Sunday, January 31, 2010

Mobile operators, broadband service providers and pay-TV operators will now know how much it will cost them to ride on TM's fibre optics network


Telekom Malaysia Bhd (TM) (4863), the country's dominant fixed-line operator, has finally revealed the pricing for its High Speed Broadband (HSBB) access to industry players, more than one year after the project was first announced.

This means that service providers, including mobile operators, broadband service providers and pay-TV operators will now know how much it will cost them to ride on TM's fibre optics network to offer services like video-on-demand, Internet protocol television (IPTV), voice call and Internet surfing.

TM met with some 100 industry players in Kuala Lumpur yesterday evening, which lasted over two hours. Besides revealing the prices, TM also made its indicative terms and conditions (ITC) documents available to the players.
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It is believed that most of the industry players came away feeling that the pricing offered by TM was "good" and "reasonable", but remained concerned on how the prices will affect them in the long run.
"I am concerned over the prices five years down the road. (That's because) the HSBB access pricing is not in the official access list under the Malaysian Communications and Multimedia Commission (MCMC). This means that TM may increase the pricing significantly in the future (if it wants to).

"If it was in the access list, then there's a little bit more control," said an industry player who declined to be named.

Meanwhile, TM executive vice-president Rafaai Samsi gave an assurance that the company would not abuse its "power".

"From our understanding, the government/regulator will only step in when there's a market failure. So it is in our best interest to keep the pricing reasonable to all, to avoid a market failure," Rafaai told Business Times in an interview yesterday.

Still, some industry players feel that the HSBB access pricing was complicated.

The pricing comes in two forms: a one-time charge and a monthly recurring charge.

It charges service providers one-time fees of between RM100 and RM200 for activation of each Internet port. On a monthly basis, it charges the service providers between RM50 and RM550 per megabit per second (Mbps) for bandwidth subscription. Different monthly charges are catered for different type of usage.

"The pricing we got was too broad. We will need another discussion with them (TM) personally to get more clarity on the pricing, the timeline as well as the roll-out locations," said an official from Packet One Networks Sdn Bhd.

Still, Rafaai believes that customers will see value in its pricing after studying it in detail.

TM held its first briefing with the industry players March last year to reveal the ITC of the HSBB Transmission service. However, it did not reveal its pricing then.

The launch of the HSBB consumer retail service is on schedule: in March this year in Bangsar, Taman Tun Dr Ismail, Shah Alam and Subang Jaya.

The ringgit is expected to rise against US dollar next week with Asian currencies lending support on positive economic signs in the region, dealers said.

"The ringgit will be well supported at the 3.40 level next week," said one of the dealers, who added that the ringgit may break the resistance level of 3.38 next week.

However, the dealer said that the fundamentals were still weak in the absence of strong leads.

"Any unfavourable news in the United States will downgrade the greenback's value in overseas markets, hence the ringgit is likely to ride on this weakness," he said.


Another dealer said the US Commerce Department will release its fourth-quarter gross domestic product (GDP) data on Friday and negative numbers will encourage investors to take positions on the US dollar.

He did not rule out the possibility of strong buying of US dollars if the data comes in much weaker than expected as most investors preferred to keep the greenback as a "safe haven" during economic crisis.

The local market will be closed on Monday for the Federal Territory Day public holiday.

On a week-to-week basis, the ringgit depreciated against the US dollar to 3.4060/4110 from 3.3940/3990 recorded last Friday.

The local currency declined against the Singapore dollar at 2.4256/4319 from 2.4203/4260 last Friday and was also weaker against the Japanese yen at 3.7748/7820 from 3.7586/7658 previously.

The ringgit, however, strengthened against the euro at 4.7602/7679 from 4.7978/8055 last Friday and also against the British pound at 5.5078/5173 from 5.5183/5281 previously. -- BERNAMA

The Prime Minister said the move by the government to offer several subsidiaries of the Ministry of Finance Inc to private companies is in line with its role as a business facilitator and not as a business entity.

Datuk Seri Najib Tun Razak, who is the Finance Minister, said the government was now identifying the subsidiaries involved which would be offered through open bidding.

He was speaking to reporters after opening the "Digital Pekan 1Malaysia" today.

Also present were Menteri Besar Datuk Seri Adnan Yaakob and Information Communication and Culture Minister Datuk Seri Dr Rais Yatim.


Najib was asked to comment on the statement by Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah yesterday that the government planned to transfer some of the MOF Inc-owned companies to private companies to boost private sector investment.

Najib said: "It's not because the government has no money. Most of these companies are handled by the government, which, in principle, is a business facilitator and not directly involved in the activity." -- Bernama

Sunday, January 24, 2010

PARIS (AP): Hermes stepped back from the fashion fray on Saturday by delivering a collection of timeless pieces that willfully snubbed trendiness.

The storied label's menswear offerings for fall-winter 2010-2011 made nearly no concessions to the fads that have swept other Paris catwalks, including proposing slouchy longjohns as a stand-in for pants and relieving blazers of their sleeves.

Hermes' menswear designer, Veronique Nichanian, served up to-die-for suits with straight-leg pants remarkable only for their perfect cut and sweaters that retired French soccer international Lilian Thuram - a front row guest - said he was already coveting.

"For me, what's important is to have clothes that last and age gracefully," Nichanian told The Associated Press in a post-show interview. "Season after season, I tell the same story - of quality and effortless chic - and the wardrobe of the (Hermes) man gets richer with each season."

Nichanian's sole nods to ever-shifting street-style were the neon orange lining on some of the blazers, and a zip-front jacket in crocodile that looked like the world's most expensive hoodie and the bad boy chains dangling from the belts (albeit sterling silver chains).

The rest of the pieces - which included slim overcoats worn with leather belts, velvet jackets in slate and mauve and cashmere V-neck sweaters - were timeless in a manner befitting a house that has been forging a reputation for handmade excellence since its start as a saddlemaker in 1837.

GEORGETOWN, Guyana (AP): A Canadian company will soon begin drilling for oil and gas in Guyana's southwestern savanna region that borders Brazil.

Calgary-based Groundstar Resources is targeting the Takutu Basin where earlier explorations showed potential for resource-rich deposits, spokesman Dilorece South said late Friday.

The company is building an airstrip and ferrying in heavy equipment to start exploratory drilling in May, South said.

Groundstar Resources is teaming up with Canacol Energy Ltd. to pursue commercial oil production in the South American country. Late last year, Canacol paid Groundstar $3.45 million to buy an additional 35 percent stake in the prospecting license.

Canadian petroleum company CGX Energy Inc. also expects to drill for oil and natural gas deposits along Guyana's eastern coast in late 2010. The drilling would come after a nearly decade-long border dispute disrupted operations in the region.

Spanish-Argentine company Repsol YPF and Exxon Mobil Corp. of Irving, Texas, also have concessions in Guyana's oil-and-gas-rich basin, which experts estimate could contain up to 15 billion barrels of oil and 42 trillion cubic feet of gas reserves.

SAN FRANCISCO (AP): Another newspaper publisher desperate to dump debt has filed for bankruptcy protection in hopes of recovering from an advertising meltdown that has obliterated much of the print media's revenue.

Friday's late filing by Affiliated Media Inc., the holding company of MediaNews Group, had been expected. The owner of 54 U.S. daily newspapers said Jan. 15 that it would seek to reorganize its finances in bankruptcy court.

MediaNews, based in Denver, says its newspapers, which include The Denver Post and the San Jose Mercury News, and 8,700 employees won't be affected during the bankruptcy proceedings. The company also owns four radio stations in Texas and a television station in Alaska.

At least 14 U.S. newspaper publishers have now filed for bankruptcy protection in the past 13 months.

Last year was particularly hard on big newspapers as the industry's print ad sales plunged by nearly 30 percent. Some of the revenue is expected to return as the economy bounces back, but much of it is expected to remain on the Internet, where many marketers are finding they can generate more sales for less money.

Privately held Affiliated Media worked with its major lenders and shareholders during the past year to hammer out a plan aimed at shortening the company's stay in federal bankruptcy court in Delaware. Affiliated hopes to emerge from bankruptcy protection within two months.

The plan calls for Affiliated's debt to fall to $179 million from $930 million, according documents filed late Friday and early Saturday.

In exchange for this $751 million concession, a group of lenders led by Bank of America will become the company's majority owners with 89 percent of the common stock, according to a disclosure statement filed Saturday. The remaining 11 percent goes to MediaNews' management team, which is led by William Dean Singleton, who is also chairman of The Associated Press.

The MediaNews executives will receive warrants that eventually could boost their combined stakes to 20 percent.

Heading into the bankruptcy filing, Singleton held a roughly 30 percent stake in Affiliated.

Richard Scudder, who co-founded MediaNews with Singleton in 1985, will relinquish his interests in the company to the lenders.

Another major newspaper publisher, Hearst Corp., also will surrender a 30 percent stake it acquired in Affiliated's newspapers outside the San Francisco Bay area as part of a complex $317 million deal in 2006.

Singleton will continue to run MediaNews, signaling the lenders remain confident in him despite the company's recent struggles.

The decision probably stems from Singleton's reputation as a hard-nosed businessman who has never shied away from cutting costs, said Alan Mutter, a former newspaper editor who blogs on the media business.

"Who do we know who can go in and run the hell out of a newspaper and make a buck?" he said. "The only answer is William Dean Singleton."

MediaNews spokesman Seth Faison declined to comment late Friday.

"By aggressively facing the challenges of the newspaper business, we will continue to deliver high-quality journalism and will prepare our newspapers for a promising future," Singleton said in a statement Friday.

Affiliated's annual revenue has fallen by $270 million, or 20 percent, during the past two fiscal years, according to court documents.

To cushion the financial blow, Singleton has reduced Affiliated's expenses by $385 million, or 31 percent, since the end of 2006, according to court documents.

Affiliated still lost $582 million as revenue fell 10 percent to $1.06 billion in its last fiscal year ending June 30, the documents show. That came on top of a $406 million loss in the previous fiscal year.

The losses stemmed from accounting charges taken to reflect the crumbling value of its newspapers.

Despite Affiliated's troubles, Singleton says all but one of the company's newspapers are profitable. He hasn't identified which one is losing money.

But Singleton couldn't figure out a way to cope with all the debt that MediaNews took on to expand into new markets. Like other publishers, Singleton borrowed heavily before the Internet and recent recession began to devour the newspaper's main source of income - advertising.

Affiliated is bracing for more tight times ahead. In a disclosure statement, the company discusses possible savings from farming out some production, newsroom and administrative jobs and imposing permanent wage cuts at some newspapers beginning this year.

SAN FRANCISCO: A co-president of software maker Oracle acknowledges he had an affair with a woman he was shown snuggling with on billboards in New York, Atlanta and San Francisco.

Charles Phillips released a statement Thursday about his relationship with YaVaughnie Wilkins after blogs went abuzz over the mysterious billboards.

"I had an 81/2 year serious relationship with YaVaughnie Wilkins," Phillips said.

"My divorce proceedings began in 2008. The relationship with Ms. Wilkins has since ended and we both wish each other well."

This undated photo provided by Jen Gallardo shows a billboard on the corner of 52nd St. and Broadway in New York featuring a photo of Charles Phillips and YaVaughnie Wilkins. Phillips, a co-president of software maker Oracle, acknowledges he had an affair with a woman he was shown snuggling with on billboards in New York, Atlanta and San Francisco. (AP Photo/www.jengallardo.com) MANDATORY CREDIT NO SALES

Wilkins did not respond to calls for comment, and no one has taken credit for the billboards, which were taken down by Friday.

The billboards directed viewers to a Web site, charlesphillipsandyavaughniewilkins.com, which is now out of service.

The site included pictures purported to be of the pair, organized by yearly albums starting in 2001.

The pictures appeared to show Wilkins and Phillips at parties, on vacation and hanging out with friends.

The site also included digital images of love letters supposedly sent to Wilkins from Phillips and recordings of the pair singing karaoke.

The man who designed the site, Bela Kovacs, told The Wall Street Journal that Wilkins commissioned the site in late summer.

Kovacs said he assumed the site was for a happy couple and he never met Phillips.

Kovacs told The New York Post that Wilkins told him the site, which cost about $1,400, was a gift for Phillips.

A former Marine, Phillips is a co-president of Redwood Shores-based Oracle Corp.

According to the company's Web site, he was appointed last year to President Obama's Economic Recovery Advisory Board. - AP



CHENNAI: Indians spent almost RM500 million over the last seven years purchasing properties in Malaysia, making them the fourth biggest property buyers in Malaysia.

International Trade and Industry Minister Datuk Mustapa Mohamed said after Singapore, United Kingdom and South Korea, cash-rich Indians have emerged as major investors in Malaysia's property sector.

"India is now the fourth highest buyer of properties, they have a growing strong middle-class with good purchasing power.

"And, the close connectivity to Malaysia from India, and also the commonalities between both countries are some of the reasons why more Indians are coming to Malaysia to buy properties," Mustapa told reporters at the Malaysia Property Expo 2010, which opened in Chennai on Saturday. -- Bernama

The property market in Malaysia is on an upward trend with middle class suburban property prices rising driven by the steady stock market movement.

Ho Chin Soon, director of Ho Chin Soon Research, a property company that specialises in land use and ownership maps, said the KLCI which has been moving upwards from 2009 to 2010, will be a catalyst for the property market.

"However, the high-end and high-rise property market is still in a cautious mode with property developed by branded developers expected to do well," he said during a talk on "2010 Asian Equity and Property Outlook" on Saturday.

"Sentiment will be much better this year onwards, provided the economy holds up," he said.


Ho said demand for high rise properties in Kuala Lumpur was expected to continue due to limited land space.

"High rise residential units in KL generally grew some 12 to 18 per cent per annum for the past 15-20 years. Whatever small growth that KL has is channeled into high rise projects," he said.

Another prime property location was also in Mont Kiara in Kuala Lumpur where development has become more commercial, he said.

Elsewhere in the region, Ho said the property markets in Singapore and Hong Kong were doing exceptionally well with property prices shooting up.

Ho said Malaysia was relatively sheltered from the global financial crisis (compared to the Asian financial crisis) and there was still an upside potential in property investment in Malaysia.

Another speaker, Joanne Goh, senior equity strategist and vice president of group research in DBS Bank, said sustainable growth was expected this year with Asian economies projecting a six per cent growth while the G3 countries were forecast to grow at two per cent this year.

The "continuation of the governments' stimulus programme in Asia this year will benefit economic growth in the various countries concerned," she said during the seminar.

"Stock markets in Asia, excluding Japan, are fairly valued with a minimum 15 per cent upside on earnings growth," she said.

However, Goh warned that there will be economic risk concerns this year.

"There is still economic growth concerns this year such as the effect of the expected rising interest rates and developments in the United States such as the unemployment rate," Goh said.

She said while there were concerns that interest rates could go up due to pressures from cost push inflation such as rising oil prices, materials and business costs, the numbers will not be scary.

"The low interest rate enviromment will likely continue," she said.

Another effect that could have an impact on stock markets was the impending World Cup this year whereby bourses were expected to be quiet before and after the event, she said. -- Bernama

Thursday, January 21, 2010


A Starbucks outlet in Somerville, Massachusetts, the United States. — Reuters pic

SEATTLE, Jan 21 — Young people wearing hoodies and chunky glasses are sipping microbrew beers and espressos, nibbling on cheese and baguettes made at a local bakery and listening to a guitarist strum and sing.

The scene could be at any independent coffeehouse around the United States. Instead, it is at a Starbucks-owned shop called 15th Avenue Coffee and Tea.

The new store, one of two in Seattle1s trendy Capitol Hill neighbourhood, grew out of a series of brainstorming sessions by a group of Starbucks employees after Howard D. Schultz, Starbucks1 chief executive, told them to “break the rules and do things for yourself.”

The directive was part of his effort, since he returned as chief executive two years ago, to turn the struggling company around by injecting the multinational chain with a dose of the urgency, nimbleness and risk-taking of a start-up company.

“We lost our way,” he said. “We went back to start-up mode, hand-to-hand combat every day” to find it. “And with the kind of discussion and focus that probably we had not had as a company since the early days — the fear of failure, the hunger to win.”

There are indications that Starbucks1 turnaround efforts are working. Yesterday, the company reported that in the first quarter, which included the important holiday season, net income was US$241.5 million (RM821 million), up from US$64.3 million in the year-ago quarter.

Revenue climbed 4 per cent, to US$2.7 billion. Same-store sales were up 4 per cent, reversing steady declines. In the last year, the company1s stock has nearly tripled to US$23.29, though that is still significantly below the record high of nearly US$40 in 2006.

But even if Schultz, who bought the first six Starbucks stores in 1987, still sees the company through an entrepreneur1s eyes, it is no longer a start-up and its stores are not local coffeehouses. Some analysts wonder whether Starbucks is refusing to accept its new identity.

“That kind of resonance it had at one point is going to be hard to recapture,” said Bryant Simon, a history professor at Temple University and author of a book about Starbucks titled “Everything but the Coffee.” “It1s his own sense of the brand overtaking what1s doable right now.”

When Schultz returned in January 2008, Starbucks had just posted its first quarterly decline in the number of transactions at stores in the United States. As the chain opened a record 2,571 stores in 2007, the onetime growth stock lost 42 per cent of its value.

Then, in a one-two punch, consumer spending plummeted, and Starbucks, selling a luxury rather than a necessity, was one of the first to feel the pinch. Meanwhile, competition emerged from a new corner of the market when McDonald1s began serving espresso.

When Schultz, standing at the bar in one of the new Seattle shops and sampling espressos with whole milk, talks about Starbucks, he uses phrases like “the authenticity of the coffee experience” and “the romance, the theatre of bringing that to life.”

But that does not match the reality of many Starbucks customers, who rush through each morning on their way to work, or many of its former customers, who have rejected the chain1s cookie-cutter shops in favour of small local shops that serve more carefully made coffee.

Schultz1s first job upon returning was to halt the marathon store openings, lay off 1,500 United States store employees and 1,700 global corporate employees and figure out how to get the remaining 150,000 to think like employees of a scrappy little company that just wants to serve a good cup of coffee. Starbucks1 coffee buyers, for example, had chosen only varieties of beans that were produced in large enough quantities to supply all Starbucks stores. They rejected coffees made in small batches, which artisanal coffeehouses specialise in. Schultz changed that. “We1re not one size fits all.”

Even as Schultz tries to manage more like a start-up founder, he has given in to traditional big-company ideas that he had previously resisted. Last year, Starbucks embraced customer research surveys and ran its first major advertising campaign.

Entrepreneurs, more than traditional chief executives, “keep shaking things up and pulling the stakes out of the tent because they like the mud and the chaos of reinventing, and Howard has a bit of that in him,” said Warren Bennis, founder of the Leadership Institute at the University of Southern California, who has known Schultz since the mid-1990s.

But he has also noticed that Schultz has developed “more gravitas, more depth.”

Bennis added: “I don1t think he1s going to become the classic entrepreneur who can invent but doesn1t manage.”

Schultz brought Cliff Burrows, who was managing stores abroad, back to Seattle to run American operations. One of the first discoveries he made talking to customers seemed basic, but had been lost in Starbucks1 push to open stores.

Coffee drinkers in the Sun Belt, it turns out, prefer cold drinks, while those in the Northeast generally like drip coffee and those in the Pacific Northwest drink more espresso. Yet the executives in charge of regions of the country were divided along time zones and out of touch with what different customers wanted.

Burrows shifted the geographic divisions. “All of a sudden you start to see it1s not a numbers game — it1s about consumers influenced by where they live,” he said.

Schultz also recruited Arthur Rubinfeld, who had left the company in 2002, to return as president of global development in charge of choosing sites and designing stores. To shed the sameness, Rubinfeld is trying to give each store a feeling of “local-ness,” he said, reflecting the neighbourhood and its architectural history.

At the University Village store in Seattle, for example, there is a long communal table hewn from an ash tree that fell in the Wallingford neighbourhood of Seattle, and it is lined with electrical outlets because at night it is filled with students studying.

At the Starbucks stores in the Capitol Hill neighbourhood, bunches of wildflowers sit in mismatched jugs on tables found in antique shops. Beans are ground to order and poured through a cone like those used in artisanal coffeehouses. On the outdoor patio, coffee grounds are piled in a bucket with a handwritten sign encouraging neighbours to take them for composting in their gardens.

One customer, Joshua Covell, was visiting from San Francisco, where he said he never went to Starbucks. “All the Starbucks have that cookie-cutter feel,” he said. “It1s natural not to like corporate giants, but you can see they1re trying.”

But Sylvia Lee, a doctor who lives in the neighbourhood, said she was excited when she saw the shop was opening — until she discovered it was owned by Starbucks. “No one wants to be the duped customers won over,” she said.

For Starbucks, the stores are partly learning laboratories. Some of the things they sell, like small-batch beans and brewed-to-order cups of coffee, will appear in other stores.

But they are also venues for Schultz to scratch his start-up founder1s itch. He said he planned to open similar stores in other cities, complete with local artists1 work and salvaged furniture. “I think we1ll be able to scale this in a similar fashion at a lower cost.” — NYT

Monday, January 18, 2010



BAGHDAD: Iraq gave final approval Sunday to a deal by a Shell-Petronas led consortium to develop one of its largest oil fields, marking a crucial step toward the nation's postwar rebuilding by boosting the production of its most lucrative resource.

Royal Dutch Shell PLC and its partner, Malaysia's state-run Petronas, won the right to develop the 12.5 billion barrel Majnoon field last month during Iraq's second postwar bidding round.

As part of the deal, Shell and Petronas will pay the Iraqi government a $150 million signing bonus.

At a Baghdad signing ceremony, Oil Minister Hussain al-Shahristani hailed the deal as a "major step that will transform the region from an area of misery and deprivation into a prosperous one."

Shell Chief Executive Peter Voser said his company looks "forward to a good cooperation with the government," but he refused to say how much money will be spent on the project.

The oil deal for Majnoon, located in Basra province near the Iranian border, was one of seven that the Iraqi government awarded last month.

The 20-year contract calls for the companies to be paid $1.39 per barrel produced above current output levels.

The businesses have said they hope to raise production from the current 45,900 barrels per day to 1.8 million barrels per day by 2020.

The Majnoon field was discovered in 1976 and was partially developed until the Iran-Iraq war halted work there in the early 1980s.

Oil production resumed in 2002.

For Iraq, the oil deals mark a crucial step forward in the country's so-far faltering bid to raise oil output.

Although it sits atop the world's third-largest proven reserves of conventional crude oil, Iraq produces a comparatively modest 2.5 million barrels per day, of which about 1.9 million barrels a day are exported.

Decades of neglect of the fields have been compounded by the effects of the fighting and sabotage after the 2003 U.S.-led invasion to oust Saddam Hussein.

That violence has meant that Iraq has been unable to even reach its prewar output levels of oil.

Crude oil sales account for roughly 90 percent of the government's budget.

Of the seven deals awarded in December, Iraq's Cabinet has approved four, including Majnoon.

The Cabinet has asked for changes to proposals for the remaining three - awarded to consortiums led by Russia's private oil giant Lukoil, China's CNPC and Russia's Gazprom _ before signing off on them as expected by the end of the month.

On Monday, the Iraqi government will give final approval to a contract to develop the Gharraf field in the southern Nasiriyah province, which is believed to hold 863 million barrels of oil.

That deal, won by a partnership between Petronas and Japan's Japex, seeks to pump 230,000 barrels from Gharraf daily by 2023, for $1.49 per barrel.

On Jan. 26, the government is scheduled to sign off on contracts to let Angola's Sonangol develop two oil fields in the northern province of Ninevah, about 225 miles (360 kilometers) northwest of Baghdad.

Sonangol will be paid $6 per barrel produced from the Nejma field, which holds an estimated 858 barrels, and it plans to raise output to 110,000 barrels per day by 2019.

The company also is seeking to develop the nearby Qayara field for $5 per barrel.

There are an estimated 807 million barrels in Qayara, and Sonangol plans to produce 120,000 a day within nine years.

Last June, Iraq awarded only one oil deal, to BP PLC and its partner CNPC of China, for the 17.8 billion-barrel Rumaila field in Basra.

The field is the nation's largest, and two other foreign business consortiums have since revised their bids to develop two other prized oil fields nearby.

Al-Shahristani said one of those deals - a partnership among Italy's Eni, U.S.'s Occidental Petroleum Corp. and South Korea's KOGAS - will be approved next Friday.

He said oil production from those fields could boost output to 12 million barrels per day within by 2017, although some analysts call that an overly optimistic target. - AP



BRUSSELS: The euro is in a rough spot. And it could be there for years.

The economic and financial crisis has ballooned budget deficits in Greece, Ireland and several other member countries - exposing one of the underlying vulnerabilities of Europe's decade-old experiment in a multinational currency.

While few think the 16-country currency zone will actually break up, holding it together through the unfolding debt crisis will mean painful, unpopular measures such as budget cutbacks and higher taxes.

German Chancellor Angela Merkel said in a speech Wednesday that "the euro is in a very difficult phase for the coming years."

And Daniel Gros, director of the Centre for European Policy Studies in Brussels, foresees "lean years ahead and there is very little that European leaders can do about it."

Jean-Claude Trichet, the head of the European Central Bank, faced several questions at his monthly press conference last week about the possible breakup of the euro.

He brusquely dismissed them: "I do not comment myself on absurd hyptheses."

The problem: The eurozone has one currency and one central bank, the Frankfurt-based ECB - but 16 governments.

Before the euro, the governments went their own way on spending.

But since big budget gaps can undermine a currency, the euro members agreed deficits should stay below 3 percent of a country's economic output every year.

So forecasts that Greece's 2009 deficit was set to hit at least 12.5 percent of gross domestic product, and Ireland's 11.7 percent have spread shock waves.

Both countries have announce plans to cut spending and raise taxes.

More trouble is ahead as the euro's states suffer very differently from the crisis, with Spain's jobless rate hitting 19.4 percent in November - the most recent figures available - far ahead of 3.9 percent in the Netherlands.

It will be a challenge for the European Central Bank to find one interest rate to stimulate laggards and, at the same time, prevent inflation in growing economies.

The pain level is already high enough that a few voices are asking whether it's worth it.

Irish economist David McWilliams is advocating the end of his country's "loveless marriage" with the currency.

That would let Dublin instantly devalue its currency to make exports more competitive.

It could also attract jobs to Ireland through comparatively cheaper wages.

"We need a break. We can't keep cutting expenditure when there is no offsetting stimulus coming from a cheaper exchange rate, which allows the trading sector to grow," McWilliams wrote in Ireland's Sunday Business Post newspaper on Jan. 10

But the Irish government is adamant that it won't leave - winning praise from EU officials for massive cutbacks to public spending, cutting government wages 10 percent and demanding every worker pay at least 1 percent last year to plug the budget gap.

Not all is negative.

The euro weathered the first months of the crisis well.

Membership spared Greece and Ireland the currency devaluations that savaged nonmembers Hungary, Iceland, and Ukraine.

Indeed, the euro's exchange rate has remained strong, at times rising in value as investors turned to it when the dollar tumbled. It traded around $1.44 on Friday.

Russia's reserve holdings of euro outweighed dollars for the first time last year.

Ukraine even asked Russia to pay recent gas transit fees in euros, not dollars.

And quitting would not be pretty, according to Barry Eichengreen, an economics professor at the University of California, Berkeley.

In a September 2009 paper for the International Monetary Fund he describes a currency devaluation that would scare investors and devastate savings.

"A systemwide bank run would certainly follow," he wrote.

"This would be the mother of all financial crises. And what sensible government would willingly court this danger?"

Gros at the Centre for European Policy Studies says the current course of making cuts to bend to the EU rules is "the lesser evil."

He sets little store on frantic plans by EU officials to draw up a recovery strategy that promises to generate jobs by making labor markets more flexible, knocking down barriers to business between European countries and focusing on a green, innovation-based economy.

Down the road, the medicine offered by the EU's executive commission may work - but the immediate costs may be hard to bear.

Denmark is touted as a model for Europe with a "flexicurity" system that allows businesses dismiss workers at short notice, gives generous welfare benefits to the unemployed and encourages them to retrain for other jobs.

Following that example and scrapping some labor market rules that make it expensive for companies to hire and fire workers - will likely raise hackles among trade unions in Spain, Italy and France.

Gros sees these only as solutions for the long term.

"There's nothing that can really give a boost in the short run to overcome the effects of this crisis, but that is something that policy makers cannot accept publicly," he said.

"This is very painful process which will take a long time." - AP



KUALA LUMPUR: Asian stock markets were largely down in morning trade Monday taking their cue from the fall in the Dow Jones on Friday.

The U.S. market retreated by 0.9-1.2% last Friday as investors sold financial stocks after JP Morgan Chase & Co.reported a loss at its retail banking and raised loss reserves for consumer loans, Hwang DBS said.

In its morning note to clients, it said taking its cue from the external development, the benchmark FBM KLCI may see a slight retracement today, widening the gap from the psychological mark of 1,300.

Meanwhile, the immediate support would be at 1,280 which we think is unlikely, the house said.

At 10.15 am, the FBM KLCI was down 0.22% to 1,295.7.

Tokyo’s Nikkei 225 shed 1.70% to 10.795.46 while Seoul’s Kospi was down 0.35% to 1,695.83.

At Bursa, rubber stocks extended their losses from Friday with Latexx falling 26 sen to RM3.92, Top Glove 20 sen to RM11.18, Hartalega and Latexx-WA 14 sen each to RM6.92 and RM3.45 However, IRC added six sen to RM1.43.

Tech-related stock MPI fell 22 sen to RM7.28 as investors locked in gains from Friday.

Others like Pentamaster continued thier run rising eight sen to 61.5 sen with 14.4 million shares done.

Nymex crude oil lost 69 cents to US$77.31per barrel.

Spot gold added 30 cents to US$1.131 per ounce.

The ringgit was quoted at 3.35 to the US dollar.

Wednesday, January 13, 2010



TOKYO: Shares in Japan Airlines Corp. nosedived 81 percent to just 7 yen Wednesday as the money-losing airline was expected to file for bankruptcy protection as early as next week.

Investors dumped JAL shares Wednesday, with the stock dropping 30 yen - the maximum one-day decline allowed in JAL's stock - from Tuesday's finish of 37 yen.

The Nikkei 225 stock average lost 0.9 percent to 10,781.92 in the morning session.

Japan's top business daily Nikkei and the major daily Ashai said Asia's biggest airline was expected to file for bankruptcy protection as early as Jan. 19 with its shares to be delisted.

"The reports that JAL shares are to be delisted spooked investors. Investors continued to sell its shares because they could well become just worthless," said Yutaka Shiraki, senior strategist at Mitsubishi UFJ Securities Co. Ltd.

Kazuho Inamori, founder of electronics component maker Kyocera Corp., is reportedly expected to head JAL during the restructuring.

A Kyocera spokeswoman said Inamori is to meet Wednesday with officials from the state-backed corporate turnaround body responsible for JAL's restructuring.

As part of JAL's restructuring, the turnaround body is also considering setting up a budget airline, Kyodo News agency said Wednesday.

While the Japanese airline is teetering toward bankruptcy, its access to Asia is a prized asset for other airlines.

Delta Air Lines Inc. - the world's biggest airline operator - and its rival American Airlines are vying for a stake in JAL as they seek to expand their Asian networks.

American Airlines, along with its alliance partners, on Tuesday boosted its offer of support to Japan Airlines to keep the money-losing airline with the oneworld family.

American, British, Airways, Qantas Airways and Cathay Pacific Airways said they are ready to inject $1.4 billion cash into Japan's flagship carrier, up from $1.1 billion. In addition, they will guarantee $2 billion in revenue over the next three years if JAL stays in the oneworld alliance.

Delta and its SkyTeam partners, for their part, have offered $1 billion, including $500 million in cash.

Following its bankruptcy filing, JAL is to slash about 15,600 jobs - 33 percent of its group work force - under a restructuring plan being hammered out by the state-backed corporate turnaround body, Kyodo has said.

The Enterprise Turnaround Initiative Corp. of Japan, which is responsible for JAL's restructuring, will ask banks to forgive 350 billion yen ($3.8 billion) of debt owed by the airline, the Nikkei said during the weekend. - AP

LONDON: Malaysia wants more British investments in the aerospace industry and financial services sector, says Deputy Prime Minister Tan Sri Muhyiddin Yassin.

He said Malaysia was a viable location for manufacture of aircraft components, maintenance, repair and overhaul for both regional and global markets.

"Aerospace companies in the United Kingdom should take advantage of Malaysia's International Aerospace Centre established by the government to develop Malaysia into a regional aerospace centre by 2015," he said when addressing 16 British investors here.

Muhyiddin, on a five-day official visit to Britain from Sunday, said the Malaysian Government had announced comprehensive tax incentives that include tax holidays and allowances to further promote aerospace industry growth in Malaysia.

Malaysia was now on a higher plane of industrialisation, focusing on attracting quality and high technology investments, capital intensive, high value-added, knowledge-based and skills-intensive operations, incorporating activities like design and development and research and development programmes, he said.

"Our priority sectors are advanced electronics, information and communications technology, machinery and equipment, biotechnology, medical devices and renewable energy," he said.

Muhyiddin said the government had announced additonal liberalisation measures in the financial services sector which include increasing foreign equity participation in the banking and insurance sectors.

He said Bank Negara Malaysia had also signed a memorandum of understanding with the UK Trade and Investment, a government agency, to promote Islamic Finance and business linkages between the United Kingdom and Malaysian financial institutions.

"With the growing interest in Islamic banking, British banks are invited to collaborate with Malaysian banks in the Islamic financial services areas to enter the financial markets, not only to serve the Asean region but also the Middle East," he said.

The government had also announced deregulation of investment guidelines administered by the Foreign Investment Committee in the areas of acquisition of equity stakes, mergers and takeovers, acquisition of properties and treatment of funds raised by listed companies, he said.

Muhyiddin said the deregulation would strengthen Malaysia's attractiveness as the place to do business and to invest for Malaysians and foreigners alike.

The Deputy Prime Minister said the government was also in consultations with service providers to identify additional services sub-sector for liberalisation.

He said this was achieved in line with Malaysia's commitment to Asean and the World Trade Organisation to enhance Malaysia's stature as a competitive investment environment for the services sector.

Muhyiddin said the government was promoting the setting up of regional establishments. Among them are operational headquarters, international procurement centres and regional distribution centres for which attractive incentives are being offered to investors who set up such operations.

To date, some 2,600 regional establishments have set up operations in Malaysia, of which 53 are from the United Kingdom.

Muhyiddin said Malaysia had also emerged as an important hub for shared services, data centres, back offices and customer service centres.

On medical tourism, he said the government was also promoting healthcare tourism industry by offering incentives to entrepreneurs and investors.

"This include converting the status of foreign patients entering Malaysia for medical treatment on emergency via "Visa On Arrival" to social visit pass," he said.

On pull factors, the Deputy Prime Minister said Malaysia had provided and would continue to provide political and social stability, strong economic fundamentals to ensure the momentum for economic growth and business potentials, strong public sector support and collaborations and business-friendly policies, highly-productive workforce and global trade linkages.

The other factors are availability of a wide range of both fiscal and non- fiscal incentives including pre-packaged customised incentives for projects and activities targeted for development by the government, added Muhyiddin who was former International Trade and Industry Minister. - Bernama

KUALA LUMPUR: The establishment of a Joint Business Council (JBC) between Pakistan and Malaysia is in the final stage.

The Pakistan High Commissioner to Malaysia, Lt Gen (Rtd) Tahir Mahmud Qazi said the formation of the JBC, is being undertaken by both the National Chamber of Commerce and Industry of Malaysia (NCCIM) and the Federation of Pakistan Chamber of Commerce and Industry (FPCCI).

In a statement here on Wednesday, he added that the purpose of the JBC is to foster friendship and understanding between the business communities of Malaysia and Pakistan.

"The objective is also to enhance the existing level of trade and investment between the two countries.

"At the same time, it is to facilitate the transfer of technology, strengthen cooperation in services and other sectors of economic activities as well as the exchange of information on trade and investment related matters," he said.

WASHINGTON: A senior administration official says President Barack Obama is ready to announce an administration plan to recover Wall Street bailout shortfalls with a bank fee on America's biggest financial firms.

The announcement is expected Thursday.

The official was not authorized to discuss the fee publicly.

The official said the fee would be designed to recoup as much as US$120 billion.

That's the most administration officials expect to lose from the government's US$700 billion Troubled Asset Relief Program that bailed out banks, automakers and other financial firms.

Most of the TARP losses are expected to come from auto industry rescues and the bail out of insurance conglomerate American International Group Inc. - AP

Monday, January 11, 2010

Clothes are hung to dry outside public housing estate flats in Singapore. The republic expects unemployment to stay high for some time. — Reuters pic

SINGAPORE, Jan 11 — The Singapore government said today it expects unemployment to stay high for some time and growth momentum to slow in the second half of this year, though the risk of a double-dip recession is low.

The comments from the country's trade minister come after data showed last week that the economy contracted in the fourth quarter of 2009 having emerged from recession earlier that year. A second straight quarter of contraction would meet the common definition of recession. "The risk of a return to recession is low in the absence of further financial shocks," Minister for Trade and Industry Lim Hng Kiang told Parliament.

"But growth momentum in the second half of 2010 may slow down as the effects of global fiscal stimulus measures and inventory restocking wane," he said.

Singapore's recovery from its worst recession faltered in the fourth quarter as the economy shrank 6.8 per cent on a seasonally adjusted and annualised basis, reflecting weaker manufacturing, preliminary data showed last week.

Singapore's government expects growth this year of between 3 per cent and 5 per cent compared with an estimated contraction of 2.1 per cent in 2009, the GDP estimates released last week showed.

Lim said pledges among members of the G20 and the Asia Pacific Economic Cooperation meant that protectionism, which could derail global trade and growth, had been largely kept in check.

"Growth in 2010 may also be derailed if creeping trade protectionism becomes more prevalent and causes global trade flows to contract again. But the likelihood of this scenario is low," he said. — Reuters


PERTH, Jan 11 — Oil prices bounced over 1 per cent and topped US$83 a barrel today, thanks to a hobbled US dollar and weekend data that showed China's crude oil imports surging by over 25 per cent to more than 20 million tonnes in December.

Concerns over gasoline supplies following a fire at Korea National Oil Corp's Newfoundland refinery in Canada, and cold weather in the US and Europe, are also lending support to prices.

US crude for February delivery rose 60 cents to US$83.35 a barrel by 0225 GMT, after having risen earlier by 1.1 per cent. The contract settled up 9 cents at US$82.75 a barrel on Friday.

London Brent crude gained 59 cents to US$81.96.

"The Chinese trade data is providing very strong underlying support. Combined with the US dollar weakness and cold weather in the northern hemisphere, the market fundamentals are now very strong," said Michelle Kwek, an analyst at Informa Global Markets in Singapore.

"In the near term, we could see prices test the US$85 levels and the longer-term target would be around US$90."

But oil is still 43 per cent below its July 2008 high of more than US$147 a barrel.

China ended 2009 with record monthly imports of crude oil and soybeans and a strong appetite for iron ore and copper, while its aluminium and steel sectors saw a welcome increase in export volumes.

Monthly crude oil imports in the world's second-largest energy consumer leapt above 20 million tonnes for the first time ever in December, reaching 21.26 million tonnes, up almost a quarter from November, according to Customs data published yesterday.

Hopes that the frigid weather in the United States will help spur a drawdown in swollen oil inventories in data shown later this week are also keeping prices supported, analysts said. The US dollar deepened losses today, with the index falling 0.4 per cent against a basket of currencies, extending its biggest loss in six weeks after US jobs data disappointed on Friday.

US employers unexpectedly cut 85,000 jobs in December, cooling optimism on the labour market's recovery and keeping pressure on US President Barack Obama to find ways to spur job growth.

Weak demand in the United States and other developed economies have weighed on oil prices, with energy markets looking to wider economic data for signs of a turnaround.

With little economic data due this week, analysts said traders will seek directions from the equities markets and possible news from the Chinese government on its economic policy.

US stocks could be in for a bumpy ride this week as three Dow components kick off the quarterly earnings reporting season, with investors clamouring for reassurances on future profits.

On the supply side, Chevron said on Saturday it had been forced to shut down 20,000 barrels per day (bpd) of crude oil production in Nigeria, a day after security sources said gunmen had attacked a pipeline operated by the US firm.

Mexico's three main oil exporting ports in the Gulf of Mexico remained closed yesterday afternoon due to bad weather, the government said. — Reuters

KUALA LUMPUR, Jan 11 — Manufacturing sales declined 8.1 per cent to RM41.9 billion in November last year compared with November 2008.

The figure was also a drop by 6.2 per cent from the preceding month of October, the Statistics Department said in a statement today.

On a cumulative basis, the sales value of the manufacturing sector from January to November 2009 was down by 21.2 per cent to RM426.9 billion compared with the previous corresponding period.

The decline in sales from the RM45.6 billion registered in November 2008 was due to the drop in the sales value of 58 industries out of 116 industries covered under a survey, the department said.

The five major industries with significant decreases were refined petroleum products (38.6 per cent), computer and computer peripherals (14.9 per cent), basic iron and steel products (14.2 per cent), motor vehicle (14.9 per cent) and that of other basic precious and non-ferrous metals (34.5 per cent).

On a month-on-month basis, the drop in November from preceding October was the result of lower sales value in 78 industries out of 116 industries covered in the survey.

Decreases were registered in the five major industries including the manufacture of refined petroleum products (9.4 per cent), computer and computer peripherals (18.1 per cent), basic iron and steel products (16.2 per cent), electronic valves and tubes and printed circuit board (11.3 per cent), and television and radio receivers, sound and video recording or reproducing apparatus, and associated goods (8.1 per cent).

In November 2009, total employees engaged in the manufacturing sector was 942,013, an increase of 0.3 per cent from the preceding month but was 3.6 per cent lower than the 977,068 persons employed in November 2008.

Total employees in October 2009 stood at 938,780 workers.

For the January to November period 2009, the number of employees engaged decreased 3.6 per cent to 942,013 persons compared with the previous corresponding period, it added.

In terms of salaries and wages, it said a total RM2.02 billion was paid during the month under review, up 0.3 per cent from the preceding month and was an increase of 2.1 per cent from a year ago.

In terms of productivity or average sales value per employee, it decreased 6.5 per cent month-on-month in November to register RM44,441. — Bernama

KUALA LUMPUR, Jan 11 — The Barisan Nasional government will today get a respite from the negative publicity that has enveloped the country in the past few weeks when a Chinese government-linked company announces a plan to pump a massive US$11 billion (RM37.4 billion) into Sarawak.

Government officials told The Malaysian Insider that the foreign direct investment by the State Grid Corporation of China will be spread over a few years and will involve developing the energy and manufacturing sectors in the Sarawak economic corridor.

The investment is likely to be announced at the signing of an operation framework agreement between SGCC and 1Malaysia Development Berhad (1MDB) today.

The signing ceremony will be witnessed by Prime Minister Datuk Seri Najib Razak and Sarawak Chief Minister Tan Sri Taib Mahmud.

It is unclear if details of the FDI will be unveiled today. But earlier news reports suggested that the SGCC will provide technical expertise and capital, while 1MDB will help facilitate the investment.

The Sarawak economic corridor was one of the growth corridors launched by former Prime Minister Tun Abdullah Ahmad Badawi. Like the Northern Corridor Economic Region and the Sabah Development Corridor, the Sarawak corridor has not progressed much due to lack of government funds and foreign investments.

The Najib administration has targeted cash-rich China as a source of much needed FDI for Malaysia.

During Hu Jin-tao’s visit to Kuala Lumpur in November last year, Najib. communicated the government’s desire for more involvement from China to develop infrastructure in Malaysia.

This courting of Beijing has been made necessary by two facts: Malaysia’s growing budget deficit impairs the government’s ability to fund development projects and the inability of Malaysia to compete with the likes of India, Vietnam, China, Thailand and Singapore for foreign investments.

This investment by SGCC will be the single largest inflow of funds into the country in recent years and will give an administration which has been clobbered with numbing news of missing jet engines and unprecedented arson attacks on churches an opportunity for some positive headlines.

Monday, January 4, 2010

Published: Sunday January 3, 2010 MYT 8:03:00 AM

LOS ANGELES - Some U.S. football fans and "American Idol" devotees can breathe a sigh of relief. Fox and Time Warner Cable have reached a deal in principle that will keep the network on the cable television provider after Fox threatened to pull the plug over a fee dispute.

Friday's agreement, which included Bright House Networks, ended a week of public sparring that had some viewers worried they'd miss Friday night's Sugar Bowl, Saturday's Cotton Bowl and Sunday's professional football lineup, as well as an array of other programming.

Fox had been threatening to force Time Warner Cable and Bright House to drop the Fox broadcast signal from 14 of its TV stations and half a dozen of its cable channels as a contract expired at midnight Thursday.

But signals were extended into Friday as talks continued, allowing more than 6 million cable subscribers in New York, Los Angeles, Orlando, Florida, and other markets to continue viewing programs.

Neither company would divulge the terms of the deal. Fox wanted to be paid $1 per cable subscriber each month for the broadcast signal it had once given away freely from the stations it owns. Other Fox affiliate stations that are owned by different companies had already cut deals to be paid by cable operators for a fraction of that fee.

"We're pleased that, after months of negotiations, we were able to reach a fair agreement with Time Warner Cable - one that recognizes the value of our programming," said Chase Carey, chief operating officer at News Corp., which owns Fox.

Time Warner Cable Inc. Chief Executive Glenn Britt said he was "happy to have reached a reasonable deal with no disruption in programming for our customers."

Politicians and regulators had gotten in on the dispute, especially because Fox sends its signals out freely on public airwaves on a frequency it obtained for nothing, with the obligation that it serve the public interest.

Federal Communications Commission Chairman Julius Genachowski congratulated both companies and his staff for the deal. But Sen. John Kerry, a Massachusetts Democrat, raised concerns about the effectiveness of a 1992 cable law that allows broadcasters to seek compensation from cable and satellite operators for their signals.

"I will reach out to both parties, the FCC, and consumer advocates to assess lessons learned from this dispute and what, if any, changes to law are necessary," Kerry said in a statement.

Fox said it could no longer give away its stations' signals to cable companies because the network is facing stiff competition from cable channels, such as the Walt Disney Co.'s ESPN, which earn subscriber fees on top of advertising dollars.

That dual revenue stream allowed ESPN to outbid Fox for high-priced events such as the college football Bowl Championship Series - including the Sugar Bowl, Fiesta Bowl and Orange Bowl that are now on Fox - from 2011 to 2013.

Time Warner Cable, in the meantime, had vowed to hold the line on cable bill increases, and said the vast of majority of viewers who went to its Web site, www.rolloverorgettough.com, urged it to "get tough" and fight back against higher costs.

 

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