FMM Wants Bigger Economic Stimulus Package As compared to 2003 and 2009 (Highlights from TheEdge 7th Feb)

Malaysia

• Malaysia Association of Tour and Travel Agents (MATTA) wants a bigger economic stimulus package than the one in 2003 and 2009 to assist sectors affected by the pandemics. In 2003 and 2009, the government introduced RM8.1 billion and RM60 billion stimulus package as a mitigation for the global virus pandemics. MATTA with some key industry stakeholders already had a series of meetings with the related ministry to brainstorm for strategies that can help boost the local economy.
• Federation of Malaysian Manufacturers (FMM) wants BNM to cut another 50bps to cushion any anticipated moderation in economic activities and lower the employee’s contribution in EPF by three percentage points. This increases the liquidity in the market by allowing citizens to spend more since they have more cash. They also suggested to intensify the promotion of Buy Made-in-Malaysia products to boost domestic sales, remove the RM300k limit on market development grant to encourage more SME to participate in international export promotion activities, halve levy payments to HR Development Fund to 0.5%, reduce electricity and gas tariffs for one year to help lower business cost and sustain operations, and to provide more Cuti-Cuti Malaysia travel vouchers to improve local tourism amongst Malaysians.
• SME Corp Malaysia will execute a mitigation plan to help SME should the local industry’s economy was severely impacted by the Wuhan virus. Currently, its impact is still unknown as they cannot be quantified yet.  SME Corp will work with government and agencies to come up with the plan soon.
• GSC in Pavilion will be closed down on 17^th Feb but no reason was disclosed for the matter (Sure la parking RM10 per entry).
• Demand for global air freight, which is used to measure amount of cargos transported via air mode transportation fall 3.3% in 2019 as compared to 2018, but total capacity rose by 2.1% y-o-y. This is the first decline since 2012 and the weakest performance since the global financial crisis in late 2008. It is mainly attributed to weaker growth in global trade but to the fair I am kinda shocked because e-commerce sales has hitting its record high in 2019, but airfreight demand drops? Perhaps mode of transportation preferred is water?
• Palm oil conference will be delayed to June citing space availability as the major factor behind its decision to postpone the conference. Since the emergence of Wuhan virus, more than two dozens large trade fairs and conferences in Asia have been postponed.
• Starbucks-franchise owner BJFOOD announced its 2Q20 profit of 8million, but no y-o-y comparison as they changed their financial year last year. It says its earning is still impacted by the adoption of the Malaysian Financial Reporting Standard 16 (MFRS16) which took effect last year January. MFRS16 requires depreciation to be charged on the right-of-use assets and interest expenses to be incurred on lease liability instead of lease rental expenses, which BJFOOD’s bottom line took a hit.
• London Biscuits bid for its assets will be opened on March 2^nd, as liquidation of the company proceeds. London Biscuit impaired RM400 million on its ballooning receivables, an amount that is more than its full year revenue of RM391 million. When a company has high receivables, they will have cash flow problem and it will be difficult to proceed with normal business operations. In London Biscuit case, their ever-growing receivables should be a red light to investors to dump the company before it’s too late.
• Petronas Dagangan is not planning to stop its natural gas for vehicles (NGV) now. PetDag has launched Setel, Malaysia’s first mobile application for fuel payment and plan to offer Setel at more than 1,000 Petronas stations by 2Q20. In my opinion, e-wallet is already taking the job of this so why consider launching another? Even the big companies can’t understand ‘Sunk Cost’?
• Bulk Cement price have risen to RM250/tonne from RM190/tonne since the M&A of Lafarge into YTL Cement. After the acquisition, YTL Corp controls 58% of the cement production capacity in Malaysia. However, YTL Corp would need to pare down its current stake in Malaysian Cement from 77% to 75% to meet public spread regulation.

Globally

• Ex-SriLankan Airline CEO was arrested yesterday for multibillion-dollar bribes received from Airbus regarding aircraft deal. He and his wife were arrested for money-laundering allegations after the Colombo court issued their orders.
• China National Offshore Oil Corp declared force majeure, means it will not take any delivery of liquified natural gas cargoes claiming that the virus is constraining its ability to import the fuel. It is the first known cases of the legal clause being invoked in the commodity contracts due to the Wuhan virus.
• Fund manager Didier Darcet said virus outbreak will peak in March, suggested according to the rate of acceleration of the virus spread. The number of new infections is now growing at a slower rate than last week, provided that the official numbers are correct.
• Toyota raised its operating forecast by 4.2% on favourable currency rates and better-than-expected vehicle sales. It is common for companies in matured market like Japan, Hong Kong, US, etc to announce its operating profit forecast before actual announcement.
• China’s Banking Commission (CBIRC) asked banks to assess whether their borrowers can repay their loan accordingly, as a measure to assess the impact of Wuhan virus to the economy. CBIRC has also urged banks to lower interest rates and extend loan repayment date to affected companies like tourism, real estate, energy sector.
• US crude flows to Europe are set to increase as Asia’s demand on the crude oil fall due to the Wuhan virus outbreak. This comes as a mitigation plan for the US energy companies as they place more emphasis in Europe since Asia’s economy will take some time to recover.
• US President Trump’s impeachment trial has finally ended as he is saved by his fellow Republicans in his impeachment trial. The senate voted 52-48 to acquit (Not guilty) Trump of power abuse from his request that Ukraine investigate political rival Joe Biden. Trump now proceeds into the election season that promises to further polarize the country.
• Latest death toll in China is over 500, with total confirmed infections over 28,000 cases. That will be a mortality rate of 1.8%, going down from a mortality rate of 2.2% last week. To date, there are still no known effective therapeutics against the Wuhan virus, World Health Organization (WHO) spokesman Tarik Jasarevic said. Most of those infected recovered quickly with only mild symptoms but it is still unknown how lethal the virus can be as those with mild symptoms can quickly turn into severe respiratory illnesses.

Disclaimer: This is simply to note down the major incidents that I should take note in TheEdge NewsPaper. Reading this will be just enough for you to understand Malaysia’s finance. I tryI cover as much local news as possible and exclude global news that’s uninteresting. Please subscribe and read the original TheEdge for more details and information.