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Challenges for immigration system

THIS week, the Home Ministry issued a request for proposal (RFP) for the development of a new integrated immigration system for the Immigration Department. The exercise drew overwhelming response. But many interested parties were disappointed as only companies registered with the Finance Ministry were allowed to participate in the RFP exercise. Aside from that, this new RFP has to contend with the fact that this project is coming from the ashes of the now-defunct RM3.5bil Sistem Kawalan Imigresen Nasional (SKIN) project approved by the previous Barisan Nasional administration.

Home Minister Tan Sri Muhyiddin Yassin had said previously that the decision to cancel SKIN was based on the need to develop a new system that was more comprehensive, efficient and user-friendly.

He also said that the new system must be one that is value-for-money and would bring savings to the government.

It is left to be seen if that is easily achievable. For starters, there is the ongoing RM733mil legal claim by Prestariang Bhd against the government for the unilateral termination of the SKIN project by way of expropriation.

The SKIN project was a 15-year concession, which had been secured by Prestariang’s subsidiary, Prestariang SKIN Sdn Bhd (PSKIN), on Aug 9, 2017.

Under the multi-billion-ringgit deal, Prestariang was required to design, deliver, continuously maintain and provide scheduled upgrades for a new immigration and border control system that was supposed to replace the existing Malaysian Immigration System (MyIMMS).

Built in the 1990s, MyIMMs is said to be a patchwork of different systems, which, in turn, has led to oft-reported instances of border control compromise and the inability of the government to carry out crucial threat assessments.

PSKIN has clarified that the key payment terms of SKIN were not financially burdensome to the government. It said that the SKIN project was a self-funded project, which could have generated new income and created savings for the government. Payment to PSKIN by the government would only commence after SKIN is completely operational. SKIN was initially projected to provide the information and communications technology firm an annual payment of about RM294.7mil from year four to year 15 during the maintenance and technical operation phase. Hence, any new system being built will have to at least match these features, if not do better.

APM bucks the trend

A common thread appearing in the notes accompanying the results of companies in the current reporting season is how the US-China trade war has affected business.

More often than not, the trade war, which has generally thrown global trade onto an uncertain path, is used as the reason for the poor performance. From plantation companies to construction and property developers, they all blame the trade war for their troubles.

However, APM Automotive Holdings Bhd has bucked the trend.

In its latest quarterly results, the company that produces automotive components with operations in the region and countries such as the Netherlands, the United States and Australia, states that the downtrend is not something that is new or unexpected.

The company, which is part of the Tan Chong group, says that it has put in place measures to mitigate the risk associated with the downtrend and plans to go ahead with its five-year expansion plan prudently and cautiously.

Going forward, APM remains optimistic and believes that its expansion plan can and will yield positive results to the group as a whole.

APM’s positive statement comes amidst the company registering a drop of almost 40% in its profits for the first quarter ended March this year. The results were down due to lower profits from its local operations and losses from overseas offices, where it supplies components as an OEM manufacturer.

If one were to look at it, APM is right in anticipating the current tough market conditions and not putting the blame squarely on the trade war. In fact, the trade war between the US and China has been ongoing for more than a year now without any resolution in sight.

So, do companies stop doing business outside their comfort zone or put on hold their expansion plans?

Certainly not, as in the case of APM. It has put in place measures to mitigate the downtrend and rightly pointed out that the expansion plans would go ahead.

A war with no winners

THE trade war that has gripped the global markets does not look like it will end anytime soon. Both the US and China have dug into their trenches and it is now the war of attrition as to what will happen next.

When the US slapped the 25% tariffs on China’s exports to the US, it was done with the knowledge that it will also hurt the US economy. Economic growth will get dented, as the tariffs will lead to higher prices and it is to be watched how inflation will play its role on the US Federal Reserve, whose priority has always been to keep an eye on the rise in the price of goods and services.

The fallout, though, will also be felt throughout the world, as when the US and China’s growth slows, it will have ramifications on all other countries.

In Malaysia, the immediate effect has been on the price of palm oil. Palm oil trades at a discount to the price of soybean and the slump in soybean prices will impact the price of palm oil and the oil palm industry.

As it stands, Bursa Malaysia is weighted quite significantly on plantation stocks. The larger growers have benefited from the steady price of oil palm until of late, where depressed prices and rising production costs have pinched on margins.

This is going to have a profound impact on the stock market, where tech stocks are now fending off the claws of the bear. Coupled with a lethargic construction and property sector, it has been no surprise to see the benchmark FBM KLCI taking a hit with no sight of recovery on the horizon.

Right now, the world is at the mercy of the trade war and also the outcome of Brexit. The contagion impact has to be taken seriously, as the collapse of Lehman Brothers has shown the roiling troubles it can cause through the domino effect of such a collapse.Malaysia might benefit in the short term from the displacement of manufacturers from China, but with projects like the ECRL kicking off, the need for a healthy China economy is paramount to the success of that mega-project.

There are few winners in any war, let alone a trade war that has its offshoots in political collateral in the upcoming US election. The question before the policymakers already grappling with a sluggish economy is, what needs to be done next.

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