QSR Brands appoints new chairman, MD

KUALA LUMPUR: QSR Brands (M) Holdings Bhd (QSR Brands), the food chain brand that operates KFC and Pizza Hut Malaysia, has appointed Datuk Mustafha Abd Razak as chairman and Nehchal Khanna as managing director, effective April 1, 2020.

The appointments follow the retirement of managing director of QSR Brands, Datuk Seri Mohamed Azahari Mohamed Kamil,the who left the company on March 31, 2020.

Prior to joining QSR Brands, Nehchal was the corporate business advisor for Johor Corporation, a state investment corporation established by the Johor state government.

“In his previous capacity, Nehchal was managing director in the Singapore office of Wall Street firm Morgan Stanley between 2010 and 2016,“ said QSR Brands in a statement today.

Nehchal’s wealth of experience includes advising on some of the largest transactions for Malaysian corporations including Khazanah, Petronas and Sime Darby.

Prior to joining Morgan Stanley in 2010, Nehchal was managing director at Deutsche Bank in Singapore where he was head of investment banking for Malaysia and Indonesia.

QSR Brands also welcomes Mustafha, who has more than 24 years of professional experience within the corporate and banking sector in Malaysia, as its new chairman. -Bernama

source https://www.thesundaily.my/business/qsr-brands-appoints-new-chairman-md-CX2202589

Megah Port Managment takes over Labuan Port, allocates RM10m for upgrades

PETALING JAYA: Straits Inter Logistics Bhd’s 51%-owned subsidiary, Megah Port Management Sdn Bhd has taken over the management of Labuan Liberty Terminal effective today, for the next six years

Megah Port will be handling the operation and facility management of the port, with an allocation of RM10 million for upgrading works.

It said it needed to optimise the usage of the Labuan Port by upgrading some of the facilities, which includes the repair of container yards and enhancing its fire safety systems and warehouses at the port.

“It is important to note that the facilities have not been upgraded in the last 20 years, thus it requires some fresh funds to improve the quality of its services and management,” it said in a statement.

With the port management role, the group will be involved in the provision of services which includes container operations, breakbulk berthing and mooring, and harbor tug services.

Labuan Port currently receives vessels carrying containers, dry and liquid bulk, general cargoes as well as oil and gas products.

Megah Port sadu this initiative shall help to create demand for port management services to facilitate the seamless administration of the various port activities. in line with the Labuan Development Blueprint 2030, launched in January 2018.

source https://www.thesundaily.my/business/megah-port-managment-takes-over-labuan-port-allocates-rm10m-for-upgrades-HX2202548

Coronavirus: Comparing today’s crisis to 2008 reveals some interesting things about China

With the new coronavirus still spreading rapidly, the shock to the global economy is becoming ever more apparent. I’ve been comparing the different major economies, and how this relates to the great financial crisis (GFC) of 2007-09.

World stock markets are currently down by about 25% from their January highs, having recovered a little since the US government unveiled its US$2 trillion (£1.6 trillion) economic relief package. This remains the markets’ fastest decline in history – but how does it compare in scale to 2007-09?

In the four weeks from mid-February to mid-March, the stock markets of the G7 countries fell by about 33%, compared with 55% during the worst 18-month period of 2007-09. The leading markets still have to fall some way to outdo the previous crisis, though this varies considerably between countries. China’s main market, the SSE Composite Index, fell by about 97% in the year ended October 2008, but only about 15% this time – despite the pandemic starting there.

Fall in stock markets GFC vs 2020

But this compares a short 2020 period with a much longer period during the previous crisis. A more reasonable comparison of the Covid-19 crash might be with the four weeks after the Lehman Brothers collapse of September 15 2008. On that basis, it’s a Covid-19 fall of 33% against 19% after Lehman. (On this comparison, China’s performance was actually worse in 2020, since its market flatlined for two months after Lehman.)

Fall in stock markets post-Lehman vs 2020

Recession comparisons

The shock to the world economy in 2020 is quite different, since the lockdowns have severely hampered everything from manufacturing to services. In 2007-09, the problem was a banking crisis as a result of too much bad debt, and there was no equivalent crisis on what economists call the supply side of the economy.

Nonetheless, the Covid-19 pandemic is having knock-on effects that are showing some similarities with the previous crisis. The credit markets have frozen and corporate bonds have plunged in value: the gap or spread between corporate bond yields and those of the benchmark ten-year US government bond has now widened more than during 2007-09.

The best realistic economic outcome is probably a recession no deeper than last time, where GDP fell 1.7% in 2009. It could yet be a lot worse, however. According to this paper, led by distinguished Australian economist Warwick McKibbin, the G7 plus China could be heading for an average decline of 8% of GDP this year, including 6% in the UK, 8% in the US and 9% in Germany.

The good news is that they assumed that 30% of the Chinese population got infected. In the month since the paper was published, the pandemic seems not to be turning out as badly in China. On the other hand, the US and Europe could be heading towards the gloomier end of expectations.

Another leading economist, Pierre-Olivier Gourinchas, predicts a 10% decline in world GDP if economic activity halves for a month and then spends a further two months at three-quarters the norm.

Fiscal stimulus

However the figures turn out, the economic outcome of Covid-19 seems arguably worse than 2007-09 because of such severe collapse in such a short time. If a significant amount of income is held up for even six months, it will drive a number of firms into effective insolvency, with consequences for everything from employment to bad debts on bank balance sheets.

No wonder the world’s leading economies have been unveiling economic relief packages. When I compare these with the last crisis, it reveals the scale of the economic problem: the average package by the G7 countries is 4.4 times bigger than last time.

Again, there are considerable variations. The UK package is ten times bigger, amounting to 15.4% of GDP compared to only 1.6% of GDP in 2008-09. Since the UK has just left the EU, this big response might be with an eye to the Brexit shock as well. Next biggest is Germany, whose stimulus is five times that of 2008: 17.6% of GDP compared to only 3.4% last time.

At the other end of the spectrum are Canada and Japan. These two countries look to be at different stages in the pandemic: Canada is only 16 days after its 100th case, whereas Japan is 35 days from that point. They could also be on different trajectories, with Canada reporting 24 new deaths on March 30 compared to Japan’s two, taking their totals to 89 and 56 respectively.

The most noteworthy relief package is that of the US, which is only 1.9 times bigger than in 2008 – that’s 10% of GDP compared to 5.3% of GDP last time. In such a huge relief package, there might be economies of scale. Nonetheless, the US response is arguably too small compared to other countries at similar stages of the pandemic, such as the UK, Germany and also France.

Relief packages as a % of GDP

Also notice China. Just like the Chinese stock market has reacted more coolly than its western rivals, Beijing’s economic relief package is ten times smaller than in 2008. Considering China has been at the epicentre of the pandemic, and industrial output declined by an estimated 13% in the first two months of lockdown, you might have expected the government to fire a comparable bazooka to Germany or the UK.

Time will tell if this is the right move. Perhaps China’s strict lockdown measures have made such spending unnecessary, especially in a country probably big enough to make up for an economic problem centred on one province. With Chinese manufacturing having rebounded strongly in March, it will be interesting to compare the overall effect of the coronavirus on the world’s leading economies a year or two in the future.

source https://www.thesundaily.my/business/coronavirus-comparing-today-s-crisis-to-2008-reveals-some-interesting-things-about-china-MX2202349

Indonesia bolsters financial crisis plans to cope with coronavirus

JAKARTA: Indonesia has bolstered its procedures to prevent a financial crisis during the coronavirus outbreak, the finance minister said on Wednesday, flagging a worst-case scenario of an economic contraction this year and the rupiah hitting a record low.

Finance Minister Sri Mulyani Indrawati said the protocol to help failing banks has been upgraded to allow for early responses by all financial authorities as part of an emergency regulation that President Joko Widodo announced on Tuesday.

Widodo signed the regulation to give room for more spending and to widen the budget deficit, waiving a 3%-of-GDP (gross domestic product) deficit cap for three years.

He also unveiled 405 trillion rupiah ($24.65 billion) of additional spending to cushion the impact of the virus outbreak on Southeast Asia’s biggest economy, which would expand the 2020 fiscal deficit to 5.07% of GDP.

The economy is expected to grow 2.3% in 2020, but the government has prepared for a worst-case scenario of a contraction of 0.4%, Indrawati told an online news conference.

Her scenarios also include the rupiah falling further to average 17,500 to 20,000 to the dollar, the weakest on record.

Bank Indonesia (BI) Governor Perry Warjiyo later stressed these scenarios were not an outlook and were to be prevented.

He said the current exchange rate level was “adequate”. The rupiah weakened after the announcement to 16,430 at 0600 GMT, from 16,380 before.

Indrawati described the new procedures as “extraordinary measures” and pledged authorities would adhere to careful governance. Despite, for example, the new protocol giving room for BI to purchase sovereign bonds directly from the government, she said such a move would be a last resort.

Other provisions include allowing the government to lend to the Indonesia Deposit Insurance Corporation - a government agency that insures bank deposits and saves failing banks, easing rules on BI’s short-term liquidity lending and allowing the Financial Services Authority to do early restructuring of banks or even merge lenders if needed.

Governor Warjiyo stressed Indonesia would not impose capital controls.

The new plan also includes a cut in the corporate tax rate to 22% effective immediately until 2021 and a further trim to 20% starting in 2022.

Anushka Shah, sovereign analyst at Moody’s Investor Services, said the 5% fiscal deficit would be below the median of countries with Baa-investment grade and said the fact that the deficit cap would be reinstated in 2023 “would be an important consideration for fiscal discipline and would anchor overall investor confidence”.

Indonesia’s known cases of coronavirus have gone from none in early March to 1,528, with 136 deaths as of Tuesday. -Reuters

source https://www.thesundaily.my/business/indonesia-bolsters-financial-crisis-plans-to-cope-with-coronavirus-FX2202135

AWER lays out recommendations for water, energy sector

PETALING JAYA: Due to the magnitude of Covid-19’s impact to the global economy and the slump in crude oil market, the Association of Water and Energy Research Malaysia (AWER) has put forth a number of recommendations to the federal government, urging it to prepare for a worst case scenario.

In a press release, AWER said that the recent discount given in electricity tariff, as announced in the second economic stimulus package, comprises of funds from Kumpulan Wang Industri Elektrik (KWIE), contributions from Tenaga Nasional Bhd and the government.

“Due to the current Movement Control Order (MCO), TNB will face a drop in revenue collection that may impact funds channeled to KWIE for 2020. If our predictions are correct, the drop in crude oil prices will all rally a drop in coal and natural gas prices. This fuel price rally will add more funds to KWIE when fuel cost drops below benchmarked prices of fuel set in electricity tariff review,” it said.

It stressed that the government and the ministry in charge must be prudent in utilising the KWIE fund, so that the fund could continue to play a cost dampening role in for this year and the next.

In addition, AWER has also reiterated its proposal to establish an energy price stabilisation fund.

It reasoned that energy resources prices are volatile and can be subjected to manipulation by a cartel of producers as Malaysia also depends on the import of energy resources.

Furthermore, the country’s affordable energy resources supply is also affected by currency volatility.

Hence, the organisation stated that the fund is vital for consumers to absorb sudden shocks in energy resources price.

“This fund is not a form of subsidy and it is auto generated from the retail prices of energy resources via modelling of historic data and forecast. It is used only to cushion the sudden impact of fuel price volatility in the international market,” it said.

Meanwhile, on coal and natural gas prices, AWER said should it continue its down trend in tandem with the oil slump, Malaysia stands to benefit.

However, it also called for the government to venture into the spot liquefied natutral gas (LNG) market to reduce natural gas prices for the electricity and manufacturing sector, which will boost the economy by reducing the cost of doing business.

Finally, AWER also urged the government to postpone implementation of water tariff adjustment for six treated water licensees.

“The government must also cancel the ‘cost plus’ mechanism used by National Water Services Commission (SPAN) to set tariff as this mechanism does not remove inefficiencies in the operations and just adds a regulated profit margin on top of the proposed cost,” it said.

It opined that the tariff should be set by the benchmarking mechanism agreed upon in 2009, whereby similar operations’ input cost will be benchmarked to the lowest efficient cost and operators who operate higher than the benchmarked cost will not be allowed to pass through the inefficient cost to the water tariff.

“Due to our suggestion to postpone the water tariff adjustment, the Finance Ministry must also ensure that Pengurusan Aset Air Berhad (PAAB) is able to service existing bonds and any new bonds issued must also be government guaranteed bonds to ensure least cost pass through to the water tariff,” it said.

source https://www.thesundaily.my/business/awer-lays-out-recommendations-for-water-energy-sector-GX2202091

BHIC appoints new CEO

PETALING JAYA: Boustead Heavy Industries Corp Bhd (BHIC) has appointed Sharifuddin Md Zaini Al-Manaf (pix) as CEO effective today.

Sharifuddin, 50, holds a bachelor’s degree in aeronautical engineering from Imperial College London, UK. He brings to BHIC a wealth of management experience amassed over more than 20 years working in the oil and gas and the shipping industries.

Prior to joining BHIC, Sharifuddin was the CEO of Orkim Sdn Bhd, an investee company of Ekuinas providing tanker shipping services in the Asia Pacific region.

During his time at Orkim, he led the growth of the company’s new business through continuous strategic business expansion and formation of alliances which contributed to its profitability.

“BHIC is confident that with his experience and management capabilities, Sharifuddin will steer the organisation through these challenging times and navigate it towards a path of profitability and growth,“ the group said in a statement.

Its previous CEO Ee Teck Chee had resigned on Jan 31, 2020 due to “personal reasons”. Ee was redesignated as CEO from COO effective May 1, 2019, amid several changes to its board of directors.

source https://www.thesundaily.my/business/bhic-appoints-new-ceo-EX2202017

Malaysia’s March manufacturing PMI falls to 48.4, lowest since June 2016

PETALING JAYA: The IHS Markit Malaysia Manufacturing Purchasing Managers’ Index (PMI) fell to 48.4 in March, from 48.5 in February, the lowest level since June 2016,

In a statement, IHS Markit pointed out that this signals a sharp slowdown in manufacturing production in Malaysia, as demand- and supplyside factors adversely impacted output volumes.

The latest survey data pointed to the sharpest decrease in new order intakes since data collection began in July 2012.

IHS Markit chief business economist Chris Williamson said the marginal fall in the PMI masks steeper deteriorations in production and new orders trends.

“While supply chain delays are usually seen as a positive development, reflecting rising demand and accelerating economic growth, the current survey is seeing record degrees of supply chain disruption from the coronavirus outbreak, notably from China. These supply shortages are hitting production capacities and constraining growth,”he said.

Williamson added that public health measures aimed at curbing the spread of Covid-19 also led to a fall in demand.

Furthermore, the global pandemic also had a noticeable impact on external markets, as evidenced by a sharp drop in export demand during March.

The rate of decline in the data was broadly in line with that seen in February following the initial negative shock to demand from China.

Meanwhile, supply-side hindrances also restricted production schedules in March, as supplier delivery times lengthened at an accelerated rate that was by far the most severe on record.

“Supply from China should start to improve in coming weeks, helping lift some of the production constraints, but the next problem will be one of slumping global demand for many goods as both business and households around the world spend less due to closures and lockdowns.

“Worse therefore looks set to come in the second quarter, both in terms of exports and domestic demand in Malaysia, but as yet there is great uncertainty as to how long the global slump will persist,” said Williamson.

Although material shortages and domestic currency weakness did lead to a consequent rise in import prices, there were numerous reports from panel members of suppliers cutting their fees due to low input demand.

Overall, the rate of input price inflation slowed to a three-month low.

Meanwhile, the survey data indicated the rate of input price inflation slowed to a three-month low, while output charges fell in March for a third month in a row.

For the month, it reported that purchasing activity fell sharply as lower production requirements and widespread supply chain disruptions deterred firms from buying additional inputs.

In turn, stocks of purchases fell for a third successive month.

The survey found that Malaysian manufacturers also reduced their inventories of finished goods during March.

Looking towards business prospects over the next 12 months,the IHS Markit found Malaysian manufacturers expect further cuts in production, linked to the prospect of sustained supply chain disruption.

““Until more is known about the likely length of the Covid-19 pandemic, businesses are likely to remain highly risk averse, as evidenced already by companies’ future expectations for the year ahead sliding to an all-time low,” said Williamson.

source https://www.thesundaily.my/business/malaysia-s-march-manufacturing-pmi-falls-to-484-lowest-since-june-2016-XB2201330