Economy Seen To Moderate At 5%-6% On Soft Global Demand

The Malaysian economy is expected to moderate between 5% and 6% this year, consistent with the softening of global demand, particularly from the United States, the European Union, China and Japan, and anticipated slow-down in global demand for electronics. Since Malaysia is a net exporter of oil, higher oil prices are expected to cushion the decline in global electronics demand. The Malaysia International Trade and Industry Report 2004 stated that manufacturing sector would continue to remain the main engine of growth through efforts to manufacture more high value-added products and expansion into new markets. This sector is expected to register 7.6% growth in 2005, down from last year's 9.8% primarily due to the expected decline in the electrical and electronics (E&E) sector. Growth for this sector is expected to slow down this year due to lower demand from major markets, especially from the US, China and Japan, as a result of inventory built-up last year.

The lower demand for semiconductors will also contribute to the overall moderate performance of the sector. The demand for iron and steel products for manufacturing activities is projected to grow with the commencement of new facilities in the production of specific grade and specifications, which were previously not produced in the country, as well as sustained external demand through ongoing efforts by local manufacturers in exploring new markets. However, demand for iron and steel products by the construction and building sector is not expected to improve further in 2005, due to the reduction in the public sector spending to achieve a balanced budget by 2007. The machinery and equipment sector is anticipated to grow at a moderate rate of 4%. The demand for specialised machinery is expected to grow to cater to specific industries. Malaysia is expected to produce more high value-added machinery due to the introduction of new technology, automated manufacturing process and installation of sophisticated machinery. Demand for chemicals and chemical products is also expected to expand due to the growth in the oil and gas industry and pharmaceutical sector. The projected hike in health expenditure by the public and private sectors will contribute to the sustained growth of the pharmaceutical sub-sector.

(Source: The Star, 5 July 2005)

Malaysia Ranked 21st For Ease Of Doing Business

A World Bank report on the ease of doing business among 155 countries ranked Malaysia at number 21, better than Holland and South Korea, but Thailand was rated a notch higher at 20. "Many economies improved their regulations for protecting investors including Hong Kong, Indonesia, South Korea, Malaysia, Thailand, the Philippines and Vietnam," World Bank Group president Paul Wolfowitz said. Now in its third year, the World Bank had expanded its research coverage to 155 countries and added three new indicators — dealing with business licences, trading across borders and paying taxes. It did not, however, track variables such as macroeconomic policy, quality of infrastructure, currency volatility, investor perceptions or crime rates.

"Overall, European nations were the most active in enacting reforms. Poor countries levy the highest business taxes in the world, driving many firms into the underground economy and do not translate into higher revenues," Wolfowitz said in a statement released yesterday on World Bank's official website. Six East Asian economies make the list of top 30 economies in the world in terms of the report's ease-of-doing-business index. In order, the list is New Zealand, Singapore, the US, Canada, Norway, Australia, Hong Kong, Denmark, the UK, Japan, Ireland, Iceland, Finland, Sweden, Lithuania, Estonia, Switzerland, Belgium, Germany, Thailand, Malaysia, Puerto Rico, Mauritius, the Netherlands, Chile, Latvia, South Korea, South Africa, Israel and Spain. The Doing Business project is based on the efforts of more than 3,500 local business consultants, lawyers, accountants, government officials and leading academicians around the world.

(Source: Business Times, 14 September 2005)

GDP Growth In Q2 Slower Than Expected

The economy grew in the second quarter at its slowest pace in more than three years as factories cut production of semiconductors and building materials. The economy grew 4.1 per cent in the three months ended June, compared with a revised 5.8 per cent expansion in the first quarter, Bank Negara Malaysia said in a statement yesterday. The median forecast of 21 economist surveyed by Bloomberg was for 5 per cent growth. "Malaysian economic activity has followed global chip shipments lower," Tim Condon, an economist at ING Groep NV in Singapore said before the release of the figures. "Malaysia has been hit hard by the electronic cycle" and "it may be adversely affected by competition from Chinese exporters for some of those electronics goods." Consumer prices meanwhile will average 2.8 per cent in 2005, up from a previous forecast of 2.5 per cent, Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz told reporters yesterday. The inflation rate will stay above 3 per cent until April next year, she said. Malaysia last increased its policy rate, then known as the three-month intervention rate, in August 1998. It unveiled a new overnight rate of 2.7 per cent in April 2004 and maintained that rate at yesterday's policy meeting.

(Source:  The Malay Mail, 25 August 2005)

'Ringgit Expected To Remain Stable'

The ringgit is expected to remain stable, Second Finance Minister Tan Sri Nor Mohamed Yakcop said, dashing investors' hopes of a strong appreciation in the currency. "I see the ringgit trading stably, no volatility but the direction I won't say. I see continued stability," Nor Mohamed told reporters after attending a government sports carnival. Investors have poured up to US$15 billion (US$1 = RM3.77) into ringgit assets, such as government treasury bills and bonds, over the past 18 months or more on hopes of hefty gains once Malaysia abolished its currency peg, which it did last month. But the ringgit has appreciated by only 1 per cent to 3.765 per US dollar from its pegged rate of 3.8 since the central bank severed the currency's 7-year-old link to the US dollar and switched to a managed float on July 21.

Some analysts warn that investors may dump Malaysian assets and spark a big rush of capital out of the country, as minimal currency gains and low interest rates give little incentive to keep their money here. The ringgit was quoted at 3.7655/75 late last Friday. Malaysia's switch to a managed float of its currency comes at a time when its economic growth is slowing due to a subdued global outlook and China's rising dominance of the Asian export market. But Nor Mohamed said Malaysia was sticking to its target of 5-6 per cent economic growth this year for now and surging energy costs still had a positive effect on the economy. "At this point in time, we don’t see a major issue," he told reporters when asked about the possible impact of high crude oil prices on the economy. "We are a net oil exporter so the first round effect of an oil price increase is certainly favourable for us. "For the time being, we stay with our forecast of 5-6 per cent," he added, referring to the official 2005 gross domestic product (GDP) growth target. But Nor Mohamed warned that a prolonged spell of high oil prices could dampen the economies of Malaysia's key trading partners and hit demand for the country's exports. Exports make up the equivalent of about 100 per cent of Malaysian GDP. Oil climbed more than 3 per cent to US$65.35 a barrel last Friday as rocket attacks in West Asia and protests in Ecuador reminded the market how vulnerable supply lines are. 

(Source:  Business Times, 22 August 2005)

COMMODITY NEWS

Weak Battery Output Cuts China Lead Demand

 Weak battery output from plants suffering power shortages has cut Chinese lead demand, while high prices have also discouraged the factories from buying, smelter and trading sources said today. Chinese smelters are, meanwhile, gearing up output, which may force them to export more lead in the second half of the year, weighing down world prices. "Current sales of lead are not good. Prices are too high," a manager for a lead smelter in the north, said. "Local stocks must be rising." China, a major world supplier of lead, does not have enough electricity for its fast-growing economy, which expanded 9.5 per cent between the second quarters of 2004 and 2005. Power shortages have cut production of battery plants in the eastern provinces Zhejiang and Jiangsu, traders said. Many battery plants, the largest lead buyers, are located in those provinces.

"About 90 per cent of batteries for electric bicycles are made in Zhejiang and Jiangsu," a Shanghai-based trader said. "The electric bicycle is the fastest growing type of vehicle in China." Demand from car and electric bicycle plants has boosted uses of lead and supported local prices, traders and analysts said. Spot lead was trading at around 8,900 yuan, or US$1,097 (US$1 = RM3.75) a tonne in Shanghai, up 2.3 per cent from a year ago but down 4 per cent so far this month, pressured by the demand slowdown. Motor vehicle output — everything from cars to trucks and buses — should come to 5.5 million units this year, the official Xinhua news agency cited the State Development and Reform Commission as saying. That output would be 8.4 per cent more than last year. Lead demand from electric bike makers is comparable. State-controlled research group Antaike estimates that China made about 7 million electric bicycles last year and that output will rise to 10 million this year. A battery for electric bicycle uses about 7.5kg of lead compared with 9kg for passenger car battery and 12kg for truck battery, an analyst for Antaike said.

China's lead production jumped 20 per cent to 1 million tonnes in the first half and will rise further in the second half, smelter officials said. Kunming Smelter is running trials at its new 100,000-tonne-per-year lead plant, a company official said. The company also owns a 50,000-tonne lead plant. Yuguang Gold and Lead Co Ltd, China's largest producer, will raise its annual capacity by 19 per cent to 250,000 tonnes by December and will produce about 230,000 tonnes of refined lead this year, up 9.5 per cent from 2004, a company official said. China imported 417,067 tonnes of lead concentrate in the first half, 20.8 per cent more than a year earlier. Lead typically comprises 65 per cent of concentrate.

(Source: Business Times, 28 July 2005)

MEMBER NEWS

Making It Good With Tips Learnt In His Younger Days

Ever since he was a child, he has learned about the importance of quality and branding from his father and grandfather. The grandchild of Selangor Pewter (now Royal Selangor Pewter) founder Yong Koon and son of Peng Kai, used to help his sisters and brothers pack pewter and painted labels on boxes when he returned home from school. All the lessons and tips he learned from young about branding did not go to waste when Datuk Yong Poh Kon became the managing director of his family business. On Friday, Yong, 60, received the Ad Personality Of the Year Award 2005 from the Malaysian Advertisers Association (MAA) for his contributions and success in the local advertising industry. The humble businessman attributed the award to his company and employees. "I receive this award on behalf of employees and staff of Royal Selangor Pewter," he said. "Many of them have worked hard to put the company where it is today," he said.

The father of three believed that branding was vital when competing in the export market. He also noted that Royal Selangor Pewter started exporting only 2% of their products in 1970 but now their exports were over 60%. Yong also believed that every local company dealing in exports had a role to play to lift the name of the country. "It is important that exported products are of good quality as this will help to promote the image of the country and when the country's reputation is finally built up, it will help to promote all of its other products in the export market. "For instance, when one mentions Swiss-made, immediately others will recognise that the product has a good brand," he said. Yong called on other industry key players to help make Malaysia renowned for its locally made products.

(Source:  The Star, 15 August 2005)

Yong Named Ad Personality Of The Year

Malaysia's Royal Selangor International Sdn Bhd managing director Datuk Yong Poh Kon was crowned the advertising personality of the year 2005 by Malaysian Advertisers' Association (MAA) yesterday. Yong has been instrumental in bringing the 120-year-old local brand of the company's pewter products onto the international stage. Today, Royal Selangor Pewter International is reputed to be world's largest pewter maker and its products are available in exclusive department stores such as Harrods in England and Japan-based Wako. When the economic down-turn occurred in the late nineties, Yong revised the group's marketing strategies and re-branding exercise to strengthen Royal Selangor's brandname to face competition. Since then, Royal Selangor has grown to be one of the top 30 brands in Asia.

The brand then embraced the Internet, adapting to changes in the market and after more than a decade, Royal Selangor now enjoys lucrative and invaluable presence in cyberspace. The citation for Yong which was read at the award presentation ceremony noted that Royal Selangor's success is also attributed to the investment in development and production. "The trust that consumers place on the Royal Selangor brand is not down to perception marketing or glitzy media campaigns but honest publicity generated by word of mouth," it said. Under Yong's stewardship, Royal Selangor virtues were simplicity and reliability, a key which has successfully cultivated a sincere tie or customer loyalty between the brand and consumers. Yong believes that a strong brand needs to be nurtured and seen as innovative. Hence he is of the opinion that moving into mass production will only harm Royal Selangor's brand. Past recipients of the MAA advertising personality of the year award include Tan Sri James Peter Chin, Tan Sri Dr Lim Kok Wing and Datuk Kadir Sheikh Fadzir.

(Source:  Business Times, 13 August 2005)

Tankards With An Attitude

Royal Selangor tankards are sporting a new look – a colourful and vibrant one. The pewter ware maker engaged famous artists Harris Ribut, Yusof Gajah and Sandra Knuyt to paint works of art on the tankards, which are Royal Selangor's best-selling item. These works of art on pewter are part of the company's New Attitude campaign, and 18 pieces will be donated to the Women's Aid Organisation to be auctioned later. Royal Selangor sales and marketing manager Yong Yoon Li said each piece could fetch more than RM2,000 at an auction. " Harris is famous for his fat women paintings while Yosuf is known for his elephants and Sandra for the large lips in her paintings.

"We chose these three artists because they are well-known locally and internationally. Our aim is to change the public's perception about pewter and bring pewter to new heights with exciting designs," said Yong. In conjunction with its 120th anniversary this year, Royal Selangor invited the public to participate in an art contest. More than 1,000 people sent in their illustrations, but only 12 were selected for the one-day painting workshop at Royal Selangor in Setapak Jaya, Kuala Lumpur, using tankards as the canvas. Michelle Yap, Tan See Ling and Wong Jing Cherng were the eventual winners in the contest, each receiving a Royal Selangor tankard painted by a professional artist and RM2,000 Royal Selangor voucher.

(Source:  The Star, 11 August 2005)

Perstima Q1 Profit 58% Higher

Perusahaan Sadur Timah Malaysia Bhd (Perstima) made a pre-tax profit of RM13mil for the first quarter ended June 30, which was 58% better compared with a pre-tax profit of RM5.9mil during the same period last year. Revenue stood at RM195.8mil against RM137.5mil previously. Perstima, however, cautioned its shareholders that it would be difficult to maintain last year's profits, as the operating environment was expected to remain challenging and competitive in the current year ending March 31, 2006. The company made a pre-tax profit of RM51.2mil on turnover of RM670mil for the year ended March 31. Perstima's first quarter pre-tax profit was, however, lower than the RM19.4mil reported in the preceding quarter ended March 31.

(Source:  The Star, 9 August 2005)

Perstima Counts On Viet Ops

Perusahaan Sadur Timah Malaysia (Perstima) Bhd, the country's sole tinplate producer, expects the better performance from its Vietnam operations to cushion the impact of a softer demand for its products this year. Chairman Tan Sri Ab Rahman Omar said Perstima had detected a slowdown in demand as a result of customers retaining stock. "If the trend continues, it will be difficult to have growth in sales volume for the domestic market this year," he said after the company AGM in Kuala Lumpur yesterday. This outlook is a stark contrast to its sterling performance for its financial year ended March 31 where it achieved a more than 50% increase in its net profits to RM41mil from RM17mil in the previous year. Perstima also recorded a 77.5% increase in turnover to RM670mil from RM377mil. The high increase was attributed to sales of tinplates to local Malaysian can makers, as the global supply was tight during that financial year. Declining to forecast any figures for the current year, Ab Rahman would only say it would be a tough year. The upward trend of steel prices is also a factor effecting demand for Perstima's tinplates as he pointed out that steel prices had risen by more than 200% in the last two years. However, Perstima viewed the situation as "reasonable" as its operations in Vietnam were expected to balance this outlook.

It planned to increase its market share in that country from its present 60% but Ab Rahman revealed no targets. "We foresee business in Vietnam to be on an uptrend as we only began operations some two years ago and needed time to smoothen operations" he said. One reason Vietnamese customers were not buying 100% from Perstima could be that they still had old stock from previous suppliers, he added. The company is confident of boosting sales once customers in Vietnam were aware of its products' high quality. Perstima's plants in Malaysia and Vietnam are producing some 20,000 tonnes per month. Its Vietnamese plant is running at 90% capacity, a figure that Ab Rahman described as "good enough". Perstima maintains that while the demand from the international market was "tight", it will continue to give first priority to its local customers and retain exports at 20% of total production. The canned drinks industry in Iran is its biggest foreign market, while the local milk powder, evaporated and condensed milk industries dominate its domestic market. Other export destinations include Bangladesh, the Middle East and Indonesia.

(Source:  The Star, 16 August 2005)

Vanilnoir Made Royal Selangor Distributor In Europe

Malaysia's premier pewter producer, Royal Selangor International Sdn Bhd, has appointed Rusia-based Vanilnoir Ltd as its distributor in Europe. Vanilnoir will tap the Russian market and help expand Royal Selangor's business in Europe, a market currently taken care by Royal Selangor (UK) Ltd in London, it said in a statement. "We have set out to expend into Europe and have found a representative whose immediate strategy is to open two to three shops in Moscow before the end of the year," said Royal Selangor director Peter J Coleman. He said Vanilnoir was chosen due to its experience in the retail market. Coleman said the retail sector in Moscow caters to some 12 million customers. In recent years, the industry has been marked by a boom and massive expansion of European retail chains. "Analysts estimate turnover for the retail industry to be beyond US$200 billion (US$1 = RM3.80), and we intend to get a piece of the pie," he said. The Moscow agency will be led by Elena Sharapova and her partner, Nikolai Donstov, who pioneered the shop-in-shop concept which they intend to adopt for Royal Selangor. Royal Selangor exports to more than 20 countries and operates via a network of offices complete with warehousing facilities in Australia, US, the UK, Canada, Singapore, Hong Kong, China, Japan and Thailand.

(Source:  Business Times, 16 July 2005)

Perstima Positive On Viet Operations

Tin plate manufacturer Perusahaan Sadur Timah Malaysia Bhd (Perstima) hopes its two-year operations in Vietnam will continue to contribute positively to the group's financial position this year. Its chairman, Tan Sri Ab Rahman Omar, said the subsidiary, Perstima (Vietnam) Co Ltd, had achieved capacity utilisation at almost 90 per cent currently. "We foresee our operations in Vietnam still on an upward trend and we hope more customers will start buying from us," he told reporters at the company's annual general meeting in Kuala Lumpur yesterday. The company, which managed to capture 60 per cent of the market share in Vietnam last year, hopes to improve on it. For the financial year ended March 31 2005, Perstima recorded a turnover of RM670 million, an increase of 77.5 per cent compared with the previous year.

The substantial increase in turnover was mainly due to sales of tinplate to local Malaysian can makers. The global supply situation of tinplate was tight last year. For this year's outlook, Ab Rahman said tinplate demand would be little bit soft in the local market and it would be tough going for the company to maintain growth in the domestic market. However, he said with the continuous contribution from its operation in Vietnam, the company expects to perform satisfactorily this year. In Malaysia, Perstima produces about 12,000-13,000 tonnes of tinplate per month and in Vietnam around 7,000 tonnes per month. The bulk of Perstima's tinplate is sold domestically, with about 20 per cent exported to other countries.

(Source:  Business Times, 16 July 2005)

Royal Selangor Boosts Revenue Via B2B Deals

Royal Selangor International Sdn Bhd expects growth in its business-to-business (B2B) sales to boost revenue by at least 10% this year. The company had identified the architectural interior market and corporate recognition programme as the growth segments in the B2B sector, said corporate sales manager Chen Tien Yue. Last year, B2B sales contributed approximately 30% to Royal Selangor's local sales. The company, he said, was expanding its product offering in the architectural interior market to include larger structures such as murals, walls, doors, mirror frames, counter tops and conference tables. The company designs and produces custom-made pewter wall tiles for corporate clients. "We are able to do this cost-effectively for our clients by applying new technology, which enables us to combine a layer of pewter or other metals with materials such as wood, ceramic, concrete and glass," Chen said in an interview. Royal Selangor is targeting human resource personnel for its corporate recognition programme, which offers companies gift options in recognising employee performance and loyalty.

"Most companies recognise their employees either for their long service or performance. Rather than just giving each person a plaque or cash, it is better for companies to make the most of such recognition by providing a comprehensive recognition programme. "What we do for our corporate clients include consultancy services, provide a range of product options so that the employee can choose an item he wants, selection through online purchase by the employee, gift-wrapping, delivery service and administration support," Chen added. And in line with the growth of its B2B segment, Royal Selangor has launched www.coporate.royalselangor.com for its corporate clients. The website is aimed at facilitating communication with corporate customers, providing them with product ideas and to become an online source for human resource, public relations and marketing professionals.

(Source:  The Star, 7 September 2005)

Crafted For Export Market

The Vietnam War was coming to an end when Datuk Yong Poh Kon went to Canada in 1975 to market his pewter ware. During that time, images of the evacuation from Vietnam were splashed in newspapers everywhere. "It was difficult, especially for someone coming from South East Asia. Many Canadians believed that if Vietnam fell to the communists, the rest of the region (including Malaysia) would likely follow. "Many department stores wondered whether our supplies would be reliable. But we persevered," said the Royal Selangor MD and CEO in a recent interview. According to Yong, among the challenges in running and maintaining an international business is hiring the right talent. "Get professionals to do the job – both locally and overseas. "Another challenge is the cost of building the brand overseas. For example, consider the advertising cost in the United States," said Yong, who will deliver the keynote address at a seminar Doing Business Overseas: Challengers, Pitfalls and Success Stories on Sept 6. The seminar is part of the Business Networking Series of the Global Malaysians Network – a project initiated by the Asian Center for Media Studies and supported by The Star.

Yong will share with the audience Royal Selangor's experience in pewter export in relation to the Malaysian Industrial Plan. He will give an insight on the many ups and downs in designing, manufacturing and marketing. Have Malaysian companies gained international recognition or do they still need to prove themselves? Yong said: "We have a neutral image in the international market, one that neither detracts the quality of items nor connote a very positive image. "We still need quality products to bring up the Malaysian brand," he concluded. The half-day seminar (9am to 12.30pm) will be held on Sept 6 at Menara Star, 15 Jalan 16/11, Petaling Jaya. For details, go to globalmalaysians.com or call 03-79671388 ext 1121 & 1123.

(Source: The Star, 30 August 2005)