The Star Online: Business
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- M'sia trade from January-October up 3.4% to RM1.13 trillion
- Saab wins jet deal as NSA scandal sours Boeing bid
- End of boom? Not for Australia’s iron miners
| M'sia trade from January-October up 3.4% to RM1.13 trillion Posted: KUALA LUMPUR: Malaysia's total trade between January and October this year rose by 3.4% to RM1.13 trillion from RM1.09 trillion in the same period last year, according to Malaysia External Trade Development Corp (Matrade). Chief executive officer Datuk Dr Wong Lai Sum said exports rose by 0.9% to RM591.83bil and imports were up 6.3% to RM540.38bil, both compared to the same period last year. "We foresee total trade value will surpass last year's by year-end, taking into account the world economic climate and demand," she told a media briefing on Matrade's 2014 trade promotion activities here yesterday. In line with Matrade's aim to accelerate Malaysia's export growth next year, it has planned 147 trade-promotion activities. "These comprise participation in international trade fairs, specialised marketing missions, in-coming buying missions, joint promotion activities and organisation of Malaysia International Halal Showcase, Malaysia Services Exhibition and International Trade Malaysia," Wong said. One of the new initiatives Matrade would undertake for 2014 is the high-impact GoEx programme. The programme is aimed at enhancing the competitiveness, contribution of exports and internationalising small medium enterprises (SMEs) through market immersion. "This programme also aims to have 50 export-ready SMEs and to boost exports by 30% annually with five new buyers established for each company per market," she said. She said this was in line with the Government's objective to ensure that SMEs contributed 40% to gross domestic product and 20% to exports by 2020. The industry sectors that will be covered by trade promotion activities include oil and gas, maintenance, repairs and overhaul, electrical and electronics, information communication technology, chemical and chemical products, transport equipment, logistics, medical devices, building materials, machinery, lifestyle, biotech and halal products and services, processed food, construction and professional services and business services. She said Matrade would also host industry-specific international events in Malaysia – the Offshore Technology Conference Asia and Kuala Lumpur International Aerospace and Defence Business Convention next year. "More than 60% of the promotion programmes planned will be in Asia, as it is expected that this region will continue to be the global economic powerhouse to propel growth in trade. "A total of 36 programmes, or 29% of trade promotion activities, will be within Asean," she said. – Bernama |
| Saab wins jet deal as NSA scandal sours Boeing bid Posted: BRASILIA/SAO PAULO: Brazil awarded a US$4.5bil contract to Saab AB on Wednesday to replace its aging fleet of fighter jets, a surprise coup for the Swedish company after news of US spying on Brazil helped derail Boeing's chances for the deal. The contract, negotiated over the course of three presidencies, will supply Brazil's air force with 36 new Gripen NG fighters by 2020. Aside from the cost of the jets themselves, the agreement is expected to generate billions of additional dollars in future supply and service contracts. The deal is the largest-ever foreign order for the Saab Gripen, building momentum for a programme that has consistently undercut competitors on price, senior executive Lennart Sindahl said in an interview. Chicago-based Boeing Co and France's Dassault Aviation SA were also contenders for the contract. The timing of the announcement, after more than a decade of off-and-on negotiations, appeared to catch the companies involved by surprise. Even Juniti Saito, Brazil's top air force commander, said on Wednesday that he only heard of the decision a day earlier in a meeting with President Dilma Rousseff. Brazilian officials said the deal, one of the most coveted emerging market defense contracts, went to Saab because it provided the most affordable option, as well as the best conditions for technology transfer to local partners. The choice, Defense Minister Celso Amorim said, "took into account performance, the effective transfer of technology and costs - not just of acquisition but of maintenance." NSA RUINED IT Until earlier this year, Boeing's F/A-18 Super Hornet had been considered the frontrunner. But revelations of spying by the National Security Agency in Brazil, including personal communication by Rousseff, led Brazil to believe it could not trust a US company. "The NSA problem ruined it for the Americans," a Brazilian government source said. A US source close to the negotiations said that whatever intelligence the spying turned up for the American government was unlikely to offset the commercial cost of the revelations. "Was that worth US$4bil?" the source asked. The lament echoes recent complaints by Cisco Systems Inc, which said in November that a backlash against US spying hurt demand for its products in China. In a statement, Boeing called Brazil's decision a "disappointment," but added that it would continue to work with Brazil to meet its defence requirements. Dassault, for its part, said it regrets Brazil's decision and called Saab's fighter inferior to its Rafale jet. "The Gripen is a lighter, single-engine aircraft that does not match the Rafale in terms of performance and therefore does not carry the same price tag," it said. Saab says the next-generation Gripen NG has a lower operational and maintenance cost than all fighters currently in service. The company has one prototype of the Gripen NG flying and another in production. The Swedish and Swiss armed forces have ordered the updated model for delivery starting in 2018. Under the terms of their agreement, Brazil and Saab will now finalise contract details within a year. The first jet is expected to be delivered two years later, with about 12 of the aircraft expected each year after that. SECURING VAST BORDERS Brazil coexists peacefully with all of its South American neighbors and has no ongoing conflicts. The country, however, is eager to fortify its military as it considers the long-term defence of its vast borders and abundant natural resources. "We are a peaceful country, but we won't be defenceless," Rousseff said on Wednesday at a lunch with military officials. Brazil's decision unexpectedly wraps up a prolonged decision-making process. French President François Hollande had personally lobbied for Dassault last week during a state visit. Boeing, for its part, was so committed to winning the contract that it opened a big corporate office in Brazil and named Donna Hrinak, a former US ambassador to the country, as its top executive there. The timing of the announcement surprised many analysts, who believed that the slowdown in Latin America's biggest economy, coupled with Rousseff's expected bid for re-election next year, would delay the purchase until 2015. Indeed, the decision coincides with pressure on Rousseff from economists, the private sector and political opponents to curb public spending. Having initially increased the federal budget to spur growth, she now faces growing criticism because of stubborn inflation and a grimmer fiscal outlook. Still, the country's current fleet of Mirage fighters, which the new jets will replace, is so old that the air force this week is taking them out of service. Brazil's government said the money to pay for the jets would not come out of the budget until 2015, after the contract is finalised. LOCAL PARTNERSHIP Analysts said the Gripen's cost advantage stems from its relative simplicity compared with competing jets. "The Gripen is more accessible in terms of technology," said Richard Aboulafia, an analyst at the Teal Group, a Virginia-based research company for aerospace and defense. "It's something Brazil could conceivably build itself." At the briefing in which they announced their decision, government officials said Brazilian aircraft maker Embraer SA would be Saab's main local partner. The transfer of technology is crucial to help Brazil develop future generations of fighter aircraft. "There isn't necessarily a need to produce all the parts in Brazil," Amorim, the defense minister, said. "What's important is that specific aviation technology is transferred to Brazil so we can develop it." The Gripen, which can fly up to twice the speed of sound, will be the first supersonic aircraft made in Brazil. Still, Boeing's loss is a setback for Embraer's recent collaboration with the US company. Boeing has offered to help with development and sales of Embraer's upcoming military cargo jet, providing a key ally to crack the coveted US market. Boeing said the decision would not affect the company's ongoing commitment to expand its presence in Brazil or its partnerships with Embraer and other Brazilian companies. The delta-winged Gripen, which is Swedish for Griffin, first entered service in the late 1990s and is flown by the Swedish, Hungarian, South African, Thai and Czech air forces, according to Saab's website. Saab shares rose 1.84% to 133 krona on Wednesday, their highest close in 10 days. Earlier in the day, they rose as much as 5.7% to 138 krona, a five-month high. Boeing shares fell 0.13% to $135.70 in New York, while Dassault Aviation fell 0.4% to 920 euros in Paris – Reuters. |
| End of boom? Not for Australia’s iron miners Posted: VALLEY OF THE KINGS, AUSTRALIA: A fleet of charter flights ferry thousands of workers to and from this outback mine site. The resort-like housing offers gourmet food, cheap alcohol, swimming and well-equipped gymnasiums. Australian iron ore mining seems immune from the spending crunch afflicting other commodities as a slowdown in Chinese growth cools a decade-long mining boom. Rio Tinto, BHP Billiton and Fortescue Metals Group are bulking up in Western Australia's iron-rich Pilbara desert as if the mining boom had never ended. A place where capital expenditure is still measured in the billions. The miners are speeding up transformation of an area the size of Peru into a moonscape of rust-red pits linked via thousands of kilometres of rail lines to giant iron ore ports perched on the easternmost edge of the Indian Ocean. "All this discussion about the end of the mining boom, we don't see it," said Fortescue Chief Executive Nev Power, before leading uniformed workers through dawn exercises at the company's King's mine. "We sell all we mine." The chief executive, who left school as a teenager to work in a copper mine, laughs and groans along with the workers through repetitions of star jumps. Alluding to the riches below the ground, Fortescue named this area after ancient Egypt's Valley of the Kings, where Tutankhamun's tomb was unearthed. Ore lies close to the surface. It is simply shovelled up and carted to rail cars. So many trains run to and from the mines that some producers now pay farmers flat annual fees to compensate for cows killed crossing tracks. BARBECUE PITS Miners are digging so fast, it's hard to keep up. Australia this week revised up its estimate for exports for the fiscal 2013-14 year to a record 650 million tonnes from 615 million just three months ago. Powered by Chinese demand, iron ore prices have shot up from under US$87 a tonne in September 2012 to around US$134. On the other hand, copper prices have slumped 12% this year, while gold, nickel and aluminium offer little or no profit margins. While Australian miners in some of these sectors have lost their jobs, iron ore firms such as Fortescue are still prepared to lavish expenditure on mining hubs. By dusk, many Fortescue staff change into shorts and t-shirts and head to barbecue pits or one of two cafeterias for dinner. Others will swim laps in the Olympic-size pool, workout in the gym or spend an evening in a private air-conditioned suite surfing the Internet or watching cable TV. In more populated areas of Australia, where coal is mined, workers have to find their own accommodation sometimes sleeping three to a room. Shifts in the Pilbara typically run 10 days on and six days off. Most workers fly home to Australian cities, while some opt for the Indonesian resort island of Bali, a short flight away. PAST SINS Warnings by Goldman Sachs, UBS and others iron ore would tumble as low as US$70 a tonne in the third quarter proved unfounded. In fact, it ended the quarter 12% higher. Driving up prices is China, which buys most of Australia's ore and where steel demand is growing by 8% a year. Fortescue, despite dabbling in copper and gold and looking at shale oil, remains entirely dependent on iron ore. "If the iron ore price goes, so goes most, if not all their profits," said Eagle Mining analyst Keith Goode. BHP and Rio Tinto also risk alienating investors traditionally buying their stock for exposure to a diversified portfolio. Even buffered by its oil and gas business, BHP would have seen its last full-year earnings before interest and tax drop to US$10bil from the US$21.1bil it reported without iron ore. Rio Tinto, the world's biggest aluminium producer and a top five miner of copper and producer of a dozen other commodities, last year derived all but a fraction of earnings from iron ore. Citigroup estimates miners have cut capital spending budgets by US$19bil, or 5%, after some disastrous investments in struggling metals like copper and aluminium. "Iron ore is covering a multitude of sins committed by these companies," said Morningstar analyst Mark Taylor – Reuters. |
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