Selangor State Development Corporation (PKNS) has struck an agreement with Singaporean firm RDA Ventures Pte Ltd to develop three data centres in Cyberjaya. 

PKNS chief executive officer Dato’ Mahmud Abbas said the RM1 billion project, which will be managed by its subsidiary Selangor Industrial Corporation (SIC), is in line with the global demand for and importance of the data industry. 

He explained that SIC will be responsible for drawing in customers, including foreign companies, while RDA Ventures will provide expertise on matters concerning construction, maintenance and operations. 

“This data centre will be built in parts of the 34 acres of land owned by PKNS in Cyberjaya. They will be constructed within eight years, comprising three phases, with works to begin by the first quarter of next year.

“These centres will be equipped with cutting-edge innovations, besides ensuring optimal energy efficiency, robust design, cost-effectiveness, and reliable facility management,” he said during the signing of memorandum of understanding ceremony between, here, today. 

Mahmud said the centres will be tailored to meet customer requirements, in accordance with current needs.

“They will also be constructed with consideration for green energy and environmentally-friendly design to ensure the preservation of the surroundings,” he said.

Meanwhile, SIC chief executive officer Saharom Mohni said the collaboration, which is expected to last at least 30 years, will open up various job opportunities, including for skilled labourers in electronics, computer sciences, statistics and administration.

He added that the data centres will involve the participation of major agencies like the Malaysia Digital Economy Corporation (MDEC) and Malaysian Investment Development Authority (MIDA). 

“The participation of various leading companies, including international ones, aims to ensure the security of information and data for customers.”  

Source: Selangor Journal

PKNS collaborates with Singaporean firm to develop billion ringgit data centre

Universiti Malaya (UM) remains the nation’s best in its overall position out of the 41 Malaysian universities featured and is 3rd among Asean universities in the Quacquarelli-Symonds (QS) World University Rankings: Asia (QS-AUR) 2024.

The latest edition of the ranking sees Malaysia’s premier university continues to maintain its top-20 position, ranking 11 this year.

Despite falling two places over the last year, UM’s top-20 status in the region is based on its outstanding recognition among the world’s academics and employers.

It ranks among Asia’s top 10 for Employer Reputation and top 20 for Academic Reputation.

UM also produces Malaysia’s most impactful research and is Asia’s third-most international research institution.

UM vice-chancellor Prof Datuk Seri Dr Noor Azuan Abu Osman said the university would continue to strive to push the boundaries of knowledge and nurture aspiring leaders.

“I am pleased that Universiti Malaya continues to elevate Malaysia on the global stage through our dedication, commitment and hard work towards serving the nation and impacting the world,” he said in a statement yesterday.Second in the country is Universiti Putra Malaysia (UPM) which improved from 27 to 25 while third is Universiti Kebangsaan Malaysia (UKM) which also improved two spots from 30 to 28.

UPM’s is 11th in Asia for research, which also has Malaysia’s highest staff expertise, according to the Staff with PhD indicator, in which it ranks 21st regionally.

Rounding off Malaysia’s research universities are Universiti Sains Malaysia (USM) which dropped three spots to 35 while Universiti Teknologi Malaysia moved up two ranks to 37.

Meanwhile, Taylor’s University is Malaysia’s highest ranking private institution in the list.

It also enjoys having Malaysia’s highest teaching capacity, according to faculty per student ratio, in which a score of 92/100 places it among Asia’s top 50, the only local institution to achieve this result.

Its progress is marked by significant growth in five key indicators – International Research Number, Citations per Paper, Faculty-Student Ratio, International Faculty and Academic Reputation.

Taylor’s University vice-chancellor and president Prof Michael Driscoll said this was a pivotal moment for the university, particularly as the institution advanced its mission to deliver purposeful learning within its curriculum.

UCSI University is now ranked 61st in Asia after climbing 11spots in the rankings.

Its vice-chancellor Prof Datuk Dr Siti Hamisah Tapsir said that the regional rankings trend resulted from years of hard work.

With a total of 41 Malaysian universities making it into the rankings, Malaysia boasts one of Asia’s most international student cohorts, indicating it is an attractive study destination.

Additionally, the list includes five new universities that have made it to the ranking for the first time.

With 41.5% of its universities moving up the rankings, Malaysia is the region’s second most improved location, among locations with 10 or more universities ranked.

QS senior vice-president Ben Sowter said: “The expansion and internationalisation of Malaysia’s higher education system are pivotal for its evolution into a high-income, knowledge-based economy.”

He said with the government’s strategic investments and policy reforms, including a significant allocation in Budget 2023 and a comprehensive overhaul of the TVET system, the country was forging a path to attract global talent and bolster its intellectual resources.

China’s Peking University maintained its top position in the region with the University of Hong Kong coming in second.

Third went to National University of Singapore which fell from the second spot last year.

The 15th edition of the rankings features 857 institutions from 25 countries and territories, with 149 ranking for the first time.

Source: The Star

UM remains in pole position

By Dzof Azmi November 8, 2023

•  Signs JV with Singapore’s STT GDC to boost Malaysia’s data centre aspirations
• Two data centres located in Cyberjaya set to be operational by 2024 and 2025

(L-R): Thyaga Rajan Serniwassan, CEO, Basis Bay Data Centres; Praba Thiagarajah, Executive Chairman, Basis Bay; Zuaida Abdullah, ED – Services Division, Malaysian Investment Development Authority (MIDA); Mahadhir Aziz, CEO, Malaysia Digital Economy Corporation; Bruno Lopez, President and Group CEO, ST Telemedia Global Data Centres; and Lionel Yeo, CEO, Southeast Asia, ST Telemedia Global Data Centres.

Malaysia’s digital infrastructure is set to receive a significant boost as Basis Bay, a global provider of sustainable cloud and green data centres headquartered in Kuala Lumpur, announced a partnership with ST Telemedia Global Data Centres (STT GDC), a rapidly growing global data centre provider from Singapore. The alliance aims to develop, construct and operate data centre projects in Kuala Lumpur and Cyberjaya with total investments to be in the billions though neither STT GDC and Basis Bay provided details of their investments. This initiative underscores Basis Bay’s commitment to sustainable, efficient digital solutions and marks a significant contribution to the expansion of Malaysia’s digital infrastructure said Praba Thiagarajah, Executive Chairman of Basis Bay.

The partnership’s focus is building a data centre campus in Cyberjaya, located approximately 30 kilometers from Kuala Lumpur. The three-acre campus will host two comprehensive data centre buildings. The first, known as ‘Cyberjaya DC.2’, is designed to be highly secure and sustainable, meeting the digital needs of domestic and international banks, financial institutions, government agencies, and other crucial industry segments. The other building, ‘STT Kuala Lumpur 1’, will cater to the hyperscale segment. These facilities, set to be operational by 2024 and 2025 respectively, are in response to the growing demand for digital infrastructure in Malaysia.

Having operated data centres in Malaysia for 27 years, Basis Bay brings a deep understanding of local regulations and clients. This matched with STT GDC’s portfolio of 85 data centres across 10 geographies, makes for a competitive blend of local expertise and global excellence in data centre operations.

“Basis Bay recognizes the soaring demand for data centres, mainly fuelled by the proliferation of digital technologies such as Artificial Intelligence and Internet of Things, as well as growth from global cloud service providers and the continuous expansion of digital services,” said Praba. He sees data centres as becoming increasingly essential, with the demand for such infrastructure projected to continue rising.

A JV with both significant domestic and foreign direct investment

With the entire complex delivering close to 20MW of IT load when it is complete, Praba confirms that the total investment needed will eventually climb into the “billions”. “We will be the most significant data centre by far, by domestic direct investments (DDI),” he said stressing the importance of DDI in the data centre industry. Pointing to the majority of data centre investments in Malaysia being fully foreign owned, Praba believes that it is crucial for a country to have local control and participation in its digital infrastructure due to issues of data sovereignty and national security and that the ownership of data centres should not be fully foreign-controlled, especially when hosting mission-critical data. He also suggested that regulatory frameworks need to be established to monitor and control the type of data stored in these centres.

“It’s time for Malaysia to wake up. Data sovereignty and protection of key digital infrastructure is something we can’t afford to ignore,” Praba declared.

In this venture, Basis Bay and STT GDC will each hold a controlling interest in separate joint venture companies associated with the data centre project. Basis Bay, as the majority shareholder, plans to focus on serving mission-critical clients, including financial institutions, while STT GDC will target the hyperscale segment.

“The FDI infusion from STT GDC, with our portfolio of 85 data centres spanning ten geographies, brings global expertise, international standards, best practices, advanced technology and access to a wider market including hyperscale customers,” explained Bruno Lopez, President & Group CEO, STT GDC. “On the other hand, the DDI contributions from Basis Bay bring a deep understanding of the domestic landscape, regulatory nuances, and valuable local relationships, including its network of enterprise customers.”

Meanwhile Ts. Mahadhir Aziz, CEO, Malaysia Digital Economy Corporation (MDEC) noted that the joint venture provides Malaysia a world-class hyperscale data centre facility while emphasising AI integration into its services. “This joint venture would also form a Centre of Excellence to train local high-end talent for regional and global demands in the data centre industry. MDEC’s mandate is to drive the digital economy and accelerate Malaysia’s digital transformation,” he said.

As pioneers of green solutions in Asia’s data centre industry, Basis Bay also affirmed its commitment to the environment through the new project. They emphasise energy efficiency and will power the data centres with as much green energy as possible, and will go to the extent of hiring an arborist to maintain the plants surrounding the data centres, taking into account their impact on local wildlife. 

Souce: Digital News Asia

After signing data centre JV, Basis Bay founder Praba Thiagarajah says, ‘It’s time for Malaysia to wake up’

Prime Minister Datuk Seri Anwar Ibrahim today affirmed the government’s “unwavering dedication” towards green technology, especially in electric vehicles (EV).

Anwar, who is also the finance minister, said EVs hold significant promise in addressing climate change.

“Given our ongoing reliance on imported fuels and the unpredictable fluctuations in global oil prices, it makes perfect sense to promote the transition to electric vehicles.

“This transition not only leads to fuel and gas cost savings but also substantially reduces our greenhouse gas emissions, championing sustainability in our day-to-day activities.

“Having an electric vehicle in Malaysia comes with a multitude of incentives and benefits,” he said in his speech during the launch of the Weststar Maxus Mifa 9 electric vehicle at Shangri-La Hotel, here.

Anwar said the government’s steadfast dedication to promoting a greener and more sustainable Malaysia was evident in the Budget 2024 he tabled last month.

“Our primary goal is to accelerate the widespread acceptance of electric vehicles and promote the use of green technology in diverse sectors.

“The government’s unwavering dedication to sustainable mobility and green technology is evident in our robust policies,” he said.

On October 13, the government proposed several incentives for adoption of EV in next year’s budget, such as extending import duty exemptions for locally assembled EV components until December 2027.

“We have also granted full excise tax and sales tax exemptions for completely knocked down (CKD) EVs and extended completely built-up (CBU) duty exemptions until December 2025.

“To further bolster EV adoption, we’re offering tax deductions of up to RM300,000 for companies leasing non-commercial electric vehicles and have waived road taxes for EVs until December 31, 2025,” he said.

Anwar said the government is committed to setting up 10,000 electric vehicle charging stations throughout Malaysia by 2025.

“At present, we have 1,246 operational public charging stations, signifying just the initial phase of a robust charging infrastructure that will facilitate the widespread adoption of electric vehicles,” he added.

Source: Malay Mail

Anwar says Malaysia fully committed to green energy transition

Sabah signed a memorandum of understanding (MOU) with Huawei Technologies Malaysia Sdn Bhd at the Huawei headquarters on Tuesday (Nov 7).

Chief Minister Datuk Seri Hajiji Noor witnessed the signing of the agreement during his trade visit to China,

“I am happy to note that under the MoU, Huawei Technologies will provide consultancy and advisory services in agriculture, smart manufacturing under Industry 4.0, tourism, smart city planning, e-commerce, digital infrastructure, inclusive connectivity and digital government,” he said.

Huawei Malaysia chief executive officer Simon Sun said under the MoU, Huawei Technologies would explore collaborative efforts to initiate the implementation of digital services for the government, businesses and the community.

The MoU was signed by Sabah Public Service director Datuk Zainuddin Aman and Sun.

Huawei board director cum president of Huawei Digital Power Hou Jinlong and Huawei president for Global Public Sector Xia Zun were also present at the signing ceremony.

Source: The Star

Sabah signs MOU with Huawei Malaysia to boost digital infrastructure and smart city planning

Malaysia’s global business services (GBS) sector is predicted to attract RM89 billion in digital technology deals by 2025, said Minister of Communications and Digital Fahmi Fadzil.

He was citing an index by the global consulting firm A.T. Kearney, which also stated that Malaysia ranks as the world’s third-most competitive GBS location, trailing only behind India and China.

“We have all it takes to usher in a golden digital era. With advanced infrastructure, including widespread 5G technology deployment, we are at the forefront of the digital revolution. Our well-developed physical infrastructure, modern logistics networks, and tech-ready urban centres make the country an attractive hub for digital innovation,” he said at the launch of the Malaysia Digital Expo (MDX 2023) Grand Finale by Malaysia Digital Economy Corporation (MDEC) today.

He mentioned notable data centre operators including Amazon Web Services (AWS), Microsoft, and Equinix Inc. which have chosen Malaysia to invest in.

“Malaysia is open for business, and the world is taking notice. Our commitment to digital transformation is evident as we secure technology commitments from across the globe,” he added.

He said that local animation studios have created over 65 original intellectual properties, resulting in an export value exceeding US$40.5 million (RM191 million) to date. Additionally, these studios have expanded their global footprint to over 120 countries.

Furthermore, Malaysian gaming studios have collectively generated over RM1 billion in annual export value, with over 100 studios contributing to this figure.

“Our gaming market and animation industry are thriving, with local studios making a global impact. Local animation studios, of which many are world-beaters including the likes of Les’ Copaque Production, makers of Upin & Ipin, and Animonsta Studios, producers of the award-winning Mechamato series continue to set the world alight with high-quality products,” he said.

In the startup arena, he said that local startups have generated RM767 million worth of export value.

“Companies like Aerodyne and Meraque are gaining international recognition. Aerodyne is ranked number one by Drone Industry Insights in its Drone Service Provider Ranking 2021 and 2022, while another drone company Meraque ranks amongst the top 20 in the world,” he said. 

Source: The Sun Daily

Malaysian global business services sector seen attracting RM89b digital tech deals by 2025

Local companies in the digital technology industry have generated RM767 million of export value to Malaysia’s economy, said communications and Digital Minister Fahmi Fadzil.

Fahmi said in the startup arena, companies like Aerodyne and Meraque are gaining international recognition.

“Aerodyne is ranked number one by Drone Industry Insights in its ‘Drone Service Provider Ranking 2021 and 2022’, while another drone company, Meraque, ranks among the top 20 in the world.

“I am proud to announce that our local companies have generated RM767 million worth of export value,” he said at Malaysia Digital Expo (MDX) 2023 Grand Finale.

Meanwhile, Fahmi said Malaysia’s gaming market and animation industry is thriving with local studios making a global impact.

He said to date, local animation studios have produced more than 65 original pieces of intellectual property, creating over US$40.5 million in export value while at the same time expanding their presence to more than 120 countries.

“Over RM1 billion in annual export value has been generated through over 100 Malaysian gaming studios,” he said.

Malaysia Digital Economy Corporation (MDEC) chief executive officer Mahadhir Aziz said the corporation is setting a new direction for Malaysia’s digital ecosystem, focusing on self-reliance and innovation while reducing dependency on grants.

Mahadhir underlined the necessity of moving away from what he referred to as the ‘grantrepreneur’ mindset, where businesses solely rely on grants without taking proactive steps to innovate and address market needs.

“We have been trying so hard to move away from the mindset that we call ‘grantrepreneur.’ People will just wait for something like this, without doing anything.”

“Look at the success of local businesses like Aerodyne and carsome, what is common among those companies, they were never initial beneficiaries of any Malaysian grant,” he said.

However, Mahadhir said while MDEC is committed to nurturing self-sufficiency, the organisation will continue to focus on grants for specific purposes.

These grants will be directed towards initiatives that create new intellectual property and foster competition in the digital creative content space, he added.

The MDX 2023 Grand Finale marks the culmination of a six-week empowerment journey through 18 auxiliary events that commenced on September 25, 2023. MDX 2023 has garnered significant attention, with a total of 120,000 participants engaging in the event.

Over the course of three days, industry experts will share their insights through a series of conferences and networking sessions.

The MDX 2023 Grand Finale will also include an exhibition and an exclusive MDX 2023 Awards Night to celebrate the outstanding innovations and achievements within the local digital technology ecosystem.

Source: NST

Malaysian digital firms rake in RM767 mil in exports – Fahmi Fadzil

The government aims to make Malaysia among the best artificial intelligence (AI) infrastructure and technology hubs in the region through the Kuala Lumpur 20 (KL20) blueprint which will be launched in February, next year.

Economy Minister Rafizi Ramli said various discussions with global giant AI companies have been carried out to realise the plan.

“The overall new strategies and improvements relating to the AI ecosystem are contained in the KL20 blueprint, with the aspiration to accelerate the growth of the world’s best digital economy ecosystem.

“Hence, the government’s focus is to establish Malaysia as a regional hub for AI, aside from creating an ecosystem for startup companies that are interested in the technology which will be announced in the KL20 blueprint,” he said during the minister’s question time in the Dewan Rakyat, today.

Rafizi said this in response to a supplementary question by Howard Lee Chuan How (PH-Ipoh Timur) on whether the government would assist established companies in the digital economy landscape to progress to the next level.

Meanwhile, he added that the KL20 blueprint would also detail the government’s decision on several policies established to open the digital economy sector to a wider audience, such as international talents.

Unlike previous approaches, he said the blueprint will also not be confined to specific sub-sectors following the rapidly changing nature of the digital industry.

“We need to also take into account how quickly the digital industry changes, including how it depends on the flavour of the month, which is now, AI. Hence, investments will go into the main sub-sectors related to AI and talent acquisition.

“(And) while the strategy that will be included in KL20 will not be tied to specific sub-sectors, we will need to consider several approaches to position Malaysia at a competitive level within specific sub-sectors.”

Source: NST

Govt aims for Malaysia to be top regional AI hub

Malaysia’s digital economy can reach its full potential of US$30 billion gross merchandise value (GMV) by 2025, according to a report jointly released by the United States multinational technology company Google, Singaporean Government-linked investment company Temasek and global consultancy company Bain and Company.

GMV refers to the total value of goods or services sold.

In a joint statement today, Google, Temasek and Bain and Company said the eighth edition of the e-Conomy Southeast Asia (SEA) report revealed that Malaysia has made significant progress in digital inclusion, extending connectivity to rural areas to bridge connectivity gaps.

“The percentage of households with internet access has increased from 76 per cent to 97 per cent in urban areas and from 49 per cent to 89 per cent in rural areas between 2015 and 2022.”

However, they said consumers outside of metropolitan areas are at risk of facing a widening digital economic divide in terms of digital participation, which is the active involvement in the digital economy through the consumption of products or services across sectors.

Nevertheless, they said high-value users (HVUs) in Malaysia spent 5.3 times the amount that non-HVUs spend online of which, more than half of HVUs reside outside of metropolitan areas, demonstrating that opportunities for digital businesses to grow exist beyond metros such as Kuala Lumpur and Selangor.

They said in comparison, over 70 per cent of digital economy transaction values in Southeast Asia were generated by the top 30 per cent of spenders.

“Bridging the digital participation divide is the collective responsibility of all digital economy stakeholders.

“Removing barriers, such as supply and security issues, can improve the participation of non-HVUs and enable Malaysia’s digital economy to reach its full potential of US$30 billion GMV by 2025,” it added.

Source: Bernama

Malaysia’s digital economy poised to achieve US$30bln gross merchandise value by 2025

HAVING contended with supply chain disruptions during the Covid-19 pandemic, logistics players are now facing challenges that are tied in large part to macroeconomic volatility, such as rising inflation and high interest rates, and geopolitical conflicts, which threaten to impact trade flows and leave shippers uncertain of their next move.

S&P Global Market Intelligence expects global real gross domestic product (GDP) to increase 2.6% in 2023, with growth easing to 2.3% in 2024, amid the risk of a prolonged period of weakness increasing. The ongoing Israel-Hamas conflict adds to the already elevated economic uncertainty.

Nevertheless, for most local logistics companies, cargo handling volume in Malaysia has held steady so far this year and has not been impacted by the conflict in the Middle East, thanks to their low exposure to Israel. In fact, they are anticipating a pickup in demand in the second half of the year, which is historically stronger than the first half.

Westports Holdings Bhd CEO Eddie Lee Mun Tat says the supply chain disruption, which reached crunch levels in 2021 with shipping containers and ships stuck in logjams in ports around the world, is now over.

“Everything is back to normal. As for our port performance, we are fortunate that our import and export boxes have continued to hold up since the pandemic. One of the reasons is that many companies are setting up factories in Malaysia,” he says, adding that the US-China trade tensions have pushed Chinese companies to move manufacturing to places like Malaysia.

“Even in the last quarter of this year and moving into the next quarter [in 2024], we still see a few new production lines being built here. So, we are benefiting from this despite the global uncertainty,” he tells The Edge.

According to Lee, the port operator is expecting to record single-digit container volume growth for 2023, up from 10.05 million TEUs (20ft equivalent units) last year. In 1H2023, Westports’ container volume grew 7.4% year on year (y-o-y).

In an Oct 23 report, Maybank Investment Bank says it is optimistic about the outlook for Westports, supported by continued growth in intra-Asia trade, while rising foreign direct investments in Malaysia will support its gateway volume growth.

Still, Lee is worried about the sharp increase in global oil prices amid the conflict in the Middle East. “Diesel constitutes a substantial part of Westports’ operating costs. We use diesel for our 200-odd rubber-tyred gantry (RTG) cranes and 600-odd terminal tractors.”

To reduce diesel usage, Westports has acquired several electric autonomous vehicles, but he notes that the transition to sustainable transport “will take a while”.

Swift Haulage Bhd group CEO Loo Yong Hui says the overall slowdown in global trade continues to be a concern, given that Malaysia is a trading nation. “That said, this is not a challenge that is unique to us as all the other players and sectors are similarly affected,” he adds.

Loo sees Swift Haulage’s financial performance picking up in the second half of this year, which is traditionally stronger than the first half. “We typically achieve 60% of our total yearly profit in the second half.”

And the company is confident of closing FY2023 on a positive note.

“Internally, we always aim for y-o-y growth. This growth is likely to be driven by more mature contributions from the ongoing investments in new warehouses and our fleet expansion. Earnings drivers for the group will be the same as in previous financial years, with the haulage and land transport segment contributing to more than 75% of the total group revenue,” he says.

The integrated logistics services provider saw a 28% decline in net profit to RM19.85 million in the first six months ended June 30 (1HFY2023) from RM27.5 million a year earlier, on higher finance cost and depreciation expense.

Swift Haulage is the largest haulage player in the country, with more than 1,500 prime movers. “The demand for our services is expected to be maintained as our large fleet and wide network are preferred by large multinational corporations (MNCs), which account for the majority of our clients,” says Loo.

Warehousing remains the bright spot

For most logistics players, the warehousing segment stood out as a bright spot during the pandemic.

“Notably, the demand for specific warehouses in good and strategic locations is higher than ever. We are capitalising on this by building a new warehouse in Pulau Indah, Selangor, that will come on stream in the next year or so. Having been on an expansion spree for the last two years, our warehousing capacity currently stands at about 1.3 million sq ft,” says Loo.

The group will continue to allocate capital expenditure (capex) for FY2023 and FY2024 to expand its warehouse capacity, buy electric prime movers and develop its IT systems. But it has no plans to raise funds from the capital market, says Loo, noting that it is well funded with a good combination of internal funds and borrowings.

At end-June, Swift Haulage’s cash and equivalents stood at RM43.64 million, while borrowings totalled RM690.91 million. Its net gearing was 0.97 times.

Meanwhile, Tiong Nam Logistics Holdings Bhd has earmarked RM376.4 million in capex for FY2024 and FY2025 (ending March 31) to extend its warehouse network to meet the growing demand for logistics solutions. The expansion will bring the group’s total warehousing capacity to 9.3 million sq ft in FY2025, up more than 30% from 6.8 million sq ft as at June 30, 2023.

Ong Yoong Nyock, founder and managing director of Tiong Nam, says the capex allocation will be financed with internal funds and bank borrowings.

“Our balance sheet remains healthy and conducive for our growth plans. Our primary focus is on expanding the logistics and warehousing segment, with over 90% of the total projected capex allocated to warehouse expansions,” he tells The Edge in an email reply.

“This expenditure includes the mega warehouse facility slated for lease to Mercedes-Benz Parts Logistics Asia-Pacific, as well as three warehouses currently under construction and two upcoming warehouses in Johor, Kedah and Singapore. These initiatives are scheduled for completion in FY2024 and FY2025, with the balance capex allocated to vehicle purchases.”

Tiong Nam, which offers full-fledged and integrated logistics and warehousing services, has 95 warehouses and distribution centres across Malaysia, Thailand, Singapore and Laos. Its warehouse utilisation rate was close to 90% as at end-June.

On its plans for a warehouse real estate investment trust (REIT) spin-off listing, Ong says he is currently in discussion with an investment bank for the exercise. “Any progress related to this listing will be communicated at a later time,” he adds without elaborating.

Ong has a positive outlook for the logistics and warehousing sectors for the remainder of 2023 and 2024, on the back of Malaysia’s GDP rebounding to pre-pandemic levels. The local economy is anticipated to grow 4% to 5% in 2023, with the positive outlook continuing into 2024.

“There is growing demand for comprehensive total logistics services as companies increasingly outsource logistics management to reliable service providers and concentrate on their core operations. As the country’s largest land logistics and warehousing service provider, our services are crucial to support the business supply chain and the reliable delivery of goods across industries in the country, while enhancing regional connectivity,” he says.

Tiong Nam started its new financial year ending March 31, 2024 (FY2024) on a promising note, with its net profit rising 96% y-o-y to RM747,000 in 1QFY2024, while revenue grew 8% y-o-y to RM192.79 million.

At end-June, the group’s deposits and bank and cash balances stood at RM12.82 million, while its total borrowings came to RM1.34 billion. It had a net gearing of 1.5 times.

Ong says the performance of the property development segment, which accounted for 10.5% of the group’s revenue in 1QFY2024, led to the earnings improvement. This was supported by healthy property sales at its Kota Masai housing development in Johor. The segment’s contribution helped to partially offset the logistics and warehousing services segment’s increased operational costs, including higher staff expenses, depreciation and finance costs due to ongoing warehouse expansions.

The group is anticipating favourable growth in the property development segment in FY2024, with increased contribution to the group. “Our confidence is reinforced by the encouraging 71% take-up rate recorded as at June 30, 2023, for Phase 1A1 of the Kota Masai project, which commenced in December 2022. We are optimistic that this success will extend to the second phase, Phase 1B1, launched in June 2023,” says Ong.

Phase 1A1 of the Kota Masai development comprises 91 units of two-storey homes with a gross development value (GDV) of RM43.6 million. Phase 1B1 has 58 shoplots with a GDV of RM59 million. The project’s unbilled sales stood at RM4.1 million as at June 30.

However, the logistics and warehousing services segment will remain the group’s primary growth driver in FY2024 as it makes up the majority of its revenue.

“Our property development segment is a minor contributor. We do not have plans to spin off the segment,” says Ong.

“Furthermore, we are nearing a significant milestone as we have secured the certificate of completion for our mega warehouse for use by Mercedes-Benz Parts Logistics Asia-Pacific, with leasing operations set to commence in November 2023. This facility is the largest warehouse in our portfolio and will provide long-term recurring income. We foresee that it will contribute positively to our financial performance in FY2025.”

For FY2024, Tiong Nam is positive of achieving better performance compared with the year before, as demand for logistics and warehousing services remain healthy, while the property development segment is expected to complement earnings. But the group is unable to provide a specific forecast at this point due to the global uncertainties.

“Our revenue has been growing steadily, achieving a record high of RM725.7 million in FY2023, mainly attributed to increased business from existing customers and addition of new customers, including MNCs that rely on our reliable and quality services,” says Ong.

“However, we remain mindful of global conditions that could pose a short-term impact on the local economy. Nevertheless, we believe the sector’s long-term prospects remain robust.”

Tiong Nam faces challenges in recruiting and retaining skilled workers in Malaysia, as well as higher operating costs due to the rising interest rates and higher wages.

“Nevertheless, we remain dedicated to effectively addressing these challenges through improved resource allocation, cost management and enhanced operational efficiency. Additionally, the costs associated with our ongoing expansions will be effectively managed through a prudent approach of aligning the pace of expansion with market demand,” says Ong.

Today, Tiong Nam’s clients comprise major domestic and world-renowned brands, including from the food and beverage, IT, electrical and electronics (E&E) and trading sectors.

Correction in freight rates erodes profits

After a soft start to 1QFY2024 ended June 30, Tasco Bhd has seen an uptick in shipment volumes and expects a 10% to 15% increase in the volume of shipments handled in the financial year ending March 31, 2024 (FY2024).

Its deputy group CEO Tan Kim Yong says the integrated logistics solutions provider remains on track to hit the RM1 billion revenue mark in FY2024, although it may be difficult to repeat the record performance in FY2023. The group reported a net profit of RM90.8 million in FY2023, up 39% from RM65.25 million in the previous year, as revenue rose 8% to RM1.61 billion from RM1.48 billion.

According to RHB Research, the sharp correction in both air and ocean freight rates since 2022 has eroded the profitability of all freight forwarders such as Tasco and FM Global Logistics Holdings Bhd. Nevertheless, FM Global’s domestic businesses such as third-party logistics (3PL), warehousing and support services should continue to bolster the group’s earnings, it says in an Oct 3 report.

The latest Drewry World Container Index, which measures the cost of shipping a 40ft equivalent unit (FEU) container in eight major routes to/from the US, Europe and Asia, stood at US$1,364 per FEU on Oct 19, indicating that it is now 4% below the average rate of US$1,420 in 2019 and the lowest in three years.

Tan says the downside risks mainly hinge on macroeconomic headwinds. “Fortunately, most of our freight shipments are intra-Asean and to Australia. Also, our clients in certain sectors are still doing well,” he adds.

“We don’t know how the war between Israel and Hamas will affect the Malaysian market. For us, we don’t have a lot of business in that region.”

RHB Research likes Tasco for its diversified client base and business segments that will sustain its earnings base, as well as the integrated logistics services tax incentives that offer a buffer against sectoral headwinds.

Tasco is also expanding its warehouse space.

According to RHB Research, the group’s four-storey, 600,000 sq ft logistics centre in Shah Alam, Selangor, is expected to be handed over to its E&E and retail customers in 4QFY2024. Meanwhile, its new 250,000 sq ft Westports logistics centre expansion should be completed by November, which will provide a growth catalyst for FY2024 and FY2025.

In an Oct 3 report, the local research firm expects Tasco to register a much better performance in 2HFY2024 with the maiden contribution from new warehouses, which should fetch a wider margin than that of its rented warehouse. 

Source: The Edge Malaysia

Logistics sector resilient despite lingering macroeconomic and geopolitical risks