The Winners of The Edge Billion Club Corporate Award 2012

Value Creator:
1) Tan Sri Azman Hashim (Chairman AMMB Holdings Bhd)
2) Tan Sri Dr Tony Fernandes (Group CEO, AirAsia Bhd)

Company of the Year
1) Genting Bhd

Big Companies (with more than RM 10bil market capitalisation)
1) Most profitable company - British American Tobacco Malaysia Bhd
2) Highest profit growth company - Genting Bhd
3) Best performing stock - Digi.Com Bhd


Construction sector
1) Most profitable company - Mudajaya Group Bhd

2) Highest profit growth company - Mudajaya Group Bhd
3) Best performing stock - Mudajaya Group Bhd

Consumer product sector
1) Most profitable company - British American Tobacco Malaysia Bhd

2) Highest profit growth company - Tradewinds (M) Bhd
3) Best performing stock - Dutch Lady Milk Industries Bhd

Finance sector
1) Most profitable company - Public Bank Berhad

2) Highest profit growth company - Cimb Group Holdings Bhd
3) Best performing stock - Malaysia Building Society Berhad

Indsustrial products sector
1) Most profitable company - Supermax Corporation Bhd

2) Highest profit growth company - DRB-Hicom Bhd
3) Best performing stock - Supermax Corporation Bhd

Plantation sector
1) Most profitable company - Kuala Lumpur Kepong Bhd

2) Highest profit growth company - Kulim (M) Bhd
3) Best performing stock - Rimbunan Sawit Bhd

Property and reit sectors
 1) Most profitable company - Krisassets Holdings Bhd

2) Highest profit growth company - Krisassets Holdings Bhd
3) Best performing stock - Eastern & Oriental Bhd

Trading/services, hotel, ipc and technology sectors
1) Most profitable company - Berjaya Sports Toto Bhd

2) Highest profit growth company - Genting Bhd
3) Best performing stock - SEG International Bhd

Best CSR initiatives
1) Nestle (Malaysia) Bhd
2) Digi.Com Bhd
3) Carlsberg Brewery Malaysia Bhd
4) Cimb Group Holdings Bhd

New Banknotes Series Issued Into Circulation from 16 July 2012

Bank Negara Malaysia is pleased to announce the issuance of new Malaysian banknotes series into circulation from 16 July 2012. The new banknotes will co-circulate with the existing banknotes which remain as legal tender. Members of the public will be able to obtain these new banknotes through their normal business transactions.

Themed 'Distinctively Malaysia', the latest banknotes series draws its inspiration from the country's diverse culture, heritage and nature. The new banknotes series uses the latest banknote technology to enhance security features which include shadow image, clear window, watermark portrait with pixel and highlighted numerals, colour shifting security thread, micro lens thread, perfect see-through register and coloured glossy patch. The visually impaired are able to use specific feature such as tactile identification to identify and distinguish the different denominations.

The new banknotes series comprises denominations of RM1, RM5, RM10, RM20 and RM100.  The RM20 banknote is reintroduced in this new series and polymer substrate is used for the RM1 and RM5 banknotes. The current RM50 banknote has been issued since December 2007 and will continue to remain in circulation.

Bank Negara Malaysia urge all the relevant parties to expedite their machine calibration to accept the new banknotes series for the convenience of the public.

For further information on the new banknotes series, members of the public can contact BNMTELELINK at 1-300-88-5465 or call 03 - 2698 8044 ext 8658 or visit Bank Negara Malaysia's website at www.bnm.gov.my.

The security features:

·         RM1

·         RM5

·         RM10

·         RM20

·         RM100

Bank Negara Malaysia
12 July 2012

© Bank Negara Malaysia, 2012. All rights reserved.

Saham FELDA - FGV MK EQUITY

Sedikit maklumat tentang pergerakan harga saham Felda pada 12hb Julai pada sesi pertama dagangan hari ini.

Harganya telah ditutup pada RM5.40, iaitu RM0.85 lebih tinggi daripada harga tawaran ketika IPO. Sekian.

Monetary Policy Statement

Ref No : 07/12/02

Embargo : Not for publication or broadcast before 1700 hours on Thursday 05 July 2012

At the Monetary Policy Committee (MPC) meeting today, Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 3.00 percent.

The pace of the global recovery has moderated in the recent months.  The latest data pointed to slower economic activity and more challenging growth prospects in several regions around the world.  Although pressures in the international financial markets have receded following the recent policy announcements to address the European crisis, a number of important policy issues remain unresolved and continue to unsettle financial markets.  Economic activity in several of the advanced economies continues to be affected by ongoing fiscal consolidation, impaired financial intermediation and weak labour market conditions.  In emerging economies, while domestic demand remains an important source of growth, exports are affected by weak external demand.

In the domestic economy, recent data and surveys of business conditions suggest that consumption and investment activity remains resilient. Looking ahead, domestic demand will continue to be the anchor of growth. Household spending continues to be supported by stable employment conditions and income growth. The strong investment activity is mainly led by the domestic-oriented industries, the oil and gas sector and the steady progress in the construction of infrastructure projects.

Headline inflation is expected to remain moderate for the remainder of 2012. With some excess capacity in the economy, the strength of domestic demand is not expected to result in inflationary conditions.  Global energy and commodity prices are likely to be contained given the weak global conditions.  However, upside risks to inflation could emerge should disruptions to global supply result in higher global prices for these commodities.

In the MPC’s assessment, there continues to be considerable uncertainties in the global economic and financial environment. The MPC will continue to carefully assess these evolving conditions and their implications on the overall outlook for inflation and growth of the Malaysian economy.

Bank Negara Malaysia
05 July 2012

© Bank Negara Malaysia, 2012. All rights reserved.

Bursa Malaysia Enhances Central Matching Facility for Straight Through Processing in Trade Settlement

Bursa Malaysia has introduced the enhanced Central Matching Facility, an automated settlement system offering end-to-end electronic matching of trade and settlement details, between Trading Clearing Participants (stock broking companies) and Non-Trading Clearing Participants (custodian banks).

Dato' Tajuddin Atan, Chief Executive Officer of Bursa Malaysia, said, "The Exchange is stepping up efforts to improve the market framework to increase the efficiency of its market operation. The enhanced Central Matching Facility, together with the CDS-STP service introduced last month, is part of the initiatives introduced by the Exchange to reduce market friction and to be in line with international best practices and standards."

The Central Matching Facility allows market participants to enhance their back-office settlement operations by increasing the capacity to handle a higher number of pre-matched transactions, minimising settlement risks and errors and facilitating straight-through processing.

Through the Central Matching Facility, Clearing Participants will be able to upload post-trade settlement instruction files containing records of Depository Transfers and Institutional Settlement Service (ISS) transactions to the system for processing. Where there is matching for the ISS, the system will automate the creation of the ISS instructions.

With the new enhancements, the system will be able to further automate settlement instructions from multiple custodian banks and improve operational efficiency and turnaround time between the Clearing Participants.

 

Commencement of New Commercial Banking Business

Bank Negara has announced the commencement of commercial banking business of India International Bank (Malaysia), which is a joint venture between Bank of Baroda, Indian Overseas Bank and Andhra Bank with effect from 11th July 2012.

The bank has been granted a commercial banking license by the Finance Minister of Malaysia with pursuant to section 6(4) of the Banking and Financial Institutions Act 1989.

It will operates at Ground Floor of Bangunan Yee Seng, 15 Jalan Raja Chulan, Kuala Lumpur.

Bumiputra firm files RM131.9mil lawsuit against Bank Negara

KUALA LUMPUR: A Bumiputra company has filed a RM131.9mil lawsuit against Bank Negara Malaysia for damages and outstanding payment over the construction of its financial services resource centre here.

H&I Niaga Sdn Bhd, a Class A Bumiputra contractor who was awarded the RM320.3mil contract in September 2005, claimed that their contract was wrongfully terminated after the work was 97% completed.

At a press conference on Sunday, the construction company's managing director Datuk Ismail Mohd Hashim and executive director Amerudin Ismail claimed that the non-payment of money allegedly owed could result in the winding-up of the company and them being declared bankrupt.

They are seeking to claim RM81.9mil in outstanding payment including costs for project delays, retention sum and out-of-pocket expenses and RM50mil for financial and reputational damages to the 14-year-old company.

They claimed to have invested almost RM16mil of their own money into the project.

BNM terminated their contract in April 2010 and appointed another to complete the project, Amerudin said.

Amerudin said the termination was allegedly for the progress and milestones of the building's facade which he claimed was the responsibility of a sub-contractor.

Ismail said the company had met their milestones, adding that they had lodged a police report and complaint with the Malaysian Anti-Corruption Commission on June 27.

DAP's publicity secretary and Petaling Jaya Utara MP Tony Pua, who was also present, said the company had no choice but to initiate a legal suit against BNM as it has exhausted all means to settle the matter in an amicable manner, including a failed arbitration process.

“We call on BNM to negotiate a fair settlement for outstanding sums due. The dispute has caused a complete collapse of H&I,” he said.

The suit was filed on June 20. The case is set for mention on July 4, he said. 

* Reported in The Star online dated 1 July 2012.

Pertukaran Saham MAS-AIRASIA Dibatalkan

Berdasarkan laporan dalam beberapa akhbar kewangan dan ekonomi arus perdana, Putrjaya telah mengambil kata putus untuk membatalkan cadangan pertukaran saham antara MAS-AIRASIA, setelah menerima banyak tekanan daripada pelbagai pihak, termasuklah daripada kesatuan pekerja-pekerja MAS sendiri.

Walaubagaimanapun, difahamkan kerjasama antara kedua-dua syarikat tersebut akan tetap diteruskan, namun dengan pendekatan yang berbeza yang akan dibincangkan dalam mesyuarat lembaga pengarah pada minggu ini.

Harapan kita semua, agar pendekatan yang akan diterima pakai kelak tidak akan mengulangi kontroversi yang sama sebagaimana yang telah berlaku dalam isu pertukaran saham ini. Biarpapun penyelesaian, biarlah ia memberikan manafaat yang besar kepada rakyat, bukan sekadar kepada sesetengah golongan tertentu.

KFH strategises under five-year transformation plan

THE STAR - KUWAIT Finance House (Malaysia) Berhad, which is revamping its business to include retail, has identified several areas for improvement.

Under the five-year transformation plan, the strategy is to grow “a bank within a bank,'' that is, to have income streams from both wholesale and retail banking.

Its universal banking licence allows KFH Malaysia to offer the full suite of Islamic banking products and services.

However, for all that to happen, certain processes need to be put in place or refined.

“One of the key ingredients of success for the bank is the ability to create a conducive environment for all employees to achieve their maximum potential. We have been working diligently behind the scene to strengthen our organisational structure,'' CEO Jamelah Jamaluddin tells StarBizWeek.

Under the previous organisational structure, she had found:

Too much direct reporting;

A large span of control which affected delivery and turnaround time;

Lack of strategic direction; and

Accountabilities not proportionately allocated to the heads of divisions.

A more refined organisational structure was introduced, effective January this year. Several improvements were targeted to:

Optimise performance (cost control management) and streamline business processes;

Align the business and operating models;

Manage the quality of assets and credit better;

Have more effective customers' interface;

Grow and sustain business; maximise the profitability of the business opportunities;

Focus on regional expansion; and

Assign accountabilities that commensurate with responsibilities.

Realising that the bank is primarily known in the wholesale area, she is steering it into the retail arena to bring in a new income stream and make use full use of its universal banking licence.

At this stage, her efforts are viewed positively by the industry. “KFH Malaysia's direction to go into retail business is a wise move after the fall of their corporate endeavour,'' says an industry player, referring to the RM800mil debts it had incurred earlier. “The present stewardship is hitting the right note with its new gold savings product which is its darling product now. It will probably gain the retail market in due course. The CEO is trying hard and putting big money into above the line adertisements.''

“Respecting that KFH is our competitor, it would not be appropriate for us to comment on their revamping initiatives. Nevertheless, we wish them all the best for this positive exercise, which will definitely benefit the industry and consumer at large,” says a source from Bank Islam.

KFH Malaysia's initial foray into corporate and wholesale banking had, to a certain extent, helped in brand positioning.

In fact, it has come up with some innovative structures for financing, for the:

RM500mil sukuk ijarah for AirAsia Bhd in May 2008;

RM720mil serial sukuk musharakah for Kuala Lumpur Sentral Sdn Bhd in April 2007;

RM69mil musharakah mutanaqisah for Sunway South Quay Bhd in August 2006; and

Ijarah rental swap, which is a treasury solution for customers with ijarah financing arrangements, in October 2006.

But for the new thrust into the mass market to be successful, more efforts in branding and marketing are required. Realising that, Jamelah has placed more priority on marketing and corporate communications in her new organisational structure.

“We want to be known to the masses not just as one of the Islamic banks but the preferred Islamic bank,'' she says, adding that microfinance will be among the new line-up of products.

“We are part of a bigger group worldwide, and that helps us,'' she says, unfazed by the competition and rapid expansion in the sector.” KFH is the second largest Islamic bank in the world. Set up in 1977, it has learned the loop,'' she says.

For instance, in introducing the its gold savings account, KFH Malaysia had leveraged on the experience of its sister company, KFH Turkey, which had mastered the product.

“We can develop products by making use of existing ones and adapting to the local market,'' she says, adding that asset and liability products will be upcoming.

Apart from the three in the market mortgages, personal financing and hire purchase there are variations, for example, personal financing for haj and umrah or the purchase of gold.

KFH Malaysia has 600 staff with different capabilities, experienes and levels of education. “We want to improve the quality of the staff to run an Islamic bank. We need to train them in Islamic banking products and be syariah compliant,'' says Jamelah.

A lot of time and resources are spent to train the staff on syariah-related aspects. technical skills and competency.

Jamelah is eyeing the rich experience of the senior management and how she can tap further into it. “We are thinking of how to make use of the 500 years of experience this group has accumulated and how to transfer some of that to the people below.

“We hold interactive sessions with the Generation Y, spend time with them and get their buy-in,'' she says. “This can act as an agent of change.''

Jamelah is confident that once the new direction, processes and culture shift are in place, the numbers will come.

KFH Malaysia, which has 10 branches, returned to the black in the fourth quarter ended Dec 31, 2010 with a profit of RM13mil from a net loss of RM35.5mil in the previous corresponding quarter but reported a full year (FY10) net loss of RM75.6mil which more than double its net loss the year before.

So far, more than RM100mil out of debts of RM792mil has been recovered or restructured.

The bank is working towards a culture that is open-minded and progressive.

Getting the public transport policy right

THE EDGE DAILY - The Klang Valley MRT project has received so much media attention over the past six weeks, the whole project is beginning to seem bigger than it actually is. Never before has so much anger, bitterness and frustration been poured over an infrastructure project. It would appear that all the bad experiences associated with packed LRT trains, stalled buses and walks in the scorching heat have rained on the proposed MRT line running from Sungai Buloh to Kajang.

The underlying fact is the Klang Valley needs an efficient public transport system. Over the last 20 years, Klang Valley residents have seen many changes with only minor improvements to the way they get from point A to point B, which is why they are demanding much, much more from the proposed MRT. The cost of the MRT will be bigger, the disruptions during construction will be greater and therefore expectations are higher.

The situation today
In the Klang Valley today only 17% or approximately 1.24 million trips per day are completed using public transport, which can be broken down as follows:

• Buses — 600,000 trips (made on 1,050 buses)
• LRT — 400,000 trips (for both the Ampang and Kelana Jaya lines)
• Monorail — 40,000 trips
• KTM Komuter — 100,000 trips
• ERL — 20,000 trips
• Taxis — 80,000 trips

The remainder of the 83% or six million trips were made using private transport, mostly single occupancy vehicles (SOVs). This explains the huge traffic jams and constant gridlock even though the Klang Valley has one of the highest concentrations of roadways and tolled highways in the world.

There are currently six million people in the Klang Valley and this is expected to increase to 10 million by 2020. The Klang Valley also has 3.2 million cars. This number is growing at an exceedingly fast rate — an average of 30,000 cars per month.

At this rate we would have approximately seven million cars by 2020, a number that the Klang Valley cannot support. Already we are facing space constraints to build more roads and more parking lots. Cars are being double- and triple-parked, causing even more congestion. Traffic jams in the city are increasing and it is taking longer and longer to get to work.

Very soon, the argument that driving to work takes less time than taking public transport is not going to be true anymore. We would have eschewed public transport for traffic jams, time wastage and lost productivity.

The MRT is not a silver bullet, the overall policy must be got right before people trade private transport for public.

This situation is very different in Singapore, Hong Kong and London, whose share of public transport trips is 64%, 74% and 90% respectively. All these cities share a common fact — they have an MRT but they also have public transport policies in place, and this has resulted in a high share of public transport trips. A well-grounded public transport policy has to be put in place and coordinated public transport planning is needed to ensure that the Greater KL area becomes one of the top 20 most liveable cities in the world. An effective policy can determine how  public transport will move ahead. Otherwise, people are going to get into their cars and drive off before you can even say MRT.

Importance of policies and coordinated planning
The over-dependence on cars is a direct result of an unplanned public transport system that relies on piecemeal improvements. One of the reasons is the lack of coordinated planning by a single agency that takes ownership of the responsibility of looking at public transport as a network instead of piecemeal “projects”. It is therefore timely that the Land Public Transport Commission (SPAD) officially came into being on June 3, 2010, with the coming into force of the Land Public Transport Act 2010.

The core functions of SPAD are to draw up policies for land public transport, planning, regulation and enforcement of laws, rules and regulations concerning land public transport.

To achieve the 50% public transport share as envisaged by the Economic Transformation Programme under the Greater KL National Key Economic Area, SPAD will have to cure the deficiencies in the public transport system with more than piecemeal efforts. It will need to look into policies and plans to ensure the mistakes of the past are not repeated and the solutions are grounded in the following:

Utility
Governments have realised that public transport is not a business but a utility that it is very difficult to make money from. There are ways to reduce costs and increase revenues, but generally operators have a tough time recouping costs and running their operations profitably. The story is the same whether it is in London or Hong Kong. In these countries, there is a single manager which ensures operators are given certain routes to ply, wear standard colours and meet certain key performance indicators. In exchange they are paid a fee. This way the participation of operators is guaranteed and the regions that are covered by a public transport system will be more complete as opposed to having areas that do not have any.

In the case of the Klang Valley, for example, Syarikat Prasarana Negara Bhd, set up under the Ministry of Finance, should be the single manager. It should manage the various rail operators with SPAD ensuring that Prasarana does a good job. SPAD should be dealing only with a single entity, Prasarana and not multiple entities. SPAD can then focus on the big picture, such as public transport policy directions, fare standards and so on.

Lessons of the past in the Klang Valley, where various operators were allowed to run the rail and bus networks for profit, resulted in operators not being able to make returns on their investment and consumers on unprofitable routes being underserved. This mistake should not be repeated.

Inclusivity
Any public transport system in a major urban area needs to cater for the entire population and not just the lower- or middle-income group or tourists. A lack of such planning will result in an under-utilised public transport system.

This means that the service level should be one that serves a high-level executive or a manual labourer equally. This for the most part means air-conditioned comfort, clean public toilets, well-lit covered walkways, proper signage and on-time scheduling at an affordable price.

This will ensure a higher take-up rate among the general population, who will now view public transport in a more positive light. Today many private vehicle owners in the Klang Valley give public transport the thumbs-down because it is not up to the mark, to be tolerated only by those who have no choice.

Integration
Rail-based infrastructure in the Klang Valley is fairly extensive and has a total rail length of 224.6km comprising the following:

• Ampang Line — 27km (25 stations)
• Kelana Jaya Line — 29km (24 stations)
• Monorail — 8.6km (11 stations)
• KTM Komuter Sentul-Port Klang  — 43km (13 stations)
• KTM Komuter Batu Caves-Sentul  — 7km (4 stations)
• KTM Komuter Sungai Buloh-Kajang — 53km (14 stations)
• ERL — 57km (5 stations)

While this figure is commendable, there should be greater strategic integration within the rail network and with other forms of public transport.

A passenger should be able to travel on the network seamlessly, without having to worry about buying tickets for different lines, and be able to switch trains with ease.

He or she should find it easy to get from home to the train station and once he gets off the train should find it easy to reach his or her destination. Because rail networks have a limited reach and cannot go to every destination, it is important that they are supplemented by a good feeder bus network. This feeder bus network must be planned in such a way that people living within a 3km radius of any station can reach the station in 15 minutes.

So while more kilometres of rail are added to — the extensions of the Ampang and Kelana Jaya lines by a further 35km and MRT lines will add another 141km of rail to cater for the growth in population to 10 million by 2020 — strategic integration, that is, using different modes to enhance the effectiveness and efficiency of the other should be emphasised, otherwise adding kilometres of rail will not get people to make the move from private to public transport.

Sustainability
Public transport especially rail networks which are more environmental friendly can be part of an overall “green” policy, the broader issue of reducing CO2 emissions and environmental protection through the promotion and use of rail networks to replace exhaust-emitting cars, especially SOVs. It is estimated a single four-carriage MRT train would be able to carry 1,200 people, the average number of people carried by 700 cars.

Conclusion
The Klang Valley needs an MRT system for sure. But more importantly it needs to put in place a sustainable public transport policy. The Klang Valley Public Transport Master Plan should incorporate all these elements of utility, inclusivity, integration and sustainability in order that public transport gets the buy-in from the public it is meant to serve. The MRT alone is not a silver bullet, a well-grounded public transport policy is.

AMMB Holdings aims for 14%-16% profit growth

KUALA LUMPUR (THE EDGE) : AMMB Holdings Bhd, which achieved record profit of RM1.34 billion for FY11 ended March 31, is “strong enough to grow organically”, said its managing director Cheah Tek Kuang.

“Based on our forecast until 2014, we look very strong in terms of organic growth,” Cheah told the financial result briefing yesterday.

AMMB Holdings aims to increase its profit after tax and minority interest (Patmi) by 14% to 16% annually in the medium-term from 2012 to 2014.

The same range is also targeted for the group’s return on equity (ROE) ratio of 14% to 16%, which will be adjusted for Basel III impact. Historically, the group has been recording double-digit ROE growth averaging 11.5% to 13.6% from FY08 to FY11.

AMMB Holdings dropped off the list of the top five banking groups after Hong Leong Bank Bhd took over the banking assets of EON Capital Bhd recently. The group is now the sixth biggest in the country in terms of assets.

Cheah did not rule out any potential mergers and acquisitions by any financial groups, and noted that the banking group would not “close its eyes” in any corporate exercise that could take place.

“Any corporate exercise that we do must bring value to every stakeholder of the bank. As you know, we have looked at some other [exercises] before and some did materialise, such as the insurance bank,” he explained.

To recap, AMMB Holdings, in which Australia and New Zealand Banking Group Ltd (ANZ) holds a 23.8% stake, was in the spotlight some months ago when the authorities made known that it would consider allowing up to 49% foreign shareholding in local banks on a “case-by-case” basis.

Soon after the regulator’s announcement, ANZ’s chief executive for Asia Pacific, Europe & America Alex Thursby in March revealed the group might raise its equity interest to a controlling stake in four of the Asian banks in which it has stakes, including AMMB Holdings.

ANZ is the single largest shareholder in AMMB Holdings. The Australia-based banking group is permitted to raise its stake to 26.2% of AMMB’s shares as granted when it first bought the stake in 2007.

Cheah sharing a light moment with AmBank deputy group MD and CFO Ashok Ramamurthy at the announcement of AMMB Holding Bhd's FY2011 full year financial results yesterday.

Other substantial shareholders are the founder Tan Sri Azman Hashim’s Amcorp Group, which holds 16.8% and the Employees Provident Fund (EPF) with 12.6%.

In its annual financial results announcement yesterday, AMMB Holdings said it expected loan growth of 10% to 12% for FY12, in line with the expected industry-wide growth that is twice the rate of GDP growth.

The banking group’s Patmi grew 33% to a record high of RM1.34 billion. This represents a ROE of 13.6% and earnings per share (EPS) of 44.7 sen.

“The results are slightly higher than our guidance and were underpinned by our diversified portfolios, growth in profitable and viable segments, new business initiatives, and higher non-interest incomes,” said Cheah.

The group’s profit after tax (PAT) grew by 33.4% year-on-year (y-o-y) due to broad-based earnings growth and lower impairments, and well diversified divisional contributions, according to a statement released by the group yesterday.

In retail banking, PAT increased 14.4% to RM603.3 million as the division accelerated deposits growth, which increased 13.9% y-o-y and expanded assets focusing on profitable segments and pricing risk.

Other divisions also recorded double-digit growth in terms of profitability except for market divisions, where PAT increased by 4.2% to RM177 million. However, the segment saw greater income contribution from foreign exchange and derivatives business, while lower impairments for available for sale (AFS) was recorded.

On a divisional basis, the Islamic banking arm of the group contributed 12.3% of the group’s PAT.

MyEmail Project According to Idris Jala

Since the 1Malaysia Email (an e-Government Entry Point Project in the ETP roadmap and henceforth referred to by its URL i.e. MyEmail) project was announced, there has been considerable criticism, controversy and misunderstanding arising from incorrect and false reports and commentaries.

While we have provided the facts, there appears to be certain quarters who refuse to accept the truth, preferring to 'spin' the facts in order to propagate their false assertions and portray the project negatively.

Here, I will detail the MyEmail project comprehensively and transparently in the hope that the public will get an undistorted perspective of the matter.

1. What is MyEmail?: Rationale, Concept and Business Model

Every year, the Government and related public agencies send out millions of correspondences to the rakyat such as quit rent notices, reminders to renew licences, assessment bills, traffic summons, EPF and income tax statements, and so forth. The cost of distributing these correspondences runs into millions of ringgit, annually.

Typically, five steps are needed before a correspondence goes out: (1) information needs to be extracted from the database (2) the information is then put into the respective correspondence formats (3) the correspondence is then printed (4) the correspondence is put into an envelope; and (5) a stamp is affixed before it is posted.

The total average cost for this entire process is about RM1.00 per correspondence, including system, paper and ink, and labour. It is easy to assume that the only cost is postage and conveniently forget that there are four other cost components.

In one of the ETP labs conducted in 2010, which included key members from the private and public sectors, and non-government organisations, it was envisaged that by sending these correspondences via email, we will save a lot of money for the Government. Instead of spending RM1.00 per correspondence, we can save about 50 sen, or in other words, halve the correspondence cost.

The cost saving is derived from the free email delivery. The remaining cost of 50 sen goes towards extracting the information required from the database and presenting them in the respective formats. Most agencies do not possess this system, also known as digital bill presentment solution. These two (out of the original five) cost components are not accounted for in the argument on ‘free’ email transport by other providers, espoused by the detractors.

However, it is necessary to ensure high security because the information involves personal data. People want their personal information and data to be kept confidential and secure. Hence, a critical success factor is that the email facility must be highly secure. This requirement is met with the one-time authentication using finger prints with the National Registration Department to ensure confidential information reach only the intended recipients.

It was also agreed in the lab that the project be driven and funded by the private sector so that the Government can enjoy the operational savings without even having to invest in the development expenditure. Hence, the idea was incorporated into the ETP roadmap to solicit private sector response.

Facilitated by MAMPU and GITN, proposals were received from five private companies. A competitive selection process was undertaken to ensure high technical standards and the right business model is adopted at the lowest cost and highest quality. The evaluation team selected Tricubes Berhad based on these criteria.

Tricubes will invest 100 per cent of the capital expenditure (capex) and operating expenditure (opex) required for this project. The Government will spend nothing in terms of investment and operating cost to run MyEmail.

Instead of sending correspondences to the rakyat in physical form, the Government will be able to send these via email and save millions of ringgit. Hardcopy correspondences will still be sent to those who do not have access to the Internet. Nonetheless, the operational savings for the Government will still be substantial. Simulations on four Government agencies alone showed an estimated cost savings in the region of at least RM200 million over 10 years.

Regardless of whether the Government agencies use MyEmail or otherwise, money will be spent to send correspondences to the rakyat. If the agencies use MyEmail, it will be on commercial terms just like paying for any other service. Therefore, it is wrong to say that paying for the service rendered is tantamount to the government financing Tricubes.

This service will be made available and marketed by Tricubes to Federal and State Governments and all public agencies independently. It is strictly voluntary: none of these units are obliged or forced to use the MyEmail facility, regardless of the fact that it will help them save money. As such, the assertion of concessions for Tricubes by all or various public agencies is absolutely baseless.

In addition, Tricubes can also market the same service to private entities, which will subject it to the full force of open competition. In fact, this model is similar to a credit card or online banking operator who has to market its services to potential merchants (both private and public sectors) and card holders or online users. In these models, operators earn their keeps by charging merchants on each transaction while costing card holders or online users nothing in most cases.

As MyEmail is strictly voluntary, its success depends on Tricubes’ ability to secure high percentage of people who accept it and register voluntarily.

Why do we need MyEmail and who benefits?

MyEmail offers a multitude of benefits to various parties:

1. The Government benefits because though it does not spend any money in terms of investment and cost to operate the system, it can save about 50 per cent of the current cost of sending correspondences. In 10 years, the project can save the four agencies used in the simulations at least RM200 million. If more agencies are convinced of the benefits of the service, the potential savings could be higher than RM200 million over the same 10 year period.

Despite having stated this fact, there are a small group of detractors who keep asserting without basis that this project is a waste of public funds. How can this be a waste of public money when not a single sen of public money is or will be spent, while a lot of public money can potentially be saved?

2. By investing up to RM50 million in a secure and efficient email system and value-added services over five years, Tricubes can generate revenue through service charges to the Government, its agencies and private sector clients as well as users of their value-added services. The plain email service is free.

While the Government will spend money for the services rendered by Tricubes similar to other services it uses, the amount spent will be significantly less than what it is current spending.

3. The rakyat benefits because they get a free MyEmail account which also allows effective and secure email communication between the Government and the individual rakyat. If they do not want MyEmail, there is no problem. This is strictly voluntary.

For those who decide to subscribe to this service, they will get their correspondences from the Government instantaneously and will not have to wait for normal mail. In addition, if the rakyat has any query, they can also use MyEmail, if they so choose, to communicate with various Government departments and agencies.

4. Apart from the Federal Government, all State Governments and public agencies could potentially benefit if they decide to use MyEmail.

It should be noted that State Governments under Barisan Nasional or Pakatan Rakyat may choose to use the MyEmail facility, if they are interested in saving public money. If they are not interested in saving 50 sen per correspondence by using MyEmail and instead prefer to spend RM1.00 per correspondence, then they are neither obliged nor forced to use MyEmail.

Conclusion

The majority of Malaysians are keen to know the facts so that they can form their own conclusions. However, regardless of the amount of information we provide on this issue, there will be a small minority that has already made up their minds. Even after we publish these facts, this small group will continue to reject the facts and find ways and means to distort the truth.

We hope that the information provided above, together with the accompanying summary of 10 important facts on MyEmail and Frequently Asked Questions, will help the largely silent majority better understand the context and rationale behind MyEmail and reject the misrepresentations spewed by the vocal minority.

Lies and truth about MyEmail

Lie #1:

The Government is investing RM50 million in this project.

Truth #1:

Tricubes Berhad, a private company, is investing 100 per cent of the RM50 million.

Commentary:

There are a lot of false and misleading reports, articles and comments in the social media that the Government is undertaking the RM50 million investment for this project. These reports are totally incorrect.

This investment for this project comes entirely from Tricubes. The management of Tricubes has committed that they will initially invest RM5.3 million and subsequently over the years, increase the total investment to RM50 million.

The Government is not investing a single sen in MyEmail. This fact has been categorically confirmed by the Prime Minister, PEMANDU and Tricubes.

The onus is on Tricubes to secure the initial and total financing required, either through equity or debt, failing which the commercial failure is entirely theirs.

The people who are bent on portraying this project negatively continue to ignore the truth and refuse to make any correction, and continue to mislead the general public into believing that the Government is investing RM50 million in MyEmail.

Lie #2:

The Government is forcing people to be registered to use MyEmail.

Truth #2:

No one is forced to use it. The service is completely voluntary. People who want to use the service just have to register. If they do not want to use it, they need not register. It is that simple, nothing more than that.

Commentary:

Despite numerous clarifications about this fact, the purveyors of these lies continue to make their baseless assertions. One must wonder why they continue to spread these lies and what their motives are for doing so.

Lie #3:

The Government will use MyEmail to contact the people as a mechanism to win votes.

Truth #3:

MyEmail is owned by Tricubes and not owned by the Government. It has nothing to do with communicating with the public to campaign and win votes.

Commentary:

As with any database (such as those owned by banks, telecommunication companies etc), all individual personal information and data is owned by the individual operators concerned. The use of such information can only be done with the prior agreement of individual operators concerned.

If this myth is to hold any water, then even Pakatan Rakyat state governments can use it a channel to propagate their messages as this service is similarly open to them. Clearly, this is a baseless assertion.

Lie #4:

MyEmail is a waste of public money.

Truth #4:

MyEmail is not a waste of public funds as the Government will not spend even a single sen in terms of investment and operating cost to run the email system. On the other hand, it is estimated that the Government stands to save at least RM200 million over 10 years.

Commentary:

It is easy to assert that sending emails via other providers, sans the authentication process with the National Registration Department which may result in wrong recipients of confidential information, is free. These detractors choose to ignore there are still two out of the original five cost components that need to be accounted for, namely extracting the information required from the database and presenting them in the respective formats.

Lie #5:

MyEmail was ‘awarded’ to Tricubes to rescue a ‘crony’ company belonging to influential people connected with the Government.

Truth #5:

MyEmail was conceptualised as an Entry Point Project in an ETP lab. Tricubes was selected via a competitive process, conducted by MAMPU and GITN, and participated by four other parties.

Commentary:

If anyone has any evidence of fraud and corrupt practices, they should come forward with the evidence.

Lie #6:

MyEmail is the equivalent of a long-term concession to Tricubes.

Truth #6:

MyEmail is neither a concession nor a long-term commitment which binds the Government to use it for all its correspondences to the public.

Commentary:

If there is any company that can come up with a better, cheaper and even more secure email service, the Government and public agencies are completely at liberty to use their services, instead of Tricubes. With such complete independence to choose, how can it be a concession?

10 important facts about MyEmail

1. MyEmail is part of E-Government programme

E-Government is the use of technology to enhance access to and delivery of government services to the rakyat and businesses

It has three strategic thrusts:

* E-counter services

Towards zero face-to-face: 90% of transactions online, 10% in e-forms

Available on all devices (kiosk, PC, monile) at all locations and at all channels

* Paperless government

Replacement of paper with digital archives

Gradual elimination of paper in stages – minutes, presentations, circulars

* MyEmail account

Secure with single sign-on channel to all government e-services

Value-added services (e.g. online bill payment, public record searches etc)

2. MyEmail is secure and convenient

?First-time biometric (i.e. finger print) authentication with National Registration Department required, either over-the-counter or at home with purchase of USB finger print reader, using name and MyKad number

Personal identity information such as MyKad number is stored locally and secured by Tricubes Berhad , while email service is powered by Microsoft’s cloud infrastructure

SSL encryption protects transportation of data; additional layer of protection is optional via content encryption using biometrics

Single sign-on for email and value-added services compared to multiple registrations and authentications, duplication of information release, and multiple usernames and passwords on other platforms

3. MyEmail is privately funded

Tricubes will fund RM50 million over 10 years

The onus is on Tricubes to secure the initial RM5.3 million and total RM50 million financing required, either through equity or debt, failing which the commercial failure is entirely theirs

4. MyEmail saves the government money

Simulation on four agencies shows the government can save at least RM200 million over 10 years

Cost per email will not exceed RM0.50 compared to an average of RM1.00 per physical mail

While email delivery is free, RM0.50 cost goes to digital bill presentment solutions (data extraction, conversion and process); this is not accounted for in ‘free’ email transport by other providers

5. MyEmail project is not a concession for Tricubes

Tricubes needs to market and secure contracts from government agencies and private corporations independently

No government agency is compelled to use MyEmail or awards fixed term contracts to Tricubes

Any contract will be negotiated on open market commercial terms

6. MyEmail-type services is not exclusive to Tricubes

??Government agencies can use other existing vendors or other vendors in the future that offers similar services

7. MyEmail sign-up is voluntary/market-driven

??The public makes the independent decision to sign-up for MyEmail or otherwise

??Public acceptance must be based only on merits of MyEmail’s services

8. Tricubes’ selection was transparent and competitive

Five proposals for MyEmail was submitted to the evaluation team comprising officials from MAMPU and GITN

Selection criteria were best-in-practice technology, sustainable business model, track record and security

MAMPU and GITN adjudged that Tricubes met or surpassed these benchmarks

9. MyEmail is not a tool for sending out propaganda

MyEmail is a secure digital channel for communication and e-services between the government, and citizens and businesses

As it is privately-funded and marketed, it can be use by any federal, state or local authority regardless of political affiliation

10. MyEmail is not unprecedented

A similar service in Singapore called OneInBox will be launched in 2012

According to a fact sheet by the Infocomm Development Authority of Singapore, OneInBox allows individuals and businesses to receive correspondences from government agencies in a single and secure platform through the eCitizen portal using their SingPass

The same document also states that OneInBox will offer potential cost savings to agencies by reducing the need for hardcopy correspondences

Frequently Asked Questions (FAQ) about MyEmail

1. If MyEmail is part of the E-Government programme, why is it not a Government initiative?

E-Government is the Government’s vision to promote the use of technology to enhance access to and delivery of Government services to the rakyat and businesses. MyEmail, on the other hand, is a privately-funded initiative that dovetails into this vision and enables the Government to leverage an effective platform without making the upfront investment. This is in line with the ETP focus for private sector to drive economic growth.

2. PEMANDU changed the description on MyEmail from Government initiative to privately funded initiative. Why?

The idea was originally mooted in a PEMANDU-facilitated lab. To avoid the Government from having to fund the investment, it was decided to get the private sector to implement the project. It was always seen as a Government initiative, funded by the private sector. However, based on the initial statement we released, the facts were distorted and MyEmail was projected as being funded by the Government. We amended the description of MyEmail to make this point clear to the public.

3. If it is a private sector initiative, why did the government make the announcement instead of Tricubes?

Since the Economic Transformation Programme (ETP) was launched, the Prime Minister has made five announcements, totalling 72 initiatives under various Entry Point Projects (EPP), with a cumulative investment of RM106 billion. Most of these projects and investments are private sector initiatives. Under the ETP, 92 per cent of the investments are envisaged to be financed by the private sector. The Prime Minister announced MyEmail, as he has been done in the past few months since October 2010, with all the other private sector initiatives to keep the public informed on the progress of the ETP.

4. Why can’t the Government undertake this project instead of outsourcing it to the private sector?

By 'outsourcing' it, the Government will avoid having to invest RM50 million and avoid spending money operating the email system. The Government’s core role is to provide efficient service delivery to the public. It should not get into the business of creating communication and service platforms as it may not necessarily have the core competencies to do so. It is more cost efficient and effective to use best-in-practice platforms offered by specialised private entities.

5. Why was the name changed from 1Malaysia email to MyEmail?

MyEmail is the domain name for the platform and is the correct description. Project 1Malaysia email was the name givien to this Entry Point Project under the ETP lab.

6. Won’t Tricubes Berhad mine the email database?

As with other commercially-owned databases, Tricubes should be able to mine it, provided it does so in line with the privacy laws of the country, and only with the prior agreement of the individuals who have registered as members.

7. Won’t the Government have access to the email database?

The database is owned by a commercial entity and the Government does not have access to it.

8. What is so different about this email platform? Can I not receive E-Government correspondences via other email platforms?

The MyEmail account, which includes a MyKad-based authentication security layer, ensures that Government correspondences reach the correct recipients and reduces incidence of compromised sensitive personal information. Other email platforms may only provide encryption for the transport but cannot rule out mistaken delivery that can compromise sensitive personal information.

9. By paying Tricubes for the use of email platform, isn’t the Government financing the project?

No. The Government pays various vendors for services rendered. This does not mean that the Government is financing those vendors. For MyEmail, Government agencies will pay per use on open market commercial terms. In addition, the Government does not need to fork out additional upfront capital expenditure. It will merely need to pay for services rendered as part of its correspondence expenditure.

10. Tricubes has received project financing from Mavcap and has Commerce Technology Ventures and Mayban Venture Capital (both are GLC-controlled) as shareholders. Isn’t this tantamount to Government financing?

No. Venture capital firms receive investments from various investors and invest the money on their behalf. It is not a form of Government financing. These investments are done strictly on commercial basis and the Government has no involvement whatsoever in arranging any of these financing deal.

11. Tricubes has only raised RM5.3 million out of the RM50 million investment required. Will the Government extend Tricubes any financial aid, maybe in the form of a soff loan?

Tricubes is confident of raising its own financing through internally generated funds and other equity and debt instruments as part of its financial regularisation plan. This is in line with the ETP focus of making the private sector the engine of economic growth.

12. Mavcap has publicly stated that its RM5.5 million facility to Tricubes was not meant for the MyEmail project, contrary to Tricubes’ earlier claim. How is Tricubes’ going to raise RM50 million when it did not secure the initial RM5.3 million required as claimed?

The onus is on Tricubes to secure the initial RM5.3 million and total RM50 million financing required, either through equity or debt, failing which the commercial failure is entirely theirs.

13. Why does the Government select a company in financial distress to undertake the project?

MAMPU and GITN’s selection criteria were best-in-practice technology, sustainable business model, track record and security. MAMPU and GITN adjudged that Tricubes met or surpassed these benchmarks.

They have also clarified with Bursa Malaysia that a GN3 status can affect Tricubes’ listing status but the company is not prevented from conducting business as usual. It is able to execute business projects, its financial statements are properly drawn up and all its debts and financial obligations are up-to-date.

14. What about the other contenders?

MAMPU and GITN’s selection criteria were best-in-practice technology, sustainable business model, track record and security. MAMPU and GITN adjudged that Tricubes met or surpassed these benchmarks.

15. What happens if Tricubes fails to deliver?

Like all private sector projects, if the enterprise fails to deliver, it will lose its investment.

16. Will the Government bail-out Tricubes if the business fails?

No. In a private sector-driven economy, there will be businesses that succeed and others that will fail. The Government must allow free market to operate and not bail-out failed businesses, save for critical national interests.

17. Why should Government agencies pay up to RM0.50 per email when it can send emails for free on other platforms? How can it be considered as savings?

Government agencies currently pay up to RM1.00 per mail and even RM2.00 for each returned hardcopy correspondence. This is the cost for data extraction, conversion and process, document generation (paper and print), sorting and enveloping and distribution.

When you use the MyEmail platform, you only need to pay for data extraction, conversion and process, which cost up to RM0.50 per email, and if necessary, biometric encryption, which may cost more.

Arguments that such correspondences can be sent free on other email platforms on takes into account the email transport, without considering the cost for data extraction, conversion and process.

Hence, there is real savings of almost 50 per cent per email should government agencies use MyEmail. However, final terms of usage is subject to open market commercial negotiation between the agencies concerned and Tricubes as the former can choose other vendors or traditional mail.

18. How can an email platform be a sustainable business model?

The email platform is part of the business model where senders are charged on pay per use for bill and notice presentment, and users are charged for value-added services. It is a feasible business model.

19. Why do we need MyEmail when you already have MyEG?

MyEmail and MyEG are not alike as the latter is purely a payment portal without a single sign-on authenticated email platform.

20. How can sign-up be voluntary when Tricubes’ has a KPI to get 100% of Malaysians aged 18 and above signed up by 2015?

Tricubes put a KPI of 100 per cent sign-up as a target and aspiration though it is voluntary. There is nothing to prevent businesses from putting stretched targets.

As with any project, public or private, there must be KPIs for performance monitoring and accountability. Tricubes decided to adopt the stretched targets set by the CCI NKEA. It does not mean that Malaysians will be compelled to sign on or assigned the service unilaterally.

21. What is the Government’s role in this project?

The Government’s role is to facilitate the project implementation of MyEmail such as ensuring cross-agency coordination and monitoring its implementation progress based on set KPIs.

21. Why has PEMANDU defended Tricubes so vigorously in public?

PEMANDU tries to put out timely and accurate information for public interest. Tricubes has also issued two statements, one Q&A document, held a media briefing and engaged with various media. The reason why we are clarifying this situation is to make sure that the general public is not misinformed by people who distort the truth. PEMANDU believes in integrity and transparency.

22. Why will Tricubes want to undertake this project in the absence of a concession or business guarantee?

Private sector owners follow the money and if they are confident to achieve profits, they will undertake the projects. That decision is best left to them.

23. If there is another company that can come up with a superior email system that is better, more effective and cheaper, will the Government consider shifting away from Tricubes?

Yes. That is why the Government has not entered into a concession or long-term agreement. For all the information that is given on this project, it is really surprising to find that there is a small group of people who are bent on distorting the truth.

24. Will this detailed information pack resolve this controversy?

Even after we have given the facts and the truth, we are convinced that selected groups who are bent on distorting the truth will continue to do so. However, we are equally convinced that the majority of the public would welcome the facts and that is all we are hoping to achieve with this detailed information.

25. If there is no Government investment, concession or minimum commitment, why was there a selection process?

The selection process is merely an assessment to find out which company would likely succeed in rolling out the email service based on its capabilities. It does not mean that other companies cannot offer their own version of the service. However, overlapping projects could lead to waste of resources and that is why the evaluation team only selected one company

Other parties who are not selected or did not submit a proposal earlier can still pursue the opportunity if they see a viable business case for it.

Source: The Edge 

Pos Malaysia eyes myemail project as threat

KUALA LUMPUR: Pos Malaysia Bhd views Tricubes Bhd’s myemail project as a threat to its business and is planning to engage government entities, the Performance Management and Delivery Unit (Pemandu), and Malaysia Administrative Modernisation and Management Planning Unit (Mampu), to discuss the possibility of offering similar services, or to play a role in the initiative.

After the company AGM yesterday, Pos Malaysia’s managing director and chief executive Datuk Syed Faisal Albar said the national postal company had already made inroads into the business. 

“We are in the delivery business, both physical and digital. We know that this (myemail project) will be a significant threat to the physical mail business. So we would like to understand this project and explore ways on how Pos Malaysia can play a role,” he said.

Pos Malaysia, he added, was already working on several e-commerce initiatives and had taken a cue from the Government Transformation Programme (GTP) to increase the use of e-government initiatives.

About two weeks ago, Tricubes announced that it had been selected to spearhead the provision of an email service for government agencies, to deliver email to subscribers. Each email could cost the government agency about 50 sen.

This 50 sen fee has come under fire from several parties.

On whether Pos Malaysia would have similar charges, Syed Faisal said a “win-win” situation would be sought where both Pos Malaysia and the government benefited. 

“We do not want to cannibalise our physical mail. Whatever charges we propose are going to be reasonable… We need to find a sweet spot,” he said.

Last year, Pos Malaysia’s revenue from mail business amounted to about RM624 million, of which RM20 million came from handling government mail.

“The e-commerce business is getting bigger and bigger. The industry is a billion dollar industry and it is something that we don’t want to miss out on… If we don’t do anything, it will canablise our business,” Syed Faisal added.

While Syed Faisal is charting the direction of Pos Malaysia, DRB-Hicom Bhd, which recently won the  bid to buy Khazanah Nasional Bhd’s 32.21% stake in the postal service company, has yet to come forward with any direction or plans. 

“I believe Khazanah has formed a divestment panel comprising professionals and experts to evaluate the business plans. As far as Pos Malaysia is concerned, this is a shareholder matter,” he said.

He added that he did not know if DRB-Hicom plans to use the post office network to expand Bank Muamalat Bhd.

Syed Faisal also said no date had been set as to when the Postal Act would be amended for postal land to be converted for other uses. At present, the use to post office land comes under the Federal Land Commission Act, which limits the use to only postal activity. 

Pos Malaysia has about 700 parcels of land all over the country, including sizable land in premium locations.

While Pos Malaysia grapples with various issues, its targeted revenue of RM1.17 billion for this year could be adversely impacted by higher fuel prices which make up about 15% of its total operating cost.

For FY10 ended December, Pos Malaysia posted a net profit of RM67.11 million on the back of RM1.01 billion in revenue.

Pos Malaysia ended trading at RM3.22 yesterday, gaining two sen.

Source: The Edge