Business sector prefers targeted MCO in selected areas

Public health efforts to stop the spread of Covid-19 should be reflected in a more area-centric movement control order (MCO) so that unaffected areas in the Klang Valley are free, say those in the business sector. They feel that the areas placed under the current conditional MCO are too vast covering areas with little or no cases, thus demotivating economic activities that are much needed now to stimulate the market. Malaysia Retail Chain Association (MRCA) president Shirley Tay said the targeted enhanced MCO should be imposed in places with infections to effectively curb the virus spread upon identification. As footfall at malls and retail spaces were still badly affected, Tay said such targeted control would at least allow some economic activities in unaffected areas to go on. Tay noted that business failure would lead to loss of employment for many Malaysians. “If such sentiment persists, the SMEs will go down the drain in no time,” said ACCCIM committee chairman for SMEs Koong Lin Loong, adding that while the market needed consumers to spend, Koong said the government must instil confidence among the people with targeted enhanced MCO at specific red zones instead of a wider district movement restriction. (The Star Online)

Property, construction stocks surge ahead of more details on HSR project

Shares in property and construction counters surged today in an apparent reaction to the progression of the Kuala Lumpur-Singapore High Speed Rail (HSR) project amid talks between Malaysia and Singapore leaders about the megaproject with details expected to be announced this month. Bursa Malaysia’s Property index rose as much as 2.3% to a near nine-month high of 687.01 while the Construction index surged as high as 1.48% to an almost six-month high of 179.92 yesterday. “The property and construction sectors should be the beneficiaries if HSR moves on. This is coupled with the recovery theme after the vaccine announcement for several rounds,” said Malacca Securities Sdn Bhd head of research Loui Low. Market breadth was positive across the two indices on hope that the country’s megaproject, which is currently up for review, will see end-tunnel lights. Prime Minister Tan Sri Muhyiddin Yassin and his Singapore counterpart Lee Hsien Loong in a joint press statement yesterday said that both countries were in discussion and would announce further details on HSR ahead of the deadline. (The Edge)

Global banks face considerable risks in 2021

Although most banking systems entered the crisis in good shape following a decade of balance-sheet strengthening, the recent resurgence in coronavirus cases highlights the risk of further economic deterioration. This uncertainty, along with dissipating support measures going into 2021, poses considerable risks for banks, underpinning Moody’s Investors Service’s negative outlook for global banking systems. These outlooks broadly reflect the risk that weakening operating conditions, particularly in key sectors such as hospitality and retail, will lead to a deterioration in loan performance and profitability, and potentially undermine confidence in banks, as seen in past crises. Among this group, Italy and India are most exposed to the economic and fiscal consequences of a shock to the financial sector. In addition, increased corporate debt burdens will add to banks’ asset risks, and as supportive measures ease, corporate default rates will rise. (Bernama)

Multi-tier levy system for foreign workers postponed to July 2021

he multi-tier foreign worker levy system, which was scheduled to take effect on Jan 1, 2021, has been postponed to July 1, 2021, said Home Minister Datuk Seri Hamzah Zainudin. He said the move was taken after considering the impact of the COVID-19 pandemic on industry growth and business operations. “Besides that, the meeting also decided to review the levy rates for the multi-tier levy system for each sector to ensure the effectiveness of its implementation later,” he said. Hamzah said the inaugural meeting also agreed to the proposal to close the employment of foreign workers for the frozen sub-sectors of metal/scrap and recycling. He said the foreign worker’s reduction and termination plan in the sub-sectors would be implemented in stages in the next three years. (Bernama)

MoF: UEM and EcoWorld proposed merger does not require Cabinet approval

The proposed merger of UEM Sunrise Bhd and EcoWorld Development Group Bhd, which was put forth by UEM Group, does not require the approval of the Cabinet, said Minister of Finance Tengku Datuk Seri Zafrul Tengku Abdul Aziz. Tengku Zafrul said the proposal was mooted based on the potential commercial benefit the merger could bring, and that it only requires the approval of the respective companies’ boards of directors, as it is a matter relating to the operation of companies. On Oct 5, UEM Group said it has proposed the merger of its property development arm UEM Sunrise with EcoWorld, via a swap of shares and warrants between the two companies. It was reported yesterday that the Securities Commission Malaysia (SC) had approved UEM Sunrise’s application for more time to announce any firm intention to make a takeover offer for EcoWorld, and now has until Jan 31 next year to make its announcement. (The Edge)