Regional Notes 2018.04.13

Indonesia’s newest unicorn now wants to take on the big boys

Indonesia has an e-commerce market that McKinsey & Co. says can be one of the fastest-growing in the world, part of a digital economy adding $150 billion a year to gross domestic product by 2025.

Internet businesses present an attractive alternative to consumers struggling with inflation and worsening traffic congestion. Bukalapak’s aim is to profit by bridging between buyers and sellers scattered across more than 700 islands.

Pharmaniaga’s Indonesian business ‘doing very well’

“There are currently no vaccine plants in Malaysia. We are on the right track to make sure that the facility is made available. We are currently in the process of doing feasibility studies. We expect to have our first commercial batch by 2024,” Farshila said, adding that the plant would be ready between 2020 and 2022.

Moving forward, Pharmaniaga also plans to continue reducing its dependency on its concession business, which contributes 49% to total earnings currently. It plans to do this by having a better share in the private sector.

“We are also now aggressively registering our products in the EU region. We have managed to register two products so far. EU has a different set of standards but we are in compliance with that,” she said.

Pharmaniaga currently has more than 200 products, with more than 60 of them halal-certified. According to its annual report, the group expects to receive halal certification for more than 150 pharmaceutical products by the end of 2019.

The pharmaceutical group has a 10-year concession agreement with the health ministry, which began on Dec 1, 2009. The concession enables the group to supply and distribute pharmaceutical products to medical institutions under the ministry via its logistics and distribution division until 2019.

HKMA intervenes to buy local currency, first time since ’05

With record foreign-exchange reserves, the HKMA is in a strong position to defend its city’s currency, and there’s no evidence that the trading band is under sustained speculative attack. The authority’s deputy chief executive Howard Lee said Friday morning that the banking system has ample liquidity and can cope with capital outflows, which are within expectation. He said interest rates are likely to rise incrementally and gradually.

The intervention is still significant because the HKMA’s purchases have the potential to boost borrowing costs by draining liquidity. That would signal the end of an era of ultra-cheap money that made Hong Kong the world’s least affordable market for housing and propelled equities to all-time highs.

Singapore favors ‘organic’ policy in move toward open banking

The transition towards “open banking” can be more successful if it takes place without the regulator mandating action, said David Hardoon, Chief Data Officer at the Monetary Authority of Singapore. “You can come and say ‘thou shall do it’ but then nothing happens effectively,” Hardoon said in a Wednesday interview.

The MAS’s policy differs from the approach taken in Europe and Japan, where regulators have set deadlines for banks to give access to their client data to rivals and to fintech firms. In Europe, banks have until 2019 to comply with the revised Payment Services Directive (PSD2), which obliges them to share client account data.

BNM governor urges industry players to drive RPP promotion

“One such area is through the publication of open application programming interfaces, better known as open APIs. Based on our interaction with the banking community, there is interest for this among our banks. BNM’s survey last year indicated that more than 50 per cent of banks in Malaysia view open API as a high priority. Thus the industry should leverage on open API to facilitate collaboration with financial technology firms to introduce innovations and facilitate new use cases to enhance the RPP’s value proposition to businesses and consumers.”

“Of the Malaysian adult population of 24 million, we estimate that about 10 million do not use online banking, while two million remain unbanked. We look to the industry, both banks and non-banks, to come up with new and imaginative ways to accelerate the onboarding of these underbanked and unbanked segments of our society.”

Company Notes 2017.09.08

SCGM registers RM5.6m net profit

“We have witnessed eight consecutive quarters of double-digit growth in domestic sales of thermo-form packaging, not only because of higher demand from retailers following the ban on polystyrene packaging, but also because of its relative low-cost and space-saving in storage.

“Our upcoming new plant in Klang Valley, which is on track to commence by the end of this month, will be well-positioned to capture the demand from Central and even Northern Peninsular Malaysia.”

The group has allocated RM20 million in capital expenditure for machinery. With five thermoform machines and two extruders, the Klang Valley factory would have a production capacity of 5 million kg per annum.

Axiata unit makes its biggest deal

Axiata Group Bhd’s subsidiary edotco Group Sdn Bhd is buying more than 13,000 telecommunications towers in Pakistan for US$940 million (about RM4 billion) to strengthen its position as one of the world’s independent tower companies.

With its existing portfolio of over 26,000 towers owned and operated across six countries, the deal will effectively place edotco as the eighth largest independent tower company in the world and second largest multi-country tower operator globally.

Fajarbaru wants a slice of action in current construction boom

“We will continue to tender for construction projects. But you see, jobs coming from the property development side will be passed on to our construction arm and [will] keep it busy for years to come.”

…“has a good chance” of getting its hands on the anticipated 37km light rail transit 3 project which connects Bandar Utama to Klang, and that it had tendered for five contracts under the RM9 billion project, including for the development of a depot, viaduct and stations.

“By possessing these machines, this also makes Fajarbaru one of the few private organisations to own such equipment, giving us a significant competitive advantage in the bidding of new construction and maintenance jobs for rail-related projects in the future.”

Fajarbaru’s unbilled order book currently stands at about RM400 million and it is expected to last the group for at least two more years, according to its finance director Charles Tan. Its tender book, which consists of railway, infrastructure and building projects, now stands at about RM4 billion.

…the timber segment will “continue to generate significant contributions to the group’s revenue, on the back of stable average prices of timber products”.

Money changing biz in Malaysia expected to hit RM80b this year, says association

“Many tourists are still coming into Malaysia judging by the flight arrivals, also there is a high turnover in the money changing business from Malaysians who work in Singapore and Brunei, who convert their [higher denomination] currencies here.”

Ramasamy said the wholesale currency business, which recorded transactions totalling RM10.6 billion in 2016, is also expected to grow by approximately 40%. However, he noted that remittances are expected to drop by about 7% this year. Total transaction value of remittances had dropped 1.9% to RM34.4 billion in 2016, compared to RM34.9 billion in 2015.

According to BNM’s Financial Stability and Payment Systems Report 2016, the total amount of Money Services Business (MSB) transactions in Malaysia, consisting of money changing, wholesale currency and remittance totalled RM118.5 billion in 2016, up 14.7% compared to RM103.3 billion in 2015.