This is Najibrosspussynomics.
Despite the soft economy, the government is mulling the use of imported luxury cars for judges to replace its leased fleet of ageing Proton Perdana V6 Executive vehicles which are no longer in production.
The cars — Mercedes Benz S class, BMW 5 series, Toyota Camry and Honda Accord — are likely to be leased for four years from Spanco Sdn Bhd, which has a 25-year concession with the government ending 2018 that is now worth RM80 million a year.
The Mercedes Benz S class.
Is this conducted in the transparent Open Tender way ? Another "Revolving Door " Business ?
Remember what was MB of the Court of Perak has said on the use of TOYOTA Camry as official cars ?
Where is the Performances of our National Car, Proton ? Aren't they have KPI
The new cars could raise heckles as Barisan Nasional (BN) lawmakers had objected to Pakatan Rakyat (PR) administrations in both Perak and Selangor for opting to use Toyota Camrys over the Perdanas, accusing them of being unpatriotic and disloyal to the national carmaker.
The BN government that ousted PR in Perak later put the Camrys on the auction block early this year.
The BN government in Terengganu also raised eyebrows last year when it ordered 14 Mercedes Benz E200 Kompressors for RM3.43 million to replace the Perdanas, citing costly maintenance for the national car.
The BMW 5 series.
Another government source said the new cars had competitive lease rates, reducing initial costs but he reckoned Spanco can turn in a tidy profit from maintenance charges.
"The lease for each car is four years and maintenance charges are a bit high but they do everything from A to Z. So on paper, it's worth it for the government," he told The Malaysian Insider.
The government stopped buying cars for the administration and senior government officers since January 1994 by agreeing to lease from Spanco which initially provided Mercedes Benz and Volvo models.
But the Tun Dr Mahathir Mohamad administration stopped that in 1997 under its austerity drive during the height of the Asian financial crisis.
Deputy Finance Minister Datuk Kong Cho Ha told Parliament last year that apart from cars for official government use, Spanco also leased saloon cars for the various ministries and federal departments.
"Under the agreement, Spanco is responsible for supply, maintaining and repairing all cars leased by the government.
"In return, the government pays for the cost of rental, maintenance and repairs to Spanco on a monthly basis based on the number and type of cars leased," he said in reply to Lim Kit Siang (DAP-Ipoh Timur) who wanted to know the cost and benefits of leasing Proton Perdana V6 as official cars of the government.
He said until July 2008, a total of 8,341 cars were leased of which 105 were for use by members of the government administration.
The Proton Perdana V6.
Apart from the Perdana as a standard car for government servants, Spanco also provides the Proton Waja.
Spanco was given the contract to lease and maintain vehicles for the government for 25 years as part of the government’s privatisation exercise. It was seen a good deal as many government departments, such as the police force, had thousands of cars, and leasing and maintenance was not Spanco’s core business.
In 2004, the Finance Ministry asked Coopers & Lybrand to review the Spanco deal in the belief that the government had paid too much. The contract sum was then reduced by 20 per cent from RM100 million a year to RM80 million a year.
The decision to renegotiate the Spanco contract came after the then Deputy Prime Minister Datuk Seri Najib Razak said that the government would look into lopsided concessions.
Najib, who succeeded Tun Abdullah Ahmad Badawi as prime minister last April, had added the government would learn from its mistakes to ensure that it did not get the short end of the stick when negotiating deals with the private sector.
Investors recoiled from risky assets today and dumped shares in Asian banks and builders, fearing a Dubai debt default could reignite the financial turmoil of the credit crisis.
Stocks from Tokyo to Mumbai were haunted by suspicion of lenders’ exposure to Dubai firms that built islands in the Gulf, planned cities from Pakistan to Africa and fashioned the financial hub of the world’s biggest oil exporting region.
“This an important reminder that the credit crisis is forgotten but not gone,” Robert Rennie, strategist at Westpac Global Markets Group, said in a note.
Asian banks, like their European peers, scrambled to distance themselves from Dubai, a desert emirate that emerged from dusty obscurity to invest in global lenders such as Standard Chartered and lure fund managers with the promise of a tax-free lifestyle. Dubai, part of the oil-exporting United Arab Emirates, said on Wednesday it would ask creditors of state-owned Dubai World and Nakheel to agree to a standstill on billions of dollars of debt as a first step towards restructuring.
Dubai World, the conglomerate that led the emirate’s expansion, had US$59 billion (RM200.13 billion) of liabilities as of August, most of Dubai’s total debt of US$80 billion. Nakheel was the builder of three palm-shaped islands off Dubai.
The news shook markets recovering from the collapse of the US housing bubble and contagion that threatened to rupture the global financial system last year.
“The panic button’s been hit again,” said Francis Lun, general manager of Fulbright Securities in Hong Kong.
Analysts expect financial support from Abu Dhabi, the UAE’s largest emirates and producer of most of its oil. But Dubai may have to abandon an economic model that focused on developing swathes of desert with foreign money and labour.
The prospect of a bailout did little to allay concerns among investors, already worried the global economy may not be recovering quickly enough to justify a near doubling of prices for emerging market stocks and many commodities since March.
“The biggest worry I have is whether this will trigger a repricing in the overall emerging market,” said Arthur Lau, a fund manager in Hong Kong with JF Asset Management.
The nerves showed in credit markets, at the centre of the financial storm triggered by the Lehman Brothers’ bankruptcy last year.
Asian credit default swaps, used to insure against default, were at their widest in a month, with the Asia ex-Japan iTraxx investment-grade index touching 124/129 basis points.
Dubai’s credit default swaps were being quoted as high as 500-550 basis points, some traders said on Thursday.
BANKS
Dubai’s debt problems are a hangover from a property bubble that imploded after the financial crisis derailed its plans to become a magnet for tourists and a regional hub for everything from shipping to entertainment.
Banks’ exposure to a Dubai default pales in comparison to the US$2.8 trillion in writedowns the International Monetary Fund estimates US and European lenders will have to make between 2007 and 2010 as a result of the credit crisis.
International banks’ exposure to Dubai World could be as high as US$12 billion, banking sources told Thomson Reuters LPC..
It was the fear of the unknown that was driving trade.
“Similar stories to the one in Dubai are likely to come out, leading risk money to pull out from assets such as commodities and stocks,” said Takahiko Murai, general manager of equities at Nozomi Securities in Japan.
Japan’s biggest bank Mitsubishi UFJ Financial Group fell as Japan’s Nikkei average struck a four-month closing low. It also came under pressure from weak exporters after the dollar hit a fresh 14-year low against the yen. The Australian and New Zealand dollars retreated.
Oil extended yesterday’s decline to tumble below US$75 a barrel. Shanghai copper and Chicago grains each dropped around 2 per cent.
Shares in HSBC Holdings, one of the bookrunners on an outstanding US$5.5 billion Dubai World loan, dropped more than 7 per cent and Standard Chartered losses topped 6 per cent. The London listed shares of the two lenders led the biggest tumble in European bank stocks in six months on Thursday.
The Dubai crisis could have a “meaningful impact” on banks across Asia, said Daniel Tabbush, Asia banks analyst at CLSA in Bangkok, listing Standard Chartered, HSBC and Singapore’s DBS Group as the most exposed in the region.
DBS shares were not traded due to a market holiday in Singapore.
China State Construction International and ICICI Bank were among Asian firms that said they had no exposure to Dubai after their shares fell.
Builders, such as Australian construction firm Leighton Holdings, took a beating on concern that money due from Dubai’s grandiose construction projects, including the world’s tallest building, would not be paid. — Reuters
Indian stocks and the rupee skidded on Friday as Dubai's debt woes sparked fears over corporate exposure to a key trading partner and
that foreign funds will lose their appetite for risk.
Banking, property and construction-related shares were among those hardest hit, after Dubai said two of its flagship firms planned to delay repayment on billions of dollar of debt. Foreign investors have poured roughly $15 billion into Indian stocks this year, helping drive a 75 percent rally through Thursday, and were among the sellers on Friday.
Dubai said on Wednesday it wanted creditors of Dubai World and property group Nakheel to agree to a debt standstill as it restructures Dubai World, the conglomerate that spearheaded the emirate's breakneck growth. Dubai World had $59 billion in liabilities as of August.
"Whenever this sort of situation arises you will see a flight to safety, but I think within the emerging markets space India and China clearly are the favourites, so to that extent they will be protected on the downside," said Manish Sonthalia, portfolio manager at Motilal Oswal.
The benchmark Sensex pared losses to 2.2 percent on buying at lower levels in mid-afternoon trade after falling as much as 3.8 percent, outperforming the 4 percent drop in the MSCI Index of non-Japan Asia.
India and the United Arab Emirates, of which Dubai is a member, are separated by the Arabian Sea and closely linked by the millions of Indians who work in the region. Indians make up about 40 percent of the UAE's population, accounting for 10 to 12 percent of India's inward remittances, CLSA said in a report.
The UAE was the second-biggest export destination for India during the nine months through December 2008, accounting for $14.6 billion, or 11.15 percent of India's total -- a share that has been rising and closing in on the United States.
"This event would be a trigger for investor risk aversion and that could slow down the flow of capital into emerging markets, and Indian stocks would be affected by that," said Gaurav Kapur, senior economist at ABN Amro Bank in Mumbai.
Minister for trade Anand Sharma said India's economy was unlikely to be hard-hit by the situation in Dubai. "India is a very large economy. I don't think some development in the real estate in Dubai is going to impact the Indian economy," he told reporters.
While Indian banks are heavily focused on the domestic market, they are active in handling remittances from overseas workers and India's banking index was down 3 percent.
Bank of Baroda, which had a total exposure in the UAE of around 100 billion rupees ($2.1 billion) according to its chairman, saw its shares fall about 7 percent. The mid-sized lender has 10 branches in the Gulf, more than any other Indian bank, according to CLSA, but the exposure is mostly related to remittances, the brokerage said.
SENTIMENT HIT
Several market players said the biggest impact of Dubai's difficulties would be on sentiment. "The market was expensive, and it was looking for a reason to correct, and Dubai happened to be one," said Anand Shah, head of equities at Canara Robecco Mutual Fund. "Fundamentally, we are not impacted. But, if the risk appetite comes off, the liquidity flow could reduce," he said.
Many Indian companies were quick to play down their exposure to Dubai. Engineering conglomerate Larsen & Toubro said it had exposure to Dubai of $20 million to $25 million. India's largest listed realty firm, DLF, and second ranked Unitech said they had no exposure to Dubai, and leading private bank ICICI Bank said it had no material exposure.
Real estate shares were down 3.83 percent. Nagarjuna Construction said it was slowing down its real estate operations in Dubai. "We have only one real estate project in Dubai, to develop 1.45 million sq feet ... and right now in the Dubai real estate market we are going slow on this project," Y D Murthy, executive vice-president, finance, said.
Emaar MGF, a joint venture between Indian financier MGF and the UAE's Emaar Properties, is one of several Indian property firms planning a listing. It has filed papers with the market regulator to raise about $830 million, about half the amount it had planned to raise in 2008.
Emaar MGF declined comment, saying it was in a silent period after having filed the prospectus for its share offering.
"For real estate per se, the pressure would be due to lack of investor appetite at a time when a slew of IPOs are lined by local real estate companies," ABN Amro's Kapur said.
NEW YORK: It's one Forbes list where none would want to figure, but Ramalinga Raju, the founder-chairman Satyam Computers (now Mahindra Satyam),
has managed the feat of being among the world's 10 most outrageous CEOs.
Raju has been ranked as the world's fourth most outrageous CEO in 2009 on the list compiled by the Forbes, known for its rankings of the richest and the most powerful the world over.
Giving Raju company are Sri Lankan-origin American hedge fund manager Raj Rajarathnam (third), former Merrill Lynch CEO John Thain (2nd) and Goldman Sachs' Lloyd Blankfein (1st).
Raju, the only Indian on the list dominated by Americans, owes his place on the list to his disclosure in January about committing the country's biggest ever corporate fraud.
In January, B Ramalinga Raju, the founder of Satyam Computer Services, confessed to overstating its profits over several years and creating a fictitious cash balance of more than $1 billion.
He confessed to inventing more than 10,000 fictional employees to help him steal money from the company, and using his mother's name to buy land with the proceeds. The police arrested Raju, his co-founder and brother, B Rama Raju, and former CFO Srinivas Vadlamani on charges of cheating, forgery and breach of trust.
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By Adib Zalkapli
