Jumaat, 14 Februari 2014

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The Star Online: Business

Fishing for the right answers

Posted: 14 Feb 2014 08:00 AM PST

If past mistakes aren't properly addressed, Malaysia's RM1.5bil tuna plan should perhaps be canned.

APPARENTLY, Malaysia is hooked on the allure of the tuna industry.

Despite the expensive failure of some tuna-related projects, the Government hopes that new investments of more than RM1.5bil in the nine years leading to 2020 will enable the country to be a significant player in the global tuna market.

On Feb 4, the Fisheries Department launched a book on the strategic plan to develop the country's tuna industry between 2012 and 2020.

The news reports on the event didn't explain the lateness of the launch, but according to the department, the plan is a sequel to a similar development plan for 2002 to 2010. In the book, the department said 60 tuna vessels were licensed during the earlier period to operate in international waters.

Other initiatives implemented under the first plan included the development of an international tuna port in Batu Maung, Penang; captain training; and the growth of support services and downstream activities. That's the extent of the book's review of the 2002-2010 plan. It's a sketchy account of what had transpired over those nine years.

A report in The Star on the launch in Penang hints at the fact that there's indeed a lot more to be said about this subject.

At a press conference, Fisheries Department director-general Datuk Ahamad Sabki Mahmood said Malaysia could become an international tuna port because it was near the Indian Ocean, a tuna spawning ground. He added that this could be achieved easily with good facilities and in partnership with other countries.

"We could be using the wrong methods to venture into the industry, so it is time for us to look at it from another perspective," he was quoted as saying.

What are these wrong methods? Could it be that he was referring to the collapse of Malaysian International Tuna Port Sdn Bhd (MITP), the concessionaire for the Batu Maung port? The episode drew so much attention and criticism that it prompted a probe by the Dewan Rakyat's Public Accounts Committee (PAC) in 2011.

Late last year, the flop made the news again amid finger-pointing and confusion over the status of the port and its problems.

In December 2004, MITP entered into a concession agreement with the Fisheries Development Authority of Malaysia (LKIM), a statutory body under the Agriculture and Agro-based Industry Ministry (MOA). The 32-year concession gave MITP the exclusive rights to develop, manage, operate and maintain the tuna port.

LKIM had a 40% stake in MITP, while the rest of the equity was owned by Bindforce Sdn Bhd, which was controlled by Sabah businessman Datuk Annuar Zaini Binyamin.

The project was plagued by delays, which in turn prevented MITP from commencing operations at the port. In November 2009, MITP defaulted on its RM240mil Islamic bonds. This triggered lawsuits, including OSK Trustee Bhd, the trustee for the bonds, successfully suing MITP to recover the debt.

However, when MITP didn't pay up, OSK Trustee then sought to extract the amount from the Government, on the basis that the MOA had issued a letter of support for MITP's borrowings. The Kuala Lumpur High Court rejected the trustee's claim, but it's not known if there's subsequently an appeal against that decision.

In its report on the MITP fiasco, the PAC said the Government might incur a loss of up to RM209mil because of MITP's inability to proceed with the port project. Presumably, the PAC was alluding to OSK Trustee's claim against the Government. If the case hasn't gone beyond the High Court, the liability doesn't arise and the taxpayers won't be unfairly penalised.

But what happens with the port? The PAC concludes that the project is viable because of the port's location and the infrastructure around it. The committee adds that the project failed to take off because of the incompetent management of LKIM and Bindforce, and also because it was highly geared.

The question is, have the lessons from the debacle sunk in? Also worth noting is the demise of Langkawi Tuna Corp Bhd, which was set up by Khazanah Nasional Bhd to undertake tuna farming in Bukit Malut, Langkawi.

Another initiative that would have boosted Malaysia's tuna dreams was Konsortium Perikanan Nasional Bhd (KPNB), which was formed to spearhead the development of the local fisheries industry by modernising the country's deep-sea fishing fleet and by improving the processing, marketing and distribution of fish.

This too drifted into stormy weather. In March 2010, it defaulted on a credit facility of RM7.56mil taken from Bank

Pertanian Malaysia Bhd. A 70% subsidiary of Oilcorp Bhd had a 51% stake in KPNB. But Oilcorp itself landed in financial trouble and was delisted from Bursa Malaysia in January 2011.

The websites of the MOA and the Fisheries Department don't mention KPNB at all.

The current strategic development plan for Malaysia's tuna industry calls for the Government and the private sector to invest RM721.75mil and RM800.6mil respectively.

The bulk of the funds are meant to be spent on the Batu Maung international port (RM250mil); the development of two domestic tuna ports in Labuan and Sabah (RM200mil); the purchase of tuna vessels (RM560mil); and the lease of tuna fishing quotas (RM105.6mil).

The Government is expected to underwrite the expenditure on the ports, while the vessels and quotas will be part of the investments by the private sector.

There's nothing wrong with Malaysia attempting a second bite of the cherry – a fishy cherry but a plump one nevertheless – but considering the past failures in the fisheries sector, there has to be a proper accounting of what has gone wrong and what has been done to prevent repeats of the mistakes.

To begin with, what was the MOA's response (if there was one) to the 18-page PAC report on the Batu Maung port? The PAC apportioned blame for the port project's failure largely to LKIM. Does the MOA agree with this and if so, what action has it taken?

What is the fate of KPNB? Has it been abandoned altogether? If it's to be revived, what role does it play in the tuna industry development plan?

Most importantly, how is the MOA satisfied that the current plan can avoid the pitfalls and underperformance of the previous plan?

If there's a lack of convincing answers, maybe it's best that Malaysia's tuna dreams be canned.

Executive editor Errol Oh doesn't really fancy tuna, but will cheer Malaysia on in finding a place in the world tuna market, as long as it's done in a transparent, competent and sustainable way.

Toyota recalls 295,000 vehicles globally for electrical fault

Posted: 14 Feb 2014 07:20 PM PST

DETROIT: Toyota Motor Corp is recalling about 295,000 Lexus and Toyota brand vehicles globally, mostly in the United States, because various safety systems including stability control and anti-lock brakes could become inoperative.

It is recalling vehicles from model years 2012 and 2013 because an electrical component in the brake actuator, which adjusts fluid pressure in each wheel cylinder, may experience increased resistance, according to documents filed with the U.S. National Highway Traffic Safety Administration.

That could lead to reduced vehicle control and an increased risk of a crash as various safety systems, including traction control, become inoperative.

There have been no reports of accidents or injuries related to the issue, said a Toyota spokesman.

Of the total recalled, 261,114 were sold in the United States. The rest were exported to other markets, a spokeswoman for the company said.

The affected vehicles globally include about 57,000 of the Lexus RX350 crossover vehicles and about 109,000 of the Toyota Tacoma pickup trucks, both from model years 2012 and 2013, she said.

In addition, about 129,000 of the Toyota RAV4 SUVs from model year 2012 are affected, she said.

In the United states, those numbers were 54,010 RX350 crossovers, 100,052 Tacoma trucks and 107,052 RAV4 SUVs, according to the NHTSA documents.

Toyota and Lexus dealers will update the software for the skid control electronic unit free of charge, according to the NHTSA documents.

Earlier this week, Toyota recalled all 1.9 million of the third-generation Prius cars sold worldwide due to a programming glitch in their hybrid system.- Reuters

Soros exits J.C.Penney, trims Herbalife, others follow

Posted: 14 Feb 2014 07:15 PM PST

NEW YORK: Soros Fund Management, one of the hedge fund industry's most closely watched investors, exited J.C. Penney and trimmed its stake in Herbalife late last year, marking a notable shift in course only months after buying into the companies.

The New York-based firm, which ranked as J.C. Penney's second biggest investor, sold 19.98 million shares during the last three months of 2013, according to a regulatory filing on Friday. It also cut its stake in Herbalife, where it was the fifth biggest investor.

J.C. Penney and Herbalife spent most of last year in the spotlight, with the retailer's stock price losing half its value as an ambitious overhaul fizzled and the nutrition and weight loss company surging 139 percent in the wake of a dramatic faceoff between some of the world's biggest investors.

At both companies, Soros' involvement, fueled by the firm's history of making a lot of money on savvy bets, boosted the share price and raised their credibility quotients, possibly even drawing in other hedge fund investors.

In the 40 years since 83-year old George Soros founded the firm, it has earned its investors $40 billion, including $5.5 billion last year, according to industry data. Even though the firm now invests only Soros' personal fortune, its investment decisions are still followed closely.

So when Soros bought 17.4 million J.C. Penney shares in April, not long after Ron Johnson was ousted as chief executive officer, investors cheered and pushed the share price up.

But as the company's once-ambitious turnaround plans lost steam and a former CEO returned to the helm, its biggest investor, William Ackman's Pershing Square Capital Management, abruptly exited in August. The share price kept tumbling and has lost 68 percent in the last 12 months.

While Soros was a steady J.C. Penney supporter through the end of the third quarter, the firm evidently changed its mind in the last months of 2013.

It had company in the form of other prominent managers who also exited. Richard Perry, whose Perry Corp owned 10 million shares, sold out, and Kyle Bass's Hayman Capital liquidated its 5.6 million shares. David Tepper's Appaloosa Management sold all of its 737,800 shares.

Fund managers who oversee more than $100 million are required by the U.S. Securities and Exchange Commission to report their U.S. stock holdings 45 days after the end of the quarter. And while the information is often backward looking, it can shed light on certain trends.

J.C. Penney did not lose all support, however, with filings showing that Larry Robbins' Glenview Capital kept its stake steady at 12.3 million shares and Highfields Capital still owned 3.2 million shares at the end of the fourth quarter.

Soros' involvement was similarly critical at Herbalife, where the media quickly identified Soros and Carl Icahn, Herbalife's biggest backer with $16.9 million shares, as the industry's elder statesmen facing off against a younger rival, Ackman. The 47-year-old's Pershing Square Capital Management has a $1.16 billion short bet against Herbalife and is accusing the company of running an illegal pyramid scheme. The company denies that accusation.

Icahn kept his Herbalife holding steady, but Soros has now trimmed its stake to 3.2 million shares from 5 million shares.

The family foundation of Soros' former lieutenant, Stanley Druckenmiller, no longer listed Herbalife on its filing, after having had held 79,032 shares at the end of the third quarter.

Hayman's Bass, another closely followed manager, liquidated his firm's stake by selling 436,371 shares.

Other firms have take some money off the table. Tiger Consumer Management cut its position by 48 percent to 400,000 shares, while Adage Capital Partners cut its stake by 40 percent to 441,276 shares.

Since January, a U.S. lawmaker's calls for regulators to probe Herbalife's business practices has helped push its share price down 15 percent.- Reuters

Kredit: www.thestar.com.my

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