Malaysia's Sukuk Foray Overseas

Malaysia plans to sell a benchmark-sized 5-year US dollar sukuk at 190 basis points over US Treasuries, pushing ahead with its first global bond in eight years, sources involved in the deal said.

Malaysia is looking to raise US$1 billion (RM3.3 billion) from the sale and the order book, following a global roadshow. It has already drawn interest of US$3.25 billion, they said.

Final pricing could take place later today in London or New York, one of the sources said.

Malaysia’s ijara sukuk, the fourth sovereign global bond in the region this year, comes as global financial markets wrestle with the impact of Europe’s debt crisis.

“Timing is not exactly perfect but there is actually no perfect timing,” said a fixed-income analyst with a Malaysian bank. “I expect they’ll come out with a relatively interesting pricing level.”

Market reaction to the Greek crisis has already impacted new issues in Asia.

The government held investor meetings in Hong Kong last Thursday, Jeddah on Saturday, Riyadh on Sunday and London and Dubai on Monday.

It concluded the roadshow in New York yesterday but held talks with Middle East investors after that, another source with direct knowledge of the deal said.

CIMB, HSBC Holdings and Barclays are deal managers.

Standard & Poor’s has given the sukuk an ‘A-’ preliminary long-term issue rating and Moody’s has assigned an A3 foreign currency rating with a stable outlook.

The sale of Islamic bonds allows Malaysia to tap a wider investment base, although investors can demand a higher return on sukuk because of the lack of a secondary market.

Prime Minister Najib Razak said on May 19 that the deal was designed to set a pricing benchmark for future sukuk and conventional bond issues.

Malaysia last tapped the global bond market in 2002 when it raised US$600 million from the sale of its first international sukuk.

This month, Saudi Electricity Co raised 7 billion riyals from a 7-year sukuk at 95 basis points above Saudi Interbank Offered Rate (Sibor).

The yield on the issue was below the 160 bps above Sibor at which the Gulf’s largest power utility priced its previous sukuk issue of the same size. — Reuters

Sime Darby posts first ever quarterly loss

 KUALA LUMPUR, May 27 — The writing on the wall is plain to see. Sime Darby, the country’s second-biggest listed company was set to post its first ever quarterly loss after massive cost-overruns bled its energy division. And it did!

The loss, the first since its formation in 2007 was overwhelming. [It was merger with two other government-controlled plantation groups.]

Sime Darby posted a January-March net loss of RM308.6 million, compared with a 150.6 million ringgit profit a year ago.

The group is set to miss its own net profit target of RM2.5 billion for this year because of the losses.

Sime Darby this month removed its chief executive officer after an internal probe into energy and utilities projects which resulted in provisions of almost US$300 million (RM995.25 million).

The provisions were mainly for cost overruns in four key projects, including its Bakun hydroelectric dam project and the Maersk Oil Qatar project.

The company said the figure may not be final as the investigation is still going on. [They may be more,so it seems].

The energy and utilities division, which contributed only 0.7 percent to the group’s total operating profits in fiscal 2009, posted a loss of RM1.02 billion in the nine months to March. It did not provide a quarterly figure.Sime Darby shares hit at 10-month low of RM7.47 today ahead of the earnings report.

The losses at Sime Darby has put the Najib administration under heavy pressure to revamp the management as well as the board of directors.

Former Prime Minister Tun Dr Mahathir Mohamad had said action should be taken against all those involved in Sime Darby Berhad’s cost overruns for the Bakun project and not just chief executive Datuk Seri Ahmad Zubir Murshid.

Ahmad Zubir was asked by the board to take a leave of absence prior to the expiry of his contract in Nov 26, 2010 after the discovery of RM964 million in cost overruns from four energy and utilities projects, including the Bakun dam project, racked up by the company during his tenure.

Sime Darby chairman Tun Musa Hitam has also said he will resign if necessary following the conglomerate’s huge losses of nearly RM1 billion for this quarter arising from cost overruns in the four projects.

Well, for the sake of PNB and the Amanah Saham shareholders, the full board must go, including some former  board members who put the group in the wrong direction in the first place!

Worth of Malaysia’s 40 richest soars 42pc to US$51b

SINGAPORE, May 27 —

Malaysia’s top 40 richest are worth US$51 billion (RM168 billion), up from US$36 billion a year ago, and higher than the previous record of US$46 billion registered in 2008.

According to Forbes Asia in its Malaysia Rich List 2010 released today, their combined wealth has risen by 42 per cent, spurred by the country’s economic expansion.

The overall increase in wealth was also in line with the 32 per cent rise in the Kuala Lumpur Composite Index, and the ringgit’s 11 per cent gain against the US dollar over the past 12 months, Forbes said.


Topping the rich list again is Tan Sri Robert Kuok who has held the pole position since 2006 when Forbes Asia began ranking the 40 richest Malaysians.

Forbes said the biggest gainer in dollar terms this year, the 86-year-old tycoon’s net worth increased to US$12 billion, a gain of US$3 billion over last year.

Top telecommunications tycoon Tan Sri T. Ananda Krishnan remains in second place with US$8.1 billion, an increase of US$1.1 billion from a year ago.

His Maxis Communications, Malaysia’s largest mobile phone service provider, went public last year and raised US$3.4 billion in the country’s largest-ever IPO.

Unchanged at third position is Tan Sri Lee Shin Cheng with US$4.6 billion, up from US$3.2 billion last year.

The 71-year-old heads IOI Group, one of the world’s leading operators of palm oil refineries. The company is reportedly investing US$300 million to expand.

Forbes said the top three tycoons were not the only ones who saw gains in their wealth, 27 others on the list also registered growth in their net worth, particularly notable is technology tycoon Goh Peng Ooi, ranked No. 16, who enjoyed the biggest percentage jump.
His fortune increased to US$425 million from US$112 million previously, a massive jump of 280 per cent.

Forbes said this year a minimum net worth of US$110 million was needed to qualify for the list, up from US$90 million last year.
It said the number of billionaires had also increased, with now 10 tycoons with a 10-figure net worth, compared with nine a year ago.

Newcomers making the rich list this year included brothers Datuk Shahril and Shahriman Shamsuddin who shared the No. 23 spot with a net worth of US$270 million.They have equal stakes in Sapura Group, founded by their father.Shahril is chief executive of its affiliate SapuraCrest Petroleum, the listed oil and gas contractor that makes up the bulk of their fortune.

Another new face is self-made building contractor Datuk A.K. Nathan, 54, who is ranked No. 24 and worth US$250 million.His company, Eversendai, has been involved in some of the most high-profile buildings in the Middle East including Dubai’s Burj Khalifa, the world’s tallest building.

Forbes said three people were back on the list after having fallen off previously, and the most notable is Datuk Seri Nazir Razak, Prime Minister Datuk Seri Najib Razak’s brother and head of financial services firm CIMB. He is ranked No. 32 with a net worth of US$145 million.

Malaysia: Net Oil Importer Beginning 2011?

Malaysia is likely to become an oil importer as early as next year at the current rate it is consuming petroleum,so says  Idris Jala, Minister in the Prime Minister’s Department as reported by Bernama today.


Malaysians continue to be among the highest fuel consumers per capita in the world fuel consumption habits pattern which generally has remained relatively unchanged despite increased oil prices in 2008.

He also said that approximately 70 per cent of the government’s liquefied petroleum gas (LPG) subsidy goes to commercial concerns and not the intended households. [Ask yourself,why is this so?]

About 30 per cent of the cooking oil subsidy is also abused, he said. [Ditto above]

He said the government is proposing to phase out the petrol subsidy gradually in line with its move to strategically position Malaysia’s economy on a stronger footing to realise the aspirations of Vision 2020, which is to achieve a developed, high-income nation status.

“Subsidies are an inaccurate representation of trade,” Idris said when officiating the Subsidy Lab Open Day here to receive feedback from the public on subsidies.

“In addition, they pose a fiscal burden that emerging economies such as Malaysia should move away from. As such, we desperately need an exit strategy for subsidies, as they are unsustainable,” he said.

“In order to save the country, we need to increase our GDP, Malaysians need to be aware we are giving the highest subsidies — 4.6 per cent of GDP, even higher than Indonesia (2.7 per cent) and the Philippines (0.2 per cent),” said Idris, who is also chief executive officer of the Performance Management and Delivery Unit (Pemandu).

Malaysia is one of the most subsidised nations in the world. Its total subsidy of RM74 billion in 2009 is equivalent to RM12,900 per household.

This covers the areas of Social (RM42.8 billion), Fuel (RM23.5 billion), Infrastructure (RM4.6 billion) and Food (RM3.1 billion).

“All savings to reduce these savings are intended to reduce our deficit and debt of RM103 billion in five years,” he said.

Meanwhile, studies by Bank Negara have shown that inflation will rise to four per cent (2011-2012) and three per cent post-2013.

Subsidies only result in market distortion and they drain the government of much-needed funds that could be better used for more strategic and pressing development projects for the rakyat, Idris said.

“The time for subsidy rationalisation is now,” he said.

“We are reviewing the possibility of introducing a floating price mechanism, mitigation measures and assistance needed to put in place.”

“We do not want to end up like Greece with a total debt of 300 billion euros.

Our deficit rose to record high of RM47 billion last year.

“If the government continues at the rate of 12 per cent per annum, Malaysia could go bankrupt in 2019 with total debts amounting to RM1,158 billion,” he cautioned.

Look, who's talking?

Malaysia: Cut Off Subsidies or be Greece

The Federal Government says it will save RM103 billion over the next five years if it starts to cut subsidies now. 

Datuk Seri Idris Jala , who is in charge of the Government Transformation Plan (GTP), said today Malaysia had a whopping RM362 billion debt and must start reducing subsidies amounting to RM74 billion last year to avoid becoming a bankrupt nation by 2019.

“We do not want to end up like Greece,” the minister in the Prime Minister’s Department told a packed hall at the government’s open day to rationalise subsidies here this morning.

But my friend, how about seriously trimming down a bloated civil service, wiping out corruption and preventing wastage at the same time?

So kawan, let us have a more holistic approach to save Malaysia from financial ruin, okay?

Subsidies alone is not the culprit...............

Praise to the 'Sinner' Class

In days of old, tax collectors rank on equal footing as doctors and grave diggers. They were considered as  the ' sinful class' for the jobs they do. Today,except for the grave-diggers,the doctors have become a most favoured worker category and now tax collectors are even exalted and paid bonuses.

This latest accolade to Malaysian tax collectors is sufficient testimony.

" The Inland Revenue Board (IRB) has taken home a RM1mil incentive for winning the Prime Minister’s Innovation Award.

The reward, said Prime Minister Datuk Seri Najib Tun Razak, could be used in any way deemed meaningful by the board – including for training purposes or to be given out as bonus.

Najib hoped the award would be a strong encouragement for the department – all the way from the head of department to the lowest level of staff – to want to perform even better.

The Prime Minister presented the award at a ceremony yesterday.

IRB chief executive officer Datuk Hasmah Abdullah said the department had always been negatively perceived by the public, but this would not dampen its determination to keep improving.

“Many people have the common perception that paying taxes is burdening. Our key to innovation is to make tax payment easy and we have done it successfully,” she said after receiving the award from Najib.

Earlier in his speech, Najib said Malaysia had no choice but to be willing to embrace change in this globalised era. The public sector must be able to think out of the box and be creative to bring about development.

“We need to engage new methodology and approach because other countries which were not our competitors before have changed and are competing against us,” he said.

He added that the Government sector had taken a big leap when it introduced the National Key Result Areas and Key Performance Index to ensure that the country was not lagging behind when others were moving forward.

“There must be innovation in the government administration to ensure that its outcome will please and satisfy the rakyat,” he said."

To my mind, the IRB has definitely improved particularly in electronic submissions and tax refunds.

Syabas, IRB!

Mah Sing Turning Magical

Mah Sing Bhd posted a net profit of RM27.9mil in the first quarter ended March 31, 2010, 23.2% higher compared with the same period last year.

In a filing with Bursa Malaysia, the group said its revenue rose 58.5% to RM238.3 in the quarter under review.
It said the result was mainly driven by better performance of its property and plastic divisions.

“Apart from property development, our plastics division also contributed positively to the quarter’s earnings,” it said.

The group achieved strong sales of RM601mil in the first quarter, which is 60% of the full year target of RM1bil.

It said the group would continue its innovative marketing strategies to promote quality properties with good concepts in prime locations.

As at March 31, the group has unbilled sales of about RM1.1bil, giving them significant earnings visibility.

This may be a stock to watch as it is now a potential boutique developer like SP Setia and Sunrise.