PRESIDENT

MANAGEMENT COMMITTEE

FOR YEAR 2002 /2003

PRESIDENT

MS. GAY LEONG

ROYAL SELANGOR INTERNATIONAL SDN BHD

VICE-PRESIDENT

MR. MAMORU KAWASAKI

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MR. JASON LEE

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The Malaysian Tin Products Newsletter is published quarterly by the Malaysian Tin Products Manufacturers’ Association (MTPMA). The opinion and statements expressed in the Newsletter are not necessarily those of the MTPMA or the Editorial Sub-Committee and neither endorsement nor confirmation are intended or implied.

Dear members,

Sang Yang Kai Tai! This popular Chinese phrase refers to a new beginning with the return of Spring. It is therefore with hopeful thoughts of a bright year ahead that the Management Committee and I would like to wish all MTPMA members.

As our 13^th Annual General Meeting approaches this 26 June 2003, I cannot help but reflect upon the last three years and be amazed at the historic events we have encountered in the world, in our country, and not to mention our industry! We have all, I am sure, been very busy responding to the challenging times in our respective ways and we realise the value of strategic alliances and relationships with customers or colleagues, business partners or associates. So we hope to see you at the AGM where, among other matters on the agenda, there will be the election of the Management Committee members and a new President. It would also be an excellent opportunity to meet each other at lunch thereafter.

With that, I take this opportunity to thank the entire Management Committee and the Secretariat staff for their hard work and diligence in running the Association so far, and all members for their support. On a personal note, it has been a pleasure serving the MTPMA, and a terrific learning experience for me.

Do stay in touch with us and let us know if you have any news you’d like to share with the other members.

Thank you.

Gay Leong

President

Integrated electronics manufacturing service provider Unico Technology Bhd, which recently downsized its operations on mainland Penang, retrenched 800 of its 1,400 workers recently. The move, which follows the closure of one of the company's business units dealing with high-volume products like motherboards and computer cards, will see Unico focusing its operations on low-volume niche items such as networking products.

The company said that of the 800 retrenched staff, 200 are foreign workers who will be repatriated. In an immediate reaction, the Penang State Government said that all efforts will be stepped up to get industries to move up the value chain in areas where Penang can compete with cost-competitive locations like China. "Penang must see that value-added services continue to be enhanced, and we will collaborate with the Federal Government on more targeted incentives for investors here," said Datuk Dr Toh Kin Woon, who is the state Economic Planning, Education and Human Resource Development Committee chairman.

A Unico spokesperson said the company had complied with the Employment Act 1955 in notifying the labour authorities and paying out appropriate retrenchment benefits. She added that additional efforts were being made to lessen the burden on the affected employees. These include a career fair, which will be held on January 27 and 28. "We have contacted 20 companies in the area to try and absorb these workers back into the industry," the Unico official said. Unico has also hired an employment agency to prepare employees for job interviews and enter the names of the affected staff in a database for future employment, she added. "We have also contacted several training providers who retrain retrenched workers in addition to helping affected workers, who wish to become entrepreneurs, to obtain grants from agencies like Mara".

The official said that the company's decision to downsize was because one of its major customers had decided to consolidate its external supplier base and move the base out of Malaysia due to cost reasons. Industry sources revealed that the customer is chipmaker Intel Technology, which has decided to outsource its business to China. "We have been having a series of negotiations with the customer since the middle of last year on costs, but could not agree to a lower figure," the Unico official said. "Despite taking other measures like freezing hiring, cutting costs and letting foreign employees go, we have no other choice (than to retrench staff)," she added.

(Source: Business Times, 8 January 2003)

Samsung Electronics Co, Intel Corp and Texas Instruments Inc will probably widen their lead over chipmaking rivals this year because they're investing billions of dollars needed to compete in the US$141 billion industry, investors and analysts say. Intel is opening factories that produce more chips from each silicon wafer and cut production costs by as much as 30 per cent to stay ahead of Advanced Micro Devices Inc, its closest competitor in the computer microprocessor market. Similar spending will help Samsung, the world's No. 1 memory-chip maker, beat out rivals Micron Technology Inc and Hynix Semiconductor Inc.

"The chip industry is a high-stakes gamble that requires a lot of investment," said Takehiko Takachio, a senior portfolio manager at Kokusai Asset Management Co, which manages about 470 billion yen (100 yen = RM3.22) in Japanese equities, including shares of chipmaker Toshiba Corp. "Those that invest for the future will be the winners." Falling business spending and slowing global growth have cut sales of the personal computers and phone equipment that use 70 per cent of the world's chips. Companies that invest now will be set to outsell their competitors as corporate spending and demand for advanced mobile phones revive chip sales later this year, analysts say.

Take Texas Instruments. The company, whose chips power half the world's mobile phones, invested US$800 million in 2002, mostly to upgrade wafer equipment. That dwarfed the US$180.5 million spent by National Semiconductor Corp, which also focuses on chips for wireless devices. In 2001, the industry's worst year ever, Texas Instruments invested US$1.8 billion. "We think we're further ahead in products and performance that we were during the height of the last upturn," Texas Instruments chief financial officer Bill Aylesworth said in an interview. "With our strong financial position, we knew we weren't jeopardising the health of the company." The company had US$2.59 billion in cash and marketable securities as of September, according to a filing with the Securities and Exchange Commission. By the same measure, National Semiconductor had US$686 million in November. "If you're ever going to make a big bet, this is the time to make it," said Cody Acree, an analyst at Legg Mason Wood Walker Inc who rates Texas Instruments shares "buy" and said he doesn't own them. It's not really a huge risk to shareholders."

Global chip sales will probably rise 12 per cent this year to about US$174 billion after gaining just 1.4 per cent in 2002, according to market researcher Dataquest Inc. That still trails gains in 2000 when worldwide chip sales climbed 37 per cent to a record US$204 billion. In 2000, capital spending on semiconductors surged 87 per cent before falling for two straight years. Spending this year will probably rise 5 per cent, according to IC Insights Inc. "For 2003 as a whole I'm not very optimistic," said Egbert Jan Nijmeijer, who helps manage about 30 billion euros (1 euro = RM4.00) at Robeco Groep in Rotterdam, including Samsung shares. "There is still big price pressure as there is still overcapacity." Most of this year's growth will go to chipmakers that are building more cost-efficient factories and relying less on personal-computer demand by making chips for camera-equipped mobile phones, digital cameras and other consumer electronics, investors said.

Intel, the world's biggest chipmaker, opened a US$2 billion extension to a New Mexico plant in October that makes silicon wafers with smaller circuitry and 300-milimetre diametres, larger than the current standard. That means more chips can be made from each wafer. The Santa Clara, California-based maker of the Pentium chip used in about 80 per cent of the world's PCs plans to open two more plants making chips from 12-inch wafers in the next two years. "They've made the technology transitions, and they're already experiencing the benefits to some extent," said Sunil Reddy, who helps manage US$32 billion at Fifth Third Bancorp, including 9.4 million shares of Intel. Intel chief executive officer Craig Barrett said last year his company would win market share from rival Advanced Micro by outspending it. Intel said in November it would invest US$4.7 billion in 2002, making it the industry's biggest spender. Advanced Micro planned to spend US$750 million for the year.

This year, Intel's net income will rise 29 per cent to 63 cents a share from an expected 49 cents in 2002, according to the average estimates of analysts surveyed by Thomson First Call. Advanced Micro will post a loss of 66 cents a share, analysts predict. Intel's shares fell about 50 per cent in 2002, and Advanced Micro's declined 59 per cent. While machines used to make chips from 12-inch wafers cost more than 8-inch equipment, the current standard, investors say the savings may shield Intel from chip-price fluctuations. "Once business improves and demand improves, it's not pricing that's going to get you to the margins you want, it's going to be the economics of your fixed costs," said Rose Papp, who owns Intel shares among the US$1 billion managed by L. Roy Papp Associates in Phoenix.

New investments may help South Korea's Samsung extend its gains this year. The South Korean company's chip sales rose 30 per cent last year to US$8.17 billion, according to market researcher Dataquest Inc. "Samsung has been an extraordinary exception in the chip industry when you look at profit levels and increasing market share," said Robeco's Nijmeijer. "Nothing is stopping Samsung from further building on its already strong position." Samsung invested 4.88 trillion Korean won (US$4.1 billion) in new plants and equipment in 2002, more than four times its nearest memory-chip-making rival, Micron. Samsung said recently it plans to spend 1.5 trillion won to start mass-producing chips for 12-inch wafers by the third quarter. The company has 6 trillion won in cash. South Korea's Hynix, the world's No. 4 memory-chipmaker according to iSuppli Corp, spent only about a 10^th of what Samsung did last year. Saddled with debt of more than 12 trillion won, Hynix will probably post a 1.1 trillion won loss in 2003, its sixth in a row, according to Merill Lynch & Co. By contrast, Samsung's 2003 profit will probably rise to at least 8.1 trillion won from an estimated 7.1 trillion won last year, according to nine analysts surveyed by IBES. Samsung's shares rose 12 per cent last year, while Hynix's slid 88 per cent and Micron's shares dropped 68 per cent.

Europe's biggest chipmakers are spending less than their US and Asian counterparts on new plants and equipment. STMicroelectronics NV, the region's No. 1 chipmaker, plans to invest about US$1 billion this year, the same as in 2002. To share costs, it's linked up with Royal Philips Electronics NV and Motorola Inc to develop semiconductors that are smaller, cheaper to produce and more efficient. The three partners plan to spend a combined US$1.4 billion by 2005. Germany's Infineon Technologies AG, the world's third-largest memory-chip maker, said it will invest 980 million euros in the year ending in September and reach full production capacity at a new 12-inch wafer plant by mid-2003. Others have less cash for expansion. Philip, Europe's No. 3 chipmaker, cut planned capital spending for 2002 to 425 million euros in October from an earlier forecast of 450 million euros.

Rising global consumer demand for digital cameras, camera-equipped cell phones and video-game consoles will sustain chip-sales growth in 2003 as PC demand stalls, analysts said. The market for chips used in consumer electronics will grow 20 per cent to US$23.1 billion this year, according to IC Insights. That more than twice the 8 per cent increase in PC sales expected by market researcher International Data Corp. Sales of flash-memory chips used in cell phones, digital cameras and MP3 music players are set to climb 39 per cent in 2003, the Semiconductor Industry Association forecasts.

Japan's Toshiba, Sony Corp and Matsushita Electric Industries Co will be among the chipmakers that benefit most from growing demand for those gadgets as they increase production of the chips that power them, analysts said. Toshiba, the world's No. 5 chipmaker, said last month it plans to invest 350 billion yen to build two new plants that make chips from 12-inch wafers, and it's increasing production of large-capacity flash memory chips. "We expect chip demand to surge perhaps in the second quarter of 2003, mostly because mobile phones require semiconductors with higher performance," Toshiba senior vice president Takeshi Nakagawa told reporters last month. "That's why we need to invest in the latest chip technology."

(Source: Business Times, 8 January 2003)

American electronics companies in Malaysia expect sales to grow as much as 10 per cent this year, helped by increased spending on computers, disk drives and other computer-related equipment, an industry group said. "We anticipate an 8 per cent to 10 per cent growth from 2002 to 2003," American Malaysian Chamber of Commerce president Timothy Garland said, citing a preliminary survey of the 18 members of the chamber's electrical and electronics industry group. The survey was conducted in January and February.

According to the chamber, combined export sales of the electrical and electronics group probably rose nearly 24 per cent to more than RM54 billion last year. That's better than the estimate it gave in February, when it said sales exceeded RM50 billion in 2002, rising for RM41.4 billion in 2001. Shipments of electrical and electronics goods, which make up almost three-fifths of Malaysian exports, rose 4.4 per cent last year to RM198 billion as manufacturers benefited from a recovery in global demand after a slump in semiconductors that slashed economic growth to 0.4 per cent in 2001. Much of that growth came from companies that weren't in the chip business. Sales at semiconductor companies rose "a very modest" 1.5 per cent in 2002, Garland said in an interview.

The gains may not be sustained. Manufacturing, which accounts for a third of the economy, is slowing after the rush to meet year-end demand for electronics and other goods ended in the US. Malaysian factory production rose 1 per cent in January, the slowest pace in 10 months, the government said over the weekend. The possibility of a US-led war on Iraq is also making consumers in the world's largest economy less willing to spend. American consumer sentiment fell in February to the lowest since 1993. The American chamber's 18 electronics companies, who include Motorola Inc and Intel Corp, accounted for over a fifth of Malaysia's electrical and electronics exports in 2001. Still, "the general indications are that the spending on computers and other related equipment, including disk drives, should increase in 2003," Garland said.

Sales by disk drive manufacturer Western Digital Corp and other non-semiconductor electronics companies will probably help boost electronics sales as demand for computer chips eases. While Intel Corp, the world's biggest semiconductor maker, has lowered its 1^st quarter sales forecast as orders decline for flash-memory chips, Western Digital has said that 2^nd quarter profit rose six-fold. It expects sales of as much as US$700 million and profit as high as 22 US cents a share in the 3^rd quarter ending in March. "We will increase output" at the Malaysian and Thai plants "to match and demand profile of the industry," Western Digital (M) Sdn Bhd managing director John Coyne said in an interview. "As we look forward to the coming year, we will continue to invest in equipment upgrades and technology improvements in both facilities." According to Garland, capital investment by the American chamber's electrical and electronics companies will probably amount to between RM1.5 billion and RM1.6 billion this year, matching investments of RM1.6 million in 2002. The 2002 figure was a 30 per cent decline from 2001. "Foreign direct investment as a whole is down across the world, and there are other hotspots attracting some of the FDI," Garland said.

Still, he said, the electronics industry would continue to spend money in Malaysia on improving existing plants as they brought in higher value-added production capacity to Malaysia. The chamber represents more than 350 members, including International Business Machines Corp, that together employ more than 100,000 people in Malaysia with a combined foreign direct investment of more than RM50 billion.

(Source: The Star, 11 March 2003)

Growth in global chip sales slowed to 1.3 per cent in November from October, well below average growth for the month, the semiconductor industry said, and investors are bracing for even weaker trading ahead. Total November sales were US$12.68 billion, but growth slowed from a 1.8 per cent monthly rise in October, the World Semiconductor Trade Statistics (WSTS) group, the industry's main research organisation, said in its monthly report.

Since 1990, sales have grown by an average of 2.7 per cent for the period, according to Dan Scovel, analyst at Needham & Co. "The reported number of 1.3 per cent growth is well below average. We consider such an anaemic growth number to be relatively consistent with our expectations for lacklustre seasonal growth." Chip sales traditionally accelerate in the run up to the year-end holidays on the back of strong demand by electronics manufacturers for goods ranging from computers and cellphones to toys and shavers.

This year, however, demand from business and consumers for the two categories which consume most of the world's chip - computers and mobile phones - have remained slack. November sales were "a small disappointment," said analyst John Geraghty of Gerald Klauer Mattison & Co. "It's not a disaster, but things aren't flying off the shelves." Compared with 2001, November global sales climbed 19.6 per cent, slightly below the 19.9 per cent growth in October. But these comparisons look favourable only because the semiconductor industry then experienced its worst decline ever. Chip sales could grow even more slowly if early indications are correct that consumers have become more cautious since a relatively buoyant Thanksgiving in late November.

Slow Q1

The US retail sector now expects its worst end-of-year holiday sales season in 30 years as a sluggish economy, a weak job market and the threat of war with Iraq dampen consumer confidence and spending. "The WSTS numbers for November are historical data. Key is what's happened in December. We've seen weak retail reports this month, and just before Christmas (US chipmaker) Cypress warned about weak wireless chip sales," said one London-based analyst at a major investment bank. With No 1 mobile phone maker Nokia and No 1 consumer electronics retailer Best Buy Co Inc warning of soft sales in December, analysts said the next quarter could be difficult. "People are doubting we're going to have a huge Q1," Adam Parker, an analyst at Sanford Bernstein, said. "You need pricing power to get an upcycle in this business. And it's hard to imagine how you'll get that in the first quarter." Like most analysts, he expects the sector to pick up in the second half of 2003. He and Geraghty are both forecasting 15 per cent growth next year. Geraghty said 2002 growth will total about 2 per cent.

Europe strong

European chip sales remained resilient, while the Americas and Japan hovered around zero growth and the rest of the Asia Pacific was in line with the global average. Excluding Japan, chip sales in the Asia Pacific region - where most chips are manufactured - rose 1.3 per cent in November from October to US$4.62 billion, slightly above the 1 per cent growth in October. In Europe, where the chip sector is focused on consumer electronics, cars, mobile phones and other categories which are not exposed to the depressed computer sector, monthly sales grew 5.8 per cent to US$2.60 billion down slightly from 6.2 per cent in October. The US Semiconductor Trade Association (SIA) singled out wireless chips as the driving force behind the sales growth in November. "The wireless sector continues to be the strongest single market," it said in a statement.

(Source: The Star, 2 January 2003)

Hitachi, NEC Ask Intel To Invest In DRAM Chip Joint Venture

Japan's Elpida Memory Inc, a DRAM chip joint venture between Hitachi Ltd and NEC Corp, said recently its parents had asked Intel Corp of the US for capital investment in it. An Elpida spokesman declined to comment on the size of the possible investment, but said the Japanese firms aimed to reach an agreement by the end of the current business year in March.

Securing outside investors to supply part of the 80 billion yen needed to boost capacity and cut costs at Elpida's new semiconductor plant is vital to achieve its target to make its operations profitable by December. The state-of-the-art facility, due to start commercial production this month, is one of the few Japanese plants to use 300-milimetre wafers, which produce twice as many chips as the standard 200 mm variety and are already used by many of Elpida's foreign rivals.

Elpida is Japan's sole major producer of dynamic random access memory (DRAM), the mainstay of computer memory chips and a market Japan once ruled. The Elpida spokesman said NEC and Hitachi intended to keep their combined share in Elpida at 51 per cent or higher even after the possible capital injection. Elpida also said it had reached a consignment production agreement with Chinese foundry Semiconductor Manufacturing International Corp (SMIC). Under the five-year deal, SMIC will start manufacturing 200 mm wafers designed by Elpida for the Japanese firm from the third quarter this year. The initial output is set at 10,000 units a month, with the production to be raised to 15,000 units per month next year. Shares in NEC rose 1.58 per cent to 451 yen, while Hitachi gained 4.62 per cent to 476 yen.

In another development, Hitachi said recently it has launched a company combining its hard disk drive (HDD) operations with those of US counterpart IBM Corp to boost global competitiveness. Hitachi Global Storage Technologies is owned 70 per cent by Hitachi Ltd and 30 per cent by IBM, but the Japanese firm will take full control of the business - headquartered in San Jose, California - at the end of 2005. "One of Hithachi's overarching goals is to leverage its competitive edge in HDDs to exercise leadership in the IT (information technology) industry by building the infrastructure needed to support a ubiquitous information society," the firm said in a statement. The deal finalises an agreement reached in June when Hitachi announced it would take over IBM's HDD business for US$2.05 billion.

(Source: Business Times, 7 January 2003)

Intel Corp, the world's largest chipmaker, sees little improvement in technology spending in the next six months, but hopes demand from new markets like China will drive an improvement in the second half, a top official said. "We don't expect a big uptick in spending in the first part of 2003," Tom Kilroy, Intel's vice-president for sales and marketing group, said in an interview recently. "We are hopeful that overall, we will see a pick-up in the second half of 2003. We're very optimistic about the emerging markets, that's the exciting area… It will continue to outperform," he said.

Last month, Intel raised its fourth-quarter revenue outlook to US$6.8 billion to US$7 billion, from an earlier forecast of US$6.5 billion to US$6.9 billion, citing higher sales in Asia and stronger demand for its microprocessors. "More and more of our revenue is coming from emerging markets and the highest percentage of that business comes from the channel or independent system builders," Kilroy said. Intel sells primarily to manufacturers of personal computers, but it also sells products to some 85,000 small independent system builders or those who build their own PCs or servers using Intel components. Aside from China, Vietnam and India as well as South-East Asia fall under the emerging markets umbrella. Outside of Asia, Russia, eastern Europe, West Asia and Latin America are considered emerging markets.

About a third of Intel's revenue comes from Asia Pacific, which accounts for some 45 per cent of Intel's overall channel business. "What we do know is that there's a more consistent spending pattern in Asia Pacific," Kilroy said, adding that governments as well as small businesses were spending on information technology. When I look at 2003, I expect strong growth in China, in India and increasingly, a greater contribution to our growth from South-East Asian countries," Kilroy added. In China, for instance, Kilroy said Intel plans to move into second- and third-tier markets outside of Beijing and Shanghai.

The Santa Clara, California-based chipmaker is also a leading manufacturer of computer, networking and communications products. "What we expect for 2003 is a significant growth pattern in the mobile segment. We will see a bigger growth curve in this emerging area and if you look over a four- to five-year horizon, I think you'll start to see a shift from desktop into mobile as convergence of communications and computing happens," Kilroy said. In the last several years, Intel has been working to boost revenue beyond its mainstay PC-related business, where it faces a maturing market in the US and western Europe.

(Source: Business Times, 9 January 2003)

The world's third-largest contract chip maker, Chartered Semiconductor, said recently it would cut 14 per cent of its staff and shut one of its five factories by March 2004 after two years of losses. Analysts saw the move as a bid for survival.

The cost-cutting comes two weeks after the Singapore state-controlled group, which ranks a distant third behind rivals Taiwan Semiconductor Manufacturing Co Ltd and United Microelectronics Corp in the market for built-to-order chips, posted an eighth straight quarterly loss. It also marks a second round of job cuts at Chartered Semiconductor Manufacturing Ltd since October, when it axed 300 people, or about 7 per cent of its workforce as demand for communications and computer chips languishes. Many big chip makers, facing their worst industry slump on record, have shelved plans for expansion or upgrading of plants while much of their factory capacity has gone idle.

Analysts generally saw the news as positive for the longer-term prospects of Chartered, which expects to save US$25 million a year from the move. "It's survival issue for Chartered," said Russell Tan, analyst with Netresearch-Asia. "The company is poised on a knife-edge, being the lagging third in the industry, and if they had continued to expand and invest in the vain hope of a magical recovery, then they could very well have gone belly up." However, Chartered's plan seems to suggest the company was betting on a muted recovery this year, Tan added. "This strategy can only work if industry conditions remain difficult for one to two years, and there's no hurry to expand. This will give Chartered time to gain market share through minimal spending." Chartered shares fell nearly 3 per cent today to S$0.67 (S$1=RM2.18) in brisk trade of more than eight million shares. "It will take a great deal of positive news for the stock to go up," said Steven Lim, a fund manager at Daiwa SB Investments Singapore, which manages about S$500 million. Chartered is likely to languish in the current weak market situation," he said.

Chartered, which employs about 3,500 people, said it would close a Singapore plant that uses older 150mm wafer manufacturing technology, known as "Fab 1", and consolidate the factory's business into another plant to slash costs. The process involves 500 job losses and will take 13 months. Fab 1 accounts for about 15 per cent of total factory capacity. "As a result of the sharp contraction in the semiconductor market over the last two years, the worst in the industry's history, Chartered has excess capacity at mature technology nodes," Chartered's chief executive, Chia Song Hwee, said.

He said Chartered faces one-time costs over the next several quarters of between US$18 million and US$22 million as a result of the plant closure. "About 75 per cent of our restructuring costs will be taken in 2003, and the savings realised in 2004," he told analysts in a conference call. About US$4 million in restructuring charges would be recognised in the March quarter, and were not included in the company's guidance of a net loss of US$96 million to US$99 million for the March quarter, provided last month. Chartered will issue its mid-quarter guidance on March 11. It said the plant closure and job cuts would not affect its 2003 capital expenditure budget of US$275 million. Chia also said Chartered was planning to start manufacturing in China. He said the company is scouting for a potential partner in China interested in acquiring the firm's older wafer technologies of 0.25 micron and above. "We are in discussions and still in search in China for potential partners."

Chia said Chartered plans to increase its capacity for higher-end technology to 50 per cent by end-2004, from the current 15 per cent, without increasing its total capacity base. Now that the it derives 36 per cent of total revenues from the advanced 0.18-micron technology, and has begun shipments of 0.13-micron technology, Chartered is able to aggressively target "first-source" business, which typically commands higher prices and profit margins. First-source business refers to being selected as first manufacturing source for customers' new product introductions. Chipmakers are moving towards increasingly advanced technology which features larger wafers and thinner line widths so more chips can be packed into a wafer, boosting productivity. He said Chartered now lags rival TSMC three to four quarters in terms of revenue from 0.18-micron shipments. While these moves could help Chartered return to profit eventually, Chia declined to forecast the timing, adding that the management hoped to post a quarterly improvement in its results.

(Source: Business Times, 14 February 2003)

Agilent Technologies Inc has doubled its investments in Penang by investing RM2.1 billion over the past five years, an increase of 140 per cent over its RM1.5 billion accumulated investment of 25 years between 1972 and 1997. This brings the company's total investment in Agilent Technologies Malaysia Sdn Bhd to RM3.6 billion. The communications technology giant has also increased its manufacturing space at the Bayan Lepas free industrial zone in Penang by 85 per cent from 60.385 sq m to 111,480 sq m over the same period.

Penang Chief Minister Tan Sri Dr Koh Tsu Koon recently officiated at the opening of Buildings 6, 7 and 8 at the Agilent plant at the Bayan Lepas Free Industrial Zone. Present were Agilent Technologies president and chief executive officer Datuk Edward W Barnholt and Agilent Malaysia-Singapore president Datuk Tan Bian Ee. Also present were former Chief Minister Tun Dr Lim Chong Eu, State Economic Planning, Education and Human Resource Development committee chairman Datuk Dr Toh Kin Woon, and Penang Development Corp general manager Datuk Siti Balkish.

Agilent Technologies Malaysia manufactures optoelectronics, motion control devices, microwave components, modules and test accessories, as well as electronics test and measurement instruments. "Although Agilent revenue had been declining in other parts of the world, our revenue in Malaysia has grown about 40 per cent over the past two years," Barnholt said. Barnholt said the company pledged to keep building on its long-term commitment to Malaysia as it sees the region as an important source of growth. On the company's outlook for 2003, Barnholt said it hopes to see improved performance in 2003 or at least similar to what was achieved last year. Barnholt said Agilent Malaysia, which is responsible for the design and development of many of the company's complex electronic products, had become a world-class manufacturing centre and the benchmark for other plants in the group.

(Source: Business Times, 25 February 2003)

Labour Market Seen Improving This Year, Salaries To Grow At Modest Pace

Malaysia's labour market will improve this year with salary levels growing at a modest pace, JobStreet.com vice-president of operations Suresh Thiru said. He said some sectors, such as information technology (IT), will not be hiring many employees, while regional call centres set up multinational corporations (MNCs) in the country will be looking for a lot of qualified people.

Fresh graduates are expected to have a tough time in the first and second quarters of this year as there are still graduates who have not found jobs since last year. "It will continue to be a competitive job market for fresh graduates this year. The starting salary for fresh graduates has already dropped from RM2,200 a few years back to RM1,500 last year," Suresh told a news conference at the launch of JobStreet Salary Report, an online salary information service, in Kuala Lumpur recently. Suresh said the employment market this year is expected to grow in line with the anticipated economic growth of between 4 and 6 per cent. But it (the job market) will not return to the tight situation in 1995 and 1996 as there is no major driver," he said.

Malaysia experienced a tight labour market before the 1997 Asian financial crisis, with new companies being set up and many expanding their operations. The situation, which is characterised by many employers seeking fewer employees, resulted in higher salaries to attract and retain workers. The regional financial crisis and the bursting of the dotcom bubble have seen the main drivers of the employment market, such as the manufacturing, electronics and information technology (IT) sectors, too weak to generate jobs. Suresh said the current soft employment market has resulted in some workers in sectors like manufacturing being willing to work for lower pay. He said although the starting salary for fresh graduates has been on a downtrend, the salary for the existing workforce is still growing, but at a small quantum. According to JobStreet, the current top five industries in the country offering the most jobs are manufacturing; electrical and electronics; IT (software); banking and financial services (call centres); and education. The job specialisations currently most sought after by employers on JobStreet.com are IT/computers and software; clerical/general administration; finance (general/cost accounting); marketing/business development; and customer service. Suresh said since its soft launch in November last year, other clients have also subscribed to the service. Among them are Iris Corp, Maxis Communications Bhd, Matshushita Display Device, CIMA Malaysia, Komag US (M) Sdn Bhd, Fujitsu Malaysia and American Express.

"We are targeting 200 subscribers for the JobStreet Salary Report by the end of this year." he said. The JobStreet Salary Report, said to be the first online salary information tool, allows human resource practitioners and companies to access up-to-date salary data for decision-making purposes. Suresh said companies can also benchmark their salary levels with other organisations. With an annual fee of RM600, the salary report offers unlimited access and multiple sharing within organisations per subscription. Suresh said JobStreet took six months to complete the salary report. Data is gathered from updated resumes sent by job-seekers registered with JobStreet. JobStreet plans to launch the same service in India, Singapore and the Philippines in the next few months.

(Source: Business Times, 15 January 2003)

DOE Issues Publicity Rules For Firms

The Department of Environment has introduced guidelines for companies to voluntarily publicise all eco-friendly actions in their business. DOE director-general Rosnani Ibarahim said the guidelines would encourage firms to undertake the publicity as their social responsibility towards consumers and stakeholders.

She said the law compelled companies to fulfil certain environmental requirements and the voluntary reporting would publicise the steps they take to fulfil them. She said this would empower the consumers, giving them a say in how the products they buy are made, and how a company should conduct business. "This will allow consumers with the choice of purchasing 'ethical' products. "Buying ethically will encourage more innovative products and companies while discouraging those that ignore the social and environmental consequences of their action," she said when launching the Environmental Reporting Guidelines for Malaysian Companies recently.

The guidelines were compiled with the co-operation of the Association of Chartered Certified Accountants (ACCA). Rosnani said that most of the companies now undertaking the voluntary reporting were multinational corporations. "We have to see how the companies react to the reporting before thinking about making it compulsory," she said. ACCA's head of social and environmental issues Rachel Jackson said the guidelines included the benefits of environmental reporting and reporting activities across Asia and Malaysia, what stakeholders look for in the report, best practices and environmental policies. "Investors will want to know if the products are made in a responsible manner. Responsible investors will not buy the products if they were sourced unethically. The report is an effective communication tool to attract investment," she said.

An ACCA survey showed more KLSE mainboard-listed companies are involved in environmental reporting. From 25 companies doing the reports in 1999, it grew to 35 in 2000, and 40 in 2001. This represented 5.3 per cent, 7 per cent and 7.7 per cent of the listed companies in the three years. The Industrial Product sector (such as oil and gas, chemicals and manufacture of metals and cement) is the largest sector engaged in environmental reporting, comprising 23 per cent of reporting companies in 1999 and 28 per cent in 2001. The plantation sector was the second largest, followed by consumer products, trading/services, construction, infrastructure and properties and finance. No reporting companies were identified in the mining, technology and hotel sectors.

On the land clearing on an 8 ha plot of land formerly part of the Blue Valley Tea Plantation in Cameron Highlands, Rosnani said the stop work order by the district office was still in force. She said the office had also told the parties responsible for the illegal clearing to rehabilitate the area.

(Source: The Star, 11 March 2003)

The war in Iraq appears to have no bearing on business operations of export-oriented companies on Malaysia's "Silicon Island", Penang, with most companies claiming that it's "business as usual". Multinationals and local companies said they are not facing any problems in shipping their goods to markets around the world since the US-led invasion started on March 20. Penang police have also stepped up surveillance in areas surrounding factories and export points in the state.

Shipping companies, contacted by Business Times, reported that goods are being transported to both the US and Europe smoothly. "Shipments bound for Europe, via the Suez Canal, take the regular route, even though we have put in place a contingency plan of shipping via the Cape of Good Hope in South Africa should problems arise," a shipper said in an interview. "If we need to use the longer route, it would cause a delay of between 10 and 14 days. We have had no need to use this route so far," he added. A regional shipping company which transports goods to Europe – which include electronic items and furniture – also ships the same items including garments to the US across the Pacific Ocean.

For over three decades, Penang has served as an offshore base for US, Japanese and European companies. With raw materials sourced from the local front and manpower the finished products are exported to markets worldwide. Manufacturers in the Bayan Lepas Free Industrial Zone and other industrial estates in the island say the issue of excess inventories or delayed shipping for outgoing orders have not arisen. Several electronics firms when contacted attributed this situation to the fact that their goods were bound for Asian destinations and as such, the war in West Asia have no bearing on their operations. Others, whose goods are headed for the US or distribution centres in Europe have also been able to meet customer demand on schedule. "Our job is to ensure that business goes on as usual and so far, we have been able to do just that – thanks to the very good support from the police, Government and local authorities," a spokesman for a communications multinational company said.

Penang police chief Deputy Commissioner Datuk Arthur Edmonds said besides the standard operating procedures practised in ensuring high security for companies in the industrial areas of Penang, other measures have also been stepped up. "We are concentrating more resources by deploying our men to these areas since the war broke out, and have also been in regular contact with the security officers of these manufacturing companies," he said. Edmonds said frequent visits by police personnel to the factories were an ongoing practice along with added surveillance.

(Source: Business Times, 27 March 2003)

Malaysia's economy is expected to register stronger growth in the second half of this year, according to economists. Credit Suisse First Boston chief economist for South-East Asia and India P.K. Basu said Malaysia's economic growth is showing an uptrend.

"I see a stronger year in 2003 for Malaysia's economy. Many have suggested that Malaysia's economy will accelerate through the fourth quarter of last year. It did accelerate through the fourth quarter and this year, it is going to be a fairly strong second half. With the consumers' consumption getting stronger and stable, I expect the country's economy to be strong," he said. Basu said he expects Bank Negara Malaysia to ease some aspects of monetary policy that will boost liquidity and stock market performance. However, he said the country will see slower export growth in the first half of this year due to weaker demand. "That moderation in growth will create room for easing the monetary policy. In the first half of this year, we expect some easing of monetary conditions and slowdown of economic activities. Both factors will help boost the stock market," he said. Basu also said that the current account service in Malaysia is fundamentally sound.

Morgan Stanley Dean Witter's vice-president for South-East Asia, Dr Daniel Lian, expects Malaysia's gross domestic product (GDP) growth rate to be 4.3 per cent this year against the estimated 4.1 per cent for 2002. He also said that Malaysia's policymakers need to address several issues before confidence can be restored in the market. He identified five main issues that need addressing: dimmer cyclical prospects, a less-than-aggressive restructuring momentum, and uncertainty in political successions in 2003. Other issues are the appropriateness and effectiveness of the new economic development strategy and irrational competition with neighbours, which risks wasting economic resources.

K & K Kenanga Bhd's head of research (economics and strategy) Seow Choong Liang said the Malaysian economy is likely to grow by about 5 per cent over the next three or four years until it finds a new niche in the global market. He said the current economic consolidation is the "middle phase" characterised by a period of low interest rates, mixed economic data, volatile stock market and disinterested investors. He noted that several economic indicators, such as manufacturing sales and salaries, had shown little or flat growth since 1999. Seow was also less optimistic on whether the economy could rebound from this "middle phase" any sooner as consumer sentiment was still low, although some sectors, such as automotive, had benefited considerably due to lower interest rates. "Given the lingering threat of war in Iraq, the current middle phase would continue and it might take longer for the economy to get out of the current slow growth," he said. But he said the restructuring programme implemented by the Government and the private sector since 1999 may provide the economy with more options to avoid a major downturn. "Malaysia can still afford moderate pum-priming to stimulate its economy," he said.

(Source: Business Times, 15 January 2002)

Bank Negara Malaysia has forecast a modest economic growth of 4.5 per cent this year, largely due to an already sluggish global economy weighed down by the current geopolitical uncertainties. With a more stable world and the nation's fundamentals working for it, however, the economy could expand by between 6 and 7 per cent in 2004, Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz said recently. The forecast, a shade higher than the 4.2 per cent recorded last year, will be driven by the strong fundamentals of the economy – a greater balance between domestic and external sources of growth; the public and private sector roles; and, the performance of various sectors of the economy, all of which have made the country's economy more resilient to external factors.

"There is no strain or stress in the economy that can make the economy worse," Zeti said. The projection for this year, which is in line with the Government's latest forecast, is based on a modest world economic growth of about 3 per cent, some pick-up in the global electronics industry, firm commodity prices and further expansion of intra-regional trade. However, Zeti cautioned that while the forecast had taken into account the war in Iraq, a longer-than-expected conflict, for instance, one that extends beyond one month, could work against Malaysia's fundamentals and impact somewhat the projection. "In terms of length of time, if the war lasts several months, it will have a dampening effect on the fundamentals," she said.

Nevertheless, Zeti said, the management of the economy will not be based on reactions to specific events. The central bank and the Government will have the flexibility to respond to changes. "The focus of our policies is not event-driven, but on our underlying fundamentals," she said at a media briefing in Kuala Lumpur recently when releasing the central bank's annual report for 2002. Zeti said there will likely be a shift in the driving force of the economy this year, from the Government to the private sector. Unlike in 2002 when the Government was the principal driver of the economy, policies this year will see it creating an enabling environment to promote private sector investment and consumption.

Growth this year is also expected to be driven by private demand, which is about 45 per cent of the nation's gross national product (GNP). In the US, for example, private demand constitutes about 65 per cent of its GNP. However, Zeti said a prolonged period of uncertainties could affect confidence and impact on private investment and consumption. "For Malaysia, should the recovery in private investment seen in the second half of 2002 not gain momentum, real GDP (gross domestic product) growth could be weaker," she said in the report. Private consumption is expected to grow by 6.9 per cent, with consumer confidence remaining steady. Zeti also said that moderate growth for the year is expected to sustain a strong balance of payments position, with a continued large current account surplus. She added that there is currently no change in the interest rate policy nor the mechanism of its determination as it has proved to be effective to date. The low interest rate regime has been a positive enabling factor to strengthen private consumption and investment.

On foreign direct investment (FDI), she said it is a general trend now for a slower flow of funds worldwide to work out the excesses in FDI in the 1990's as well as a reflection of the weaker economic growth. China is an exception because of the new inflow of funds following its entry into the World Trade Organisation two years ago. "We must remember that (unlike China), Malaysia has been receiving FDI for more than 100 years," she said. Nevertheless, a steady inflow of FDI is expected, mainly in the form of reinvestment – with many manufacturers now utilising more than 80 per cent of their capacities – as well as some new investment in the manufacturing sector. Investment in the services sector is also expected to be sustained. On the fiscal policy front, it is expected to be moderately expansionary with a deficit of 4 per cent of GDP, which would be needed to support recovery of the private sector.

Zeti said the financial system is also now more stable and balanced and sources of funds have expanded to include conventional banking, the capital market, private debt securities, development banks and venture capitalists. Total assets of the central bank rose to RM162.2 billion as at end-2002 from RM149.7 billion at end-2001. The major increase in assets was attributed to higher international reserves of RM131.4 billion at end-2002. Bank Negara registered a net profit of RM800 million for the year ended December 31 2002 and declared a dividend of RM500 million to the Government.

(Source: Business Times, 27 March 2003)

In conjunction with the Year of the Goat, leading pewter manufacturer Royal Selangor has specially designed a limited edition plaque. A collector's item, it will certainly prove to be a special gift as only 1,000 plaques are available worldwide. Called Jiu Yang Qi Tai, the play on the words are extremely important in Chinese symbolism.

Jiu is 'nine' in English, and is considered to be propitious as the number sounds similar to 'infinite' or 'perpetual'. And 'sheep' which sounds like the word 'sun', is a symbol of growth and prosperity as it is the sun that gives light and warmth to the land. The depiction of nine sheep thus signifies infinite prosperity or continuous growth. The plaque is painstakingly sculpted and shows a shepherd and his nine sheep celebrating the arrival of spring. Carefully composed, auspicious symbols are artistically rendered to convey aspirations and blessings for the year. Touches of 24K gold are also used to enhance the beauty and value of the plaque which upholds the tradition of Royal Selangor's fine craftsmanship.

A popular expression during the Chinese New Year is San Yang Kai Tai, which refers to the return of spring and signifies a new beginning. Inspired by this traditional expression, Royal Selangor has also created a pewter sculpture depicting three rams standing on a hilltop with a clear view of the horizon, to convey joy, achievement and success. Mounted on a wood base in pewter, the phrase San Yang Kai Tai, is engraved in pewter and enhanced with 24K gold.

Other new designs specially created by Royal Selangor for this gift-giving season are a pair of shot glasses featuring the goat. Prices for the items range from RM180 for the plate, to RM2,500 for the limited edition plaque.

(Source: The Malay Mail, 29 January 2003)

The Kuala Lumpur City Centre Twin Towers were designed to be a harmonious blend of Malaysian traditional cultural elements with a contemporary and dynamic image. A national landmark, the 88 storey towers sits atop a six-storey podium that contains Suria KLCC, the retail and entertainment centre. Standing at 452 meters above street level, this towering pride of Malaysia can be seen from miles around. Its ribbed exterior of horizontal ribbons of glass and stainless steel catches sunlight so that the Towers' visibility is enhanced. The design boasts geometric elements favoured in Islamic art as it creates an unending pattern, seen to represent the infinite nature of God.

The Twin Towers Malaysia collection by Royal Selangor is a range of pewter gifts and accessories inspired by the national landmark. It consists of a three-dimensional model, a cardholder and a photo frame as well as a coaster, lighter and key chain - decorative and functional items that allow everyone to have a piece of Malaysia. The three dimensional sculpture is an exact replica of the KLCC Twin Towers, complete with all 88 levels and the Skybridge at levels forty one and forty two. Made completely of pewter, the model is mounted upon a nyatoh wood base in mahogany finish. It can be easily personalised with a message or company logo as there is a pewter plate affixed to its base for this purpose. An item that will no doubt be most popular as a corporate gift is the cardholder. This features the Twin Towers in front and is a handy and attractive accessory to have on the desk. The back of the cardholder is left plain for customisation. The twin photo frame features a high relief sculpture of the Twin Towers in the middle with the word 'Malaysia' inscribed at its base. This unique photo frame allows flexibility in that either a single 3R picture or two smaller pictures can be displayed.

Also part of the collection is a coaster, a lighter holder and a key chain. The edges of the coaster and key chain are decorated with a geometric motif, mimicking the polygonal plan of the towers which is an eight-point star with semi-circles nestled within the inner angles of the star. This attractive geometric motif is also echoed on the outer surface of the lighter, forming a lovely texture. All three pieces feature the image of the Twin Towers. Retails prices for the Twin Towers Malaysia collection begin at RM29.00 and are available at all Royal Selangor outlets.

(Source: A Press Release from Royal Selangor International Sdn Bhd)

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