Published November 19, 2009

Medical tourism: 'KL must stop brain drain'

By PAULINE NG
IN KUALA LUMPUR

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IN order to expand medical tourism in Malaysia, 'irritants' impeding its growth must be removed and concrete measures taken to stem the brain drain of highly skilled doctors, a senior minister has acknowledged.

'Unfortunately some of our doctors are attracted to neighbouring countries to work, but we will get them back.' - Nor Mohamed Yakcop, Minister in the Prime Minister's Office

The establishment of the Malaysia Health Travel Council - helmed by Ooi Say Chuan, the former deputy secretary-general of trade - seeks to advance the sector which earned an estimated RM400 million (S$164 million) last year, by acting as a one-stop centre and serving as a platform for the private sector and government to iron out problems.

'With medical tourism, we cannot go wrong as we have very good doctors,' Minister in the Prime Minister's Office Nor Mohamed Yakcop said at a seminar on healthcare tourism in Kuala Lumpur yesterday.

'Unfortunately some of our doctors are attracted to neighbouring countries to work, but we will get them back. We must look at what the irritants are and remove them,' he added, noting these could include mutual recognition of overseas accreditation and certification.

His comments on addressing the issues driving away skilled professionals echoes recent comments by Prime Minister Najib Razak that more needs to be done to reverse the serious brain drain if Malaysia hopes to have the talent to innovate so that the country can transform into a high-income economy.

To promote medical tourism, the income tax exemption on the value of increased exports was raised to 100 per cent from 50 per cent in the last budget, Mr Nor Mohamed said, adding more incentives would be revealed later.

Despite having the ingredients to be a big player in the booming sector, estimated to be worth US$40 billion globally, Malaysia has been slow to leverage on the advantages, a number of participants lamented, pointing to the lack of focus over the past decade even though the potential had already been identified after the Asian financial crisis in the late 1990s.

The various initiatives submitted had gotten nowhere in the tangle of government agencies and, as a result, 'we have muddled our way through', one participant observed.

Another noted the renewed focus on healthcare and medical tourism notwithstanding, Malaysia needs to find its niche to stand out in the region against more established markets such as India, Singapore and Thailand.

Over the past decade, the brain drain has also intensified and in the medical line, Malaysia now faces a dire shortage of doctors - especially specialists - in public hospitals. At the same time, doctors in private practice are drawn to better-equipped hospitals and fatter salaries and prospects overseas, many of them moving over to Singapore.

However, some entrepreneurial doctors have also been quick to exploit the demand for private healthcare and medical tourism, and according to Association of Private Hospitals of Malaysia (APHM) president Jacob Thomas, a number have returned, in part due to improving facilities.

The APHM, however, does not have statistics on the numbers of Malaysian doctors practising overseas or those that have returned.

Mr Ooi told participants they ought to capitalise on the new 'phenomena' of patients from developed nations travelling to less-developed ones for medical procedures.

A medical procedure in Malaysia would cost about one-tenth of that in the United States, he said, and provided the example of a heart by-pass, which costs US$9,000 locally versus US$11,000 in Thailand and US$18,500 in Singapore.

Given the sector was worth only RM59 million in 2003 and about RM400 million now - indicative figures only because not all hospitals give details - the potential is vast, with Penang and Malacca the leading states in the country.

Published November 19, 2009

M'sia's Q3 growth seen down 2%

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(KUALA LUMPUR) Malaysia's economic slide looks set to have bottomed out in the third quarter with economists saying gross domestic product probably contracted 2 per cent from a year ago, a Reuters poll showed.

Malaysia, Asia's third-most trade-dependent country, is still feeling the brunt of uncertain demand from the United States and Europe due to the global financial crisis although some economists say that improved private consumption should offset the drag in trade when third-quarter figures are announced tomorrow.

September's exports fell 24.2 per cent on an annual basis with exports to the US down 35.2 per cent from a year ago.

'What it will start showing is an improvement in private consumption. Consumer confidence has shot higher,' said HSBC economist, Robert Prior-Wandesforde.

The economy shrank by a smaller- than-expected 3.9 per cent in the second quarter, thanks in part to fiscal pump-priming by the government, prompting the central bank to revise growth figures upwards.

The poll of 15 economists also showed that Malaysia's central bank would hold rates at 2 per cent until there was firm evidence of an economic recovery. The central bank's last policy meeting of the year will be held next Tuesday.

'Inflation is not a concern. There is no domestic source of inflation. Everyone cut rates early in 2008 but Bank Negara cut only at the tail-end of the year so it will probably hike rates much later than everyone else,' said Standard Chartered economist Alvin Liew.

The central bank has held rates steady at 2 per cent for five consecutive policy meetings this year. -- Reuters

Published November 19, 2009

WB warns KL against early fiscal exit

But it adds that extending support could hamper consolidation

By S JAYASANKARAN
IN KUALA LUMPUR

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THE World Bank straddled the fence on Malaysia yesterday, warning that while the country should not exit fiscal spending too early, it should not extend it too long either.

Tall order: Malaysia needs to achieve 5.4% growth a year in order to attain high-income economic status

In a country report on Malaysia released yesterday, the World Bank said that stopping spending prematurely would choke off economic recovery. At the same time, it warned that extending fiscal support could 'hamper the credibility of medium-term fiscal consolidation, reduce room for future stimulus packages, increase the risk of asset price bubbles and constrain the private sector once demand picks up'. The institution did not, however, give any timeframe on what period was too short or too long.

Kuala Lumpur expects a budget deficit of 7.4 per cent of gross domestic product (GDP) in 2009. This is the highest shortfall in two decades and is largely due to RM67 billion (S$27.7 billion) in additional spending to mitigate the effects of the global financial crisis.

Even so, Prime Minister Najib Razak expects the deficit to be pruned to 5.6 per cent of GDP in 2010 by sharp cuts in both operating and development spending. Indeed, yesterday, Sidek Hassan, the nation's top civil servant, said that some departments could face spending cuts of up to 14 per cent. It is not clear if the spending cuts fell into the World Bank's category of exiting too early.

Still, the global financial institution was considerably more upbeat on Malaysia's prospects for 2010 than Mr Najib's administration. The government expects the Malaysian economy to shrink 3 per cent this year and to expand by the same percentage next year.

The World Bank begged to disagree. 'With East Asia leading the recovery and advanced economies showing progressive improvement, the Malaysian economy is projected to grow at 4.1 per cent in 2010, following a contraction of 2.3 per cent in 2009,' it predicts in its report.

And it could get better. On Tuesday, World Bank senior economist Philip Schellekens said in a seminar here that Malaysia's growth in 2012 could reach 6 per cent because of Mr Najib's economic reforms and the global recovery. He said that the reforms had 'encouraged more private sector participation and greater productivity'.

In an immediate response to the World Bank report, the minister in charge of the Economic Planning Unit Nor Mohamad Yakcop said: 'Three to 4 per cent economic growth is good but it's very anaemic.' He was presumably referring to the fact that Mr Najib had said recently that while the official growth was 3 per cent, he was actually hoping for 5 per cent through private sector participation.

'At that growth, there is no excitement,' Mr Nor Mohamad told reporters when asked to comment on the World Bank report. 'The excitement comes at beyond 5 per cent, and at 6 per cent, of course, it is very exciting.'

According to government planners, Malaysia needs to achieve at least 5.4 per cent growth a year in order to attain high-income economic status by 2020.

Published November 19, 2009

How SATS can still rule the roost

By VEN SREENIVASAN

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THE announcement by Changi Airport Group (CAG) that it was inviting tenders for the third ground services provider at Changi Airport must have come as a surprise to the folks at Singapore Airport Terminal Services (SATS).

After all, it comes barely seven months after global giant Swissport pulled out of Changi after an unhappy three-year episode which saw it losing some $50 million.

CAG says that the tender invitation was in response to 'interest received from several parties and changing industry dynamics in the last three to six months'. It gave no indication on who these parties were.

Still, why would companies want to wander into a business where its very experienced predecessor drowned in a sea of red ink?

CAG's CEO Lee Seow Hiang provided a hint when he said that interest was stoked by the divestment of SATS by Singapore Airlines, among other reasons.

Ferrovial-owned Swissport was the sole new entrant into Singapore's airport ground services businesses after the industry was liberalised in 2005. It started off promisingly, pulling off a coup by snatching SIA associate Tiger Airways from SATS, and becoming the sole operator at the Budget Terminal in the process. In 2006, it invested in a new $15 million warehouse with a throughput capacity of 250,000 tonnes. Its entry is said to have reduced ground services rates at Changi by about 15-20 per cent. But the rest is sad history.

Although the official reason for its failure here was the small market size and global downturn in the aviation industry, Swissport officials privately cited a much bigger challenge. This was the advantage and influence of incumbency.

SATS and longtime rival Changi International Airport Services (CIAS) controlled 80 and 20 per cent respectively of the Changi market, and already had considerable assets on the ground. CIAS, first as a Temasek group subsidiary, and now owned by Dubai's Dnata (which also controls Emirates airlines), remains a formidable player.

But SATS had an even bigger advantage as the 81 per cent-owned ground services subsidiary of SIA. Besides dozens of clients, including SIA and Qantas (the two largest operators in Changi), SATS also enjoyed what some folks the industry called 'reciprocity'.

When SIA engages ground services providers in overseas airports, airlines owning those outfits would be obliged to sign up with SATS at Changi. And given that the SIA group flies to 99 destination in 40 countries, it doesn't take a genius to work out the advantage that SATS enjoyed. This is likely to be what one Swissport official referred to as 'political' hurdles that the company faced.

But the scenario is different today. SIA has divested its 81 per cent stake in SATS to its shareholders, leaving it an independent company.

While SATS recently renewed its five-year contract with SIA and SIA Cargo, the separation means that the airline is not obliged to use its former subsidiary after the five years. More critically, SATS' lucrative 'reciprocity' advantage ends.

So as CAG's Mr Lee hinted, potential entrants must be calculating that the 'Giant of Changi' is no more as imposing or invincible as it once used to be.

What does all this say about SATS' prospects? A lot has changed at Changi since Swissport exited in March.

SATS is a different animal. The aviation industry, beaten and bruised, is essentially going for low cost and fast turnaround. Loyalty is a thing of the past.

Following its $509 million takeover of Singapore Food Industries (SFI), SATS' income from the food services business has risen to two-thirds, from less than half a year ago. Its latest quarterly results also show that contribution from non-aviation revenue surged from just 2.1 per cent to almost 40 per cent. Also, with SFI's significant presence in the United Kingdom, revenue from overseas surged to 22.4 per cent, from just 0.5 per cent a year earlier.

Still, aviation remains a key business for SATS. And going forward, one segment - the low-cost carriers (LCCs) - will grow in importance.

LCCs currently account for 20 per cent of the traffic at Changi Airport, up from around 10 per cent in 2007. With the appetite for cheap fares stoked by the economic crisis, this business segment can only grow.

Swissport's customers included Tiger Airways and AirAsia - the two most successful low-cost carriers in the region. When it exited, SATS picked up Tiger, while CIAS picked up AirAsia.

Since then, SATS has built up significant expertise and capabilities in handling low-cost operators. This is critical.

The Changi ground services market will become more fragmented over time. If SATS can retain its big clients and maintain its margins, it will still rule the roost.

Meanwhile, it can count on its significant food business, which gives it bottom line stability and growth while also cushioning it from the vagaries of the aviation business cycles. And if it clinches the IR contracts (which will be announced soon), SATS will have one more feather in its cap, even if rivals continue chipping away at its dominance at Changi.

Published November 19, 2009

The pull of CapitaMalls Asia

By ARTHUR LEE

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THE public response to CapitaLand's initial public offering of CapitaMalls Asia - an integrated shopping mall owner, developer and manager - at $2.12 per share is good if the demand for its prospectus is anything to go by.

On the first day, about 2,000 copies of the prospectus were distributed from 13 booths. Copies are available at bank branches as well as selected malls in which the group has an interest - Bugis Junction, Bukit Panjang Plaza, Funan DigitaLife Mall, IMM Building, ION Orchard, Junction 8, Lot One Shoppers' Mall, Plaza Singapura, Raffles City Singapore, Sembawang Shopping Centre and Tampines Mall. The Singapore public offer closes on Nov 23 at noon. Applications can also be made via specified ATMs and Internet banking websites.

Published November 19, 2009

SingTel to conduct 4G trials in S'pore, region

By ONG BOON KIAT

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SINGAPORE Telecom and its partners will begin a trial in the first half of next year to test a 4G mobile technology that can wirelessly deliver broadband content to and from mobile devices much faster than what is commonly available now.

The telco said yesterday that it is testing a technology known as Long Term Evolution (LTE), which promises top speeds of up to 340Mbps - zippy enough to deliver high-definition TV content to mobile device users. SingTel's trial will cover Singapore, Australia, Indonesia and the Philippines. The telco will join hands with its Australian subsidiary Optus, as well as Indonesia's Telkomsel and the Philippines' Globe Telecom.

Six network vendors - Alcatel-Lucent, Ericsson, Huawei, NEC, Nokia Siemens Networks and ZTE - have also been invited to take part.

In a statement, SingTel said that the trial will help the parties involved 'better understand LTE and determine the best approach and strategy for its adoption in their respective local markets'. It will also lay the groundwork to establish a 'regionally compatible' LTE network.

'LTE will open doors to new and more powerful mobile solutions that will transform the way our customers across the region live, work and play,' said Lim Chuan Poh, SingTel's CEO International Group. There is no indication when SingTel might roll out commercial LTE services. 'We will make a decision on the launch date after the trials,' a SingTel spokesman told BT.

'The time frame for the launch of commercial LTE services is dependent on the availability of spectrum slots and LTE mobile devices,' he noted.

LTE has been coined a fourth-generation - or 4G - wireless technology and is expected to succeed the popular High Speed Packet Access (HSPA) technology.

Demand for mobile broadband services has soared in recent years, sparked by the proliferation of Internet-savvy smartphones such as Apple's iPhone. This demand has fanned interest in upcoming mobile broadband technologies such as LTE.

According to market research firm IDC, there will be 43.6 million HSPA connections by year-end in the Asia-Pacific region excluding Japan. Juniper Research said that the market for LTE services will exceed US$70 billion globally by 2014.

SingTel currently offers mobile broadband plans with download speeds of up to 7.2Mbps, but said that its HSPA network is capable of supporting 21Mbps. StarHub and MobileOne both have plans with download speeds of up to 21Mbps.

Published November 19, 2009

SingTel officially rejects StarHub offer

By FELDA CHAY

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IT looks like the ugly spat between SingTel and StarHub over whose hardware to use may have come to an end, with Singapore's No 1 telco officially rejecting StarHub's offer to host its pay-TV content after it received a formal proposal from the green camp last week.

Picture this: SingTel's Mr Lew says users get a much better experience when they use its pay-TV system

'The feature functionality of our platform is superior to theirs, and our users will get a much better experience when they view our channels,' said SingTel's chief executive Allen Lew yesterday.

'At the end of the day, we are a pay-TV operator. For pay-TV operators, there is a very strong differentiation we can create from the quality of the content, the quality of the infrastructure and the features that we have. So three of these things working together help us build up value in our TV system.'

In addition, SingTel has already invested in its own pay-TV infrastructure, he said.

When contacted, StarHub confirmed that it was notified of SingTel's decision yesterday.

'We have heard from many customers who are concerned about linking multiple boxes to their TV sets, and are therefore disappointed with SingTel's decision as our proposal was aligned with public interest and consumers' wishes,' said a StarHub spokesman.

'While we support a universal set-top box solution that would be operator agnostic, like mobile number portability and unlocked SIM cards, it now appears that a single set-top box option for consumers will not happen through just commercial negotiation.'

The formal decline likely puts an end to the saga which began soon after SingTel outbid StarHub to score the sought-after broadcast rights for the next three seasons of the English Premier League (EPL).

Besides winning the coveted rights, SingTel also convinced ESPN Star Sports to migrate from cable to its mio TV platform.

What followed was a flood of complaints from viewers about having to deal with multiple set tops to view entertainment and sports content starting next year.

This culminated in an offer to SingTel from Star- Hub's chief executive Terry Clontz to host SingTel's content on its network, and to allow SingTel to carry its exclusive content like HBO on the mioTV platform.

Last week, SingTel said that StarHub's older set-top boxes might need to be upgraded if viewers want to make the most of the upcoming NGNBN (Next-Generation National Broadband Network), a new fibre-optic network capability that will be rolled out nationwide from next year.

StarHub refuted the remark, saying it 'completely disagrees with any claims about technological reasons' for not accepting its proposal. It added that it was untrue that customers with older set-top boxes would have to get them upgraded next year.

Yesterday, SingTel and ESPN STAR Sports launched their 24/7 sports news channel, ESPNEWS, on the mio TV platform.

Touted as the 'sports news channel specially dedicated to Asian sports fans', ESPNEWS will deliver content from local, regional and international sporting events by providing a continuous update of news, latest team or player standings, rankings and statistics from the top professional leagues around the world, SingTel and ESPN STAR Sports said in a joint statement.

Currently launched with an English voice-over, the channel will also be available in Cantonese and Malay once the network is launched in Hong Kong and Malaysia, said ESPN STAR Sports managing director Manu Sawhney.

Published November 19, 2009

CIMB seeks to set up private real estate funds here

Forms JV with S'pore firm to invest in Aussie property

By UMA SHANKARI

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(SINGAPORE) The real estate division of Malaysia's CIMB Group is looking to set up private real estate funds in Singapore to invest in Australian property.

CIMB has formed a joint venture with Singapore-based TrustCapital Advisors - CIMB-TrustCapital Advisors Singapore, or CIMB-TCA - which is now raising equity to invest in office properties in Melbourne and Sydney.

TrustCapital Advisors' managing director Chris Cheah told BT the target is for the JV to grow total assets under management in Australia to A$3 billion (S$3.87 billion) in five years. Several funds will be set up and at least one will be listed, he said.

Mr Cheah owns 50 per cent of TrustCapital Advisors, which has a 30 per cent stake in CIMB-TCA. The remaining 70 per cent is owned by CIMB Real Estate.

With the setting up of CIMB-TCA, Singapore has become CIMB's international headquarters for private real estate funds outside Malaysia. The group has another JV, with Singapore's Mapletree Investments, to run its Malaysia-focused private real estate funds.

For this newest JV, CIMB will provide A$20 million of seed money. The JV company will tap CIMB's private and investment banking units to raise equity for its funds, Mr Cheah said.

The first fund CIMB-TCA sets up will target completed office buildings in Australia. Mr Cheah said Australia was picked as the first market to enter because it is 'safe'.

'If you look at the global economies right now, I think the Australian economy is one of the strongest,' he said. Occupancy rates for Australian office space stand at more than the 90 per cent generally. And the market also provides good returns - broadly speaking, office buildings offer yields of 7 per cent or more per year, said Mr Cheah.

He is also very familiar with the Australian market - as the former head of property for Australia's ANZ bank. His partner David Tan, who owns the remaining 50 per cent of TrustCapital Advisors, is the former CEO of APL Japan Trust and led Singapore-listed CapitaCommercial Trust before that.

CIMB Group is Malaysia's second-largest financial services group.