Malaysia Will Lobby Europe Against Palm Oil Ban – Plantation Minister

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KUALA LUMPUR (Mar 21) — Malaysia’s Plantation Minister said Thursday she will visit Europe in early-May in a last-ditch effort to dissuade the European Union Parliament against adopting measures to phase out palm oil.

Prior to the tabling of the delegated act in May, “I’ll visit the government leaders again to explain to them [and] to push for sustainable palm oil,” Teresa Kok told reporters after a meeting with palm oil producers.

“A lot of their political leaders and MPs don’t understand the actual situation here,” she said. “Many of them have never come to Malaysia or visited oil palm plantations.”

Indonesia, the world’s largest palm oil producing nation, also planned to send envoys to protest the European Union’s plans to ban palm oil as biofuel by 2030, weekly magazine Tempo reported citing Coordinating Minister for Economic Affairs Darmin Nasution. 

– By Gan Pei Ling

Local, Foreign Parties Interested In Buying Malaysia Airlines – Mahathir

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KUALA LUMPUR (Mar 20) — Some local as well as foreign parties have shown interest in buying flag carrier Malaysia Airlines, Prime Minister Mahathir Mohamad said Wednesday.

“There are interested parties to buy Malaysia Airlines,” Mahathir told reporters in parliament. “We will study whether it needs to be sold or not.”

The comments come a day after state investment arm Khazanah Nasional’s managing director said it would inject this year part of six billion ringgit ($1.47 billion) that was provided in 2014 to revamp the financially-strained national airline.

Malaysia Airlines has been struggling to turn in consistent profits over the years despite several attempts by the government to restructure the company grappling with volatile fuel prices and brutal competition from low-cost carriers such as AirAsia.

The most recent effort was launched in 2014–involving massive job cuts, rebranding, management changes, and buying out the then-listed airline -following losses of two of its planes that killed hundreds of people in that same year.

The company, now wholly-owned by Khazanah Nasional, however has missed a crucial target to return to profitability by 2018 despite axing thousands of jobs and disposing of some of its planes.

An outright sale of the airline appears unlikely in the near term, said analysts, noting potential hurdles that include resistance from its highly-unionized workforce of 14,000.

“The turnaround probably hasn’t been successful,” said Singapore-based Brendan Sobie, an analyst for Centre for Aviation. “In this case, selling the airline is going to be challenging because Malaysia Airlines still needs a major overhaul.”

“It’s a national carrier so national interest is involved,” said Tan Kam Meng, an analyst who covers the aviation sector at brokerage TA Securities. “The company is also in a tough industry.”

Earlier this month, Mahathir had said that the government would study and soon decide whether to shut, sell or refinance the flag carrier.

“We will consider whether we want to change (the airline’s) management or to scale down or to expand,” Mahathir said. “We have a lot of planes that are not use fully utilized.”

– By Sarah Nadlin Rohim and Gan Pei Ling

Malaysia Hopes EU Commission Won’t Shortly Submit Draft Law To Ban Palm Oil In Biofuels

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KUALA LUMPUR (Mar 13) — Malaysia hopes the European Commission will not submit a proposed ‘delegated act’ to phase out palm oil in biofuels by 2030 in the next EU Parliament session even as the world’s second largest exporter of the commodity has no immediate plan to approach the World Trade Organization to resolve its differences over EU’s move on palm oil exports.

“As member of the WTO, Malaysia has an option to bring this palm oil issue to the Dispute Settlement Body in WTO, but it only can be made if we have the details and clarity of the new law on palm oil from the EU,” International Trade Minister Darrel Leiking said in parliament. “Then only Malaysia and other members that are affected by the ruling can see whether it is against WTO rules.”

The EU Commission is still discussing the so-called delegated act for Indirect Land Use Change, which once approved as law, will have a big impact to the palm oil industry, Leiking said. “So we will wait for more information before we take decision with our counterpart from other countries,” he added. 

Last month, the European Commission said the use of palm oil in motor fuel should be phased out because oil palm cultivation often leads to deforestation. Top palm oil producers Indonesia and Malaysia, which together control about 85% of global oil palm output, have repeatedly voiced their protest against the EU’s move and recently met the EU executive to discuss the issue.

“Our expert team has made a presentation to the European Commission and related bodies. We just hope the European Commission won’t table the delegated act to phase out palm oil in the European Parliament’s sitting in April,” said Teresa Kok, minister of primary industries.

The European Commission published a draft of the delegated act to phase out palm oil but not soybean on Feb. 8, a week later than its original deadline. The commission is expected to finalize the act this week that will give the European Parliament the required two months to review and potentially object to the act. The issue assumes importance as the European parliamentary election will be held in May. 

– By Sarah Nadlin Rohim and Gan Pei Ling

Malaysia ‘Cautiously Optimistic’ Of Members Ending RCEP Talks By Year-End – Ong

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KUALA LUMPUR (Mar 11) — Malaysia, which is currently focussing on a speedy conclusion of the Regional Comprehensive Economic Partnership or RCEP, is “cautiously optimistic” that participating countries can conclude talks by this year-end, the deputy international trade minister said Monday. 

“We make slow progress in terms of each session but I’m sure we’ll get to the end,” Ong Kian Ming told reporters on the side lines of an event. “The percentage of goods that will not be charged tariffs, whether it’s 70%, 90%, 80%…the number is still being deliberated by member countries. Some want more, some want less.”

RCEP is a free trade agreement being negotiated between the 10 countries in ASEAN with China, India, Japan, South Korea, Australia and New Zealand.

Meanwhile, Malaysia’s federal cabinet is still discussing pros and cons of joining the Comprehensive and Progressive Agreement on Trans Pacific, or CPTPP, Ong said. 

In March 2018, Malaysia signed the CPTPP that is expected to account for around 13.5% of global economic output and a market of 500 million people, sharply shriveled from its initial avatar – Trans Pacific Partnership, or TPP – which would have covered 40% of the global economy and 800 million people if U.S. had remained as a member of the trading bloc.

Malaysia, which once relied mostly on commodity exports – crude oil and palm oil – to earn precious foreign exchange has steadily turned into electronics manufacturing base for several transnational companies cranking out computers and digital storage devices for global shipments. Electronics and electrical items account for more than a third of Malaysia’s exports, which find ready takers in the region, China as well as in the developed Western markets. Over the years, Malaysia has forged strong trade ties with regional neighbours as well as other Asian power houses such as India and China to keep its factories humming with export orders. 

– By Gan Pei Ling

Malaysia Khazanah To Split Assets Into 2 Funds As Portfolio Value Erodes

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KUALA LUMPUR (Mar 05) — Khazanah Nasional said Tuesday it will split its assets into two funds after the value of its portfolio eroded in 2018, dragging the investment holding arm of the Malaysian government into its first pre-tax loss in a decade.

The company will separate its investments with CIMB Group and Axiata Group among others in the so-called commercial fund, Managing Director Shahril Ridza Ridzuan said in a media briefing. Holdings such as in Telekom Malaysia and Tenaga Nasional will be placed in “strategic fund,” he said. 

The commercial assets will diversify revenue sources for the country, while the strategic assets are expected to generate long-term economic benefits for Malaysia, he said. “We needed to restructure the assets to better meet our mandate and objectives.”

The company is targeting return of 3% above consumer price index on five-year rolling basis for commercial fund portfolio, Shahril said. The strategic fund, meanwhile will aim for return equivalent to 10-year Malaysian government bond yield on a five-year rolling basis and “measurable economic benefits.”

Since sweeping to power in last year’s shock election outcome in May, Prime Minister Mahathir Mohamad has criticized Khazanah for deviating from its so-called initial goal of supporting local enterprises. He appointed Shahril as the new managing director after Azman Mokhtar resigned in July along with the entire board to help an orderly transition under the new government.

The Mahathir-administration, burdened with massive debt, in part arising from multi-billion dollar scandal at state investment fund 1 Malaysia Development Bhd, is relying on hefty dividend payouts from state-run enterprises such as Khazanah and Petroliam Nasional to help fix the government’s strained finances. 

Last year, Khazanah’s realizable asset value fell 13% to 136 billion ringgit ($33.36 billion). Net worth adjusted, Khazanah’s preferred measure of portfolio value after stripping out liabilities and net transfers to the government, declined 22% to 91 billion ringgit.

Khazanah also suffered pre-tax loss amounting to 6.27 billion ringgit due to fewer divestments, reduced dividend income and higher impairments, amid weak capital market conditions. The company booked 7.3 billion ringgit in impairments and 1.4 billion ringgit divestment gains last year.

Following the change in its entire leadership, Khazanah has reviewed and revalued some of its investments in 2018. “The organizational restructuring we are currently undertaking will enable us to execute and deliver on our role of growing Malaysia’s long-term wealth, beginning from this year,” Shahril said. He is confident of returning to profitability this year as Khazanah sharpens focus on executing its portfolio rebalancing strategy, investing 60% in equities, 30% in private companies and 10% in property investments, while strengthening its financial position. 

Apart from listed entities, Khazanah also owns stakes in a mix of privately-held companies that range from national flag carrier Malaysia Airlines to film studio Pinewood Iskandar. It has also invested in semiconductor manufacturer Silterra and Themed Attractions Resort & Hotels that owns Legoland in Malaysia. 

– By Gan Pei Ling
– Edited By Jason Ng

Malaysia QSR Brands’ IPO Plan On Schedule, Targeting Listing By 1H-Managing Director

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KUALA LUMPUR (Feb 28) — Malaysia’s fast food chain operator QSR Brands (M) Holdings Bhd is on track to return to Bursa Malaysia within the first half of 2019, its Managing Director Mohamed Azahari Kamil said Thursday.

“As far as the IPO is concerned, we are on target. The IPO will proceed as scheduled. We’re finalizing the documentation to submit to the regulators,” he said at a news conference.

QSR submitted a draft prospectus to the Securities Commission Malaysia in October. It said last year the company aims to raise 2 billion ringgit via the IPO.

QSR expects to open 24 more KFC restaurants in Malaysia this year, Azahari said. The KFC franchisee currently operates 820 restaurants in Malaysia, Singapore, Brunei and Cambodia. 

– By Gan Pei Ling
– Edited By Abhrajit Gangopadhyay