Rising oil prices likely to stall Asian economies with high fuel subsidies
by Stella Lee 04:46 AM May 02, 2011
SINGAPORE - Rising oil prices are likely to weigh down heavily on Asian governments with high fuel subsidies, economists said.
They said that should oil prices continue to rise, fuel subsidies will take a larger share of government spending, which means that there will be less money available for other fiscal projects such as infrastructure.
Most investors expect the demand for oil to remain strong amid the global economic recovery and further helped by concerns over supply due to the unrest in the Middle East.
But they are also concerned about many Asian countries that have significant portions of their budgets allocated to fuel subsidies to help cushion the impact of rising oil prices and how that is likely to affect their economic performance.
With oil prices expected to remain above the US$100 mark this year, economists say this will have implications for Asia's economies.
Malaysia and Indonesia currently have the largest fuel subsidies in South-East Asia costing the economies as much as over 1 per cent of their GDPs. Both are expected to increase fuel subsidies.
Still, most analysts believe both countries, being oil producers themselves, will be able to absorb more subsidies as they will benefit in the form of higher tax collection and royalty payments.
Most vulnerable, they say, will be India, where fuel subsidies will likely increase its budget deficit. Analysts estimate that a US$10 (S$12.24) increase in oil prices will increase the subsidy bill by US$3 billion for India.
Mr Victor Shum, managing consultant at energy consulting firm Purvin & Gertz, said: "Politicians will be under pressure to really maintain the subsidies or increase the subsidies as oil prices rise."
"What will happen is that funds will be diverted from other areas to finance subsides and that is going to hurt economic growth in India, so these subsidies will hurt economic growth," he said.
Higher oil prices also mean more inflation, further cutting back investment spending.
Ms Prakriti Sofat, regional economist at British bank Barclays Capital, said: "You would see prices at the pump increasing, that is passing through to transportation costs, as well as having second-round effects into food and other products. And we are already seeing that, whether it's Singapore, the Philippines, service sectors are increasing quite a lot."
Economists say that the best way to control inflation will be to remove subsidies as higher prices would have an immediate effect of dampening consumption.
Territories such as Korea, Taiwan, Singapore and Hong Kong are the least likely to be affected as they have no explicit oil subsidy programmes in place.
Singapore, which uses an exchange-rate policy, has allowed its currency to rise to help counter imported inflation including the rise in oil prices. Bloomberg
Monday, May 2, 2011
Sunday, May 1, 2011
LOGISTICS: TAILOR-MADE SOLUTION
Revenue matters for speed logistics operator
Time:matters posted record revenue of US$112 million last year and “significantly increased profit” as the specialist speed logistics operator focused on expanding the business.
The independent company, a Lufthansa Cargo spin-off, provides customers with tailor-made transport solutions on short notice, which are especially effective for logistics challenges such as volatile economic situations, strikes or ash clouds.
“We anticipate that the exceptional requirements of 2010 will become standard in the future and are continually adjusting to this development, which ensures we can generate and implement customised solutions for our customers as quickly as possible,” said Franz-Joseph Miller, CEO of time:matters.
The positive developments of time:matters’ European branch offices, as well as the constant strong business growth in Asia, confirm the ongoing strategy of expansion.
Therefore, time:matters expects above-average growth throughout 2015, based on its internationalisation strategy and focus on Special Speed Solutions.
Miller said the company planned to further develop its core business and expand its presence in Europe and Asia.
Time:matters posted record revenue of US$112 million last year and “significantly increased profit” as the specialist speed logistics operator focused on expanding the business.
The independent company, a Lufthansa Cargo spin-off, provides customers with tailor-made transport solutions on short notice, which are especially effective for logistics challenges such as volatile economic situations, strikes or ash clouds.
“We anticipate that the exceptional requirements of 2010 will become standard in the future and are continually adjusting to this development, which ensures we can generate and implement customised solutions for our customers as quickly as possible,” said Franz-Joseph Miller, CEO of time:matters.
The positive developments of time:matters’ European branch offices, as well as the constant strong business growth in Asia, confirm the ongoing strategy of expansion.
Therefore, time:matters expects above-average growth throughout 2015, based on its internationalisation strategy and focus on Special Speed Solutions.
Miller said the company planned to further develop its core business and expand its presence in Europe and Asia.
Port News - Malaysia
Malaysian ports handle 4.78m TEUs in first quarter
Malaysian ports handled 4.78 million TEUs in the first quarter of 2011, an increase of 12.7 per cent over the 4.24 million TEUs recorded in the first quarter of 2010, reported Bernama.
Cumulatively, the nine ports posted positive growth of between two and 18 per cent, with Port of Tanjung Pelepas (PTP) recording the biggest growth of 18 per cent in container traffic.
Port Klang, Northport and Westports solidified their position as the largest container ports in the country, with container throughput rising by 11.6 per cent to 2.25 million TEUs.
Kuantan Port and Bintulu Port however recorded a decline in the quarter reviewed, down by 2.8 per cent and 16.5 per cent, respectively.
Transhipment traffic in the first quarter increased by 19 per cent to 3.23 million TEUs while import grew by four per cent to 764,855 TEUs from 732,634 TEUs previosly.
Malaysian ports handled 4.78 million TEUs in the first quarter of 2011, an increase of 12.7 per cent over the 4.24 million TEUs recorded in the first quarter of 2010, reported Bernama.
Cumulatively, the nine ports posted positive growth of between two and 18 per cent, with Port of Tanjung Pelepas (PTP) recording the biggest growth of 18 per cent in container traffic.
Port Klang, Northport and Westports solidified their position as the largest container ports in the country, with container throughput rising by 11.6 per cent to 2.25 million TEUs.
Kuantan Port and Bintulu Port however recorded a decline in the quarter reviewed, down by 2.8 per cent and 16.5 per cent, respectively.
Transhipment traffic in the first quarter increased by 19 per cent to 3.23 million TEUs while import grew by four per cent to 764,855 TEUs from 732,634 TEUs previosly.
Monday, April 4, 2011
Shipping - Leasing
Leasing Through Labuan Has Attractive Tax Savings For Shipping Industry 
April 05, 2010 15:09 PM
KUALA LUMPUR, April 5 (Bernama) -- Many corporations and small medium enterprises (SMEs) in the shipping business remain unaware of the significant tax benefits involved when leasing ships through Labuan.
As such, they spend more than what is really needed, said Sue Yong, Managing Director of Equity Trust (Labuan).
Speaking at a seminar co-organised by OCBC Bank (Malaysia)Bhd and Equity Trust (Labuan) Limited here recently, she also said the favourable tax regime and regulatory environment in Labuan, has helped both foreign and Malaysian-based companies lower operating costs through innovative leasing structures.
She highlighted that leasing through the Labuan International Business and Financial Centre (Labuan IBFC) involves enormous tax benefits - such as taxation at three per cent of net audited profit or a flat tax of RM20,000 instead of the usual 25 per cent.
Unfortunately, she said many remain either unaware of or indifferent to this opportunity to better manage their funds," she said in a statement today.
The seminar, "Labuan IBFC for Ship Owners," was held at Menara OCBC and attended by participants from various companies involved in the shipping business.
Besides the generous tax benefit, Sue also said offshore companies registered in Labuan, have no withholding tax nor stamp duty on offshore transactions.
She said with the exception of the transportation of passengers or cargo by sea or letting out on charter of ships on voyage or time charter basis, Labuan Offshore Companies are allowed to carry on the leasing of ships on a "bare boat" basis.
The seminar was also told that, with recent changes to the Malaysian insurance law that allows direct access to the reinsurance market through the removal of the requirement for fronting companies, Labuan has become even more cost-effective and attractive.
Speaking at the same seminar, David Kinloch, Chief Executive Officer of Labuan IBFC said that, previously, risk prevention measures required a fronting company that would take up to 10 per cent in commission before reinsuring to a captive insurer.
However, he said with the change in regulation after April 1 last year, a fronting company is no longer required and, with direct access to the reinsurance market, about 50 per cent of costs spent on risk prevention may now be saved.
Kinloch said Labuan is strategically located with access to developing economies such as China and India.
In Labuan, he added, setting up a company is a quick and simple exercise, and approvals come from a one-stop regulator, the Labuan Offshore Financial Services Authority (LOFSA).
He also said that operationally, costs are lower in the jurisdiction without sacrificing quality, with access to expertise and world-class infrastructure.
The half-day event provided an avenue for stakeholders in maritime financing to gain insights into the opportunities at Labuan IBFC and risk-based capital management through captive insurance as well as tax incentives involved.
Commenting on the need for the seminar, Jeffrey Teoh, Head of Commercial Banking, OCBC Bank, said as one of the few banks in Malaysia with a dedicated ship financing team, it has over the last three years undertaken to provide insights into vessel financing for the benefit of those involved in the industry.
"We are aware that the bulk of SMEs operating in the shipping industry are not fully aware of the benefits associated with Labuan IBFC and they are missing out on opportunities that could bring untold benefits," he said.
Teoh also said the thrust of the briefing centred on the question of why a company should lease vessels through Labuan IBFC also consider setting up its own captive insurance company.
He said many companies such as international airlines, and major shipping, oil exploration and real estate companies are already reaping the rewards of having done so.
"By locating their captive insurance bases and/or establishing a leasing company at Labuan IBFC, companies get to enjoy generous tax benefits, innovative products, financial expertise and exceptionally low costs of operation.
"Progressive regulations and clear laws further ensure maximum security and transparency," he explained.
-- BERNAMA
As such, they spend more than what is really needed, said Sue Yong, Managing Director of Equity Trust (Labuan).
Speaking at a seminar co-organised by OCBC Bank (Malaysia)Bhd and Equity Trust (Labuan) Limited here recently, she also said the favourable tax regime and regulatory environment in Labuan, has helped both foreign and Malaysian-based companies lower operating costs through innovative leasing structures.
She highlighted that leasing through the Labuan International Business and Financial Centre (Labuan IBFC) involves enormous tax benefits - such as taxation at three per cent of net audited profit or a flat tax of RM20,000 instead of the usual 25 per cent.
Unfortunately, she said many remain either unaware of or indifferent to this opportunity to better manage their funds," she said in a statement today.
The seminar, "Labuan IBFC for Ship Owners," was held at Menara OCBC and attended by participants from various companies involved in the shipping business.
Besides the generous tax benefit, Sue also said offshore companies registered in Labuan, have no withholding tax nor stamp duty on offshore transactions.
She said with the exception of the transportation of passengers or cargo by sea or letting out on charter of ships on voyage or time charter basis, Labuan Offshore Companies are allowed to carry on the leasing of ships on a "bare boat" basis.
The seminar was also told that, with recent changes to the Malaysian insurance law that allows direct access to the reinsurance market through the removal of the requirement for fronting companies, Labuan has become even more cost-effective and attractive.
Speaking at the same seminar, David Kinloch, Chief Executive Officer of Labuan IBFC said that, previously, risk prevention measures required a fronting company that would take up to 10 per cent in commission before reinsuring to a captive insurer.
However, he said with the change in regulation after April 1 last year, a fronting company is no longer required and, with direct access to the reinsurance market, about 50 per cent of costs spent on risk prevention may now be saved.
Kinloch said Labuan is strategically located with access to developing economies such as China and India.
In Labuan, he added, setting up a company is a quick and simple exercise, and approvals come from a one-stop regulator, the Labuan Offshore Financial Services Authority (LOFSA).
He also said that operationally, costs are lower in the jurisdiction without sacrificing quality, with access to expertise and world-class infrastructure.
The half-day event provided an avenue for stakeholders in maritime financing to gain insights into the opportunities at Labuan IBFC and risk-based capital management through captive insurance as well as tax incentives involved.
Commenting on the need for the seminar, Jeffrey Teoh, Head of Commercial Banking, OCBC Bank, said as one of the few banks in Malaysia with a dedicated ship financing team, it has over the last three years undertaken to provide insights into vessel financing for the benefit of those involved in the industry.
"We are aware that the bulk of SMEs operating in the shipping industry are not fully aware of the benefits associated with Labuan IBFC and they are missing out on opportunities that could bring untold benefits," he said.
Teoh also said the thrust of the briefing centred on the question of why a company should lease vessels through Labuan IBFC also consider setting up its own captive insurance company.
He said many companies such as international airlines, and major shipping, oil exploration and real estate companies are already reaping the rewards of having done so.
"By locating their captive insurance bases and/or establishing a leasing company at Labuan IBFC, companies get to enjoy generous tax benefits, innovative products, financial expertise and exceptionally low costs of operation.
"Progressive regulations and clear laws further ensure maximum security and transparency," he explained.
-- BERNAMA
Saturday, April 2, 2011
GOVERNMENT POLICY
SUKARTI: OUTDATED POLICIES MUST GO | |||
1st April, 2011KOTA KINABALU: In keeping with the times, policies that are outdated and no longer effective must be done away with. “There is a need to formulate new policies that are relevant to meet changes, to face economic and political challenges so as to continue to progress and compete with other countries,” State Secretary Datuk Sukarti Wakiman said when opening a seminar on Politics of Public Policy here yesterday. He said policies to be formulated must benefit the people especially those who have shown they are capable and determined. Sukarti added that while new policies to be introduced must be effective, those who draw up these policies must also be efficient and possessed good knowledge. And, he said that in facing challenges from within and outside the country, everyone in the public service must work very hard in order to achieve success. He also said everyone must be fully committed in order to achieve the objectives of Vision 2020. “Every individual must be prepared to work hard, reinvent themselves, change the way they think, be disciplined and have a sense of urgency in facing the ever increasing global challenges,” he pointed out. Meanwhile, the State Secretary urged all civil servants to play their respective roles in helping to realise the noble efforts of the state government in carrying out the strategies and policies that have been introduced. “This is to enable Sabah to become a high income state in line with the goals of the New Economic Model,” he said. He said civil servant must understand the problems and difficulties faced by the people so that they are able to take appropriate meaures to overcome them. “And we not only must be productive but also creative and innovative in facing future global challenges. They must also think out of the box,” he said matter-of-factly. Yesterday’s seminar was organised by the Cabinet and Policy Division in the Chief Minister’s Department (CMD). The speakers were Prof Madya Datuk Dr Hilmi Abdul Rahman of UiTM Pahang, Datuk Dr Chua Kim Hing of UiTM Sabah and Prof Dr Marina Roseman of Queen’s University of Belfast, Northern Ireland. Also present were director of the Cabinet and Policy Division Yusof Abd Abbas and organising chairman Dr Ismail S. Charles | |||
OIL & GAS
Oil, Gas Industrial Park in Sipitang
by Mariah Doksil. Posted on April 1, 2011, Friday
KOTA KINABALU: Plans are afoot to build an oil and gas industrial park in Sipitang that is expected to create more than 34,000 jobs and contribute more than RM10 billion to the State GDP, according to Industrial Development Minister Datuk Raymond Tan.
The State Government has identified an area with the ideal attributes and logistics for developing the Sipitang Oil and Gas Industrial Park (SOGIP), Tan said at the launch of the first annual Deepwater Offshore Conference & Exhibition World Asia 2011 at Nexus Resort Karambunai yesterday.
“The industries expected to be placed in SOGIP when it is fully developed will contribute greatly to the GDP of Sabah about RM10.62 billion or about 36.61 percent of the current GDP of Sabah at RM29 billion,” he said.
About 34,350 jobs will be created directly or indirectly by the industries, he added.
Tan said Malaysia has targeted Gross National Income (GNI) growth of 5.9 percent per annum and achieving this economic growth is expected to raise consumption by 3 percent, which will have a knock-on effect on the oil, gas and energy sector.
He said the increased consumption will require an additional two gigawatts of installed capacity to be built at a cost of RM9.6 billion, creating an estimated 2,500 jobs and adding RM11.2 billion to GNI.
“The additional transmission and distribution of this energy will create a further RM5.6 billion in GNI and require an investment of RM12.4 billion.
“In the downstream sector this increased consumption will boost GNI by RM1.5 billion and create 3,200 jobs. An estimated 90 new petrol stations will also need to be built at a total cost of RM3.2 billion.
“The most important enabler to ensure the successful realisation of the mentioned business opportunities is adequate supply of qualified domestic human capital.
“The government has to increase the supply of graduates in the next decade to staff the approximately 21,000 new jobs created at or above graduate level by 2020,” he said.
Tan added it is an exciting time for the oil and gas industry in Malaysia, since Sabah has 11 trillion cubic feet of gas and 1.5 billion barrels of oil in reserves.
It has been announced at the convocation of the Institut Teknologi Petroleum Petronas (Instep) here recently that Petronas will build a training school in Kimanis in two years. About 7,000 have graduated from Instep as skilled petroleum technicians and engineers since its inception in 1988.
LOGISTICS - Shuttle Sevice Between Hospitals
Posted on April 2, 2011, SaturdayKOTA KINABALU: Terminating the shuttle bus service from Queen Elizabeth Hospital 1 (QEH) to QEH 2 in Damai, Luyang is a diservice to the public, especially those who do not have their own transportation.
This is because most of those seeking treatment at the government hospital do not have their own transportation.
“The situation is made worse by the fact that QEH is located in an area where public transportation is almost nil,” Luyang assemblywoman Melanie Chia said.According to her, the shuttle service between the two hospitals was stopped on December 31 and this has caused problems to many of the patients as well as their relatives.“The bus service only ply along Jalan Tuaran and Jalan Kolam. There is no public transportation into the Damai area. Maybe City Hall can look into establishing a route for bus service into the area,” she said.While waiting for that to happen, the shuttle service between QEH 1 and QEH 2 must be reinstated immediately, Chia stressed.
Posted on April 2, 2011, Saturday
KOTA KINABALU: Terminating the shuttle bus service from Queen Elizabeth Hospital 1 (QEH) to QEH 2 in Damai, Luyang is a diservice to the public, especially those who do not have their own transportation.
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