Tuesday, September 30, 2014
Thursday, September 11, 2014
Dr M has raised questions about the heavy debt & usage of funds at 1MDB
Published on 11 September 2014 by Malaysian Insider.
Tun Dr Mahathir Mohamad has raised questions about the heavy debt and usage of funds at 1MDB in his first open criticism of the controversial government-owned investment company started by Prime Minister Datuk Seri Najib Razak.
Writing in his blog yesterday, the former prime minister noted that 1MDB had spent billions of ringgit buying power plants from Genting and Ananda Krishnan and had paid above market prices for them.
He also lamented that 1MDB is heavily indebted. It has debt of around RM38 billion after just five years in operation as the country's sovereign wealth fund.
"The money for 1MDB is not from the country's surpluses. It is debt, billions of ringgit of debt that has added to the already high national debt," Dr Mahathir wrote.
The former PM, who recently wrote he was withdrawing support from Najib, said as the government was already facing a deficit budget problem, it would not have the ability to help pay the 1MDB debt.
He also noted that a large part of the money raised from the issue of debt paper by 1MDB has been sent to the Cayman Islands, a move which many has questioned.
Critics have complained about the lack of transparency in how the money is managed out of Cayman and it has been estimated that at least RM18 billion of 1MDB's money is parked there.
1MDB is Malaysia's second sovereign wealth fund after Khazanah Nasional Bhd.
Tuesday, September 2, 2014
Lynas gets full operating licence before TOL expiry date!
By Eileen Ng. Published by The Malaysian Insider on 2 September 2014.
The Lynas rare-earth refinery in Gebeng, Pahang has been granted a Full Operating Stage Licence (FOSL), days before its two-year Temporary Operating Licence (TOL) expires midnight today.
The Atomic Energy Licensing Board (AELB) director-general Hamrah Mohd Ali said the board met on August 21 and agreed to issue a two-year FOSL to Australian rare earth miner and producer Lynas after it fulfilled all the conditions set.
"They have complied with all the conditions set by us during the TOL stage and that is why the licence was issued," he told The Malaysian Insider when contacted today.
He said this included having a permanent disposal facility, a condition set by the TOL, which Lynas detractors had accused the Australian company of failing to comply with.
To this Hamrah said: "We work based on science and facts, not hearsay. They have submitted all the relevant documents to the board which showed they have complied with the conditions set and that is why we granted the licence to them."
Hamrah said the board could issue FOSL of between one and three years but he could not explain why Lynas was given a two-year licence.
"It is up to the board to decide on the tenure of the licences. Lynas is one of the 2,000 plants in Malaysia where we issue licences but the company can renew their licence after the two years has lapsed," he said.
The Australian mining company chose Malaysia for its operations following generous incentives including pioneer status and a 12-year tax holiday. It employs some 300 personnel in its Kuantan facility.
Despite strong protest from environmentalists, in September 2012, the AELB granted Lynas (Malaysia) Sdn Bhd a TOL for a two-year period ending on September 2, 2014.
In December last year, the board said Lynas had submitted last July the results of its research on recycling its waste for commercial purposes.
However, it said further study was needed on the findings.
The main concern over the rare-earth processing plant was contamination of the coastal environment and the adverse health impact which could result from the mismanagement of radioactive waste streams.
This fear stemmed from the experience in the 1980s at Mitsubishi Chemical’s Asian Rare Earth plant in Bukit Merah, Ipoh, which was shut down more than two decades ago and linked to cases of leukaemia because of radioactive exposure, some of which were fatal.
The board had on several occasions assured residents that it was monitoring the operations of the Lynas plant around the clock and said it had found radiation levels onsite and offsite to be within acceptable limits.
Link: http://www.themalaysianinsider.com/malaysia/article/lynas-gets-full-operating-licence-before-tol-expiry-date
RM6 billion injection of public funds into Malaysia Airlines (MAS) is a bailout or an investment?
Published by The Malay Mail Online on 29 August 2014.
The RM6 billion injection of public funds to turn around the fortunes of ailing national carrier Malaysia Airlines (MAS) is not a bailout but an investment, Prime Minister Datuk Seri Najib Razak said today. Najib said state fund Khazanah Nasional intends to fully recover the RM6 billion investment but that recovery for the ailing national carrier could take longer than the three years envisaged by the restructuring plan announced today.
“This is an investment, not a bailout,” Najib told reporters after the Umno Supreme Council meeting here. “The recovery may take more than three years. But we believe in three years we will see a positive turnaround,” he added. Najib also said that any downsizing of the company will be done in the most humane and compassionate way.
Khazanah announced today that the carrier will trim its workforce by 6,000 although Ahmad Jauhari Yahya will stay on as chief executive until July 2015. He said that a foreign CEO, if hired, will make room for a local eventually.
Najib also claimed the plan is rooted in making MAS a commercially viable airline, and Putrajaya would need to subsidise MAS if it wants to keep certain routes. The prime minister also said that the airline is being kept alive as Malaysians want MAS as a national carrier.
Published by Reuters on 29 August 2014.
Malaysia Airlines (MASM.KL) (MAS) will slash nearly a third of its 20,000 workforce and cut back its global route network as part of a radical 6 billion ringgit ($1.9 billion) restructuring following the devastating impact of two jetliner disasters.
The 42-year-old company will be de-listed by the end of the year under the broad revival plan announced by state fund Khazanah Nasional on Friday that aims to bring long-elusive efficiency and global standards to the loss-making carrier.
The 6,000 job cuts were higher than expected by the industry and mark a painful new blow for staff after a traumatic year for the national flag-carrier and the Southeast Asian country. Khazanah, which owns a majority stake in MAS, said it would invest in "re-skilling" those who lose jobs and pledged to set up a panel to improve often rocky relations between unions and management.
Link: http://www.reuters.com/article/2014/08/29/us-malaysia-airline-restructuring-idUSKBN0GT0KR20140829
Published by Bloomberg on 29 August 2014. By Chong Pooi Koon, Choong En Han and Elffie Chew.
Malaysian Airline System Bhd. (MAS), which lost two jetliners in air disasters this year, will eliminate 6,000 jobs as the national carrier restructures.
Chief Executive Officer Ahmad Jauhari Yahya, whose term was due to end next month, will lead the carrier until July 1, Azman Mokhtar, managing director of majority owner Khazanah Nasional Bhd., said today in Kuala Lumpur. The full impact of the disasters will only be seen in the second half, the airline said yesterday after reporting its sixth quarterly loss.
Sovereign wealth fund Khazanah made a 1.38-billion ringgit ($438 million) buyout offer this month to take Malaysia Airlines private, and the funds are part of 6 billion ringgit it is investing to return the carrier to profit in three years. Prime Minister Najib Razak has said “painful steps” need to be taken to overhaul the airline, which has racked up 4.9 billion ringgit in losses since the start of 2011.
“We believe the fastest way is actually to create a hard reset and create a clean slate,” Azman said. “We needed to have a fresh start because the current MAS, unfortunately the cost structure does not work, unfortunately the revenue has been consistently below its cost.”
The national carrier that traces its beginnings to the 1930s will cut its workforce to 14,000 from 20,000, with Khazanah setting aside funds for retrenchment costs. It’s struggling to repair its image after MH370 vanished in March and MH17 was shot down over Ukraine last month.
CEO Search
As part of the restructuring, Khazanah will review Malaysia Airlines’ services to Europe, renegotiate supply contracts and move the carrier’s headquarters and operations to Kuala Lumpur International Airport, the fund said. It will spend 1.6 billion ringgit on revamp and retrenchment costs.
Khazanah’s buyout will result in the company’s delisting, targeted for completion by year-end. The airline is expected to be relisted in three to five years, Khazanah said. A global search will be carried out to find a new CEO by the end of this year, it said.
Khazanah will invest in a “staggered and conditional basis” over the next three years, it said in a statement. “While funds have been made available, they come with strict conditions, so as to ensure that MAS truly resets its business model and cost structures, in order to be truly sustainable.”
The 6 billion ringgit it is pumping into the carrier is not a bailout, Azman said today as the fund outlined its plans in a 40-page report titled “Rebuilding a National Icon.” Shares of Malaysia Airlines (MAS) were suspended from trading today. They have lost 19 percent of its market value this year.
Tainted Image
“The need to restructure the company was accelerated” after the disasters damaged the brand, Ahmad Jauhari said in a statement yesterday. “Our company has had to undergo a thorough re-examination and re-evaluation in order to reposition ourselves as a stronger and more sustainable Malaysia Airlines for the future.”
The March 8 disappearance of Flight 370, en route to Beijing from Kuala Lumpur with 239 people on board, sparked street protests in Beijing and prompted boycotts by Chinese travelers. No trace of the plane has been found in the world’s longest search for a missing jet in modern aviation history.
The airline’s yields, or measure of ticket prices, fell 4 percent in the second quarter to 21.7 sen, the company said. It filled 73.7 percent of its seats in that period, 6.7 percentage points lower than a year earlier.
Rebuild Sales
“We expected the impact of MH370” on second-quarter performance, Ahmad Jauhari said. “Given that, our team put in much hard work and effort to regain market confidence and rebuild sales. Tragically, just as we were beginning to see signs of recovery in all regions, we were dealt the blow of MH17.”
Flight 17 carried 298 people and was shot down in Ukraine July 17 on a route Malaysia Airlines said was declared safe by the International Civil Aviation Organization. The Ukrainian government blamed the downing on pro-Russian rebels in the country’s eastern part.
Average weekly bookings fell 33 percent immediately after the incident, the airline said yesterday. Unverified images of near-empty Malaysia Airlines planes have circulated on social media since MH17 crashed. The airline will review its European routes, Khazanah said today.
Malaysia Airlines said it retired its older Boeing Co. 737-400 aircraft at the end of June, six months earlier than planned, to save fuel costs and increase productivity. It had a fleet of 127 aircraft at mid-August.
The company’s cash and cash equivalent dropped to 2.38 billion ringgit at the end of June, compared with 3.25 billion ringgit at the end of March, it said.
The net loss widened to 307 million ringgit last quarter from a year earlier, the company said. Revenue fell to 3.59 billion ringgit. The carrier will probably lose more than 1 billion ringgit in 2014 and continue to report losses through 2016, according to analyst estimates compiled by Bloomberg.
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