Private pension go-ahead

KUALA LUMPUR: The much talked about private pension funds will kick off by the middle of next year.

Minister in the Prime Minister’s Department Tan Sri Nor Mohamed Yakcop, who announced this, said the new scheme would target the two million self-employed and those who were outside the current pension scheme.

He said the new pension funds could either be operated by new fund management firms to be licensed by the Securities Commission, or by existing firms.

The funds would be regulated by the Securities Commission.

“Several fund managers have already shown keen interest,” he told a press conference after delivering his keynote address at the Forum on Private Pension Industry Retirement Funds here yesterday.

Nor Mohamed said the scheme would target self-employed individuals who currently did not contribute to the Employees Provident Fund or those who wanted to contribute more than the EPF’s statutory requirements.

“We have to ensure it is well managed as it is a pension fund, a fund for individuals in their old-age,” he said.

He said the EPF had a government guarantee of 2.5% return.

“The private pension funds should be able to provide a ‘market return’ at any point of time,” Nor Mohamed said when asked on investment returns.

“The EPF has RM340bil in assets now. These private pension funds have huge potential,” he said, adding that there were currently 5.7 million active EPF members.

Nor Mohamed said the funds were part of the Government’s effort to reform the pension fund industry.

“This is crucial as Malaysia moves towards a developed and high income nation,” he said, adding that such funds would be a boost to the nation’s capital markets.

He said the SC had been tasked to prepare a report containing further details within the next six months.

“The Government at the same time will look at its own pension scheme and the Employees Provident Fund (EPF), and head a committee to coordinate all aspects of the pension reform,” he said.

In a survey by the EPF, it was found that around 90% of members have less than RM100,000 in their accounts and more than 70% would have exhausted their money within three years of withdrawing the lump sum upon retirement.

“This underlying trend reflects the sole dependence of retirees on their EPF savings as a safety net and as such, the inadequacy of sustainable levels of income after retirement,” he noted.

He said Malaysia had pension coverage via EPF, the Public Sector Pension Scheme and Lembaga Tabung Angkatan.

“However, there are gaps in the existing pension framework,” he said.

SC chairman Tan Sri Zarinah Anwar said the regulator would make capital preservation and investor protection top priorities when it came to the funds.

“We are gathering input from successful private pension funds models in other countries. We will then try and adopt the best practices to start off on the right footing,” she said.

Areca Capital Sdn Bhd chief executive officer Danny Wong said it “would take some time” to see the impact of the funds on the capital market.

“It all depends how individuals respond,” he told The Star

Naza to open maiden Tutti Frutti

Tutti Frutti, a US frozen yogurt chain, will hit local shores through the franchise route, with the opening of its first outlet by September and another four by December.

Its Malaysian master licence holder, the Naza Group of companies, will spend some RM3.5 million to open Tutti Frutti outlets across the country and provide training, corporate identity guidelines and equipment.

"We plan to open 25 outlets by the end of 2010 and to double the number by 2012," Naza Group director Nur Diana SM Nasimuddin said at the signing of the master licence agreement between the Naza Group and US-based Well Spring Inc in Kuala Lumpur yesterday.

Under the licence agreement, the Naza Group will hold exclusive rights to develop Tutti Frutti franchisees in Singapore, Thailand and India.

To achieve this target, Nur Diana said, the Naza Group will invest in developing the Tutti Frutti brandname in the respective markets and will invite entrepreneurs who are interested in becoming franchisees

Only rich Britons can get professional jobs

LONDON, July 21 — Only children from the richest families can enjoy careers in top professions like law and medicine because of increasingly impenetrable social barriers, a government-commissioned report said today.

The study, led by former Labour government minister Alan Milburn, said there was a “closed shop mentality” in many professions which excluded young people from low and middle income backgrounds.

“Frankly there are too many kids out there from average income families who are bright . . . and who want to go on to get a top professional carer but haven't got the right connections, haven't necessarily gone to the right school, maybe haven't had the chance to go to university, and that has all got to change,” Milburn told BBC radio.

The “Fair Access to the Professions” report said “birth not worth” had become a greater factor in deciding someone's chances in life and that professions had become increasingly socially exclusive, open to fewer people.

It found:

* 75 per cent of judges, 70 per cent of finance directors and 45 per cent of all top civil servants had been to independent schools, although just 7 per cent of the population were independently educated.

* Those who get professional jobs grow up in a family richer than seven in 10 of all families.

* A doctor of the future will grow up in a family richer than five in six of all UK families, while a journalist will grow up in family more affluent than three in four of all families.

But Milburn said a large expansion in such jobs in the near future – with up to seven million new professionals needed by 2020 – provided an opportunity for a second wave of social mobility, similar to the situation after World War Two.

The report made 88 recommendations, including opening internships to a wider pool of people, improving careers advice and making extra-curricular school activities and university degrees more widely available.

There also needed to be a campaign to raise aspirations and, although it rejected a return to academic selection of pupils, the report called for parents to be given the right to choose better schools for their children.

Milburn said efforts by Labour to improve the performance of schools since the party had been in power for the last decade had helped but more needed to be done.

“We've managed to raise the glass ceiling but in all truth we haven't broken through it,” Milburn said.

Professional bodies welcomed the report.

The Bar Council, the professional body for advocates in England and Wales, said it would “redouble” its efforts to improve access to the profession.

“The Bar has a good story to tell on gender balance and ethnic mix,” said its chairman Desmond Browne.

“At all levels, the profession has also shown its commitment to promoting access to the Bar for the talented, regardless of social background.”

The Medical Schools Council said more efforts were needed to attract people from all backgrounds into medical careers.

But doctors' body the British Medical Association said the “crippling” costs of studying medicine made the career inaccessible to poorer children. – Reuters

Philippines' richest man to expand empire in China

MANILA: Billionaire Henry Sy, whose retail empire has made him the richest man in the Philippines, may build as many as three malls a year in China to expand in the first major economy to rebound from the global recession.

"We have 34 malls in the Philippines and China is a market that's 13 times bigger" by population, said Hans Sy, president of SM Prime Holdings Inc, a unit of his father's SM Investments Corp. SM Prime, the biggest Philippine mall operator, is spending 5.5 billion pesos (100 pesos = RM7.67) this year in China.

SM Investments, whose 61 per cent share-price gain this year beats the Philippine benchmark, is increasing capital spending for 2009 by almost a third. Expanding in China, the world's most populous country, may help open opportunities for the family's other businesses, said Teresita Sy-Coson, Henry Sy's eldest child and vice-chairwoman at SM Investments.

"The malls will be an excellent outpost for the group," said Alex Pomento, Philippine strategist at Macquarie Group Ltd. "They get a gauge of China's consumer pulse and a springboard for the group's other businesses."

Tata Motors delivers first Nano

MUMBAI, July 17 — Tata Motors Ltd, India’s largest vehicles maker, delivered the Nano, the world’s cheapest car, to its first three customers today.


Chairman Ratan Tata had showcased the Nano at an auto show in New Delhi in January last year, but consumer bookings began only in April this year after the project was delayed due to land disputes at its planned site in the eastern state of West Bengal.

The plant for producing the Nano was shifted to a new site in Gujarat on the west coast, but the first batch of Nanos would come from its car plant in Pantnagar in northern India.

Tata has assured price protection for the first 100,000 customers, for whom the cars will be available for 100,000 rupees (RM7,337), excluding taxes. – Reuters

Merapoh in US$10b refinery venture

Privately-held Merapoh Resources Corp Sdn Bhd has roped in two private Chinese companies to invest US$10 billion (RM36 billion) in a refinery project that will include Chinese state oil company China National Petroleum Co (CNPC).

Hong Kong Beijing Star Ltd and Winson Investment Ltd will invest US$5 billion (RM18 billion) each to build the refinery in Yan, Kedah.

The two investors signed a memorandum of agreement with Merapoh and the Kedah state government in Kuala Lumpur yesterday.

Merapoh executive chairman Md Nazri Ramli said it will invite other local and foreign investors to take up stakes in the project.

Construction is scheduled to start next month.

Hong Kong Beijing Star and Winson will hold 40 per cent stake each, with Merapoh owning the rest.

"Local and international financial institutions will become investors and equity partners of the project," Md Nazri told reporters after the signing.

Work on the two-train refinery, which involves reclaiming 340ha offshore, will take five years, with commissioning expected by end-2013 or early 2014.

The refinery will be able to process 350,000 barrels of oil per day (bpd).

Merapoh has hired SK Group of Companies to build the refinery in the Sungai Limau Hydrocarbon Hub.

SK Group is South Korea's third largest industrial group. Its unit SK Energy will also operate the refinery.

To comply with government rules, 30 per cent of works, such as building tank farms and pipe-laying, will be awarded to local contractors, Md Nazri said.

"We will build a 20km pipeline going towards offshore Kedah for offloading of crude oil and loading of refined oil. The refined products will be ferried, using tankers, to consumers in East Asia, particularly China," he said.

Under the project, Merapoh will import crude oil from the Middle East, process the crude into refined products and export them to China and other Asian nations.

Merapoh has tied up with CNPC under a 20-year deal in which the Chinese oil company will buy the bulk of the plant's output and market the rest.

"Some 200,000 bpd of refined oil will be allocated specifically to CNPC for them to market in China, while the remaining 150,000 will be sold on the open market."

Saudi Aramco will supply crude oil to Merapoh under an in-principle deal.

"We expect to sign a deal in the next one or two months.

"We may also rope in suppliers from the other Middle East countries, probably Iran," Md Nazri said.

Google ad sales down

SAN FRANCISCO: Google Inc.'s Internet ad sales grew at their slowest rate ever during the spring, forcing the online search leader to tighten its belt another notch to propel its second-quarter profit above analyst estimates.

The performance - punctuated by revenue growth of just 3 percent - disappointed investors.

The company's shares fell more than 3 percent in extended trading Thursday after the results were released.

Google is the most profitable company on the Internet, thanks to its dominance of the online advertising market.

That means its lackluster revenue growth could foreshadow even more significant sluggishness among other Internet companies that rely on advertising and e-commerce.

Many of those companies will detail what happened in their second quarters in the coming weeks.

Although the U.S. recession has been making it increasingly difficult for Google to sell ads, Chief Executive Eric Schmidt said he doesn't expect the climate to become any more challenging.

"We're not at the moment looking at that downward spiral that we thought we might see six months ago," Schmidt told analysts during a Thursday conference call.

The remarks echoed comments made to reporters last week when he said the recession had already appeared to hit bottom.

The Mountain View-based company earned $1.48 billion, or $4.66 per share, during the three months ended in June.

That compared with income of $1.25 billion, or $3.92 per share, for the same period last year.

Revenue rose to $5.52 billion from $5.34 billion in last year's second quarter.

It marked Google's lowest growth rate since the company went public five years ago.

It was also the company's second consecutive quarter of single-digit revenue growth, which had never fallen below a 30 percent pace until late last year.

If not for stock compensation expenses, Google said it would have made $5.36 per share.

That topped the average estimate of $5.09 per share among analysts polled by Thomson Reuters.

After subtracting ad commissions, Google's net revenue totaled $4.1 billion - about $40 million above analyst estimates.

Google relied on cost cutting and an unusually low tax rate to boost its profits amid the slowing ad sales.

For instance, the company trimmed its general and administrative expenses by 23 percent to save about $110 million and reduced its spending on capital projects by 80 percent, or $559 million.

The financial discipline resulted in the biggest quarterly reduction in Google's payroll since Larry Page and Sergey Brin started the company in a Silicon Valley garage nearly 11 years ago.

Google ended June with 19,786 employees, 378 fewer than at the end of March.

Google's second-quarter tax rate was 20 percent, well below the 25 percent range that is typical for the company.

The company's shares fell $14.50, or 3.3 percent, after finishing the regular session at $442.60, up $4.43.

The stock has surged by about 50 percent since it last traded below $300 in early March, reflecting investors' faith in Google to weather the recession better than most companies. - AP