Banks outside the Gulf played down on Friday their exposure to Dubai debt, after fears the emirate could default and even derail world economic recovery prompted a sell-off in global markets.
Stocks from Tokyo to London were haunted by concerns that banks were exposed to state companies in Dubai, whose rise from a desert backwater into the business hub of the world's top oil exporting area had lured expatriate money and executives.
The crisis began on Wednesday when Dubai, part of the United Arab Emirates federation, asked to delay payment on billions of dollars of debt issued by conglomerate Dubai World and its main property subsidiary Nakheel, developer of three palm shaped islands that once lured celebrities and the super-rich.
"We have seen a classic risk aversion reaction in the markets over the past 24 hours. The dollar has slumped, the yen is stronger," a Societe Generale note said.
"Anybody who thought the exit profile for markets from the great recession and the great financial crisis was going to be a smooth one was kidding themselves." Dubai World had $59 billion of liabilities as of August, most of Dubai's total debt of $80 billion.
The numbers pales in comparison to the $2.8 trillion in writedowns the International Monetary Fund estimates U.S. and European lenders will have made between 2007 and 2010 as a result of the global credit crisis.
"The events in Dubai in recent days are one of the hiccups if you like, one of the difficulties, which affirms that we were right to highlight the uncertainty ahead of us and that the road ahead could be a bumpy one," European Central Bank Governing Council member Athanasios Orphanides said.
International banks' liabilities related to Dubai World could be as high as $12 billion in syndicated and bilateral loans, banking sources told Thomson Reuters.
French banks said their exposure to the Dubai crisis was limited and Italy's central bank said Italian banks should face no problems linked to the Gulf trade and tourism hub. Those sentiments were echoed by Chinese banks.
Those statements tempered losses in European stocks after investors around the globe fled shares, oil and other risky assets, fuelling flows into the low-yielding yen and safe-haven government bonds.
"At this stage, this set back, looks to be one that is very much country specific," the SocGen note said.
Abu Dhabi Exposure
While European and Asian banks scrambled to distance themselves from the Dubai crisis, lenders in Abu Dhabi, a fellow member of the UAE federation and home to most of the country's oil, appeared to have major positions.
They lent heavily to Dubai firms at the height of the property boom that saw the emirate build the world's tallest tower but went bust with the financial crisis in 2008.
Abu Dhabi Commercial Bank has at least 8-9 billion dirhams ($2.18-$2.45 billion) exposure to Dubai World and related entities, forcing the bank to book more provisions, a senior executive of the bank said.
First Gulf Bank has at least 5 billion dirhams ($1.36 billion).
JP Morgan said in a research note it was "less concerned" about global banks' direct exposure to Dubai World and was not worried about Abu Dhabi, a major oil producer which is sitting on hundreds of billions of dollars.
"We are more concerned about the spillover effect within the UAE with CDS spreads in Abu Dhabi increasing," it said.
"It remains unclear if the Dubai government will support the liabilities of government related entities and how ... neighbors will weather the storm." The price of insuring Gulf debt surged again on Friday.
Credit default swaps (CDS) for Dubai rose more than 100 basis points but CDS prices were way below previous peaks in the global financial crisis late last year and earlier this.
Nakheel's Islamic bond prices extended losses, falling 30 points to a record low of 40, according to Reuters data.
The $3.52 billion bond at the centre of the crisis, which was originally due to mature on Dec 14, 2009, had traded as high as 110 on Wednesday before the Dubai government said it would ask creditors to agree on a standstill of debt held by Nakheel and Dubai World until May 2010.
The debt crisis in Dubai has also pushed up debt insurance costs for other sovereigns in the Gulf, a wealthy region Western firms had turned to for help at the height of the credit crunch.
Analysts expect Dubai to receive financial support from Abu Dhabi, though it may have to abandon an economic model focused on developing swathes of desert with foreign money and labor.
But the prospect of a bailout did little to allay concerns among investors, already worried the global economy may not be recovering quickly enough to justify a near doubling of prices for emerging market stocks and many commodities since March.
"The biggest worry I have is whether this will trigger a repricing in the overall emerging market," said Arthur Lau, a fund manager in Hong Kong with JF Asset Management.
Friday, November 27, 2009
Thursday, November 26, 2009
罰單先莫丟‧地方政府沒提控權晉上訴
柔佛‧新山）要把地方政府罰單丟掉，且慢！
柔佛州法律顧問拿督阿都拉曼提醒說，民眾千萬不可在此時把地方政府所發出罰款傳票如違例停車、沒有放置停車固本、公開焚燒等傳票棄之於垃圾桶，因為高庭較早時裁決地方政府沒有提控任何人的權力一案，如今已晉入上訴的程序。
他說，由於此課題已晉入上訴的階段，因此，柔佛州法律單位目前並不需要特別針對此事採取任何的行動，也不作任何法律解讀。
阿都拉曼週三（11月25日）列席柔州議會，他在休會時向《星洲日報》發表談話。
據他瞭解，若有關裁決上訴不得直，相信中央政府還會在國會尋求修改憲法，以解決因為此項裁決而削弱了地方政府的執法。
彭亨州淡馬魯高庭阿達爾司法專員早前推翻推事庭的判決，宣判地方政府並未賦予權限提控任何人，否則就抵觸聯邦憲法145（3）條文，即總檢察長擁有絕對的檢控權。
http://www.sinchew.com.my/node/140059?tid=1
柔佛州法律顧問拿督阿都拉曼提醒說，民眾千萬不可在此時把地方政府所發出罰款傳票如違例停車、沒有放置停車固本、公開焚燒等傳票棄之於垃圾桶，因為高庭較早時裁決地方政府沒有提控任何人的權力一案，如今已晉入上訴的程序。
他說，由於此課題已晉入上訴的階段，因此，柔佛州法律單位目前並不需要特別針對此事採取任何的行動，也不作任何法律解讀。
阿都拉曼週三（11月25日）列席柔州議會，他在休會時向《星洲日報》發表談話。
據他瞭解，若有關裁決上訴不得直，相信中央政府還會在國會尋求修改憲法，以解決因為此項裁決而削弱了地方政府的執法。
彭亨州淡馬魯高庭阿達爾司法專員早前推翻推事庭的判決，宣判地方政府並未賦予權限提控任何人，否則就抵觸聯邦憲法145（3）條文，即總檢察長擁有絕對的檢控權。
http://www.sinchew.com.my/node/140059?tid=1
Bumiputera contractors: A wasteful national mission to date
By Koon Yew Yin
Wednesday, 18 November 2009 07:54
Centre for Policy Initiatives
It is an indictment of our system that IJM is able to compete internationally for contracts but yet is required to work as a sub-contractor to Bumiputera companies on the North-South Highway in Malaysia.
On Oct 25, 2009 our Second Finance Minister Ahmad Husni Mohamad Hanadzlah said that government has vowed to cut down on wasteful spending to lower its budget deficit and all major public projects must go through the open tender system.
Earlier, the Auditor-General’s report for 2008 revealed continuing financial management weaknesses at every level of the government. Delays in project completion seem to be a perennial problem and the lack of oversight by various ministries and departments in the procurement of goods and services continue to cost the government hundreds of millions of ringgit.
These statements indicate perhaps that our Prime Minister Najib Razak may want to reverse his announcement on January 9 in Kuala Teregganu that the government would always look after Class F contractors. (Non- Bumiputeras cannot register as a Class F contractor).
The government had in fact already set aside RM900 million, which was RM300 million more than last year, for works to be undertaken by Class F contractors this year.
Producing competitive Bumiputera contractors
As reported on May 1, 2005, Malaysia had one contractor for every 614 persons. Most likely there are more contractors by now. This ratio is again likely to be amongst the highest in the world and is obviously costing the public a significant amount of money besides affecting our overall economic performance.
I would like to pose a few questions which may appear unkind or insensitive but nonetheless need to be asked.
Out of hundreds of high-rise buildings in Kuala Lumpur does anyone know of any Bumiputera contractor who has won any of the building contracts through an open competitive tender process? Out of hundreds of kilometers of highway in Malaysia, can any Bumiputera contractor who won any part of the highway contracts through open tender be identified?
The answer to the above questions unfortunately is in the negative. The evidence is that all the government’s well-intentioned efforts in trying to produce competitive Bumiputera contractors since 1957 have failed.
Why this has happened needs to be openly discussed rather than swept under the carpet. In this note, I share my experiences as a contractor and my knowledge of why Bumiputera contractors have failed in the past and what needs to be done by the government to correct this unhealthy situation.
Facts of life in the contracting business
Contracting is a very difficult business yet it is so easy to register as a contractor.
To register as a Class F contractor one has only to show that he has RM5,000. He does not even require a pass in Lower Certificate of Education (LCE). But it will take at least 10 years to learn how to overcome all the inherent difficulties and become competitive and efficient. Continuously giving out lucrative and over-priced contracts without open tenders will only make the recipients less competitive.
Secondly, studies have shown that there are more failures and bankruptcies in contracting than in any other business, and also almost all construction projects are NOT completed within the original scheduled time.
The delay will cost the contractor more and that is why you can often see uncompleted buildings and abandoned projects which have been undertaken by inefficient contractors. There are many reasons for this peculiar phenomenon.
1. Open tender system
Although this system is the best way to ensure completion of any project/contract at the lowest price, it is the most difficult obstacle any contractor has to face in the real competitive world. He must know his business very well and be efficient to face the open competition all the time. Like a good athlete, he has to keep fit and constantly be aware of the market conditions and his competitors.
There is a classic saying, ‘a cheap thing is not good and a good thing is not cheap’. But contractors always have to produce good work at the cheapest price.
In order to submit the cheapest tender, the contractor must be very optimistic in all his assumptions to get the cheapest rates. He must assume that he will not encounter any cash flow difficulties and that he will always get his progress payments on time to pay his creditors.
He must also assume that he will not encounter any difficulty in getting all the required materials on time to avoid any delay and also that there are ample workers for him to pick and choose from.
Furthermore, he must also assume that the heavens will be kind to him and he will not meet any inclement weather during construction. Invariably, many of these assumptions are proven wrong and thus completion delayed, and the infrastructure will cost more to complete than provided for in the contract.
2. The importance of teamwork
Teamwork is important in all business endeavours. It is more so in the contracting business. Every contractor must realise that his success is not going to be determined by his own knowledge, talent or abilities. It is going to be determined by his ability to develop a great team. Those who are closest to him will help determine the level of his success.
Every efficient contractor must have a reliable team comprising managers, sub-contractors, material suppliers, foremen and skilled workers. All the team players must cooperate with one another, bearing in mind that the main contractor’s survival depends on their contribution. Their main goal must be saving cost. If they cannot complete the contract within the tender price, all of them will also be affected.
3. Construction material pricing
There was no material price escalation clause in the conditions of contract before I became the Secretary General of the Master Builders Association. During the unprecedented oil crisis, building material prices shot through the roof. As a result, many contractors could not complete their contracts for schools and other projects. After several appeals the Public Works Department (PWD), now known as Jabatan Kerja Raya (JKR), eventually allowed only cement and steel for price variation reimbursement.
This was only a partial solution as hundreds of other items were excluded.
Without a protective price fluctuation clause for the other items, contractors are exposed to risk. At the same time, knowing that they have to undercut their competitors during the tender process, contractors would normally under-price to achieve the lowest tender. Invariably, most materials would increase in price due to inflation and other reasons. Contractors require many years of experience to be able to anticipate such price changes and to make adequate provisions for them whilst at the same time not overpricing their tenders and losing the bid.
4. No contract is exactly the same
No two high-rise buildings in KL are the same.
Construction of a building, a bridge or a stadium is always akin to making a prototype. The process is much more difficult than manufacturing any product where there is repetition. For example in making cars, the first prototype and the initial few cars may be more difficult to make but once everyone gets used to the routine, the manufacturing process will normally proceed smoothly.
However, in the construction of buildings or any civil engineering works, there is very little repetitive work. Every construction site is different and most of the people involved have never worked together before.
On top of this, there may also be inexperienced supervisory staff that can create a lot of difficulties for the contractors. Invariably, by the time all parties get used to the routine, the scheduled time is over.
5. Financing
Most contractors do not have sufficient capital to finance their undertakings.
Contractors generally do not have fixed assets like most manufacturers. They usually do not have land and buildings but, instead, they have construction equipment. Unfortunately, banks do not accept these moving assets as collateral for a loan. Without bank financing, contractors will obviously find it more difficult to undertake their business.
Beginning at the bottom: The key to success
I have provided some insight into why contracting is not a business that is as easy or profitable as it is commonly perceived to be.
There are other factors explaining why or how some of the most successful tycoons associated with the building or construction industry have managed to get where they are.
Firstly, it should be noted that the majority of listed companies were started by Chinese merchants most of whom incidentally did not have tertiary education. For example, Lim Goh Tong of Genting began his working career as a scrap iron dealer and a contractor; and Yeoh Tiong Lay of YTL Corp. started off as a small contractor.
Generally, Bumiputeras are not interested in working long hours in managing small businesses earning marginal profit. Because of the NEP, many have hopes of securing permits or concessions for big deals so that they can become instant millionaires. There are relatively few Bumiputeras involved in small and medium-scale enterprises (SMEs).
More Bumiputeras should follow the humble footsteps of the Chinese to become traders and merchants for building materials and similar goods. The business skill they can learn from these humble beginnings will carry them a long way. I am very sure some of them will eventually become good contractors and successful businessmen if they learn the trade at the bottom and not try to parachute into the contracting business.
The importance of skilled workers
Although there are already many Bumiputera engineers unable to find employment, most of the universities are still producing more and more engineers every year. But without a sufficiently skilled workforce, all the engineers in the world would not be able to complete a single project.
There are so few Bumiputera construction foremen, carpenters and other skilled workers. If you were to go into any building construction site, you would see the truth of what I am saying. How many Malay carpenters have you seen in KL?
Without skilled Bumiputera workers, it would be more difficult for Bumiputera contractors to succeed. In fact, most of the Chinese contractors started as apprentices and rose from the bottom to become successful contractors. More Bumiputeras should be encouraged to work as apprentices in construction sites. This is a necessary good practice to produce really good Bumiputera contractors.
The role of trade schools
There should be more trade schools and more Bumiputeras should be encouraged to learn construction skills like carpentry, welding, plumbing, bricklaying, etc. Very soon, skilled tradesmen will be able to earn more than degree holders as is the case in Australia or England.
The government should build more trade schools and not hesitate to offer scholarships to Bumiputeras to be trained in these trade schools. Presently, the construction industry is not short of engineers but it is very short of skilled workers and supervisors. If more Bumiputeras are properly trained in various crafts and blue collar skills, some of them will go on to become good contractors.
Time and more time
They say Rome was not built in a day. It is easier to produce engineers, doctors and other professionals than to produce efficient and competitive contractors who do not need government financial aid. Just giving out lucrative contracts to Bumiputeras is not the answer; in fact it is counter-productive as it simply makes them more inefficient and less competitive.
IJM Corporation Bhd has taken more than 40 years to attain a competitive level of competence. The record shows that IJM has secured on competitive tenders five toll road concessions in India. Three are currently in operation and two are under construction. The total length of the roads exceeds 1,000 kilometres, longer than our North-South Highway.
In addition, IJM completed a toll bridge in Kolkata and sold its interest for RM65 million profit after a short period of three years. IJM is also a very reputable LRT builder, having to date completed 15km of the elevated sections of the New Delhi Metro and it was recently awarded another 8km.
Based on open competitive tender, IJM won the contract to build the tallest building, a prominent future landmark for the Delhi Municipality, in New Delhi.
It is an indictment of our system that IJM is able to compete internationally for contracts but yet is required to work as a sub-contractor to Bumiputera companies on the North-South Highway in our own country.
Conclusion: Half-baked contractors are not in our national interest
Contracting is one of the most, if not the most, difficult business and it takes a very long time to produce competent contractors.
It is very dangerous to quickly produce half-baked ones as they will soon find themselves in financial difficulties and require bailouts. The bankruptcy record shows that a large number of debtors are Bumiputera contractors with many of them unable to pay back the loans given by government-controlled financial institutions.
The government must change its methods and policies which have proven unworkable. There is no urgency in producing more Bumiputera contractors as many of the key industries e.g. the banks, plantations, motor vehicles, taxis, rice etc are already under the control of Bumiputeras.
Our government must not be narrowly communalistic and should make use of all the groups, irrespective of race, that are more efficient in the contracting business.
Giving out contracts without a full tender process is akin to corruption. I urge the government to stop this corrupt practice and to utilize the savings from these enormous sums to implement the options suggested above.
Note on the Author
I am a 76-year-old chartered civil engineer and one of the founders of the three larger construction companies listed in Bursa Malaysia. These are Gamuda Bhd, Mudajaya Group Bhd, and IJM Corporation Bhd.
I was a member of the Board of Engineers, Malaysia for three terms. I was also on the Sirim Board responsible in writing the Malaysian standard specifications for cement and concrete. In addition, I was the Secretary General of Master Builders Association, Malaysia for nine years.
These days, I am completely retired. My intention in writing this article is honourable. Many people may not like reading what I have written and the truth may be difficult to accept. Nevertheless, this is my considered analysis for the benefit of my country, the Bumiputera contractors and the construction industry.
http://blog.limkitsiang.com/2009/11/25/bumiputera-contractors-a-wasteful-national-mission-to-date/#more-6708
Wednesday, 18 November 2009 07:54
Centre for Policy Initiatives
It is an indictment of our system that IJM is able to compete internationally for contracts but yet is required to work as a sub-contractor to Bumiputera companies on the North-South Highway in Malaysia.
On Oct 25, 2009 our Second Finance Minister Ahmad Husni Mohamad Hanadzlah said that government has vowed to cut down on wasteful spending to lower its budget deficit and all major public projects must go through the open tender system.
Earlier, the Auditor-General’s report for 2008 revealed continuing financial management weaknesses at every level of the government. Delays in project completion seem to be a perennial problem and the lack of oversight by various ministries and departments in the procurement of goods and services continue to cost the government hundreds of millions of ringgit.
These statements indicate perhaps that our Prime Minister Najib Razak may want to reverse his announcement on January 9 in Kuala Teregganu that the government would always look after Class F contractors. (Non- Bumiputeras cannot register as a Class F contractor).
The government had in fact already set aside RM900 million, which was RM300 million more than last year, for works to be undertaken by Class F contractors this year.
Producing competitive Bumiputera contractors
As reported on May 1, 2005, Malaysia had one contractor for every 614 persons. Most likely there are more contractors by now. This ratio is again likely to be amongst the highest in the world and is obviously costing the public a significant amount of money besides affecting our overall economic performance.
I would like to pose a few questions which may appear unkind or insensitive but nonetheless need to be asked.
Out of hundreds of high-rise buildings in Kuala Lumpur does anyone know of any Bumiputera contractor who has won any of the building contracts through an open competitive tender process? Out of hundreds of kilometers of highway in Malaysia, can any Bumiputera contractor who won any part of the highway contracts through open tender be identified?
The answer to the above questions unfortunately is in the negative. The evidence is that all the government’s well-intentioned efforts in trying to produce competitive Bumiputera contractors since 1957 have failed.
Why this has happened needs to be openly discussed rather than swept under the carpet. In this note, I share my experiences as a contractor and my knowledge of why Bumiputera contractors have failed in the past and what needs to be done by the government to correct this unhealthy situation.
Facts of life in the contracting business
Contracting is a very difficult business yet it is so easy to register as a contractor.
To register as a Class F contractor one has only to show that he has RM5,000. He does not even require a pass in Lower Certificate of Education (LCE). But it will take at least 10 years to learn how to overcome all the inherent difficulties and become competitive and efficient. Continuously giving out lucrative and over-priced contracts without open tenders will only make the recipients less competitive.
Secondly, studies have shown that there are more failures and bankruptcies in contracting than in any other business, and also almost all construction projects are NOT completed within the original scheduled time.
The delay will cost the contractor more and that is why you can often see uncompleted buildings and abandoned projects which have been undertaken by inefficient contractors. There are many reasons for this peculiar phenomenon.
1. Open tender system
Although this system is the best way to ensure completion of any project/contract at the lowest price, it is the most difficult obstacle any contractor has to face in the real competitive world. He must know his business very well and be efficient to face the open competition all the time. Like a good athlete, he has to keep fit and constantly be aware of the market conditions and his competitors.
There is a classic saying, ‘a cheap thing is not good and a good thing is not cheap’. But contractors always have to produce good work at the cheapest price.
In order to submit the cheapest tender, the contractor must be very optimistic in all his assumptions to get the cheapest rates. He must assume that he will not encounter any cash flow difficulties and that he will always get his progress payments on time to pay his creditors.
He must also assume that he will not encounter any difficulty in getting all the required materials on time to avoid any delay and also that there are ample workers for him to pick and choose from.
Furthermore, he must also assume that the heavens will be kind to him and he will not meet any inclement weather during construction. Invariably, many of these assumptions are proven wrong and thus completion delayed, and the infrastructure will cost more to complete than provided for in the contract.
2. The importance of teamwork
Teamwork is important in all business endeavours. It is more so in the contracting business. Every contractor must realise that his success is not going to be determined by his own knowledge, talent or abilities. It is going to be determined by his ability to develop a great team. Those who are closest to him will help determine the level of his success.
Every efficient contractor must have a reliable team comprising managers, sub-contractors, material suppliers, foremen and skilled workers. All the team players must cooperate with one another, bearing in mind that the main contractor’s survival depends on their contribution. Their main goal must be saving cost. If they cannot complete the contract within the tender price, all of them will also be affected.
3. Construction material pricing
There was no material price escalation clause in the conditions of contract before I became the Secretary General of the Master Builders Association. During the unprecedented oil crisis, building material prices shot through the roof. As a result, many contractors could not complete their contracts for schools and other projects. After several appeals the Public Works Department (PWD), now known as Jabatan Kerja Raya (JKR), eventually allowed only cement and steel for price variation reimbursement.
This was only a partial solution as hundreds of other items were excluded.
Without a protective price fluctuation clause for the other items, contractors are exposed to risk. At the same time, knowing that they have to undercut their competitors during the tender process, contractors would normally under-price to achieve the lowest tender. Invariably, most materials would increase in price due to inflation and other reasons. Contractors require many years of experience to be able to anticipate such price changes and to make adequate provisions for them whilst at the same time not overpricing their tenders and losing the bid.
4. No contract is exactly the same
No two high-rise buildings in KL are the same.
Construction of a building, a bridge or a stadium is always akin to making a prototype. The process is much more difficult than manufacturing any product where there is repetition. For example in making cars, the first prototype and the initial few cars may be more difficult to make but once everyone gets used to the routine, the manufacturing process will normally proceed smoothly.
However, in the construction of buildings or any civil engineering works, there is very little repetitive work. Every construction site is different and most of the people involved have never worked together before.
On top of this, there may also be inexperienced supervisory staff that can create a lot of difficulties for the contractors. Invariably, by the time all parties get used to the routine, the scheduled time is over.
5. Financing
Most contractors do not have sufficient capital to finance their undertakings.
Contractors generally do not have fixed assets like most manufacturers. They usually do not have land and buildings but, instead, they have construction equipment. Unfortunately, banks do not accept these moving assets as collateral for a loan. Without bank financing, contractors will obviously find it more difficult to undertake their business.
Beginning at the bottom: The key to success
I have provided some insight into why contracting is not a business that is as easy or profitable as it is commonly perceived to be.
There are other factors explaining why or how some of the most successful tycoons associated with the building or construction industry have managed to get where they are.
Firstly, it should be noted that the majority of listed companies were started by Chinese merchants most of whom incidentally did not have tertiary education. For example, Lim Goh Tong of Genting began his working career as a scrap iron dealer and a contractor; and Yeoh Tiong Lay of YTL Corp. started off as a small contractor.
Generally, Bumiputeras are not interested in working long hours in managing small businesses earning marginal profit. Because of the NEP, many have hopes of securing permits or concessions for big deals so that they can become instant millionaires. There are relatively few Bumiputeras involved in small and medium-scale enterprises (SMEs).
More Bumiputeras should follow the humble footsteps of the Chinese to become traders and merchants for building materials and similar goods. The business skill they can learn from these humble beginnings will carry them a long way. I am very sure some of them will eventually become good contractors and successful businessmen if they learn the trade at the bottom and not try to parachute into the contracting business.
The importance of skilled workers
Although there are already many Bumiputera engineers unable to find employment, most of the universities are still producing more and more engineers every year. But without a sufficiently skilled workforce, all the engineers in the world would not be able to complete a single project.
There are so few Bumiputera construction foremen, carpenters and other skilled workers. If you were to go into any building construction site, you would see the truth of what I am saying. How many Malay carpenters have you seen in KL?
Without skilled Bumiputera workers, it would be more difficult for Bumiputera contractors to succeed. In fact, most of the Chinese contractors started as apprentices and rose from the bottom to become successful contractors. More Bumiputeras should be encouraged to work as apprentices in construction sites. This is a necessary good practice to produce really good Bumiputera contractors.
The role of trade schools
There should be more trade schools and more Bumiputeras should be encouraged to learn construction skills like carpentry, welding, plumbing, bricklaying, etc. Very soon, skilled tradesmen will be able to earn more than degree holders as is the case in Australia or England.
The government should build more trade schools and not hesitate to offer scholarships to Bumiputeras to be trained in these trade schools. Presently, the construction industry is not short of engineers but it is very short of skilled workers and supervisors. If more Bumiputeras are properly trained in various crafts and blue collar skills, some of them will go on to become good contractors.
Time and more time
They say Rome was not built in a day. It is easier to produce engineers, doctors and other professionals than to produce efficient and competitive contractors who do not need government financial aid. Just giving out lucrative contracts to Bumiputeras is not the answer; in fact it is counter-productive as it simply makes them more inefficient and less competitive.
IJM Corporation Bhd has taken more than 40 years to attain a competitive level of competence. The record shows that IJM has secured on competitive tenders five toll road concessions in India. Three are currently in operation and two are under construction. The total length of the roads exceeds 1,000 kilometres, longer than our North-South Highway.
In addition, IJM completed a toll bridge in Kolkata and sold its interest for RM65 million profit after a short period of three years. IJM is also a very reputable LRT builder, having to date completed 15km of the elevated sections of the New Delhi Metro and it was recently awarded another 8km.
Based on open competitive tender, IJM won the contract to build the tallest building, a prominent future landmark for the Delhi Municipality, in New Delhi.
It is an indictment of our system that IJM is able to compete internationally for contracts but yet is required to work as a sub-contractor to Bumiputera companies on the North-South Highway in our own country.
Conclusion: Half-baked contractors are not in our national interest
Contracting is one of the most, if not the most, difficult business and it takes a very long time to produce competent contractors.
It is very dangerous to quickly produce half-baked ones as they will soon find themselves in financial difficulties and require bailouts. The bankruptcy record shows that a large number of debtors are Bumiputera contractors with many of them unable to pay back the loans given by government-controlled financial institutions.
The government must change its methods and policies which have proven unworkable. There is no urgency in producing more Bumiputera contractors as many of the key industries e.g. the banks, plantations, motor vehicles, taxis, rice etc are already under the control of Bumiputeras.
Our government must not be narrowly communalistic and should make use of all the groups, irrespective of race, that are more efficient in the contracting business.
Giving out contracts without a full tender process is akin to corruption. I urge the government to stop this corrupt practice and to utilize the savings from these enormous sums to implement the options suggested above.
Note on the Author
I am a 76-year-old chartered civil engineer and one of the founders of the three larger construction companies listed in Bursa Malaysia. These are Gamuda Bhd, Mudajaya Group Bhd, and IJM Corporation Bhd.
I was a member of the Board of Engineers, Malaysia for three terms. I was also on the Sirim Board responsible in writing the Malaysian standard specifications for cement and concrete. In addition, I was the Secretary General of Master Builders Association, Malaysia for nine years.
These days, I am completely retired. My intention in writing this article is honourable. Many people may not like reading what I have written and the truth may be difficult to accept. Nevertheless, this is my considered analysis for the benefit of my country, the Bumiputera contractors and the construction industry.
http://blog.limkitsiang.com/2009/11/25/bumiputera-contractors-a-wasteful-national-mission-to-date/#more-6708
Wednesday, November 25, 2009
MIDF expects 9.7pc IJM revenue growth
MIDF Research expects IJM Corp Bhd to post 9.7 per cent revenue growth year-on-year for the financial year 2010 on the back of strong billings on RM4.8 billion order book.
" We estimate the pre-tax profit margin in the 2010 financial year to be maintained at 11.5 per cent as cost pressure stabilises," it said in its research note today.
High material cost like steel, which peaked at RM4,000 a tonne, has since softened to around RM2,000 a tonne in the third quarter this year, which translated into healthier margins for construction players.
" We expect IJM Corp's financial year 2010 net profit to be at RM431.3 million, an improvement of 7.3 per cent year-on-year," MIDF Research said.
It said a stronger 2010 second half financial year is expected as IJM's RM4.8 billion order book will be enhanced by more projects announced under the second stimulus package. - Bernama
" We estimate the pre-tax profit margin in the 2010 financial year to be maintained at 11.5 per cent as cost pressure stabilises," it said in its research note today.
High material cost like steel, which peaked at RM4,000 a tonne, has since softened to around RM2,000 a tonne in the third quarter this year, which translated into healthier margins for construction players.
" We expect IJM Corp's financial year 2010 net profit to be at RM431.3 million, an improvement of 7.3 per cent year-on-year," MIDF Research said.
It said a stronger 2010 second half financial year is expected as IJM's RM4.8 billion order book will be enhanced by more projects announced under the second stimulus package. - Bernama
Palm hits 15-week high on weather fears
MALAYSIAN crude palm oil futures rose as much as 0.9 per cent today to hit a near-fifteen week high on fears that more rainy weather would cut into production.
Palm oil scaled its highest since Aug 14, largely ignoring weaker crude oil prices and slightly higher export data released by cargo surveyor Intertek Testing Services.
Malaysian planter Genting Plantations has given guidance of lower November and December output due to heavy rains and flash floods for its estates in Sabah — a top oil palm growing state in Borneo island, Kenanga Investment Bank said in a note.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange rose as much as RM23 to RM2,501 (US$740.8). By midday, the most-active contract was trading up RM15 at RM2,493.
“The 2,500-ringgit level is a tough nut to crack,” said a trader with a foreign commodities broker.
“Weather is a great concern and the earlier export data was not so fantastic. We are waiting for Societe Generale de Surveillance data to confirm this.”
Cargo surveyor Intertek Testing Services reported today that Malaysian palm oil exports for Nov 1-25 only rose 1.2 per cent to 1.13 million tonnes from the same period a month ago. SGS will give its estimates later in the day.
Expectations of higher exports come as heavier rains sap palm oil yields in the central state of Pahang and the prospect of floods could complicate the transport of the vegetable oil to refineries and ports.
Oil prices slipped below US$76 a barrel on Tuesday, weighed by the slower-than-expected U.S. growth, although most vegetable oil markets priced in demand-supply factors instead.
U.S. soyoil for Dec. Delivery rose 0.5 per cent in Asian trade on strong import demand and the most-active September soybean oil contract on China’s Dalian Commodity exchange inched higher.
This is certainly a good news for plantation stocks. Personally, I like KLK-CH.
Previous related posts
http://cathoon.blogspot.com/2009/10/klk-ch-50-unrealised-profit.html
http://cathoon.blogspot.com/2009/11/palm-up-on-rising-oil-price-weather.html
Palm oil scaled its highest since Aug 14, largely ignoring weaker crude oil prices and slightly higher export data released by cargo surveyor Intertek Testing Services.
Malaysian planter Genting Plantations has given guidance of lower November and December output due to heavy rains and flash floods for its estates in Sabah — a top oil palm growing state in Borneo island, Kenanga Investment Bank said in a note.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange rose as much as RM23 to RM2,501 (US$740.8). By midday, the most-active contract was trading up RM15 at RM2,493.
“The 2,500-ringgit level is a tough nut to crack,” said a trader with a foreign commodities broker.
“Weather is a great concern and the earlier export data was not so fantastic. We are waiting for Societe Generale de Surveillance data to confirm this.”
Cargo surveyor Intertek Testing Services reported today that Malaysian palm oil exports for Nov 1-25 only rose 1.2 per cent to 1.13 million tonnes from the same period a month ago. SGS will give its estimates later in the day.
Expectations of higher exports come as heavier rains sap palm oil yields in the central state of Pahang and the prospect of floods could complicate the transport of the vegetable oil to refineries and ports.
Oil prices slipped below US$76 a barrel on Tuesday, weighed by the slower-than-expected U.S. growth, although most vegetable oil markets priced in demand-supply factors instead.
U.S. soyoil for Dec. Delivery rose 0.5 per cent in Asian trade on strong import demand and the most-active September soybean oil contract on China’s Dalian Commodity exchange inched higher.
This is certainly a good news for plantation stocks. Personally, I like KLK-CH.
Previous related posts
http://cathoon.blogspot.com/2009/10/klk-ch-50-unrealised-profit.html
http://cathoon.blogspot.com/2009/11/palm-up-on-rising-oil-price-weather.html
Genting sees 3Q profit leap
GENTING BHD leapt into a net profit of RM371.33 million in the third quarter ended Sept 30, 2009 (3Q2009) from a net loss of RM40.38 million a year earlier. Revenue rose 1.3% to RM2.4 billion from RM2.37 billion, Bursa was told today.
Its cumulative nine-month net profit climbed 15.8% to RM798.94 million from RM690.08 million, while revenue was down 1.8 % to RM6.57 billion from RM6.69 billion.
Genting said its 3Q net profit was helped by higher gains from Resorts World Genting in Malaysia, and the group's casino operations in the UK. Its power unit also registered more profit as turnover rose amid lower operating cost at its Meizhou Wan electricity-generation plant in China.
"The lower profit from the other business divisions is due primarily to lower revenue," Genting said. During the quarter, the group's leisure & hospitality, and power divisions recorded higher revenue, while other units registered lower turnovers.
Revenue from its oil palm PLANTATION [] operations fell mainly due to lower prices amid less output of the commodity, while the real estate division was affected by a slower property market. The poorer performance at its oil & gas division was due to lower crude oil prices.
Looking ahead, Genting said it would incur significant pre-opening costs at its Resorts World Sentosa in Singapore as the conglomerate accelerated its human resource recruitment, training, besides sales and marketing programmes for the integrated resort.
"The performance of Meizhou Wan power plant could continue to be affected by lower than expected tariff increases, which are being negotiated, and a slight uptrend in coal prices," Genting said.
Its cumulative nine-month net profit climbed 15.8% to RM798.94 million from RM690.08 million, while revenue was down 1.8 % to RM6.57 billion from RM6.69 billion.
Genting said its 3Q net profit was helped by higher gains from Resorts World Genting in Malaysia, and the group's casino operations in the UK. Its power unit also registered more profit as turnover rose amid lower operating cost at its Meizhou Wan electricity-generation plant in China.
"The lower profit from the other business divisions is due primarily to lower revenue," Genting said. During the quarter, the group's leisure & hospitality, and power divisions recorded higher revenue, while other units registered lower turnovers.
Revenue from its oil palm PLANTATION [] operations fell mainly due to lower prices amid less output of the commodity, while the real estate division was affected by a slower property market. The poorer performance at its oil & gas division was due to lower crude oil prices.
Looking ahead, Genting said it would incur significant pre-opening costs at its Resorts World Sentosa in Singapore as the conglomerate accelerated its human resource recruitment, training, besides sales and marketing programmes for the integrated resort.
"The performance of Meizhou Wan power plant could continue to be affected by lower than expected tariff increases, which are being negotiated, and a slight uptrend in coal prices," Genting said.
Saturday, November 21, 2009
以缠红布麻绳起棺代表有冤情 明福遗体送双溪毛糯医院待验
早上11点45分更新
为了厘清赵明福的死因，其家人今日开棺。赵家家属、泰国著名法医普缇与法医人员已聚集在士毛月富贵山庄，并于9点准时开始进行祭拜和开棺仪式。
家属选择以缠红布麻绳起棺，代表有含冤待雪，同时减少开棺仪式的煞气，避免冲击怀孕的苏淑慧和胎儿。
11.15 赵明福棺木被运上灵车，随后被运往双溪毛糯医院。
普缇表示，赵明福遗体看起来相当完好，而她也肯定会出席明天的验尸工作。而家属律师哥宾星指出，各方皆满意这次的开棺程序，他感谢所有的工作人员和警方。
11.10 15分钟前，完成开棺确认，并且再次封棺。如今工作人员正拆除白幕。
10.45 起棺完成，现在进行清理工作，准备进入确认遗体的程序。
10.38 记者听到禁区内墓地工人起棺的吆喝声，众人纷纷转身背对坟墓。天上有许多鸟飞翔，根据黄十林说法，今天是鸣吠日，因此会有很多的鸟鸣和狗吠。
10.30 欧国辉指出，较早10点时，墓地工作人员已动土开挖，可见到赵明福棺木。如今开始正式起棺。
10.00 林吉祥在早上10点左右离开，他向媒体表示心情沉重，但认为为了找出真相，此程序是无可避免的。
他指出，我国贪污问题根深蒂固，并重提国际透明组织刚公布的全球贪污印象指数佐证，其中我国排名落在第56名，只获得4.5分，沦15年来最低名次。
“赵明福在雪州反贪会大楼离奇坠楼死亡，是造成我国贪污印象指数暴跌的主因。”
他也呼吁反贪会汲取赵明福命案的教训，遵守法庭裁决，不能够在办公时间以外盘问证人，否则我国肃贪工作将会越来越糟糕。
也是雪州行政议员的刘天球则表示，他跟欧阳捍华今天代表雪州政府出席开棺仪式，他期望未来不会有第二个赵明福的出现。
9.30 富贵山庄代表欧国辉表示，赵明福棺木将用麻绳吊起，而麻绳也会缠住红布，代表有冤情，也减少开棺仪式煞气，避免冲击怀孕的苏淑慧。
赵明福前上司欧阳捍华冀望这次开棺验尸能让真相大白，他也呼吁反贪会公布聘请英国法医华聂兹斯的费用。
9.02 诵经祭拜仪式开始，带领仪式的是富贵集团首席风水顾问黄十林。泰国著名法医普缇抵达现场，跟赵家、法医、警方和墓地人员进入白幕禁区范围内。
行动党国会领袖林吉祥、刘天球、欧阳捍华，和家属代表律师哥宾星也抵达现场。赵明福遗孀苏淑慧缺席，但其弟弟苏志海代表出席。
8.35 赵家兄妹赵明基和赵丽兰在8点半左右抵达现场，他们带着一袋祭拜使用的橙。而赵家律师林立迎早前也先行到场。法医和墓地工作人员现已进入墓地范围，准备开棺。
赵丽兰表示，他们以做好心理准备，也希望法医能够秉持专业行事，让真相水落石出。
早上8.15 警方在赵明福墓地围起警戒线，设立警戒区，禁止闲人和媒体进入；在警戒区内，赵明福坟墓四周更立起白幕，再设另一禁区，方便开棺仪式的进行。其临近也搭起两个临时帐篷供媒体和警方使用。
明福兄长赵明基负责确认
赵家昨日召开记者会透露，明福的双亲赵亮辉及张秀花将会在双溪毛糯医院守候，而其兄妹赵明基（右图中）和赵丽兰则在开棺现场。
根据富贵集团发布的开棺仪式流程，众人将在早上8点集合，过后工作人员将会安排赵家家属和警方，确认破土之处。
到了早上9点正，当局将会进行诵经和15分钟的祭拜仪式，9点15分钟才正式开始破土。
当局预料破土需时1小时，到10点15分钟起棺后，将会在现场开棺，以让赵家家属及警方确认是明福的遗体。
明福的兄长赵明基将会代表赵家，负责确认胞弟的遗体。
遗体送双溪毛糯医院待验
完成确认后，当局将会马上封棺，再把灵柩送上灵车，然后在大约11点运往双溪毛糯医院，以便在明日进行验尸工作。
警方将会封锁现场，限定媒体在30尺范围之外，只有法庭规定的相关人等，才可踏入警戒线内。
媒体只有在封棺仪式后，灵柩运送到灵车上时，才可进行拍摄采访工作。
普缇宣称有八成他杀可能
随着泰国著名法医普缇（Porntip Rojanasunan）在10月21日於验尸庭上做出震撼供证，认为赵明福死因有80%是遭到他杀，推翻两名政府法医的看法，其家人在10月27日正式入禀验尸庭，要求开棺验尸，进行第二次解剖，以图让真相水落石出。
验尸庭在11月4日批准赵明福家属要求开棺验尸的申请，但是却必须交由我国法医进行第二次的解剖，而普缇只能从旁协助。不过，推事阿兹米尔慕达法允许她在旁观察，以及提出特定的调查事项。
另一边厢，反贪污委员会也在11月13日宣布聘请英国的法医学权威华聂兹斯教授（Peter Venezis）为代表，与普堤一起，协助双溪毛糯医院的法医组主任沙希淡，为赵明福进行开棺验尸的重任。
http://www.malaysiakini.com/news/118001
Malaysia Q3 GDP shrinks less than expected
KUALA LUMPUR, Nov 20 (Reuters) - Malaysia’s economy contracted by 1.2 percent in the third quarter from a year ago, much less than the 2 percent contraction forecast in a Reuters poll, due to booming domestic demand, signalling the last quarter of the trade-dependent Southeast Asian country’s recession.
Economists in a Reuters poll had forecast gross domestic product would drop 2 percent after a 3.9 percent decline in the second quarter.
Central bank Governor Zeti Akhtar Aziz told a press conference that the economy had now shown growth for two consecutive quarters, expanding by 5.7 percent in the third quarter from the second after 4.8 percent in the second from the prior quarter.
“What we are seeing is a tremendous improvement taking place,” Zeti told a press conference, although she said doing better than the full year forecast of a 3 percent economic contraction would depend on the still uncertain global economy.
Malaysia is Asia’s third-most trade dependent country with exports reaching more than 100% of gross domestic product.
Other export-oriented Asian economies, although out of recession, are still feeling the effects of uncertain demand from the U.S. and Europe. Some economists believe however that some amount of decoupling will take place as domestic demand picks up the slack from inconsistent trade numbers.
Malaysia is also Asia’s biggest net oil exporter and second-largest gas exporter and also has large commodity exports and the prices of both have fallen sharply from a year ago.
The government had said that it expects growth to pick up in the second half of 2009 with positive growth in the fourth quarter as a 67 billion ringgit package of government spending and loan guarantees spread over two years kicks in.
Malaysia also recorded its first net portfolio inflows in the third quarter of 2009 since the first quarter of 2008 with 8.8 billion Malaysian ringgit ($2.60 billion) of inflows.
That comes after five consecutive quarters of outflows of portfolio investment totalling 114.4 billion ringgit.
Net foreign direct investment remained anaemic however at just 2.1 billion ringgit in the third quarter despite a raft of economic reforms aimed at boosting Malaysia’s attractiveness as a place to invest.
Unlike countries such as Indonesia who are considering following Brazil’s move to slow rapid inflows, Malaysia is not planning any action, Zeti said.
“We have more mature and more developed financial markets now, more diversified, so they are able to absorb these kind of flows, without disruption, so we are not concerned at this point,” she said.
Malaysia famously spurned cash and advice from the International Monetary Fund during the 1997-1998 Asian financial crisis and slapped on capital controls, which it has since removed.
Economists in a Reuters poll had forecast gross domestic product would drop 2 percent after a 3.9 percent decline in the second quarter.
Central bank Governor Zeti Akhtar Aziz told a press conference that the economy had now shown growth for two consecutive quarters, expanding by 5.7 percent in the third quarter from the second after 4.8 percent in the second from the prior quarter.
“What we are seeing is a tremendous improvement taking place,” Zeti told a press conference, although she said doing better than the full year forecast of a 3 percent economic contraction would depend on the still uncertain global economy.
Malaysia is Asia’s third-most trade dependent country with exports reaching more than 100% of gross domestic product.
Other export-oriented Asian economies, although out of recession, are still feeling the effects of uncertain demand from the U.S. and Europe. Some economists believe however that some amount of decoupling will take place as domestic demand picks up the slack from inconsistent trade numbers.
Malaysia is also Asia’s biggest net oil exporter and second-largest gas exporter and also has large commodity exports and the prices of both have fallen sharply from a year ago.
The government had said that it expects growth to pick up in the second half of 2009 with positive growth in the fourth quarter as a 67 billion ringgit package of government spending and loan guarantees spread over two years kicks in.
Malaysia also recorded its first net portfolio inflows in the third quarter of 2009 since the first quarter of 2008 with 8.8 billion Malaysian ringgit ($2.60 billion) of inflows.
That comes after five consecutive quarters of outflows of portfolio investment totalling 114.4 billion ringgit.
Net foreign direct investment remained anaemic however at just 2.1 billion ringgit in the third quarter despite a raft of economic reforms aimed at boosting Malaysia’s attractiveness as a place to invest.
Unlike countries such as Indonesia who are considering following Brazil’s move to slow rapid inflows, Malaysia is not planning any action, Zeti said.
“We have more mature and more developed financial markets now, more diversified, so they are able to absorb these kind of flows, without disruption, so we are not concerned at this point,” she said.
Malaysia famously spurned cash and advice from the International Monetary Fund during the 1997-1998 Asian financial crisis and slapped on capital controls, which it has since removed.
Friday, November 20, 2009
警方及專業人士監督挖墳開棺‧趙明福21日2度驗屍
（雪蘭莪‧加影）趙明福將在週六（11月21日）早上9時15分進行挖掘墳墓開棺儀式，並送往雙溪毛糯醫院進行第2度驗屍，目前重葬日期暫定為11月22日或23日。
富貴山莊首席營運長歐國輝受詢時指出，經過與警方和家屬3造會議後，週六早上的挖掘墳墓儀式將由富貴山莊職員負責，整個過程將由警方和法庭批准的專業人士監督。
他說，現場將會有2名攝影師全程拍攝整個過程，一名是負責攝錄影片，而另一名則是負責拍攝照片。
職員名單提呈警方
他指出，他們已經把10名職員的名單提呈給警方，名單裡清楚列明職員的詳細資料，警方當天將會檢查並核對所有工作人員和職員的護照或身份證號碼。
據他瞭解，趙明福墳墓四周將會圍起來，每個角落將會由一名警員負責駐守，趙明福墓地將會設立1個帳篷，同時也在對面的空地上設立另外2個帳篷，以方便警察、媒體和官員進行工作。
歐國輝說，他們會利用小型泥機進行挖掘工作，一直挖掘到“七星壽板”的位置後，他們將會利用人力打開壽板提取棺木。
須打破石灰墻提取棺木
他指出，由於墓穴裡沒有多餘的空間，他們必須打破四周的石灰墻，再從趙明福左邊的空地用繩子把棺材提取出來。
他說，趙明福家屬將會在挖掘之前向工作人員確認是趙明福的墓地，並簽署相關文件後才進行挖掘，這時家屬必須要離開墓地，只有職員、2名攝影師和法庭授權的相關人士監督整個過程。
“當棺木提取出來時，我們會先放在一旁空地，並且開棺由家人確認棺木裡是趙明福，然後就把棺木封起來送往雙溪毛糯醫院解剖。”
他指出，封棺後他們將會在墓園前方正在施工的地方開路，以讓車輛可以進入抬走趙明福的棺材。
富貴山莊負責重葬費
據知，整個挖掘和提取棺木的過程預料將會耗費約1小時，挖掘和提取棺木的費用將由警方負責，而重葬的費用則是由富貴山莊負責。
歐國輝說，這是富貴山莊首次因要再度驗屍而進行開棺儀式，與之前進行的拾金儀式大有不同，因為拾金儀式必須在天亮前進行，而今次的開棺則是要配合警方處理整個過程。
他表示，警方在這次的開館儀式中，尊重並配合家屬在風水上的要求。
據他瞭解，行動黨領袖如林吉祥等將會出席週六的開棺儀式。
Wednesday, November 18, 2009
Palm up on rising oil price, weather concerns
MALAYSIAN crude palm oil futures rose 1.2 per cent by midday today, boosted by rising oil prices and fears that rainy weather may cut output, traders said.
“From what everybody can see from the screen, it is crude oil that pushed the market higher. There is also talk about floods, and continued rains,” said a trader at a Kuala Lumpur-based brokerage.
Palm prices tend to track crude oil because of its use for biodiesel, which competes with fossil-based fuel.
The benchmark February contract on Bursa Malaysia Derivatives Exchange rose RM27 ringgit to RM2,369 (US$703.18) per tonne. Overall volume was 7,461 lots of 25 tonnes each.
“The market may continue to rise. I think RM2,400 will come,” the Kuala Lumpur-based brokerage trader said.
“I think the fundamentals are quite straight forward.
Exports are quite good and we have a little setback in production. So the market is well supported,” another Malaysian trader said. - Reuters
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