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Saturday, August 8, 2015

The riddled Ringgit Malasia hits 17-year low against US dollar

Falling rate: A moneychanger worker showing the ringgit and US dollar notes in Kuala Lumpur recently. The ringgit is still falling versus the greenback.

Policy Matters - The riddled ringgit

CURRENCY traders are speculators. They make their money by taking bets; betting that this currency will rise, or that will fall.

Traders deal with the sentiments of the moment. They place their bets on the basis of expectations. They are quick to sniff weaknesses and take advantage of them.

The Malaysian ringgit has been vulnerable in the hands of traders. Not that traders are evil people. This is just how capitalism works.

Buying and selling from minute to minute, based on breaking news, even rumours, foreign exchange strategists do not ponder over fundamentals and the long-term equilibrium value of a currency when short-term pressures are overwhelming.

With allegations of financial impropriety running wild, there is nothing juicier that traders can chew on.

Bank Negara Malaysia, the one organisation that would know about the movement of huge sums of money, has been aloof. As waves of rumours and allegations rise and crash, silence does not do anything to quell speculation.

Then, there have been recent political developments: the deputy prime minister, other ministers and the attorney-general were dropped.

The prime minister has had to roll up his pants and walk into the rising tide. Any attempt to induce calm can, at times, induce more speculation.

Again, a field day for speculators.

The outlook is not very promising for much of the year.

A declining ringgit would make exports cheaper while raising the cost of imports. In the short run, theory indicates that the trade balance would decline.

With the passage of time, again as theory suggests, the volume of exports might increase. At this point the value of the ringgit would rise.

Until such time as the ringgit floats back to its equilibrium level, the declining ringgit will not do a lot of good.

A declining ringgit would make the consumption of imported goods from machinery and equipment to chocolates more expensive. This would lead to a decrease in household consumption of foreign goods and services, and it would also reduce investment in capital. The latter would not be beneficial because it would affect future production.

Should there be an interest rate hike in the United States in September BNM might find it necessary to respond with a hike in Malaysia. This might stem some of the capital outflow, but it would also act as a dampener on domestic investment.

The declining ringgit would drive the central bank to prop up the ringgit, as it perhaps already has. This has led to the decrease in international reserves. Malaysia has had more than adequate reserves, so a run-down on reserves will not be damaging.

It would be problematic to see the ringgit slip after the sell-off of reserves. That would mean wasting resources only to see a short-lived support of the ringgit.

Another worrying factor is the impact of the fall in the ringgit on Malaysia's foreign debt. A weaker ringgit would mean a higher cost in debt servicing.

International rating agencies are known to look unkindly at declining international reserves and exchange rate weaknesses.

Hence, a deeper concern might be a downgrade in Malaysia's credit rating. It would be a pity if Malaysia were to be slapped with a downgrade because the government has gone to great lengths to convince international agencies of our credit worthiness.

Although the outlook is not particularly bright, all is not out of our hands.

First, confidence must be restored in our economy. In particular, companies must be given the support they need to wade through the difficulties they face.

Second, the domestic political risk factors have to be better managed.

Third, although there is not much room for expansionary fiscal policies, it may need to be used to counterbalance an economy that is faced with a slump in confidence and enthusiasm. Stakeholders must be reminded that the country's development plans are on track.

Fourth, it is necessary to convince stakeholders that the central bank can act appropriately should the ringgit continue to face strong pressures.

Trying to save the day by persuading agents not to sell the ringgit has a flat timbre to it, at least under current conditions.

Fifth, initiatives must be taken to push ahead with good institutions and governance structures. This is in keeping with the government's overall programme, and it is now most opportune to stress the commitment to this objective.

The Malaysian economy has weathered many a crisis. The challenges that present themselves now are not trivial, but they are surely surmountable.

By Shankaran Nambiar

Dr Shankaran Nambiar is author of The Malaysian Economy: Rethinking Policies and Purposes. The views expressed in this article are his own. Comments: letters@thesundaily.com

Ringgit to ease further against US dollar next week


KUALA LUMPUR: The ringgit is expected to depreciate further against the US dollar next week, as falling commodity prices coupled with domestic political development will hurt investor confidence further, a dealer said.

The dealer said consistent talks over a possible US interest rates hike next month has prolonged the greenback's strength, with most emerging Asian currencies succumbing to selling pressure including the ringgit.

Last Thursday, the ringgit breached 3.9000 against the dollar for the first time since the Asian financial crisis 17 years ago, amid political tensions. The local note was pegged at 3.80 per dollar from 1998 to 2005 during the Asian financial crisis by the then Prime Minister Tun Dr Mahathir Mohamad.

Capital Advisors Currency Trader, Justin Herling, told Bernama that other factors such as declining oil prices and China's struggling economy had largely contributed to the depreciation of the ringgit.

He predicted the ringgit to further depreciate to 4.05 over the next 30 days.

"However we see this as a short-term correction but in the long term fundamentals still remain strong," he added.

For the week just ended, the ringgit traded lower against the US dollar at 3.9220/9250 from 3.8230/8260 recorded last Friday.

The local currency also fell against the Singapore dollar to 2.8291/8317 from 2.7775/7799 last Friday and weakened against the yen to 3.1429/1458 from 3.0771/0800 previously.

It declined against the pound sterling to 6.0881/0943 from 5.9509/9563 last week and was easier against the euro at 4.2836/2885 from 4.1816/1860 previously. – Bernama

Getting into the ringgit engine room

The depreciating ringgit has caught the imagination of most people on the streets. Beginning this week, we are featuring a special column on the mechanics of the currency and the forces that dictates its movements.Armed with two decades of experience as an interest rate and foreign exchange strategist in various financial institutions, Suresh Ramanathan will be looking into the intricacies of currency markets. With a Doctorate in Economics from Universiti Malaya, Suresh specialises in Modelling of Interest Rate Swaps, Foreign Exchange Forwards and Monetary Policy Signalling.Voted as Asia’s best foreign exchange strategist last year by AsiaMoney, he remains intrigued and fascinated by the workings of financial markets.

JUST how much is a currency worth? Exactly what the last buyer was willing to pay for it. That is the short answer. The longer answer is complicated.

In Malaysia’s foreign exchange (forex) markets, figuring out what a currency is worth is suddenly urgent. Trading is erratic, bid and offer spreads are wide and volume is thin as the market adapts to currency volatility. Determining the fair value of a currency is not an easy task either, disagreements between economists on what the fair value is or how it is measured becomes a banter at coffee bars and rigorous in academia. While the simple approach in analysing recent currency weakness is taking a top-down approach – meaning looking into macro-economic issues, followed by external and internal factors – affecting the economy.

But in the current environment, it may not suffice. Expectations of currency depreciating is built over a period of time until it reaches a breaking point.

The breaking point for ringgit is when the rest of the macro economic variables such as economic growth, inflation and trade balances are impacted.

The big question being where exactly is the breaking point for the ringgit? For the ringgit, a factor that stands out, is the arbitrage-speculative mechanism in the forex forward market.

A forex forward contract is an agreement between two parties to buy or sell currency at a specified future time at a price agreed upon today. It is available in all banks and used primarily for exporters and importers as a hedging instrument. The forex forward market has two features – one being a deliverable forward contract traded in the domestic market and settled in ringgit.

The other feature being a non-deliverable forward (NDF) contract that is settled in US dollar and traded offshore. Generally the NDFs are traded in financial centres such as Singapore, London and New York.

The mechanism of how a NDF trade and settlement works is based on the tenure of the contract followed by the fixing rate. The tenure can range from one month to a year or more and the price is fixed at the time the trade is entered into between two parties.

The trade, fixing and settlement dates are crucial since the period between the inception of the trade and the fixing can decide the profit and loss of a non-deliverable trade.

The fixing of the ringgit against the US dollar is currently done onshore through a spot fixing mechanism monitored by Bank Negara. The mechanism of fixing the rate onshore or in the domestic market removes certain elements of arbitrage and speculation.

But it does not prevent traders from taking a position in the offshore market by going into an agreement to buy or sell NDFs. It provides an arbitrage opportunity. In simple terms, the difference between the spot rate that is fixed in the domestic market and the offshore rate indicated by the MYR NDF provides an arbitrage opportunity for traders.

The second channel of arbitrage – speculation involves yield when one buys or sell a currency contract in the forward market. Between the period of inception of the trade and the fixing date, the MYR NDF yield can move either way. It is here where banks profit the trade, via using the implied NDF yield arbitrage versus the onshore forward yield.

This spread has been the lynchpin of trading mechanism for currency markets, particularly for emerging market currencies that are not convertible in the international market and not allowed to trade offshore. This is a legacy that was left behind from the Asian financial crisis of 1997/98 when Malaysia imposed capital controls and ringgit no longer became an international tender.

In the current trading environment of ringgit, spreads on the implied yield between onshore and offshore forward markets have persistently stayed above 1%, since the third quarter of 2014. An implied yield spread of more than 1% between onshore and offshore forward market indicates weakness of the ringgit against the US dollar.

This provides an avenue for markets to exploit the difference in yield, particularly for financial institutions that have access to both the onshore and offshore foreign exchange forward market. As the arbitrage window gradually closes and the spread between offshore and onshore implied yield from the foreign exchange forward narrows, the impetus for the ringgit to weaken further slows in pace, and it is here the risk of the currency swinging to the firm side picks up momentum.

Bottom-line, it’s not the macro view ala top-down that affects the ringgit. It’s the trading arbitrage in the currency that truly plays a significant role for the ringgit’s current predicament.

By SURESH RAMANATHAN


The difference between now and 1998

THE ringgit is falling and so is the stock market. Contagion worries are building.

That scenario is a reality for Malaysian capital markets and the anxiety over a slowdown in China’s economy has got many worried about its effect on economic momentum in Malaysia.

Parallels from such a situation today can be drawn against what happened during the Asian Financial Crisis of 1997/98 but the setting is different than what happened almost 20 years ago.

Going back to 1997/98, it was a time when growth in Malaysia and South-East Asia was booming. Overheating worries turned into whether such growth was sustainable.

Starting with the attack on the Thai baht, the currencies of many South-East Asian countries were soon under attack.

The ringgit too felt the brunt of such attacks and at the worst, fell to RM4.80 to the dollar before recovering and ultimately pegged at RM3.80 to the dollar in September 1998.

“In 1997/98, it was contagion that caused problems. The currency crisis turned into a financial crisis,” says independent economist Lee Heng Guie.

The reasons for the fall in the ringgit this time is different.

The value of the ringgit was for some time after the peg was removed linked with the price of crude oil. As the price of crude oil rose, so the ringgit.

But as the price of crude oil collapsed like it has now, the ringgit felt the brunt. Political uncertainties in Malaysia is not helping the value of the ringgit.

The price of West Texas Intermediate is now at US$44.81 a barrel

The danger is what will happen to the real economy as the ringgit weakens?

The external trade sector will do well as seen in June’s export numbers. The steep decline of the ringgit in June lifted external trade by 5.0% year-on-year to RM64.3bil. “In part, the weak ringgit currency spurred exports growth during the month. Ringgit fell to an average of RM3.74 per US dollar in June versus RM3.60 in May. Exports growth were driven by most export products except the exports of petroleum including crude petroleum, LNG and petroleum products. Primarily, the exports of E&E surged by 13.5% following two months of contractions,” says AmResearch in a note.

Although there are similarities in the movement of the ringgit between 1997/98 and today, the stark contrast was economic strength.

In 1997 Malaysia had a current account deficit and a fiscal surplus. That situation reversed a year later and has been so ever since. The ringgit peg at RM3.80 afforded stability to exporters and that swelled the trade account in 1998. A fiscal deficit was realised after the Government embarked on priming, with the aid of lower government debt than today, to kickstart the economy which had been ravaged by a steep decline in economic activity.

One of the reasons why businesses found it hard going in 1998 was corporate leverage. A number of corporations were saddled with big debts and institutions such as Danaharta Nasional Bhd was formed to restructure corporate debt in Malaysia.

Conditions are reversed for most of corporate Malaysia today. Leverage has been kept in check and cash balances among corporates are in a far healthier state than it was in 1997/98.

The difference was also foreign reserves. From a high of US$34.6bil in May 1994, foreign reserves dropped to a low of US$17.5bil in 1997. Foreign reserves in Malaysia was US$96.7bil as at July 31.

Although the quantum of foreign reserves compared with the size of the economy is a comparative consideration, economists point out that the amount of reserves today is sufficient for nearly 7.6 months of imports. Back then, it was enough for just 3.2 months of imports.

“We have come a long way from the past. The banking system is well capitalised compared with back then,” says AmResearch economist Patricia Oh Swee Ling.

The biggest difference between 1997/98 and today are households.

During the Asian financial crisis almost two decades ago, household debt as a percentage of GDP was a meagre 16%.

At the end of last year, it was 87.9% and remains at an elevated level. The man in the street was generally immune to the crisis although there was an uptick in unemployment and higher loan repayments for loans as interest rates spiked.

While per capita income today is in excess of RM35,000 compared with RM12,314 in 1998, cost pressures have emerged. The goods and services tax (GST) has crimped spending power among consumers and retail sales, according to the Malaysia Retailers Association, contracted by 3% in the second quarter compared with a rise of 4.6% in the first quarter of 2015.

Purchasers by consumers has been a big factor in the growth of the economy and if private consumption, which accounts for 50% of GDP according to an economist, falls, then that will put pressure on economic growth in the second quarter.

Economic weakness ahead

Bank Negara will release second quarter GDP numbers next week and the general consensus is it will be lower than the first quarter. The consensus is for a growth of 4.5% for the second quarter.

Citigroup, in a note, projects second quarter GDP to come in at 4% compared with 5.6% in the first quarter.

“Services were dragged down by a 11.2% year-on-year plunge in motor vehicle sales post GST, while transport and utilities were also soft. Loan growth was stable, though fund raising in capital markets lifted financial services growth,” it says.

Citigroup says growth in mining slowed to below 8% from a year ago in the second quarter on weaker production volumes in gas and oil.

“Manufacturing also slowed below 5% year-on-year on softer April-May electrical and electronic production, although rebounding in June to 7.1% year-on-year. Growth was likely cushioned by a turnaround in palm oil production and strong construction.

“From an expenditure perspective, the slowdown in second quarter GDP growth was likely led by domestic demand, especially consumption. We remain cautious on third quarter prospects given continued slump in the Composite Leading Indicator, second half growth should be cushioned by base effects, a gradual recovery from the GST induced slump, and a lift to manufactured exports from a US recovery,” it says.

Affin Hwang Capital believes that despite households adjusting to the GST following its implementation in early April, it believes private consumption will remain supportive of economic growth in the second half, supported by favourable labour market conditions on the back of steady increase in income and low unemployment rate in the country.

“Malaysia’s real GDP growth is expected to slow from 5.6% y-o-y in the first quarter to an estimated 4.5% in the second quarter, before recovering to an average of 5% y-o-y in the second half. We highlighted that our full year 2015 GDP forecast remained unchanged at 5% in 2015, at the mid-point of the official forecast of between 4.5% and 5.5% (6% in 2014).”

Moody’s Investors Service was more optimistic. It expects Malaysia’s economy to grow by 5.1% in the second quarter.

“Exports are the main drag, driven by soft global demand and low oil prices. This filters through to the domestic economy as unemployment rises and consumers reduce spending. Capital expenditure should remain buoyant as government infrastructure projects come on line.

Malaysia’s economy should pick up later this year as the global economy strengthens,” it says.

By JAGDEV SINGH SIDHU The Star/Asia News Network

Slide continues despite efforts to arrest fall

THE ringgit slide continues despite aggressive attempts by the central bank to shore up the beleaguered currency.

Bank Negara said yesterday the country’s international reserves fell to US$96.7bil as at end of July, down US$8.8bil from a month ago. It came from a high of US$140bil in 2013.

Analysts said the recent sharp fall in reserves indicated that Bank Negara had step up its intervention in the currency market.

The ringgit had been under tremendous pressure in recent months as the outflow of funds continued unabated.

Bank Negara said foreign investors cut their holdings of Malaysian bonds by 2.4% to RM206.8bil in July. This is the lowest level of foreign holding in the Malaysian bond market since August 2012.

The outflow from the bond market coincided with the sell-off seen in the stock market.

MIDF Research earlier this week said global investors had pulled out an estimated RM11.9bil from Bursa Malaysia as of end of July.

This added to the RM6.9bil that left the stock market last year.

The rush to exit by foreign investors was a major force behind the ringgit’s sharp decline year-to-date. The local currency exchange rate against the US dollar hit 3.93 yesterday, which is a new 17-year low.

That put the ringgit down 11% year-to-date and made it Asia’s worst performing currency so far this year. To some, the currency’s recent plunge evokes an eerie reminder of past financial crisis.

The ringgit was fixed at 3.80 against the US dollar in September 1998, at the height of the Asian financial crisis. The currency peg was removed in July 2005.

Ten years down the road, the ringgit is again under pressure. And so are other currencies across the region as global investors adjust to the prospect of tighter monetary policy in the US.

In Indonesia, the rupiah was down 8.5% against the US dollar, while its stock market declined 8.7%.

Capital Economics, an independent macro-economic research firm said the biggest threat to Malaysia is slump of its currency and lower commodity prices that is hurting exports.

“With the exception of Malaysia, where US dollar debt is high, currency weaknesss is not a major threat to the region,” it said.

State owned Petroliam Nasional Bhd (Petronas) sold US$5bil of US dollar denominated bonds in March, while Tenaga Nasional Bhd recently said about 6% of its RM24bil debts are in US currency.

Others like 1Malaysia Development Bhd (1MDB) also have a significant portion of its RM42bil debts in foreign denominated currency.

Malaysia has also been hit hard by the fall in global commodity prices. The country is a net exporter of crude oil, liquefied natural gas and is ranked among the largest exporters of rubber and palm oil

For the first six months, exports declined 3.1% from a year ago, largely due to lower prices of commodities.

Next week will be a busy one for the market as the Government is scheduled to release the country’s factory output figures on Monday followed by gross domestic product (GDP) for the second quarter on Thursday.

The country’s economic performance and its outlook by the central bank should provide some bearing for the ringgit, which some analysts, including those at CIMB Research expect to touch RM4 against the US dollar by the end of the year.

By IZWAN IDRIS The Star/Asia News Network

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Friday, August 7, 2015

Penang deals with S’poreTemasek to build RM1.3bil Business Process Outsourcing Prime in Bayan Baru complex

Joining forces: Temasek Consumer & Real Estate head and Southeast Asia head David Heng (fourth right) exchanging the agreement documents with PDC general manager Datuk Rosli Jaafar. The event is witnessed by Lim (centre).

Penang Development Corporation (PDC) has inked a joint venture agreement with two Singapore-based companies to develop a RM1.3bil Business Process Outsourcing Prime (BPO-Prime) Complex in Bayan Baru.

The complex will be built on a 2.8ha of land where the PDC office is located currently.

Chief Minister Lim Guan Eng, who witnessed the agreement signing ceremony, said the collaboration with Temasek Holdings and Economic Development Innovations Singapore is a testimony of confidence and trust the international business community has in the future of Penang.

“BPO-Prime will represent the prime business hub in Malaysia’s Multimedia Super Corridor at Penang Cyber City 1 in Bayan Lepas with a gross developmental value of RM1.3bil and gross floor area of minimum RM1.6mil sq ft,” Lim said.

He added that the project would start in 2016 and was expected to finish by 2019.

Lim said BPO-Prime would be the catalyst for the Penang’s industrial transformation, such as creating a new cluster of economic development in BPO, Knowledge Process Outsourcing and Information Technology Outsourcing.

“It will also become the home to multinational companies and it is estimated to create 4,000 high-income and quality job opportunities.

“Its high value added ser-vices hub includes customer operations, data processing, back office administration, accounting, technical support, transcription, software development, IT consultancy and disaster recovery services,” he said.

Lim said BPO-Prime would ensure progress in economic vibrancy, social development, liveability and sustainability.

“The Shared Services Outsourcing (SSO) sector has achieved rapid growth over the years and the state’s SSO is providing more than 8,000 high-income jobs to locals as well as serving both regional and global markets,” he said. - By The Star

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Thursday, August 6, 2015

MH370: Aircraft debris found on La Reunion is from missing Malaysia Airlines flight

Malaysian Prime Minister Najib Razak (C) attends a press conference on the missing Malaysian Airlines flight MH370 in Kuala Lumpur, Malaysia, Aug. 6, 2015. Verification had confirmed that the debris discovered on the Reunion Island belongs to the missing Malaysian Airlines flight MH370, Malaysian Prime Minister Najib Razak announced here early on Thursday. (Xinhua/Chong Voon Chung)



KUALA LUMPUR, Aug. 6 (Xinhua) -- Verification had confirmed that the debris discovered on Reunion Island belongs to missing Malaysian Airlines flight MH370, Malaysian Prime Minister Najib Razak announced early Thursday.

"Today, 515 days since the plane disappeared, it is with a heavy heart that I must tell you that an international team of experts have conclusively confirmed that the aircraft debris found on Reunion Island is indeed from MH370," the prime minister said.

"We now have physical evidence that, as I announced on 24th March last year, flight MH370 tragically ended in the southern Indian Ocean," Najib said.

"This is indeed a major breakthrough for us in resolving the disappearance of MH370. We expect and hope that there would be more objects to be found which would be able to help resolve this mystery."

The airlines will update the families and cooperate with the authorities, he added.

The prime minister said his country remains dedicated to finding out what had happened on board the flight. "I would like to assure all those affected by this tragedy that the government of Malaysia is committed to doing everything within our means to find out the truth of what happened."

Meanwhile, the Malaysia Airlines said the finding had been confirmed jointly by the French Authorities, the French Bureau of Enquiry and Analysis for Civil Aviation Safety (BEA), the Malaysian investigation team, the technical representatives from China and the Australian Transportation Safety Bureau (ATSB) in Toulouse, France.

The debris was discovered on Reunion Island on July 29 and was officially identified as part of a plane wing known as a flaperon from a Boeing 777.

Prior to the latest discovery, a massive surface and underwater hunt had failed to find the plane in what has become one of the biggest mysteries in the aviation history.

The plane went missing on March 8, 2014 en route from Kuala Lumpur to Beijing with 239 on board, most of them Chinese. - Xinhua

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Tuesday, August 4, 2015

Malaysian construction projects shrunk in Q1


The real property gains tax, the difficulties in obtaining housing loans from banks and the impact of the goods and services tax had affected demand, which in turn slowed down the number of new property launches, Penang Master Builders and Building Materials Dealers’ Association president Datuk Lim Kai Seng (pic) told StarBiz.

GEORGE TOWN: The value of construction jobs given out in the country in the first quarter of this year fell to RM11.6bil from RM12.5bil in the corresponding period a year ago.

The number of jobs contracted out in the nation has also declined to 614 from 671, according to the latest Construction Industry Development Board (CIDB) report.

The real property gains tax, the difficulties in obtaining housing loans from banks and the impact of the goods and services tax had affected demand, which in turn slowed down the number of new property launches, Penang Master Builders and Building Materials Dealers’ Association president Datuk Lim Kai Seng (pic) told StarBiz.

“During the first-quarter of 2015, the number of residential projects dropped to 179 from 207 in the same period in 2014, while the non-residential figure shrunk to 239 from 268.

“In the corresponding period, the number of private projects given out also plunged to 459 from 537, while the number of government projects increased to 150 from 131.

“Normally, the first quarter is a slow period for the construction industry, due to the Chinese New Year celebration and holidays,” he said.

Lim said the rapid progression of mega projects such as the light rail transit (LRT) and mass rapid transit lines in the Klang Valley, and the efforts by the Federal Government to revive 74% of the abandoned housing projects in the country, should see more jobs being contracted to the construction industry this year.

Last December, Prime Minister Datuk Seri Najib Tun Razak had said some 10.7% or 23 of these abandoned projects were in the process of rehabilitation, while 33 or 15.35% were in the planning stage.

“The total value and the number of construction jobs to be given out in 2015 are expected to improve by a strong single-digit percentage in 2015.

“Last year, a total of 7,180 projects worth RM149.5bil were given out nationwide,” Lim said.

In Penang, the number of projects contracted out for the first quarter 2015 was 55 compared with 44 in the same period a year ago.
br /> Lim said the delay in the issuance of advertising permits and developer licence by the Federal Government to developers in Penang had led to fewer projects being awarded in the first quarter of 2015.

“This delayed the commencement of work for most of the projects, slowing down the jobs awarded.

“The residential projects given out declined to 10 from 16 in the first quarter of 2014, while the value of the residential projects contracted out increased substantially to RM936.89mil from RM391.50mil.

“The value has appreciated because the density of units per project has increased.

“The units launched are also of higher value,” Lim said.

According to the CIDB report, the number of government projects given out in first-quarter 2015 was nine compared with 17 in the corresponding period in 2014, while the number of private projects shrunk to 35 from 38.

Lim said with the implementation of the RM27bil Penang Transport Master Plan, scheduled to take off this year, the local construction industry could expect some RM400mil to RM500mil worth of jobs to be outsourced.

“These jobs are related to the alignment and soil studies for the LRT system,” he said.

By David Tan The Star/Asia News Network

Sunday, August 2, 2015

By-laws governing strata property management in Malaysia, part 1

Third Schedule of Strata Management Regulation 2015



WITH the demise of the Deed of Mutual Covenants, the Third Schedule of the Strata Management Regulation 2015, now known as by-laws and any additional by-laws made under the Strata Management Act 2013 (“the Act”) shall bind the developer, the joint management body, the management corporation or the subsidiary management corporation, as the case may be, along with the purchaser, parcel owners or proprietors.

It also binds any chargee or assignee, lessee, tenant or occupier, of a parcel to the same extent as if the by-laws or the additional bylaws have been signed or sealed by each person or body mentioned above, and contain mutual covenants to observe, comply and perform all the provisions of the bylaws or additional by-laws.

These by-laws shall apply to any development area:
  • during the management by the developer before the joint management body is established;
  • during the management by the joint management body;
  • during the management by the developer before the first annual general meeting of the management corporation;
  • during the management by the management corporation after first annual general meeting of the management corporation ; and
  • during the management by the subsidiary management corporation after it has been established in respect of the limited common property .

SALIENT FEATURES OF THE BY-LAWS

Functions of the management corporation are to maintain in a state of good condition, service and repair, where necessary, including:
  • renew or upgrade the fixtures and fittings, lifts, installations, equipment, devices and appliances existing in the development area and used or capable of being used or enjoyed by occupiers of two or more parcels;
  • maintain, repair and, where necessary, renew or upgrade sewers, pipes, wires, cables and ducts existing in the development area and used or capable of being used in connection with the enjoyment of more than one parcel or the common property;
  • where applicable, establish and maintain suitable lawns and gardens on the common property;
  • where applicable, manage, maintain and secure suitable operators for any of the common utilities, amenities and services in the common property, such as launderette, convenience store, cafeteria, nursery and others, to reasonable standards of safety and health for the convenience, comfort and enjoyment of the proprietors and occupiers;
  • renew and upgrade common property where necessary for the purpose of retaining and adding the market value of parcels in the development area;
  • on the written request of a proprietor of a parcel and on payment of a fee, which shall not exceed RM50, furnish to the proprietor, or to a person authorised in writing by the proprietor, the copies of all policies of insurance effected under the Act or effected against such other risks as directed by the proprietors by a special resolution, together with the copies of the receipts for the last premiums paid in respect of the policies;
  • set up, manage and maintain proper procurement procedures and tender process in a fair and transparent manner for all purchases, acquisitions or awards of contracts in connection with the management and maintenance of the common property;
  • set up, manage and maintain a good credit control system in the collection of maintenance charges and contribution to the sinking fund and any other charges lawfully imposed by the management corporation; administer and enforce the bylaws and any additional by-laws made under the Act; and
  • and without delay, enter in the strata roll, any change or dealing notified to it by any proprietor.

COMMON PROPERTY FOR COMMON BENEFIT

The management corporation shall control, manage and administer the common property for the benefit of all the proprietors, provided that the management corporation, by written agreement with a particular proprietor, grant him for a defined period of time, the exclusive use and enjoyment of part of the common property or special privileges in respect of the common property or part of it, subject to appropriate terms and conditions to be stipulated by the management corporation.

To impose a fine, the management corporation may, by a resolution at a general meeting, do so, of such amount as shall be determined by that general meeting against any person who is in breach of any by-law or any additional bylaws made under the Act.

It is important to note that defaulters of service charges et cetera, can have theirs and their family’s access card denied and also be imposed a fine.

A defaulter is a proprietor who has not fully paid the charges or contribution to the sinking fund in respect of his parcel or any other money imposed by or due and payable to the management corporation under the Act, at the expiry of the period of 14 days of receiving a notice from the management corporation. Any restriction or action imposed against a defaulter shall include his family or any chargee, assignee, successor-intitle, lessee, tenant or occupier of his parcel.

If any sum remains unpaid by the proprietor at the expiry of the period of 14 days, the proprietor shall pay interest at the rate of 10% per annum on a daily basis or at such rate as shall be determined by the management corporation at a general meeting, until the date of actual payment of the sum due.

The management corporation may prepare a defaulters’ list showing the names of the defaulting proprietors, their respective parcels and the amount of the sum that remains unpaid. The management corporation may also display the list of defaulters’ names on the notice boards at the building, provided that such a list shall be updated by the management corporation at the end of every following calendar month.

The management corporation may, at the expiry of the period of 14 days, and without prior notice, deactivate any electromagnetic access device, such as a card, tag or transponder, issued to a defaulter until such time, that any sum remaining unpaid in respect of his parcel has been fully paid, together with a charge not exceeding RM50 that may be imposed by the management corporation for the reactivation of his electromagnetic access device. During the period of the deactivation of his electromagnetic access device, the management corporation may require the proprietor to sign in a defaulters’ register book each time that the defaulter requires any assistance for entry into or exit from the building or the development area. The management corporation may also stop or suspend a defaulter from using the common facilities or common services provided by the management corporation, including any car park bay in the common property that has been designated for the use of the defaulter.

The management corporation may accept payment of any sum due by a defaulter which is made by his chargee, assignee, successor-in-title, lessee, tenant or occupier, and any of the aforesaid persons, who had made such payment, shall be deemed to be irrevocably authorised by the defaulter to do so.

Follow part two of our article next week touching on the general duties and prohibitions of strata title proprietors.

By DATUK PRETAM SINGH DARSHAN SINGH The Sun (Malaysia)

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Malaysian Strata Management Act 2013 will be enforced from June 1, 2015 in Penang

Saturday, August 1, 2015

Beijing wins to host Winter Olympics 2022







http://english.cntv.cn/2015/08/01/VIDE1438381810003714.shtml

Chinese captital celebrates victory

The National Stadium, or Bird Nest, is seen with giant illumination showing a message celebrating Beijing and Zhangjiakou's winning of the right to host the 2022 Winter Olympic Games.




http://english.cntv.cn/2015/08/01/VIDE1438395244275676.shtml

Beijingers celebrate Olympic victory

Beijing last night was the scene of jubilation and cheering. People celebrated the news from Kuala Lumpur.


Games offers new drive to opening-up

Beijing and Zhangjiakou have won the bid to host the 2022 Winter Olympics. It's great.

Seven years after Beijing hosted the 2008 Summer Games, Chinese people get to embrace the Olympics again. Many still remember the passion and joy after winning the 2008 Games. Our optimism and happiness has come alive again. Chinese society is still actively seeking to host major international sports events. Such sentiment fits the country's rising momentum.

Countries in the developed world are no longer enthusiastic about holding the Olympics like they once were. They have their own calculations. But over 90 percent of people in Beijing and Zhangjiakou support their cities' hosting of the Winter Games. Such high rates of support is generally true in other parts of the country in hosting major international sports events.

Chinese people long for progress and more contact with the outside world. Many people consider the hosting of major sports events an opportunity to enhance a city's development level and help it become more international.

But there are also many who oppose hosting the Winter Games. Some of them are just following the voices of popular Western-style opponents. Others have their marginal reasons. But these opinions are not mainstream in China.

It is great that many stadiums and other pieces of infrastructure built for the 2008 Beijing Olympics can still be of use for the 2022 Games.

The 2008 Summer Games can be seen as a coming-out party for China. China has made significant progress in the seven years since it hosted the event. China's GDP leapt from the third place globally to second. Chinese people have seen more of the world.

To be frank, when Beijing hosted the 2008 Summer Games, many Chinese people were nervous that they might mess up the event. That is why the 2008 Games emphasized pomp and ceremony in order to demonstrate China's capabilities.

This time when we host the Winter Games, we may be able to be more relaxed, focusing on the beauty of the sports instead of laboring ourselves in ensuring a perfect event. We can try to make the 2022 Games a big party.

The 2022 Winter Games is also likely to bring concrete benefits in the coming seven years. "Olympic blue" may become a new target in dealing with air pollution. A high-speed railway between Beijing and Zhangjiakou is likely. Winter sports may become more popular.

The Winter Games will become a lasting drive for China's further opening-up. Chinese society will seek greater balance between outside criticism and China's own principles and traditions. This project will help China further integrate with the world. - Global Times

Friday, July 31, 2015

MH370 Debris found in Reunion may give clues on when plane part broke

The pilots of Malaysia Airlines Flight 370 are Forst Officer Gambar Fariq Abdul Hamid, left, and Captain Zaharie Ahmad Shah at right.

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A policeman and a gendarme stand next to a piece of debris from an unidentified aircraft found in the coastal area of Saint-Andre de la Reunion, in the east of the French Indian Ocean island of La Reunion, on July 29, 2015. The two-metre-long debris, which appears to be a piece of a wing, was found by employees of an association cleaning the area and handed over to the air transport brigade of the French gendarmerie (BGTA), who have opened an investigation. An air safety expert did not exclude it could be a part of the Malaysia Airlines flight MH370, which went missing in the Indian Ocean on March 8, 2014. AFP PHOTO / YANNICK PITONYANNICK PITON/AFP/Getty Images
Video: http://edition.cnn.com/2015/07/30/world/mh370-debris-investigation/  
Saint-Denis, Reunion Island (CNN)When investigators get an in-person view of a wing component that likely came from a Boeing 777, they'll be looking for not only a serial number but clues as to why the part broke off the Boeing 777.

Story highlights

  • Independent group says damage appears to indicate flaperon came off while plane was in air
  • Plane debris will be sent to investigators in France on Friday, official in Paris tells CNN
  • Investigators confident debris found on an Indian Ocean island comes from a 777 aircraft
One group of independent observers said Thursday that the damage to the component -- a right wing flaperon -- should give authorities a good indication that the piece came off while the plane was still in the air.
The group, led by American Mobile Satellite Corp. co-founder Mike Exner, points to the small amount of damage to the front of the flaperon and the ragged horizontal tear across the back.
The rear damage could have been caused if the airliner had its flaperon down as it went into the ocean, some members of Exner's group wrote in a preliminary assessment after looking at photos and videos of the component.
But the lack of damage to the front makes it more likely the plane was in a high-speed, steep, spiral descent and the part fluttered until it broke off, the group said.
Boeing and Australian officials are confident the debris -- found Wednesday off the coast of a remote island in the west Indian Ocean -- came from a Boeing 777 -- and might be from Malaysia Airlines Flight 370, a 777 that disappeared in March 2014 with 239 people on board.
The plane debris will be transported to France on Friday evening, a spokeswoman for the Paris prosecutor's office said. Agnes Thibault-Lecuivre said the piece will arrive in Paris on Saturday and will be sent to Toulouse, the site of the nearest office of the BEA, the French authority responsible for civil aviation accident investigations.
Exner's group -- an informal cadre of aviation experts -- said that if the flaperon were still on the wing when the plane hit water, the front would have been damaged by hitting the part of the wing to which it was attached. And the rear damage looks like it was caused by stress rather than being bent and broken off when the plane hit the water.
But an aircraft component specialist who spoke to CNN disagreed.
The lack of damage to the front section "tells me that the component could still have likely been back in its original position inside the wing itself," said Michael Kenney, senior vice president of Universal Asset Management, which provides plane components to airlines.

'Highly confident' component from Boeing 777

Boeing investigators are confident that debris found on a remote island in the Indian Ocean comes from a 777 aircraft, according to a source close to the investigation.
Martin Dolan, chief commissioner of the Australian Transport Safety Bureau, agreed.
"We are highly confident but it still needs confirmation that it is a part from a 777 aircraft," he told CNN's "Erin Burnett OutFront." "The only 777 aircraft that we're aware of in the Indian Ocean that could have led to this part floating is MH370. But as I said, we still need to confirm that through closer study."

EXPAND IMAGE
People cleaning a beach found the debris Wednesday on Reunion, a French overseas territory in the western Indian Ocean.
The source said Boeing investigators feel confident the piece comes from a 777 because of photos that have been analyzed and a stenciled number that corresponds to a 777 component. A component number is not the same as a part number, which is generally much longer.
Images of the debris also appear to match schematic drawings for the right wing flaperon from a Boeing 777. A flaperon helps the pilot control the aircraft. It is lightweight and has sealed chambers, making it buoyant.
Despite this confidence, no one is saying the part definitely comes from a 777, much less MH370.
Finding the debris is a "significant development" in the search for MH370, Australian Deputy Prime Minister Warren Truss said.

More debris

New debris, which washed ashore Thursday and appears to resemble remnants of a suitcase, is also part of the investigation, Reunion Island police officials confirmed to CNN.
The flight vanished March 8, 2014, en route to Beijing. So far, no confirmed trace of it has been found, making it one of history's biggest aviation mysteries and leaving relatives of passengers and crew members uncertain about the fate of their loved ones.
A preliminary assessment by U.S. intelligence agencies, produced in the wake of the MH370 disaster, suggested it was likely someone in the cockpit deliberately caused the aircraft's movements before the Malaysian airliner disappeared.
Two U.S. officials briefed on the matter told CNN that the assessment, which was not intended for public release, was prepared months ago and was solely based on available satellite and other evidence.
The U.S. intelligence assessment was largely focused on the multiple course changes the aircraft made after it deviated from its scheduled Kuala Lumpur to Beijing route. Analysts determined that, absent any other evidence, it's most likely someone in the cockpit deliberately moved the aircraft to specific waypoints, crossing Indonesian territory and eventually toward the south Indian Ocean.
Malaysian investigators haven't reported finding any evidence that casts suspicion on the pilots.
The airliner's crew has been the focus of attention since the mysterious disappearance, but no proof has emerged indicating they intended to destroy the plane. Law enforcement and intelligence agencies from numerous countries examined the plane's manifest of crew and passengers and found no significant information to suggest anyone on board posed an obvious threat.

Missing plate

If it does turn out to be from Flight 370, the development would reassure Australian officials that they are looking for the rest of the plane in the right area, Truss and Dolan said.
Airplane debris found in western Indian Ocean
Airplane debris found in western Indian Ocean 02:27
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"It's credible that debris from MH370 could have reached the Reunion Islands by now," Truss said.
Malaysia Airlines is sending a team of investigators to Paris and a second team to Saint-Denis, Reunion, on Friday, an airline official in Kuala Lumpur, Malaysia, told CNN.
It's unclear how identification will be made.
Normally identification would be aided by a small serial number plate attached to a flaperon, but the part found on the beach appears to be missing the serial number plate, according to photographs.
Other markings may be found on the part, said Kenney, the executive from Universal Asset Management. 




Australia is leading the underwater search for the remains of Flight 370 in the southern Indian Ocean, some 2,300 nautical miles (3,700 kilometers) east of Reunion. But Truss said that French and Malaysian authorities will be responsible for establishing whether the debris found off the island came from the missing jetliner.
Australia has offered its help, he said, including asking marine experts to look at photos of the debris to determine whether barnacles on it are "consistent with something that was floating in the oceans for 16 months or more."
Video: http://english.cntv.cn/2015/07/31/VIDE1438309202518257.shtml

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