional shareholders approved of its biggest shareholder DRBHICOM Bhd taking private the company. While many minority shareholders voted against the corporate move, EON's second biggest shareholder Kualapura S/B voted for the privatisation at RM1.55/share via a selective capital reduction (SCR). EON's privatisation is expected to be completed by the third week of August, said chairman Tan Sri Marzuki Mohd Noor. "The meeting ended well. More than 90% of the shareholders were present and voted in favour of the resolution," said Marzuki. (BT)

Malaysian builders are setting their eyes on expanding into the Middle Eastern markets as infrastructure spending in the area increases, a report from Bernama said. Local contractors are currently working on 51 projects worth US$10bn in the Middle East and are eyeing for more amid a projected upswing in construction demand. The majority of projects are in the United Arab Emirates, Saudi Arabia, Qatar, Bahrain, Oman, Syria, Iran, Jordan and Yemen. The Malaysia External Trade Development Corporation (Matrade) noted the Middle East contributed the highest share (42%) among the 614 overseas projects worth US$24bn local contractors have worked on from 1997 to 2009. (Building Materials Week)

The new board of directors of Ho Hup Construction Co will meet with Malton today to renegotiate the JDA concerning the former’s only remaining landbank and its jewel, a 60- acre parcel in Bukit Jalil. Ho Hup will also try to negotiate for a construction job on the JDA as it was the company’s core business. (Financial Daily)

ExxonMobil is said to be ready to privatise its downstream asset Esso Malaysia. It is prepared to make a GO for the remaining 35% of Esso shares it does not own, without revealing the offer price. (Malaysian Reserve)

Two directors with links to the Shapadu Group, Rosthman Ibrahim and Mohamad Hasif Mohd Nahar, have been appointed to the board of beleaguered oil & gas outfit Vastalux. Mohamad Hasif has acquired an 11.6% stake in Vastalux, buying over the block from Mohamad Nor Abdul Rashid who ceased to be a substantial shareholder. Vastalux's Petronas license was suspended in Jan. (Edge Daily)

Lityan CEO Nor Badli Munawir is slated to helm Ramunia as Lembaga Tabung Haji (LTH) plans to play a more prominent role in the company. LTH has a 25.2% stake in Ramunia and owns 65% of Lityan. Ramunia has been without an MD since Mar 09. (Edge Daily)

KFC Holdings plans to invest RM40m to open 40 new KFC outlets in Malaysia, bringing the total number of outlets to 518. The new outlets will include some drive-through ones, combining KFC and Pizza Hut outlets, with each drive-through outlet costing RM5m. (Star)

20100330 1013 Malaysian Economic News.

The highly anticipated New Economic Model (NEM) to be unveiled today aims to transform the country into a high-income nation. The framework of the NEM will recommend action on: (i) reducing subsidies, (ii) providing a wider safety net to cover more people, (iii) improving the skills of the locals, (iv) addressing the question of affirmative action, and (v) redefining the poor and how to help them. Today’s unveiled framework is the first part of the NEM. (The Star)

The 'Impact of Foreign Workers on the Malaysian Economy' study by the National Economic Action Council (NEAC) cost RM1.16m, the Dewan Rakyat was told. Prime Minister Datuk Seri Najib Tun Abdul Razak said based on the study, seven new initiatives were implemented among them the establishing of a special task force by the Home Ministry to review policies and procedures in the hiring of foreign workers. (Bernama)

Malaysia's banking system remains strong and well capitalised to provide loans to anyone especially for running and expansion of businesses, the Dewan Rakyat was told. Deputy Finance Minister Datuk Chor Chee Heung said Bank Negara's decision to shorten the non-performing loan (NPL) classification period to 3 months from 6 months did not adversely affect the country's banking system. It also did not change the way banks handle the NPL issue. (Bernama)

Total trade in the Multi-Level Marketing (MLM) industry is expected to reach RM10bn by the end of the 10th Malaysia Plan (10MP) (estimated RM5bn in 2009), Minister of Domestic Trade, Cooperatives and Consumerism, Datuk Seri Ismail Sabri Yaakob said. Sabri added that the MLM industry had the potential to expand even faster if it was regulated closely by an effective Act. (Bernama)

Minister of International Trade and Industry, Datuk Seri Mustapa Mohamed, has invited Thai companies to invest more in Malaysia. He said the companies could leverage on Malaysia's conducive investment environment through establishing joint ventures with local companies. "The New Economic Model (NEM) will present exciting opportunities for business collaborations," he said. (Bernama)

Thai entrepreneurs are seeking Malaysian joint venture (JV) partners to enhance cooperation in trade and investment to benefit from the establishment of an Asean Economic Community (AEC) in 2015. Thailand Chamber of Commerce chairman, Dusit Nontanakorn, said AEC aimed to turn the region into a single market with over 500m people, into a community where goods, production assets, people and capital could move across borders freely. (Bernama)

The Employees Provident Fund (EPF) plans to increase its overseas investment to 10.0% over the next one to two years (vs. current 6.0-7.0%). Its CEO Tan Sri Azlan Zainol said the focus would be on investing further in equity of public-listed companies. (Financial Daily)

A new Employees Provident Fund scheme to enable contributors to get higher housing loans based on their Account II savings will be implemented this year. Its CEO Tan Sri Azlan Zainol said several banks had expressed interest in the scheme and were willing to help contributors obtain higher financing. (NST)

20100330 1009 Global Economic News.

US consumer spending rose in February for a fifth consecutive month, a rebound that will require gains in employment to be sustained. Personal consumption expenditures (PCE) increased US$34.7bn or 0.3% (US$38.5bn or 0.4% in Jan), matching market estimates. US personal income increased US$1.2bn or less than 0.1% in February (US$30.4bn or 0.3% in Jan), and disposable personal income increased US$1.6bn or less than 0.1% (US$26bn or 0.2% in Jan), according to the Bureau of Economic Analysis. (Xinhua)

The US economy looks set to return to relatively rapid growth soon, International Monetary Fund (IMF) chief Dominique Strauss-Kahn said. "It's a flexible economy. We'll see how rapid the recovery in the US economy can be. But I'm rather confident that the US economy will grow rather rapidly again quite soon," he added. (Channel News Asia)

The US Treasury Department Monday confirmed its plan to sell all of its approximately 7.7bn shares of Citigroup stock over the course of 2010. The Treasury said it will initiate its disposition of the shares pursuant to a pre-arranged written trading plan, and assured that it will sell its Citigroup common shares into the market through various means in an orderly and measured fashion. (Xinhua)

European confidence in the economic outlook improved to the highest in almost two years in March, beating economists’ forecasts and signaling the recovery is gathering strength as a weaker euro helps exporters. An index of executive and consumer sentiment in the 16 nations using the euro rose to 97.7 from 95.9 in February. Economists forecast it would increase to 97.1. (Bloomberg)

Australia’s central bank said home-loan rates rising faster than its benchmark interest rate were part of its policy “deliberations,” suggesting fewer increases may be required to return borrowing costs to normal levels. “The cash rate determined by the Reserve Bank is still the major determinant of the interest rate structure in Australia, including that of mortgage rates,” Assistant Governor Guy Debelle said. (Bloomberg)

Japan’s retail sales rose 4.2% yoy in February (2.3% in Jan), marking the biggest monthly jump since 1997 and signaling that a drop in the unemployment rate is feeding through to higher household spending. The growth was well above the economists’ forecast for a 1.6% yoy gain. (Bloomberg)

South Korea’s current account swung back to surplus last month as energy imports declined and fewer people traveled overseas. The current-account surplus was US$158m in February (-US$631m in Jan). The figure will climb to about US$1.5bn in March, helped by an increase in the trade goods surplus, bank official Lee Young Bog said. (Bloomberg)

South Korean manufacturers’ confidence rose from 101 to 105 in April, marking the highest level in more than seven years as the nation’s economic recovery strengthens. A measure of non-manufacturing companies’ expectations fell to 88 from 91. (Bloomberg)

China’s National Social Security Fund (NSSF) plans to increase its investment in the US and European Union (EU), Dai Xianglong, the head of the pension fund said. This is in order to reap higher returns, even though it expects the yuan to rise in the long term. The dollar would remain a key global currency and expressed confidence that the eurozone’s sovereign debt strains would not escalate, he noted. (Financial Daily)

Thailand’s Finance Ministry raised its economic growth forecast for this year as the nation’s economic recovery gains momentum, buoyed by rising exports and public spending. Gross domestic product (GDP) is projected to expand 4.0-5.0% in 2010, with a mid-point forecast of 4.5%. The ministry in December predicted growth of 3.0-4.0% this year, with 3.5% as the mid-point of the range. (Bloomberg)