Archive for March, 2013

Sabah RE producers set to enjoy FiT rates soon

March 27, 2013 Leave a comment
KUALA LUMPUR: RENEWABLE energy (RE) producers in Sabah, mostly biomass and biogas plant operators at palm oil mills, may soon be able to subscribe to the feed-in tariff (FiT).

Unlike in Peninsular Malaysia, RE producers in Sabah have not been able to enjoy the deserving rate of 32 sen per kilowatt per hour (kWh) under the FiT. They, instead, have to contend with Tenaga Nasional Bhd (TNB)’s Small Renewable Energy Projects rate of 21 sen per kWh.

This is because under the law, RE producers in Sabah will only be eligible for FiT when the one per cent RE levy is collected by Sabah Electricity Sdn Bhd, a 70 per cent subsidiary of TNB, from heavy power users in Sabah.

FiT essentially guarantees RE producers a premium selling price over that generated from depleting and finite sources such as oil, gas and coal. Power generated from sustainable sources that benefits from FiT includes that of oil palm biomass, biogas, small hydro power and solar.

Since December 2011, heavy power users in Peninsular Malaysia using more than 350kWh or whose monthly bills exceed RM77, have been paying the one per cent RE levy to TNB.

The Sabah government, however, had appealed against collection of RE levy, saying it would be too taxing on heavy power users there.

Now that it has been over a year, the federal government indicated that the Sabah government seemed to have come around.

When met yesterday, Energy, Green Technology and Water Ministry secretary general Datuk Loo Took Gee said “the Sabah government has verbally agreed. We met up this week.”

She was speaking to reporters after representing Energy, Green Technology and Water Minister Datuk Seri Peter Chin in officiating at the launch of the Eco-B workshop organised by Malaysia Green Building Confederation.

Asked when Sabah Chief Minister Datuk Seri Musa Aman will sign on and allow TNB to collect RE levy from heavy power users in Sabah, Loo replied: “We’ll have to wait for the official letter from the Sabah state government”.

Wage rule has small impact on money outflow

March 22, 2013 Leave a comment
KUALA LUMPUR: There has not been any substantial spike in foreign workers’ remittance to their home countries resulting from the implementation of minimum wages at the start of this year, said Bank Negara Malaysia (BNM).

“There’s not much impact on monetary outflow despite a 20 to 25 per cent jump in their salaries,” said BNM’s assistant governor Dr Sukhdave Singh. He was responding to a question if Malaysia had experienced an outflow of more than RM2 billion following the blanket implementation of minimum wage law. 

Previously, Malaysia Employers Federation (MEF) executive director Shamsuddin Bardan estimated that foreign workers, on average, send back some RM700 each month, which is half of their take-home pay that include overtime claims. 

“With a conservative estimate of two million foreign workers here, that works out to be RM1.4 billion flowing out of Malaysia to their home countries every month. Starting 2013, with the blanket implementation of the minimum wage law, the outflow of money from Malaysia is likely to swell to RM2.1 billion every month,” Bardan reportedly said. 

Sukhdave says one need to look at this comprehensively. Minimum wages are good for the economy and it ensures Malaysia achieves its high-income nation goal,” he said, adding that a blanket wage floor eliminates the price advantage that foreign workers have over Malaysians, thus creating greater job opportunities for locals.

“Small and medium enterprises and the plantation sectors say it erodes our competitiveness. If these sectors’ competitiveness is based on low wages, then that’s the wrong economic structure,” he said.

“The main objective of minimum wages is for low-income earners to be able to afford their basic living needs here,” he added.

The Minimum Wages Order 2012, which took effect from January 1 2013, requires employers with six employees and above to pay a minimum wage of RM900 a month in the peninsula or RM800 a month in Sabah, Sarawak and the Federal Territory of Labuan.

Sukhdave was speaking to reporters after presenting his views on the country’s economic performance at a seminar organised by the Malaysian Economic Association here yesterday.

When asked to comment on Goods and Services Tax (GST) and government subsidy reduction, he said this tax can be implemented in a manner with no significant loss to low-income earners’ welfare. 

“As far as the government is concerned, many daily necessities like food products would actually be exempted from GST.

“As for subsidy rationalisation, you can physically transfer it directly to the lower income group. It would also significantly help offset any negative impacts of the subsidy rationalisation on the lower income households,” he said.

On the Economic Transformation Programme, Sukhdave said it has played a catalytic role in promoting private investment to the country’s economy.

RM342m gain for FGV from stake sale

March 22, 2013 Leave a comment
KUALA LUMPUR: Felda Global Ventures Holdings Bhd (FGV) has raked in more than RM342 million one-off gain, outpacing what the giant planter makes in a quarter, from the sale of its 20 per cent stake in Tradewinds (M) Bhd to billionaire Tan Sri Syed Mokthar Albukhary.

The RM342 million is larger than the RM179.6 million net profit FGV made in the fourth quarter ended December alone, which had been dragged by lower crude palm oil (CPO) prices.

In its filing to Bursa Malaysia yesterday, Tradewinds said it had completed its purchase of 59.2 million shares from FGV at RM9.30 a piece worth a total of RM550.5 million.

FGV acquired the 20 per cent stake in 2010 from Grenfell Holdings Sdn Bhd at RM3.50 a share, totalling RM208 million cash.

With the completion of the deal, FGV has made a net gain of RM342 million or a return on investment of 264 per cent.

Grenfell is a company linked to the PPB Group Bhd, controlled by Malaysia’s richest man Robert Kuok.

FGV president and chief executive officer Datuk Sabri Ahmad could not be reached for comments, but last December said that proceeds from the sale will be used in its upstream sector – to buy more plantation land for rubber and oil palm in countries such as Myanmar, Cambodia and Indonesia.

“With proceeds of RM342 million, FGV can buy controlling stakes in many other companies,” said an analyst who declined to be named.

Syed Mokhtar announced last December his plan to take Tradewinds private, of which, sources said, will be restructured into four separate divisions – rubber, sugar, oil palm and rice.

The plan is expected to lead to the privatisation of both Tradewinds Plantation Bhd and the country’s sole rice importer Padiberas Nasional Bhd (Bernas).

The low-profile businessman and Malaysia’s seventh richest was taking over Tradewinds by offering shareholders RM9.30 for every share he did not already own in the company.

The vehicle for the deal is his private companies – Perspective Land Sdn Bhd, Kelana Ventures Sdn Bhd, Seaport Terminal (Johor) Sdn Bhd and Acara Kreatif Sdn Bhd – which would acquire all the shares they did not already own in Tradewinds by cash.

The whole privatisation deal is expected to cost RM2.5 billion.

Prior to the purchase of the 20 per cent stake, Syed Mokhtar directly and indirectly owned 42.97 per cent of Tradewinds, which in turn, had 69.76 per cent and 72.57 per cent control of Tradewinds Plantation and Bernas, respectively.

It was also reported that from January 2010 to date, FGV has received net dividends totalling RM46.3 million from the Tradewinds stake.

FGV is one of the world’s largest plantation company, owning over 850,000ha land in Malaysia, 500,000ha of which it leases and manages for the country’s 112,635 smallholders.

The plantation conglomerate, which produces over three million tonnes or 10 per cent of the world’s CPO output, is already flushed with RM4.4 billion cash, raised from its initial public offering in June last year.

‘Explain to foreign workers about minimum wages’

March 21, 2013 Leave a comment
KUALA LUMPUR: The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) is urging all relevant authorities and agencies to explain to representatives of foreign workers on the latest changes to minimum wages.

In a statement yesterday, the trade body said this is to avoid any misunderstanding by the foreign workers and recurrence of riots in Muar.

Three days ago, Muar police foiled an attempt by 5,000 foreign workers from Nepal to hold a demonstration there. Muar police chief Assistant Commisioner Mohd Nasir Ramli said his men prevented them from gathering in front of a supermarket in Jalan Ali. 

“We detained 106 people, including those believed to be the masterminds behind the gathering, for questioning and they were released at 1pm,” he had said. Last week, Muar police also arrested 32 Nepalese workers for rioting at a furniture factory over their salaries.

In view of these unfortunate incidents, the National Wages Consultative Council (NWCC) had two days ago, announced that small and medium enterprises (SMEs) are allowed to defer implementation of minimum wages for their foreign workers until the end of this year.

Employers of other sectors who are facing difficulties in implementing minimum wages may also appeal for deferment by submitting their applications to NWCC in Putrajaya by June 30 2013.

Following NWCC’s decision, employers in the SME sector are not allowed to make deductions from the foreign workers’ wages for the levy, cost of accommodation or other allowances.

Instead, they will be given more time to negotiate with their employees on ways to restructure their salary framework. 

As for employers of big companies who have been implementing minimum wages for foreign workers from January 1, NWCC said they will be given blanket approval for deductions of levy and cost of accommodation.

NWCC said the amount of levy to be deducted is pro-rated monthly and it shall not exceed RM50 a month for each foreign worker. Both the deductions must be reported to the Labour Department.

However, under special circumstances and based on individual merits, the Labour Department may consider applications for cost of accommodation exceeding RM50 a month for each foreign worker, NWCC said.

The Minimum Wages Order 2012, which took effect from January 1 2013, requires employers with six employees and above to pay a minimum wage of RM900 a month in the peninsula or RM800 a month in Sabah, Sarawak and the Federal Territory of Labuan.

Mobile hospital set up at Felda Sahabat

March 15, 2013 Leave a comment
KUALA LUMPUR: The Health Ministry will set up a 40-bed “mobile hospital” to provide medical treatment for the people and security forces personnel at Felda Sahabat in Lahad Datu, Sabah.

Its minister, Datuk Seri Liow Tiong Lai, said the mobile hospital would benefit those in the remote area as many of the injured or sick patients had to travel more than 100km to reach the nearest hospital.

The Lahad Datu health centre, nearer to Felda Sahabat, only provides outpatient treatment without warding patients.

The mobile hospital, which will be built beside the Lahad Datu health centre, will bolster treatments currently provided at a 12-bed mobile tent set up there.

Six groups comprising 44 medical personnel, specialists, pediatricians and psychiatrists from here will be deployed there.

Liow said safety would not be an issue as the mobile hospital would be located 6km away from the conflict zones and guarded around the clock by security forces.

He added that the ministry was monitoring the hygiene and sanitation levels at relief centres for displaced villagers to prevent any disease outbreak. Liow said vaccinations would be carried out to those at the relief centres.

It was previously reported that the ministry had allocated RM4 million to provide free medical treatment to those in the terrorist-hit areas of Sabah, including the security forces.

‘Palm oil shipments unaffected’

March 15, 2013 Leave a comment
PETALING JAYA: PALM oil exporters from Lahad Datu, Sabah, did not experience any shipment cancellation despite the intrusion by Sulu terrorists.

Since the government launched Ops Daulat offensive on March 5 to counter the terrorist threat, 56 Sulu gunmen had been killed while 10 security forces personnel died in the line of duty.

“No, there had been no force majeure invoked with regards to palm oil shipment from Lahad Datu,” said Palm Oil Refiners Association (Poram) chief executive officer Mohammad Jaaffar Ahmad. 

He was responding to rumours of palm oil shipment cancellation in the midst of unrest in Lahad Datu.

In the frenzy of the Ops Daulat offensive launched last week, a news report stated that the government had ordered Kuala Lumpur Kepong Bhd (KLK) and other palm oil refineries in Lahad Datu to halt operations for a few days. 

Soon after, another news report quoted a KLK official as stating the group’s estates and refinery operations were running as normal.

“We are monitoring the situation and will act accordingly,” the company official said.

Confusion arising from the first few days of fighting in Lahad Datu clouded price-sensitive information flow to many participants at the Palm and Lauric Oils Conference & Exhibition Price Outlook in Kuala Lumpur early last week.

When commenting on conflicting news reports concerning Poram members, Jaaffar noted that traders leveraged on volatile palm oil price swings in the futures market.

According to Malaysian Palm Oil Board, there are 13 refineries in Sabah with a total capacity of 7.73 million tonnes per year. 

In Lahad Datu, there are five refineries under Felda Group, Wilmar International Ltd, KLK and Kwantas Bhd. These refineries get their palm oil supply from surrounding mills under Felda, Hap Seng Plantations, KLK, Sime Darby Bhd, Wilmar and IOI Corp Bhd, including independent mills.

In an interview with Business Times here yesterday, Jaaffar confirmed that Lahad Datu port was never closed to traffic despite the ongoing Ops Daulat offensive. 

“Based on the feedback we received from our members, shipping activities in Lahad Datu are as per scheduled. 

“There is no threat of ‘force majeure’ clause being invoked arbitrarily. Refiners are transporting their refined palm oil products to the port for shipment without any disruption,” he added.

Jaaffar explained that the force majeure clause in a contract excuses a party from not performing its contractual obligations due to unforeseen events beyond its control. These include floods, earthquakes and other “acts of God” as well as terrorist attacks. 

When asked on exports outlook, Jaaffar expects Malaysia’s palm oil stocks to continue its downtrend. 

“We are bullish on palm oil exports as they will pick up when the winter season is over in the Western hemisphere. In the mid term, we see consumers from China and India coming back into the market to replenish their stocks,” he said.

KDF eyes bigger share of derivatives

March 12, 2013 Leave a comment
KUALA LUMPUR: KENANGA Deutsche Futures Sdn Bhd (KDF) wants to expand its trade market share on the Bursa Malaysia derivatives market, as more clients show interest in leveraging on the direct market access mechanism.

KDF chief executive Azila Abdul Aziz said the company had consistently chalked up close to 1.5 million contracts on the derivatives market, making up around 14 per cent of 9.6 million total trades.

In an interview with Business Times here, she said more funds are starting to use futures as a tool to hedge their investment exposure.

A more specific example would be the equity index futures.

The market currently trades less than one time of its underlying stock/equities market value. In other regional markets, futures trade three to five times more than its underlying value.

KDF’s reputation as the leading futures broker in Malaysia was reaffirmed by Bursa Malaysia last week when it won the best performer award at the Palm and Lauric Oils Outlook Conference 2013.

KDF is the top overall performer for 10 years in a row in attracting the biggest trades into Bursa Malaysia Derivatives Exchange.

Asked on factors that had driven consistent achievement, Azila attributed it to clients’ long-term rapport and strategic partnership with Deutsche Asia Pacific Holdings, which instantly raise the group’s profile among potential investors in the region.

“Our best clients tomorrow are the ones that are happy with us today,” Azila said, adding that human capital investment is also a key success factor. “We need to constantly keep up with changing market conditions. We hire candidates equipped with the right technical skills unique to the futures broking industry.”

“We also carry out an internal one-year management trainee programme that includes one-on-one mentorship and training by four highly experienced business managers. KDF employees are highly sought after by the industry, so we have to ensure that we retain our valuable talent,” she added.

On the outlook for the year, Azila said direct market access capabilities will help to improve and increase the number of products available for trading here.

“We see potential growth in attracting liquidity by leveraging on technology to improve market access. It will be the key enabler that drives volume growth, improve liquidity and governance,” she said.