Malaysia’s Metrod Holdings To Invest Over MYR1.1 Billion In Selangor Copper Pant

© Nikkei Markets

KUALA LUMPUR (Feb 25) — Malaysia’s Metrod Holdings will invest over 1.1 billion ringgit ($270.24 million) in a new copper manufacturing plant in Selangor, its president said Monday. 

“The new plant will raise copper rod output capacity to over 300,000 metric tons per year,” Rajan Mittal said at the launch of the new facility. 

The copper rod manufacturer expects its total sales to double in the next three years with the launch of the new plant, he added. The unaudited total sales value for 2018 is about 2.5 billion ringgit, he said.

“I’m confident we’ll be able to double our sales in the next three years,” he said. 

– By Gan Pei Ling
– Edited by Sayantika Bhowal

Malaysia Still In Talks With China To Cut East Coast Rail Link Project Cost- Mahathir

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KUALA LUMPUR (Feb 25) — Malaysia is still in talks with China to reduce the construction cost of the suspended East Coast Rail Link, Prime Minister Mahathir Mohamad said Monday.

“If the price is right, then we’ll continue. Right now we have not agreed on the price,” he said at a news conference after launching a manufacturing plant in Selangor.

“Our hope is to spend less money,” said Mahathir.

Under current contract terms including interests on a 30-year loan from China, Malaysia would be spending up to 140 billion ringgit ($34.4 billion) on the project.

“We’ll be saddled with interests. We cannot afford that. Therefore, we’re trying to reduce cost or we may have to postpone.”

– By Gan Pei Ling
– Edited By Abhrajit Gangopadhyay

Malaysia Axiata Upbeat On 2019 Operations After Swinging To 4Q Loss

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KUALA LUMPUR (Feb 22) — Malaysia’s biggest wireless carrier Axiata Group Friday forecast strong operating earnings this year as it exited some of the non-core businesses in India and Singapore, and wrote off legacy technology assets.

Over the past several months, Axiata has been selling non-core assets as it sharpened focus on key operating markets such as Indonesia and Malaysia, and digital business. Last year, it exited the bleeding Indian venture Idea Cellular after the Aditya Birla Group-backed company merged its operations with the local unit of Britain’s Vodafone amid cut-rate competition.

Last week, Axiata sold its 29% stake in Singapore’s M1 to conglomerate Keppel Corp and Singapore Press Holdings for 1.65 billion ringgit ($404.6 million) amid stiff competition and high capital expenditure requirements. The company also booked a gain of 126.5 million ringgit from the sale.

Axiata, which has operations across multiple countries in Asia, said its immediate emphasis is to “shifting gears” towards profitable growth and cash generation.  

Across geographies, the operating companies are focusing on higher profit as against revenue growth, the company said. Axiata expects operating earnings this year to expand 5%-to-8%. That’s sharply higher than 2% increase it eked out in 2018. It expects revenue to grow between 3% and 4% in 2019, after posting a 2.1% decline to 23.89 billion ringgit last year. 

The company also plans to spend 6.8 billion ringgit in capital expenditure this year. Of this, about 2 billion ringgit will be spent to expand operations in Indonesia and close to 1 billion ringgit in Malaysia, its Chief Financial Officer Vivek Sood told reporters at a news conference.  

The strong outlook came after Axiata posted a fourth quarter net loss on a one-off asset write-off. Net loss for the fourth quarter ended Dec. 31 totaled 1.66 billion ringgit, compared with a net profit 24.73 million ringgit a year ago. Revenue marginally grew to 6.27 billion ringgit. 

Axiata said it has written off some legacy technology worth 1.82 billion ringgit, primarily in its Indonesian unit XL and Malaysian arm Celcom as part of network modernization exercise.

The company also proposed a higher full-year total dividend of 9.50 sen per ordinary share, taking the total dividend pay-out ratio to 85% in 2018.

“Barring unexpected and external factors, we are confident we will have a promising 2019,” said Chief Executive Jamaludin Ibrahim.

To be sure, Axiata is facing challenges in some of its key markets such as Nepal, where earlier this month, the top court ordered the company and its unit NCell to pay capital gains tax amounting to 2.16 billion ringgit. The tax claim stems from Axiata’s 2015 purchase of the operator from TeliaSonera Norway.

The company acknowledged the concerns surrounding a possible tax liability. “In the absence of official notification, our parties to the litigation continue to await the full judgment to gain more clarity and we will provide an update upon receiving the order,” it said.

The company also warned that it remains “cautious of the challenging industry and macro landscape,” with heightened regulatory and competitive environment expected in some of the geographies. 

– By Gho Chee Yuan and Gan Pei Ling
– Edited by Dhanya Ann Thoppil

Malaysia Duopharma Hopes To Get MYR10 Mln GST Refund This Year-Managing Director

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KUALA LUMPUR (Feb 20) — Malaysian pharmaceutical company Duopharma Biotech, formerly called CCM Duopharma Biotech, hopes to get 10 million ringgit ($2.45 million) in goods and services tax refund this year, the group managing director said Wednesday.

“There are still questions to be resolved with the Finance Ministry,” Leonard Ariff Abdul Shatar told reporters in Selangor after a shareholders’ meeting. “Hopefully it will occur within 2019.”

Meanwhile, the company is banking on a stronger ringgit to boost earnings this year, Leonard said.

“A stronger ringgit is better for our industry. Apart from salaries and packaging, our raw materials are imported. It’s all denominated in USD. We have a good start of the year with the ringgit appreciating,” he added.

Earlier Wednesday, the company’s shareholders approved Duopharma Biotech’s name change following a demerger from its parent company Chemical Company of Malaysia Bhd (CCM Bhd).

Leonard said the company expects to launch a new drug in April after it secured the government’s approval on Feb 7. 

The company typically allocates about 3% of its annual revenue towards research and development, he added. 

– By Gan Pei Ling
– Edited By Abhrajit Gangopadhyay

Kuala Lumpur High Court Sets Genting Malaysia Vs Finance Ministry Trial On May 30

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KUALA LUMPUR (Feb 14) — The Kuala Lumpur High Court on Thursday set May 30 as the trial date for Genting Malaysia Bhd versus the federal finance ministry case. 

Judge Hajah Azizah Nawawi had granted Genting Malaysia leave on Jan. 24 to review the finance ministry’s decision to amend a provision under which Genting enjoyed a 10-year tax holiday for capital expenditure on Genting Integrated Tourism Plan.

The court had also granted a stay on the ministry’s decision until the case is resolved.

In 2014, the finance ministry had granted a 10-year tax exemption to Genting Malaysia on its capital spending on a $2.5 billion revamp plan for its hilltop casino, recreational amenities and a 20th Century Fox-branded theme park.

In December 2017, the finance ministry amended the tax incentive pact, which Genting Malaysia challenged. The ministry rejected Genting Malaysia’s appeal against the revision in September 2018. 

– By Gan Pei Ling
– Edited by Abhrajit Gangopadhyay

Malaysia Bets On Biodiesel Projects To Lift Local Palm Oil Use By 2020

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KUALA LUMPUR (Feb 12) — Malaysia is aiming for domestic annual demand of crude palm oil to rise by 1.3 million metric tons in 2020 as it presses ahead with biodiesel programs in the transport and industrial sectors, the federal plantation minister said Tuesday.

“By increasing the blending percentage from B10 to B20, and also rolling out the B10 for industrial diesel use, we anticipate that the uptake of CPO to increase to 1.3 million tons per annum,” Teresa Kok said at a palm oil forum in the administrative capital Putrajaya.

Malaysia already trails Indonesia, which introduced B20 – a blend of 20% palm oil and 80% fossil fuel – to its transport sector in 2016. The move will help stabilize palm oil prices and reduce stock, Kok said.

Shares of palm oil producers rose further following the minister’s remarks. Sime Darby Plantation rose 0.4%, while the Bursa Malaysia Plantation Index climbed 1% and outperformed the broader market decline.

The gain also comes as stockpile in Malaysia, the world’s second-largest palm oil producer after Indonesia, eased off record-high levels as exports surged. Malaysia’s palm oil inventory dropped 6.7% to 3 million tons in January from a month earlier, official data released Monday showed.

Exports of the widely-used edible oil surged 21.2% to 1.68 million tons in January, in part due to changes in Indonesia’s export tax structure and cut in India’s palm oil import duties. The mammoth palm oil inventory fell for the first time in seven months.

Palm oil is a key export commodity of the trade-reliant nation and makes up the second-largest shipment after electrical and electronics items. Weakness in overseas demand typically swells stockpile of the commodity that is used in everything from ice creams to lipsticks. Hefty inventory also weighs on the palm oil’s prices and potentially pressures earnings of plantation companies.

Malaysia’s Prime Minister Mahathir Mohamad had said in December the country should move towards adopting B20 biodiesel program by 2020. Malaysia rolled out B10 biodiesel, a blend of 10% palm oil and 90% petroleum diesel, for the transport sector on Feb 1.

The industrial sector is expected to start using B7 biodiesel from Jul. 1.

“We still need to monitor for few months to see how much CPO is being consumed for the biodiesel program,” said Public Investment Bank Analyst Chong Hoe Leong. “Our domestic consumption is weak.”

In the near term, analysts said production will likely weaken seasonally in the months ahead, helping to prop up crude palm oil prices at least in the first quarter.

“We expect further moderation of stock levels in the coming months, as output continues to dwindle,” said RHB Research Institute Analyst Henry Wibowo. That could help crude palm oil prices to stay buoyant for the rest of the quarter and stabilize in the second quarter, he said.

The most-traded palm oil futures for April delivery was last traded at 2,249 ringgit a ton on Bursa Malaysia Derivatives. Palm oil prices have risen close to 7% so far this year.

– By Gan Pei Ling and Gho Chee Yuan
– Edited By Abhrajit Gangopadhyay