Budget that braces for tough times


Broad measures spelt out under Budget 2020 will likely sustain the economy, if there is no further escalation in trade fights.

A glimmer of hope emerged after the US outlined the first phase of a deal to settle some issues related to trade, but there is a lingering suspicion that China could be just buying time as it will most likely not concede to any loss of sovereignty.

China is developing its own ecosystem that could be “outside the reach” of the US, and it is possible that the time bought with such rearguard actions may allow China to achieve its aims.

Malaysia, a trade dependent economy, can only hope that it all works out well, if it can integrate into both ecosystems, said Inter-Pacific Securities head of research Pong Teng Siew.

More stimulus measures would be undertaken should the global economy worsen and in the worst case scenario, Malaysia would have room to spend more if it increases the budget deficit, currently at 3.2% of the gross domestic product (GDP).

The worry is that a further deterioration in global trade tensions may push the global economy into recession. If that does not happen, these Budget 2020 measures should be able to sustain the economy, according to RHB Research Institute chief Asean economist Peck Boon Soon.

Given the external headwinds that continue to pose more downside risks, it looks like Budget 2020, which attempts to spread out its positive effects, has been designed to brace for rough times.

Some positive impetus could be derived from measures to support tourism, construction and infrastructure, as well as small and medium scale enterprises (SMEs), said AmBank Research head Anthony Dass.

Tourism-related businesses such as food and beverage, accommodation, travel and transport, shopping and entertainment will likely benefit.

Recognising the importance of SMEs in driving growth, a string of measures to facilitate their financing needs, ease of doing business, faster adoption of high technology and green initiatives, should also bode well.

The bottomline is that resources are limited while the government still aims for fiscal consolidation and repayment of all debts.

Spreading out these scarce resources will probably succeed in paring off any broad-based slowdown, but it will be hard to make a dent when the sense of a loss in economic momentum is gradually settling in, said Pong.

More measures are required to stimulate the economy but in view of the gloomy global outlook and domestic issues, it is still overall, a good budget.

However, the allocation between capital and operating expenditure is still imbalanced; there is too little capital expenditure and there appears to be ‘little effort’ to reduce operating expenditure.

This will have a long term effect, especially in an aging society, according to Areca Capital CEO Danny Wong. In view of concerns over the lack of investments and falling revenue, efforts to boost foreign direct investments and tourism are welcome but more robust steps are required.

A correction in property prices may be a remedy for the overhang and inaffordability issues especially among young people.

The budget tries to forestall a price pullback, which would affect developers stuck with high land prices, by allowing foreigners to fill the demand gap.

But demand has evaporated, partly caused by the migration of mid-level talent and delays in household formation, the driver of long term demand and new home construction. Developers, lulled by the padding of demand through low interest rates for borrowers, high financing margins and easy access to debts, find it hard to lower prices.

They had thought the elevated level of demand was sustainable but it was not. Reduced prices may mean less profits but possibly a lifeline by way of cashflows, and may help restore delays in household formation and loss of talent, said Pong.

A worrying trend is that more and more young Malaysians are moving out of the country in search of jobs.Even mid-level expertise and talent is migrating; previously, it was mostly those who were highly mobile internationally.

A major cause is the lack of growth in real purchasing power.

Is the projected GDP growth of 4.8% achievable?

With the government continuing its spending and development initiatives, growth should remain robust, supported by services and construction, higher production from agriculture and mining. But manufacturing is expected to moderate.

Malaysia can achieve its 4.8% growth target, said Hong Leong Bank chief operating operating officer, global markets, Hor Kwok Wai.

However, in view of slower world GDP growth of 2.8%, AmBank Research expects growth of 4.0% with an upside of 4.3% for Malaysia.

Coming up with a further set of stimulus, should things worsen, may be a challenge.

Columnist Yap Leng Kuen is watchful of the tech war. The views expressed are the writer’s own.

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‘Budget 2020 favours the rich’

 

 


Budget 2020 is a capitalist budget that neglects the poor, says …

 

 

Viewing trade talks progress with rationality, calmness

Ending the trade war benefits whole world

Both China and the US still have resources to sustain a  trade war, but further consumption of those resources is unnecessary  since their goals have proved naive and absurd. The situation is still highly uncertain, but the historical indicators will gradually be corrected. China and the US will not get lost and the world will benefit from the implementation of the consensus reached by the two heads of state, assuming the responsibility to both countries and the world and moving steadily towards the final end of the trade war in stages.

 

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Recession fears can by itself be a self-fulfilling prophecy


 

AS talk of a recession picks up, a veteran fund manager, Ang Kok Heng of Phillip Capital Management Sdn Bhd, correctly points out that the Malaysian stock market has been in “recession” in five of the six years since 2014.

Hence, he does not envisage how it can get worse for the Malaysian stock market if the global economy does go into a recession next year. Fears of a global recession have picked up pace based on the behaviour of the US yield curve.

The yield curve, which charts the spreads of US debt papers of various tenures, has inverted several times in the past few weeks. Most people would not understand what an inverted yield curve means.

Simply put, it means long-dated debt papers of 10 years giving lower returns compared to shorter-term debt papers such as two-year US Treasuries. It causes what is called an inverted yield curve.

It goes against the normal behaviour of US Treasury yields because long-term debt papers should give a higher return than short-term papers.

The consequence of an inverted yield curve is that it will lead to banks reducing their lending activities because their margins are narrow. Eventually, it results in companies reducing their activities and the country going into a slowdown or recession.

An inverted yield curve has been the precursor to all past recessions (see diagram).

However, there are some who are disputing the fears of an impending global recession based on the behaviour of the bond yield curve. Their reason is that the bond yields are not behaving as what they should due to the governments all around the world printing money to keep interest rates artificially low since 2009.

Interest rates have become so low to the extent that European banks are offering no returns on deposits. This means depositors do not get any money for keeping their money in the banks. Borrowers instead get discounts on their installments.

It’s happening in Europe because government bond yields there have turned negative.

For instance, the yield on 10-year Switzerland bonds is negative 0.74%, while German bonds of a similar tenure yield negative 0.52%. From France to Denmark, government debt papers have negative yields.

Only some countries such as Portugal and Spain still have positive yields on their debt papers.

Analysts believe that this has resulted in investors resorting to buying US debt papers that still offer positive yields. Hence, the price of bonds across all tenures in the US has gone up, causing their yields to come down.

The search for yields has also resulted in the narrowing of the difference between what the two-year and 10-year debt papers offer. And there have been several occasions in the last one month when the yield on the 10-year paper was lower than the two-year debt papers.

Apart from the behaviour of the yield curve, the other indicator that is seen as a precursor to a recession is the declining manufacturing sector all around the world caused by the trade war between the US and China. The Purchasing Managers’ Index (PMI), which is a leading indicator to assess the state of the economy, has been declining for all major economies.

For Malaysia, the PMI has been less than the 50-point benchmark for almost a year now. The same trend is seen in China, while the indicator has started to decline in the US in the last few months, which some see as a result of the trade war.

The trade war has caused supply disruptions, impacting the manufacturing sector.

However, there are other indicators that do not indicate a recession is imminent.

Banks are fairly well-capitalised and have pulled the brakes on lending. We do not hear of banks being impacted by major corporate defaults except for some financial institutions in China. Malaysian banks, for instance, have weathered the storm quite well so far, thanks to Bank Negara keeping a tight rein on their lending activities.

There has not been any run-up in asset prices. Property prices in countries such as Malaysia have remained subdued since 2015 after Bank Negara pulled the brakes on lending. Since 2014, Bursa Malaysia has closed lower every year, except for 2017.

The only exception of rising asset prices is Wall Street that has soared to record highs. Stock prices are hitting all-time highs due to improved earnings growth.

Technology companies such as Apple and Amazon are US$1 trillion companies. The other technology companies such as Facebook and Alphabet are enjoying growing valuations because of earnings growth.

No other stock exchange in the world has such a large concentration of technology companies than the exchanges on Wall Street. All technology companies, even from China, want to list on Wall Street.

Even Alibaba is listed on the New York Stock Exchange and not in Hong Kong.

It has been 11 years since the last recession, but the world’s central banks have resumed their printing of cheap money to keep interest rates low. The European Central Bank has resumed quantitative easing, while the US Federal Reserve is reducing interest rates. In essence, central banks are taking these measures to prevent a slowing economy going into recession.

In the meantime, it has caused fear among people and companies. Companies are holding back on spending, and in fact, cutting down on their debt.

A clear indicator is in the US where companies raised the most amount of corporate debt. Apple and Disney raised US$7bil worth of debt papers to reduce their borrowings.

In Malaysia, corporations have been deleveraging for the past few years in anticipation of a slowdown. Companies are not expanding, as indicated by the declining private-sector gross capital formation.

It is only reasonable for companies and people to save for the upcoming rainy days. Even governments are cautious in spending. For instance, in the upcoming Budget 2020, many are expecting the government to start spending. But there is also a view that the government will adopt a cautious stance as it continues to strengthen its balance sheet and reduce debts.

If nobody spends for fear of a recession, it would be a self-fulfilling prophecy.

Most people are expecting a recession, meaning negative growth. Fear of a recession has translated into a slowdown that the world and Malaysia are experiencing. If this fear continues to perpetuate, a recession would be a self-fulling prophecy.

It is good to be fearful, but being too fearful and conservative will also result in lost opportunity.

As Ang of Phillip Capital puts it, in times when fears of a recession seap in, cash must be held to seize opportunities. Holding cash as an investment is not a wise option.

By M. SHANMUGAM , The views expressed here are solely that of the writer. Source link

 

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Yes to Belt and Road – Everyone will benefit from BRI


Centre of attraction: China’s President Xi Jinping greeting Dr Mahathir as he leaves with Russian President Vladimir Putin after the opening ceremony of the Second Belt and Road Forum in Beijing, China.

Dr M endorses the BRI – ‘Many countries are going to benefit from initiative’

With help from Chinese firms, Malaysia will have an AI park soon. That’s not all the good news that came from the Prime Minister’s trip to China. Businessmen are pleased that Tun Dr Mahathir Mohamad has given the thumbs up to the Belt and Road Initiative. He says countries in its route will be the beneficiaries. And that means Malaysia too. WITH all of China as his stage, Tun Dr Mahathir Mohamad gave a massive endorsement to the country’s Belt and Road Initiative (BRI), saying all will benefit from the ease of travel and communication the development strategy will bring.

The Prime Minister said that with trade driving the world, it was only natural that land and sea passages be better developed.

“The Silk Road, the land passage between East and West, has not received much attention. Yet it must be obvious that with modern technologies the passage can be improved.

“Without a doubt, the utilisation of these passages will enrich all the littoral states along the way, as much as the great nations of the East and West. I am fully in support of the Belt and Road Initiative. I am sure my country, Malaysia, will benefit from the project,” he said in his speech at the High-Level Meeting of the Second Belt and Road Forum for International Cooperation held at the China National Convention Centre here yesterday.

The forum attracted over 5,000 participants from 150 countries including leaders from around the world, such as Russian President Vladimir Putin, President Rodrigo Duterte (Philippine), President Abdel-Fattah al-Sisi (Egypt) and Prime Minister Nguyen Xuan Phuc.

The BRI, also known as the One Belt One Road (OBOR) or the Silk Road Economic Belt and the 21st-century Maritime Silk Road, is a strategy adopted by the Chinese government involving infrastructure development and investments in 152 countries and international organisations in Europe, Asia, Middle East, Latin America and Africa.

Dr Mahathir said just as massive trade by ships helped spawn the development of huge bulk carriers, the land passage should also “respond” to the increased trade between East and West. He also suggested that bigger trains be built for the purpose.

“If ships can be built bigger, why can’t trains be equally big to carry more goods and raw material and people? Have we reached the limit in terms of the size and length of trains? I think not,” he pointed out.

Dr Mahathir, who is on his second visit to China since becoming the 7th Prime Minister last May, said the world has the technology and funds to bring about such improvements.

He said freedom of passage along these routes was important and warned against bureaucratic hassles slowing down the speed of travel.

“It is essential therefore for these passages to be free and open to all,” he said, adding that the passages must be made safe as terrorism and wars would render the modern marvels and also delivering the benefits promised.

“Yes, the Belt and Road idea is a great. It can bring the landlocked countries of Central Asia closer to the sea. They can grow in wealth and their poverty reduced.

“As the sea routes and land routes improve, trade and travel will grow, and with this, the wealth of the world will increase for the betterment of everyone.

Dr M in Beijing: Everyone will benefit from Belt and Road initiative

PETALING JAYA: Prime Minister Tun Dr Mahathir Mohamad has endorsed the Belt and Road initiative by China, saying everyone would benefit from the ease of travel and communication that it would bring about.

He said this in his speech at the Belt and Road Forum for International Cooperation in Beijing on Friday (April 26).

“Today, trade drives the world. It is only natural that the land and sea passages have to be better developed.

“The Silk Road, the land passage between East and West, has not received much attention. Yet it must be obvious that with modern technologies, the passage can be improved.

“Without doubt, the utilisation of these passages will enrich all the littoral states along the way, as much as the great nations of the East and West,” said Dr Mahathir..

According to the Prime Minister, just as the massive trade by ships helped spawn the development of huge bulk carriers, the land passage should also respond to the need from the increased trade between East and West.

He suggested that bigger trains be built towards this end.

“Although trains can now connect China with Eastern Europe, current trains are not designed for the increases in goods and people needing to travel along this passageway.

If ships can be built bigger, why can’t trains be equally big to carry more goods and raw materials and people?

“Have we reached the limit in terms of the size and length of trains? I think not,” he added.

The Prime Minister said the world had the technology and money to bring about such improvements.

He said freedom of passage along these routes, which pass through many countries via both sea and land, was important and warned against bureaucratic hassles slowing down the speed of travel.

“It is essential therefore for these passages to be free and open to all,” said Dr Mahathir.

He added that the passages must be made safe as terrorism and wars would render the modern marvels that enabled the Belt and Road incapable of delivering the benefits they promised.

“Yes, the Belt and Road idea is great.

“It can bring the landlocked countries of Central Asia closer to the sea. They can grow in wealth and their poverty reduced.

“As the sea routes and land routes improve, trade and travel will grow, and with this, the wealth of the world will increase for the betterment of everyone.

“Everyone will benefit from the ease of travel and communication that the development of the Belt and Road project will bring.

“I am fully in support of the Belt and Road initiative. I am sure my country, Malaysia, will benefit from the project,” said Dr Mahathir.

PM’s BRI backing allays fears over KL-Beijing ties

KUALA LUMPUR: Tun Dr Mahathir Mohamad’s full endorsement of China’s Belt and Road Initiative (BRI) will allay concerns over Malaysia-China relations and lead to greater cooperation between both countries, according to China watchers here.

RHB Research Institute Sdn Bhd vice-president and head of Economic Research Peck Boon Soon said Malaysia was trying to mend its relations with China.

“It is safe to conclude that relations between our two countries are back to normal,” he said, referring to the suspension and cancellation of several China-linked projects last year.

Peck said the revival of East Coast Rail Link (ECRL) and Bandar Malaysia projects and the Prime Minister’s presence at the Second Belt and Road Forum for International Cooperation in Beijing yesterday would help restore confidence among businessmen from China.

He said it made perfect sense to have warm ties with China as the country was the largest export market for Malaysia.

ACCIM SERC Sdn Bhd executive director Lee Heng Guie said Malaysia’s expressed support of the BRI opened up mutual consultation, increased cooperation and connectivity benefits between both sides.

“With this strong endorsement, we expect the relationship to further deepen bilateral ties and enhanced economic relations based on the principles of mutual benefit,” he said.

Lee said Malaysia and its private sector could gain from the enlarged trade and investment opportunities along the passage and gateway of BRI, if the countries could adopt the freedom of passage along these routes through the easing of bureaucratic hassles.

National Chamber of Commerce and Industry of Malaysia president Tan Sri Ter Leong Yap, who attended the Belt and Road CEO conference which was the first such conference at the forum, said the conference provided huge business opportunities for many companies in the region.

“This is a timely boost for the global economy,” he said, adding that there were nearly 1,000 participants from 90 of the world’s Top 500 companies, 78 of China’s Top 500 companies, more than 100 state-owned enterprises and 200 private companies at the conference.

Businessman Datuk Liu Thim Soon, who is vice-chairman to the United Nations Maritime-Continental Silk Road Cities Alliance, said the BRI was a visionary, long range direction by Chinese President Xi Jinping. “It is an enabler and platform for many developing smaller countries to be linked to investments, trade and tourism.

“With about 140 million China tourists travelling yearly, smaller developing countries can benefit and derive great economic potential if they can tap into this market,” he said. – By Yimie Yong

Who should you believe about BRI?

https://youtu.be/uK3-dhLp2yU

Deal inked to develop M’sia’s first AI park

MALAYSIA is to develop its first artificial intelligence (AI) park.

The park will serve as a platform for the development of AI solutions such as speech recognition, robotics and smart city technology.

It is also planned to be a regional epicentre for data management, research and development and commercial ecosystem.

An agreement was signed yesterday between Malaysian company G3 Global Bhd (G3) and its Chinese partners SenseTime Group Ltd and China Harbour Engineering Co Ltd (CHEC) on the setting up of the AI park, with the total investment at US$500mil (RM2.07bil).

The location of the park has yet to be identified.

The agreement was signed between G3 executive chairman Wan Khalik Wan Muhammad, SenseTime president for Asia-Pacific Business Group Jeff Shi, and CHEC chairman Lin Yi Chong.

The ceremony was held after Tun Dr Mahathir Mohamad’s visit to SenseTime’s office here.

The Prime Minister also tried his hands on the self-driving car system at the company, which specialises in AI technology.

G3 Global banks on AI 



Driven by technology: SenseTime Group Ltd founder Prof Tang Xiaoou with Dr Mahathir during the premier’s visit to SenseTime’s Beijing office.
Driven by technology: SenseTime Group Ltd founder Prof Tang Xiaoou with Dr Mahathir during the premier’s visit to SenseTime’s Beijing office.

From jeanswear maker to one of Malaysia’s rising artificial intelligence (AI) companies. That is the interesting story ofG3 Global Bhd that is unravelling today.

While many companies can attempt to boast the AI buzzword as a business focus, it is not an easy area to venture into.

First you need super computers. Then you need the AI software or algorithms.

And then you need to use that software on vast amounts of data in order to build the AI applications for real use.

While G3 Global may have made some inroads into building its own Internet of Things (IoT) platform, it has yet to achieve anything big by itself in the AI space. That was until it signed a deal with China-based SenseTime Group Ltd, touted as the world’s most valuable AI startup.

On April 11, G3 Global told Bursa Malaysia that it will partner with SenseTime to set up Malaysia’s first AI park, in collaboration with China Harbour Engineering Company Ltd (CHEC).

The AI park is expected to see more than US$1bil (RM4.13bil) in investments over the next five years.

According to G3 Global executive chairman Wan Khalik Wan Muhammad, the AI park is vital in order to build AI research-related public service infrastructure as the base to promote AI technology in Malaysia.

“In addition, this becomes a place for talent to be trained on AI and machine learning,” he said.

On Friday, the culmination of the relationship between G3 Global and SenseTime took place, following Prime Minister Tun Dr Mahathir Mohamad’s ongoing official visit to China.

Dr Mahathir, accompanied by several Malaysian ministers, visited SenseTime’s Beijing office where they got a first-hand experience of the latest AI technologies and its application in smart city solutions, autonomous driving technology and remote sensing, among others.

During this visit, G3 Global had inked memorandums of understanding (MoU) with SenseTime and CHEC in relation to the AI park project.

G3 Global said in a statement that as the local partner, it will coordinate efforts with the Malaysian authorities and regulators, form local partnerships as well as promote and develop the AI park project.

Meanwhile, SenseTime will serve as the AI technology provider for the partnership while CHEC will provide infrastructure engineering and construction services as well as management and maintenance of the park.

Valued at over US$4.5bil (RM18.67bil), SenseTime is the fifth national AI platform in China and is also the country’s largest AI algorithm provider.

Although it is only less than five years old, the company now serves over 700 customers and partners globally, including the Massachusetts Institute of Technology, Qualcomm, NVIDIA, Honda, Alibaba, vivo and Xiaomi, among others.

Based on SenseTime’s website, the startup leads the AI market in “almost all vertical industries” such as smart city, smartphone, mobile Internet, online entertainment, automobile, finance and retail.

“SenseTime has independently developed a deep learning platform, supercomputing centers, and a range of AI technologies such as face recognition, image recognition, object recognition, text recognition, medical image analysis, video analysis, autonomous driving and remote sensing,” it says.

According to a recent Bloomberg report, SenseTime has been profitable for two years and the company has recorded triple digit revenue growth for the past four years.

The collaboration between G3 Global and SenseTime aptly serves what both companies need. By setting up an AI park in Malaysia, SenseTime will be able to expand its global presence further while G3 Global gets to go big into the booming AI scene.

Overall, the AI hub in Malaysia is a nice sounding plan. But how real will it be and how extensive will it be?

Speaking with StarBizWeek over the telephone, Wan Khalik says that the move into AI has been a natural progression of the company.

“With IoT as our core business, the only logical next move was to get into the field of AI. We had been in search for a good partner to fast-track out entry into AI, which has a high entry barrier.

“That’s how we got to do a deal with Sensetime, which took much effort on our part, considering how successful Sensetime already is,” he says.

Perfect partner

Wan Khalik: With IoT as our core business, the only logical next move was to get into the field of AI

Wan Khalik adds that SenseTime is the perfect partner, considering that they are one of the biggest AI companies in the world and have their own AI algorithm as well as products and services.

“Their products are already deployed in the commercial world,” he points out.

While acknowledging that AI is still nascent in its growth in Malaysia and still suffers from a lack of understanding and appreciation, Wan Khalik points out two important aspects that the deal with Sensetime will bring about.

“First is that the lab will become an education tool to showcase what AI is all about and the benefits it brings. Second is the fact that we intend to address the issue of developing talent in Malaysia in the AI space.”

In the press release announcing the strategic partnership between G3 and SenseTime, it was revealed that SenseTime will be assisting in the development and deployment of training syllabus for universities in Malaysia.

Wan Khalik says that SenseTime has designed and developed part of the AI syllabus that is currently being taught in schools across China.

“The good news is that the Malaysian government has expressed strong interest in AI and it wants industry to get involved in AI. But we need to invest in buidling up the talent in this field,” he adds.

The little-known G3 Global’s journey is an impressive one.

Its diversification into the information technology scene began less than four years ago after G3 Global (formerly known as Yen Global Bhd) acquired IoT solution provider Atilze Digital Sdn Bhd in December 2015.

Green Packet Bhd , image: https://cdn.thestar.com.my/Themes/img/chart.png , a mobile broadband and networking solutions provider, emerged as a major shareholder in G3 Global after it acquired a 22% stake in August 2016.

A year later, Green Packet boosted its equity interest in G3 Global to 32%.

The G3 Global stock’s trend has been rather flattish since mid-2017. However, since the start of April this year, shares of G3 Global surged by 106% to its record-breaking high of RM1.62.

On April 25, the company hit limit-up and was issued with an unusual market activity query from Bursa Malaysia, in relation to the rapid advances in its share price.

While the reasons behind the sharp increase in G3 Global’s share price were unclear, it seems to have some correlation with G3 Global’s partnership with SenseTime.

G3 Global also saw the entry of Wan Khalik as shareholder, after he assumed control of private vehicle Global Man Capital Sdn Bhd, which currently has the largest stake in G3. Global Man Capital increased its holdings of G3 Global to a 32.04% stake following an acquisition of 32.15 million shares in April, edging out Green Packet’s 32% stake.

On April 5, G3 Global appointed Wan Khalik as its new executive chairman.

Wan Khalik, who is also a substantial shareholder in DWL Resources Bhd, has some notable Sarawak connections, having been the principal private secretary to the Sarawak State government between 2013 until July 2018.

Wan Khalik’s background also includes experiences in corporate planning, public administration, IT strategic planning, and business development.

When asked on why did he pick DWL and G3 Global as companies to invest into, he says, “For DWL we see opportunities in project management of jobs of major infrastructure projects that the country is embarking on. That is why we have teamed up with the likes of Gadang to prepare to jointly bid for such jobs. As for G3 Global, it is even more interesting because of the future of AI. As you probably already know, AI is the world’s next great technological revolution. It is changing the way information is gathered, stored and used. We will not be able to do without it, whether as individuals, organisations, companies and governments. We believe our deal with Sensetime puts G3 Global on solid footing to bring AI to Malaysia and the Asian market.”

G3 Global recorded a net loss of RM17.15mil in the financial year of 2018 ended Dec 31, against a turnover of RM29.4mil. Both of its apparel and ICT business segments were in the red for the 12-month period.

“The ICT business continues to show growth potential despite incurring losses due to business development costs and we hope to see better contribution to sales from this division in the new financial year.

“The setting up of various new subsidiaries will drive the growth in the ICT business including the provision of IoT solutions and services like connected commercial vehicles and sensor hubs, and AI smart cameras. The group will be well positioned to take advantage of improving prospects of the ICT industry for the current financial year,” G3 Global said in a filing.

Moving forward, with the AI venture with SenseTime, the company is clearly on a new trajectory, especially considering the way AI is going to flood all our lives.

According to a recent study by Microsoft and IDC Asia Pacific, only 26% of organisations in Malaysia have embarked on their AI journeys, although about 70% of the business leaders polled agreed that AI is instrumental for their organisations’ competitiveness.

The immense untapped potential in the domestic AI market offers promising opportunities for local AI companies, including G3 Global.

With a strong backing from SenseTime, G3 Global could rise to become a leading AI solutions provider in the region.

By ganeshwaran kana The Star

Related post:

Deal inked to develop M’sia’s first AI park

MALAYSIA is to develop its first artificial intelligence (AI) park.

The park will serve as a platform for the development of AI solutions such as speech recognition, robotics and smart city technology.

It is also planned to be a regional epicentre for data management, research and development and commercial ecosystem.

An agreement was signed yesterday between Malaysian company G3 Global Bhd (G3) and its Chinese partners SenseTime Group Ltd and China Harbour Engineering Co Ltd (CHEC) on the setting up of the AI park, with the total investment at US$500mil (RM2.07bil).

The location of the park has yet to be identified.

The agreement was signed between G3 executive chairman Wan Khalik Wan Muhammad, SenseTime president for Asia-Pacific Business Group Jeff Shi, and CHEC chairman Lin Yi Chong.

The ceremony was held after Tun Dr Mahathir Mohamad’s visit to SenseTime’s office here.

The Prime Minister also tried his hands on the self-driving car system at the company, which specialises in AI technology.

G3 Global banks on AI

Driven by technology: SenseTime Group Ltd founder Prof Tang Xiaoou with Dr Mahathir during the premier’s visit to SenseTime’s Beijing office.
Driven by technology: SenseTime Group Ltd founder Prof Tang Xiaoou with Dr Mahathir during the premier’s visit to SenseTime’s Beijing office.
From jeanswear maker to one of Malaysia’s rising artificial intelligence (AI) companies. That is the interesting story ofG3 Global Bhd that is unravelling today.

While many companies can attempt to boast the AI buzzword as a business focus, it is not an easy area to venture into.

First you need super computers. Then you need the AI software or algorithms.

And then you need to use that software on vast amounts of data in order to build the AI applications for real use.

While G3 Global may have made some inroads into building its own Internet of Things (IoT) platform, it has yet to achieve anything big by itself in the AI space. That was until it signed a deal with China-based SenseTime Group Ltd, touted as the world’s most valuable AI startup.

On April 11, G3 Global told Bursa Malaysia that it will partner with SenseTime to set up Malaysia’s first AI park, in collaboration with China Harbour Engineering Company Ltd (CHEC).

The AI park is expected to see more than US$1bil (RM4.13bil) in investments over the next five years.

According to G3 Global executive chairman Wan Khalik Wan Muhammad, the AI park is vital in order to build AI research-related public service infrastructure as the base to promote AI technology in Malaysia.

“In addition, this becomes a place for talent to be trained on AI and machine learning,” he said.

On Friday, the culmination of the relationship between G3 Global and SenseTime took place, following Prime Minister Tun Dr Mahathir Mohamad’s ongoing official visit to China.

Dr Mahathir, accompanied by several Malaysian ministers, visited SenseTime’s Beijing office where they got a first-hand experience of the latest AI technologies and its application in smart city solutions, autonomous driving technology and remote sensing, among others.

During this visit, G3 Global had inked memorandums of understanding (MoU) with SenseTime and CHEC in relation to the AI park project.

G3 Global said in a statement that as the local partner, it will coordinate efforts with the Malaysian authorities and regulators, form local partnerships as well as promote and develop the AI park project.

Meanwhile, SenseTime will serve as the AI technology provider for the partnership while CHEC will provide infrastructure engineering and construction services as well as management and maintenance of the park.

Valued at over US$4.5bil (RM18.67bil), SenseTime is the fifth national AI platform in China and is also the country’s largest AI algorithm provider.

Although it is only less than five years old, the company now serves over 700 customers and partners globally, including the Massachusetts Institute of Technology, Qualcomm, NVIDIA, Honda, Alibaba, vivo and Xiaomi, among others.

Based on SenseTime’s website, the startup leads the AI market in “almost all vertical industries” such as smart city, smartphone, mobile Internet, online entertainment, automobile, finance and retail.

“SenseTime has independently developed a deep learning platform, supercomputing centers, and a range of AI technologies such as face recognition, image recognition, object recognition, text recognition, medical image analysis, video analysis, autonomous driving and remote sensing,” it says.

According to a recent Bloomberg report, SenseTime has been profitable for two years and the company has recorded triple digit revenue growth for the past four years.

The collaboration between G3 Global and SenseTime aptly serves what both companies need. By setting up an AI park in Malaysia, SenseTime will be able to expand its global presence further while G3 Global gets to go big into the booming AI scene.

Overall, the AI hub in Malaysia is a nice sounding plan. But how real will it be and how extensive will it be?

Speaking with StarBizWeek over the telephone, Wan Khalik says that the move into AI has been a natural progression of the company.

“With IoT as our core business, the only logical next move was to get into the field of AI. We had been in search for a good partner to fast-track out entry into AI, which has a high entry barrier.

“That’s how we got to do a deal with Sensetime, which took much effort on our part, considering how successful Sensetime already is,” he says.

Perfect partner

Wan Khalik: With IoT as our core business, the only logical next move was to get into the field of AI
Wan Khalik adds that SenseTime is the perfect partner, considering that they are one of the biggest AI companies in the world and have their own AI algorithm as well as products and services.

“Their products are already deployed in the commercial world,” he points out.

While acknowledging that AI is still nascent in its growth in Malaysia and still suffers from a lack of understanding and appreciation, Wan Khalik points out two important aspects that the deal with Sensetime will bring about.

“First is that the lab will become an education tool to showcase what AI is all about and the benefits it brings. Second is the fact that we intend to address the issue of developing talent in Malaysia in the AI space.”

In the press release announcing the strategic partnership between G3 and SenseTime, it was revealed that SenseTime will be assisting in the development and deployment of training syllabus for universities in Malaysia.

Wan Khalik says that SenseTime has designed and developed part of the AI syllabus that is currently being taught in schools across China.

“The good news is that the Malaysian government has expressed strong interest in AI and it wants industry to get involved in AI. But we need to invest in buidling up the talent in this field,” he adds.

The little-known G3 Global’s journey is an impressive one.

Its diversification into the information technology scene began less than four years ago after G3 Global (formerly known as Yen Global Bhd) acquired IoT solution provider Atilze Digital Sdn Bhd in December 2015.

Green Packet Bhd , image: https://cdn.thestar.com.my/Themes/img/chart.png , a mobile broadband and networking solutions provider, emerged as a major shareholder in G3 Global after it acquired a 22% stake in August 2016.

A year later, Green Packet boosted its equity interest in G3 Global to 32%.

The G3 Global stock’s trend has been rather flattish since mid-2017. However, since the start of April this year, shares of G3 Global surged by 106% to its record-breaking high of RM1.62.

On April 25, the company hit limit-up and was issued with an unusual market activity query from Bursa Malaysia, in relation to the rapid advances in its share price.

While the reasons behind the sharp increase in G3 Global’s share price were unclear, it seems to have some correlation with G3 Global’s partnership with SenseTime.

G3 Global also saw the entry of Wan Khalik as shareholder, after he assumed control of private vehicle Global Man Capital Sdn Bhd, which currently has the largest stake in G3. Global Man Capital increased its holdings of G3 Global to a 32.04% stake following an acquisition of 32.15 million shares in April, edging out Green Packet’s 32% stake.

On April 5, G3 Global appointed Wan Khalik as its new executive chairman.

Wan Khalik, who is also a substantial shareholder in DWL Resources Bhd, has some notable Sarawak connections, having been the principal private secretary to the Sarawak State government between 2013 until July 2018.

Wan Khalik’s background also includes experiences in corporate planning, public administration, IT strategic planning, and business development.

When asked on why did he pick DWL and G3 Global as companies to invest into, he says, “For DWL we see opportunities in project management of jobs of major infrastructure projects that the country is embarking on. That is why we have teamed up with the likes of Gadang to prepare to jointly bid for such jobs. As for G3 Global, it is even more interesting because of the future of AI. As you probably already know, AI is the world’s next great technological revolution. It is changing the way information is gathered, stored and used. We will not be able to do without it, whether as individuals, organisations, companies and governments. We believe our deal with Sensetime puts G3 Global on solid footing to bring AI to Malaysia and the Asian market.”

G3 Global recorded a net loss of RM17.15mil in the financial year of 2018 ended Dec 31, against a turnover of RM29.4mil. Both of its apparel and ICT business segments were in the red for the 12-month period.

“The ICT business continues to show growth potential despite incurring losses due to business development costs and we hope to see better contribution to sales from this division in the new financial year.

“The setting up of various new subsidiaries will drive the growth in the ICT business including the provision of IoT solutions and services like connected commercial vehicles and sensor hubs, and AI smart cameras. The group will be well positioned to take advantage of improving prospects of the ICT industry for the current financial year,” G3 Global said in a filing.

Moving forward, with the AI venture with SenseTime, the company is clearly on a new trajectory, especially considering the way AI is going to flood all our lives.

According to a recent study by Microsoft and IDC Asia Pacific, only 26% of organisations in Malaysia have embarked on their AI journeys, although about 70% of the business leaders polled agreed that AI is instrumental for their organisations’ competitiveness.

The immense untapped potential in the domestic AI market offers promising opportunities for local AI companies, including G3 Global.

With a strong backing from SenseTime, G3 Global could rise to become a leading AI solutions provider in the region.

By ganeshwaran kana The Star

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Highlights of Xi’s keynote speech at second Belt and Road Forum


Chinese President Xi Jinping delivered a keynote speech at the opening ceremony of the Second Belt and Road Forum for International Cooperation (BRF) in Beijing on Friday. Here are the highlights:
On Belt and Road Initiative
Xi said that the Belt and Road Initiative (BRI) aims to build a trade and infrastructure network, adding that joint building of the Belt and Road has opened up new space for the world’s economic growth.
Based on the principles of equality and mutual benefit, the BRI focuses on connectivity and practical cooperation to achieve win-win outcomes and common development.
The principle of extensive consultation, joint contribution and shared benefits should be upheld, Xi said, and open, green and clean approaches should be adhered to.
The goals of high-standard, livelihood-improving and sustainable development should be achieved, according to Xi.
China will work with other parties to promote a coalition of sustainable cities and an international coalition for green development under the Belt and Road Initiative, Xi said.
High-quality infrastructure under BRI
Xi highlighted building infrastructure of high quality, sustainability, risk resilience, reasonable pricing, inclusiveness and accessibility under the BRI.
Calling infrastructure the cornerstone of connectivity and a bottleneck of  evelopment confronting many countries, Xi said building infrastructure with such standards could help countries give full play to their advantages in resources and better integrate into the global supply, industry and value chains for interconnected development.
On people-to-people connectivity
China will support 5,000 people from the innovation sector in Belt and Road countries in conducting exchanges, training programs and joint research over the next five years.
China will work with other participants of the Belt and Road Initiative to promote scientific and cultural exchanges, set up joint science labs, build science and technology parks, and promote the transfer of technologies, Xi said.
A total of 10,000 representatives of political parties, think tanks and non-governmental organizations from countries participating in the Belt and Road Initiative will be invited to China for exchanges in the next five years.
On trade and opening-up
Xi said that China will increase imports of goods and services on a larger scale, slash its negative list on imports and will negotiate and sign high-standard free trade agreements with more countries.
China will further lower its tariff rates and the country would continuously open up its market and welcome quality products from around the world.
China is also willing to import more competitive farm produces, finished products and services and will allow foreign investors to operate businesses in more sectors with
controlling or full stake.

China prohibits forced technology transfer

China will step up protecting the legitimate rights and interests of foreign owners of intellectual property rights, and prohibit the forced transfer of technology, Xi said.
It will create a business environment in which the value of knowledge is respected, Xi said.
(With input from Xinhua)

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Mega trends EAC must address


THE government is to be congratulated for establishing the new Economic Action Council that will give a better sense of direction and priorities for the nation to overcome the short-term economic challenges, such as rising cost of living, cost of doing business, restoring investor confidence and promoting sustainable economic recovery.

The Council should move with a sense of urgency. Its composition is balanced with a cross-section of representation, including from the orang asli community and consumer associations, which is praiseworthy as it does not just represent business interests. The presence of distinguished economists is also reassuring.

But I propose that the EAC also develops a longer term National Economic Strategy. To move forward, we need to identify the key mega trends that will impact on the nation in the next five to 10 years and then develop a comprehensive and holistic national strategy to address them.

I have identified here 10 strategic shifts or mega trends that need to be addressed.

1. On the international scene, we see a shift from geo-politics to geo-economics, requiring nations to adopt a geo-strategic response. This can be seen from Brexit and the US-China trade war. Geo-economics, including the control over economic assets such as oil and gas, will have a greater impact on international diplomacy. Increasingly, we will see economic and trade diplomacy becoming more important than political diplomacy to maintain global peace, stability and prosperity. We need to be able to step up to this level to analyse and strategise our response to geo-economic and geo-strategic challenges.

2. We also see a shift in the global centre of gravity from West to East with the rise of China and re-emergence of Japan as well as the growth of India and Korea. We need to identify a strategy to succeed in enlarging our presence in these markets and create new opportunities for our entrepreneurs and SMEs in China and Japan.

3. The world is also witnessing a rapid technological shift towards digital disruption and the Fourth Industrial Revolution with growing interest and applications in artificial intelligence, robotics and the Internet of Things. Big Data can be a strategic competitive advantage. The impact of drones and driverless vehicles will make a big impact on society. What is our national strategy to deal with these new technological advances? Hopefully, the EAC will also develop a strategic game plan to deal with these challenges and opportunities.

4. We also see an eco-sustainability shift with growing concern over climate change. This will drive demand for green technology and clean energy. We have a dynamic Energy, Technology, Science, Climate Change and Environment Minister. More must respond to support this ministry and its institutions. We need to embrace clean energy faster and more comprehensively.

5. Demographic shift will lead to an ageing society and a hollowing out of the demographic middle where we will have more aged elderly and younger cohorts below 30 but fewer of the middle-aged. It has been estimated that 20% of our population will be above 60 by 2040. Hence, we need new strategies and action plans to deal with the changing demographics.

6. Consumer shift will see the rise of e-commerce as we move from bricks to clicks. The rise of online business and e-commerce will not only impact on retail business but also on traditional banking, education and healthcare with the risk of fintech (financial technology), online learning and distance education, and telemedicine (pic). We need to embrace and adapt to these trends.

7. Globally, we also see a political shift from liberalism to the emergence of the right. The rightward shift led to the election of Donald Trump as president of the United States and is also partly the cause of Brexit. Is this era the end of liberalism? What can we do to bring people back to the centre? This trend has also led to a consolidation of the Malay right-wing with the strengthening ties between Umno and PAS. While the immediate focus of the EAC is economic, it also needs a strategy to deal with this phenomenon as it will impact on race relations and religious harmony, which are so essential for peace and stability to facilitate business and economic growth.

8. A shift in wealth and income has caused growing inequalities. The income gap between the highest earning population and the bottom 20% has grown. The income gap and inequalities can destabilise peace and stability. New thinking and new strategies need to be adopted to overcome the growing inequalities in our society.

9. Urbanisation shift arising from continued rural-urban migration will also cause urban poverty to rise. Urban poverty is a challenge that must be urgently tackled. The urban poor is a microcosm of Malaysian society as it comprises all ethnic groups. The rising cost of living affecting the urban poor needs to be prioritised.

10. A freedom shift is very evident after the 14th General Election with Malaysians feeling more free. This is good as it will lead to stronger support and protection of human rights such as freedom of speech, freedom of expression and freedom of association.

I believe the above 10 strategic shifts and key challenges are important priorities the government and the people must work on together.

We should have new policies to address these challenges. In formulating new policies, it is important to focus on the 4Cs – consistency, clarity, certainty and coherence.

The new Malaysia also needs the 3Is – integrity, inclusiveness and innovation. Old problems need new innovative solutions and new problems also need new ideas to resolve.

We should work together to address the above key challenges. We need to come together as a nation seeking national reconciliation and unity.

With a common purpose, we can move forward with renewed determination to build a new Malaysia that is sustainable and not a flash in the pan.

As the government has already established the EAC, I propose that it should also consider establishing a National Strategy Commission to plan future scenarios for the nation as well as effective strategies to overcome them.

A National Strategy Initiative should also be established to carry out in-depth Futures Studies for the country.

 


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Better to buy a car or a house first?


Given a choice, would you prefer to get a loan to buy an item that depreciates over a short period which is deemed as “bad debt” or commit on a “good debt”, which is to purchase a house or asset that will appreciate in the long term?

A car used to be a symbol of freedom and ease of mobility. I could understand the dilemma of having to choose between a house and a car a decade ago.

Even then, we should still have chosen a car within our means to manage our financial position.

Today, with public transportation and the availability of ride-sharing services such as Grab Car, we can now really have the option of buying a house first. This gives us both shelter and value appreciation.

This choice has just been made easier with Budget 2019 and the recent announcement by the Finance Ministry.

The government has rolled out several measures to assist homebuyers, including stamp duty exemptions.

Homebuyers will get a stamp duty waiver for memorandum of transfer (MoT) for the purchase of houses priced up to RM1mil, during the six-month Home Ownership Campaign (HOC) from January to June 2019. In addition, the stamp duty on loan documentation is fully waived up to RM2.5mil.

Besides that, the Real Estate and Housing Developers Association (Rehda) has also agreed to cut the prices of its completed and incoming units by at least 10%.

When I talk to potential homebuyers, they always ask about the right time to own property.

There is no perfect time to buy a house on foresight. If the price is within your means, and you plan to buy it for own stay or as a long-term investment, then anytime is a good time.

However, with the property market at the bottom half of the cycle now, this could be a good time to commit to a house with the attractive tax incentives rolled out by the government.

Homebuyers can grab the “duty-free” opportunity now to explore the property market. Those living in the Klang Valley will be able to find their dream home during the Homeownership Campaign Expo at the KLCC Convention Centre from March 1-3.

The campaign is jointly organised by Rehda and the Housing and Local Government Ministry. Besides having all developers under one roof, the ministry will also be featuring homes under RM300,000 by PR1MA, SPNB, PNB and others.

The Homeownership Campaign was first held in 1998 to lessen the burden of homebuyers and to encourage homeownership. It is re-introduced after two decades now with the same objective.

For homebuyers who don’t like the risk of buying a house under construction, there are plenty of completed units for sale in the campaign.

Buying a house can be emotional and uncertain for many homebuyers. However, in the long run, we can rest assured that we are buying an asset that will appreciate.

For homebuyers, always buy within your means as you can upgrade your house in the later stage of your life.

In this auspicious Chinese New Year, I hope you decide to prioritise a new house over a new car. Gong Xi Fa Cai!

By Alan Tong . . . Food for Thought

Datuk Alan Tong has over 50 years of experience in property development. He was the World President of FIABCI International for 2005/2006 and awarded the Property Man of the Year 2010 at FIABCI Malaysia Property Award. He is also the group chairman of Bukit Kiara Properties. For feedback, please email bkp@bukitkiara.com
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