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KUCHING: Malaysia’s technology sector’s outperformance in share prices and re-rating of valuations are supported by the encouraging outlook of the global semiconductor supply chain, strong near-term earnings growth catalyst, as well as robust domestic liquidity.

The research arm of Maybank Investment Bank Bhd (Maybank IB Research) viewed that the global and domestic technology or semiconductor supply chain is on track to ride an upcycle.

“This is backed by key catalysts such as deployment of the 5G network with high adoption rates and stronger demand and supply for 5G devices (smartphone) and growing sub-sectors, such as automotive or electric vehicles (EV), Internet of Things (IoT), artificial intelligence (AI), medical or life science and Industry 4.0 (IR4.0),” Maybank IB Research said in its Malaysia technology sector update.

“Positively the World Semiconductor Trade Statistics (WSTS) projects global semiconductor sales to grow 8.4 per cent year on year (y-o-y) and SEMI (the global industry association) estimates global fab equipment spending to increase by 13 per cent y-o-y in 2021.

“Elsewhere, Osram has significantly raised its 2021 outlook with favourable top-line growth estimates, and Taiwan Semiconductor Manufacturing Co Ltd has guided for a sizeable capex of US$25 billion to US$28 billion in 2021 (US$17.2 billion in 2020) to make advanced chips.”

The sector, within Maybank IB Research’s coverage, is currently trading at current year 2021-2022 (CY21-22E) price earnings ratio (PER) of 39-fold-37-fold.

The research arm believed the sector’s outperformance in share prices and re-rating of valuations are supported by the encouraging outlook of the global semiconductor supply chain, strong near-term earnings growth catalyst, as well as robust domestic liquidity.

“Meanwhile, most of the technology hardware companies are also backed by healthy balance sheets with a net cash position or low gearing -supportive of merger and acquisition (M&A) opportunities.”

All in all, Maybank IB Research reiterated its ‘positive’ rating on the sector, as we think that prospects for the sector will be sustained at this juncture. “Year to date 2021 (YTD21), the broad Bursa Malaysia Technology Index has risen 27 per cent, strongly outperforming the KLCI Index, the latter declining two per cent.”

Source: The Borneo Post

Tech’s performance supported by semiconductor outlook

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KUALA LUMPUR (Feb 21): Renewable Energy (RE) is without a doubt the future in energy consumption and mix and a much debated topic not only in Malaysia but also globally, as it needs the right policies, infrastructures, and funding.

In a no holds barred interview on the issue, Petroliam Nasional Bhd (Petronas) president and chief executive officer Tengku Muhammad Taufik Tengku Aziz shed some light on how Malaysia’s only Fortune 500 company is gearing up to future proof itself.

He said there is a good two to three decades window for Petronas to strategise its position, while it may look like a long gestation period, it is anyone’s guess as to when such shift could happen.

The dip in oil price in 2020 was a good indication of how things could flip in the blink of an eye, he warned.

In early March last year, a crash in oil demand amid the spread of Covid-19 infections and price spat spurred the commodity’s price to plunge into negative territory.

Oil and gas companies globally took a hit and Petronas was not spared, having made an impairment of RM20.78 billion in the second quarter of 2020. As of the end of the first nine-month period, its impairments amounted to RM32.12 billion.

“(Of course), even in the most aggressive outlook, oil and gas will still constitute half of the energy mix. So, we do have the expectations that it will still be relevant for a good two to three decades.”

But as an entrusted national oil and gas company, Petronas needs to continuously monetise, increase the value, and maximise the return arising from hydrocarbons to the people of Malaysia and at the same time, ensure its sustainability.

“We have to be prepared for a drop in oil demand as efficiency gains traction and consumer preference changes for cleaner and renewable energy.”

Gas obviously remains a crucial and cleaner source of fuel, but diversification into renewable energy is equally important, stressed Tengku Muhammad Taufik, who took charge of Petronas seven months ago.

“Some people are aggressive to say you will even see a peak for oil, especially in transport emerging even as early as 2030 and 2035, and you will see new models and more electronic vehicle charging infrastructure.”

However, that doesn’t mean oil will be irrelevant and it will still be used in refineries to generate petrochemicals that are used in daily products. Consumption for it will still be there,” he told Bernama and Berita Harian in an interview.

If the choice to venture into RE is not undertaken now, he believed there was risk in Petronas becoming less relevant going forward.

“But the kind of investment that we make must be carefully deliberated,” he said.

There is a promising market for energy mix not only in Malaysia but also in other jurisdictions such as India and Vietnam, he said, adding that Petronas has made calculated investments in India through Singapore-based Amplus Energy Solutions Pte Ltd, also known as M+.

According to reports, M+ is one of India’s largest rooftop installation providers, and currently has over 800 megawatt-peak (MWp) of solar capacity in operation and under construction in India, Dubai, and Southeast Asia.

The commercial and industrial installations serve over 200 multinational firms including Honda, General Electric and Halliburton.

As Asia grows, the demand for electricity will also increase, he said, adding that there were varying reports pointing out that there are between 100 million and 130 million people, depending on the time of survey, who do not have access to regular electricity.

For now, Petronas is tapping into what is available in abundance , which is solar power.

“As we speak, business opportunities in renewable energy, such as battery technology and other viable renewable energy, are being looked at because not all governments are keen to invest in electricity grid, which is a costly affair to undertake.”

But to be frank, the returns are not as attractive as one gets in the traditional oil and gas investments.

“But what we need to do is to future proof the revenue streams for Petronas…To ensure income is more diversified, while we maintain the extraction of value from our core business,” he stressed.

Malaysia’s energy mix plan

Tengku Muhammad Taufik said there needs to be a deliberate policy shift when one deals with energy mix that is ever evolving.

In 2018, Malaysia announced that it had set a target of 20% of RE in its generation mix by 2025.

“So, the accompanying policies have to be refined. Are you going to commit to incentivise the transition? Will our banking system allow transition financing?” he asked.

A report in 2019 on power-technology.com website indicated that to achieve the 20% energy mix target, Malaysia needs RM33 billion (US$8 billion) worth of investments in RE sector.

Tengku Muhammad Taufik said the world have heard that between US$5 trillion and US$6 trillion required to make the world shifts to more sustainable models and energy transition financing are much needed to make sure it happens.

There needs to be an ecosystem that supports that, he opined.

“I think, this is a debate that is ongoing, not only in emerging market but also advanced and matured markets on how much capital they want to set aside to allow the private sector to do this.”

“Because you have to accept that these are investments that are not going to give very handsome returns (immediately). But if you don’t do it, there will be a point in time when consumers demand for clean energy.”

Petronas, which is among the top five players in Asia for liquefied natural gas (LNG), is a strong advocate of gas being the transition fuel towards realising its Net Zero Carbon Emissions 2050 aspiration.

The International Energy Association outlook sees gas approaching 20-25 per cent of energy mix by 2040 and continues to scale up.

Of course, coal is way much cheaper and still plays a key part in the country’s energy mix but one needs to understand that Malaysia is not a coal-producing country.

“So the more you rely on coal energy security perspective, importation will also be a part of the equation and therefore, (it’s about) managing your coal importation reliance and outflow of our currency as we buy more particularly from Indonesia and Australia.”

Obviously, cost structure of businesses can be disrupted (in the transition to cleaner fuel) but if such steps are not taken, “I think the sustainability of our economy at national level, practices, and emissions will be in jeopardy.”

The real step that can be taken by consumers and industries in Malaysia is look at their efficiency gain. “It is painful, but that is the step that needs to be taken to keep us competitive as a country.”

Tengku Muhammad Taufik cited the International Maritime Organisation’s (IMO) legislation for the industry to use cleaner fuels as an indication that the world is moving towards that path.

In Malaysia, for the longest time, Petronas had to bear heavily the cost of subsidised gas price for power generation, which was at RM6.40 per million British Thermal Unit (MMBtu), which was almost 70% lower than the actually market price then.

“There has been a gradual step up towards market pricing. But we have not fully embraced market pricing (we have to gradually move there).

“(Subsidies) are not sustainable, why, because if as an investor the material I produce has nothing to do with the market price, my investment return will either (be) drawn out or (is) very uncertain.”

“As an investor in our local upstream sector, I will be very worried about how I am going to extract the molecules If I can’t sell it for the price I know and able to forecast.”

Tengku Muhammad Taufik believed that the government would unveil its plans towards RE and energy transition as part of the 12th Malaysia Plan and National Energy Policy which is coming soon.

“We are not driving the effort but I am grateful that they are seeking input from Petronas. We are making our views known,” he said.

Source: Bernama

Renewable energy and clean energy is the future, but are we ready?

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KUALA LUMPUR: The country’s economy is expected to show a positive development by the middle of this year once the National Covid-19 Immunisation Programme, which begins on Wednesday, gathers momentum, an economist said.

Malaysian Academy of Sciences fellow Datuk Dr Madeline Berma said economists predicted that Malaysia would be able to revive its economy starting the third quarter of this year, depending on the smooth implementation of the vaccination programme.

“This is in line with the forecast issued by the Economic Planning Unit which expects the country’s economy to recover around 4.5 to 5.0 per cent,” she said in a special coverage of the first batch of Covid-19 vaccines arrival to Malaysia on BernamaTV on Sunday.

Madeline said the services sector was one of the sectors that needed to be given priority in the vaccination programme, besides the manufacturing sector to help increase production rates.

She hopes with the national immunisation programmme underway, the country’s tourism and export sectors could also be mobilised again to open more economic opportunities for industry players.

“The country’s tourism and export sectors have been badly affected by the closure of national borders since the Movement Control Order was imposed,” she said.

Meanwhile, Madeline said investments from international pharmaceutical companies in the research and production of the Covid-19 vaccine in the country could help reduce the unemployment rate.

She said the potential for collaborative research and vaccine production in the country would open up opportunities for recruitment of highly skilled graduates.

“We hope the presence of pharmaceutical companies that could create jobs will drive the country’s economy and instils confidence in foreign and local investors that the country’s economy is growing and recovering well with a good cycle.

“This is a good development in the effort towards a high-tech country in line with the launch of the Malaysia Digital Economy Blueprint,” she said.

Source: Bernama

Economy to show positive development once Covid-19 vaccination gathers momentum

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KUALA LUMPUR (Feb 19): Prime Minister Tan Sri Muhyiddin Yassin has unveiled the country’s Digital Economy Blueprint in a bid to catch up in the digitalisation race.

The 10-year road map aims to transform Malaysia into a digitally-driven, high-income nation and a regional leader in the digital economy.

The Digital Economy Blueprint will be implemented in three phases:

Phase 1 (2021 to 2022):

To accelerate adoption towards strengthening the digital foundation needed for the rapid and smooth roll-outs of Phase 2 and Phase 3.

Phase 2 (2023-2025):

To drive digital transformation and inclusion across the digital economy, emphasising inclusivity among the rakyat and all levels of businesses.

Phase 3 (2026-2030):

To position Malaysia to become a regional market producer for digital products and digital solution providers.

According to the blueprint, the government has set the following targets:

By 2022:

Cashless payment for all ministries and agencies;
80% of the public sector to use cloud storage;
the chief information officer (CIO) to take on the role of the chief digital officer in every ministry;
OSC 3.0 Plus online to be used by all local authorities (a system to present online applications for development plans, making payments online, and to enable the technical agency review these applications virtually and subsequently acquire outcomes through the system);
400 electronic payment transactions made per capita;
a greater mandate for MAMPU (the Malaysian Administrative Modernisation and Management Planning Unit) to act as an adviser, project member or subject matter expert on nationwide digital-related projects.

By 2025:

100% of Malaysian households will have Internet access;
online learning (My Device, My Digital Teacher Programme);
the digital economy will account for 22.6% of Malaysia’s gross domestic product (GDP);
to attract two to five unicorns with headquarters in Malaysia (a unicorn is a start-up with US$1 billion [or about RM4.04 billion] in valuation);
RM70 billion in digital investment;
80% end-to-end government services to be available online;
legislations relating to broadband as a basic utility at the federal and state levels to be streamlined by 2025 (among the laws to be reviewed are the Local Government Act 1976 and the Street, Drainage and Building Act 1974 [Act 133]);
all ministries and agencies to use MyGDX (the Malaysian Government Central Data Exchange, a data sharing platform that provides data brokerage services for common data referred by government agencies; data sourced from original sources);
all schools to have access to the Internet (identifying financing models with contributions from the private sector and civil society organisations (CSOs) to support the implementation of this initiative);
the local data centre industry to churn out a revenue of RM3.6 billion;
for Malaysia to have the highest number of submarine cables landing in Southeast Asia.

By 2030:

Malaysia to become a regional market producer of digital products and a digital solution provider.

Read more stories on MyDigital here.

Source: The Edge Markets

What Malaysia wants to achieve through the 10-year Digital Economy Blueprint

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KUALA LUMPUR, Feb 18 — The newly launched Malaysia Digital Economy Blueprint has identied several challenges which need to be addressed in order to achieve Malaysia’s goal to become a digitally-driven, high-income nation and a regional leader in the digital economy.

According to the blueprint published by the Economic Planning Unit, Prime Minister’s Department, there is a need to have a digital-rst mindset and higher digital technology adoption across the public sector, as well as a supportive ecosystem for local enterprises to digitalise.

It also noted the need for better deployment of quality broadband and digital technologies infrastructure; the necessity to narrow the digital divide among income and age groups; the need to build trust and ethics in using data and technology; as well as increasing awareness on the importance of cybersecurity.

Prime Minister Tan Sri Muhyiddin Mohd Yassin said the digital economy growth had accelerated in 2020 as the COVID-19 pandemic necessitated the creation of new digital businesses, forced traditional brick-and-mortar enterprises to pivot online, and saw millions of Malaysians going online to meet their daily needs.

“To ensure that no Malaysian is left behind to catch the wave of digitalisation, the time has come for us to lay the foundations for the country’s transformation towards an advanced digital economy.

“This foundation means building the infrastructure, facilitating innovation and creating an ecosystem for all of us to contribute to bring forth higher standards of living,” he said in the blueprint.

MyDIGITAL sets out the consolidated initiatives and targeted outcomes, to be delivered through six strategic thrusts, 22 strategies, 48 national initiatives and 28 sectoral initiatives, which will be implemented in three phases up to 2030.

Under Phase 1 (2021 to 2022), the government aims to focus on accelerating digital adoption to strengthen the digital foundation needed for the rapid and smooth rollout of Phase 2 and Phase 3.

In Phase 2 (2023-2025), the focus shifts to driving digital transformation and inclusion across the digital economy, emphasising inclusivity among the people and all levels of businesses, while under Phase 3 (2026-2030), the focus would be on making the country a regional leader in digital content and cybersecurity.

Source: Bernama

Malaysia Digital Economy Blueprint identies issues, challenges

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KUALA LUMPUR, Feb 19 — Malaysia’s comprehensive Digital Economy Blueprint will be implemented until 2030, setting the country’s way forward in becoming a regional leader in the digital economy and achieving inclusive, responsible and sustainable socio-economic development.

Minister in the Prime Minister’s Department (Economy) Mustapa Mohamed said the Economic Planning Unit had been mandated to formulate the Malaysian Digital Economy Blueprint, which features three policy objectives designed to fulfill the country’s vision in achieving digitalisation.

“The three policy objectives are namely encouraging industry players to be creators and consumers of innovative business models; producing capable and competitive human capital; and fostering an integrated ecosystem that will enable communities to participate in the digital economy,” he said.

Mustapa said this during the virtual launch of the MyDigital – Digital Economy Blueprint Friday.

In his speech, he emphasised that the country is still facing some challenges that need to be addressed immediately to reduce the digital gap.

“This includes issues such as low broadband quality and coverage, incomplete digital infrastructure and insufficient digitally-skilled workforce,” he added.

The minister noted that the COVID-19 pandemic has prompted the government, the private sector and the community to increase efforts to master digital technology.

“The government is aware of the importance of introducing specific policies to take advantage of the opportunities in the digital economy,” he said.

The blueprint will be implemented in three phases — the first phase (2021-2022) will see the government focusing on strengthening basic digital usage.

This is followed by phase two (2023-2025) where the focus would be on driving inclusive digital transformation and the third phase (2026-2030) would be on making the country a regional leader in digital content and cyber security.

Meanwhile, the government had also introduced the MY Device initiative which will be implemented through cooperation between the government, the private sector and the people, aimed at providing free data to students from vulnerable groups.

“This is in line with Malaysia’s goal in becoming a regional leader in digital economy by 2030,” added Mustapa.

Source: Bernama

Comprehensive Digital Economy Blueprint to Be Implemented Until 2030

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KUALA LUMPUR (Feb 18): Apple, Samsung and Huawei retained lead positions as the top original equipment manufacturers (OEMs) and semiconductor buyers in 2020.

According to research data analysed and published by online trading portal Comprar Acciones on Tuesday, in total, the top 10 semiconductor buyers in 2020 spent a cumulative US$188.73 billion (RM761.53 billion), marking a 10% increase over 2019.

They accounted for a 42% share of the global market, which was worth US$449.84 billion during the year, it said.

The portal said compared to Apple’s 2019 expenditure, which amounted to US$43.24 billion, that was an increase of 24% year-on-year (y-o-y).

Also, Apple accounted for an 11.9% share of the global semiconductor market in 2020.

Meanwhile, Samsung occupied a distant second spot, spending US$36.42 billion, a 20.4% increase over 2019’s US$30.25 billion.

Its market share was 8.1%.

Though Huawei managed to retain its third spot, its spending reduced considerably in comparison to 2019.

Due to US government trade restrictions on the company, its ability to purchase semiconductors was limited.

As a result, both its smartphone supply and market share decreased over the year.

Its spending on semiconductors totalled US$19.09 billion in 2020, down by 23.5% from US$24.93 billion in 2019.

Huawei’s market share was slightly higher than the fourth-ranked company, at 4.2%, versus 4.1% for Lenovo.

Lenovo’s spending was just US$500 million less than Huawei’s, at US$18.56 billion, up by 10.6% y-o-y.

Rounding up the top five was Dell Technologies, which spent US$16.58 billion and had a 3.7% share of the market.

Apple’s iPhone sales up 17% in 1QFY21

Apple retained the top spot, thanks to heightened demand for tablets and mobile PCs as consumers shifted to a work-from-home model.

Its semiconductor demand also increased due to a transition from Intel processors to Apple silicon chips for the Mac line of products.

Apple reported an increase of over 17% in iPhone sales during the fiscal first quarter (1QFY21).

iPhone revenue hit US$65.6 billion against an expected US$59.8 billion, according to Refinitiv analysts.

The figure set an all-time high for quarterly iPhone revenue, up from US$61.58 billion, a record set in 1QFY18.

Source: The Edge Markets

Top 10 OEMs accounted for 42% of global semiconductor market in 2020

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LONDON (Reuters) – Tens of millions of workers in developed economies will have to retrain for secure careers in post-COVID labour markets reshaped by the pandemic and the remote working revolution, a report by consultancy McKinsey said on Thursday.

The analysis by MGI, McKinsey’s economics research arm, concluded the pandemic’s biggest impacts will be concentrated in four work areas: leisure and travel venues; on-site customer interaction such as in retail and hospitality; computer-based office work; and production and warehousing.

Its scenarios suggested more than 100 million workers in the countries covered by the study – Britain, China, France, Germany, India, Japan, Spain and the United States – may need to switch occupations by 2030, up to 25% more than expected pre-pandemic.

“These workers will face even greater gaps in skill requirements,” it warned, noting that job growth may concentrate more in high-wage jobs as middle- and low-wage jobs decline.

“Workers without a college degree, women, ethnic minorities, and young people may be most affected,” it added .

Other types of work – such as medical care and personal care – may see less change because there is little alternative to the high level of proximity they require.

Overall, the study found that remote work and virtual meetings are likely to continue – less extensively than at the pandemic’s peak but still with considerable knock-on effects for real estate, business travel and urban centers.

While leisure travel and tourism are seen rebounding, McKinsey estimated some 20% of business travel may not return after the pandemic as companies and workers acknowledged a lot of earlier travel for face-to-face meetings was superfluous.

“This would have a significant knock-on effect on employment in commercial aerospace and airports, hospitality, and food service,” it noted.

Source: Reuters

Pandemic to widen skill gaps as workplaces change, McKinsey says

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By Dr Amalina Amir – February 18, 2021 @ 12:13am

There are three main reasons for economic growth to stagnate in Malaysia — market saturation of household and automotive products; increasing cost of low-skilled labour and shortage of a high-skilled labour force; and no development of products and infrastructure in line with the Fourth Industrial Revolution (IR 4.0).

For us to rise again economically, we must lead and invest in the following: creation and production of IR 4.0 products, such as pharmaceuticals, halal foods and products, semi-finished or finished palm-based products, beside the electric vehicle (EV) industry.

As Malaysia is no longer competitive in labour cost, we need to invest more in setting up many TVET (Technical, Vocational Education and Training) institutions to produce a highly skilled labour force.

Let us compare economic development and foreign direct investment (FDI) between Malaysia and our neighbour, Indonesia. Statistics show the biggest FDI into Indonesia is in the EV and EV battery manufacturing sectors, which accounted for over 70 per cent of its FDI last year.

This year, if Tesla finalises its plan to set up the Tesla Gigafactory in Indonesia, the EV industry will once again be the largest portion of FDI into Indonesia.

Indonesia-owned company PT INKA is manufacturing and exporting electric trains to the international market, including Malaysia. Soon it will mass manufacture and export its electric buses to the international market.

To support the EV industry development, two state-owned companies, Pertamina and Perusahaan Letrik Negara, were tasked with building EV charging infrastructure for Java and Bali islands.

Where is Malaysia at in the EV industry, one which is going to revolutionise the world? The answer is we are still working on the roadmap of Malaysia’s participation in the industry.

Meanwhile, Europe had more than three million plug-in EV passenger cars and light commercial vehicles in circulation at the end of last year.

In mid-2020, I was invited by the Prime Minister’s Department to attend a presentation by a company, Mimco Holding Sdn Bhd, that proposed the manufacturing of New Energy Vehicles (NEV) with our own technology and using its modular platform.

This was the company that was the final two shortlisted for the Malaysia New National Car Project that was proposed to the government in 2018, to manufacture our own NEV by 2022. However, it was not chosen for the project.

After an in-depth study of its proposal, Mimco does have technical and technological expertise as it has three technical partners that have provided similar services to established major automotive companies for decades.

Mimco could be a successful automotive manufacturing company producing NEV for the global market as it has the necessary knowledge and experience to become another NIO (China-owned multibillion EV company) that can compete with companies like Tesla and others.

Its modular platform is one of the reasons for NIO’s success as, at present, only the Volkswagen Group has the platform, which is now used by Ford and a few other well-known companies, besides VW Group subsidiaries.

We should emulate what the United States, China and Indonesian governments did in developing their nation’s EV industry by providing funding for start-up companies to realise a potentially multibillion business.

We should know that without a US$500 million soft loan from the US government to Elon Musk, there would be no Tesla today. Without the same aid by the China government, NIO would not be a US$50 billion company today. Also, it is projected that the Mimco NEV manufacturing company will generate 25,000 direct and indirect jobs.

If the government studies Mimco’s proposal, which is similar in size and production volume to Hyundai’s new NEV manufacturing plant in Indonesia, it is similar in terms of investment and number of jobs created by the Hyundai factory.

According to a recent report by Bloomberg New Energy Finance, 58 per cent of global passenger vehicle sales in 2040 will be electric vehicles, yet they will make up less than 33 per cent of all cars on the road.

In short, the future of cars is electric. It goes without saying that Malaysia should start to be proactive in this matter.

The author is a senior lecturer and head of Innovative Electromobility Research Lab at Faculty of Mechanical Engineering, UiTM Shah Alam. She is also former visiting researcher and Associate Fellow of United Kingdom Higher Education Academy at University College London

Source: NST

The future of cars is electric — what are we doing about it?

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KUALA LUMPUR, Feb 19 — Baker Hughes and C3 AI will be providing joint enterprise articial intelligence (AI) solutions to Petronas by applying BakerHughesC3.ai (BHC3) technology across the company’s digital transformation programmes.

In a statement today, Baker Hughes said the adoption of AI as part of its overall programme for improved oil and gas productivity, asset integrity, and safety supports the national oil and gas company’s commitment to providing clean, ecient energy solutions by harnessing the power of technology.

“Petronas will work with energy technology, data science, and AI experts at Baker Hughes and AI software provider C3 AI to collaborate on projects focused on improved reliability of energy assets in critical operations.

“Utilising Microsoft Azure, Petronas will deploy the BHC3 reliability application to further improve maintenance programmes for gas turbines and, in a separate project, improve the reliability of control valves by detecting anomalous conditions, preventing downtime,” it said.

Baker Hughes executive vice-president of regions, alliances & enterprise sales Uwem Ukpong said the programme would continue the strong relationship between

Baker Hughes and Petronas to drive productivity and eciency for a cleaner, safer energy.

“AI will play a critical role in digital transformation programmes that bridge today’s demand for energy with tomorrow’s energy transition.

“We are thrilled to work with Petronas as it leads in digital transformation and deploys the full power of enterprise AI,” he said.

Source: Bernama

Petronas to apply AI technology in Digital Transformation Programmes

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KUALA LUMPUR, Feb 18 — The National COVID-19 Immunisation Programme (NIP) is the rst step to Malaysia’s economic recovery, a think tank said today.

The Institute for Democracy and Economic Affairs (IDEAS) research director Laurence Todd said with the NIP, Malaysia will start to see economic success like other countries (United Kingdom and the United States) that have rolled out their immunisation programmes.

“Malaysia is moving fast with its immunisation plan with a wider community protected from the virus, and the country can start thinking of opening up the economy permanently.

“This (immunisation programme) will be what businesses need and (it would) certainly bring investments back into Malaysia,” he said on Bernama TV’s ‘Mid-day Update’ programme.

Prime Minister Tan Sri Muhyiddin Yassin on Tuesday launched the NIP handbook.

The programme commences on Feb 26, pending the arrival of the rst batch of vaccine doses on Feb 21. The immunisation will be carried out in three phases.

The first being from Feb 26 until April 2021, the second starts from April until August 2021, and the third is scheduled to be from May 2021 until February 2022.

Todd said other than the NIP, continuous support to households and businesses would also help boost investors’ condence.

“We should also think about how to make our economy more resilient in future. That means creating bubble investments to digitalise the economy, including infrastructure and skills.

“Large talents are able to help small businesses to move online. This ensures our economy is ready to face such (pandemic) impacts in future and continue to build a more resilient economy,” Todd said.

He added that investors are going to be looking for an economy that is making efforts to make them more resilient.

“Improving competition, tackling governance issues and increasing transparency are some areas which allow or encourage more investors to come into the country,” he said.

Todd also commented about the Malaysian Investment Development Authority (MIDA) which has identied 240 high prole foreign investment projects in the manufacturing and services sectors this year.

MIDA said a combined potential investment value of RM81.9 billion is being negotiated and targeted, while the gross domestic product was projected to grow 7.5 per cent this year.

He said the economic projection for the third and fourth quarters is achievable only if the immunisation plan proceed timely and accordingly.

“Seeking vaccines is important as well as building a stronger vision on why Malaysia is an important place to invest, with economic competitiveness and well-dened governance.

“But the big question is not just looking at 2021. Are we building that resilience in the longer term?”

On Jan 11, Malaysia, through the Ministry of Health, signed an agreement with Pzer (Malaysia) Sdn Bhd for the delivery of the COVID-19 Pzer-BioNTech BNT1262b vaccine.

The agreement involved the acquisition of the rst 12,799,800 vaccine doses for 20 per cent of the population, with two doses for each person.

Source: Bernama

NIP, the first step to Malaysia’s economic recovery – IDEAS

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KUALA LUMPUR, Feb 18 — Linde Malaysia today announced it has completed and started up a new plant in Muar, Johor to supply high purity gaseous nitrogen.

In a statement today, Linde said the RM28 million plant was designed and built primarily to support the increased demand from STMicroelectronics, a leading global semiconductor manufacturer, which has a back-end plant in Muar.

“Built with state-of-the-art technology, the ECOGAN5 is a highly energy-ecient, cost-effective and reliable plant that delivers a continuous stream of gaseous nitrogen,” it said.

Linde’s Asean president, Binod Patwari said the investment is a testament to its commitment towards not only the electronics industry in Malaysia, but also the country’s overall economic growth.

“Linde has long-standing associations with STMicroelectronics for over 30 years, and I am proud to see our cooperation grow from strength to strength with this latest start-up,” he added.

Source: Bernama

Linde sets up new RM28 mln plant in Muar

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KUALA LUMPUR (Feb 18): The number of jobs created in 2020 decreased by 31,000 jobs to 73,000 from 104,000 jobs created in 2019, reflecting a softer labour demand from businesses in the private sector, said Department of Statistics Malaysia (DOSM) chief statistician Datuk Seri Dr Mohd Uzir Mahidin.

He said that preliminary numbers based on the average of quarterly labour force statistics indicated employed persons recorded a marginal increase to 15.1 million persons, while the unemployment figure edged up to 711,000 persons.

“Hence, the unemployment rate spiked to 4.5% against an average rate of 3% recorded during the pre-crisis period,” he said in a statement today.

Mohd Uzir further explained that valued added for 2020 contracted 5.6% as labour productivity per employment decreased by 5.4% to RM88,899 per person.

“Following decline in business operation hours, total hours worked in 2020 reduced to 32.0 billion hours (2019: 35 billion hours), resulting in labour productivity per hour worked increasing 3.4% to RM42 per hour,” he said.

Mohd Uzir added that 2020 had been a tough and unprecedented year, but it had also given industries the opportunity to re-examine business models and venture into new areas.

Some businesses had improved their adoption of digitalisation while others had resorted to flexible working arrangements, he said.

“However, some businesses may find digitalisation more challenging due to the existing operational structure and lack of technical competencies, especially the small and medium enterprises (SMEs). The adoption of technology through smart business partnership is one of the mechanism to escalate SMEs’ economies of scale.

“Therefore, it is pertinent to ensure continuous support for SMEs in the adoption of digitalisation towards the creation of more skilled jobs which will cater for the growing number of skilled labour supply,” he said.

On the outlook for this year, he reiterated that Malaysia’s labour market in early 2021 would remain in a challenging situation, hence the need for continuous collaborations of all parties to alleviate the unfavourable circumstance.

Source: Bernama

73,000 jobs created in 2020, says chief statistician

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KUALA LUMPUR, Feb 17 — The pandemic has indeed placed limitations on how renewable energy (RE) players conduct business and it is now considered as the biggest challenge faced by the sector.

However for Ko Chuan Zen, co-founder and chief executive officer of solar photovoltaic (PV) solutions provider Plus Solar Systems Sdn Bhd, there are opportunities and RE players have been trying to change the mindset of Malaysians as well as the business community in seeing the potential in RE.

“We have succeeded on many platforms with clients such as Ajiya Bhd and Mah Sing Plastics Industries Sdn Bhd, the established names who have adopted RE and have enjoyed savings of up to 25 per cent,” he told Bernama.

He said while the pandemic has indeed proven challenging, with the earliest potential recovery only in the second half of 2021, Plus Solar is confident of the prospects in 2021 as well as to contribute towards the newly revised RE target of 31 per cent in 2025 and 40 per cent in 2035.

“The net energy metering (NEM) 3.0 programme provides an opportunity for more users to instal the solar PV systems on the roof of their respective buildings or homes for electricity bill reduction.

“Through the programme, end-users in the industrial and commercial sectors have seen significant savings, and this will continue to drive up the trend for clean energy,” he said, adding that energy consumption has been identified as one of the top operational expenditures for business owners along with raw material, labour and rent, when they invest.

NEM 3.0 which covers both NEM Rakyat (domestic households), NEM GoMEn (government buildings) and NOVA (for commercial and industrial buildings), to be in effective from 2021-2023, with the total allocation of up to 500MW (megawatts).

Ko said that with the attractive Green Investment Tax Allowance (GITA) by the Malaysian Investment Development Authority and NEM 3.0 in place till 2023, people will begin to realise that solar energy is no longer a luxury but an affordable essential.

“Digitalisation of energy will also be our concentration with Plus Solar’s AIoT (artificial intelligence Internet of things) energy performance management system called SOURCE which empowers business owners to turn their building energy data into smart energy savings.

“We rolled out this system last year as we saw how much it would resolve the concerns of business owners where they can gain up to 25 per cent energy savings,” he added.

Ko said Plus Solar would continue to expand its businesses overseas such as in Vietnam following the government support for solar energy.

Source: Bernama

Plus Solar sees opportunity to change Malaysian mindset on RE potential

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KUALA LUMPUR, Feb 17 — Malaysia’s bilateral relations with the United States (US) is expected to remain strong and continue to be mutually beneficial under President Joe Biden’s administration.

Analyst Thomas Daniel said this is because the relationship is largely managed by professional diplomats and technocrats which accounts for its functionality and effectiveness for both parties.

“The good thing about the US-Malaysia bilateral relationship is that it is low-key and deep-rooted enough to weather (any) changes both in (Washington) DC and Putrajaya.

“From a broad regional perspective, it is in Malaysia’s interest to have a proactive, productive, and constructive US presence in the Asia-Pacific,” he told Bernama in an interview recently.

He added that even though there may be potential “speed bumps” in the bilateral relations, they can be managed by both sides as has been done in the past.

Malaysia and the US have formally established diplomatic relations in 1957. In April 2014, both countries have elevated the bilateral relationship to a Comprehensive Partnership.

Thomas, who is a fellow (Foreign Policy & Security Studies) of the Institute of Strategic & International Studies (ISIS) Malaysia, said with the new US administration, which seems to be more proactive in its commitment to multilateral approaches, the US might engage in more consultations with Asean claimant states to the South China Sea and with Asean itself.

“The Biden administration has indicated an alliance-building focused approach. The world would expect to see a more proactive and engaged US, especially on and across multilateral platforms and mechanisms,” he said.

He said it is also important for the Biden administration to elevate the engagement with the Association of the Southeast Asian Nations (Asean), not for the purpose of containing China, but as a constructive player to the regional grouping especially in providing practical options and avenues for cooperation.

Although the Asean region was not specifically mentioned, Biden — in his first foreign policy speech on February 4 — had labelled China as US’ ‘most serious competitor’, adding that his administration will take on directly the challenges posed by China.

“We’ll confront China’s economic abuses, counter its aggressive course of action to push back on China’s attack on human rights, intellectual property and global governance,” Biden had said.

On the South China Sea issue, Thomas opined that it is expected to continue to be a key focus under the new US administration in this region, adding that the dispute will continue to be subsumed within US-China strategic competition, further narrowing the options for Southeast Asian claimant states and Asean.

“One of the few things that see bipartisan support in the US now is its perception of the potential threat posed by China as a revisionist power with hegemonic ambitions,” he said.

Hence, he said the US is also likely to increase their freedom of navigation operations (FONOPS) and overflight operations in the contested water.

At the same time, the US is expected to further its public commitments to the Philippines, he added.

The South China Sea conflict involved overlapping territorial claims by four Asean countries — Brunei, Malaysia, the Philippines, and Vietnam. China and Taiwan had also laid their claims in South China Sea, known for its marine, hydrocarbon and mineral resources as well as its vital shipping lanes.

However, the conflict was further complicated by the rivalry between China and the US, which have grown intense in recent years — with both sides accusing each other of aggressively advancing power and influence through military might.

Source: Bernama

Malaysia-US ties expected to remain strong under Biden’s administration, say analyst

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KUALA LUMPUR (Feb 17): The global buy now pay later (BNPL) market as a whole is on a rapid uptrend and is projected to surge 400% to US$352 billion by 2025 from US$89 billion in 2020.

According to research data analysed and published by online trading portal Comprar Acciones yesterday, it was estimated that the BNPL industry will process US$680 billion worth of transactions in 2025, adding that it would translate to a compound annual growth rate of 13.23%.

Meanwhile, it said credit card debt fell to unprecedented lows in 2020 and is expected to keep dropping.

It said that for instance, in the US, there was an 11.9% decline in credit card balances for the year according to the Federal Reserve.

Comprar Acciones said prior to the pandemic, the figure had been growing steadily.

It explained that in May 2020, it dipped below the US$1 trillion mark for the first time since September 2017 and has been on a downtrend since.

Elsewhere, the highest valued fintech globally is Stripe, a US-based company with a US$36 billion valuation.

India-based One97 Communications, which is valued at US$16 billion, is second, while US-based Robinhood is third with US$11.6 billion.

Source: The Edge Markets

Global e-commerce buy now pay later spending to surge 400% to US$352b by 2025

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German luxury sports car maker Porsche AG is said to be setting up an assembly plant in Kulim, Kedah, in what would be its first outside of Germany, according to sources familiar with the project.

Porsche will be partnering Inokom Corporation Sdn Bhd, a subsidiary of Sime Darby Motors Sdn Bhd, which in turn is a subsidiary of Sime Darby Bhd, for the venture. However, the value of the investment cannot be ascertained at the moment.

“There have been quite a number of big investments coming into Malaysia in the automotive sector, but the government has yet to declare them. Because of the Covid-19 pandemic and the Movement Control Order, many of the principals could not come to Malaysia.

“The announcement has to be made jointly. They are big names; the government cannot just hold a press conference and announce the investments,” a source tells The Edge.

According to another source, Porsche is making Malaysia its Asean hub. The incentives for the investment have been approved by the Ministry of Finance, the source says.

Inokom will construct a new plant specifically for Porsche in Kulim, he adds.

When asked to comment on the speculation, Porsche’s deputy director of corporate communications and spokesperson, production and logistics, Christian Weiss says, “Asean is a promising region with great potential, and we continuously examine options for further growth in this market.”

A Sime Darby Motors spokesperson,when asked about the matter, says the group welcomes any partnership that will add value to its strategic business plans and as such, regularly engages existing and potential partners to explore opportunities to expand their business.

If the rumour proves to be true, it would be a much-needed boost to Malaysia’s reputation as a preferred destination for automotive investments in the region. With Indonesia and Thailand announcing huge investments by global automakers, Malaysia seems to be left behind.

In November 2019, Indonesia’s Industry Minister Agus Gumiwang Kartasasmita said that the Toyota Group was investing US$2 billion in the country and Honda Motor Co Ltd was planning to invest around US$360 million.

Meanwhile, Hyundai Motor Co is investing US$1.55 billion (RM6.3 billion) in its regional assembly hub in Cikarang, West Java, which will have a production capacity of 200,000 units per year. Hyundai has also moved its Asia-Pacific headquarters from Malaysia to Indonesia.

Chinese carmaker Great Wall Motors Co Lt is making Thailand its hub for right-hand drive vehicles, especially new energy and electric vehicles (EVs). The group is said to be investing around THB22 billion (RM2.97 billion) in the kingdom.

While Malaysia is still finalising its automotive policy on EVs, Thailand and Indonesia are ramping up efforts to attract investments in that space. Industry players say the two countries’ clearly spelt-out incentives for automotive investments to make them attractive to investors.

Malaysia’s National Automotive Policy 2020 does not specifically target EV as a sector. Instead, it lumps EVs together with other energy efficient vehicles (EEV), such as hybrid and new energy vehicles, as Next Generation Vehicles (NxGV).

The government’s policy to not provide menu-based incentives for automotive investments has also been criticised by many in the industry, as it is hard for players to convince their principals to invest in Malaysia without them.

The new EV policy is expected to address some of these issues, as Malaysia cannot afford to lose investments to neighbouring countries if it is serious about becoming an automotive production and export hub in the region.

As such, the investment by Porsche, if it comes to fruition, will be testament to Malaysia’s capabilities as it will demonstrate the luxury sports car brand’s confidence in the country’s ability to produce a high-quality product.

While the country has been missing out on investments from mass-market automotive producers, it has been doing well with upmarket brands. It is the assembly hub for various models of BMW AG and its subsidiary brand MINI, as well as Mercedes-Benz AG and Volvo Cars in Southeast Asia.

The partnership with Porsche AG would also boost Sime Darby’s earnings in the long run. For the year ended June 30, 2020 (FY2020), the automotive sector contributed RM574 million, or 40.8%, to Sime Darby’s profit before interest and tax (PBIT).

In the first quarter ended Sept 30, 2020 (1QFY2021), the automotive business contributed RM223 million, or 49.9%, of the company’s PBIT.

Sime Darby Motors represents many brands in Malaysia and Asia-Pacific, including BMW, MINI, Rolls-Royce, Jaguar, Land Rover, Ford, Peugeot, Volkswagen, Audi, Porsche, Ferrari, Lamborghini, Hyundai, KIA, Mazda, Suzuki, McLaren and Mitsubishi.

In FY2020, it sold 79,241 units of cars across Asia, a 9% decline from 89,606 units in FY2019. The drop was due to the Covid-19 pandemic, which led to subdued demand in all its major markets of China, Australia and Southeast Asia.

Through Inokom, Sime Darby Motors assembles Hyundai, BMW, Mazda and MINI cars at its integrated facility in Kulim.

Over the last 12 months, Sime Darby’s share price has risen 5.58% to RM2.26 as at last Thursday, valuing the group at RM15.37 billion. The counter is trading at a price-earnings ratio of 18.37 times.

Most analysts covering the stock have either a “strong buy” or “buy” call, with a consensus target price of RM2.618 per share, which translates into a potential 15.8% gain over last Thursday’s price.

Hong Leong Investment Bank Research has a “buy” call on Sime Darby with a target price of RM2.68. It says it likes the group for its strong balance sheet and potential leverage on the China market rebound.

AmInvestment also has a “buy” call on Sime Darby with a target price of RM2.87 per share while Kenanga Research calls for a “hold” on the counter with a target price of RM2.40 a share. Public Investment Bank is “neutral” on the company with a target price of RM2.23 per share.

The automotive industry is one of the major industries in Malaysia, contributing 4.3% to the country’s gross domestic product in 2019.

Source: The Edge Markets

Porsche to set up assembly plant in Kulim?

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KUALA LUMPUR: Malaysia and Singapore are positioned to gain from global growth in 2022, said Moody’s Analytics.

It said both countries have been cautious in opening their borders to travellers despite being among the most aggressive with fiscal policy support for their economies over the past year.

“Malaysia is in the midst of an emergency order banning interstate travel,” Moody’s Analytics said in a commentary note today.

The rating agency said China and its linkages through supply chains in Asia Pacific (Apac) and the rest of the world could help Asia lead the economic recovery, much as it did following the global financial crisis of 2008-2009.

It noted that the focus on getting the production side of the economy back on track effectively allowed manufacturing to spark Chinaʼs recovery beginning in the second quarter of 2020, and lifted surrounding Asian economies in the quarter, as they eased up on many movement restrictions.

Economies, including Vietnam, Malaysia, Taiwan and Indonesia, have benefited from the carry condition of Chinaʼs growing trade demand, said Moody’s Analytics.

Trade between China and the rest of Apac also depends upon stable demand for goods from Europe and North America, it said.

It added that the expected passage of the second United States’ stimulus bill strengthens the outlook for imports of goods into the US.

“However, demand for goods in Europe is at higher risk, at least in the near term,” said Moody’s Analytics.

It added that trade with China last year grew in percentage terms in double digits in Vietnam, Malaysia, Taiwan, Indonesia, Hong Kong, Japan, Thailand, and Singapore.

“It should be noted that this trade alone is not enough to guarantee full economic recovery. Containment of Covid-19 also is a necessary condition, which neither Indonesia nor Malaysia have yet managed to achieve,” said Moody’s.

While Chinaʼs recovery momentum boosted trade across Apac, the sustainability of regional export flows remains contingent on the collective effort to control the Covid-19 pandemic.

“Indonesia, the Philippines and Malaysia continue to struggle and may require more fiscal support, since they also run risks of additional quarantines or movement controls in coming months,” said Moody’s Analytics.

Aside from trade linkages, vaccination rates will further differentiate patterns of economic growth in 2020 but remains difficult to monitor in Asia, because there are little data available from consolidated sources.

Moody’s Analytics says trade between China and the rest of Apac depends on stable demand for goods from Europe and North America.

Source: Bernama

Malaysia and Singapore stand to gain from global growth in 2022, says Moody’s Analytics

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KUALA LUMPUR (Feb 17): The National Covid-19 Immunisation Programme, which is scheduled to begin next week, can strengthen the confidence of the business and investment sectors in the country, says the Ministry of International Trade and Industry (MITI).

MITI secretary-general Datuk Lokman Hakim Ali said the comprehensive vaccination programme would impact positively on the operations of the business community and industries in Malaysia.

“This programme is expected to help accelerate the overall opening and recovery of economic activities.

“It will directly increase productivity and strengthen Malaysia’s position in the global supply chain,” he told Bernama when contacted today.

Prime Minister Tan Sri Muhyiddin Yassin yesterday launched the Handbook on the national Covid-19 immunisation programme, which will kick off on Feb 26, pending arrival of the first batch of vaccine on Feb 21.

The immunisation will be carried out in three phases, The first being from Feb 26 until April 2021, the second, from April until August 2021, and the third, from May 2021 until February 2022.

On Jan 11, Malaysia through the Ministry of Health signed an agreement with Pfizer (Malaysia) Sdn Bhd for delivery of the Covid-19 Pfizer-BioNTech BNT1262b vaccine nationwide.

The agreement involved acquisition of the first 12,799,800 doses of the vaccine for 20% of the Malaysian population, with two doses for each person.

Source: Bernama

Covid immunisation will strengthen Malaysia’s position in global supply chain — MITI

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PETALING JAYA: Widad Business Group Bhd has entered into a memorandum of collaboration with Germany-based hydropower player Voith Hydro GmbH & Co KG to jointly seek and bid for hydro projects in Malaysia.

According to Voith’s head of sales and proposal service & upgrade Markus Kaufmann, the German entity has been in Malaysia for years. He said more than 50% of the hydropower plant capacity has been provided by Voith, namely, the schemes in Sungai Perak and Cameron Highlands.

“The Asean region and hydropower market is important to us, and we would like to increase our presence here by providing high technological expertise which has been our trademark for 150 years,” Kaufmann said in a press release.

For a successful venture, he said, the hydropower player felt a need to collaborate with a partner that could complement its offerings and help open up more opportunities locally.

“Widad fills in this gap perfectly with their track record in relevant industries and sizeable past projects in both the public and the private sectors,” he said.

Widad’s founder and group executive chairman, Tan Sri Muhammad Ikmal Opat Abdullah, commented that the partnership paves the way for the two to focus and foster collaboration in mutual beneficial opportunities in Malaysia.

“We are already in talks to develop joint activities and look forward to prospects of further developing our partnership in the future,” he said.

Recently, the group embarked on its maiden integrated development project, The Widad@Langkasuka, in Langkawi which has an estimated gross development value of RM40 billion.

Source: The Sun Daily

Widad partners German company to pursue hydro projects in Malaysia

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PETALING JAYA: Kejuruteraan Asastera Bhd (KAB) has ventured into the solar photovoltaic (PV) energy business via a binding term sheet entered into by its wholly owned subsidiary KAB Smart Solar Energy Sdn Bhd with Mayang Hijau Sdn Bhd, Evergreen Thumbsup Sdn Bhd and Heng Boon Liang.

Under the term sheet, it will subscribe for 800,000 ordinary shares representing an 80% equity stake in Mayang Hijau for a cash consideration of RM800,000.

In turn, Evergreen Thumbsup will subscribe for 199,999 ordinary shares into the company for RM199,999 and Heng will transfer one ordinary share to Evergreen Thumbsup.

After completion, Mayang Hijau will be an 80% indirectly owned company of KAB with the remaining 20% stake held by Evergreen Thumbsup

Recently, Mayang Hijau entered into a solar supply agreement to finance, design, construct, own and operate a 1.58-megawatt peak solar PV energy generating system under a build-operate-transfer arrangement, with the expected commercial operation date by the third quarter of 2021.

It is also in negotiations to secure a cumulative capacity of 10-megawatt peak of contracts, in which it will be responsible for the operations and maintenance of the solar pv system for a concession period of 25 years.

At the end of the contract period, the ownership of the installed solar panels will be handed over to the customers.

According to KAB’s Bursa disclosure, the rationale behind the transaction is part of its expansion strategy and will mark its venture into the solar industry which will establish a steady stream of recurring revenue that complements its existing core earnings.

Its managing director Datuk Lai Keng Onn is confident that the proposed subscription will enhance its recurring income stream from the existing core businesses and subsequently create more value for all its stakeholders.

“As a responsible corporation, besides financial returns, we also look beyond the environmental, social and governance criteria and the sustainable development goals that deliver long-term positive impact to the society, environment and the performance of the business,” he said in a press release.

Source: The Sun Daily

Kejuruteraan Asastera ventures into solar energy business

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Malaysia’s private investment growth rate and share of gross domestic product (GDP) has been decelerating in recent years.

Weighed down by external and domestic factors, private investment’s momentum had moderated from 12.1% per annum in 2011-2015 to 4.8% pa in 2016-2019.

Amongst these include the uneven state of global economic conditions post 2008-09 Global Financial Crisis; weakening domestic economic growth; a weak investment climate, including high regulatory and compliance costs; lingering uncertainty about policy transition as well as political instability.

In the first nine months of 2020, private investment declined by 13.2% year-on-year (y-o-y) as the Covid-19 pandemic-induced recession and extremely weak sentiments have caused businesses and companies to slash capital spending.

The Malaysian Investment Development Authority’s approved domestic direct investment (DDI) had declined 6.0% pa from RM175.1bil in 2014 to RM128.5bil in 2019 while approved foreign direct investment (FDI) increased 5.1% pa from RM64.6bil in 2014 to RM82.9bil in 2019.

In January-September 2020, approved DDI contracted by 21.6% to RM67.2bil to make up 61.2% of total approvals while approved FDI went down by 34.9% to RM42.6bil.

For the period 2010-2019, DDI had accounted for a higher share of total approvals, averaging 69% amid a declining share in recent years. FDI’s share of total approved investments was averaging 31% pa for the same period.

Actual FDI inflows into Malaysia had declined by 5.3% pa in 2016-19 from an average growth of +6.2% pa in 2011-15. In 2021, net FDI inflows contracted sharply by 56.2% to RM13.9bil.

Gross FDI also declined by 0.3% pa in 2016-19 compared to +1.5% pa in 2011-15. In 2020, it contracted sharply by 54.4% to RM17.1bil.

Private investment is an important component of the overall economy.

Sustaining private investment, which makes up of domestic and foreign investment, is needed to expand and diversify our industrial base; raise productive capacity and increase economic growth; accelerate technological progress; create high-income paying jobs and increase exports.

Domestic and foreign investments can have strong complementary or substitution interactions between each other. Policymakers were often being asked should we focus on efforts on domestic investment or foreign investment. There are questions whether FDI crowds in domestic investment, or FDI crowds out domestic investment.

Substantive research studies have validated the benefits of FDI, which amongst others include employment creation, the deepening of the industrial base through technology transfer and technical know-how, enhancing linkages with domestic firms, embracing better business practice management, establishing business networks and accessing international markets as well as supporting the domestic financial system and capital market.

Sustaining high-quality domestic investment is equally important and must continue to be facilitated in driving Malaysia’s economy and expanding the industrial structure, especially the development of small-and medium-sized enterprises (98.5% of total business establishments; 38.9% of GDP in 2019; 48.4% (or 7.3 million) of total employment; and 17.9% of total exports).

Granted, domestic investment’s size and value of capital investment in the manufacturing sector is smaller (RM48.6mil per project) relative to that of foreign investment (RM121.7mil per project), as well as less capital-and high technology intensive investment during the period 2010-2019, the nature and type of domestic investments span a cross section of sectors and businesses, and hence, create jobs usually many more than FDI.

Backed by a pool of capable domestic businesses and SMEs in the home market, multinational corporations would be keen to expand existing operations and set up new plants in an environment where the existing ecosystem is able to support their operations, especially since our domestic players are capable of integrating with high-value added global supply chains.

Domestic indigenous industries are the backbone of Malaysia’s investment and industrial development. They are deep rooted in Malaysia and here to stay, and hence, should be given further investment facilitation at the federal, state and local authorities in a coordinated manner.

Time is of the essence for investors to secure a fast and quick approval of their investment applications and the resolve of matters, including operational issues relating to doing business.

The departments and agencies at all levels (federal, state and local authorities) play a decisive role in creating a predictable enabling business investment environment while efficiently facilitating investment at ease, regardless of domestic investors/companies (large, SMEs and small businesses) and foreign investors.

A renewed focus on improving the regulatory and investment facilitation offers the key to reducing friction costs in government-business interactions. Common government-to-business pain points are delays; lack of transparency in the approval process; paperwork burden; duplication; inconsistency and complexity. While most businesses would welcome fewer regulations, what they really want is to spend less time and effort on compliance.

There is widespread agreement that the federal, state and local authorities need to refocus on removing the obstacles that businesses face in fostering an environment conducive to investing and doing business here.

It’s in the government’s interest to make regulations and compliance as painless as possible. Policymakers must harness the power of investment by making both domestic and foreign investment work together to generate the maximum benefits for our economy.

Lee Heng Guie is the executive director of Socio-Economic Research Centre. The views expressed here are his own.

Source: The Star

Insight – Domestic or foreign investment?

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KUALA LUMPUR (Feb 16): Careplus Group Bhd has entered into a conditional share acquisition agreement with Shin Heung Precision Co Ltd to acquire the latter’s subsidiary Shin Heung Electronics Malaysia Sdn Bhd, which owns a piece of land at Oakland Industrial Park in Seremban, Negeri Sembilan.

In a filing with the bourse, the company said it intends to acquire the dormant company for a total cash consideration of RM9.31 million, given that it is the registered owner of a parcel of 2.03-acre freehold industrial land.

“The proposed acquisition is undertaken in line with the group’s future and immediate expansion plans to increase its existing manufacturing capacity by commissioning new production lines for gloves.

“The property will be earmarked for warehouse and packing facilities,” said Careplus.

The group said the purchase price will be satisfied in cash via internally generated funds and expects to complete the proposed acquisition by the second quarter of 2021.

It said the proposed acquisition will not have any material effect on its net assets per share, gearing or its earnings per share for the financial year ending Dec 31, 2021.

Careplus fell five sen or 2.35% today to close at RM2.08 for a market capitalisation of RM1.14 billion.

Source: The Edge Markets

Careplus to acquire Negeri Sembilan land for RM9m to expand warehousing capacity

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Prime industrial asset values are expected to rise over the near term, particularly in well-planned secondary industrial locations such as Klang in Selangor.

Knight Frank Malaysia deputy managing director Keith Ooi said Klang is benefiting due to the rapid growth and spill-over demand for prime grade industrial space from neighbouring Shah Alam, where land and property prices are predominantly higher compared to secondary industrial locations.

“With the low-interest-rate environment, yields are expected to remain at low levels. Typically, prime grade industrial assets with strong tenant covenants coupled with good accessibility will better weather future headwinds,” he said.

Kight Frank Malaysia deputy managing director Keith Ooi said Klang is benefiting due to the rapid growth and spill-over demand for prime grade industrial space from neighbouring Shah Alam. Courtesy image

Ooi said the local industrial market has seen steady growth in recent years largely due to a higher e-commerce penetration rate resulting in additional warehousing space requirements to meet the surge in last-mile delivery as well as the structural shift towards omnichannel retailing.

He said the firm anticipates the momentum gained this past year to continue into 2021 as the demand remains resilient despite challenging economic conditions.

The Covid-19 pandemic continues to hurt the already battered retail sector but the e-commerce and industrial sectors are making headwinds.

Many business-to-consumer (B2C) companies were forced to adapt quickly from meeting customers face-to-face to selling their goods via digital platforms as lockdowns and movement restrictions were implemented nationwide. This prompted a huge shift to online retail activity.

Knight Frank Malaysia recently launched its New Frontiers – Regions of Opportunities: Infrastructure Impact on Industrial and ECommerce and Supply Chain Evolution’s Impact on Industrial real estate. The report highlights the opportunities for industrial real estate in the Asia Pacific.

The firm’s executive director of capital markets, Allan Sim said online retail activity will remain permanent going forward and result in higher online retail sales growth and penetration across the region, regardless of market maturity.

Sim said the pandemic has accelerated the adoption of online retailing across selected key markets in Asia-Pacific, with the average online penetration growth estimated at 14 per cent in 2020.

He said Malaysia’s online retail growth of 17 per cent during the year, the third-highest among the countries reviewed only translates to a country online penetration of five per cent, hence, there is much potential for further growth.

According to him, the firm has observed notable multi-national companies (MNCs) choosing Malaysia as the location for their regional distribution centres (RDC) in the likes of IKEA Asean RDC, Zalora Regional E-Fulfilment Hub, Lazada E-commerce RDC, Nestle DC, BMW Regional Parts DC, VW Regional Aftersales & Parts DC, Bosch RDC and Broadcom Global DC.

Sim said well-developed infrastructure like road and rail networks, port facility, the readiness of utility (water, electricity, internet connection) is important for e-commerce activities.

Malaysia tops the ASEAN region with c.US$250 million spent on transport infrastructure investments per million capita over the past two decades. One key driver behind Malaysia’s lead is the East Coast Rail Link (ECRL) project, which will connect the main port of Klang on the Straits of Melaka to Kota Bharu, Kelantan.

Sim said Klang is on the radar of many developers, manufacturers, and investors as it is the closest to Port Klang, the largest port in the country that is a platform for the supply chain.

According to Knight Frank Malaysia’s Real Estate Highlights 2H2020, during the review period, Majlis Perbandaran Klang received a surge in applications for development planning of industrial projects.

Circa 38.9 per cent of the applications were for new standalone factories on pockets of land, followed by 29.9 per cent of applications for legalisation of unlicensed factories under Program Pemutihan, 26 per cent for extension or amendment to existing premises, and the remaining 5.2 per cent for new built-to-sell factories.

Johor has also benefited from the rapid growth of e-commerce. Johor Port has announced a breakthrough of over one million twenty-foot equivalent units (TEUs) for the year 2020 and remains optimistic of its future prospects.

Knight Frank Johor director Debbie Choy said Johor seems to be the choice of automakers in housing their RDC.

BMW has set up their RDC on over 58 acres of land in the Free Industrial Zone of Senai International Airport while Volkswagen has set up 538,196 sq ft facilities in the Port of Tanjung Pelepas.

The Penang industrial property market saw active activities compared to others last year.

Penang remains on track in attracting investment from both local and foreign companies. The setting up of US-based Dexcom Inc and Ultra Clean Holdings Inc (UCT)’s first facilities in Penang is proof that the state has a strong industrial eco-system.

Knight Frank Penang executive director Mark Saw said: “We are excited to see the North Butterworth Container Terminal (NBCT) being gazetted as a free trade zone starting February 2021. Such move will elevate Penang from being the manufacturing base for electrical & electronics industry as the NBCT will be able to cater to warehousing and logistics needs of local and global players.”

Source: NST

Prime industrial assets in Klang on the radar of developers, manufacturers, and investors

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KUALA LUMPUR (Feb 16): Perodua has launched its first sustainable blueprint, the Perodua Smart Build, that includes almost the entire Malaysian automotive supplier and dealer ecosystem, designed to thrust itself and the industry towards greater globalisation.

Its president and chief executive officer Datuk Zainal Abidin Ahmad said the Perodua Smart Build is also the automaker’s ‘Transformation 3.0’ as it built upon its previous milestones to create a sustainable and robust automotive ecosystem.

“Under Transformation 3.0, Perodua is working together with its business partners to rationalise the gap in quality, cost and delivery within the automotive ecosystem and get the industry to be in the right size,” he said in a statement today.

“Perodua Smart Build is an evolution of what Perodua and the Malaysian automotive industry were originally set up to do; to create a sustainable and robust automotive ecosystem.”

He said Perodua Smart Build was designed to help Perodua and the automotive ecosystem reap the benefits of the National Automotive Policy by making the industry more competitive and progressive.

Perodua has been also working with all its partners to utilise existing expertise beyond Malaysia as part of its effort to export local expertise abroad.

As such, Zainal Abidin said the automotive company would continue to leverage on its close partnership with Daihatsu Motor Company of Japan to realise Perodua Smart Build’s objective and the Malaysian government who had the foresight to create this ecosystem for the benefit of the nation.

“Chief among the components of the Perodua Smart Build are full product development by Perodua and its suppliers, the establishment of a first-class working culture, and first-class thinking that will be able to contribute to the nation.

“The launch does not mean that we have reached the full potential of these components, rather it marks the start of Perodua and its partners’ journey towards a higher level of competitiveness,” he added.

Sumber: Bernama

Perodua launches ‘smart build’ sustainable blueprint

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