The Star Online: Business
The Star Online: Business |
- FBM KLCI down in early trade
- M'sia has sufficient funds and is insulated from debt crisis and recession
- U Mobile pledges to avoid future service disruption
| Posted: 02 Nov 2011 06:29 PM PDT KUALA LUMPUR: The FBM KLCI was traded lower in early trade on Thursday, dipping 7.39 points or 0.5% to 1,463.56 at 9.10am, taking no cues from the gains seen on Wall Street overnight. Despite opening at 0.92 points higher, the local index barometer succumbed quickly to bearish sentiments as investors took profit. HwangDBS Vickers Research said in its market preview that the benchmark FBM KLCI will probably rise to challenge the immediate resistance level of 1,475 ahead, amid a steadier external backdrop that may lift share prices on the local stock market today. Major equity indices on Wall Street rebounded between 1.3% and 1.6% overnight, boosted by stronger U.S. economic fundamentals. Regional peers were mostly down with Taiwan's Taiex Index shedding 0.51% to 7,559.78 while Seoul's Kospi Index dipped 0.65% to 1,885.65. Nymex crude oil lost 73 cents to US$91.78 per barrel. Spot gold fell US$5.98 to US$1,732.63 per ounce. The ringgit was quoted at 3.1516 to the US dollar. Full content generated by Get Full RSS. |
| M'sia has sufficient funds and is insulated from debt crisis and recession Posted: 02 Nov 2011 05:40 PM PDT By LEONG HUNG YEE hungyee@thestar.com.my KUALA LUMPUR: The country has enough funds to cushion the economy, should the contagion from the European debt crisis hit Malaysi according to Second Finance Minister Datuk Seri Ahmad Husni Mohamad Hanadzlah. "We have our buffer the RM6bil stimulus spending allocated under the budget initiative. Assuming there's no recession, the buffer will be available to ensure strong growth. If there's a recession, it will help to protect our economy," he said after officiating the MIA-AFA Conference yesterday. Asked if Malaysia had funds for another stimulus package under the worst-case scenario, Husni said the Government had its reserves for the purpose. "We have a RM4bil contingency fund and about RM5bil in Kumpulan Wang Amanah Nasional. "We have also asked our accountants to review trust funds worth some RM30bil," he said, adding that those funds were for various programmes, especially the dormant on es, the Government was reviewing. According to Husni, the Govern ment could also monetise its assets by selling Federal Government land, s uch as that belonging to the Malaysian Rubber Board, to raise funds. "There are a number of these pieces of land. They are just sma ll plots of three to seven acres that we are not going to utilise. If we are not utilising those land, why can't we privatise it? "We have managed to raise the value of land through projects, such as the River of Life, which was a federal government initiative to transform the Klang and Gombak rivers into vibrant and liveable waterfronts," he added. Separately, Husni said the net national debt was still manageable. "It is well within our capability (to repay). Our debt ratio to gross domestic product (GDP) must not be more than 55% while external loans must not exceed RM35bil." He said the current national debt was still below the critical level of 55% of GDP and the country's loan payment to national revenue was at 10%, which was below the prudent level of 15%. Meanwhile, the debtserving ratio for external loans was about 2%. According to the Economic Report 2011/2012, national debt continued to remain low at 28.5% of GDP as at end-June 2011, while federal government debt is projected to be marginally higher at 53.8% of GDP. Total federal government debt is expected to increase by 11.9% to RM455.7bil in 2011, mainly due to higher borrowings to meet financing requirements. Of the total, domestic debt accounts for 96.2% or RM438.5bil. Similarly, the federal government external debt, which is mainly denominated in US dollars and yen, is projected to increase by 3.2% to RM17.3bil following the successful issuance of the US$2bil dual-tranche Wakala global sukuk. Federal government external debt, however, continues to remain low and manageable at 3.8% of total debt (2010: 4.1%). MIDF Research economist Anthony Dass said the debt rose to 12.3% in 2010 on the back of a 7.2% increase in GDP, implying that the 2010 fis cal deficit stood at 53.1% of GDP for the second consecutive year from 53.7% in 2009. "In our view, the debt level is still at a manageable level but what is disturbing is the increase between 2010 and first half of 2011. Should this upward trend continue, it can add some pressure on the economy to reduce the debt level. "However, if the policymakers were to institute policies for potential reduction in the debt level, the surge in the first half may not yield a strong adverse impact," Dass said. Malaysian Rating Corp Bhd (MARC) chief economist Nor Zahidi Alias, when contacted, said Malaysia's debt level used to be higher at around 75% of GDP in 1990. Since then, it had been brought down to less than 50% by the mid-1990s. He said only since the 1997 Asian financial crisis, the debt level had start ed to creep up; after the 2008 global financial crisis, it surpassed the 50% level again. "What is more critical here is not the debt level per se whether on the absolute amount or as a percentage of GDP but the component of the debt. "In Malaysia, only about 5% of the total federal government debt is foreign debt; the rest is domestic debt. This makes a whole lot of difference when it comes to the way sovereign risk is evaluated for a country," Zahidi said. Similarly, Japan also has minuscule foreign debt; its debt level was about 200% of GDP. Part of the reason why the Japanese economy has not collapsed is due to the fact that a bulk of its debt is financed via domestic sources. "This is quite similar to Malaysia. It is true that the benchmark of 60% of GDP is always on investors' minds but one should not forget the component of the debt itself. Secondly, if the budget deficit can be brought down to less than 5% of GDP next year and keeps on sliding in the following years, there will be less pressure on Malaysia's debt level," Zahidi said. Full content generated by Get Full RSS. |
| U Mobile pledges to avoid future service disruption Posted: 02 Nov 2011 05:27 PM PDT By B.K. SIDHU bksidhu@thestar.com.my PETALING JAYA: While U Mobile Sdn Bhd's major service disruption on Monday raises concerns about the stability of its network, chief executive officer Dr Kaizad Heerjee has assured that plans are in p lace to avoid future recurrences. "We acknowledge that U Mobile has let down our customers as they expect better service from us. We have to redouble our efforts to rebuild their confidence in U Mobile ,'' he told StarBiz. He declined to say ho w much more investments was needed or how much revenue the company had lost during the disruption as the priority was to keep its users on the network. "Our technical team is monitoring the network closely and working on stabilising the service,'' a notice on the U Mobile website said yesterday. To compensate its over one million users, U Mobile will offer free SMS for a 24-hour period on Nov 10, Dec 10 and Jan 10. In addition, data users will get free 500MB monthly for three months starting Nov 10. "It was an unexpected glitch that came about, and in a way, it triggered the technical systems to fall over. So basically, it took a while to recover,' ' Kaizad said. He pointed out that "no mobile operator can guarantee there will be no outages as networks are not 100% foolproof. However, what we need to do is to enhance our network contingency and back-up plan." For that, he said, investments would be made so that di sruptions would not recur. "What we are building is the highest speed data network in Malaysia and, for that, we have been upgrading our network for a while now. The technical side is always a challenge but we have learnt from the episode and recovered quickly. We hope we will be able to rebuild customer trust and that is why I took the bold move to send a personal message to them (via Facebook and U Tube). We hope the customer appreciates that we mean it,'' Kaizad said. He said the "small token (of free SMS and data services) can in no way compensate for the downtime they experienced but our goal is to rebuild customer confidence in U Mobile.'' The disruption occurred just before noon on Monday and, two hours later, the network was restored. However, the surge in traffic forced it down again and it took more than five hours for total restoration. Since late last year, U Mobile had introduced its new strategi c partner China's ZTE Corp. Earlier, the company worked with Huawei and Ericsson. Asked about the switch and whether it had anything to do with lower pricing, Kaizad said: "No. We found a strategic partner in ZTE, so pricing is not the only decision. But it is the long-term commitment that ZTE offered. We are also cooperating on products and services, network features and functionality.'' U Mobile has 1,500 base stations and, according to its website, its 2G coverage spans 98% of populated areas in the country. Singapore Technologies Telemedia (STT) has a 33% stake in U Mobile; Tan Sri Vincent Tan's U Television Sdn Bhd has 62% and Multi-Purpose Holdings Bhd 5%. STT owns StarHub, a telco in Singapore. "We have very solid partners and each brings different capabilities and experiences to U Mobile. STT has a lot of experience in operations and management of mobile business via its StarHub unit, while the Berjaya Group (in which Tan is the controlling shareholder) has its expertise in distribution channels as well as good understanding of the local market. All this brings value to U Mobile,'' he said. There had also been areas of cooperation between StarHub and U Mobile, he said, adding that "we have brought a lot of innovation to the market place and we are also the only celco that offers free roaming service to Singapore. The same goes for StarHub users when they come here. It is a unique offering that has never been offered by any of the celcos.'' U Mobile has a partnership for domestic roaming with Celcom Axiata Bhd and recently inked a deal to use Maxis Bhd 3G network. Full content generated by Get Full RSS. |
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