Malaysia Hiap Teck Joint Venture To Be Profitable If Current Steel Price Holds-Official

© Nikkei Markets

KUALA LUMPUR (Dec 17) — Malaysian steelmaker Hiap Teck Ventures expects its joint venture company Eastern Steel to be profitable if the price of steel slabs remains at the current level of $450/ton, its group executive director said Monday.

“We are operating at our full capacity of 700,000 tons per annum and have incurred positive cash flow,” Foo Kok Siew told reporters after its annual shareholders’ meeting in Selangor.

Hiap Teck Ventures was in the red from 2015 to 2017 after operations at the Eastern Steel were stalled. “Our downstream operations (trading and manufacturing) have always been profitable,” Foo added.

Eastern Steel’s furnace in Kemaman, Terengganu ceased production after steel slabs price dropped to $250/ton in 2015, thanks to the influx of cheap imports from China. It resumed production in July this year after the Chinese production capacities fell.

Foo said 60% of Eastern Steel’s production is exported to the neighboring countries mostly to the Philippines, Indonesia, Thailand and Taiwan.

– By Gan Pei Ling
– Edited by Sayantika Bhowal

Malaysia Tabung Haji To Offload Under-Performing Assets Worth MYR19.90 Bln-CEO

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KUALA LUMPUR (Dec 11) — Malaysia’s state-run Muslim pilgrimage fund board, Lembaga Tabung Haji, will transfer under-performing assets worth 19.90 billion ringgit ($4.76 billion) to a state-run special purpose vehicle as a part of its broader restructuring plan, its managing director and chief executive said Tuesday.

“We’re transferring the assets to an SPV, owned by the Ministry of Finance before Dec. 31,” Zukri Samat said at a news conference.

The underperforming assets include equity investments that have lost more than 20% in value and properties with a yield of less than 2%.

In exchange, the Ministry of Finance-owned SPV will issue Islamic bonds, or sukuks worth 10 billion ringgit and Islamic redeemable convertible preference share worth 9.90 billion ringgit to Tabung Haji.

“The sukuk will be subscribed by Tabung Haji. We cannot go to the market to sell the sukuk. We’re proposing a seven-year sukuk so that the SPV has time to (turn around) the (underperforming) assets,” said Zukri.

The Islamic redeemable convertible shares won’t have maturity timeframe and yield no dividend.

Tabung Haji would also be placed under Bank Negara’s supervision from Jan.1, 2019, Zukri added.

With this recovery plan, the fund hopes it would be able to improve its balance sheet for the financial year 2018. 

It has been in the limelight for allegedly issuing dividends to its depositors since 2014 even as its liabilities exceeded the value of its assets as of the financial year 2017, the Islamic affairs minister informed the parliament Monday. 

– By Gan Pei Ling
– Edited by Sayantika Bhowal

Malaysia Probing Top Glove After Firm Admits To Breaching Overtime Cap-Minister

© Nikkei Markets

KUALA LUMPUR (Dec 10) — Malaysia’s federal labour department is probing Top Glove Corp for violations of some labour laws after it found the company breached the legal working hour limit, the human resources minister said Monday.

Some of the workers of the world’s largest rubber glove maker clocked more than 104 hours of overtime per month, Kulasegaran told reporters after visiting the company’s plant in Selangor.

“They (Top Glove) have themselves admitted. It’s an offense under the law,” he said.

Suggestions from an independent committee on foreign workers to improve working conditions will be submitted to the cabinet this month, he added.

Labour Department Director General Mohd Jeffrey Joakim said his department is still interviewing workers to verify other complaints of labour abuses reported by The Guardian and Thomson Reuters Foundation recently.

Top Glove’s Chairman Lim Wee Chai said the company is committed to ensure the welfare of its work force and is cooperating with official investigation.

– By Gan Pei Ling
– Edited By Abhrajit Gangopadhyay

Malaysia Petronas May Build 32-KM Gas Pipeline To Connect Terengganu Industrial Park-CEO

 © Nikkei Markets

KUALA LUMPUR (Dec 06) — Malaysia’s national oil and gas company Petroliam Nasional or Petronas may build a 32-kilometer gas pipeline connecting a new industrial park in the Terengganu state, Group Chief Executive Wan Zulkiflee Wan Ariffin said Thursday. 

The company will conduct a feasibility study to assess demand for gas and power at the new industrial park, he said at a pact signing event with the investment arm of the Terengganu state. 

“Apart from gas supply, the study also involves technical assessment of the feasibility to build a 32 km gas transmission and distribution pipeline from Santong to the industrial park,” Wan Zulkiflee said. 

Terengganu’s Chief Minister Ahmad Samsuri Mokhtar expects to attract 13 billion ringgit worth of investments to the industrial park – Terengganu Silica Valley – to create 7,200 jobs. 

– By Gan Pei Ling
– Edited By Abhrajit Gangopadhyay

Malaysia To Announce In 1Q Regulatory Framework For Peer-To-Peer Home Financing-SC Chairman

© Nikkei Markets

KUALA LUMPUR (Nov 28) — The Securities Commission of Malaysia will announce in the first quarter of next year the regulatory framework for peer-to-peer home financing, its chairman said Wednesday.

“We’ve completed the first draft for the FundMyHome peer-to-peer, equity crowd financing platform,” Syed Zaid Albar told reporters. “We’ll engage with all the stakeholders.”  

Earlier this month, while announcing the federal budget for 2019, the finance minister said private sector would be allowed to engage in peer-to-peer lending scheme, governed by the capital markets regulator, to help home buyers purchase properties through crowd funding mechanism. 

– By Pei Ling Gan
– Edited By Abhrajit Gangopadhyay

Malaysia Plans To Start Implementing B10 Biodiesel Program From December

© Nikkei Markets

KUALA LUMPUR (Nov 26) — Malaysia will start implementing a so-called B10 biodiesel program for the transportation sector from Dec. 1 and will expand it to the industrial sector from Jul. 1, 2019, the minister of primary industries said Monday as the country seeks to cut fuel import bill and boost local consumption of a commodity that is widely used in food-to-cosmetics.

The expanded biodiesel program is expected to consume 761,000 tons of palm oil a year, Teresa Kok said at a news conference in Kuala Lumpur. The move will also help Malaysia save about 1.64 billion ringgit ($391.13 million) in annual diesel import cost, she said.

“At the current low price of palm oil, now is the right time to implement the expanded biodiesel program (which was) deferred in 2016,” Kok said.

The biodiesel program, which aims to blend 10% of palm-based methyl ester with 90% traditional petroleum diesel for sale at retail pumps nationwide, was initially designed in 2013 in-part to cut the Southeast Asian country’s swelling palm oil inventory that weighed on prices of the commodity.

However, the program was deferred multiple times due to concerns over potential damage to vehicle’s engine that may prompt manufacturers to dishonor their warranty pledges. A steep decline crude oil prices in 2014-15 also dimmed appeal of the mixed-fuel program.

Palm oil futures and shares of palm oil producers fell. Analysts said the prices of crude palm oil is unlikely to rebound significantly in the near term after declining about 20% due to supply glut.

If Malaysia successfully shrinks inventory by raising palm oil in biodiesel usage, the move could support prices at current levels “but will not drive prices up in the short term,” said JF Apex Securities’ Analyst Low Zy Jing. Prices will likely trade between 2000 ringgit per ton and 2200 ringgit a ton for up to next six months, he said.

“There’s no expectation of shortage of a supply, so buyers do not need to hedge,” and those with stocks are trying hard to sell outstanding inventories and are unlikely to raise prices, Low added.

Shares of Sime Darby Plantation, the world’s biggest palm oil producer by acreage, fell 2.3% on Monday, while the broader Bursa Malaysia Plantation Index shed 1.5%. The most-traded palm oil futures for February delivery fell nearly 2% to 2004 ringgit on Bursa Malaysia Derivatives.

Malaysia’s palm oil inventory swelled in October to a 10-month high as production rose while exports fell, according to latest available data. Production of palm typically enters its peak season in the third and the final quarter of the year which are the wettest months in Malaysia.

Biodiesel is currently priced at 2.28 ringgit per liter, while diesel costs 2.31 ringgit per liter. Introduced in Nov 2014, Malaysia’s current B7 biodiesel program for the transport sector utilized 350,000 metric tons of palm biodiesel annually.

Petroleum companies have been given two months to switch to B10 from B7 program before its mandatory implementation from February 2019, Kok said.

Indonesia meanwhile is planning to issue a regulation on the production of B25 diesel early next year, Jakarta Post had reported in May. Once issued, the policy will replace the current regulation on B20 production, the newspaper had reported.

Malaysia and Indonesia collectively account for more than 80% of the global supply of palm oil.

– By Pei Ling Gan and Alexander Winifred
– Edited By Abhrajit Gangopadhyay