1. Manufacturing companies involved in the lightemitting
diode (LED) business are experiencing a
slowdown in the second half of the year due to an
over-supply situation in the global market. There is
excess supply because some 25 new LED
manufacturers have entered into the market, while
75 LED manufacturers have increased capacity over
the last two years, according to the Austin-based
IMS Research report. Meanwhile, Malaysian
American Electronics Industry (MAEI) chairman
Datuk Wong Siew Hai said the semiconductor and
electronics industry in the country in the second half
was expected to improve compared with the first half
2011. Globetronics Technology Bhd chief executive
officer Heng Huck Lee said that the group's LED
chip products was down by between 5% and 10%
compared with the corresponding quarter last year.
The group managed to find new customers for its
integrated circuits used for hard disk drives, and
high performance timing device used in consumer
electronic products, which will help the sustain
business in the second half. Heng said that
Globetronics will introduce a new range of 10,000
lumens LED module product in November for
customers in the United States and Europe, which
will generate income in 2012. Pentamaster Corp
Bhd executive chairman C.B. Chuah said orders for
the group's LED testers dropped by about 30% to
40% in the third quarter. The group's LED testers,
which are used in determining the brightness,
colours, and electricity characteristics of LEDs,
contribute about 15% of the group's revenue
annually. Chuah said the global economic crisis also
contributed to the slower sales of LED products and
LED testers. Elsoft Research Bhd managing director
C.E Tan said the market for low brightness LEDs
was saturated, and growth was slower. Another
reason that demand was growing slower than supply
was because there had been a large reduction in
LEDs used in televisions and monitor panels since
the third quarter of last year. (StarBiz)
2. Local rubber industry player must take heed and be
prepared for the impact of the European Union's
legislation on rubber and rubber products. UK-based
Tun Abdul Razak Research Centre research director
Dr Stuart Cook said the EU legislation which
covered environmental, health and safety and
medical devices directive, can influence similar
legislation in other countries. In the case of tyre,
which is the largest single product market for rubber,
Cook said the EU environmental legislation would
be looking at tyre labelling particularly on safety
performance, fuel effciency, wet grip and external
rolling noise among others. The EU tyre labelling
regulations will be made mandatory for all tyres
produced after July 2012 and on sale in the EU from
November 2012, said Cook in his paper "Impact of
European Legislation on the Rubber Market" at the
Malaysian Rubber Board's (MRB) International
Economic Rubber Conference recently. Despite the
stringent legislation imposed by the EU, Cook
pointed out that this could create opportunities for
Malaysian rubber players to look at new rubber
grades that can provide tyre with greater safety, fuel
economy or increased use of recycable and
sustainable materials. (StarBiz)
3. The short-term outlook for shop offices and retail
space in the Klang Valley is stable despite concerns
over inflationary pressures as well as reduced rental
yields, property consultants say. A report by DTZ
Nawawi Tie Leung Property Consultants Sdn Bhd
said while the retail market continued to be active,
the rise in the inflation rate would have an adverse
impact on household disposal income leading to
declining purchasing power. The retail sales growth
for 2011 is expected to be maintained at 6% due to
concerns over high oil prices, declining purchasing
power and continuous surges in prices of goods and
cost of operations. The Malaysia Retailers
Association had earlier forecast retail sales growth
at 7% year-on-year for both the second and third
quarters of this year due to the festive celebrations
and after recording a 5.1% growth in the first
quarter. The report also pointed out that the abolition
of duties for 300 selected items in Budget 2011 was
making an impact on tourist shopping expenditure.
The commercial outlook is still relatively strong in
the local property market and new launches are still
coming in at select locations at record prices. There
is still strong investor interest in landed commercial
properties like shoplots due to the vibrant retail
market and the relatively low and attractive interest
rates. (StarBiz)
4. Malaysia plans to come up with its very own national
certification scheme on the sustainable production of
palm oil to tell the world that its oil palm plantations
are grown in a sustainable manner and do not
involve the clearing of virgin forest. Malaysia's oil
palm sector currently does not certify its plantations.
Unlike, the timber sector, the oil palm sector does
not have any illegal felling of trees. However, three
million tonnes out of 17.5 million tonnes of palm oil
products produced last year are certified by the
Roundtable on Sustainable Palm Oil (RSPO).
Plantation Industries and Commodities Minister Tan
Sri Bernard Dompok said the government, together
with the industry, is on the drawing board on how to
come up with the certification scheme. He said the
government is looking at national certification
because even with RSPO-certified palm oil, big
users such as Unilever are still not buying in huge
volume for reasons known only to them. Yusof
added that the certification will emulate Indonesia,
which is also coming up with its own national
certification scheme. National Association
Smallholder Malaysia secretary general Zulkifli
Mohd Nazim said the national certificate will help the
country's over 300,000 smallholders get certified as
the RSPO is too expensive and the smallholders
cannot afford it. (Business Times)
5. Perwaja Holdings Bhd has received approval in
principle from the Terengganu state government to
mine iron ore in Bukit Besi near Dungun. The
approval will help Perwaja bring down its costs,
especially importing and shipping costs significantly.
Ahmad said the approval was given on condition
that there will be job creation and opportunities for
Terengganu youths to acquire the necessary skills in
iron mining and steel milling. According to surveys
done by several geologists, Perwaja estimates that
there's still some 50m tonnes of high grade iron ore
in Bukit Besi and another 25m tonnes of medium
grade in Kemaman. Industry observers felt that
Ahmad did not want to elaborate because of a suit
that is pending court judgment. Two months ago,
China Anshan Corp Sdn Bhd and its joint venture
company, Terengganu Anshan Iron & Steel Sdn
Bhd, filed a suit at the Terengganu High Court. They
claimed that the Terengganu state government, via
Menteri Besar Incorporation, had allegedly breached
its contract over rights to mine iron ore over a 697ha
site in Bukit Besi, Terengganu. (Business Times)
6. According to the latest research report by Bain & Co
Southeast Asia Inc, new capital is increasingly
flowing into Asia with Asia-focused funds wielding
some USD185b (RM548b) in 2010. New capital
under management in Asia surged by 6% and
accounted for 12% of all new global funds raised in
2010. New capital is starting to bypass China and
India and is heading directly to Southeast Asia.
Private firms are raising capital for funds that focus
on a single market in the sub-region. In addition,
nearly 70% of the respondents forecast that they will
invest and much as USD100m annually over the
coming two to three years. The three sectors that
topped private equity fund managers' lists of target
in region were consumer, healthcare and energy.
Nevertheless, survey respondents cited difficulty in
finding attractive companies to invest in and sellers'
inflated price expectations as two of the biggest
constraint on private equity. To recap, the overall
private equity investment activity continued the
steady decline that followed the global financial
crisis, but investor interest in Southeast Asia has
remained consistent and robust. (The Edge Daily)
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