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AmBank Group is offering up to RM1 million grant to small and medium enterprises (SMEs) and mid-tier companies (MTCs) via the Malaysian Investment Development Authority’s (MIDA) Smart Automation Grant (SAG).

In a joint statement today, MIDA and AmBank said the SAG initiative is part of the RM100 million allocation approved within the National Economic Recovery Plan, or PENJANA, launched by the Ministry of International Trade and Industry (MITI) on Dec 2, 2020.

“This grant will be awarded to eligible SMEs and MTCs on a matching basis or 50 per cent of total eligible expenditures, up to a maximum grant cap of RM1 million per company,” they said.

SMEs and MTCs that have been undertaking manufacturing or services activities in the past 12 months are eligible to be considered for SAG.

To qualify for the incentive, the automation machine, equipment or software purchased through the grant must be utilised directly in the company’s value chain to improve their productivity and efficiency.

Improvements would be assessed on a range of criteria such as the reduction of unskilled workers, man-hours, defect rate as well as the increase in production volume.

Interested stakeholders can submit their application to the various industries and services divisions in MIDA.

The parties earlier inked a memorandum of understanding (MoU) to help companies particularly SMEs and MTCs refine their knowledge on matters relating to automation and digitalisation.

AmBank would be undertaking a series of simulation training and classroom sessions that are specifically designed to help companies identify business pain points and prioritise automation and digitalisation solutions.

MIDA’s chief executive officer (CEO) Datuk Azman Mahmud said the collaboration complements the agency’s goal to create awareness and financial guidance to assist SMEs and MTCs in automating and digitalising their operations and production process.

“Understanding the needs of investors, SAG will not only improve Malaysia’s industrial competitiveness and capabilities but also reduce our reliance on low-skilled foreign workers while creating new job opportunities in high value-added sectors.

“We trust that this partnership will result in driving Malaysia’s businesses and accelerate economic growth towards continuous adoption of automation and digitalisation,” he said.

Meanwhile, AmBank group CEO Datuk Sulaiman Mohd Tahir said the bank was pleased to be the first bank to collaborate with MIDA in providing the much-needed assistance to SMEs and MTCs which was particularly timely given the current challenging business landscape.

“Through this collaboration, we are able to share our expertise and resources with these companies to help them future-proof their businesses.

“This initiative will be part of the AmBank BizRACE programme to develop our clients in the key areas of Industrial Revolution (IR) 4.0, digitalisation and the halal industry, which is in line with AmBank’s sustainability agenda,” he said.

He said the bank believed in going beyond financing to help its customers compete better and the AmBank BizRACE programme provided a platform for SMEs to have a head start in driving new revenue streams, new products, upskilling their talent and driving efficiency by adopting digital and automation solutions.

“This is part of our push to help SMEs reset and revive their businesses that have been impacted by the COVID-19 pandemic,” he added.

Source: Bernama

AmBank offers MIDA SAG grant for SME, MTC

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The state of emergency previously imposed in the Gerik parliamentary constituency in Perak and Bugaya state constituency in Sabah has proven that such a measure will not weaken investors’ confidence to invest in Malaysia, said Senior Minister Datuk Seri Mohamed Azmin Ali.

The International Trade and Industry Minister said instead, foreign investors would view it as the government’s determination and seriousness in containing the Covid-19 pandemic.

He pointed out that since the emergency proclamation on Jan 12, business activities had continued as usual.

“Investors are more confident of Malaysia’s success by responsibly dealing with the Covid-19 outbreak, so we will continue the effort.

“When we are able to slow down the Covid-19 curve, the country’s economy will recover faster; and if the period is longer, (the impact) will be bigger. That’s why we need a situation whereby an emergency ordinance is decreed by His Majesty (Yang di-Pertuan Agong) with the intention of fighting Covid-19,” he told reporters at the Social Welfare Department office here today.

The Gombak Member of Parliament further explained that the emergency proclamation was aimed at dealing more effectively with the pandemic issue.

“The Attorney General has also given a long detailed explanation at the National Security Council’s (MKN) meeting yesterday to all the chief ministers present, including the Penang Chief Minister, Negeri Sembilan Menteri Besar and Selangor Menteri Besar from the Pakatan Harapan-led state governments.

“We have given the explanation, which was well received by all,” he said in response to some analysts’ claim that foreign investors’ confidence might be affected due to the state of emergency’s implementation.

On Tuesday, the Yang di-Pertuan Agong, Al-Sultan Abdullah Ri’ayatuddin Al-Mustafa Billah Shah, consented to the proclamation of a nationwide state of emergency as a proactive move to curb the Covid-19 pandemic.

Meanwhile, Mohamed Azmin said the International Trade and Industry Ministry (MITI) was among the most active ministries in conducting engagement sessions to obtain feedback from industry associations and chambers of commerce.

“We believe we can get good views and it was through the engagements that we were able to submit to MKN a list (of industries) that we felt should be allowed to operate during the current Movement Control Order (MCO 2.0) or Conditional Movement Control Order period. Economic activities must continue, as we do not want it to affect jobs and the country’s revenue, especially Malaysia’s Gross Domestic Product.

“For other (economic) sectors, we hope they will be able to understand the need to safeguard people’s health and safety, as the Health Ministry views that one of the measures to contain the Covid-19 spread is by reducing movements,” he said.

Nonetheless, Mohamed Azmin said, the government would, from time to time, review the list of industries being allowed to operate based on the latest developments and the country’s Covid-19 situation.

“The government is always open-minded. We will get further views and will refer the Heath Ministry for consideration. We will give due consideration to all views,” he said.

Earlier, Mohamed Azmin presented assistance to several family representatives from the district affected by the floods under the post-floods humanitarian aid mission undertaken by MITI and its agencies.

Source: Bernama

Imposition of State of Emergency won’t affect investor confidence — Azmin

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ASEAN should build a new economic ecosystem by promoting the development of digital infrastructure that is accessible for both small businesses and individuals to reinforce its economic recovery efforts and promote sustainable and inclusive growth.

The Royal Thai Embassy in Malaysia said this will help to ensure that the group can be part of the growing digital economy in the region, which is estimated to contribute more than US$240 billion in the next five years.

“On our part, Thailand is developing ‘ASEAN Digital Hub’, which will help enhance digital infrastructure in ASEAN, as well as ‘Digital Park Thailand’, as part of our Eastern Economic Corridor.

“The private sector will play an important role in the development of infrastructure and technology and innovation businesses through PPP (Public-Private Partnerships) investment,” the embassy said in an email interview with Bernama in conjunction with the 1st ASEAN Digital Ministers’ Meeting (ADGMIN1) to be chaired by Malaysia on Jan 21 and 22.

Malaysia’s Minister of Communications and Multimedia Datuk Saifuddin Abdullah will chair the ADGMIN1 via teleconference.

The embassy said that apart from building physical infrastructure, it is equally important to promote digital integration to inclusively enhance business opportunity in the region.

It said that in 2019, ASEAN has successfully completed the live operation of the ASEAN Single Window (ASW) for all ASEAN Member States, which serves as an important milestone.

The ASW is the environment that provides the secure information technology (IT) architecture and legal framework that will allow trade, transport, and commercial data to be exchanged electronically among government agencies and private sectors in the region.

“But ASEAN needs to look beyond ASEAN Single Window and work towards full digitalisation to become ‘Digital ASEAN’. This involves the promotion of digital payment connectivity and comprehensive digital trade,” it added.

The embassy said the Thai government developed the country’s National Digital Economy Masterplan which covers a period of 20 years; and over the past few years, it has launched various new laws and regulations to support the implementation of its digital economy policy.

It said that in 2018, it was estimated that approximately 17 per cent of Thailand’s Gross Domestic Product (GDP) was derived from the digital economy. It is forecasted that the contribution will increase to 25 per cent in 2027.

Thailand’s market value of its digital economy is considered the second largest in ASEAN, it said.

Meanwhile, the embassy said Thailand and ASEAN member states recognise the importance of technology and the increasing pace of digital transformation, especially the accelerated adoption of digital technologies in coping with the impacts of the COVID-19 pandemic.

“The issue of digital disparity has always been one of the key elements in the ASEAN ICT Masterplan. ASEAN is committed to addressing the manifold digital gaps in skills, infrastructure, and regulations both within and across the ASEAN Member States, as well as the risks and challenges that digitalisation entails,” it added.

The embassy said ADGMIN1 will provide a good opportunity for ASEAN member states to discuss and share experiences on their responses to the emerging challenges in the digital spectrum, especially in the current COVID-19 pandemic’s socio-economic landscape.

It said the COVID-19 situation provides the region with an opportunity to accelerate inclusive digital transformation, and being well-equipped with technological skills and capabilities will open a door for ASEAN that will lead to future progress and success.

“We would like to emphasise the important role of digital technology in achieving an inclusive, resilient, and sustainable economic growth in the region. Thailand is looking forward to the adoption of the ASEAN Digital Masterplan 2025 which will serve as the roadmap for ASEAN towards achieving that vision,” it said.

The ASEAN Digital Masterplan 2025 is expected to be adopted at the ADGMIN1.

Themed “ASEAN: A Digitally Connected Community”, the meeting seeks to strengthen cooperation among ASEAN countries towards building digital ecosystems as a pillar in the post-COVID-19 development plan.

Source: Bernama

ASEAN needs to promote digital infrastructure development for small businesses, individuals

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AT Glove Engineering Sdn Bhd, a wholly owned subsidiary of AT Systematization Berhad (“AT”) has entered into a Sale and Purchase Agreement (SPA) with Seacera Porcelain Sdn Bhd, for the purchase of a 72,770 square meter plot of industrial land located in the District of Larut & Matang, for a consideration of RM 10.5m.

The deal, which is to be completed within 60 days, will be funded fully by cash and it reinforces AT to be an up and coming entrant into the glove making business, which has seen and continues to see unprecedented demand.

AT, last year embarked on a diversification exercise to take advantage of a paradigm shift in global consumption of nitrile disposable gloves. The Covid-19 pandemic, spreading across the globe, drove demand for disposable medical grade gloves soaring, reaching up to 15x its historical average selling
prices.

Malaysia, accounting for close to 70% of the world’s supply of gloves, has seen the industry flooded in the last 9 months of new players, none of which have had the speed, alacrity and determination of AT.

From its initial investment into its maiden glove factory in Chemor, building the entire operation from scratch, to its production of the first batch of gloves on Christmas Eve 2020, the company has been focused on breaking the barriers of what is traditionally a high level for entry.

Within 5 months of initial planning, AT is now in full expansionary production with an estimated 63000 pieces per hour capacity by month end.

Not resting on its laurels, AT Managing Director Choong Lee Aun has sanctioned the purchase of this new plot with the vision of establishing a new factory with the same zest and efficiency as its maiden Chemor plant.

“We have the desire, motivation and resources to be a serious proposition in what is evidently a supply choke point in terms of global accessibility of quality Malaysian made gloves, and to that extent our plans for this new factory will reflect our seriousness and ambitions to penetrate the global market
and be part of the whole ecosystem contributing to the strength and quality of Malaysian led exports,” Mr Choong said.

The new factory location, spanning almost 800 thousand square feet, will house up to 60 double former lines, churning out 35000 pieces per hour each line. The production capacity, once fully mobilised and operating at peak efficiency will be able to provide an output of 18 billion pieces per annum, making AT 1/5 of Malaysia’s top glove company TopGlove, who clocked 85.5 billion pieces in 2020.

“We see the demand for gloves to last longer and stronger, as the world struggles with coping with the pandemic. With new strains and mutations affecting the global economy, and a general increase in awareness for hygiene and protection, the global demand will likely find a plateau and last for a while to come,” Mr Choong added.

AT, having received CE certification recently, has been inundated with enquiries on contract orders which far outstrip its current demand. With the current third wave hitting Malaysian shores, production of gloves across the industry are being hampered by stop/start orders of key production lines, causing disruption in supply.

With further supply disruptions on the horizon, AT will look to take advantage of spot prices in the short term while it builds production capacity to handle the enquiries.

Source: Bernama

AT expands to build second factory, acquires 7.2 ha site

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Cars manufacturing has been gazetted as one of the essential services, allowing it to operate during the Movement Control Order (MCO).

According to the Federal Government Gazette amendments issued on Jan 15, automotive manufacturing and components has been included in the essential services list among 18 others in the manufacturing category.

Automotive maintenance and repairs is also listed in the services category.

The latest gazette confirmed The Malaysian Reserve’s report yesterday that the government would allow car manufacturers to reopen their manufacturing and assembly lines.

Previously, when the Movement Control Order (MCO) 2.0 began on Wednesday, automotive manufacturing and after sales services were included in the list of sectors operable during the period.

The manufacturing plants were in operations on Wednesday, before the directive was updated which only allowed automotive repairs and maintenance services.

Manufacturing plants had run one shift on Thursday before they were closed in adhering to the new order.

“The cost of production disruption for automotive sector is about RM160 million a day. It is a very costly, unnecessary event,” one source told TMR.

The source said order backlogs at the moment is estimated at 150,000 units, which is about 25% of the total industry volume.

The government previously has agreed to extend the sales tax exemption for passenger cars to another six months until June 30, 2021.

A source said any closure of automotive plants would defeat the objectives of the tax incentives.

Source: The Malaysian Reserve

Car manufacturing gazetted as essential services, now allowed in MCO

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Pharmaceutical companies continue to enjoy investor attention on increasing Covid19 vaccine hopes and the positive newsbytes have turbo-charged the industry.

Pharmaniaga has appreciated some 127% since it was identified by the Government for the fill-and-finish work of the vaccine in July 2020. In the past five days, the counter has gained 5% to RM5.25.

Duopharma Biotech Bhd is also identified to undertake fill and finish processes for Covid-19 vaccine. It has gained over 117% since July 2020 and 10% over the past five trading sessions.

Pharmaniaga has been on a roll. Early this week, the group announced that it signed an agreement with China’s Sinovac Life Sciences Co Ltd to purchase ready-tofill Covid-19 vaccines and later to manufacture the vaccine domestically.

The pharmaceutical group has budgeted Rm3mil to retrofit the plant to enable the production of the vaccine.

Pharmaniaga said that the company will carry out a fill-and-finish process of the vaccine in Malaysia, and will subsequently enter into local manufacturing, under license from Sinovac for its technology and know-how.

Analysts say the partnerships including technology transfer to grow the sector in Malaysia will be a positive for Pharmaniaga as the venture could bring in significant earnings contributions.

They note that Pharmaniaga is looking at vaccine development and manufacturing as a potential longer-term growth driver.

CGS-CIMB Research analysts Syazwan Aiman Sobri believes Pharmaniaga’s venture could bring in significant earnings before interest and tax (EBIT) contributions – about Rm25.5mil for the production of 14 million fill-and-finished doses in FY21.

“Our FY21-FY22 earnings per share (EPS) forecasts are raised by 4.2%-19.7%, mainly to factor in the vaccine fill-and-finish venture contribution,” he says, adding that it upgrades Pharmaniaga to hold, with a higher target price of RM5.41.

Syazwan says the commercial terms regarding vaccine pricing are undisclosed due to non-disclosure agreements signed between Pharmaniaga and Sinovac.

According to various reports, the price per dose of the vaccine is in the range of US$13.6-US$29.8, which CGS-CIMB believes could be the price range in finished form.

“As Pharmiaga is procuring the vaccines in bulk unfinished form, we have assumed a cost price of US$12 per dose for Pharmaniaga (circa15% discount to the lower end of the price range),” Syazwan says.

Meanwhile, the clarity on Duopharma’s vaccine participation in Malaysia has increased following the Government’s announcement on Tuesday.

Science, Technology and Innovation Minister Khairy Jamaluddin reportedly said the next could be Duopharma, as the company is in talks with a Russian vaccine candidate.

RHB Research believes there is a high chance of Duopharma participating in the nation’s Covid-19 vaccination programme as it has the fill-and-finish capacity of six million vials or 60 million doses per year.

The research house has upgraded Duopharma to a buy with a higher target price of RM4 as the clarity on the company’s Covid-19 vaccine participation increases significantly.

Meanwhile, inix Technologies Holdings Bhd has submitted its application for registration with Malaysian National Pharmaceutical Regulatory Agency (NPRA) pursuant to its earlier agreements to source Covid-19 vaccines from China.

The company said its wholly-owned inix Network Sdn Bhd had submitted the application to NPRA on January 12.

inix’s suppliers for the Covid-19 vaccines are Sinovac Biotech Co Ltd, Cansino Biologics Inc and Sinopharm China National Biotech Group Co Ltd.

Solution Group Bhd has obtained shareholders approval to diversify into pharmaceutical-related business at its EGM on Friday.

Its wholly-owned subsidiary Solution Biologics Sdn Bhd (Solbio) on Sept 23 entered into an agreement with Cansino Biologics Inc for both parties to collaborate on the manufacturing and commercialisation of the latter’s Covid-19 vaccine.

It has also obtained approval from the Health Ministry’s National Pharmaceutical Regulatory Agency for a design plan and layout of its vaccine fill and finish facility.

Separately, Khairy said the country will receive one million doses from Pfizer in Q1 2021, 1.7 million doses in Q2, 5.8 million doses in Q3 and 4.3 million doses in Q4.

Based on this delivery schedule, the vaccination priority list has been mapped out, with the first objective being to protect those who are most vulnerable.

Khairy, who is also the co-chair of the Special Committee on Covid-19 Vaccine Supply Access Guarantee, also addressed concerns surrounding Sinovac’s efficacy rate from its trial in Brazil.

“In Sinovac’s case, our TWG chaired by Dr Kalairasu Peariasamy, who is the Institute of Clinical Research director, is analysing the announcement and will advise me on the way forward,” he said.

Source: The Star

Pharmaceutical firms in the limelight

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Scanwolf Corp Bhd’s wholly-owned subsidiary Plastic Industries Sdn Bhd (SPI) will manufacture a new product, namely plastic film for the packaging industry to complement its existing business in the manufacturing division.

“SPI is in the process of installing the production lines in its existing plants with an initial production capacity of 3,576 metric tons per annum. SPI targets to commence delivery of the new product by March 31, 2021,“ Scanworld said in a stock exchange filing today.

The new product is expected to contribute positively to the group revenue and results for the financial year ending June 30, 2021.

The estimated total capital outlay is RM300,000 and it is financed by internally generated funds.

Source: The Sun Daily

Scanwolf to manufacture plastic film for packaging industry

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Samaiden Group Bhd’s wholly-owned subsidiary Samaiden Sdn Bhd (SSB) today received and accepted a RM25.8 million contract from Gimzan Plywood Sdn Bhd to undertake amongst others, the engineering, procurement, construction and commissioning (EPCC) works in relation to the development of a 2.0 MWac biomass RE power plant at in Terengganu.

The scope of work includes the EPCC, reliability test, remedy of defect during the defect liability period and provision of all equipment, both permanent works and temporary works in connection with the project. The works will commence on Feb 2, 2021, which is also the commencement date of the contract upon Gimzan achieves the financial close and issuance of notice to proceed.

SSB’s target completion date is within 23 months. The defects liability period for the project will be 24 months from the date of commercial operations date approved by Tenaga Nasional Bhd and Sustainable Energy Development Authority Malaysia.

Should SSB fail to complete the works within 23 months, SSB will pay or allow Gimzan to impose at the rate of RM2,000 per day up to a limit of 5% of the contract price as liquidated and ascertained damages as delay compensation.

The contract is expected to contribute positively towards the future earnings of Samaiden for the duration of the contract.

Source: The Sun Daily

Samaiden bags RM25.8m Terengganu power plant job

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MESB Bhd has proposed to diversify into the waste recycling business to include the collection and recycling of wastepaper, plastics scrap and scrap ferrous metal.

According to its Bursa filing, the group anticipate its future prospects for the present principal business in the trading and retailing of apparels and leather products to be challenging.

It pointed out that it has incurred losses in three of the past five financial years, particularly for the financial year ended June 30, 2020 in which it reported a loss after tax of RM26.78 million due mainly to the impairment losses on intangible assets in the retail segment amounting to RM25.17 million as a consequence of the Covid-19 pandemic.

On the other hand, MESB believes that the outlook and prospects of the water recycling business is better given the government’s target of reducing landfill waste by 40% and to recycle 30% of the country’s plastic waste by 2020.

The Malaysian Plastics Manufacturers Association estimates that the plastics recycling industry produces 1.5 million tonnes of recycled resins a year worth RM4.5 billion in revenue, and exports roughly 70% of its production.

With that it believes the future revenue generated from the new business segment will contribute better earnings potential and enhance shareholders’ value moving forward.

For this undertaking, the group acknowledged that it does not have any historical track record in such business but its director and major shareholder Wong Sak Kuan has experience in the recycling business through his involvement as director and controlling shareholders in companies in the recycling sector.

For the diversification, it noted that the MESB might enter into recurrent related party transactions of a revenue and/or trading nature with companies related to Wong from time to time, as such it also seeks shareholders mandate for such transactions.

It stated that the diversification and the related party transaction is subject to the approval of its shareholders at an EGM to be convened.

Source: The Sun Daily

MESB proposes diversification into waste recycling business

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Tek Seng Holdings Bhd has proposed to acquire a parcel of industrial land formed by nine adjoining lots and warehouse and structure, measuring 853,863 sq ft, in Seberang Perai, Penang, for a total cash consideration of Rm46.96mil from See Hup Consolidated Bhd.

In its filing with the stock exchange, the polyvinyl chloride (PVC) product manufacturer said the transaction was in line with the group’s long-term strategy to expand and grow its manufacturing business.

“The property is in the vicinity of the existing plant of the company and its strategic location allows better utilisation of management and resources.

“A manufacturing factory and warehouse will be built in due course,” Tek Seng said.

“Apart from the proposed factory, the prospects of the property also enable the future developments of commercial units including commercial shop lots and light industries,” it added.

Tek Seng said Wangsaga Industries Sdn Bhd (WISB), its wholly-owned subsidiary, and Tek Seng Properties & Development Sdn Bhd, collectively, the purchasers, had entered into a conditional sale and purchase agreement with Limsa Ekuiti Sdn Bhd, a wholly-owned subsidiary of See Hup, for the proposed property acquisition.

The transaction was expected to be completed by the second quarter of this year.

Meanwhile, See Hup said the estimated net pro forma gain for the group from the land disposal was Rm28.05mil.

“The proposed disposal represents an opportunity for the group to immediately unlock the value and monetise its investment on the property,” See Hup said.

It added that proceeds from the proposed disposal of property would to partially repay its bank borrowings and lower its gearing level.

The transaction would also enable the group to reinvest the proceeds for its operations and expansion of its core businesses as and when such opportunities arise.

Source: The Star

Tek Seng acquiring industrial properties

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Net profit margin to recover on cost optimisation efforts

The history of Kawan Food Bhd dates back to the 1960s when the family of Gan Thiam Chai made and sold pastries such as “pau, spring roll and kuih.’’

All these were made manually then. It was only in the 1970s that he started a smallish outfit known as Kian Guan Trading Co and from there continued to expand the range of its products and supplied them to local grocers and supermarkets.

Kian Guan was subsequently renamed Kawan Food Bhd – now one of the major suppliers of frozen food.

Its products are also found in various supermarkets and grocery stores locally and in 36 countries globally. Its major export markets include the United States, the United Arab Emirates and the United Kingdom. Kawan was listed on Bursa Malaysia in 2005.

Sadly, only three broking houses are tracking this stock although during the Covid-19 pandemic and the lockdowns, demand for its products rose not just locally but also globally.

Frozen food market in Malaysia is forecast to grow at a compounded annual growth rate (CAGR) of more than 7% over five years, a report said. By the end of 2023, the market size would be about Us$800mil.

Globally, Grand View Research forecasts the frozen food market to grow at a CAGR of 3.4% to Us$380bil from 2019 to 2027.

Kawan Food has come a long way from its humble beginning and it now has manufacturing plants in Pulau Indah, and Nantong in China. From merely selling “kuih bakul’’ to ‘’kulit popiah,” this company has expanded its product range since.

It is well known for its frozen ethnic food products. Its range includes paratha, spring roll pastry, frozen vegetable, chapati, finger food, bakery and desserts. They are sold under five brands – Kawan, KG Pastry, Passion Bake, Veat and Aman.

Publicinvest Research said flatbread or commonly known as paratha is the main revenue driver for Kawan, contributing about 45% of the group’s sales. Export sales account for 61% of Kawan’s export sales for financial year 2019 (FY19).

Overall, Publicinvest said the local market is the largest revenue contributor to Kawan, making up 39% of sales. North America is its largest export market, making up 27% of total revenue.

The house has forecast a three-year earnings CAGR of 59% on the back of the company’s capacity expansion and growing demand for frozen food.

“We believe this will be supported by the changing consumer’s preference towards frozen and convenient food and coupled with the Covid-19 outbreak, demand for longer shelf life food items are in favour,’’ it said.

Both Kawan’s plants have enough capacity to grow to cater for growing demand.

During the first movement control order (MCO) in the country, its Nantong plant reached 60% utilisation, the report said. Prior to the MCO, the utilisation rate was about 45%.

Going forward, retaining margins and continued expansion of its product range is key.

For that, the group is working towards cost optimisation efforts including installing a solar panel system and automation to streamline its business processes to cut cost, both which could lead to lower operating cost.

Though the capital expenditure (capex) for solar installation is Rm7.7mil, the savings in power bills over a period of time will be much more.

With cash reserves of over Rm51mil as at end September 2020, the company is not likely to seek external funding. Each year, it put aside nearly Rm20mil in capex maintenance.

Publicinvest said raw material costs accounted for about 38% of Kawan’s costs of goods sold.

In the past, its margins had been impacted by goods and services tax (FY16), foreign currency exchange losses (FY17), additional start-up cost for its plants (FY18), as well as higher labour cost and increase in depreciation cost from its new plant in Pulau Indah (FY19).

But the research house, which recently began tracking this stock, believes margins will be supported by Kawan’s ongoing cost optimisation efforts and higher utilisation rates.

It has forecast net profit margin to recover to 11.6%, 13.5% and 14.6% for FY20-FY22, respectively. This translates to Rm31mil, Rm39mil and Rm46mil, respectively.

Bloomberg consensus estimates of revenue is Rm269mil, Rm300mil and Rm330mil, respectively. Likewise, earnings per share is expected at 0.089 sen, 11 sen and 13 sen for FY20-FY22, respectively.

Of the three brokerages tracking the stock, two recommended “buy”, while the other has a “hold” call.

Although Kawan does pay dividends, it needs to formulate a formal dividend policy for investors to know what to expect in the future. Publicinvest has forecast a dividend per share of 4 sen (based on a 46% payout) which translates to a 1.9% dividend yield. As of FY20, the group has declared an interim dividend of 2.5 sen.

Year to date, its share price has risen 10 sen to close at RM2.14 yesterday. It has a market capitalisation of Rm769mil. The consensus 12-month target price is RM2.98 a share.

Frozen food will always be in demand with the people’s changing lifestyles and the need for conveniences. But the challenge is about maintaining freshness and authentic taste to a competitive marketplace.

Its peers in the local industry include Nestle (M) Bhd, Berjaya Food Bhd, QL Resources Bhd and Power Root Bhd.

Source: The Star

Kawan to ride on growing frozen food demand

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Products such as PVC, PP and polystyrene to benefit

Lotte Chemical Titan Holding Bhd will be able to tap on the strong selling prices or better price spreads against naphtha in 2021, on a selected range of its production output.

CGS-CIMB Research said 2021 would likely see a consumer-led recovery in demand for durable goods which should benefit demand for petrochemical products such as polyvinyl chloride (PVC), polypropylene (PP), polystyrene (PS), acrylonitrile-butadiene-styrene (ABS) and bis-phenol A (BPA).

“Because Lotte Chemical is focused on the polyolefins business, it should benefit from any recovery in demand from copolymer PP, which is used in the production of automobiles and electronic appliances,” said the research unit.

CGS-CIMB Research expects the recovery in copolymer PP demand to help sustain currently lofty Pp-naphtha price spreads, even if demand for homopolymer PP should soften in the event that the production and stockpiling of medical, health, hygiene products and fast-moving consumer goods begin easing.

Lotte Chemical has a production capacity for 640,000 tonnes per annum (tpa) of PP, which is estimated to have contributed to 33% of its revenue in the financial year ended Dec 21, 2020 (FY20).

Lotte Chemical may also benefit indirectly from any global recovery in automobile and durable consumer goods production, via increased demand for ABS plastics, which may increase demand for butadiene and keep butadiene selling prices high.

Lotte Chemical’s naphtha cracker in Malaysia has the capacity to produce 100,000 tpa of butadiene, which is estimated to have contributed to 4% of its FY20 revenue.

According to Lotte Chemical, it sells about 50% to 60% of its butadiene output to its 10%-owned Lotte UBE Synthetic Rubber Sdn Bhd, which uses the butadiene to produce synthetic rubber.

The remaining butadiene is sold to various paint manufacturers.

CGS-CIMB Research also believes that polyethylene (PE) prices probably peaked in the fourth quarter of 2020 or could be about to peak in the first quarter of 2121.

The possible downward momentum in PE prices from second quarter 2021 onwards, coupled with the research unit’s expectations for rising oil and naphtha prices, could squeeze spreads against naphtha and progressively de-rate Lotte Chemical’s share price, although the average selling prices and spreads for 2021 as a whole are expected to be higher year-on-year.

Lotte Chemical has a 40% stake in a monoethylene glycol (MEG) plant in the United States, which CGSCIMB Research expects to be loss-making in FY21 due to weak MEG prices and higher ethane gas prices due to curtailment of US shale oil and gas production.

Lotte Chemical has the capacity to produce 1 million tpa of PE, accounting for almost half of its estimated FY20 revenue.

“Lotte Chemical and Petronas Chemicals have large exposures to the ethylene value chain which we think will likely see oversupply in 2021, potentially resulting in a gradual slide in PE prices this year, and continuing weakness in MEG prices,” said the research unit.

Meanwhile, CGS-CIMB Research also retained its “neutral” weighting on the Asian petrochemical sector as the upstream products, particularly ethylene, is still subject to supply gluts from China.

The research unit said government stimulus policies in China had increased sales of automotive and electronics products by 12.8% as well as household appliances by 8.7% year-on-year in the fourth quarter of 2020.

“As such, the spreads of downstream products related to durable goods production, including ABS and BPA, have surpassed pre-covid-19 pandemic levels, hitting multi-year highs in late-2020,” said CGSCIMB Research.

ABS is also widely used in the production of components for electrical appliances and cars.

Source: The Star

Petrochemicals to gain from consumer-led recovery

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Most manufacturing companies in Penang are well-prepared for the second implementation of the Movement Control Order (MCO), the Federation of Malaysian Manufacturers (FMM) said.

FMM branch chairman Datuk Jimmy Ong said ever since the end of last year when Penang was under the Conditional MCO, most factories have strictly observed the standard operating procedures (SOPs) imposed with the guidelines provided by the Minister of Health (MoH) and Ministry of International Trade and Industry (MITI).

“Based on the five sectors that were allowed to operate during MCO 2.0, we believe the permission covers substantially all manufacturing companies except for non-personal protective equipment textile, footwear, ceramic and stationery,” he told Bernama on Monday.

However, he hoped the federal government would look into several issues faced by the manufacturing industry.

Ong said applications from some small and medium enterprise supply chains to operate during the MCO period were rejected, and he urged the authorities or MITI to approve them to enable the companies to carry on their business.

The federal government should provide clearer and comprehensive SOP guidelines in certain scenarios to ensure that factories would maintain their productivity levels, while ensuring the safety of employees from the Covid-19 pandemic, he added

“We want to know what a company should do when an employee is tested positive for Covid-19,” he said, adding that he feared that some companies might conceal information to avoid total closure of their facilities.

Meanwhile, Ong believed that the federal government ought to subsidise Covid-19 screening tests for all workers in order to identify and isolate infected cases as soon as possible.

“We feel that all companies should do mass screenings and the federal government could subsidise 50% of the costs for first-time tests,” he added.

Source: The Malaysian Reserve

Penang manufacturers well-prepared for MCO

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Vaccines and fresh economic stimulus promised by US President-elect Joe Biden will give the global economy a chance to put the coronavirus pandemic behind it in 2021, policymakers and industry leaders told the Reuters Next conference.

Their optimism came despite a resurgence in Covid-19 cases that has prompted the World Bank to downgrade its growth forecast for this year and warn that delays in vaccination programmes could pinch recovery even further.

The head of German engineering giant Siemens AG said China is currently driving the world economy but was optimistic about recovery in the United States, where Biden has promised a faster roll-out of vaccines and more economic stimulus.

“In the US … they are holding all the cards and if they put the money to work in a wise way, there is going to be a very, very, strong second half of 2021 and especially 2022,” Siemens CEO Joe Kaeser told the digital forum.

The fight against the pandemic, which has claimed 1.9 million lives globally, has now entered a critical stage as countries around the world roll out vaccination campaigns aimed at immunizing large sections of their populations by year-end.

At the same time, emerging new variants of the virus have raised concerns about vaccine resistance and a faster spread of the disease, while China is battling a rise in cases that has seen more than 28 million people put under home quarantine.

The Washington-based World Bank last week cut its 2021 global growth forecast to 4% from 4.2% and said the rise in output could be as little as 1.6% if there were vaccine delays.

Despite delays in the US inoculation programme, St Louis Federal Reserve president James Bullard said he was optimistic that vaccines heralded a way out of the pandemic, and that economic activity would revive as fatalities started to fall.

He compared the present moment to the D-Day landings of 1944 which ultimately hastened the victory of allied forces over Nazi Germany and the end of World War Two.

“It doesn’t mean the war is over but it certainly puts you in the right direction,” he said, adding that he doubted there would be a clearly defined “all-clear date” but instead a growing sense that the pandemic was being defeated.

European Central Bank (ECB) president Christine Lagarde was also upbeat, reaffirming the ECB’s existing growth forecasts for the eurozone on the proviso that lockdown measures are lifted by the end of March and vaccines adequately distributed.

She cited as positives the fact that, after elections in the state of Georgia, Biden could count on US Senate support for his economic programme and that Britain and the European Union had managed to avert a no-deal Brexit on Dec 31.

“Some of the uncertainties we had on the horizon that made us look at the future with a dark cloud over our heads, some of that has been cleared,” Lagarde told the conference.

The ECB sees growth of 3.9% this year across the 19 countries that use the euro currency, more optimistic than many private sector economists.

Even in the best-case scenario, global recovery is not expected to be even, and concerns are growing that low-income countries could be left even further behind while some sectors most exposed to the pandemic fight for their very existence.

Chris Hyams, chief executive of job listings website Indeed, said it was still unclear whether demand in sectors such as construction that have managed to hold up during the pandemic has now been sucked out for years to come.

“What we don’t know is, when things return, have people just pulled in the next five years of construction and it will all slow down, or is there more work to be done?” he said.

Asked about the risk that developing nations could be left behind in the economic recovery as their people struggle to pay for Covid-19 vaccines, Lagarde said it would “backfire” on the rich world if they did not show solidarity.

“It is in the self-interest of developed countries to make sure that low-income, developing, fragile states have access to vaccination as it is needed,” the ECB chief said.

World Bank chief economist Carmen Reinhart said increasing debt distress in many of those countries meant that China, now the world’s largest official creditor, would need to start restructuring the debt it is owed.

“What I think China will need to do to confront this is what previous other creditors in the past had done, which is you have to restructure,” Reinhart told a panel on economic inequality.

“And restructure big time, meaning either lower interest rates, longer maturities, write-off in principal or some combination of that.”

Source: Reuters

Global economy can shake off pandemic in 2021, say policymakers, industry leader

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Japan’s major automakers have cut production at various factories due to the worsening global semiconductor shortage brought about as chipmakers struggle to meet soaring demand from consumer-electronics companies.

Lockdowns and travel restrictions are prompting housebound shoppers to snap up more phones, game consoles, smart TVs and laptops, which in turn has fueled demand for the chips used in those devices. That means carmakers from Toyota Motor Corp. to Volkswagen AG are at risk of not getting enough parts to fuel a fledgling recovery in their own industry.

That’s forced automakers all around the world to cut back on production.

Here’s the state of play for Japan’s firms:

Toyota Motor Corp

Toyota said on Jan. 10 that it’s cutting production of its full-size pickup truck Tundra due to the global shortage of semiconductors. The company expects to trim output of its Tundra model manufactured in San Antonio by 40% this month as a result of limited chip supplies.

In China, Toyota halted lines at its factory in Guangzhou on Jan. 11 due to parts shortages. Toyota jointly operates the facility with Guangzhou Automobile Group Co.; the plant has produced upward of 300,000 vehicles annually in recent years, including the Camry. The lines resumed operation on the eve of Jan. 12 as the necessary parts were able to be procured, spokeswoman Shino Yamada said.

Chen Shihua, a deputy secretary general of the China Association of Automobile Manufacturers, said the chip shortage had caused a relatively big impact on China’s automobile industry from late December and may persist into the second quarter. He noted that some chipmakers have boosted their prices, so it’s hard to measure the impact in terms of vehicle-sales reductions.

Honda Motor Co

Honda was among the first global automaker to warn of chip shortages, announcing a two-day halt in output at its U.K. plant on Jan. 5 and 6. Established in 1985, the Swindon facility produces Civic hatchbacks and employed about 2,900 workers as of November. The plant is set to operate until July 2021, when it has been marked for closure, a decision that was announced in 2019.

On Wednesday, Honda again said it would stop production at Swindon from Jan. 18 due to supply issues, and aim to restart on Jan. 22.

In North America, Honda said this week it will reduce production of the Accord, Civic and Insight sedans, as well as the Odyssey minivan and Acura RDX, a crossover sports-utility vehicle. Honda will adjust production at its Marysville and East Liberty plants in Ohio, as well as at facilities in Alabama, Indiana and Canada. Honda will cut output by a few thousand units by the end of January, and the adjustment will likely continue, according to the Nikkei, which earlier reported the decreases at Honda North America.

Honda is also seeing the impact of chip shortage in China and is considering cutting production. “We will replace some models and adjust our work shifts when necessary,” a Honda spokesperson said Wednesday.

Nissan Motor Co

Nissan said on Jan. 8 that it’s cutting back on production at one of its plants in Japan this month. “A global shortage of semiconductors has affected parts procurement in the auto sector,” spokeswoman Azusa Momose said. “As a result of this shortage, the Oppama plant in Japan will adjust production in January, reducing production of the Nissan Note.” The Nikkei reported that the Note’s production would be reduced to 5,000 from 15,000 a month.

Subaru Corp

Subaru will cut output by a few thousand units each in January at factories in Japan and the U.S., a spokesperson said Thursday.

“We are adjusting production of multiple models in our Gunma and U.S. facilities due to chip-delivery delays,” the spokesperson said. “The adjustment started from Jan. 11 for Gunma and from Jan. 8 in the US. We are checking the end dates. Other companies are involved in the delivery delays, so our plan depends on them. The impact on output in February and beyond is unclear.”

Suzuki Motor Corp

There will be an impact on production, but the automaker is still checking details including which models may be impacted, a spokesman said by phone.

Mitsubishi Motors Corp

While Mitsubishi Motors is still checking regarding any impact on output, it hasn’t been forced to adjust its production for the time being due to chip shortages, a spokeswoman for the company said Jan. 12.

Mazda Motor Corp

Mazda is currently examining whether there has been any impact on production, spokesman Naoto Mawatari said by phone Tuesday.

Source: Bloomberg

How global chip shortage is impacting Japan’s carmakers

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Volkswagen Group, one of the world’s leading automotive manufacturers based in Wolfsburg, Germany, has set up its new regional Parts Distribution Centre in Port of Tanjung Pelepas, Johor.

A joint statement by Volkswagen Group and Malaysian Investment Development Authority (MIDA) said the strategically located facility aims to provide a robust genuine parts supply chain to 21 markets in the Asia-Pacific region.

With this larger facility of 50,000 square metres, the new regional Parts Distribution Centre can now store more parts and thus extend the range and depth for better parts availability.

There are 65,000 genuine parts of the group’s brands of Volkswagen Passenger Cars, Audi, ŠKODA and Volkswagen commercial vehicles.

“Volkswagen Group follows the increasing trend of the establishment of global and regional distribution hubs in Malaysia by companies in industries such as automotive, life sciences and medical devices, electrical and electronics, and machinery and equipment.

“These companies seek to tap on Malaysia’s strategic location as well as our efficient and reliable infrastructure such as ports, airports and financial institutions, allowing them to improve operational efficiency and optimise product and service quality and speed for their customers,” said International Trade and Industry Minister and Senior Minister Datuk Seri Mohamed Azmin Ali.

Meanwhile, Volkswagen Group sales head Dr Christian Dahlheim said the Asia-Pacific region offers a lot of growth potential for the group, especially on e-mobility.

“Our electric product range already consists of very attractive models like the Volkswagen ID.3 and ID.4 as well as the Audi e-tron that is fast growing. Besides vehicles, a strong After Sales performance is key for customer satisfaction.

“Malaysia offers a central and well-connected location which perfectly suits our plans to expand our foothold in the region,” he said.

The new site offers improved distribution and process efficiency. Located in the free trade zone with direct port connectivity, the warehouse processing is enhanced by as much as 15 per cent.

The new facility is also customised to Volkswagen Group’s requirements, where storage systems like semi-automated paternoster and vertical narrow aisle are built for better warehouse space and process optimisation.

“Our new Parts Distribution Centre in Malaysia undoubtedly strengthens Volkswagen Group’s global After Sales supply chain, a key milestone in providing improved genuine parts delivery to our customers in Asia Pacific.

“We were pleased by the ease of implementing our project here and the assistance given by MIDA,” said the group’s After Sales head, Roman Havlásek.

The group’s project was facilitated by the Global Trading Centre (GTC) scheme, which was announced in Budget 2021, to encourage multinational corporations(MNCs) and local companies alike to establish their global and regional distribution hubs.

MIDA welcomes investments such as Volkswagen Group that strengthen the linkages within the local industry, create jobs for Malaysians and enhance Malaysia’s positioning as a global supply chain hub.

The GTC scheme is an enhanced, comprehensive scheme which provides tax incentive and facilitation to ease import and export activities and aims to support companies in key manufacturing and services sectors venturing into procurement, distribution and trade activities to further strengthen their global supply chain.

Further information can be obtained from the Business Services and Regional Operations Division at MIDA or www.mida.gov.my.

Source: Bernama

Volkswagen Group sets up regional Parts Distribution Centre in Tanjung Pelepas

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Malaysia’s economy will remain resilient despite the re-imposition of the Movement Control Order (MCO) in six states and the nationwide state of emergency, thanks to labour productivity which drives economic growth.

Juwai IQI Global chief economist Shan Saeed said the country can survive despite the tempestuous global economy, on the back of the government’s continuous fiscal and monetary policy levers to support the growth trajectory in the economy.

“Nonetheless, in my opinion, the government should analyse the business and market pace to gauge the momentum before announcing any fiscal stimulus for the economy.

“However, small and medium enterprises need lots of support from the government as small firms are finding it tough to manage their cash flows,” he told Bernama.

Shan said that right now, markets are in the midst of an interplay between epidemiology and economics.

“It’s a very delicate line between health care and business. The government is trying its best to keep the momentum going for the economy at the macro level,” he opined.

Meanwhile, he noted that Juwai IQI’s projection for Malaysia’s gross domestic product growth remained the same, at three to four per cent this year, with ringgit to trade between RM3.67 and RM4.10 against the US dollar. (US$1 = RM4.04)

“The ringgit will continue to have structural stability in 2021 and will be trading between 3.67 and 4.10 against US dollar. Main premises for the local note’s strength in 2021 are the dollar heading for tail-end risk, higher oil prices, ringgit following Yuan movement and the local macroeconomic stability,” said Shan.

He also said that Bank Negara Malaysia (BNM or Malaysia’s Central Bank) has plenty of room to manoeuvre in terms of the monetary policy lever in 2021, adding that the central bank would continue to follow prudent monetary policy in order to deliver economic outcomes for growth, price stability at the macro level and financial stability in the system.

“The BNM will apply tactical and strategic manoeuvring as per market condition or when required. At Juwai IQI, we continue to remain cautiously optimistic about the growth outlook due to solid policy response from the government,” he said.

He expects five sectors to be major beneficiaries for this year, namely oil and gas, semiconductor, manufacturing, healthcare and plantation (palm oil).

On Monday, Prime Minister Muhyiddin Yassin announced that MCO will be enforced in Malaysian states of Penang, Selangor, the Federal Territories (Kuala Lumpur, Putrajaya and Labuan), Melaka, Johor and Sabah from Jan 13 – 26, 2021.

During the same period, conditional MCO (CMCO) would be enforced in states Pahang, Perak, Negeri Sembilan, Kedah, Terengganu and Kelantan, while Perlis and Sarawak would be placed under the Recovery MCO (RMCO).

The following day, Malaysia’s King Al-Sultan Abdullah Ri’ayatuddin Al-Mustafa Billah Shah proclaimed a nationwide state of emergency from Jan 12 until Aug 1, 2021, or when COVID-19 has come under control.

The re-imposition of the MCO came as Malaysia started to see daily cases breaching 3000 last week, putting the nation’s healthcare system under siege.

Source: Bernama

Malaysia’s economy has the resilience to bounce back strongly

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The government’s sustained engagement in implementing the Movement Control Order (MCO) 2.0 has enabled businesses to continue operations with minimal disruption, the American Malaysian Chamber of Commerce (AMCHAM) said.

The chamber commended the Malaysian government – its ministries, departments and agencies, especially the Ministry of International Trade and Industry – for the coordinated efforts in the implementation of the MCO from Jan 13 – 26, 2021.

“Quick and effective release of information has helped executives communicate to staff, along with regional and global offices, in order to make informed decisions.

“Knowing that they have a collaborative working relationship with government bodies directly or via interlocutors like the chamber, provides stability and assurances to customers locally and globally,” it said in a statement yesterday.

AMCHAM said that it would continue to support its member companies and the government in the collective fight against the global Covid-19 pandemic, putting the safety of the people first while balancing the needs of the economy.

“AMCHAM member companies are fully aware that strict adherence to the standard operating procedures is vital to minimising the spread of Covid19 and remain vigilant,” it added.

Source: Bernama

AMCHAM lauds govt’s sustained engagement in implementing MCO 2.0

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Greatech Technology Bhd is buying 5.9 acres of leasehold land in Penang for RM13.37 million from the Penang Development Corp.

In a bourse filing, the company announced that its wholly-owned subsidiary Greatech Integration (M) Sdn Bhd (GIM) had entered into the sales and purchase agreement with the state’s development agency for the acquisition of the land, which is located in Batu Kawan Industrial Park. The purchase will be funded through internally generated funds.

Greatech intends to move GIM’s manufacturing operations in Lunas, Kedah, to the newly acquired land.

The new facility is expected to have a built-up area of 200,000 sq ft, which is an increase of 152,600 sq ft compared to the built-up area GIM current has from its five rented premises in Lunas of 47,400 sq ft. With the increase in built-up area, Greatech said it would significantly increase its capacity to cater for future orders.

The group noted that the land is close to its head office in Bayan Lepas and assembly plant in Batu Kawan, thus complementing its business operations due to its location and the ability for the company to consolidate its operations and management.

Furthermore, this will reduce its annual rental commitments by RM320,000 as well.

“The construction of the new operational facility on the land is expected to commence by the end of first quarter of 2021, subject to the approval of planning permission and building plans from the relevant authorities. The physical construction is expected to be completed by the end of 2021,” said Greatech.

The purchase is subject to the approval of the Penang State Authority to transfer the land from Penang Development Corp to GIM. All in all, Greatech is expecting the acquisition to be completed by the end of 2021.

Greatech’s share price gained 4.2% or 21 sen to close at RM5.18, translating into a market capitalisation of RM6.49 billion.

Greatech shares have risen by 325% over the past 12 months to RM5.18 today, from RM1.22 registered on Jan 14 last year. The company’s share price has been on an upward trend since it made its debut on the ACE Market in June 2019. Its share price is now 749% higher against its initial public offering (IPO) price of 61 sen.

It has transferred its listing to the Main Market of Bursa Malaysia.

Source: The Edge Markets

Greatech buys land in Batu Kawan to expand capacity

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AE Multi Holdings Bhd has bagged another project to set up the production facility for PNE PCB Bhd, a new entrant to the rubber glove industry.

The company filed its press statement to Bursa Malaysia announcing that its unit AE Multi Industries Sdn Bhd has received a letter of award from PNE Glove Sdn Bhd — a unit of PNE PCB Bhd — to design, build and deliver on a turnkey basis a glove-manufacturing factory of up to 59,000 square feet within eight months.

The factory will have the capacity to house up to 10 glove-dipping lines for the sole-purpose of manufacturing medical grade nitrile gloves, said AE Multi.

AE Multi said its recent contract awards are expected to boost its new engineering, procurement, construction and commissioning (EPCC) business segment which will help to accelerate the group’s business turnaround in 2021.

Last month, the company secured a contract from Fintec Global Bhd’s unit Fintec Glove Sdn Bhd to also build a glove manufacturing factory.

“AE Multi is moving fast to collaborate with as many new glove makers as possible. Companies are looking to build new glove manufacturing factories and to ramp up their existing production capacity, and we would like to be their preferred EPCC partner,” said AE Multi group executive director Choong Lee Aun in the statement.

Shares of AE Multi went up two sen to 12 sen, for a market capitalisation of RM64.22 million.

Source: The Edge Markets

AE Multi to build factory for new glove entrant PNE PCB

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Analysts expect a strong turnaround in profits at Asian companies as regional economies see a surge in factory activity and an expansion in exports, helped by approvals for multiple coronavirus vaccines.

Asia’s large- and mid-cap companies are expected to post profit growth of 26.4% in 2021, after an estimated 5% growth last year, according to Refinitiv data.

Asian companies estimated profit growth in 2021 https://fingfx.thomsonreuters.com/gfx/mkt/rlgvdqryrpo/Asian%20companies%20estimated%20profit%20growth%20in%202021.jpg

Singapore, South Korea and Japanese firms lead the earnings growth for the region this year, boosted by a surge in electronics exports.

Breakdown by country for estimates changes in last 30 days https://fingfx.thomsonreuters.com/gfx/mkt/dgkvlqnnkpb/Breakdown%20by%20country%20for%20estimates%20changes%20in%20last%2030%20days.jpg

The data also showed Chinese firms were to likely record an 18.8% rise in profits this year, compared with 10.5% in 2020.

“China could see further earnings upgrades driven by sustained business activity growth and online/offline retail sales growth albeit at a slower pace,” Goldman Sachs wrote in a report.

“India and Korea are also likely to see earnings revision upgrades helped by sustained strong manufacturing activity data and exports,” it said.

In different sectors, industrials and consumer discretionary companies are expected to post a faster recovery this year, after being hit heavily by the COVID-19 pandemic last year.

Breakdown by sector for estimates changes in last 30 days https://fingfx.thomsonreuters.com/gfx/mkt/qmyvmqzzqvr/Breakdown%20by%20sector%20for%20estimates%20changes%20in%20last%2030%20days.jpg

Energy and mining firms are also poised to see a strong growth this year, thanks to a surge in commodity prices.

Iron ore prices have risen more than 40% in the past two months, while crude oil gained 28%.

Some analysts expect earnings growth in Asian firms to bolster the equity markets this year after a sharp rally in 2020.

The MSCI Asia Pacific index has gained 3.7% so far this year, after climbing 17.2% last year.

Source: Reuters

Asia’s corporate earnings expected to rise 26.4% in 2021, Refinitiv data shows

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Tengku Zafrul, Finance Minister of Malaysia

Thank you everyone for your feedback on my previous posting. I have read all of them, and I appreciate the constructive feedback.

Without a doubt, Covid-19 has wreaked havoc on all countries and economies. Like other nations, we are also faced with the arduous task of rejuvenating and rebuilding our economy, starting with initiatives introduced through our nation’s short-term economic recovery plan (PENJANA) announced in June 2020. PENJANA has introduced tax and investment incentives such as:

1. 0% tax rate for 10 to 15 years for new investment in manufacturing sectors with capital investment between RM300 million or above;

2. 100% Investment Tax Allowance for 5 years for existing company in Malaysia relocating overseas facilities/segments into Malaysia (extended to 31 December 2022 under Budget 2021);

3. Special Reinvestment Allowance for manufacturing and selected agriculture activity for year of assessment 2020 until 2022;

4. Additional operating expenditure for MIDA to undertake marketing and promotional activities;

5. Establishment of Project Acceleration & Coordination Unit (PACU) at MIDA to facilitate all necessary approvals;

6.Enhancement of the Domestic Investment Strategic Fund; and

7. Expedited Manufacturing License approval for non-sensitive industry within 2 working days

Under Budget 2021, many of these incentives have either been expanded or extended. The Government is committed to making Malaysia a preferred destination for high-value added service activities, continuing our pursuit of making this a hub for innovation, high-technology and future-ready industries. With this goal in mind,
several initiatives implemented through Budget 2021 include:

1. Relaxation of tax incentive conditions for Principal Hub and the incentive will be extended until 31 December 2022;
2. New tax incentive for the establishment of Global Trading Centre at a concessionary rate of 10% for a period of 5 years and can be renewed for a further 5 years;
3. Limit on the value-added and additional activities to be carried out in the Free Industrial Zone and Licensed Manufacturing

Warehouse be increased from 10% to exceeding 40% from the total annual sales value; and

4. Individual income tax rate of 15% for a period of 5 consecutive years to a maximum of 5 non-resident individuals holding key positions for strategic new investment by companies relocating their operations to Malaysia under the PENJANA incentive package.
5. Tax incentives for non-resource-based R&D findings commercialization activities to be reintroduced this year and tax incentives for commercialization of R&D findings by public research institutions will be extended to private higher education institutions.
6. Incentives including preferential tax rate of up to 10% for a period of up to 20 years for manufacturers of pharmaceutical products including vaccines;
7. Existing tax incentives for the East Coast Economic Region Development Corridor, Iskandar Malaysia and Sabah Development Corridor be extended until 2022.

The list above is non-exhaustive. Furthermore, I can assure you MOF has been working very hard with other agencies and Ministries to ensure that these incentives will be made available to genuine investors. But we must remember two important points: we are still in a health crisis, and every country is unique in terms of attracting FDI.

And while Malaysia is still working tirelessly to contain Covid-19, recovery – in public health, economy or even investments – will take time.

Nonetheless, both international and domestic business communities have remained committed to our country, having perceived our strengths and potential. As much as we want to increase our FDI, equally important is our DDI (Direct Domestic Investment), as it is a show of confidence and trust by our own fellow Malaysians in our national policies and economic resilience. Allow me to share some data and facts:

1. Despite the Covid-19 pandemic, numerous international companies and MNCs have started establishing vendor development programmes and supply chain management initiatives with local companies and suppliers. Over the years, these local suppliers became large manufacturers in their own right, and quite a few are now listed in our stock exchange, providing employment opportunities for our local talents.

2. Notable projects approved for the first nine months of 2020 include LEM (Switzerland), Dexcom, Ultra Clean (USA), Keysight Technologies (USA), Bosch (Germany), as well as Nippon Electric Glass (Malaysia) Sdn. Bhd. (NEGM). NEGM is increasing its production capacity of glass tubing for pharmaceutical use
by approximately 1,000 tons per month at its Shah Alam, Selangor facility. To date, NEGM has invested more than RM6 billion in Malaysia on various investments. Its latest RM200 million investment project reinforces Malaysia’s reputation as a sustainable and profitable investment destination for companies looking to do business in ASEAN and beyond.

3. MIDA, being the country’s principal investment promotion and development agency of the country, has also been focusing on attracting quality investments in capital-intensive, high-value added and high technology projects. This is reflected in the increase of the capital investment per employee (CIPE) ratio to
RM1,276,774 in the first nine months of 2020 from RM1,039,769 during the same period last year.

4. In the first nine months of 2020, our country continues to be a preferred location for investments, particularly for manufacturing projects where it recorded year-on-year growth in approved investments, despite a year of crisis.

5. This includes a 16.6% increase in total approved investments in the manufacturing space to RM65.3 billion across 740 projects (from RM56 billion involving 669 projects in 9M2019). This comprises a 45.5% jump in DDI to RM25.9 billion and a 3.2% increase in FDI to RM39.4 billion; which are expected to create over 51,000 jobs in the field of engineering, equipment maintenance and manufacturing, IT and more.

6. In the same period, Malaysia’s services sector recorded total approved investments of RM42.8 billion on top of RM1.6 billion total investments in the primary sector, bringing the overall total approved investments for 9M2020 to RM109.8 billion.

And don’t just take it from me. If you are looking for objectivity, look at various global rankings that have also validated Malaysia’s position on numerous metrics, and are testimonial to our sound policies and measures. I am pleased to share that Malaysia ranks:

1. Fourth among 17 economies in a recent study by KPMG and the Manufacturing Institute in the USA entitled “Cost of Manufacturing Operations around the Globe”, which assesses the economy’s competitiveness as a manufacturing hub. The study validates Malaysia’s aspirations to become a global supply
chain hub in the region.

2. Second in terms of ease of doing business in ASEAN (12th globally), as well as 2nd for protecting investors according to the World Bank Doing Business Report 2020;

3. Second in terms of trade and connectivity in Southeast Asia (12th globally) according to DHL Global Interconnectedness Index 2019;
4. Second in terms of ease of protecting minority investors according to the Global Innovation Index 2020, by the World Intellectual Property Organisation, WIPO;
5. Third in terms of global offshoring destination according to the A.T. Kearney Global Services Location Index, GSLI 2019;
6. Fourth globally in handling the Covid-19 crisis according to Blackbox Research and Toluna;

7. Fifth amongst emerging economies as a key destination for investment and businesses, on the back of potential rapid economic recovery, stable fiscal and financial position and the ability to contain and alleviate the Covid-19 pandemic according to a recent report by Bloomberg;
8. Twenty-sixth in the Global Talent Competitiveness Index 2020; and
9. Twenty-seventh in the World Economic Forum’s 2019 GlobalCompetitiveness Index

When I first agreed to take on this position, during what is probably the most challenging period for the Malaysian economy in history, I told myself and #teamMOF that it is always easy to focus on what is missing. The real work is in directing our energy towards solutions, and towards what we can achieve with the resources that we have.

This has required a delicate balancing of lives and livelihoods on MOF’s part, and it has not been the easiest of responsibilities to execute. Nonetheless, rest assured that each member in my team has been working extremely hard these past 10 months to deliver the numbers, on which I will certainly keep the public posted.

We value all our stakeholders including our trading partners and the domestic business community. There is no window dressing when I say this: last year alone, despite hurdles presented by the Covid-19 situation, between March and December, the MOF team and myself had directly engaged with more than 125 business-based associations, interest groups and chambers of commerce (both local and foreign), as part of our engagements in creating the four economic stimulus packages, and Budget 2021. For the Budget 2021 alone, we received over 6,000 ideas and suggestions, which we carefully evaluated. We are focused not only on placing our economy back on the right track, but also to start some of the much-needed structural reforms like upskilling our workforce, and reducing dependency on foreign labour, many of which will begin with the 12th Malaysia Plan.

Last year, we were pleased to have had meaningful discussions with multiple local and international agencies and business groups, including the American Malaysian Chamber of Commerce, the French Malaysia Chamber of Commerce and Industry, as well as the British Malaysia Chamber of Commerce, and held discussions with numerous ambassadors, commissioners and ministers. We have not managed to meet every single one, but we are getting there. MOF officials and I very much look forward to meeting all chambers of commerce and other stakeholders in Malaysia to see how best we can work together – particularly with MITI and other investmentfocused agencies – to facilitate more investments from our trading partners in 2021 and beyond.

I assure you that the Government remains committed to working hand in hand with investors, both local and foreign alike, to accelerate the transformation of Malaysia as an advanced nation with inclusive growth and development by providing a conducive and favourable environment to attract businesses.

We continue to welcome suggestions and well-meaning feedback without prejudice. Given the appropriate channel of engagement, I believe MOF has proven to welcome feedback and respond in the best way practicable. We do this, and more, all in the name of delivering for our beloved nation and rakyat.

Source: The Edge Markets

Our commitment to constructive engagement towards economic recovery

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The Ministry of International Trade and Industry’s (MITI) move to list all the essential service, work, industries and businesses which are allowed to operate in areas under the Movement Control Order (MCO) has reassured manufacturers that they can continue to operate.

In a statement today, the Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai said the industry is cognisant that all efforts must be taken to flatten the COVID-19 curve, and would continue to strictly observe precautionary measures.

Nevertheless, he believes that export-oriented industries like non-personal protective equipment-related textile and apparel manufacturers, ceramic and glass, toys, stationery products and footwear that have export obligations to meet should also be included in the list.

“Industries that have processes or equipment that must run on a 24-hour basis such as the cement, ceramic and glass (manufacturers) cannot be shut down as shutting down and recommissioning the equipment will be very costly,” he said.

Soh also urged the government to continue with relief assistance in the form of wage subsidies and targeted bank loan moratorium, as well as to consider exempting, reducing or delaying some of the statutory payments.

“This includes the Human Resources Development Fund (HRDF) levy, Employees Provident Fund (EPF) and Social Security Organisation (SOCSO) contributions, quit rent, assessment, as well as to consider further energy cost discounts to mitigate cost implications from the MCO,” he added.

The government has allowed five economic sectors to operate during the MCO, namely industrial and manufacturing, construction, services, trade and distribution, as well as plantations and commodities.

Yesterday, Prime Minister Tan Sri Muhyiddin Yassin announced that Selangor, Penang, Melaka, Johor, Sabah and the Federal Territories (Kuala Lumpur, Putrajaya and Labuan) will be placed under the MCO from Jan 13-26, 2021.

During the same period, CMCO would be enforced in Pahang, Perak, Negeri Sembilan, Kedah, Terengganu and Kelantan, while Perlis and Sarawak would be placed under the Recovery MCO (RMCO).

Source: Bernama

MITI’s list of essential services assures manufacturers- FMM

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The Ministry of International Trade and Industry (MITI) has formulated a set of comprehensive, relevant and practical standard operating procedures (SOPs) to enable the smooth flow of operations and ensure effective implementation of business continuity plans.

In a statement, MITI’s Senior Minister Datuk Seri Mohamed Azmin Ali said this is particularly for the duration of the movement control order (MCO) from Jan 13 to 26, 2021.

He said SOPs for the manufacturing sector under the purview of MITI can be downloaded from the MITI website at www.miti.gov.my.

Source: Bernama

MITI formulates SOPs for effective business continuity plan

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The Malaysian Investment Development Authority (MIDA) will continue to function albeit with reduced headcount at MIDA Sentral, to assist businesses in their operations, following the reimposition of the Movement Control Order (MCO).

The MCO announced by Prime Minister Tan Sri Muhyiddin Yassin will take effect tomorrow.

In prioritising staff safety while also minimising disruptions to services and operations of businesses, MIDA officials will be working from home on a rotation basis.

In a statement today, it encouraged stakeholders to leverage the various technology tools available for remote communications or virtual meetings such as video conferencing and conference calls.

“Online engagement for business enquiries can be arranged through https://appointment.mida.gov.my/appointment/, where else general enquiries may be submitted at https://investmalaysia.mida.gov.my/eTRANS_TH/LoginCS.aspx,” it said.

It said MIDA officials, particularly the directors and deputy directors could also be easily contacted through their respective emails at https://www.mida.gov.my/contact-us/.

“Delivery of documents by mail or courier service is encouraged to reduce physical contact at MIDA. For further updates, please visit www.mida.gov.my or follow MIDA on social media platforms, namely Twitter, Instagram, Facebook and LinkedIn,” it added.

Source: Bernama

MIDA to operate with reduced staff during MCO

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