US pressure on China to review exchange rate would risk of destabilising Asia

By Financial Times

Washington’s pressure on China to adjust its exchange rate could destabilise Asia, the governor of the Malaysian central bank warned on Wednesday.

Zeti Akhtar Aziz said global imbalances built up over the past 10 years could not be rectified in the space of a few months. The US has run up a huge current account deficit while Asian economies are mostly in surplus.

“If the US puts pressure on China to readjust its exchange rate too much ... it could lead to destabilising consequences for Asian economies ... You cannot expect the unwinding of global imbalances in the short term,” she told the Financial Times.

Ms Zeti fears that if the renminbi quickly appreciated against the dollar it would reduce Chinese demand for goods from other Asian countries, which rely heavily on exports to the region’s biggest economy.

The new US administration has stepped up pressure on Beijing to let its currency appreciate to make US exports more competitive, thereby boosting growth. Measured against the dollar, the renminbi gained about 20 per cent in the three years following its revaluation in July 2005. It has been treading water against the dollar since then.

Ms Zeti said most Asian economies were in good shape to cope with the global financial crisis because they had built up foreign currency reserves and were not heavily indebted. Unlike countries in eastern Europe, which have turned to the International Monetary Fund for financial support, most Asian economies do not need to raise money.

“We are not so vulnerable, in that we expect to have surpluses going into this year and next,” she said.

Ms Zeti admitted, however, that Malaysia and other small Asian countries would suffer this year as exports plunged. The latest IMF forecast shows output among newly industrialised Asian countries contracting by 3.9 per cent this year. In Malaysia, exports fell 14.9 per cent in December, a big setback as exports are worth 100 per cent of gross domestic product.

This week Malaysia cut its key interest rate for a third time, by half a point to 2 per cent. The reduction is the latest sign of concern that the country may slip into recession. Ms Zeti said growth this year was expected to be flat.

Malaysia outsourcing position could be in jeopardy (Call center Malaysia)

By Biz Times

MALAYSIA'S position as a preferred outsourcing hub could be in jeopardy as investors turn to cheaper locations during these tough economic times, an industry official said.

"While we may fare well with infrastructure, political stability, human capital and financial security, the million dollar question is still 'Are we cost-attractive?'," Customer Relationship Management and Contact Centre Association of Malaysia (CCAM) president Leo Ariyanayakam said.

He said since January this year, the industry has seen global clients looking for ways to cut costs.
"In the past month itself, we have seen blue-chip companies that used Malaysia as an outsourcing hub migrate up to 80 per cent of their back-office operations out of the country. "In times like these, cost is pivotal to global companies operating outside their shores. Malaysia may not have the desired cost advantage today to drive global outsourcers to its shores without stiff competition from countries like the Philippines," Ariyanayakam told Business Times.

He said there are many areas that the government can help to make Malaysia attractive as an outsourcing destination.

They include:
* Subsidising the cost of providing local human capital to the industry;
* Re-training grants to deploy displaced workers into the contact centre industry; and,
* Subsidising real-estate cost so that immediate value and cost propositions can be made to outsourcing clients to retain their businesses in Malaysia.

"A national framework for retraining and skills enhancement needs to be accelerated to provide value-added job creation for all categories of workers, be they unemployed graduates, the recently retrenched or the under-employed.

"With this in mind, speed-to- market is of the essence and funds for the re-education of our workforce are urgently required," Ariyanayakam said.

He said the government could also increase the number of value-added jobs available by providing enhanced services to the public, through the provision of outsourced contracts to local firms.

CCAM has about 500 members and they comprise mainly those in the banking, finance, hospitality, telecommunications and entertainment sectors.

Ariyanayakam is also chief executive officer and group executive director of Scicom (MSC) Bhd.

*Scicom (MSC) Berhad is a call center located/ address @ Menara TA One, Jalan P.Ramlee. Their clients include Nokia, GE money, Singtel, BAT, Viva Macau and etc.

Mah Sing new project in setapak

By the Star

Mah Sing Properties Sdn Bhd is set to launch its latest commercial project, StarParc Point, in three months following good response from a project preview last week, said deputy chief operating officer Andy Chua.

“Whatever factors a good commercial development should have, we have it here at StarParc Point. What’s more, most of the land around that area is leasehold except for our land.

“We expect to sell off the project this year,” he told StarBiz in an interview yesterday.

The RM118mil StarParc Point is an integrated business hub in Setapak consisting of three-storey shop offices and six-storey retail-cum-office suites on five acres of freehold land. Besides fronting Jalan Genting Klang where there is heavy foot traffic, the project offers over 8% rental yield potential, interesting architectural design and a weather-controlled outdoor yard.

The office suites are priced from RM295,000 or about RM200 per sq ft, while the three-storey shop offices are selling for about RM2.3mil or RM400 per sq ft. The retail unit costs about RM1.3mil each.

Chua said the pricing for the development was “reasonable” in view of the similar prices fetched by surrounding leasehold properties.

He added that the group was working with banks to provide buyers up to 85% financing.

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Satyam saga’s impact on outsourcing industry

By the star

SATYAM’S fall from grace has been much discussed.

Besides tarnishing the accounting image of all Indian companies, this saga has newfound consequence to the outsourcing industry as a whole. With one of its stars being jolted into the spotlight for the wrong reasons, the entire industry is left to lick its wounds and consider the profound impact to the perception of the industry in the midst of challenging times.

Though unfair, the saga has affected confidence in India as a preferred choice of outsourcing destination. Recently, India’s IT industry suffered a major blow with the barring of Wipro Technologies and Megasoft Consultants from doing any work with World Bank.

These and other similar outcomes have alienated a number of clients from outsourcing companies in India. With the belief that the Satyam scandal may not be an isolated case, people are now starting to question the viability of other Indian companies as well.

Collectively, these events have a disastrous impact on the outsourcing industry for India and the IT industry as a whole. The question now is to what degree will this saga continue to beset Satyam and India, and more importantly how does the world perceive this?
A question of bad timing?

Indeed, the news could not have come at a worse time. Already struggling amidst the backdrop of a weak global economy, the global outsourcing industry now faces a new obstacle – an erosion of confidence.

Consider this. Even before the Satyam scandal broke out, companies were already trying to undercut one another with ridiculously low rates with some companies in India believed to be willing to offer up to a fifth off its competitors’ price.

Following the scandal, outsourcing companies will now have to confront another real obstacle on top of a slowing global economy.

Many questions are now posed after Satyam’s demise. How would customers now guarantee that the outsourcing company that they invest millions of dollars in, would not suffer the same fate as Satyam? What about shareholders and more importantly, financial institutions?
All these factors combined place huge strains upon even the largest outsourcing companies in the world when one can no longer count on a solid reputation to close deals or obtain financing backing.

Satyam’s collapse was so sudden and so badly affected the company that it reportedly didn’t have the money even to pay salaries in January (although subsequently they managed to secure some funding for this). Imagine, if this could happen to the first ever Indian Internet firm to be listed on the Nasdaq, the fear factor is exponentially increased for other smaller outsourcing or IT companies.

The prospects are becoming more daunting when anti-outsourcing voices are growing louder by the day, emanating from the US. Coupled with a weakened US economy, outsourcing companies that used clinch large contracts from American companies may need to brace themselves for a hard landing, especially those based in India.

Closer to home

Whilst the Satyam incident is mostly detrimental to outsourcing companies in India, there might be a reprieve for other countries that are building on their outsourcing competencies and trying to benefit from a slice of the Indian monopoly on major outsourcing deals.

Albeit the slice is thinning, I believe we will see more companies considering options aside from India.

Countries with burgeoning outsourcing companies like Philippines and Malaysia are likely to benefit from this.

Malaysia’s appeal lies not only with its reputation as one of the top ranked outsourcing countries in A.T. Kearney’s yearly rankings, but with external factors as well.

With the strengthening of the US dollar against the ringgit, there is now greater impetus for US firms to invest in Malaysia. There is also the huge untapped Middle East market that has yet to jump on the outsourcing bandwagon and Malaysia could be well poised to benefit from its close ties with countries in that region.

Nonetheless, Malaysia faces challenges from countries like China. Upon hearing about Satyam’s fall, a China IT outsourcer introduced a “zero cost transitioning” carrot to lure customers to switch alliance.

With the market thinning, competition is fierce and Malaysian outsourcing companies need to be more aggressive to capture every available potential.

* Opportunity for Malaysia's outsourcing company to get a slice of india's strong IT market? Much effort, R&D and motivation needed to get hold a slice of this IT fat cake.

F&N is losing rights to distribute Coca-Cola and Sprite soft drinks

By The star

Shares in Fraser & Neave Holdings Bhd (F&N) plunged yesterday after the company lost the rights to sell Coca-Cola and Sprite soft drinks, tumbling RM1.15 or 12.78% to RM7.85.
About 4.2 million shares changed hands.

The selldown was sparked on concerns about the beverage maker’s prospects after The Coca-Cola Co decided not to extend its bottling and distribution agreements with F&N.
Although F&N said the non-renewal agreement was not expected to have any material effect on the operating performance for this financial year ending Sept 30 (FY09) as the agreements only expired in 2010.

In a filing with Bursa Malaysia on Wednesday, F&N said Coca-Cola Co was not extending the bottling and distribution agreements with F&N when they expired on Jan 26, 2010.
Sales revenue of Coca-Cola Co products, mainly Coca-Cola and Sprite, amounted to RM421mil, or 35% of F&N’s soft drinks division’s revenue in FY08.

Sales revenue from this division stood at RM1.2bil in FY08, or 48% of the entire group’s revenue.

Group chief executive officer Tan Ang Meng said in a statement yesterday the non-renewal of the Coca-Cola franchise agreements would give the group the opportunity to further build on the F&N brand equity, and realise a potential which was unavailable in the past.
“As a result of our new status, we are now able to launch new products and venture into new territories and export markets from which we were restricted in the past by the agreements,” he said.

Tan said the relationship between Coca-Cola Co and F&N was a dynamic one and, in the course of the collaboration, there had been differing perspectives, viewpoints and expectations.
“The group’s financial position is sound, our business sustainable and diversified and coupled with our resolve and determination, we will overcome and withstand any eventualities. While challenging, our future is indeed bright and we are confident,” he said.
Analysts were surprised when the agreements were terminated after decades-long partnership between the two companies.

Maybank Investment Bank Bhd head of research Vincent Khoo said the expiration of F&N’s 73-year union with Coca-Cola Co was unexpected.

“This is likely to de-rate F&N in terms of sentiment, as well as operationally,” he said, adding that the loss of Coca-Cola and Sprite revenues were estimated to be RM229mil in FY10 and RM475mil in FY11.

This would translate into an estimated 8.1% and 18.1% reduction in the beverage maker’s FY10 and FY11 net profit forecasts.

AmResearch said it viewed the development as negative for F&N, as its soft drinks division was the most lucrative compared with its three other divisions - dairy products, glass containers and properties.

“Assuming F&N is unsuccessful in obtaining new contracts with Coca-Cola Co, this will have a negative impact on our forecast earnings for FY10 and FY11.
“Based on our assumptions, the calculations show a potential earnings revision by as much as 14% for FY10 and a greater 22% for FY11,” it said.

Brand new Jaya Jusco in Bandar Sri Permaisuri by Aeon Co (M) Bhd?

By the Star

Aeon Co (M) Bhd has entered into a sale and purchase agreement to acquire 2.5ha of land and property for RM107.2mil from Kuala Lumpur City Hall.

The purchase comprised RM27.2mil in land cost and RM80mil in building cost to be built in the future. The land forms part of a township called Bandar Sri Permaisuri.

In a statement to Bursa Malaysia yesterday, Aeon said the acquisition would be fully satisfied by cash and financed through the company’s internal funds.

“The acquisition is in line with Aeon’s corporate strategy of accelerating the expansion of its retail business through opening of new shopping centres and outlets,” it said.

This acquisition is not expected to have any impact on the earnings per share, net assets per share and gearing of the company.

There will be no change in the share capital and major shareholders’ shareholding of the company.

*Does it mean that there will be a brand new Jaya Jusco in Bandar Sri Permaisuri? Good chance to snap new property launching in Bandar Sri Permaisuri? Your choice...

YTL Francis Yeoh is one of Asia's best executives 2008

By YTL Community News

Tan Sri (Dr.) Francis Yeoh, Managing Director of YTL Group won the accolade of being one of Asias best executive 2008 under the Asias best companies & executives category awards. ASIAMONEY talks to fund managers andanalysts to determine the best managed small, medium and large cap corporations and best executives across the region. Some attribute this patience to his Christianity. An investment banker close to Yeoh says heoften invites staff and advisers to pray before and after deal completion meetings. Whether or not Yeoh's success is the result of divine intervention, he has a knack of timing deals well.

Amongst Asias best executives 2008 were Grant King, Managing Director of Origin Energy in Australia, Zhu Min, Executive Vice-President of Bank of China, Vincent Cheng, Chairman of HSBC in Hong Kong, Liew Mun Leong, CEO of CapitaLand in Singapore, Tadashi Yanai, Chairman & CEO of Fast Retailingin Japan, Om Prakash Bhatt, Chairman of State Bank of India, Nam Yong, CEO of LG Electronics in Korea, Morris Chang, Chairman of TSMC in Taiwan, Manuel Pangilinan, Chairman of PLDT in The Philippines, Khalid Hashim, Managing Director of Precious Shipping in Thailand and Graeme Pitkethly, CFO of Unilever Indonesia.

Asiamoney, December 2008/January 2009 issue:

BEST EXECUTIVEFrancis Yeoh, managing director, YTL Group
Francis Yeoh, managing director of sprawling hotels-to-water empire YTL Group, was born into a wealthy business. He inherited his wealthy father's construction company in 1986.
But the canny business leader has proven his mettle in the years since. Under Yeoh's prudent stewardship, YTL entered both the 1997-8 Asian crisis and the current credit crisis in financial health.

Yeoh sits patiently on the sidelines during bull markets, waiting until businesses run into trouble and need to sell up cheaply. Some attribute this patience to his Christianity. An investment banker close to Yeoh says he often invites staff and advisers to pray before and after deal completion meetings. Whether or not Yeoh's success is the result of divine intervention, he has a knack of timing deals well.

In 2002, after Enron collapsed, YTL bought Britain's Wessex Water for a very cheap 1.2 billion (US$1.8 billion). And as times get tough across Asia, YTL has RM12 billion in net cash and Yeoh is on the look-out for bargains.

In October, YTL bought controlling stakes in two property funds from Australian bank Macquarie for US$189 million. The price valued the real estate investment trusts, which own a stretch of shops along Singapore's Orchard Road, at a bargain 49% of net asset value. A month later, Yeoh announced he was combing through other prospective acquisitions.
His corporate governance record is impressive, too. Unlike many Asian tycoons, Yeoh has avoided the myriad of cross-ownerships and related party transactions that so frustrate investors.

Amongst Asias best executives 2008 were Grant King, Managing Director of Origin Energy in Australia, Zhu Min, Executive Vice-President of Bank of China, Vincent Cheng, Chairman of HSBC in Hong Kong, Liew Mun Leong, CEO of CapitaLand in Singapore, Tadashi Yanai, Chairman & CEO of Fast Retailingin Japan, Om Prakash Bhatt, Chairman of State Bank of India, Nam Yong, CEO of LG Electronics in Korea, Morris Chang, Chairman of TSMC in Taiwan, Manuel Pangilinan, Chairman of PLDT in The Philippines, Khalid Hashim, Managing Director of Precious Shipping in Thailand and Graeme Pitkethly, CFO of Unilever Indonesia.

Higher Unemployment for 2009

By JobsDB

Economists are projecting Malaysia’s jobless/unemployment rate to rise to between 4 and 4.5 per cent this year following a third-quarter 2008 spike when lay-offs were four times those in Q2, says the online news portal, The Malaysian Insider.

It noted that some 11,560 workers were retrenched in Q3.

And the rate of job losses is expected to accelerate this year, with estimates that between 200,000 and 400,000 people could be laid off should the global slowdown bite deeper into consumer demand.

The news portal said tor export-reliant Malaysia - the country’s external trade to GDP is 172 per cent - manufacturing would be hit hardest. And the electrical and electronic (E&E) and automotive-related sectors would likely be bruised most.