The cost of building KLIA2

KLIA2 has been finally launched and there's been a lot of buzz ever since. It faced a tonne of trials and setbacks, but on 2 May 2014, the doors of the airport finally opened to the public, offering its services of an aero-bridge, state-of-the-art facilities and shopping areas.
It's definitely a fancy airport with hotels and rail services to get in and out of the terminal. But all that fancy convenience tend to come with an equally fancy price tag. So how much did it cost to build KLIA2 (and can we really afford to have done it)?

KLIA2 Gateway

The mounting costs
There was a lot of back and forth over cost even before KLIA2 was open, as their initial estimation of building KLIA2 was clearly overshot. In July 2007, it was announced that KLIA2 would cost RM1.7 billion. Then it was increased to RM2 billion in March 2009, and then RM2.5 billion in October 2010. The final cost, which has shocked many, turned out to be RM4 billion with more costs to be expected such as the RM100 million to build an Express Rail Link (ERL) between KLIA and KLIA2. The final cost being more than double the estimation caused quite an uproar, with many demanding to know what had happened along the way.
Chairman of the Public Accounts Committee (PAC), Datuk Nur Jazlan Mohamed, explained that the higher building cost was due to the changes in the aviation industry. He said KLIA2 was initially designed for 25 million travellers, but was now changed to accommodate 45 million travellers after a forecast by the International Air Transport Association Industry (IATA) showed that there will be a demand for low-cost travel options. This caused the size of the terminal to be expanded, meaning other parts such as the aerobridge and baggage handling system also had to be enlarged.
This has caused popular low-cost airline AirAsia to be hesitant to join KLIA2 as they feared they would be unable to keep their rates low with the new airport. AirAsia believes that they would have to raise their prices and that would affect the market that they have been targeting all this time.
Cracks appearing
RM 4 billion was spent to build a state-of-the-art airport supposedly for budget airlines. When put together that way; the plan can sound disingenuous to some. But even if this was a necessary project for the overall development of the country’s economy and infrastructure – shouldn’t RM4 billion be enough to afford some amount of workmanship guarantee?
It was in the news some days ago that KLIA 2 was showing sinking aircraft parking bays and bumpy taxiways just a few weeks after opening. In February, reports of cracks in the tarmac were patched up and although some news sites were quick to dismiss the cracks as ‘standard’ due to piping, it does give one cause for concern. We’ve spent billions of ringgit – is this the standard amount for building something that cracks and depresses within weeks?

Can it still be low-cost?
Malaysia Airports (MAHB) has given the assurance that as of now the charges at KLIA2 would remain the same as LCCT's, though this came with a qualifier in that the moratorium on cost increases would only be for a year. But beyond that, it would be up to the government to decide whether or not there would be higher charges in terms of airport tax and the likes for those who travel on low cost carriers.

But the high cost of building and operating the new terminal has already forced AirAsia to include an additional RM3 fee passed on to consumers booking tickets with them. So, not only did the new airport cos Malaysia Airport Holdings Berhad (MAHB) a veritable king’s ransom – it’s going to cost budget travellers too.

On their website, the airlines explained what the fee is and why they are forced to charge it. In response to why the fee is charged, the website explains: “klia2 Fee is charged to offset the mandatory klia2 facilities charges imposed by the airport authority.” RM3 is not a princely sum by any means but who’s to say where such additional fees will end? It’s as clear as the Klang River at present if anymore charges will be added and how many other airlines may start including such fees to offset the cost “imposed by the airport authority.”
Though many who have seen the new airport commend its snazzy exterior and facilities – it remains to be seen whether the RM4 billion was truly money well spent.

source:yahoo

Coke, Pepsi dropping 'BVO' from all drinks

Coca-Cola and PepsiCo said Monday they're working to remove a controversial ingredient from all their drinks, including Mountain Dew, Fanta and Powerade.

The ingredient, called brominated vegetable oil, had been the target of petitions on Change.org by a Mississippi teenager who wanted it out of PepsiCo's Gatorade and Coca-Cola's Powerade. In her petitions, Sarah Kavanagh noted that the ingredient has been patented as a flame retardant and isn't approved for use in Japan and the European Union.

Coke Pepsi  BVO drinks

Coca-Cola and PepsiCo have stood by the safety of the ingredient, which is used to distribute flavors more evenly in fruit-flavored drinks. But their decisions reflect the pressure companies are facing as people pay closer attention to ingredient labels and try to stick to diets they feel are natural. Several major food makers have recently changed their recipes to remove chemicals or dyes that people find objectionable.

While food companies stress that the ingredients meet regulatory requirements, their decisions reflect how marketing a product as "natural" has become priority and a competitive advantage.
PepsiCo had said last year that it would remove brominated vegetable oil from Gatorade. On Monday, the company said it has since been working to remove it from the rest of its products. PepsiCo also uses BVO in its Mountain Dew and Amp energy drinks.
The company, based in Purchase, New York, didn't provide a timeline for when it expects the removal to be complete.

Earlier on Monday, Coca-Cola had also said that it's removing the ingredient from all its drinks to be consistent in the ingredients it uses around the world. In addition to Powerade, Coca-Cola uses BVO in some flavors of Fanta, Fresca and several citrus-flavored fountain drinks. The company said BVO should be phased out in the U.S. by the end of the year.
Coca-Cola said it would instead use sucrose acetate isobutyrate, which it noted has been used in drinks for more than 14 years, and glycerol ester of rosin, which it said is commonly found in chewing gum and drinks.

A Coca-Cola spokesman, Josh Gold, noted that BVO isn't used in many other countries, but said it would be phased out in Canada and Latin America as well.
The Center for Science in the Public Interest, a health advocacy group, notes that the Food and Drug Administration permitted the use of BVO on an interim basis in 1970 pending additional study. Decades later, the group notes that BVO is still on the interim list.
Kavanagh, the Mississippi 17-year-old, had been planning on launching another petition on Change.org asking PepsiCo to remove BVO from all its drinks. She wasn't immediately available for comment late Monday. Earlier in the day, however, she said, "It's really good to know that companies, especially big companies, are listening to consumers."

source

Malaysia-US Comprehensive partnership TPPA

A Malaysia-US business synergy to drive a mutually beneficial future

PRESIDENT Barack Obama and Prime Minister Datuk Seri Najib Razak attended a signing ceremony where nearly US$2 billion (RM6.5 billion) worth of commercial deals were concluded between Malaysian and American companies in the areas of aviation technology, biotechnology and insurance. As Obama described it: "These deals... investing in each other's country" are the first following a new comprehensive partnership arrived at between Malaysia and the United States. Intended to facilitate such deals and announced during Obama's recent visit, the partnership is designed to step up a two-way investment flow unlike other earlier arrangements, which has made US companies the largest foreign investor here.

Malaysia-US business synergy

 These new deals, for instance, will help create thousands of jobs for GE Aviation in Ohio, North Carolina and Vermont and its suppliers as a result of the US$1.5 billion purchase order of engines for AirAsia's A330 aircraft. Meanwhile, Sime Darby's 30 per cent investment in San Diego-based Verdezyne, a start-up biotechnology company, will bring the latter and its technology to Malaysia to diversify Sime Darby's downstream activity. Finally, the deal signed between the AmBank Group and MetLife will see the involvement of an American insurer in the Malaysian takaful market. Of special significance to Malaysia is the note of thanks from Obama to the PM for expanding economic ties between the two countries and providing jobs for Americans, an important recognition of the depressed US economy and its unacceptably high rate of unemployment.

Malaysia's direct investment in the US has, of late, been increasing. Witness the US$3 billion invested by Genting in the hotel and tourism sector, while the investment portfolio of Malaysia Life Science Capital Fund includes several US bio-technology companies. Khazanah, the country's investment arm, is actively looking for opportunities in California's Silicon Valley. Already, too, despite riddled with bad press, Malaysian investors are in Hollywood working with esteemed directors and star actors. Capital movements indicate, therefore, that Malaysia while remaining economically robust at home, is also looking to foreign shores for means to determine a successful evolution up the value chain to arrive at Vision 2020 on cue, if not earlier.

As such, the United States, as the world's most technologically-advanced nation, in many ways is an obvious source. A symbiotic relationship is, therefore, presenting itself and there is no better point in history when the terms are this good. To ignore it would be to the detriment of Malaysia. If there is a drawback, it is that this country does not have the financial wherewithal to fully exploit what is on offer. Nevertheless, this is no reason to ink the Trans-Pacific Partnership Agreement without further assurances from Washington.

KLIA2:Mitsui to open outlet park at KLIA early 2015

SEPANG: Malaysia's new factory outlet park, the Mitsui Outlet Park KLIA, will start operations early next year, said Malaysia Airports Holdings Bhd (MAHB) chairman Tan Sri Dr Wan Abdul Aziz Wan Abdullah.

The park, the largest factory outlet shopping mall in Southeast Asia with 25,000 sq. m. of commercial area, hosts 140 outlets offering luxury products, fashion accessories, sporting and outdoor goods, a Japanese specialty store, entertainment centre as well as an amusement park, he said.

"The project marks another significant development of an exciting, much anticipated commercial project under the KLIA Aeropolis Masterplan," he said in his speech at the outlet's ground breaking here today.

Also present were Tourism and Culture Ministry secretary general Datuk Dr Ong Hong Peng and Mitsui Fudosan executive managing officer Takeshi Suzuki.

MFMA Development Sdn Bhd, a joint venture company between Mitsui Fudosan and Malaysia Airports, will undertake the construction, tenant leasing, promotions, management and operations of the mall.

"With an investment of RM335 million over three phases, we believe the project will translate to positive returns for the country's tourism and economy.

"We are honoured to have a trusted partner with Mitsui Fudosan, Japan's renowned and most reputable real estate and retail property developer," he said.

Meanwhile Malaysia Airports senior general manager Planning Khair Mirza said: "The people haven't had an outlet mall like this in the Klang Valley, this mall will be the ideal place for them," he told reporters.

He said a shuttle bus service from KLIA to the outlet, about six km away, is expected to be provided.

source NST

Obamacare:more companies are likely to dump health benefits

Get ready for a trip back to the 1950s. Back then, fast-growing companies were in the habit of offering health insurance as a fringe benefit to help recruit workers, a practice that got started during World War II to reward loyal employees when wage controls were in place. It helped that the government had passed a few tax breaks making it affordable for corporations. So it was basically by accident that employer-provided health insurance became the norm in the United States, even though the government came to oversee healthcare in most other developed nations.

 We may soon go back to a model in which employers provide healthcare more as a perk than as a routine benefit, requiring workers to get insurance from other sources. That could save big companies up to $700 billion by 2025, according to a new report from S&P Capital IQ. It’s hard to think of any other single change that could save companies that much money, indicating how powerful the Affordable Care Act (ACA) could become once it has fully impacted the U.S. healthcare system.

S&P predicts that companies will do the math and find it irresistible to move more and more of their workers off company-run plans and into the exchanges established under Obamacare, as the ACA is known. Companies with more than 50 workers will have to pay a penalty if they don’t offer insurance, but it could still be cheaper when factoring in the savings on healthcare; that’s because insurance costs have skyrocketed during the last 20 years, making healthcare one of the costs companies find most difficult to control.

The rising and unpredictable nature of healthcare costs led AOL CEO Tim Armstrong to make his unfortunate comment about "distressed babies" earlier this year. Armstrong took a lot of heat and later apologized, but many CEOs expresss similar frustrations (usually privately).

Health Benefits Phased Out

The migration away from employer-based coverage would probably occur in phases. Companies might start by moving part-timers and new hires off their plans, since they tend to get paid less than other workers and would be more likely to qualify for subsidies under the exchanges. Established employees might be the last to lose employer-based coverage, and companies would still be free to offer healthcare benefits as they choose.

Such moves would probably be controversial at first, given that just about everything related to Obamacare is controversial. And most companies will probably be reluctant to make big changes likely to produce negative headlines. “However, once a few notable companies start to depart from their traditional approach to health care benefits, it's likely that a substantial number of firms could quickly follow suit,” S&P Capital predicts.

S&P likens this change to the evolution away from defined-benefit pension plans toward employee-managed 401(k) plans and IRAs. It would put more burden on individuals to choose a plan from among dozens that might be offered. Out-of-pocket costs could rise, since employers today essentially subsidize premiums at many companies. Companies could offer stipends meant to cover some or all of the premium for workers who buy coverage on an exchange, just as many companies make contributions to workers’ 401(k) plans. Still, some people undoubtedly would go without insurance, just as many workers who ought to save for retirement don’t.

There’s sure to be an uproar over such changes, since workers tend to resist any disruption to the status quo. But the whole model of employer-based healthcare has become a fragile, outdated mess that unduly burdens employers and workers both. American firms often face cost disadvantages because they must bear healthcare expenses that foreign competitors don’t.

Most workers view healthcare coverage as an important benefit, without realizing that it is at least partly responsible for stagnant pay. Since healthcare costs have been rising far more than overall inflation, many firms have continued to offer coverage in lieu of raises. In 2000, health insurance accounted for just 5.9% of average total compensation, according to the Labor Department; it now accounts for 8.5%. Wages and salaries, by contrast, have fallen from 72.6% of total compensation to 69% during the same time span. So removing health insurance from compensation packages could allow companies to offer more generous raises -- and give workers a rationale to ask for them.

There are other potential benefits to workers. People wouldn’t lose healthcare coverage when they leave an employer, making their coverage portable and more stable, thus allowing workers to stick with preferred doctors and other caregivers no matter what their work situation. That could give some people more flexibility to find work that suits them best instead of taking a job just because they need insurance, a factor the Congressional Budget Office cited in February when it said 2 million Americans could decide not to work or work less because of Obamacare. (Of course, that became "Obamcare kills jobs" for ACA's opponents, but it isn't what the CBO actually said.)  

If employers do begin to push workers onto exchanges, it could intensify pressures to push healthcare costs lower. The Affordable Care Act includes some provisions for tackling rising costs, but that was never the primary focus of the law -- despite its name. As more individuals feel the direct sting of rising costs—without an employer to absorb part of the blow—the price of care could become an even more volatile political issue than it is now. The battles over Obamacare may have only begun.

source