Published May 20, 2009

Hindraf's splinter group forms new party

	Email this article
	Print article
	Feedback

(KUALA LUMPUR) A group of ethnic Indian activists announced yesterday the creation of a new political party to fight for racial equality for the minority in Malaysia.

The Malaysia Makkal Sakti Party (MMSP), or Malaysia People's Power Party, appears to have the blessing of the authorities, since it is a breakaway group from an anti-government movement known as Hindu Rights Action Force (Hindraf).

Party president R S Thanenthiran denied he was a proxy created by the governing coalition to neutralise Hindraf.

'We are neither pro-government nor opposition. We are independent,' he told reporters. 'We will work with any coalition or party which gives benefits to Indians at large.'

Mr Thanenthiran said his party 'would be able to function as a legal platform to continue the struggle'.

Still, the formation of MMSP indicates a split in Hindraf, seen by many as the most potent voice to have emerged among ethnic Indians who complain of discrimination by majority Malays in jobs, education and religion.

MMSP was registered by the government less than two months after its application, a surprisingly quick approval in a country where opposition parties are kept on a tight leash.

Another small opposition party had to wait for a decade before it was registered, a prerequisite for operating legally.

Mr Thanenthiran said his party's main objective is to fight for better schools for Indians, who comprise 8 per cent of Malaysia's 27 million people. -- AP

Published May 20, 2009

M'sia SWF names projects for investment

Tourism, agriculture, and energy sectors will be main focus

	Email this article
	Print article
	Feedback

(PETALING JAYA) Malaysia's first state-established sovereign wealth fund, Terengganu Investment Authority (TIA), with an initial fund of RM11 billion (S$4.56 billion), has identified several high-impact investment projects in the tourism, energy and agriculture sectors in the state and around the country, says a report in The StarBiz.

This week, the tabloid said, TIA will raise RM5 billion, which sources say will involve the issuance of Islamic medium-term notes on the back of a Federal Government guarantee, while a further RM6 billion will be 'raised through the assignment to TIA of some of the future oil royalties due to the state', it said in a statement. TIA's current paid-up capital of RM1 million will be raised to RM200 million soon and in due course increased to RM1 billion.

TIA chief executive officer and former executive partner at Accenture, Shahrol Halmi, said the fund had identified several strategic partners and would team up with well-known sovereign wealth funds for these projects, which include regional and international projects that have 'positive spillover benefits' to the state.

'The key objectives of TIA's investment strategy are to generate long-term sustainable and recurring returns and to ensure the development of long-term sustainable economic and social programmes for the state,' he said.

The Mentri Besar of Terengganu (MB Inc) owns 100 per cent of the ordinary shares of TIA with the Ministry of Finance (Inc) and TIA Foundation (it will be set up by early June to fund and implement social benefit programmes in the state and the country) owning one preference share each. The preference share entitles the holder to certain approval rights (including rights to appoint nominees to the board) as well as a 10 per cent share of TIA's annual after-tax profits.

TIA's board of directors will receive investment advice from an economic advisory panel which includes Employees Provident Fund CEO Datuk Azlan Zainol and Felda Holdings Bhd group managing director Datuk Mohd Bakke Salleh.

TIA was set up on Feb 27 after receiving the nod from the Cabinet and state executive council to manage the long-term oil royalty of the state, an idea mooted by Yang di-Pertuan Agong Tuanku Mizan Zainal Abidin after a visit to Abu Dhabi in February last year.

'His majesty wanted to ensure sustainable income for the state long after oil and gas reserves run out,' said the statement.

Published May 20, 2009

M'sian manufacturing sales shrink 25.5%

Petroleum, computer, iron and steel products hit hardest by demand slide

By PAULINE NG
IN KUALA LUMPUR

	Email this article
	Print article
	Feedback

THE value of sales by Malaysia's manufacturing sector shrank 25.5 per cent or RM12.5 billion year on year in March to RM36.6 billion (S$15.2 billion), as refined petroleum products, computers and peripherals and iron and steel products continued to suffer sharp falls in demand.

On a monthly basis, March sales value was RM2.2 billion or 6.3 per cent higher than that in February, when the contraction was 22.9 per cent. However, February is a short month when many factories take a long break for the Chinese New Year.

As a result of the March decline, the value of the manufacturing sector's sales in the first quarter slipped almost 26 per cent or RM36.6 billion year on year to RM104.6 billion, from just over RM141 billion previously.

The number of employees engaged in manufacturing was also 7 per cent or 71,440 lower year on year at 951,848. And productivity or average sales value per employee dipped 20.3 per cent to RM109,871, according to data released by the Department of Statistics yesterday.

Despite the continuing decline, there are rays of hope - the value of manufacturing sales increased month on month in February and March, after a low of RM33.7 billion in January.

But whether the bottom has been reached will not be apparent for several months.

The year on year plunge in March sales by key industries shows demand remains weak. Manufacturers of basic industrial chemicals except fertilizers and nitrogen compounds saw their monthly sales value almost halve.

Basic iron and steel product makers suffered a drop of 41 per cent. And computers and peripherals - a traditional mainstay - managed sales of only RM2.9 billion, versus RM4.9 billion in March 2008.

Sales of refined petroleum products - by far the largest manufacturing segment in value terms - contracted 37 per cent to RM6.6 billion in March, versus RM10.5 billion a year earlier.

Wages paid in March fell 8.4 per cent or RM168 million to RM1.84 billion. This was also 2.5 per cent or RM47.3 million less than the amount paid in February.

Published May 20, 2009

Property investors going back to basics

There's more stress now on asset management

By UMA SHANKARI

	Email this article
	Print article
	Feedback

THE property investment landscape has changed significantly because of the global financial crisis, speakers at a panel discussion said yesterday.

For a start, investors are going 'back to basics', said Blake Olafson, director and head of the Asia real estate group at international investment bank Arcapita.

For example, pension funds that used to invest in riskier asset classes are now beginning to redirect their investments into less risky assets, he said.

Agreeing that the industry is going back to basics, John Evans, managing director of Tractus Asia, said: 'Looking at it from a global economic perspective, the Asian real estate market had become a market where everyone was trying to get in, everyone was becoming a property developer.'

Mr Olafson and Mr Evans were speaking at Cityscape Asia, an annual real estate exhibition and conference aimed at investors.

The 'back-to-basics' approach includes a focus on making existing assets work harder.

'There's a lot more emphasis around true asset management, a shift towards hiring third-party facilities managers, and much more effort is going into tenant retention strategies,' Mr Olafson said. 'Before the downturn the focus was on building development, now asset management has become a lot more important.'

Players in the industry are going back to their core competencies and this, combined with tighter credit conditions, is driving a 'flight to quality' and a focus on assets that generate cashflows from day one, he said. 'There is liquidity, but it is being driven towards good quality projects.'

Panellists agreed that liquidity is beginning to return to the Asian market, although banks are still very selective about which projects to back.

Speakers were also quizzed about when they expect real estate markets to emerge from the current slump. In response, the panellists said there was no way to put a timeline to recovery.

'Everyone is trying to tell where the bottom is,' said panellist Stuart Labrooy, chief executive of Malaysia's Axis Reit Management. 'I think the full effects of the recession have not reached Asia yet.'

Property valuations should start to bottom out in Asia in the second half of 2009, he said.

More than 3,000 real estate developers, investors and regulators are expected to attend Cityscape Asia, which focuses on all aspects of real estate development, on May 19, 20 and 21.

Published May 20, 2009

Yongnam shows its steel in infrastructure boom

By VEN SREENIVASAN

	Email this article
	Print article
	Feedback

THE past few weeks have been good for the Singapore market, especially for construction stocks. Names such as piling specialist CSC Holdings, Tiong Woon and crane lessor Tat Hong have been in the spotlight on expectations of swelling order books as Singapore braces for a huge wave of infrastructure and property development activity.

Yongnam appears to be the only player here with the capacity to handle growing demand for structural steel.

Analysts have been upping the earnings forecasts and stock price targets on many of these companies on account of huge increases in infrastructure spending in Singapore.

And this, in turn, has fuelled active interest in infrastructure plays. How much of this is real and how much of it is mere hype remains to be seen.

Nevertheless, there are some genuine gems out there.

One of these is structural steel and construction engineering specialist Yongnam.

Listed in 1999, Yongnam is Singapore's single largest fabricator of steel structures used in infrastructure. Its fabricated structural steel holds up the roofs of Suntec City, the National Library, Singapore Post Centre, Capital Tower, the Expo MRT station, KL International Airport and the new Suvarnabhumi Airport in Bangkok, among others.

Its strutting systems support almost 90 per cent of the underground works at Circle Line MRT and at least 9km of the Kallang-Paya Lebar Expressway.

The company - which sees Singapore, the Middle East and India as its three strategic driving forces - recently announced it had clinched three new contracts totalling about $40.4 million for the Dubai Metro.

This added to the group's growing portfolio of contracts for the Dubai Metro that it first won since its beachhead into Dubai in mid-2007.

The company's revenue contribution from the Middle East has surged from $65.1 million in FY2007 to $143.3 million in FY2008. While the company prefers to remain rather low profile, its recent set of results provides valuable clues about its enormous growth potential.

It recently unveiled a 104 per cent year-on-year surge in 1Q09 net profit to $9.9 million , thanks to buoyant inflow of structural steelwork and specialist civil engineering contracts.

This came after a FY08 full year earnings jump of some 38 per cent to $34 million, on a 91 per cent jump in revenue to $332.74 million. Its existing current orderbook of some $520 million includes key projects such as the Delhi International Airport Terminal Building, the new Dubai Metro, the Vista Exchange development in Rochester Park and the Marina Bay Sands.

Another major job is a project for the Marina Coastal Expressway, which is a 5-km long strategic underground east-west transport link for three major expressways.

More projects could be in the pipeline, especially in India, where the Congress-led alliance has just won decisively in the recent national elections.

In its bid to reform and modernise India, analysts see the new Congress-dominated government pushing ahead aggressively with a slew of much-needed new infrastructure projects across the country.

And Yongnam, having grabbed a strong toe-hold in New Delhi, could benefit from this development.

In fact, company officials themselves recently said Yongnam was now 'fortifying its presence in India, where the group was working on Delhi International Airport'.

Meanwhile, back home in Singapore, the government will spend up to $20 billion on public-sector construction this year, in projects like the Downtown MRT Line, Marina Coastal Expressway, Sports Hub, a new cruise liner terminal, parks in the Marina Bay area, new and the upgrading of HDB estates, water and drainage projects, schools and such.

And, as analysts such as Lawrence Lye of CIMB note, up to another $17 billion will be spent annually on public-sector construction in 2010 and 2011.

With more than 30 years of experience, Yongnam appears to be the only player here with the capacity and capability to handle this growing demand for structural steel and struttings required by the impending infrastructure boom.

Its 76,000 square metre facility in Tuas - the size of over 20 football fields - has a total annual production capacity of some 78,000 tonnes of steel fabrication. Barriers to entry into this business are high, especially in struttings.

Analysts like Mr Lye project the company to post net earnings of some $41 million this year. But given the potential market, especially offshore in places like India, this could prove to be a somewhat conservative estimate.

In a business notorious for its 'feast-and-famine' cycle, Yongnam looks set to enjoy one very big and extended party as it heads into an industry sweet spot.

Published May 20, 2009

Yangzijiang deliveries unaffected by changes

It recently agreed to two requests for vessel type change

By VINCENT WEE

	Email this article
	Print article
	Feedback

CHINA-BASED Yangzijiang Shipbuilding (Holdings) reported that its delivery schedule has been on track with 11 vessels worth US$445.9 million delivered so far this year, even as it helps customers ride through the downturn.

Mr Ren: Yangzijiang will remain proactive and work with its customers to safely cruise through this turbulent phase It recently agreed to two requests for vessel type change

The group has recently accommodated two requests for change of vessel type - from two 1,350 twenty-foot equivalent (TEU) container ships to three 13,000 deadweight tonne (dwt) dry bulkers, and from two 4,250 TEU vessels to two 92,500 dwt vessels.

Yangzijiang has been taking a pre-emptive approach to potential order cancellations as credit worries continue to dog shipowners.

Fellow Chinese shipbuilder Cosco was hit earlier this month with an order cancellation and delivery reschedulings on two ships out of an order for four 57,000 dwt bulk carriers.

Yangzijiang had previously highlighted that it would have an increased focus on project execution to ensure the smooth and timely delivery of the vessels.

'These deliveries reiterate that commitment,' it said, adding that for the rest of the year, another 29 vessels are due to be delivered and the group is confident of keeping to this delivery schedule.

The requests by customers to change the vessel type that they have ordered are evaluated on a case-by-case basis, provided that the requested vessel type is one of the vessel models built by its yards and there is no significant change to the contract value and profit levels.

'We know that times are tough and the credit crunch is, one way or the other, affecting everyone. During this turbulent phase, we would remain proactive and very sincerely work with our customers to safely cruise through this turmoil,' said executive chairman Ren Yuanlin.

Yangzijiang's order book stands at US$6.43 billion comprising 145 vessels with deliveries scheduled till 2012.

Figures released at its first-quarter results presentation showed a delivery schedule of 45 vessels due in 2010, and 50 in 2011.

The same figures showed that the value of Yangzijiang's container ship deliveries (US$4.3 billion) is almost twice that of the bulk carriers (US$2.4 billion) and that about a third of the orders (51 vessels) are for the 4,250 TEU type of container ship.

The benchmark Baltic Dry Index rose to its highest in more than seven months on Monday, on recovering China coal and steel demand.

The container shipping market meanwhile remains in the doldrums as global consumer demand remains weak, with an estimated 10 per cent of the world's container ships laid up because of overcapacity in the market.

However, there is still a massive order backlog for bulk carriers and broker Drewry has said that the global fleet is expected to grow by 16 per cent this year.

Published May 20, 2009

PetroRig I acts to block rig sale by Jurong Shipyard

Application in US for preliminary injunction against SembMarine unit

By LEE U-WEN

	Email this article
	Print article
	Feedback

JURONG Shipyard's planned sale of a disputed rig could hit a roadblock after PetroRig I Pte Ltd filed an application before the bankruptcy courts in New York yesterday.

SembMarine said Jurong Shipyard was advised that the application is 'without merit' and that it will resist the action on various grounds.

The application is seeking a preliminary injunction restraining Jurong Shipyard, a unit of Sembcorp Marine, from selling the rig, and comes just hours before today's noon deadline for interested parties to submit their bids.

In a brief statement issued to the media, SembMarine said the application was fixed for hearing yesterday at 10am in New York (10pm Singapore time).

'Jurong Shipyard has sought and obtained legal advice and will vigorously resist the application filed for hearing in New York. Jurong Shipyard has also received a copy of the complaint filed by PetroRig I seeking protection under US Chapter 11 procedure,' it said.

SembMarine added that Jurong Shipyard was advised that the application is 'without merit' and that it will resist the action on various grounds, including the jurisdiction of US bankruptcy courts over a company incorporated in Singapore'.

This latest twist in an increasingly complicated saga comes just after SembMarine said on Monday that it was unaware of 'any injunction of any kind' restraining Jurong Shipyard from proceeding with the rig sale.

SembMarine also said then that it was unaware of a lawsuit filed against Jurong Shipyard by PetroRig I over the termination of a rig construction contract.

PetroRig I sought bankruptcy protection on Sunday and was said to have launched a lawsuit against Jurong Shipyard, which it had hired to manufacture its US$464 million oil rig. PetroRig claimed that the shipyard attempted to deliver an 'incomplete and inoperable' rig.

On April 29, SembMarine said Jurong had terminated the contract with PetroMena - an oil services group in Norway - because the final payment had not been made and planned to sell the rig to recover money owed.

PetroMena's three Singapore subsidiaries - PetroRig I, II and III - entered into agreements to build three ultra-deepwater semi-submersible drilling with SembMarine.

The rigs were scheduled for delivery from Jurong Shipyard in April 2009, September 2009 and January 2010.

PetroMena has since struggled to come up with adequate financing to complete construction of the rigs, which have previously been assigned five-year drilling contracts.

In its earlier statement on Monday, SembMarine maintained that Jurong Shipyard was confident it would be able to sell the rig and to recover all outstanding amounts owed to the shipyard.

As for what happens next, SembMarine said things would have to wait until the hearing in New York is over.

'Sembcorp Marine will make the necessary announcement at the appropriate time of the development of the proceedings.'

Published May 20, 2009

US banks rushing to repay billions of TARP funds

Move to signal their strength and avoid tighter govt rules

	Email this article
	Print article
	Feedback

(NEW YORK) Goldman Sachs Group Inc, Morgan Stanley and other banks have applied to repay billions of dollars that they borrowed under the US government's Troubled Asset Relief Program, sources familiar with the situation said on Monday.

US banks are scrambling to repay TARP money as soon as possible, in an effort to signal their strength to the market and to avoid the tighter regulation that comes with government funds, particularly limitations on compensation.

Banks began gearing up to repay government funds soon after the US government announced the results of stress tests on May 7.

The sources asked to remain anonymous because they were not permitted to talk about the matter.

The Financial Times reported on Monday that Goldman Sachs, JPMorgan Chase & Co, and American Express Co were expected to be in the first wave of major lenders allowed to return TARP funds. The government's stress tests said that none of the three needed to raise capital, even among the most negative economic scenario that regulators considered.

Treasury Secretary Timothy Geithner has said that if regulators certify that a bank would be sound without government help, the Treasury would gladly take the money back. But he also told lawmakers last month that his role was to ensure the soundness of the entire financial sector.

Wayne Abernathy, an executive at the American Bankers Association and a former Treasury official, told Reuters earlier on Monday that he expected the Treasury would act soon to let large banks repay TARP.

'I would think we're talking a matter of weeks, and probably just a few weeks, because I think Treasury wants the money, or at least some of it,' he said.

The amount of money the government could get back could be substantial. Morgan Stanley and Goldman borrowed US$10 billion under TARP in October, while JPMorgan took US$25 billion.

American Express received US$3.4 billion in January.

Morgan Stanley, JPMorgan, and Goldman Sachs declined to comment. All three banks have previously expressed interest in repaying TARP.

American Express said last week that it had filed a request with the Federal Reserve and US Treasury to repay its TARP funds.

After the government disclosed stress test results publicly earlier this month, banks began a flurry of stock and bond offers.

Morgan Stanley, which was required by regulators to raise US$1.8 billion, issued more than US$4 billion of stock after the test results were announced, and sold US$4 billion of non-government guaranteed debt. Morgan Stanley also announced on Monday that it was selling its remaining stake in MSCI, an investment analysis and market index company, in a deal that should help it raise about US$650 million.

JPMorgan Chase sold US$2.5 billion of non-guaranteed debt.

US Bancorp sold $2.5 billion of shares, while Capital One Financial Corp sold US$1.55 billion. Other banks have sold shares as well, or announced plans to.

Some banks did not even wait for the results of the stress test. Goldman Sachs sold more than US$5 billion of shares last month, and US$2 billion of non-guaranteed debt. -- Reuters