Singapore minister says RCEP trade deal on track for year-end signing

SINGAPORE: The Regional Comprehensive Economic Partnership (RCEP) trade deal is still on track to be signed by the end of 2020, Singapore's Minister of Trade and Industry Chan Chun Sing said today.

RCEP brings together the 10-member Association of Southeast Asian Nations (Asean), China, Japan, South Korea, Australia and New Zealand. The countries have made an offer to India, which pulled out of talks last November, to see if it is prepared to rejoin discussions.

"If India is unable to rejoin the discussions in the coming month, then plans will continue to proceed with the legal scrubbing for the preparation for the siging at the end of the year," Chan told reporters.

"At this point in time we are still on track for the signing by the RCEP countries at the end of the year," he added.

Chan was speaking to reporters today to outline plans to restart Singapore'e economic activity after curbs put in place to stop the spread of the coronavirus.

Singapore will progressively ramp up its manufacturing activities, with the city-state looking to restart its economy as coronavirus curbs start to ease over the next few weeks.

Sectors that are intertwined with the global supply chain such as biopharmaceutical and petrochemicals as well precision manufacturing will be among priority sectors, Chan said.

Only about 17% of Singapore's labour force is currently working onsite to maintain essential services and support for global production chains and connectivity.

Chan said workplaces will have put in place prescribed measures to minimise the risk of infection before they can reopen. He added that those who are able to work from home will have to continue to do so for the foreseeable future.

"So we will not be able to open some of the social entertainment outlets, but we will focus on our manufacturing capacities and production capabilities first," he said.

The city-state is facing the deepest recession in its 55-year history, compounded by so-called "circuit breaker" restrictions, which are aimed at stemming the spread of the novel coronavirus and are due to last until June 1.

Singapore will start allowing some businesses to reopen from May 12, authorities said on Saturday

Separately, Chan said troubles at Hin Leong Trading Pte Ltd, one of Asia's top oil traders, were not a reflection of the wider situation in the Singapore oil trading market. However, he said the wider oil trading market will be hurt by global oversupply issues. – Reuters

source https://www.thesundaily.my/business/singapore-minister-says-rcep-trade-deal-on-track-for-year-end-signing-MB2366970

Buffett’s Berkshire Hathaway reports US$49.75 billion quarterly loss

WASHINGTON: Hard-hit by the market rout surrounding the coronavirus pandemic, Berkshire Hathaway, the holding company of Warren Buffett, has reported first-quarter net losses of nearly US$50 billion (RM215 billion), it reported on Saturday.

The company, based in Omaha, Nebraska, called the setback "temporary" but said it could not reliably predict when its many businesses would return to normal or when consumers would resume their former buying habits.

Buffett is considered one of the savviest investors anywhere. His fortune of US$72 billion is the fourth-largest in the world, according to Forbes, and in normal years, the company's annual gathering in Omaha is a high-point of the calendar for investors, a "Woodstock for capitalists."

But the devastating economic impact of the pandemic has hit hard at Berkshire Hathaway's wide range of investments, and the need for social distancing forced it to hold the annual meeting online.

Buffett, in a statement, played down the bleak-looking net figure. He said a better measure of the company's performance was its operating earnings, which exclude investments and are less subject to sharp fluctuations.

By that measure, Berkshire Hathaway saw growth to US$5.9 billion from US$5.55 billion a year earlier.

The brutal drop in the net – to a loss of US$49.75 billion from a profit last year of US$21.7 billion – resulted primarily from the virus-related decline in value of its broad investment portfolio, which ranges from energy to transport to insurance and technology.

The annual meeting often has an almost carnival atmosphere, as thousands of fans and investors flock to Nebraska to hear from the celebrated "Oracle of Omaha." Buffett, famous for his relatively sedate lifestyle, turns 90 on Aug 30.

In documents filed Saturday, Berkshire noted that until mid-March many of its companies were posting "comparative revenue and earnings increases" over the same 2019 period.

Many of its companies – including in rail transport, energy production and some manufacturing and service businesses – are deemed essential and are able to continue working amid the far-reaching confinement orders.

But their turnover slowed considerably in April, the company statement said.

Buffet said he's confident the US economy will bounce back from its pummelling by the coronavirus pandemic because "American magic has always prevailed."

Buffett also announced on Saturday that his company had sold all its stakes in four major US airlines last month, as the pandemic clobbered the travel industry.

"It turns out I was wrong," he said of his acquisitions of 10% stakes in American Airlines, Delta Air Lines, Southwest Airlines and United Airlines.

Berkshire Hathaway had paid US$7 billion to US$8 billion, and "we did not take out anything like that," he said.

Between the purchases that took place over months, and the sale, "the airlines business I think changed in a very major way" and could no longer meet Berkshire criteria for profitability, he said.

"We've faced great problems in the past, haven't faced this exact problem – in fact we haven't really faced anything that quite resembles this problem," Buffett said in a lengthy speech on the country's economic history.

"But we faced tougher problems, and the American miracles, American magic has always prevailed and it will do so again."

Buffett addressed his shareholders in a livestream flanked only by Gregory Abel, who is in charge of Berkshire's non-insurance operations. His business partner for six decades, 96-year-old Charlie Munger, did not appear. – AFP

Buffett said his company sold all its stakes in four major US airlines last month. – AFPPIX

source https://www.thesundaily.my/business/buffett-s-berkshire-hathaway-reports-us-4975-billion-quarterly-loss-JB2366856

Oil-hungry Asian nations pounce on low prices to build stockpiles

SINGAPORE: Some oil-hungry Asian nations are taking advantage of the collapse in prices caused by the coronavirus pandemic to build up their crude stockpiles.

Here are some questions and answers about strategic reserves and the region's oil supplies:

What are strategic oil reserves and why do countries need them?

Strategic reserves are stockpiles of oil and other fuels held by governments in secure storage facilities to cover unexpected disruptions to energy supplies.

Major economies such as the US, China and Russia began to build up reserves after oil shocks in the 1970s, according to Ravi Krishnaswamy, regional senior vice president for energy and environment at consultancy Frost & Sullivan.

The events that spurred them to take action were principally the 1973 Yom Kippur War between Israel and the Arab nations, and the 1979 Iranian revolution, which fuelled worries about supplies.

How big are the strategic reserves across the region?

China is believed to have the biggest in the Asia-Pacific. Beijing does not give an official estimate but analysts say it is at around 550 million barrels. In comparison, the United States' strategic reserves currently hold around 630 million.

State-owned China National Petroleum Corporation said recently that the country's reserves were "obviously insufficient, and have not yet reached the international standard '90-day safety line'".

The International Energy Agency requires its members to hold emergency oil stocks equivalent to at least 90 days of net oil imports. China is an associate member, but not a full member.

Japan's oil reserves were around 500 million barrels at the end of February, equivalent to national consumption for more than seven months, according to the latest official data, while South Korea had around 96 million barrels in strategic reserves as of December 2019, enough for 89 days.

India, by contrast, has reserves with storage capacity of about 40 million barrels – which would last just 10 days in the country of 1.3 billion people.

How are reserves stored?

Strategic reserves are stored largely in secure underground depots like natural rock caverns.

The US Strategic Petroleum Reserve, the world's largest supply of emergency crude, is stored in huge underground salt caverns along the Gulf Coast.

But building underground storage is challenging as it needs to have the right geological formation, and countries also need to build infrastructure to pump oil in and out.

The high cost of building reserves has stopped many countries developing them to sufficient levels.

In Asia, India uses caverns to store its reserves but other countries, such as Japan, put theirs in above-ground tanks.

Which Asian countries are pouncing on low prices to build up stockpiles?

Australia, which has long had one of the lowest levels of emergency stockpiles in the developed world, said it will take advantage of the fall in prices to develop a strategic reserve in the United States. The country's own storage capacity is already full but it has an agreement with the US allowing it to lease space in its Strategic Petroleum Reserve.

In China, the Shanghai International Energy Exchange last month gave approval for state-owned Sinopec Petroleum Reserve to add more storage capacity. One storage depot in southern Guangdong province can hold up to 600,000 cubic metres (3.8 million barrels), while another in northern Hebei province can hold up to one million cubic metres.

India's Ministry of Petroleum tweeted on April 15 it was buying crude to fill its reserves, stored in rock caverns, "to their full capacity".

Madhu Nainan, editor of industry publication PetroWatch, however, questioned whether the country had enough available storage space to build up capacity quickly. "In India, storage tanks and pipelines are full and dealers' tanks are full," he told AFP.

Japan and South Korea, with ample stockpiles, have not announced plans to build up their reserves substantially. A Japanese trade ministry official said current levels were sufficient, while Seoul plans to increase stockpiles by less than 1% this year.

Could low prices boost the region's economies when lockdowns are lifted?

It looks unlikely, in the short term at least. Many observers believe economic activity won't bounce back quickly with the gradual lifting of lockdowns but only when a vaccine for the virus is discovered – which could be some time away.

"Low oil prices won't turbocharge Asian economic recovery," Jeffrey Halley, OANDA senior market analyst, told AFP.

Are there any winners from low prices?

Major oil-importers in Asia – such as China, Japan and South Korea – would in usual times benefit from low prices but this is unlikely to be the case immediately given the economic devastation caused by the pandemic.

In Japan, for example, "the price crash has hit financial markets hard, which is negatively affecting the Japanese economy", said Toshihiro Nagahama, an economist at Dai-ichi Life Research Institute. "We can't apply our usual framework to this unprecedented period."

Some economists, however, expect oil prices to stay low for a long period, meaning major importers could eventually emerge winners.

"Oil prices are expected to remain low to some extent when the post-corona era comes, and given the current situation, it will have a positive effect on (South Korea's) economy in terms of recovery," said Jung Jun-hwan, a researcher at the Korea Energy Economics Institute.

There are also "obvious losers" in Asia, such as oil exporters Malaysia, Indonesia and Brunei, said OANDA's Halley. – AFP

source https://www.thesundaily.my/business/oil-hungry-asian-nations-pounce-on-low-prices-to-build-stockpiles-AB2366839

Saudi stocks dive after finance minister vows 'painful' measures

DUBAI: Saudi shares tumbled today, a day after the finance minister announced "painful" measures to tackle the economic impacts of the coronavirus pandemic.

The Tadawul stock market closed the day a huge 7.4% lower, as all but one of the 195 listed stocks on the Arab world's largest bourse were in the red. Energy giant Saudi Aramco skidded 5.2% at the close of the first trading day of the week.

Finance Minister Mohammed al-Jadaan said late Saturday that the kingdom would take "drastic measures" to face the double shock of the novel coronavirus and low oil prices.

"Some of these measures could be painful," he said in an interview with Saudi-owned news channel Al-Arabiya.

The minister expected that Riyadh could lose half of its oil income, which contributes about 70 percent of public revenues, as oil prices have shed two-thirds of their value since the start of the year.

Jadaan said the government had allocated US$48 billion as stimulus to assist the economy in the face of the coronavirus impacts. He said the world's leading crude exporter would borrow close to US$60 billion this year to plug a huge budget deficit.

The company Saudi Jadwa Investment forecast on Thursday that the kingdom would post a record US$112 billion budget deficit this year.

The International Monetary Fund in April projected that the Saudi economy would contract by 2.3% this year. And London-based Capital Economics said last week the contraction would be at least 5.0%, one of the biggest drops in several decades.

Moody's Investors Service on Friday changed Saudi economic outlook to negative from stable but affirmed its A1 ratings.

"The negative outlook reflects increased downside risks to Saudi Arabia's fiscal strength stemming from the severe shock to global oil demand and prices triggered by the coronavirus pandemic," the rating agency said.

In other bourses in the oil-rich Gulf, the Dubai Financial Market slumped 4.0% at close while its sister Abu Dhabi Stock Exchange ended down 2.8%. Qatar's bourse finished 0.9% lower while Kuwait's premier index and all-shares index closed down 2.0% and 1.8% respectively. The small bourses of Oman and Bahrain were flat.

Oil revenues make up at least 70% of public revenues in each of the six Gulf Arab states. – AFP

source https://www.thesundaily.my/business/saudi-stocks-dive-after-finance-minister-vows-painful-measures-IB2366802

Web Bytes to extend contactless solutions for F&B operators beyond MCO period

PETALING JAYA: Retail management software company Web Bytes Sdn Bhd will be continuing to offer its “live order” mobile point of sales (POS) for food & beverage (F&B) operators past the movement control order (MCO) period, as it believes the trends of contactless services will continue well into the future.

The MCO was implemented on March 18, and will be conditionally lifted today.

CEO Ooi Boon Sheng (pix) told SunBiz that the POS solution was developed for F&B operators who could not entertain dine-in clientele during the MCO, and therefore had to quickly implement safe distancing measures for their customers.

It offered the solution to all F&B operators in Malaysia for free, as it recognised that many mom-and-pop F&B players did not have the technology and financial means to enable them to adapt.

Customers coming to restaurants to order takeaways only need to use their smartphone to scan a QR code that may be placed outside the premises.

This will redirect them to a menu selection webpage, where they can place their orders and make payment online, without needing to even enter the shop or wait at the cashier. Physical handling and touching of a printed menu, or the need to write on an order chit or to speak to a waiter, are eliminated as well.

“What we do now is not just for the MCO period. We believe it’s a new norm. People are now ‘forced’ to order food and buy groceries online. This trend will be here for many years. Even after the MCO, this solution will be widely adopted,“ said Ooi.

It is also working on a similar solution for retail players, with the delivery of the retail goods to be handled by GD Express Carrier Bhd, which owns a 32% stake in the company.

Ooi said this service, which does not take a commission from the retailers, will enable pick-ups from stores and the delivery of goods to customers, but noted that it is not a point-to-point delivery.

“If you’re running a pharmacy, for example, you have less walk-ins during the MCO, but you still want to sell your products, this is where it comes in handy.”

Meanwhile, Ooi said Web Bytes was not directly affected by the implementation of the MCO, but as a software provider, it waived its April subscription fees as a form of relief for customers who could not operate during the period.

Since the MCO started on March 18, Ooi said Web Bytes had no choice but to give a hefty 40-50% discount to its customers, instead of a full month’s subscription for March. As a result, its revenue for the month of April has dropped over 80%.

While its staff worked from home during the MCO period, Ooi said 10 staff were stationed at KLIA to support the airport’s POS operations.

“We still need to have our people at the airport because there are essential services shops operating. We also make sure that every team and departments have a set of work-from-home deliverables,” said Ooi.

source https://www.thesundaily.my/business/web-bytes-to-extend-contactless-solutions-for-fb-operators-beyond-mco-period-NB2366483

Reopening the Malaysian economy in a new normal

AFTER 47 days of the movement control order (MCO), most businesses have been allowed to resume operations today. As Malaysia’s economy wakes up from the necessary partial shutdown, which has been effective in arresting the spread of the Covid-19 pandemic, the days ahead will look very different. The economy reopens to a new normal.

We enter with a grim picture at the beginning, facing an expected economic loss of RM63 billion from the MCO. Many people would have lost their jobs. Many firms, both large corporates and small medium enterprises (SMEs), would not have escaped unscathed with many of them facing insolvency. The negative effects on credit markets, supply chains, and worker productivity will only dissipate gradually.

The policy objective now is to ensure firms return to their pre-crisis production and employment levels as rapidly and safely as possible.

A detailed plan for the post-MCO phase would require close coordination between the private sector and the government. The unprecedented scale of the pandemic means that the return to work will need to be gradual and phased, and heightened caution is necessary to prevent further waves of infection.

The government, in recent days, has been working to provide information with standard operating procedures for employees to follow social distancing norms to ensure safe work conditions. This support is especially important for SMEs as such companies are likely to have lower capacity than larger ones to scale up the kind of management response necessary and to put in place adequate mitigation measures.

While clear before, the current crisis has increased the benefits SMEs could derive from using new technologies, for instance through remote work and online business platforms. Measures should be identified to further increase the rate of digitisation among SMEs in Malaysia. Subsidized or free broadband access and direct technical support could be provided to SMEs to accelerate the transition to digital platforms.

Once businesses can safely operate, efforts should focus on boosting demand and reactivating supply chains. Adopting broad-based fiscal stimulus consistent with available fiscal space can help lift aggregate demand.

The measures adopted and the way they are implemented should continue to reduce physical transactions or unnecessary face-to-face interaction. Measures should also be scalable and timebound, allowing the government to increase the scope of assistance provided, reduce it as the crisis subsides, and increase it again if the virus surges.

This article is contributed by World Bank senior economist Smita Kuriakose.

source https://www.thesundaily.my/business/reopening-the-malaysian-economy-in-a-new-normal-BB2366542

K-One ramps up operations to full capacity

PETALING JAYA: K-One Technology Bhd has ramped up its operations, consisting research, design & development and manufacturing activities, to full capacity following the approval by the Ministry of International Trade & Industry (Miti) to operate during the movement control order (MCO) period.

The group said this is in line with Miti senior minister Datuk Seri Mohamed Azmin Ali’s call for businesses that have been allowed to operate to ramp up their operations to full capacity effective April 29.

“The company will abide by the standard operating procedures that have been set by Miti and the relevant authorities,” K-One assured in a stock exchange filing today.

Previously, K-One was granted approval to operate during the MCO as it plans to focus on the engineering development and prototype build of ventilators, at the same time assessing the design and development of swabs used to collect sample material for Covid-19 tests which may be 3-D printed to meet the surge in demand.

In the initial approval, the number of employees permitted working on the premise is to be reduced to a minimum or at most 50% of the current or registered number.

source https://www.thesundaily.my/business/k-one-ramps-up-operations-to-full-capacity-JD2353795