Electronic/Semiconductor Sector News
 

Chip Stocks Rally on Hope, not Proof of Turnaround

Shares in top semiconductor companies have outperformed rising markets in recent weeks, but there is scant evidence of a pick-up in demand for electronic goods to sustain that rally. Texas Instruments said on March 9 that orders had started to improve in January and February, and since then others, including TSMC, Samsung and Hynix, have also reported some scraps of comfort, but it has been mostly of the cold variety.

Alongside its slightly improved orders, Texas Instruments also noted chip demand was still dropping and there was no recovery in sight, and a boost for Hynix from higher DRAM chip prices was a consequence not of rising demand but of hugely reduced supply. "We are starting to see some positive news for the first time in a long time, but we don't think it's a start of a sustained recovery," said Gartner analyst Jon Erensen. Erensen and other analysts say the positive news has been mostly caused by chip buyers' inventory management after savage destocking, not an upturn in demand. Still, shares in the sector have made much of little. STMicro shares have jumped 36 per cent since March 9, while Infineon has almost tripled as improved sentiment has eased fears of potential financing problems.

In North America, Texas Instruments is up 13 per cent, Qualcomm has added 23 per cent and Intel 26 per cent. In Asia, Hynix has rallied 74 per cent, while other makers of DRAM chips, used mainly in PCs, have jumped on recovery hopes and on Taiwan's plans to restructure the sector. "There's a little bit of rebound in expectations," said Dale Ford, a senior analyst at research firm iSuppli, adding that many companies decided to use their worst-case scenario when forecasting 2009 due to the poor visibility. "Companies are starting to get a better feel of the magnitude of the downturn - they are starting to step back and say it's not going to be as bad. It's going to be bad, but not as bad," Ford said.

While the chip industry's history is marked with volatile cycles of shortages and oversupply, this time it faces a challenge that production cuts alone cannot solve, as consumers around the globe cut spending due to the economic downturn. Demand in emerging markets has also started to slow as weaker local currencies increase prices. For the chip industry's key markets - personal computers and cellphones - forecasts for 2009 make grim reading.

Sales of PCs are expected to fall 12 per cent, with sales in emerging markets contracting for the first time, while cellphone sales are expected to shrink 10 per cent. "We believe that the deteriorating macroeconomic conditions are likely to weigh on the fundamentals of the semiconductor industry until the end of 2009," First Global analysts said in a note dated March 26. Some help for the industry could come from forced consolidation in the DRAM industry, where analysts say some producers will have to maintain utilisation rates of under 50 per cent this year due to tight cash and low prices. "You're going to start to see spot shortages here and there," Jim Elliott, Samsung's vice-president of Memory Marketing for the Americas, said in a recent interview. And though Elliott said that could signal that the industry "could be moving toward some sort of recovery", it is indicative more of past weakness than future strength.

(Source: New Straits Times, 8 April 2009)


Nanya to Increase Prices

Nanya Technology Corp, Taiwan’s second-biggest maker of computer-memory chips, plans to raise prices of the semi-conductors by 15 per cent to 20 per cent during the first half of April. The chipmaker is in talks with clients including Hewlett-Packard Co and Dell Inc about the price increase, Sandra Liu, a spokeswoman for the Taoyuan-based company, said by telephone yesterday, confirming a newspaper report. Higher chip prices may help chipmakers return to profitability after they reported record deficits last year.

Nanya plans to raise chip prices by at least 10 per cent for the first half of April because of rising demand, the United Evening News reported earlier, without saying where it got the information. Hynix Semiconductor is in talks with clients to increase contract prices of dynamic random access memory, or DRAM, by 10 to 20 per cent this month, the Korean language Edaily reported yesterday. Samsung Electronics may also seek to raise prices, the news website reported.

(Source: New Straits Times, 8 April 2009)


Signs of Electronics Recovery

Small and medium enterprises (SMEs) in Penang could be seeing the initial sparks of a recovery in electronics component and products exports. Small and Medium Industries Development Corp (Smidec) chief executive officer Datuk Hafsah Hashim says industry associations have indicated that “SMEs at least in Penang are already beginning to get back their orders for April”. “In Penang, of course, we are talking about electronics manufacturers,” she adds at the launch of a business networking forum organised by International Women Entrepreneurs Association of Malaysia (IWEM) and Business Women Entrepreneurs of Uzbekistan (BWEU) in Kuala Lumpur yesterday.

However, the indications are still very preliminary as Smidec awaits the return of 10,000 questionnaires sent out two weeks ago. “We hope to have the results by the first week of May and after clearance, the (International Trade and Industry) Minister will be able to announce the results by the middle of May,” Hafsah says. Smidecs an agency under the ministry. She also says Smidec is monitoring SMEs’ access to credit which had been a problem at the end of last year. A joint survey by Smidec and the Federation of Malaysian Manufacturers conducted in December showed at least 40% of SMEs in the manufacturing sector and 45% in the services sector reported having difficulties accessing credit. “When I say they had difficulties accessing credit, SMEs are saying the banks are now asking them for higher collateral and beginning to cut back on their credit limit. “Some 9.6% even mentioned that banks have cut their credit altogether,” says Hafsah.

On the forum, she says: “We would like this platform to be used as a business linkage between Uzbekistan and Malaysia, especially among the women entrepreneurs recognising that both are Muslim countries and the abundant opportunities in terms of businesses as well as joint-venture projects that can be undertaken by these women entrepreneurs.” At yesterday’s event, IWEM also initiated a scholarship programme worth RM100,000 for a student from Uzbekistan to study at the Neutron Beauty Academy Putryana in Kuala Lumpur. Meanwhile, Republic of Uzbekistan Women’s Committee vice-president Zufarova Muallam invites Malaysian businesses to invest in Uzbekistan, pointing out the government incentive of tax-free status for five years for foreign joint ventures.

(Source: The Star, 18 April 2009)


Higher Demand for Electronics

UNISEM (M) Bhd, the nation’s second largest public-listed semiconductor assembler, says its equipment capacity utilisation has increased to 50% now from 40% in January, as demand has started picking up since last month. Unisem’s production utilisation averaged about 75% in the first three quarters ended Sept 30 before it saw a sharp contraction in the fourth quarter. “After a big fall in the fourth quarter, there were further falls in January and February. They fell 20% to 30%, but I am happy to say we saw substantial improvement in March,” chairman and managing director John Chia Sin Tet told StarBiz. According to him, the March demand was higher than January and February combined. Chia said its factory in Chengdu, China, was at optimum utilisation (90% to 100%) now from 50% earlier this year. The Chengdu factory is key to Unisem’s performance, where 60% to 70% of the output is for the Chinese domestic market. Traditionally, about 60% of Unisem’s customers are from the United States, 20% to 30% from Europe and the rest from Asia.

An analyst who covers Unisem said last year, its plant in Ipoh produced about two-thirds of the group’s total production volume, and the remaining came from its factories in Chengdu, Batam (Indonesia) and Mauritius. Semiconductor and test operations contributed about 80% and 20% respectively to group revenue.

Malaysian-American Electronics Industry chairman Datuk Wong Siew Hai said he expected a flat performance for the semiconductor sector in the second quarter but with a small upside because demand had stabilised. Previously, manufacturers had experienced a lot of order changes and cancellations. “Now, the amount of cancellations and changes is fewer,” he told StarBiz. He said the book-to-bill (an important indicator of the health of the semiconductor sector, where book-to-bill above one indicates more orders were received than filled, and hence demand outpaces supply) has improved to 0.61 from 0.47 earlier this year. During normal economic conditions, the book-to-bill is above one, and thus – according to Wong – the market is still soft.

Meanwhile, Chia said Unisem might see a substantially better result in the second quarter compared with the preceding quarter because March’s strong momentum was continuing into the current month. “But it is too early to tell, it depends on what happens in the second half. “Having said that, we are still very cautious about the second quarter. All experts in the industry are predicting recovery will probably happen in the second half. In other words, semiconductor companies are still very cautious, as they are keeping very low inventories,” he said. Unisem did not keep inventory of its finished products, as it is a contract manufacturer, where it builds according to specification and customers’ orders. “The only inventories that we keep are raw materials, which are pretty lean,” he said. Even early last year, Unisem had already anticipated a slowdown in the global economy. It undertook very cautious measures and did not expand its capacity significantly. According to Chia, the group capital expenditure (capex) was about RM150mil last year and he had indicated a much lower capex for this year.

Other than one-time charges of impairment loss arising from the acquisition of Unisem Europe late last year, he said Unisem always had a positive earning before interest, tax, depreciation and amortisation and cash flow. “We have enough (financial resources) to go for quite a long time,” he said, adding that there would not be any write-off on impairment losses. Going forward, he planned to continue its consolidation exercise so that once the market recovered, Unisem would become a very lean and efficient organisation.

(Source: The Star, 27 April 2009)


E&E Orders Picking Up, says Mukhriz

There has been a pick-up in export orders in certain sectors, such as electrical and electronic (E&E) products, in the current quarter, International Trade and Industry Deputy Minister Datuk Mukhriz Mahathir said in Shah Alam, Selangor, yesterday. "We have received reports from Penang that show orders slowly picking up, but we have to see the longer period," he told reporters after flagging off Naza Bikes Sdn Bhd's exports to Iran and Brunei. Mukhriz added that the ministry had yet to see the development as a trend. "Exports in the first quarter were quite slow, but the second quarter is beginning to lift," he said. He also said that the latest developments in China, after imposition of its stimulus package, would have a positive impact on Malaysia.

On the US-Malaysia free trade agreement, Mukhriz said that Malaysia was awaiting signals (from the new administration in Washington) to proceed with negotiations. Mukhriz also said that the government will continue to support activities that contribute to economic growth by enhancing industry capabilities.

(Source: New Straits Times, 29 April 2009)


Semiconductor Firms, Led by TSMC, Feel Bullish

Electronic chip firms in Europe and Asia forecast an uptick in demand and sales yesterday after reporting weak results for the start of 2009. European firms STMicro, ST-Ericsson and Infineon were all cautiously optimistic about a June-quarter uptick in demand. However, the world’s top contract chipmaker, Taiwan Semiconductor Manufacturing Co (TSMC), predicted strong growth in second-quarter sales and margins and raised its forecast on global semiconductor sales as technology demand starts to pick up. TSMC said it expects the semiconductor market to fall 20 per cent this year, compared with its earlier forecast for a 30 per cent drop. It said its net profit in the three months to March plunged 94.5 per cent as demand for microchips sank in the global recession. TSMC posted a net profit of NT$1.56 billion (NT$100=RM10.72) in the first quarter, compared with NT$28.14 billion a year earlier. The figure also marked a steep fall of 87.5 per cent from the previous quarter when the company posted a net profit of NT$12.45 billion.

The global economic slowdown is hurting the semiconductor industry as sales of personal computers and mobile phones, key products for the chipmakers, are falling 10 per cent or more this year. Recently, however, hopes of a possible turnaround in the market have started to emerge with Texas Instruments giving a rosier--than-expected outlook, and Nokia said it saw signs of stabilisation in the phones market. Carlo Bozotti, the chief executive of SMicroelectronics, said yesterday there were signs of demand picking up in Asia, except Japan, but still forecast a global drop in the semiconductor market of about 25 per cent in 2009. The Franco-Italian firm reported late on Wednesday an underlying loss of 31 cents a share for the first quarter, a cent less than analysts’ average estimate.

ST-Ericsson, a 50-50 wireless chips venture between STMicro and Swedish telecoms equipment maker Ericsson posted an operating loss of US$98 million in its first two months of operation. Alain Dutheil, chief executive of the venture, whose key rival is Qualcomm and Texas Instruments, said “we believe that the destocking phase is substantially over, even if we have yet to see signs of a broad-based pick-up of demand in our industry”. Germany’s Infineon said it expects April-June operating results to improve significantly and revenues to gain around 10 per cent from the previous quarter, but sees full-year revenue down 20 per cent. Infineon said its operating loss in the quarter to end-March was smaller than expected at €110 million after a loss of €102 million (€1=RM4.74) in the previous quarter.

(Source: New Straits Times, 1 May 2009)


Consumer Electronic Stores Expanding

While sales of consumer electronic products in the northern region are expected to drop by about 20% this year due to the recession, local consumer electronic companies are planning for expansion. Consumers are still buying LCD and plasma televisions and other electronic and white goods, and for Star Electronics Sales & Services Sdn Bhd, the success of the new flat-panel TVs has been a big sales booster. Last year, the market for electronic products was estimated at about RM50mil per month. LCD and plasma TVs generated about RM15mil in revenue while personal computers contributed RM12mil.

Star Electronics’ market share is about RM6mil or 12% of the monthly consumer electronics products sales in the north. Star Electronics managing director Joseph Hon told StarBiz that sales of LCD and plasma TVs would continue to grow this year due to the demand from the replacement market and new households. “This year, market consumption is expected to shrink by about 20% due to the contraction in the economy. But our sales this year are expected to increase by 4% due to our new outlets, which will boost our market share,” he said. He said the group aimed to inject RM5mil to set up eight more stores in the northern region and Kuala Lumpur before the year-end. “The new outlets would help us increase revenue to about RM90mil this year from about RM70mil last year,” he said.

Hon said Star Electronics was planning to invest about RM10mil next year to build a 70,000-sq-ft warehouse next to its existing 50,000-sq-ft warehouse in Bayan Lepas to support the group’s expansion. “To stay competitive and penetrate new markets, we will also widen our product range to include new products such as GPS navigators and multi-PC systems, equipped with portable central processing units,” he added. Ban Hin Bee, another leading consumer electronics products store in Penang, is also looking to expand this year despite a softening consumer market.

“We plan to establish more Ban Hin Bee stores on the island and mainland this year. Next year, we aim to set up outlets in other towns,” Ban Hin Bee Sdn Bhd general manager Wilson Yeoh said, adding that there were seven Ban Hin Bee outlets in Penang. He said people were still spending on consumer electronics products, particularly LCD and plasma TVs. “Some 100 different models of LCD and plasma TVs are sold by the company per month, making them Ban Hin Bee’s best-selling item. What is affecting their spending is the dissemination of negative news on the economy,” he said. Yeoh said the company generally projected a tough period at the start of each year but often closed the period on a positive note with double-digit growth.

Meanwhile, Pensonic Holdings Bhd managing director Dixon Chew said although the group expected the market to further soften, it was confident of maintaining steady domestic market demand with a low single-digit growth for the first three months of 2009. “We are picking up some of our competitors’ market share. Thus, even though the overall market is down, we still have slight growth in the domestic segment,” he said.

(Source: The Star, 5 May 2009)


Orders Up, Factories Report Silver Lining

More manufacturers have reported rising demand for their products, a sign that things are looking up for the manufacturing sector. The most "positive signs" are in the electrical and electronics and chemicals sectors, which have experienced rising orders from overseas in recent months, according to the Federation of Malaysian Manufacturers. FMM president Datuk Mustafa Mansur said the improving export market had resulted in higher job vacancies. Exports account for 85 per cent of manufactured products. He, however, expressed cautious optimism when asked whether the slowdown, which impacted a large percentage of the federation's 2,300 members last year, had bottomed out. "We've got to be very cautious. This trend (of rising demand and exports) needs to go on for three to four months." Mustafa said a recent survey among FMM members confirmed the general uptrend in the demand for their manufactured products. "It's very encouraging to report that export figures have gone up. Demand has increased compared with August and September last year."

In the survey, which began about two months ago, a higher percentage of respondents said they expected some improvement in export sales in the next six to nine months. These respondents forecast that production would pick up with more domestic sales and new orders. A slight improvement is also expected in new capital investment, capital expenditure and liquidity or cash flow in the next six to nine months. Mustafa said during his recent meetings with manufacturers in Penang, Sarawak and Negri Sembilan, most reported that things were improving. One of them was German bulb manufacturer Osram in Penang, which received encouraging orders last month. Official figures released by the International Trade and Industry Ministry on Friday showed that exports in March registered a double-digit growth of 10.3 per cent at RM43.65 billion compared with the previous month, with shipments to China, the United States and Asean countries registering particularly sharp rises. Mustafa said the country had not been that badly affected by external factors, adding that Malaysians might have over-reacted to the economic downturn in the West. "Unlike the financial crisis of the late 1990s, we have a strong financial system in place today. In fact, the banks are flush with cash."

Thus, even foreign banks incorporated in Malaysia have not been affected despite the economic battering in their countries of origin, he said. "Citibank is making losses in the US but here, Citibank is making profits." In addition, Mustafa noted that Malaysia's intra-Asean trade had been growing and so, too, exports to China and the Middle East. In tandem with the uptrend in exports, according to the Labour Department, there are 27,000 job vacancies in the manufacturing sector. Asked if employers had been too hasty in retrenching workers, Mustafa said the FMM had warned that retrenchment should only be a last resort. "But now, we believe this is the best time to retrain our workers and, at the same time, slowly reduce the number of foreign workers."

(Source: New Straits Times, 11 May 2009)


Supply Shortage Threatens Asia’s Tech Sector Recovery

A shortage of electronic components such as chips and displays threatens to derail a nascent recovery in Asia's technology sector spurred by China's stimulus plan. At the Computex trade show in Taiwan this week, electronics companies including Acer and Asustek Computer will showcase their latest gadgets to tempt buyers wary of spending as a global recession pinches. In the last few months, China's US$600 billion stimulus spending has driven a recovery in Asia's tech sector, especially in Taiwan, as China moulds itself into an electronics consumer and not just an exporter. But many tech companies, especially makers of memory chips and displays, have sharply trimmed output since late last year or were too cash-strapped to invest in new production equipment in the sector's downturn, leading to shortages of key components. "Tight supplies are creating a headache for many computer vendors," said Alex Huang, vice president of Taiwan's Mega International Securities. "So it remains a question mark if you ask me how strong the recovery will be in the next few months."

AU Optronics Corp, the world's No. 3 maker of LCD panels for PCs and flat-screen TVs, said it has a shortage now and can only meet 70 per cent of its orders even if it runs at full capacity in the next three months. It's a double blow as many leading PC companies have seen their profit margins weaken as they sell more cheaper netbooks - some of them small enough to slip into a purse. As prices of displays and memory chips rise due to supply shortages while demand remains lukewarm, Merrill Lynch expects PC vendors to face more pressure on margins from this quarter.

Research firm IDC has forecast worldwide PC shipments will fall 4 per cent this year. A total of 1,712 exhibitors will attend the June 2-6 show in Taipei, slightly fewer than last year. Many Chinese buyers, including Lenovo Group and Sichuan Changhong Electric, will also shop for new gadgets at the show. "For us, China is a very important market, where growth will be faster than any other major market," said J.J. Wang, a vice president of Dutch NXP Semiconductor.

(Source: New Straits Times, 1 June 2009)


Group: Global Chip Sales to Fall 22% in 2009

Global semiconductor sales will probably fall 22% this year, ten times more than previously forecast, because of the deteriorating global economy, the industry’s largest association said. Chip sales may decline to US$194.8bil in 2009, WSTS (World Semiconductor Trade Statistics) Inc said yesterday in a statement. Its November forecast was for a 2.2% slump. Revenue will probably rebound 7.3% to US$209bil next year, according to the San Jose, California-based group. WSTS joins market researcher Gartner Inc in lowering its outlook amid slumping demand for electronic equipment and consumer gear. The US Congress in February passed a US$787bil stimulus package to help pull the world’s biggest economy out of the worst recession in at least 50 years. Semiconductor-industry sales were projected to fall 24% this year, Gartner said in February. The researcher in December forecast revenue would slump 16% this year.

(Source: The Star, 4 June 2009)


Economic News

Outlook for Global Economy Still Hazy

Despite rising investor optimism worldwide, Bank Negara Malaysia governor Tan Sri Dr Zeti Akhtar Aziz said there is no clear sign that the global economy is nearing its bottom. Still, she said Malaysia's economy will improve in the second half as the government's RM67 billion stimulus plans so far, coupled with a lower interest rates, are helping to spur local demand. Zeti also said the central bank has no plans to raise the minimum capital requirements of banks, although most lenders in the country have sought to shore up their capital to prepare for a potentially deep recession.

Global stocks have been rallying for almost two months as investors' sentiment was boosted by rising hope of a US recovery, encouraged by improving economic data. But Zeti said the global economic outlook remains hazy for now. "It's not clear yet what the direction is in the global economy. We are seeing some stabilisation taking place. This is very encouraging but we still have to wait and see," Zeti said in Kuala Lumpur yesterday. The financial sector's resolution in many advanced countries needs to take place before stabilisation can occur, she added. In Malaysia, the first quarter was very much affected by the global slowdown as reflected by the declining exports. "The effect of these global developments will show up in the first quarter and also in the second quarter. As the fiscal stimulus gets implemented and as a result of the supportive monetary environment, the second half should be better," the governor said. Zeti spoke to reporters after launching two standardised documents for Islamic interbank transactions that involve deposit-taking and placement.

The 20 members of the Association of Islamic Banking Institutions Malaysia have agreed to adopt the same standards for commodity Murabahah-based transactions, president Datuk Zukri Samat said. Zukri said the success of commodity Murabahah-based instruments, just like any other money market products, depends a lot on the existence of a standard document as well as a universally accepted structure that is widely recognised. "We believe the adoption of the documents will help increase the intensity of Islamic interbank activities as a result of tremendous cost and resource saving for the industry," he said. Most importantly, he said, by using a common standard it will foster transparency, robustness, operational efficiency and consistency in Islamic financial transactions. "Being the world's first of its kind, we hope they will become benchmark documents for the global Islamic financial services industry as well," he said.

(Source: New Straits Times, 16 April 2009)


Worst may be Over for Asian Exporters

The worst may be over for Asia's exporters as interest-rate cuts and a US$585 billion stimulus package get China buying again. Singapore's shipments to China jumped 29 per cent in March from February, and those from Japan, South Korea and Taiwan also increased. AU Optronics Corp, Nissan Motor Co and Hyundai Motor Co this month all forecast higher sales to China. "This is the start of something meaningful," said Robert Prior-Wandesforde, a senior economist at HSBC Holdings plc in Singapore. "The first effects of the fiscal-stimulus packages and the monetary developments, interest-rate cuts and so on, are starting to come through."

China's spending on roads, bridges and low-cost housing should contribute "strongly" to growth in Asia, the World Bank said this month. Goldman Sachs Group Inc last week raised its 2009 growth forecast for China's economy to 8 per cent from 6 per cent previously, citing the stimulus. "Policy makers in China have been pushing the envelope on policy easing in only one direction - for more and more," said Helen Qiao and Yu Song, economists at Goldman Sachs. "We expect domestic demand growth to further strengthen." Taiwan's AU Optronics said on April 23 that liquid-crystal- display sales will rise 50 per cent this quarter from the previous three months, helped by orders from China, where the government is spending US$2.9 billion to assist people in rural areas to buy televisions and other appliances. "I have some good news," Commerce Minister Chen Deming said in Washington late Monday. "In the first 20 days of April, we have witnessed a slowdown in the decline of our foreign trade."

Japan's third-largest carmaker, Nissan Motor, said this month its sales in China rose 13.7 per cent in March. About two-thirds of the cars the company sells in China are eligible for a government subsidy that cuts by half the sales tax on vehicles with smaller engines to 5 per cent. Hyundai Motor, South Korea's largest carmaker, said the sales tax cuts introduced in January should boost sales in its third-largest market by more than 11 per cent this year. "We now expect the Chinese car market to grow about 10 per cent from a year earlier," up from 6 per cent, Beijing Hyundai Motor Co president Noh Jae Man said in an interview at the Shanghai Auto Show on April 20. Asian exports are also beginning to benefit after companies worldwide ate into inventories during the past two quarters instead of ordering new stock. Now when they need more goods, the orders translate faster into production and exports. "Inventories have been drawn down to such an extent that companies are going to have to start rebuilding," said Dwyfor Evans, a strategist at State Street Global Markets in Hong Kong. He's optimistic that from the second quarter "we're going to see far more robust numbers in terms of production and GDP". Signs that the US economy is recovering may provide further demand for Asia's exporters.

Federal Reserve chairman Ben S. Bernanke said on April 15 the world's largest economy's "sharp decline" may be slowing. Confidence among US consumers has risen two months running and sentiment last week reached its highest level since the September bankruptcy of Lehman Brothers Holdings Inc. Singapore's unadjusted shipments to the US rose 17 per cent in March from February and China's exports to the world's biggest economy rose 33.3 per cent, led by sales of clothes and furniture. Economists caution that the increase in so-called sequential month-on-month trade doesn't herald rapid economic recoveries. From a year earlier, exports are still plunging: In March Japan's shipments sank 46.4 per cent; Taiwan's sank 35.7 per cent from a year earlier and South Korea's declined 21.2 per cent. Still, the year-on-year numbers aren't necessarily the best indicators of a change in trend, according to ING's Condon. "You're looking for turning points in the business cycle," he said. "Identifying those is a lot easier with the sequential changes. I am in the 'we-have-bottomed camp'."

(Source: New Straits Times, 29 April 2009)


Industry on the Mend

The electrical and electronic sector is asking the Labour Department for workers, now that orders for its products are on the upswing again. Labour director-general Datuk Ismail Abdul Rahim said they were receiving requests for more workers from employers in the sector since the beginning of the month. “The majority of those retrenched at the beginning of the year came from this sector, followed by those in the textile and garment manufacturing sector. But now, we believe there may be new orders coming in for the electrical and electronics sector by June. This is a good indication that our exports are getting better. We will give bosses our assistance in looking for new workers. For a start, we have provided them with the profiles of 12,000 workers who were recently retrenched,” he said in an interview here yesterday.

Ismail said the department had 27,000 job vacancies on record while those retrenched in the country now numbered some 23,000. “We have managed to place 7,000 retrenched workers in these jobs. I urge those who have yet to find jobs to register with us. Hopefully, the current swine flu outbreak in Mexico and certain places in the United States won’t affect the recovery,” he said. Ismail said the department would also ask companies and factories to stop depending on third-party contractors to supply them with foreign workers as one way of saving job opportunities for local workers.

In recent statistics posted on the Human Resources Ministry website, 16,744 local and 7,145 foreign workers were retrenched between Oct 1, 2008, and April 27. Of the 8,242 workers given voluntary separation schemes in the same period, 7,342 were locals. Similarly, local workers formed the majority of those temporarily laid off or given pay cuts – 30,907 compared with 10,772 foreigners. Ismail reminded employers that according to the law, they must retrench their foreign workers first. “Bosses are required to inform us every time they retrench their workers. This is so we can check if they have followed the law and first retrenched their foreign workers,” he added.

(Source: The Star, 29 April 2009)


ADB Sees Mild Recovery Next Year

The Asian Development Bank (ADB) called yesterday for a fundamental "rebalancing" of regional economies in response to the global crisis, while predicting a “mild recovery” next year. Bank President Haruhiko Kuroda said the region would record only 3.4% growth this year but could expect a rebound to around 6% growth in 2010, as he opened the ADB’s board of governors annual meeting in Bali. "With strong national and regional efforts and a mild recovery expected in the global economy next year, developing Asia and the Pacific should bounce back to about 6% growth in 2010," he said. "These are positive signs, therefore this should not be a time of despair."

He outlined a huge expansion in the ADB’s lending plans to help stimulate developing economies across Asia, after shareholders agreed last week to triple the bank's capital base in response to the global downturn. The bank will increase its overall lending assistance to the region's poorest countries by more than US$10 billion in 2009 and 2010, including three billion to meet "urgent needs stemming from the crisis," Kurosa said. Some of that new lending would aim to help Asian economies adjust to plunging demand for their exports to markets such as Europe and the United States. "The transfer of savings from one part of the world to another worked well when advanced economies could absorb production from developing economies, but the current state of the global economy suggests that era has passed," Kuroda said. "By rebalancing export-driven growth with a greater reliance on domestic demand and consumption, Asia can lead the way in charting a new, globally beneficial development course," he said.

Interest rate cuts and government spending will help spur the recovery in Asia, whose banks are not suffering problems on the same scale as their US and European peers, according to the International Monetary Fund. Recent economic data have raised hopes that China could be the first major economy to disentangle itself from the worldwide crisis, providing new growth momentum for its trading partners across the region. In India, expectations of a healthy harvest fuelling consumer spending has driven India’s benchmark Sensex share index to a six-month high as fund managers switch their country ratings to “overweight” from “underweight”. Japan's factory output rose 1.6% in March from the previous month, the first increase since September, triggering a buying spree on the Japanese share market last week. Kuroda also called for changes to the global financial architecture to give voice to the aspirations of Asia, where powerhouses like China and India are emerging as rivals to US domination of the world economy.

(Source: The Sun, 5 May 2009)


Malaysian Economy may Shrink 3.5pc, says IMF

The International Monetary Fund (IMF) became the latest international agency to change its forecast for Malaysia this year, expecting the economy to shrink 3.5 per cent from a previous target of 1.5 per cent growth. Export-dependent Malaysia is due to be hit by weak demand in developed countries but it should expand 1.3 per cent in 2010, IMF said in its latest regional economic outlook on Asia and Pacific released yesterday. The government expects the economy to grow by 1 per cent this year or at worst fall by the same percentage. Other foreign institutions like the Asian Development Bank thinks Malaysia's economy will contract 0.2 per cent while the World Bank predicts a 1 per cent fall. " ... despite governments' efforts to invigorate domestic demand, the prospects of a recovery at this stage hinge critically on a rebound in global activity."

The fund said it may take up to a-year-and-half for investment growth to return to its pre-crisis rate in countries with a large trade exposure to advanced economies like South Korea, Malaysia, and Singapore. Private consumption will be subdued as long as rising unemployment, weak confidence, and low asset prices (including house prices) weigh on consumers' spending plans. Growth is expected to be zero in 2009 in the Philippines, as waning remittances - an important driver of consumption - will dampen domestic demand. By contrast, growth in Indonesia and Vietnam will remain positive over the next two years, as these economies depend less on advanced manufacturing and more on domestic demand.

(Source: New Straits Times, 7 May 2009)


Bank Negara to Cut GDP Forecast

Bank Negara Malaysia says it will lower the country's 2009 economic forecast amid a worse-than-expected slump in exports, predicting a recovery in the second half of the year. "The export contraction was much greater than earlier envisaged," governor Tan Sri Dr Zeti Akhtar Aziz said in an interview in Singapore last Saturday. "We will be revising our numbers as well. The important part is the domestic sector continues to grow."

Malaysia is facing its first contraction in more than a decade, and Bank Negara is currently forecasting it may shrink 1 per cent this year or expand that much. The 1.5 percentage points of interest rate cuts since late November and the government's RM67 billion of stimulus measures are enough for now, Zeti said. "Right now, the assessment is that there will be an improvement in the second half of the year, especially in the fourth quarter," she said. "Unless that assessment changes, then the current rate is the appropriate rate." Asian governments have pledged to pump more than US$950 billion (RM3.4 trillion) into their economies through increased expenditure, tax cuts and cash handouts to kick-start local consumer and business spending.

Growth in Asia, including Japan, Australia and New Zealand, will probably slow to 1.3 per cent this year, from 5.1 per cent in 2008, the International Monetary Fund said last Wednesday. Malaysia's stimulus plans are "sufficient" and, if implemented aggressively and efficiently, will help the economy resume growth in the second half of this year after a "marked contraction" in the first six months, Zeti said. The government has the capacity to do more if needed, she added. Bank Negara kept its Overnight Policy Rate unchanged at 2 per cent last month, after three consecutive reductions from November 24 to February 24. A reduction in the IMF's 2009 global trade forecast to a contraction of 11 per cent is prompting the review of Malaysia's estimate for gross domestic product this year, Zeti said.

The worst global economic slump since World War II has battered Asian exports, including Malaysian-produced Intel Corp computer chips and IOI Corp palm oil. Malaysia's exports fell for a sixth straight month in March in the longest slump since 2002, adding to signs the economy will slide into a recession this year. Overseas shipments dropped 15.6 per cent from a year earlier, after falling 16 per cent in February, the Ministry of International Trade and Industry said last Friday. Zeti did not say by how much the 2009 economic forecast would be changed. She said the central bank will unveil the new estimates when it releases first quarter economic data, due later this month. "The domestic economy is still holding its ground," Zeti said. "If we didn't have a domestic sector, the contraction would have been so much more severe."

Global central banks, including the US Federal Reserve, have slashed interest rates to help spur economic growth and sustain consumer spending. Indonesia's central bank last Tuesday lowered its benchmark interest rate for a sixth straight month. "Interest rates are likely to remain low for an extended period of time and this can have negative implications," Zeti said. "For us, we also have to consider the return on savings. We are a high-savings economy, where deposits account of about 180 per cent of gross domestic product,” she said.

Malaysia scrapped its fixed-exchange rate of RM3.80 against the US dollar in July 2005 in favour of a managed float against the currencies of its major trading partners. The ringgit "has seen greater volatility" against the dollar, Zeti said. Still, "our currency has been relatively stable against most of the currencies in this region. Malaysia does not have a target level. We don't even have a band against which we operate." The ringgit fell 1.9 per cent this year against the dollar, the worst performance among the 10 most-traded currencies in Asia outside Japan. "The currency should reflect the underlying fundamentals," she said. "If the underlying fundamentals hold the promise to improve, and going into next year especially, then the currency should also reflect that performance."

(Source: New Straits Times, 11 May 2009)


Economy at –6.2pc, but BNM says Recovery in Sight

The Malaysian economy shrank 6.2 per cent in the first three months of the year, its first quarterly drop since 2001, but Bank Negara Malaysia (BNM) maintained that a recovery is due towards the year-end. The contraction was worse than the negative 3.5 per cent that economists expected, although BNM said it was within its expectations. "Export demand continues to be weak and the environment is still challenging. Despite early signs of improvement, the second quarter will be similar to the first," BNM governor Tan Sri Dr Zeti Akhtar Aziz said at a media briefing in Kuala Lumpur yesterday.

Prime Minister Datuk Seri Najib Razak, who is also the Finance Minister, will announce the revised 2009 gross domestic product (GDP) forecast for Malaysia today. The current official forecast ranges from a 1 per cent growth to a 1 per cent contraction. Zeti said there was still a lot of uncertainty and the extent of Malaysia's recovery would depend on external conditions as well as a positive local environment. Malaysia has announced plans to spend a total of RM67 billion to stimulate the economy, while the central bank has cut the key interest rate aggressively. Economists are hopeful that similar measures by other countries around the world may hasten a global economic recovery.

Zeti said the first-quarter contraction was contributed largely by factories running down their existing stocks rather than cranking up production. Had it not been for a strong diversified domestic economy, the contraction would have been worse. Asked if Malaysia was already in a recession, Zeti said it was more constructive to see if Malaysia could come out of the economic downturn. "We are not in a financial crisis, while the household and business sectors are not over-leveraged. "We also have stability in the labour market, commodities market and stock market, which together with the decline in inflation will improve purchasing power, plus the measures (in place) will support the prospects for a positive growth into the final quarter and into 2010."

(Source: New Straits Times, 28 May 2009)


‘Malaysia’s Recovery Hinges on US’

The economic stimulus packages can only cushion the impact of the current global crisis, but the recovery of Malaysia's economy will depend on the US, according to an economist. This is because Malaysia is too dependent on trade for growth. The US is also Malaysia's biggest trading partner. "The stimulus package, ultimately, works only for a brief period," said Universiti Malaya Adjunct Professor Cheong Kee Cheok. He spoke to Business Times after giving a lecture in Sunway on Saturday. Malaysia plans to spend about RM67 billion under two packages to spur economic activity. However, only a third is actual cash spending while the rest is in the form of guarantees.

Cheong said there are suggestions for Malaysia to move away from the export sector. However, being heavily dependent on trade, this may not work for the country in the short term. But there are some good news. Cheong, who spent 16 years at the World Bank as economist and then senior economist, said there are some signs of bottoming out in the US economy. "My prognosis is it's going to be very long, it's going to take a couple of years," he said. China's economy is starting to recover and if China can sustain the recovery, it could provide support to the Malaysia's economy. China is one of Malaysia's biggest buyer of palm oil. Cheong also cautioned that the country's stimulus packages should translate into actual spending of money with financial assistance directed to people affected most from the crisis.

Providing loan guarantees to companies is not really putting real money into the economy. "We need real money put into the economy. Like China, 80 per cent of their package is actual money spent," he said.

(Source: New Straits Times, 1 June 2009)


Can-One Pushes Ahead with Buying Part of Rival

Tin can manufacturer Can-One Bhd says it will push ahead with plans to buy a 32.9 per cent stake in bigger rival Kian Joo Can Factory Bhd (KJCF) despite recent setbacks. The move would see the combined entity command about 80 per cent of the tin can industry in the country and become "a force to be reckoned with" internationally, chief operating officer and executive director Chee Khay Leong said. He said the two companies make a good fit, with Can-One's high penetration in the edible oil market and the Kian Joo group's strong presence in the processed food and beverage segment.

In March, Can-One's unit entered into a share sale agreement with Kian Joo Holdings Sdn Bhd to buy the stake in KJCF for RM241.12 million, or RM1.65 a share. However, KJCF managing director Datuk See Teow Chuan claims the transaction is illegal and, together with 13 others, is suing the Can-One unit as well as Kian Joo's liquidators who agreed to the sale. "We're leaving it to the courts to decide. For now, there's nothing to stop us from proceeding with the purchase. There's no 'Plan B' (for us). We've done everything above board," Chee told reporters after the company's annual and extraordinary general meetings yesterday.

At the EGM, shareholders unanimously voted in favour of buying KJCF. If all goes well, the purchase is expected to be completed sometime in the second quarter of the year. As the single largest shareholder, Can-One would be seeking board representation, Chee said. Can-One has already paid a tenth of the purchase price as a deposit. It has also obtained a RM241.12 million loan from a local bank to fund the entire purchase. The loan is believed to be from Bank Rakyat, although Chee declined to comment on this. The loan will be repaid over a 10-year period using dividends from Kian Joo and internally-generated funds, he said. The loan would raise the gearing of the Can-One group to 3.1 times from 1.42 times, which is higher than its competitors but necessary to keep up with the kind of growth it has seen in recent years, he added.

On whether it would partner Mara Inc, the investment arm of Majlis Amanah Rakyat, in the takeover of KJCF, as reported by Business Times in February, quoting sources, Chee said: "We welcome anybody who can work with us. Right now, we're working on our own, but we have options". He added that Can-One has had discussions with various interested parties, including Mara. Can-One, which saw net profit rise to RM17.3 million last year from RM12.1 million before, expects "another good showing" this year as the global economic crisis has not really hurt demand for its products, Chee said. Up to 90 per cent of its products are exported either directly or indirectly. Can-One's first quarter net profit doubled from a year ago to RM3.4 million. Its share price closed at 93 sen yesterday.

(Source: New Straits Times, 4 June 2009)


Member News
 

I’m a Little Pewter Teapot, Short and Stout…

The world’s largest pewter factory, Royal Selangor Visitor Centre, is celebrating its fifth anniversary. Various activities have been drawn up to commemorate the occasion. The activities, which are being held at the centre until June 28, will mainly be focusing on the exquisite, handcrafted melon-shaped teapot made in 1890s by Yong Koon, the founder of Royal Selangor. Visitors will get to go behind the scenes to see how this iconic design is reproduced by Royal Selangor’s skilled craftsmen, and listen to the tale of “Ah Ham and His Lucky Melon Teapot”. Visitors will also be able to see the original melon teapot displayed at Royal Selangor Visitor Centre’s Pewter Museum.

The company has also launched a mini version of the melon teapot for pewter collectors as well as tea lovers looking for a special teapot. The teapot is the only item in Royal Selangor’s collection that carries the founder’s “Yu He Zu Xi” hallmark, which is literally translated as “Jade Peace Pure Tin”. Those who buy a large melon teapot during the promotional period will receive a copy of the Royal Selangor story. Born and Bred in Pewter Dust written by Chen May Yee, the great-grand daughter of the founder. The hardcover coffee table book is an engaging account of the history of an enterprise that has grown to be the largest and most well-known pewter brand in the world.

Customers who buy the large melon teapot will also be entitled to a discount on the melon tea caddy. If you have not been to Royal Selangor Visitor Centre, this is one of the best times to do so. Located in Setapak Jaya, about 20 minutes’ drive from the Kuala Lumpur city centre, the modern complex has informative and interactive exhibits on the beauty and versatility of pewter. Among the attractions are the Pewter Museum, Chamber of Chimes, Hall of Finishes and a replica of Petronas Twin Towers made with 7,062 pewter tankards. There are also guided tours for visitors to witness the impressive sight of hundreds of skilled artisans at work. Since opening, the centre has been constantly drawing in the crowd with interesting exhibits and new facilities. Early last month, Royal Selangor Visitor Centre opened a new café for visitors to refresh themselves with a cup of coffee or tea, sandwiches and cakes.

For its anniversary celebration, a special menu featuring melon–and pumpkin-inspired treats are available. Those interested may enrol in the “School of Hard Knocks”, which is a pewter-smithing workshop. Participants will learn to make their own pewter dish within half an-hour. The registration fee is RM50 each. Officially opened to visitors in March 2004, the 3,600sq m Royal Selangor Visitor Centre has won the Malaysian Tourism Best Tourist Attraction Award and the Best Asean New Tourist Attraction. The centre is open daily, including public holidays, from 9am to 5pm. Admission is free.

(Source: New Straits Times, 20 May 2009)