SINGAPORE (Sept 10): “We felt like the wounded lion who climbed up the mighty baobab tree to escape a pack of hyenas — only to have the branch break.”— Scott Freidheim, chief administrative officer of Lehman Brothers, writing in the Financial Times on Sept 6, 2018, referring to the week 10 years ago, after the bank was denied a bailout by the US government.
Here are five things you need to know this week:
1 The Singapore-to-Kuala Lumpur high-speed rail (HSR) project has been postponed to end-May 2020. The official notice of this decision comes after months of speculation and uncertainty. The agreement to postpone the project was announced on Sept 5, following a meeting in Kuala Lumpur between Singapore’s Coordinating Minister for Infrastructure and Minister for Transport Khaw Boon Wan and Malaysia’s Economic Affairs Minister Mohamed Azmin Ali.
Under the terms of the revised agreement, the HSR express service is now slated to start by Jan 1, 2031 instead of Dec 31, 2026. As part of the deferment, Malaysia will pay Singapore $15 million in abortive costs before end-January 2019. Should Malaysia choose not to proceed with the project by May 31, 2020, the country will also bear the costs incurred by Singapore in abiding by the agreement. Both Singapore and Malaysia will “continue to discuss the best way forward for the HSR project with the aim of reducing costs”, according to a statement released by both governments.
The HSR project is just one of several that have come under review by the Pakatan Harapan government, which came into power four months ago. As at May 31, Singapore had spent more than $250 million on the project. The bill includes costs of consultants, newly hired staff and also the costs of acquiring land, notably the Jurong Country Club.
The Land Transport Authority of Singapore will be redeploying the specialists hired to work on the HSR project to other jobs within the agency. The Singapore Ministry of Transport has also clarified that the $15 million that Malaysia has to pay are separate from the costs already incurred for the project. Instead, they relate to the winding-down of operations and terminating of contracts.
2 The Monetary Authority of Singapore is holding a public consultation on six proposed cybersecurity measures for financial institutions in Singapore. They are to address system security flaws in a timely manner; establish and implement robust security for systems; deploy security devices to secure system connections; install anti-virus software to mitigate the risk of malware infection; restrict the use of system administrator accounts that can modify system configurations; and strengthen user authentication for system administrator accounts on critical systems.
These measures are already part of the MAS Technology Risk Management Guidelines. The financial industry regulator is proposing that these guidelines be a baseline standard for cybersecurity and be legally binding requirements for financial institutions. The consultation will run from Sept 6 to Oct 5.
3 Former Malaysian finance minister Daim Zainuddin claims that fugitive Low Taek Jho, better known as Jho Low, tried to contact him. According to Daim, Low claimed he could help resolve issues related to the 1Malaysia Development Bhd scandal.
Low is wanted for money laundering offences in connection with the 1MDB scandal. More than US$4 billion ($5.5 billion) were allegedly siphoned from the state-owned fund that was set up by former Malaysian prime minister Najib Razak. Low faces eight charges of money-laundering in Malaysia. He is also a wanted man in Singapore on similar charges.
However, Daim, who is chairman of the Council of Eminent Persons, says he rebuffed Low’s offer. Low made contact in July, just before Daim’s trip to China. The purpose of the visit was to renegotiate Malaysian government loans and contracts inked with Chinese companies during Najib’s term as prime minister.
4 US President Donald Trump appears to face opposition from within his administration. A senior White House official reportedly wrote to The New York Times on Sept 5, claiming that the administration sees Trump as a danger to the nation. According to this official, the Trump administration works as a “two-track” presidency: What Trump says is the opposite of what his staff do. Trump has since responded to the piece by tweeting “TREASON?” The Times piece also claims that officials in the administration have discussed invoking the 25th amendment to the US Constitution. That allows the removal of the president should he be judged unable to perform his duties.
5 Telecommunications company StarHub has been dropped as a component stock of the Straits Times Index following a quarterly review. Dairy Farm International (DFI) will take its place, according to FTSE Russell, which puts together Singapore’s benchmark stock market index with Singapore Press Holdings and the Singapore Exchange.
The STI is made up of 30 of the largest stocks traded on SGX. Companies that have been dropped in recent years include Noble Group and Sembcorp Marine. Shares in StarHub have declined 43.4% since the beginning of the year to close at $1.64 on Sept 6. Once a market darling for its consistent and generous dividend payout, StarHub is suffering from a flagging cable TV business. As a whole, the telco industry is bracing for tougher competitive pressure with the fourth operator, TPG Telecom, poised to begin operations in Singapore soon.
By contrast, DFI, part of the Hong Kong-based Jardine conglomerate, has gained 12.7% year-to-date to close at $8.90 on Sept 6. With the inclusion of DFI, the STI reserve list consists of Suntec REIT, Mapletree Commercial Trust, Keppel REIT, Mapletree Logistics Trust and Mapletree Industrial Trust. These are the next five stocks with the highest market capitalisation not included in the STI. The next review of the index will take place in December.
