Latest news with #RM10bil
The Star
a day ago
- Business
- The Star
Manageable impact
PETALING JAYA: The impact from the implementation of the expanded sales and service tax (SST) is expected to be rather contained thanks to its targeted approach and relief measures in place. Putrajaya's announcement on Monday to roll out the expanded SST on July 1 came as no surprise as the government had previously signalled their intention to gazette the bill in early June after a slight delay from the original May deadline. The expanded SST is expected to generate an estimated RM10bil in additional tax revenue on an annualised basis. Under the enlarged SST, essential goods like rice, cooking oil, bread, sugar, medicines and basic construction materials (cement, sand, iron) will still be exempted from the sales tax. Luxury and discretionary items, however, such as king crab, imported fruits, truffle mushrooms and silk fabrics will be taxed at 5%, while premium goods like racing bicycles and antique paintings will face a 10% tax. On the services side, selected segments will be taxed between 6% and 8% including rental and leasing services, construction, financial services (fees and commissions), private healthcare for non-citizens, high-end private education institutions and beauty services. There are exemptions of course, including residential rentals, basic banking services and for smaller businesses. Hong Leong Investment Bank (HLIB) Research had described the expanded SST as a 'non-event' from a market viewpoint, with 'limited' sector profit impact, given its targeted approach. The research house said while sectors such as construction, banking, and healthcare may appear exposed, it expects any profit impact to be negligible. 'For construction services, we foresee limited impact on contractors as most contract structures allow for cost pass-through mechanisms and new project tenders are likely to be repriced, transferring the incremental cost to end-customers,' HLIB Research said in a report yesterday. Meanwhile, the research firm added it does not expect any material impact to banks with non-essential fee-based revenue accounting for only about 6% to 7% of total sector operating income. Nonetheless, HLIB Research also noted the demand for these services will stay fairly inelastic, given limited substitutability. As for private healthcare services, given that SST applies only to foreigners, and medical tourism remains a small revenue contributor (about 5% to 10%) at this stage, the research outfit said demand should remain intact. 'This is backed by Malaysia's strong clinical reputation and continued pricing advantage versus regional peers, even post-SST. 'Moreover, healthcare services are inherently price inelastic and we do not expect operators to absorb the tax. We see no earnings impact to the sector,' HLIB Research opined. This is largely concurred by other research houses with CGS International Research stating that in the bigger scheme of things, the rollout of the wider SST scope (previously delayed from May 1, 2025) indicates the country's 'wheels of reform remain in motion to responsibly consolidate its fiscal deficit position.' Nonetheless, the impact on consumers remains a key concern, especially as businesses are expected to pass higher operating and input costs onto them. On this note, CIMB Research said it remains 'slightly negative' on the expanded SST, even though various relief measures have been introduced. The research house flagged that the expanded SST is negative for the consumer sector due to increased operating costs and weaker consumer demand. 'We expect most consumer companies will need to raise selling prices to pass on additional costs, which could further weaken spending power. The expanded SST is likely to erode wallet sizes, particularly owing to higher price points for non-essential goods and the broader range of taxed services,' CIMB Research said. That said, Bank Muamalat Malaysia Bhd head of economics, market analysis and social finance Dr Mohd Afzanizam Abdul Rashid said there could be knee jerk reaction at the beginning for consumers, but thereafter the trend could normalise. 'Consumers will eventually get used to it because they are price takers,' he told StarBiz. Even so, Afzanizam also noted that this 'does not mean that the market can take things for granted'. 'We have already observed that private consumption is growing below trend levels, which goes to show that consumers are selective and cautious as they balance their needs and wants,' he said. Afzanizam is of the view that the impact from the expanded SST on inflation is likely to be manageable as there are exemptions in place. He added that the relief measures under the revised SST structure will provide some relief to the economy, as the government has to walk on a tightrope between improving the fiscal position and minimising the impact of the expanded SST to the rakyat. 'We have seen the impact from the upwards adjustment in the service tax rate from 6% to 8% which had commenced on March 1, 2024 and the diesel subsidy rationalisation on June 10, 2024. 'Inflation rate last year had moderated to 1.8% in 2024 from 2.5% in 2023. Currently, the inflation rate has been hovering at 1.4% in April and March this year,' he said. Meanwhile, economist Geoffrey Williams said there will be an increase in the prices of the newly added goods and since the SST has a cascading effect, this will also impact prices more broadly. 'However the new categories added only constitute a small part of the consumer price index basket of goods and services and the tax effect is one-off. 'Since inflation is low at the moment this is a good time to introduce the change,' he said. Further, Williams pointed out that since the new products and services added to the expanded SST are luxury and non-essential goods, low-income groups should not be affected too much. 'Moreover, existing exemptions that benefit low-income groups have also been retained in a balanced way,' he said. UOB Kay Hian Research also projects there will be a minimal impact on the consumer sector from the enlarged SST, as the increased sales tax does not apply to essential goods. While the research house noted the service tax on sizeable rental or leasing service providers to 8% will likely have an indirect spillover effect that effectively translates to marginally revised rental rates for select outlets, it is ultimately 'very digestible' by the retailer.
The Star
3 days ago
- Business
- The Star
Econpile set for new job wins on Penang LRT catalyst
File: Artist impression of Penang LRT Mutiara Line. PETALING JAYA: Econpile Holdings Bhd , which has secured its first contract for the Penang light rail transit (LRT) Mutiara Line, is poised to win more jobs as the RM10bil project gains momentum, analysts say. On June 5, Econpile announced it was awarded a RM42.8mil bored piling sub-package spanning three stations – from East Jelutong to Gelugor – out of the total 21 stations. The works are scheduled to begin on Aug 1, 2025 and end on Oct 31, 2027. CGS International (CGSI) Research said the win validated its view that the Penang LRT is progressing as planned, with full-scale construction expected to begin in the fourth quarter of 2025 (4Q25). 'For the broader construction sector, we think this win validates our thesis that the Penang LRT Mutiara Line is progressing as planned and construction works should be in full swing in 4Q25. 'This is likely to benefit Gamuda Bhd , as we expect it to be contracted for more work for the Penang LRT, amounting to an additional RM3bil on top of its initial contract value of RM5bil,' it said. Other potential beneficiaries include Malayan Cement Bhd , HSS Engineers Bhd , IJM Corp Bhd and Sunway Construction Group Bhd . CGSI Research said Econpile's year-to-date new order wins now total RM333mil, with an order book of RM487mil as at June 2025. The group is aiming for RM400mil to RM450mil in new jobs for its financial year ending Dec 31, 2025 (FY25), in line with last year's performance. 'We expect gross profit margins for the Penang LRT bored piling contract to be about 10%-15%, higher than the recent piling projects for property development it won over the past one year,' it said, adding that Econpile's performance should improve in 4Q25. CGSI Research maintained its 'add' rating and 46 sen target price, citing Econpile's strong presence in infrastructure projects and the largest fleet of bored piles in Malaysia. Meanwhile, CIMB Securities Research said the sub-package forms part of the larger package for which the Gamuda-led SRS Consortium Sdn Bhd – comprising Gamuda (60%), Ideal Property Development Sdn Bhd (20%) and Loh Phoy Yen Holdings Sdn Bhd (20%) – is the principal civil works contractor. Mass Rapid Transit Corp Sdn Bhd is the project developer and asset owner of the Mutiara Line. 'Having secured the first major piling contract under the Penang LRT Mutiara line, the group is well-placed to bid for a larger piling-related job that is coming up,' CIMB Research said. It kept its 'buy' rating and 38 sen target price, pegging the stock at 19 times 2026 core earnings per share of 1.9 sen.
The Star
26-05-2025
- Health
- The Star
Riding that wellness trend to a healthier Malaysia
Walk into any Malaysian pharmacy, scroll through social media, or spend five minutes at a weekend market, and you'll see it: the wellness wave. Herbal teas promising 'natural detox', fitness trackers counting every step, yoga mats slung over shoulders like badges of honour, etc. From the United States to South Korea to the Middle East – and now in Malaysia – people are becoming more proactive about their health, and much of that action is happening outside of hospitals and clinics. This growing trend – often called consumer-driven wellness – is about everyday people taking charge of their health through diet, exercise, regular screenings and lifestyle tweaks. In Malaysia, where chronic diseases are rising fast and public healthcare is under pressure, the impact could be huge. But with every turmeric shot or 'miracle' supplement, there's a catch: not all wellness is backed by science, and some of it could do more harm than good. A big business Globally, wellness is big business. Americans spend billions of dollars on health tech, supplements and boutique fitness classes. In South Korea, wellness is sleek and high-tech – early screenings, personalised nutrition plans and 'biohacking' regimens are now part of mainstream life. In the Middle East, especially in the United Arab Emirates and Saudi Arabia, government health campaigns are encouraging citizens to lose weight, eat better and be more active. Boutique gyms and wellness retreats are popping up in cities like Dubai faster than you can say 'mindful meditation'. Malaysia is starting to catch up. Our cities are full of juice bars, organic grocers and fitness apps. Instagram is bursting with local influencers touting 'clean eating' and morning workouts. Even the government is encouraging healthier lifestyles through campaigns that aim to shift public attitudes from treatment to prevention. This shift matters. Malaysia is facing a serious health challenge. Diabetes, high blood pressure and obesity are on the rise. These diseases are expensive to treat, tough to manage and often avoidable. Encouraging Malaysians to take better care of themselves before they get sick could save lives – and billions of ringgit. Equal access needed It's easy to see the appeal. Why wait for a diagnosis when you can take small steps now to avoid getting sick in the first place? Regular exercise, eating well, reducing stress and sleeping enough – these are the unglamorous, but powerful tools that can dramatically reduce your risk of major illnesses. Financially, the benefits are just as clear. Hospital bills, medication and lost productivity cost both individuals and the country huge amounts every year. A study from the Health Ministry estimated that chronic diseases may cost Malaysia more than RM10bil a year. Prevention doesn't just help people live longer, it helps them stay out of hospital beds and in the workforce. But here's the challenge: not everyone can afford gym memberships or organic food. The wellness trend risks becoming an urban, middle-class privilege. For those in rural areas or low-income households, staying healthy isn't always a matter of choice; it's about access, time and cost. If Malaysia wants wellness to be more than a lifestyle trend, it has to make it accessible to everyone. Keep informed Malaysia's multicultural heritage has long embraced natural and traditional remedies. Malay jamu, Chinese herbs and Indian Ayurvedic treatments have been part of family routines for generations. Many of these practices can offer real benefits, especially when it comes to minor ailments or stress relief. But today's wellness marketplace is different. It's louder, flashier and not always honest. The rise of 'healthfluencers' on social media has led to a flood of bold claims: miracle pills that melt fat, supplements that 'cure' diabetes, detox kits that supposedly clean out your liver, etc. Some of it is harmless, while some of it is useful, but some of it is dangerous. Supplements may contain hidden drugs, interact with medications or give people false hope. When someone chooses a fake cure over real treatment, the results can be deadly. Regulators have tried to step in, but online sales and social media marketing make enforcement difficult. The key is balance. People shouldn't be discouraged from exploring traditional remedies or lifestyle changes, but they should have access to accurate information too. That means educating the public, training healthcare professionals to talk about wellness without dismissing it, and holding scammers accountable. Turning trends into strategy The rise of consumer-driven health isn't a bad thing; in fact, it's exactly what Malaysia needs. Our public hospitals are under pressure, our population is getting older, and lifestyle diseases are becoming more common. Getting people to take care of their health before things go wrong is smart policy. But to make it work, we need a strategy. That means: Government support – e.g. incentives for health screenings, fitness programmes and nutritious food. Better information – e.g. public education campaigns and regulation of health claims online. Inclusive access – i.e. making sure wellness isn't just for the rich, but available in rural areas and low-income communities as well. It also means a new mindset from doctors and patients alike. People are no longer just passive patients; they're consumers, researchers and decision-makers. Doctors need to engage with this reality, guide their patients through the noise, and work with – not against – this new wave of wellness. Consumer-driven wellness isn't just a trend; it's a powerful shift in how we think about health. Done right, it could help Malaysia become healthier, more resilient and less dependent on expensive treatments. Done wrong, it could lead to more inequality, misinformation and false hope. Wellness is good, but smart wellness – guided by science, grounded in reality, and open to all – is better. Dr Helmy Haja Mydin is a consultant respiratory physician and Social & Economic Research Initiative chairman. For further information, email starhealth@ The information provided is for educational and communication purposes only. The Star does not give any warranty on accuracy, completeness, functionality, usefulness or other assurances as to the content appearing in this column. The Star disclaims all responsibility for any losses, damage to property or personal injury suffered directly or indirectly from reliance on such information.
The Star
20-05-2025
- Business
- The Star
Heavy equipment set to be a boon for Sime Darby
PETALING JAYA: Sime Darby Bhd 's unit Sime Darby Industrial (SDI) is emerging as a key growth engine, fuelled by its strong performance in Australia, rising capital expenditure in mining, strategic commodities diversification and growing contribution from high-margin after sales and rental services. According to CIMB Research, SDI accounts for 63% of the group's revenue with solid profit before interest and tax (PBIT) margins and a potential stand-alone valuation of RM10bil to RM12bil. The research house recently visited Sime Darby's industrial and motor-vehicle operations in Brisbane and Mackay, Australia that revealed valuable insights into key revenue drivers and long-term growth opportunities in the Australian market. Australia remains one the group's most important growth engines, contributing 53% of Sime Darby's core PBIT and 33% of revenue in its financial year 2024 ended June 30 (FY24) . Within the industrial division, Australian operations accounted for 77% of SDI's revenue and 87% of its core PBIT in FY24, up from 60% and 67%, respectively, in FY19. SDI is one of the world's top two dealers for Caterpillar heavy equipment and has delivered strong growth, driven by its Australian operations, rising spending for mining, and strategic acquisitions. A key contributor to margin expansion is the growing share of higher-margin after sales and rental services, which now account for 63% of revenue and deliver two to three times the margin of equipment sales. 'The segment provides annuity-like returns, supported by a growing installed base and multiple machine rebuild cycles,' noted CIMB Research. 'We estimate SDI could be worth RM10bil to RM12bn, based on a trailing 2024 price-earnings ration of 15 times to 18 times, representing between 69% and 82% of Sime Darby's current market capitalisation of RM14.7bil. In our view, a re-rating is warranted, underpinned by SDI's strong fundamentals, resilient earnings and attractive margin profile.' With accelerating digitalisation, expanding aftermarket penetration, and infrastructure-driven tailwinds, CIMB Research said SDI presents a compelling industrial pure play with monetisation potential. The research house reiterated a 'buy' call on Sime Darby with an unchanged target price of RM3. 'Our growth outlook is underpinned by resilient performance from the industrial segment, a turnaround in its China operations, and improved cost optimisation following the integration of UMW Holdings Bhd ,' it added. The stock also offers attractive dividend yields of 7% and 7.3% for 2025 and 2026, respectively, based on an average dividend payout of 70%.
The Star
16-05-2025
- Business
- The Star
Malaysia firm on justice for MH17 victims, says PM's political secretary
KAZAN: Malaysia remains firm in its position to seek justice and resolution, particularly for the families and victims of the Malaysia Airlines flight MH17 tragedy, which was shot down over Ukraine in 2014, says Muhammad Kamil Abdul Munim. The political secretary to Prime Minister Datuk Seri Anwar Ibrahim, said, however, that Malaysia must also act wisely in handling the issue. According to him, the fact that the latest report by the International Civil Aviation Organisation (ICAO), which found Russia responsible for downing flight MH17, was released a day before the Prime Minister's visit to Moscow, must be taken into account. "I believe, as the Prime Minister mentioned yesterday, this matter should not be politicised. At this point, what matters most is how we can find ways and means to resolve the crisis or issue that has arisen," he told Malaysian media covering the Prime Minister's official visit to Moscow and Kazan, Tatarstan. He noted that there had been calls for the Prime Minister to take a firm stand on the MH17 tragedy. "In a closed-door meeting with President Vladimir Putin yesterday, the Prime Minister directly raised this issue," he said on Friday (May 16). Meanwhile, Muhammad Kamil described the first segment of the Prime Minister's visit to Moscow as highly fruitful. "The Prime Minister met with the Russian Federation's Prime Minister, Mikhail Mishustin, and President Vladimir Putin, where several important matters were discussed, including volatile trade, as well as other issues. "We have seen developments that could further strengthen and expand economic trade opportunities, including confirmation and finalisation of arrangements for direct flights by Russian carrier Aeroflot, which will soon commence operations from Moscow to Kuala Lumpur," he said. He added that this would further boost tourism between both countries, which has already seen a significant increase in visitor numbers between Russia and Malaysia over the past two years. In addition, he said discussions on other sectors also showed positive progress, including in the halal industry. "The Prime Minister also held meetings with industry players and saw great potential over the next five years. If all goes well, we could see investments valued between RM5bil and RM10bil in trade between Malaysia and Russia," he said. Meanwhile, Anwar is scheduled to attend the gala reception on the occasion of the XVI International Economic Forum "Russia - Islamic World: KazanForum 2025" at midnight Malaysian time. The Prime Minister, who is on a four-day official visit starting May 13, arrived in Kazan Friday for the second segment of his trip, which concludes on Saturday (May 17). - Bernama
