Broadband Project Expansion ‘Timely’

21 Zulhijjah 1434

KUALA LUMPUR: The move to expand the high-speed broadband project to the second phase (HSBB2) is timely, said industry executives.

The first phase elevated Malaysia to the top in terms of number of high-speed broadband subscribers in Southeast Asia, said Telekom Malaysia Bhd group chief executive officer Tan Sri Zamzamzairani Mohd Isa.

“The establishment of the submarine cable network to serve bandwidth capacity requirement of users in Sabah and Sarawak is much welcomed in anticipation of increasing future capacity requirements and growing data needs,” he said.

Technology entrepreneurs said the HSBB2 will go a long way in helping Malaysia achieve its ambition of becoming a high-income nation.

“Internet speeds of between 4Mbps and 10Mbps are good speeds. These will be useful for technopreneurs who are in the content space,” said Nazrin Hassan, chief executive officer of Cradle Fund Sdn Bhd.

“Phase 2 of HSBB is good news and it is about time to keep the momentum of growth.

“With the rollout of HSBB to more cities nationwide, this will create a bigger market for online products and services of local technopreneurs,” said Noor Azman Yusof, CEO of Online Dynamics Sdn Bhd.

Read more: BTimes

Astro Slips After Measat Fails to Secure Claim

5 Zulkaedah 1434

KUALA LUMPUR: Astro Malaysia Holdings Bhd's shares clawed back from its steepest intraday loss in a week yesterday, as investors took up some late positions ahead of a scheduled company briefing today.

The stock fell to an intraday low of RM2.89, closing the day one sen lower at RM2.95 a share with some 2.75 million shares exchanging hands.

The satellite TV provider is expected to hold a media conference today to announce its first-half results for the period ending January 31 2014.

The news conference takes added importance as it will be the first time Astro's top executives will be put under the microscope after it told Bursa Malaysia that the RM995.58 million it had won in an arbitration against three companies linked to Indonesian billionaire Mochtar Riady's Lippo Group cannot be enforced in Indonesia.

Astro is controlled by Ananda Krishnan, Asia's six richest man, who according to Malaysian Business, has a RM32.90 billion estimated fortune.

Astro said on Monday that the Supreme Court of Indonesia had dismissed its appeal against the Central Jakarta District Court's (CJDC) decision which had rejected the claimants' application to enforce the award.

It said the Supreme Court dismissed its appeal against the CJDC's decision as the awards were contrary to public order, amounted to interference with Indonesia's judicial process and violated the principles of the state and legal sovereignty of the country.

Astro's claims were put forward by its unit Measat Broadcast Network Systems Sdn Bhd against three firms from Indonesia, namely, PT First Media Tbk, PT Direct Vision and PT Ayunda Prima Mitra .

The three Indonesian firms are part of the Lippo group, Indonesia's largest developer and one of its biggest conglomerates.

To recap, PT Direct Vision in 2006 started cooperation with Astro, to provide pay TV service Astro in Indonesia. In the first year of its operation Astro made a big bang in the market of pay-TV grabbing the second largest share of the market after Indovision, with 140,000 subscribers in 2007.

In October 2008, Astro broadcast in Indonesia was stopped halted unilaterally by Astro, by stopping supply of programmes to PT Direct Vision on due to an internal conflict between PT Ayunda Prima Mitra, as a shareholder of PT Direct Vision with Astro Malaysia.

The conflict began started from the Lippo Group wanting to divest a 51 per cent stake in Direct Vision valued at US$250 million (RM825 million) to Astro based on an agreement in 2005. Astro, however, rejected as Astro it had already paid all operating and content costs of Direct Vision totaling around US$136 million in almost three years.

Read more: BTimes

Perlis Embarks on RM43m HSBB Project

5 Zulkaedah 1434

PADANG BESAR: Malaysia's smallest state, Perlis, promises high-speed broadband connectivity for its residents and investors by next year.

The RM43 million project, which covers the entire state, is a colla-boration between the Perlis government, Northern Corridor Implementation Authority (NCIA) and Telekom Malaysia Bhd.

Its Menteri Besar Azlan Man said the project will be carried out in two phases. Work on the first phase, which will cover Kangar and Arau, will start early next month.

"The estimated cost for the project in Kangar alone is about RM12 million. Once Phase One is concluded, work on Phase Two in Padang Besar, will resume."

Information and communications technology is a must if Perlis is to attract investors, adding that a mega project such as this will have a spillover effect on the entire state, said Azlan at a "Perlis Maju 2015" programme yesterday.

Meanwhile, NCIA chief executive Datuk Redza Rafiq Abdul Razak said the project is meant to generate a condusive environment for the private sector and the people of Perlis.

Read more: BTimes 

TPPA: Its benefits and challenges

IMPORTANT INITIATIVE: Country’s GDP set to improve, while its goods and services will reach a wider market, says Miti

 THE Trans-Pacific Partnership Agreement (TPPA), an initiative to establish a free trade agreement (FTA) between 12 countries - Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam - will see a market of 800 million people and combined gross domestic product (GDP) of US$27.5 trillion (RM89.1 trillion).

 The agreement covers new elements such as competition, labour, environment, government procurement and intellectual property rights. The International Trade and Industry Ministry (Miti) has put together a Q&A (question and answer) to address public concerns and fears about the ongoing talks.

Here are the excerpts from part one:

Question: What is the rationale of joining the TPPA negotiations?

 Answer: The government views the TPPA as an important initiative as Malaysia seeks to expand market access opportunities, enhance its competitive advantage and build investor confidence. The comprehensive study conducted by the United Nations Development Programme (UNDP) also identified several major economic benefits to Malaysia, including welfare gains of 1.46 per cent and higher wages for skilled and unskilled labour by 2020, in addition to improved GDP growth due to greater market access among member countries.

 The successful conclusion of the TPPA will form a huge market of 800 million people with a combined GDP of US$27.5 trillion. This far surpasses Malaysia's limited domestic market of 29.5 million people and a GDP of US$300 billion.

According to a simulation study done by the Peterson Institute of Economics in June last year, by 2025, Malaysia will benefit with an increase in gross national income by RM26.3 billion and increase in exports of RM41.7 billion.

Admittedly, the government is aware of the challenges and controversies surrounding the TPPA because unlike other FTAs, it is comprehensive and covers more areas of interest, which would naturally invite more public opinion and debate. The government appreciates all views expressed on the TPPA and will continue to engage the stakeholders and NGOs for inputs and feedback.

Question: What are the benefits of TPPA for Malaysia?

Answer: Consultations with various stakeholders prior to joining TPPA negotiations have revealed an increasing request from Malaysian companies for more open markets and trade facilitative measures. There are increasing numbers of Malaysian companies becoming global investors and they require a level of predictability that can be guaranteed effectively through binding agreements like FTAs.

 Concurrently, there is also interest from foreign companies from non-TPPA countries that are exploring Malaysia as a base for their operations as the hope to enjoy the benefits of the TPPA. The combination of greater market access for Malaysian products and services under the TPPA and the continued inflow of foreign investments will create a powerful catalyst in driving Malaysia's economic transformation agenda.

With TPPA, Malaysia will become an integral part of the greater economic integration within the Asia- Pacific region. It will also significantly enhance Malaysia's engagement with important trading partners such as the US, Canada, Mexico and Peru. As a member of TPPA, Malaysia will also be able to increase it participation in the regional supply and value chains and facilitate access for Malaysian products and services into bigger markets.

Question: What are the challenges of the TPPA for Malaysia?

Answer:  The government is aware of the many benefits and the challenges involved. For instance, government procurement is one of the new elements in TPP, which was never part of the FTAs that Malaysia has signed. This is one strategic area the government is negotiating cautiously, after taking into consideration feedback from stakeholders, particularly on the concern of safeguarding the interest of local enterprises and the Bumiputera commercial and industrial community.

Intellectual Property Rights (IPR) is another difficult area. One of the main concerns on IPR revolves around access to affordable medi-cine and healthcare as well as longer protection term which might delay manufacturing of generic drugs.

Malaysian negotiators will continue to negotiate an outcome that will give Malaysians access to affordable medicine and healthcare.

Question: What will happen if Malaysia does not join the TPPA?

Answer: The TPPA offers Malaysia an opportunity to be part of a consumer market with 800 million people. Abandoning the TPPA negotiations now would mean allowing other countries to set the terms of agreement without considering Malaysia's interests and concerns. Acceding to the TPPA later would result in Malaysia having to accept the rules, disciplines, terms and conditions decided by others.

By not joining the TPPA, Malaysia would be at a disadvantage in terms of seeking bigger and better market access for its products and services. The impact of that disadvantage will be even more significant should countries like China, Indonesia and other competitors decide to join later.

Once realised, the TPPA will result in a huge consumer market for Malaysian goods and services. Market access to 800 million people is not an opportunity we can afford to miss, especially since we are an open economy highly dependent on international trade. In an increasingly competitive global environment, our absence will make Malaysia less attractive as an investment destination, compared with those that are TPPA members. As investors avoid Malaysia, this could result in fewer opportunities for job creation.

Question: Who is in charge of the TPPA negotiations?

Answer: The cabinet has mandated Miti to coordinate Malaysia's participation in the TPPA negotiations. Miti acts as the chief negotiator but other ministries and agencies will lead the working groups for areas under their responsibility. (See Table 1).

With the mandate from the cabinet, the lead ministries and agencies involved are focused on safeguarding Malaysia's best interest in the ongoing negotiations. Before every negotiating round, the cabinet is briefed on all issues, and for the necessary mandate to be given to all negotiators.

Question: Was there a lack of consultation in forming Malaysia's position in TPPA?

Answer: The government admits more consultations could have been carried out. In this regard, Miti has made many statements assuring the public that consultations have been carried out by negotiators in their respective fields.

It had also organised a TPPA open day on August 1 to update the public and the media on issues surrounding TPPA, to clear misconceptions about it and to hear the public's concerns about it.

Miti welcomes the establishment of a bipartisan caucus in Parliament. Its minister had met and briefed the caucus on developments and issues concerning the matter. The caucus provided constructive inputs to the government.

It must be noted that inputs and feedback from industry associations, interest groups and business chambers play a key role in the formation of Malaysia's negotiating positions. To illustrate a point, Malaysia's position in the negotiations on government procurement, led by the Finance Ministry, strongly reflects the concerns of stakeholders, the Bumiputera business community and state-owned enterprises (SOEs) as well as that the small and medium enterprises (SMEs).

 Malaysia has also maintained the rights of all states on matters related to land and water. On SOEs, Malaysia's position is determined by the Finance Ministry and Khazanah Nasional Bhd.

The government will continue to engage all stakeholders. In addition to the open day, Miti met the Coalition to Act Against the TPPA Malaysia on August 6 and discussed ways to enhance engagement with stakeholders. Miti welcomes feedback and opinion from all parties regarding the TPPA.

Question: Why the secrecy in TPPA negotiations?

Answer: While the negotiating texts have never been made public as negotiations are ongoing, the government has and will continue to share its negotiating position with relevant stakeholders during the consultation sessions.

A level of confidentiality is required for two main reasons: (a) regulations and the evolving process of negotiations and rules surrounding TPPA oblige negotiators to maintain confidentiality of the negotiating texts and (b) negotiators advancing the interests of Malaysia, strategically do not want to publically disclose their bargaining positions to ensure the best outcome during the negotiations.

Mindful of the public feedback, the Miti minister will put this issue on the agenda of the forthcoming TPP Ministerial Meeting in Brunei.

Question: Why rush TPPA by October this year?

Answer: As in all negotiations, there is a need to work towards a target date to conclude negotiations. It should be noted that the Trans Pacific Partnership Leaders Statement issued on November 12 2011, in Honolulu, clearly called on the negotiating teams to continue talks with other Asia-Pacific partners that have expressed interest in joining the TPPA in order to facilitate their future participation. TPPA leaders have set an October target for substantial conclusion of the negotiations.

However, this is not a definitive deadline for the conclusion of the TPPA as the parties involved are still negotiating on a number of sensitive issues. It is in Malaysia's best interest that TPPA is concluded in a manner that benefits the people.

Question: Why is China not in the TPPA?

Answer: The position of all TPPA members is for this agreement to be a building block for the Free Trade Agreement of the Asia Pacific (FTAAP), which will encompass all the Asia-Pacific Economic Cooperation (Apec) economies, of which China is also a member. Membership in TPPA is voluntary. Every Apec member, including China, is free to decide when to join TPPA.

China is a very important trading partner to Malaysia. As such, Malaysia certainly welcomes China into the TPPA.

Read more: TPPA: Its benefits and challenges at Btimes

OSK takeover offer not fair, says Affin

6 Syawal 1434

KUALA LUMPUR: Tan Sri Ong Leong Huat has suffered a setback in his bid to take OSK Holdings Bhd private after his offer was described as “not fair” and “not reasonable” by the independent adviser for the corporate exercise.

 Affin Investment Bank Bhd said the offer price for OSK shares is “not fair” as it is below the fair value of the company.

Affin had based the fair value of OSK shares using the revised net asset value (RNAV) concept.

OSK is estimated to have a RNAV of between RM1.88 and RM2.15 per share.

The net asset per share of OSK, meanwhile, stands at RM2.57 a share, meaning that the offer price by Ong is based on an implied priceto-book ratio (PBR) of 0.65 times.

 “This is lower than the lowest unaudited PBR of comparable companies of 1.0 times and also lower than the average unaudited PBR of comparable companies of 1.57 times,” Affin said in a statement to OSK shareholders.

To recap, Ong is seeking to take OSK private through OSK Equity Holdings Sdn Bhd, which after a series of corporate deals, has a stake in OSK above the 33 per cent cut-off point.

OSK Equity is 99 per cent controlled by Ong, who is also the managing director of OSK.A party that breaches the 33 per cent cut-off point in ownership is required by law to make a mandatory offer for the shares it does not already own.

Read more: OSK takeover offer not fair, says Affin at BTimes

UMC completes Silterra stress test

6 Ramadhan 1434

TAIWAN’S United Microelectronics Corp (UMC), the world’s No. 3 contract chipmaker, has completed a stress test on Silterra Malaysia Sdn Bhd, people familiar with the matter said yesterday.

It is understood that two other potential buyers from China are waiting in the wings to take over the Malaysian chipmaker in the event the UMC deal does not go through.

Silterra, the country’s first chip fabrication company, is 98 per cent-owned by government investment holding arm Khazanah Nasional Bhd.

Business Times understands that UMC has completed due diligence on Silterra, raising expectations in the marketplace that Khazanah may off-load the chipmaker.

Khazanah has sold 55 assets worth RM35.7 billion from 2004 until last year. Chief among its sale of strategically important companies are Proton Holdings Bhd and Pos Malaysia Bhd.

Silterra, which lists itself as a project of national interest, has failed to meet profit targets as well as a listing on the New York-based Nasdaq in the second quarter of 2002.

Outside Malaysia, Silterra is highly regarded with the company being ranked No. 15 (based on revenue) in the global ranking ofleading pure-play foundries.

Silterra serves the mature tech segment of the market, valued globally at US$30 billion (RM97.25 billion) per year.

This has helped Silterra rake in profits of about RM50 million a year over the past five years, though legacy issues have capped its potential.

Silterra had cumulative losses totalling RM7.3 billion for 10 years up to 2011, putting pressure on its stakeholders to pump in more capital into the company.

Read more: UMC completes Silterra stress test http://www.btimes.com.my/Current_News/BTIMES/articles/20130812232059/Article/index_html#ixzz2bnqhc500

Malaysia Records RM139.5 Billion Realised Private Investment In 2012, Surpasses Target

17 Rabiulakhir 1434

KUALA LUMPUR, Feb 27 , 2013- Malaysia recorded RM139.5 billion in realised private investment last year, surpassing by 9.1 per cent the targeted investment of RM127.9 billion, Minister of International Trade and Industry Datuk Seri Mustapa Mohamed said Wednesday.

Compared with 2011,the realised private investment grew 24.8 per cent from RM111.8 billion, he said.

Unveiling the investment performance for 2012, Mustapa said Malaysia attracted RM162.4 billion in approved investments last year, which was also the highest amount of investments ever despite the uncertain global economic conditions.

"Of the total investments approved, RM127.6 billion (78 percent) were contributed by domestic investments (DDI) and RM34.8 billion (22 percent) came from foreign investments.

"It is heartening to note that domestic investment inflows increased substantially by almost four times the FDIs achieved in 2012, a sure sign of confidence local business have in the country's ability to prosper its investors" he told reporters here Wednesday.

Of this, Mustapa said services accounted for 72.4 percent, manufacturing was 25.3 percent while primary sectors were at 2.3 percent.

"Much of 2012's investments were in the new and emerging technologies, particularly within the aerospace, semiconductors, solar, machinery and equipment, biotechnology, petroleum and petrochemical products and medical devices industries as well as the oil and gas services sector," the minister said.

The investments approved were in 6,442 projects and are expected to generate 182,841 job opportunities.

When asked whether the trend of declining FDI and increasing DDI would sustain in the coming years, he said last year was a bad year for FDI not only for Malaysia but also globally with some developed countries facing a recession while some Asian economies were experiencing lower growth.

"We believe there will be some recovery in the global economy. Europe and America will help to push the FDI numbers somewhat, so that's our expectation. We are expecting at least US$12 billion in terms of FDI this year, same as last year, with some recovery in electrical and electronics (E&E), which will certainly contribute to FDI this year," he said.

However, Mustapa said the DDI and FDI ratio which was about 78 and 22 percent respectively, was in line with the government's goal under the Economic Transformation Programme (ETP) in encouraging DDI to take the lead in driving the country's economic transformation on the back of global economic uncertainties.

As for this year's target, Mustapa said the government is looking at a similar 20 percent growth for private investment as reflected in realised investment and approved investment last year which grew by more than 20 percent.

Asked whether the upcoming election will affect the private investment numbers this year, he said that will not be the case.

"As we saw, last year was also rumoured to be an election year but we have done extremely well. From my conversation with investors, nobody is witholding this year's investment decisions. You can see it in Iskandar Malaysia, Medini as well as the Malaysia-China Kuantan Industrial Park (MCKIP), where there is continued foreign investment interest," he said.

Mustapa said Malaysia's reputation as a global and regional hub for manufacturing and services, has managed to attract investments that will accelerate the country's shift to high value-added, high technology, knowledge-intensive and innovation-based industries.

More information: BERNAMA