Malaysia largest import & export products in 1st quarter 2009

Malaysia's largest export statistics/contributor to the economy Jan 2009:

1st = Semiconductor devices (electrical and electronic appliances) RM13.7 billion/ 35.9%
2nd = Liquefied natural gas (LNG) RM4.2 billion/ 10.9%
3rd = Palm Oil & palm oil-based products RM3.8 billion/ 9.8%
4th = Crude Petroleum RM1.8 billion/ 4.7%
5th = Timber-based products RM1.4 billion/ 3.6%
6th = Petroleum products RM958.6 million/ 2.5%

Malaysia's largest import products/goods:

1st = Intermediate goods (raw material) RM19.9 billion/ 67.4%
2nd = Capital goods (machinery) RM4.8 billion/16.4%
3rd = Consumption goods (final products) RM2.4 billion / 8.2%

Malaysia’s top ten trading partners were Japan, Singapore, the United States of America, the People’s Republic of China, Thailand, the Republic of Korea, the Federal Republic of Germany, the Republic of Indonesia, Hong Kong and Australia. These countries collectively contributed 71.7% or RM48.6 billion of Malaysia's total trade for January 2009.

Harvard referencing:

Source: Department of Statistics Malaysia, 2009, Preliminary Release of Malaysia External Trade Statistics January 2009, Putrajaya, Malaysia, Available from...... [Accessed 12th March 2009]

Critical to keep good employees during an economic downturn

By the Star

It is critical to keep employee engagement level high at all times, particularly during an economic downturn, so that an organisation can navigate a crisis and return to stability and profitability, say human resources consultants.

Hewitt Associates consultant Yap Yoke Wah said organisations that had highly engaged employees had better financial results and were more capable in building a sustainable business model.

“Our research shows that the best employers have a revenue growth of about 22% year-on-year and are still able to yield such results despite the downturn,” she told StarBiz.

Yap explained that employee engagement measured the extent to which an organisation had captured the “hearts and minds” of its people to build and sustain strong business performance.

“It goes beyond satisfaction (how much I like things here) and commitment (how much I want to be here) to engagement (how much I want to and actually do improve our business results),” she said, adding that one of the top factors driving engagement was opportunities for growth.

Meanwhile, ongoing WorkAttitudes studies by Watson Wyatt Worldwide showed a strong link between employee engagement and key business metrics such as productivity and turnover.

The studies found that highly-engaged employees are 70% more likely than low-engagement employees to exceed performance expectations. They miss 27% fewer days of work due to illness and they represent very low turnover risk.

Talent2 International Ltd director for South Asia Leigh Howard concurred that high levels of employee engagement correlate to improved performance in areas such as retention, turnover, productivity, customer service and loyalty.

Howard said employee engagement ranked well in Malaysia but predicted that its level would be tested as people begin to feel less secure about their jobs.

“As employees begin to feel there are less developmental opportunities at their workplace and are unsure about their long-term future, their sense of commitment and engagement will tend to fade,” he said.

Hence, he said it was not an option to ignore employee engagement during an economic slowdown.

“Don’t hide bad news from employees but instead be open and honest to eliminate gossip and speculation.

“Utilise your line managers in this instance to work more closely with their teams and create a sense of common purpose in their daily work lives,” he added.
Meanwhile, Yap agreed that the level of engagement among the best employers in Malaysia was still fairly high and had not gone through any drastic changes, despite the current economic environment.

“However, globally we are seeing a dip in engagement,” she said.

Watson Wyatt’s studies reiterated that economic uncertainties could potentially weaken engagement and it was crucial for employers to engage their employees even when business had slowed down.

“Companies in Malaysia must create a culture of continuous engagement built on strong strategic direction and leadership, intense customer focus as well as transparent and equitable compensation packages,” it said in a report on its findings.

It added that companies that excel in these areas were likely to make it through the current crisis and deliver superior results in the years ahead.

Kumpulan Sentiasa Cemerlang (KSC) says it..

By Biz Times

MALAYSIAN fund manager KSC is bullish on consumer stocks such as tobacco company BAT Malaysia and utilities such as YTL Power
due to the dividends they pay, but is steering clear of state-controlled power firm Tenaga Nasional.

Choong Khuat Hock, director of research at Kumpulan Sentiasa Cemerlang (KSC), which manages about US$150 million, told Reuters in an interview the deepening economic crisis boosted the allure of dividend-paying stocks as safe-haven plays.

Food maker Nestle Malaysia, mobile phone company DiGi.com and independent power producer (IPP) Tanjong were also expected to be resilient in a worsening economy, said Choong. But it was a different story with Tenaga, he said.

“The problem for Tenaga is that industrial production and electricity demand have dropped quite a bit. The company is suffering from a fall in electricity demand,” said Choong.

Tenaga, which supplies two-thirds of the country’s electricity needs, must purchase all capacity produced by IPPs regardless of its requirement.

The company swung to a net loss in the first quarter and warned that its financial performance would worsen due to ballooning capacity payments to IPPs.

MORE EARNINGS DOWNGRADES?

KSC currently owns 106,000 shares of Tanjong and 217,000 shares of YTL Corp, according to Thomson One Analytics.

YTL Corp is the parent of YTL Power. Choong declined to comment on what stocks the company is buying or selling.

Malaysian companies finished their reporting season for the October-December quarter last week, where many companies such as No. 2 palm oil producer IOI and builder WCT reported a big drop in net profits due to a surge in customer defaults, provisions and investment writedowns.

JPMorgan said in a report on the quarterly results from 44 Malaysian companies that 39 per cent had reported earnings below expectations.

“The world economy is getting worse, Malaysia is not immune. Going forward, there will be worries about further earnings downgrades,” said Choong.

The fund manager said he does not expect any major surprises from the second stimulus package to be unveiled by Malaysia’s government on March 10.

The second stimulus package is widely expected to be larger than the first one which was put in place last November and worth about US$2 billion.

“I guess they will pump prime, spend more money on infrastructure and they will presumably relax or open up the services sector as well.

But then there is only so much they can do given that our budget deficit is already quite high,” said Choong. - Reuters

Malaysia's top 10/20 companies performed 2008

Last week we saw the article by the star stating corporate's economic reports to be due at the end of Feb 2009. This week we are able to see the chart provided by Biz Times on Malaysia's top 20 companies performed in 2008.

* Source by Business's Times

By Biz Times's Goh Thean Eu

Most companies reported worse-than-expected numbers, only six of the top 20 posted better quarterly results - PPB Group, Hong Leong Bank Bhd, BAT (Malaysia), RHB Capital, Public Bank and Malayan Banking.

MOST Malaysian companies reported weak financial numbers recently, highlighting the many ways a global economic downturn can hit earnings.

Apart from sluggish demand from consumers abroad, currency movements are also becoming a more important reason for lower profits.

"Foreign exchange (forex) losses are certainly one of the main themes for most companies in this reporting season. However, at the end of the day, it is just accounting losses," ECM Libra Investment Research head Ching Weng Jin told Business Times.

Companies must deal with the effects of a stronger or weaker foreign currency in their accounts immediately, due to accounting rules. However, they are unrealised, which means that no payments were made and it won't change a company's cash position. Big companies, mainly those with international presence or have borrowed in the US currency, were badly hit in the final quarter of 2008.

A weaker ringgit against some major currencies has made debt payments more expensive for these companies.

The quarter's worst two performers, Tenaga Nasional Bhd and TM International Bhd, were mainly hit by a weak ringgit. IOI Corp Bhd was partly hit by currency losses too. But analysts said investors should pay attention to a company's business.

"The main thing for us is still the company's operations, because a company which suffered forex losses last year could bounce back this year as soon as the economy recovers and ringgit strengthens," Ching said.

Still, most companies reported worse-than-expected numbers.

"Overall, companies performance were slightly below my expectations. So many rapid developments the effects of which were difficult to quantify," said Jupiter Securities Sdn Bhd's head of research Pong Teng Siew.

Only six of the top 20 companies posted better quarterly results, they include, PPB Group, Hong Leong Bank Bhd, British American Tobacco (Malaysia) Bhd, RHB Capital Bhd, Public Bank Bhd and Malayan Banking Bhd.

"The banks did much better than I had expected," said Pong.

This year, analysts expect earnings to fall further, mainly due to a weaker economy, with forex translation continuing to hurt.

"(Currency) volatility is going to be quite evident this year, with economies still trying to find their footing in the current environment. So reported earnings could be affected somewhat," Ching explained.

Analysts added that corporate earnings may also be hit due to higher provisions, money set aside to cover potential losses, and write- downs.

"Any strong sets of earnings numbers would probably be lost in a market like this where sentiment is poor and interest is weak. So, it may be a good time for companies to take all these hits now," said an analyst who declined to be named.

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.

Click here to register

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.