Tan Sri Halim Saad set to take Sumatec up the corporate ladder


July 31, 2014

Tan Sri Halim Saad set to take Sumatec up the corporate ladder

by Sharen Kaur@www.nst.com.my – 31 July 2014 @ 1:15 AM

ASSET INJECTION: Firm targeting more than RM1b profit by 2018, say sources

FORMER Renong Bhd Executive Chairman Tan Sri Halim Saad is scaling up Sumatec Resources Bhd, which is set to make more than RM1 billion in net profit by 2018.

Halim Saad3

Halim controls 24.9 per cent of Sumatec and has been maintaining his shares since last November as he believes that the company can grow fast. “He is not selling his shares any time soon. He plans to build up the company by injecting more assets into it. He is eyeing some oil and gas (O&G) assets in Central Asia,” said a source.

Sumatec expects to produce 30,000 barrels of oil a day in Kazakhstan by 2018. Sources say the company is targeting an average net profit of US$30 (RM95.30) per barrel. “This means it will make around US$900,000 a day from 30,000 barrels, or more than US$328.5 million a year, compared with less than US$20 million currently from existing operations,” said the source.

For the financial year ending December 31 2014, Sumatec is projecting RM69 million in profits. The firm is producing oil at the Rakuschechnoye field with Markmore Energy (Labuan) Ltd, which is 99 per cent-owned by Halim.

Sumatec expects to produce 5,000 barrels of oil and gas a day from this field in the next three years. It is also acquiring Borneo Energy Oil and Gas Ltd, which owns 100 per cent of Buzachi Neft LLP, for US$250 million in cash and shares.

Buzachi has two 25-year contracts  to explore and produce oil and gas in the Karaturun Vostochnyi and Karaturun Morskoi fields, also known as Buzachi Fields.

At a recent media briefing, Sumatec Chief Executive Officer Chris Dalton said he expects the acquisition to be completed by October. He said the two assets will contribute US$1.62 million to Sumatec’s profits in the fourth quarter.

Sumatec is targeting to produce 25,000 barrels of oil and gas a day from the Buzachi Fields.  Meanwhile, Sumatec is expected to move out of its  PN17 status by next month and will submit its application to the Securities Commission soon.

ASEAN political-security community challenges


July 13, 2014

ASEAN political-security community challenges

Munir Majidby Tan Sri Dr. Munir Majid@www.thestar.com.my (07-12-14)

 THE People’s ASEAN would not be a reality if the politics is not right – both the domestic political systems in which the people live and the wider regional order that underpins the peace, stability and prosperity of their lives.

Economic Growth and Political Rights

As ASEAN member states are increasingly discovering, the previous contention that economic growth andASEAN_logo_1 benefit will satisfy citizens without need to be over-excited about political rights, is wearing thin. That model does not work any more, if it ever did. Certainly, if nothing else, the ICT revolution and social media have provided a shared marketplace of experiences in political societies across the globe. It is no longer possible to pull the wool over people’s eyes. So state authorities have to get smart to it, whatever political system they profess.

In this connection, the notion of an ASEAN political-security community (APSC) is apposite. The APSC blueprint actually is hard to be faulted. Whoever writes these things, and those who adopt them, must really know what’s happening around them, even if they do not quite come along in action against their profession in words.

Read this: The APSC… ”will ensure that the peoples and member states of ASEAN live in peace with one another and with the world at large in a just, democratic and harmonious environment.” Some more: “The ASEAN states will offer democracy, rule of law and good governance, and will ensure respect for the promotion and protection of human rights and fundamental freedom”.

All good intention. However, even if this is all aspiration, it stretches credulity when it is observed how some states in ASEAN have stagnated as communist regimes, others have regressed into persecution and murder of minorities and workers, and yet another has introduced draconian religious laws.

APSC and Human Rights

Little wonder then that there is so much cynicism about, for example, the ASEAN Inter-Governmental Commission on Human Rights (AICHR) set up in 2009 under the auspices of the APSC “to promote and protect human rights.” Where in ASEAN, through the AICHR, are human rights being protected on their violation?

It is in their promotion that refuge is taken. Even so, the promotion is gentle. Go to the AICHR web-site and you will see many pictures celebrating numerous workshops to promote human rights. More ASEAN meetings while religious minorities are being persecuted and put to the sword in enough ASEAN member states.

These are all difficult situations to handle no doubt. ASEAN Foreign Ministers try to discuss the Rohingyas issue but Myanmar would not have it, and will only do so on a bilateral basis with states facing refugee problems as a consequence of its human rights violations. And it comes to pass.

Well, the UN Universal Declaration of Human Rights was adopted in 1948, and where has the world been? Rwanda-Burundi, Bosnia, Syria, Palestine… the list is endless and the suffering never-ending. So why pick on ASEAN? But, shall we say, ASEAN is talking about community-building and higher standards of commitments to good governance? Therefore, there is every reason to hold ASEAN to a better protection on human rights and treatment of citizens.

The laudable objectives of the APSC, and in the setting up of the AICHR, should not be left on the shelf as we approach the end of 2014. The blueprint itself provides for biennial review. This review process should be reported and be held in a more open fashion, with the participation of representatives of civil society, who must however appreciate the issues of state sovereignty and ASEAN cohesion.

The hard question is not how to put aspiration down in words but how to implement it in difficult situations and circumstances. That review process should come up with creative ideas of making the words turn into at least some action, at least in respect of protection of human rights, and not just kick the matter to long grass by having more workshops and meetings to study it.

ASEAN, China and South China Sea

South China Sea

When it comes to international relations and the wider regional order, the gap between verbal exhortation and actual action is just as wide. For the longest time, ASEAN behaved as if there was no serious situation arising from the South China Sea disputes. And when ASEAN got real about it, emboldened China would suggest, it was only after US intercession. This was not good for relations with China or for the resolution of the dispute.

While no doubt there is a grave threat of the outbreak of conflict, especially from various stand-offs between China and Vietnam, China with the Philippines, the damage already done is to China-ASEAN relations. These have been extremely beneficial economically for the region. Their further development could be retarded by this “spoiler”, not to mention the threat it poses to existing economic links.

Of course, if there was actual conflict, it is something else again. We will be in new territory of uncertainty, suspicion and fear which, as we know, are bad bedfellows for investment and economic activity.

Against these near existential threats, ASEAN has been reticent and not united in addressing the South China Sea disputes. Whereas, in the APSC blueprint, it is clearly stated ASEAN will seek full implementation of the Declaration of Conduct (DOC) of States of 2002 and the establishment of a binding code of conduct under the declaration in the South China Sea.

Has there been any urgency to achieve all this before matters came to a head, before America got more involved again in regional affairs and, yes, before China got more assertive with its claims? It could be charged that ASEAN’s desultory approach has carried a cost to the stability of the regional order.

ASEAN is, of course, not one unit, it is only inter-governmental, but it makes claims for itself and gives false hope of its effectiveness by proclaiming all sorts of things in so many words, including this blessed thing about ASEAN centrality in the regional architecture. These last six exact words are to be found word for word in the blueprint and, indeed, have been repeated countless times at diplomatic convocations where those who know very well this is not the case repeat it for ASEAN’s happiness.

The APSC blueprint has been too extravagant, especially measured against ASEAN inaction. Not just on the South China Sea, but also in other pronounced areas such as conflict resolution mechanisms and the pacific settlement of disputes in the broader context.

ASEAN-a great economic prospect but...

ASEAN is a great prospect, especially its economies. But the market does not buy on prospective earnings indefinitely. If that was the case, it would be buying Latin America which, in terms of total economic size (against ASEAN’s combined much touted 7th largest in the world) is three times the Indian or Russian economy, and almost as large as China or Japan.

The point is ASEAN does have great prospect, but it will not come of itself. There has to be a more realistic mission statement, better structure and management – and better managers. Then the prospective earnings ratio might even rise.

So there has to be a reset and a rethink about how ASEAN can improve performance against all its limitations. But not just among government leaders and officials. And not to be assigned to some council of elders who would come back some years later with a document even older. It has to be fresh and dynamic involving people with ideas from all levels of society.

Yes, ultimately the political leaders of the region would decide – based however on a good and realistic plan for the future of the People’s ASEAN.

 Tan Sri Dr Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB ASEAN Research Institute. The views expressed are entirely the writer’s own.

 

“Friendly” Advice to Najib on Leadership


July 12, 2014

“Friendly” Advice to Najib on Leadership

by Nigel Aw@www.malaysiakini.com (07-11-14)

Taking a shot at Prime Minister Najib Abdul Razak’s comparison between Brazil’s devastating defeat in the World Cup semifinals and the need for strong leadership, Tun Dr Mahathir Mohamad offered some pointers.The former premier said a strong leader would reject the Trans-Pacific Partnership Agreement (TPPA).

“I think it is Najib himself who said we need strong leaders. What is the qualification of a strong leader? It is the ability and willingness to stand up against foreign pressure and protect the interest of this country. If you don’t do that then you cannot be considered a strong leader,” he told a press conference in Shah Alam.

Tun Dr. MahathirMahathir was speaking to reporters after launching a book entitled ‘TPPA: Malaysia is not for sale’ by the Malay Economic Action Council (Mtem). Asked if he thought Najib was a strong leader, Mahathir, who celebrated his 89th birthday yesterday, replied: “I don’t know.” “Because it all depends on the test or challenges he faces and how he handles it,” he said.

Asked if Najib’s stance last Friday that Putrajaya intends to go ahead with the TPPA but on Malaysia’s terms was assurance enough, Mahathir insisted the agreement should be scrapped altogether.

“In the first place, why is it (TPPA) done in secret if it is not to cheat people? I think the mark of a goodThe Silent One leader is the ability to reject what is not good for this country,” he said.

Earlier in his speech, Mahathir repeatedly made references to Najib’s statement on the need of strong leaders in making his case against the TPPA. He added that the country had been able to develop well even without free trade agreements in the past.

Mahathir was also asked about Pakatan Rakyat’s leadership in Selangor but he appeared to have mis-heard the question and instead commented on BN’s leadership in the state.

“I’m sorry to say, we should have done better in the last election but we did worse in 2008.There is a lack of leadership there or the system we used was all wrong and we should not continue to do wrong things,” he said.

Abide by the Constitution

On another matter, Mahathir said the country should abide by the constitution which provides for a constitutional monarchy and parliamentary democracy.

“If you break that, people will break other parts of the constitution then there will be chaos,” he added. He was asked to respond to readers’ comments in his latest blog posting which raised concerns about the Johor royal family’s involvement in the Iskandar region.

In the blog posting, Mahathir had weighed into the rapid development in southern Johor but expressed concern that it might become a region of foreigners like Singapore.

Asked what he thought about the comments to his posting on the royalty’s involvement in business, he replied: “If people feel we are a free country, we are very liberal, people can speak their mind, no more ISA so people can say what they like.

IMD (Switzerland) World Competitiveness Survey: Malaysia moves up to 12th position


July 8, 2014

IMD (Switzerland) World Competitiveness Survey: Malaysia moves up to 12th position

img_enewletter-issue7-01Malaysia  ranked 12 in List of 60 economies

Malaysia moved up the world competitiveness ranking again, securing a spot in the enviable top dozen and improving the country’s attractiveness to investors.

The International Institute for Management Development (IMD), a Switzerland-based top-ranked business school, lifted Malaysia to 12th position from 15th last year in a list of 60 economies.

“The improved rankings will renew interest and attract investments to the country,” IMD World Competitiveness Center director Professor Arturo Bris told the New Straits Times. The country also continues to be ahead of the United Kingdom (16th), Australia (@17th), Finland (18th), New Zealand (20th), Japan (21st) and South Korea (26th).

Malaysia, Bris said, improved its openness to foreign markets and attracted capital and investment at increasing rates.

In a separate statement, International Trade and Industry Minister Datuk Seri Mustapa Mohamed saidMiti's Mustapa 12th position was Malaysia’s best performance in the past four years and reflected the progress of the Government Transformation Programme and the Economic Transformation Programme.

“Malaysia expects a much better performance in the next three to five years as more of its initiatives begin to bear fruit,” he said.

The Survey

The World Competitiveness Yearbook 2014 is the 26th publication since 1989.The findings are compiled each year by IMD’s World Competitiveness Center in a survey of 60 economies called the World Competitiveness Yearbook.

The yearbook analyses and ranks the ability of each nation to create and maintain an environment that sustains the competitiveness of enterprises.The survey rates at the availability of fixed telephone lines, broadband, railroad network, part-time employment market, illiteracy, medical assistance and other criteria.

The report is based on statistical data and perception data obtained through a survey that reviews 338 criteria in four categories:

  1. Economic Performance covers the domestic economy, international trade, international investment, employment and price.
  2. Government Efficiency looks into public finance, fiscal policy, institutional framework, business legislation and societal framework.
  3. Business efficiency looks at productivity and efficiency, the labour market, finance, management practices, attitudes and values.
  4. Infrastructure rates technological, scientific, health, environmental and educational infrastructure.

In the category of countries with gross domestic per capita of less than US$20,000 (RM64,300), Malaysia remained at the top among 29 economies. Among countries with populations above 20 million, Malaysia climbed up to 4th position from 5th last year.

In ASEAN, Malaysia remains number two after Singapore and ranked third in the Asia Pacific region compared with fourth last year, while Thailand, Indonesia and the Philippines are fourth, fifth and seventh respectively.

Malaysia has consistently performed well in other international surveys, including being ranked 6th by the World Bank in Ease of Doing Business 2014, 24th in the World Economic Forum’s Global Competitiveness Report 2013-2014 and 32nd in the Global Innovation Index 2013 by INSEAD Business School.

Mustapa Mohamed:Malaysia’s Productivity grew by 2.3% in 2013


June 26, 2014

Mustapa Mohamed: Malaysia’s Productivity  grew by 2.3% in 2013

Report by BERNAMA dated June 25, 2014

Malaysia Productivity Report 2013-2014Malaysia registered a productivity growth of 2.3% last year to a productivity level of RM60,437 from RM59,064 in 2012

Based on the Productivity Report 2013/2014 which was launched today by the Minister of International Trade and Industry (Miti), Mustapa Mohamed, the growth has helped Malaysia’s Gross Domestic Product (GDP) to expand 4.7% to RM786.69 billion in 2013, supported by a growth in employment of 2.3%.

MUSTAPA MOHAMAD 02In his speech at the launch, Mustapa (left) said the 2.3% growth in labour productivity compared to two per cent in 2012 could be attributed to the performance of key sectors of the economy, as well as technological progress, capital deepening and widening and the quality of labour.

“The launching of the Productivity Report for 2013/2014, in its 21 years running, strengthens the government’s agenda to enhancing the nation’s productivity. In this report, Malaysia Productivity Corporation (MPC) has emphasised the productivity framework which is based on shared Malaysian values of collaboration, coordination, communication and competency that drives national development agendas such as the Economic Transformation Programme, the Government Transformation Plan and the Malaysia Plans,” he said.

According to the Productivity Report, the services and construction sectors performed well in 2013, with labour productivity growing by 4.8% and 5.2% respectively. However, labour productivity in the agriculture sector declined by 3.5%.

The reported added that MPC made a few recommendations to address the issues facing Malaysia’s productivity goals such as how to nurture a competitive and productive mindset, promote incentives within targeted industries and strengthen regulatory review to boost national productivity.

Mustapa said Malaysia’s productivity growth surpassed that of many advanced economies, including Australia (1.4%), Japan (1.3%), Singapore (1.6%), South Korea (1.7%) and the United States (0.9%).

On another note, Mustapa said in the first three years of the Tenth Malaysia Plan (10MP) implementation, the average contribution of Total Factor Productivity (TFP) to the country’s GDP was 19.7%. He said in terms of labour’s contribution, the country needed to improve the quality of labour by strengthening policies and offer firms the right incentives to create modern jobs that will attract higher wages and increase productivity through the application of technology.

“Thus, all of us, including those in the government and representatives in trade unions and associations, must make a concerted effort to ensure higher growth with improvements in technology, research and development as well as investment in human capital,” he added.

Malaysia’s Top Economist and Mr.Transformer speaks


June 24, 2014

Malaysia’s Top Economist and Mr. Transformer speaks

I missed this one dated June 20, 2014, posted in Malaysiakini because Dr. Kamsiah and I were away in Taipei. Reading it, I thought the authorities in Taiwan should have appointed Dato Seri Idris Jala as their chief propagandist.  So here it is:

idris guitarSenator Dato’ Seri Idris Jala is a Minister in the Prime Minister’s Department and CEO of Malaysia’s Performance Management and Delivery Unit (PEMANDU), an organization tasked with ensuring Malaysia meets the goals set forth under the National Transformation Programme (NTP).

He spoke with The Prospect Group about the Economic Transformation Programme’s (ETP) goals for 2014, which includes Gross National Income (GNI), investment, and job creation, and ensuring Malaysia’s economy is resilient in the face of global uncertainty.

Q: What are the ETP’s main focal points for 2014?

JALA:

Our focal point for 2014 is to make sure we implement. We have to implement what we promised under the ETP as well as the GTP. The public wants results and the way in which we have to fulfill those results is to execute the initiatives within the 12 National Key Economic Areas (NKEAs) that will achieve big results fast.

Q: What are your 2020 GNI, investment, and job creation goals?

JALA:
By the year 2020, we would like to have become a high-income economy that fulfills the GNI targets of $15,000 per capita. That is our long-term goal. To do that will require a lot of investment; something like $444bn is needed to propel the Malaysian economy to grow. We also need to create 3.3m jobs; you have to create a lot more high-paying jobs so that the citizens can benefit. So those are the three true-North targets: gross national income per capita, private investments that will drive it, and jobs that are created. The good news today is that, from when we first began, in four years, we have been able to grow our total GNI per capita by 50%. We are at the halfway mark today. So we are very pleased with the progress made on the GNI target. With regard to job creation, we are supposed to create 3.3m jobs, and we have created 1.3m jobs in the four-year period. So that is really very good.

We have met more than 60% of the investment targets, signifying we are well on the way to achieving this as well. My view today is that we would like this coming year to continue in the same way as we have experienced over the last three years. That means that everything is on the right trajectory. If things continue the way that they are, we will fulfill our targets before 2020.

 

Q: In terms of time frame and the trajectory you are on today, when do you anticipate these goals will be achieved?

JALA:
I think we should reach our targets by the year 2018. But, as you know, the world is not linear. If you look back over the last four years, it has been a good run for us, but we are subject to what happens in the global economy. We have to build in a lot more resilience within the Malaysian economy to face any global crisis or any global slowdown to ensure we can weather storms that happen between now and the year 2020. It has been a very good run for the last four years.
Q: In a world of constantly changing economic realities, how can Malaysia’s Economic Transformation Programme (ETP) and National Key Economic Areas (NKEAs) adapt?
JALA:

Adaptation is a very important requirement moving forward for Malaysia. So what we want to do in Malaysia moving forward is to ensure we build enough resilience in our economy.Let me begin by saying we must implement proper fiscal reforms. Public debt in our case should not exceed 55% of our GDP. Now there are many countries that have gone to 80%, 90%, 100%, and even 190% public debt to GDP. So if you make sure that you grow the economy and make sure the government debt is below the 55% threshold, we believe that is the way to go. You cannot and should not over leverage, so we are really focusing on that.The second thing about being resilient as an economy and being able to face any un-foretold difficulties with the global economy is to make sure we do not have a fiscal deficit that exceeds 6%. We have been steadily reducing our fiscal deficit. When we first started, our fiscal deficit was 6.6%. We have since cut that down to 5.8%, and then to 4.8%, and last year we reached 3.9%.

The other aspect of making sure we can adapt is obviously to make sure we have the right competent talent. A competent talent pool means that whatever structural changes take place in the economy, people are able to be mobile and will do what is needed to produce products and services that can compete in the world outside.

The other is that we made changes in the way the civil service operates. We have become a lot more efficient and the good news today is that we have been able to improve the ease of doing business. It is very easy to do business in Malaysia. The World Bank assessed Malaysia in 2009 at number 23. We then moved to number 18, and then to 12, and last year, for the first time, we moved to number 6 overall in the world in terms of the ease of doing business. So if it is easy for investors to put money and investment in Malaysia, and at the same time the government is fiscally prudent and we bring in all the fiscal reforms, and we have a talent pool in the country, then we can adapt very quickly to changes that are happening.

Q: How does this philosophy play into the ideology that Malaysia should move away from being a primary resource based economy and into a higher value added service based economy?

JALA:
If you look at the history of Malaysia, we were an agrarian economy during independence in 1957 and then we moved into a more commodities play. So what we are now doing is making sure that our manufacturing arm grows a lot bigger and we have started doing that. In fact, when it gets down to palm oil, we are now telling the industry it is fine and good for us to do a lot more primary products and selling that as crude, but it is much more important for us to start producing downstream products such as oleo chemicals and we gave a lot of incentives to allow this to happen as evidenced by the establishment of more refineries. That is happening as we speak today, the downstream component has to come in. At the same time, between now and 2020, we wanted to see that we increase the services sector of the GDP to become more than 60% and we have been growing that rapidly. You can see today that tourism is big for us, financial services are big, the health sector as a part of the economy is also growing, and the education sector. So all of these all together, they will become, by the year 2020, at least 60% of our GDP. So I think for the first time doing this, we will have to diversify the economy so that we do not rely entirely on the commodities play, but we get into the downstream part of the same sectors and at the same time we grow the services sector. I think if you add the two together, the Malaysian economy becomes more resilient.