02/04/2025

BIZ & FINANCE WEDNESDAY | APR 2, 2025

15 M’sia can tap Uzbek GSP for EU access o Uzbekistan envoy sees strong prospects for halal tourism as AirAsia X gears up for Tashkent flights and potential Samarkand route

KUALA LUMPUR: Malaysian investors, food producers and downstream palm oil products manufacturers should exploit Uzbekistan’s strategic location and use it as a launch pad to further penetrate the lucrative markets of Europe, the Commonwealth of Independent States (CIS) and even China. Uzbekistan’s Ambassador to Malaysia Karomiddin Gadoev also said there was immense potential for the development of halal tourism in Uzbekistan, more so with AirAsia X, which will begin flights to Tashkent this September, possibly considering mounting a flight to the holy city of Samarkand. Elaborating on the economic benefits, he said Malaysian investors could take advantage of the European Union’s (EU) Generalised System of Preferences Plus (GSP+) accorded to his country. By setting up manufacturing operations such as for food products, they could penetrate the lucrative European market which has a consumer base of 559 million people, considered among the world’s largest markets. “Malaysia must take advantage of our trade preferences to access the EU market seamlessly, more so with 6,243 eligible goods qualifying for duty-free treatment under GSP+, he told Bernama after recently appearing as a guest on Bernama TV’s “The Nation” programme. Alluding to the advantages of increased bilateral economic linkages between Tashkent and Kuala Lumpur, he said Uzbekistan, which reportedly has 600 million barrels of conventional oil reserves and 1.8 trillion cubic metres of natural gas reserves, has invited Petronas to explore oil and gas investments. As an inducement to lure investments, the Uzbek government is offering attractive incentives for investors looking to establish or expand their businesses in the country, he said. He cited how Uzbekistan with a market size of 35.6 million people could also be used as a base for Malaysian products to penetrate the immense CIS markets comprising 12 nations including Russia. A trade privilege, the GSP is a duty-free scheme that grants developing countries preferential access to the EU market while GSP+ includes additional elements such as advocating human and labour rights, environmental protection and good governance. This drop was attributed to a shortage of fresh fruit bunch (FFB) supply and increased operational costs in its milling segment. However, on a year-on-year basis, KLR’s net earnings for FY25 grew by 9.5% compared to FY24, as higher palm product prices offset the lower FFB production. AmInvest Research noted that KLR’s FY25 net profit came in 14% below the research firm’s forecast and 10% below market consensus. The underperformance was driven by a 16% QoQ decline in FFB output and weaker milling margins, which impacted the group’s Q4 results. However, KLR declared a final gross dividend per share (DPS) of 5 sen, bringing the total gross DPS to 15 sen for FY25. This translates to a solid dividend yield of 6.5%. AmInvest Research said KLR showed improved earnings in FY25 due to higher

Gadoev said that under the GSP+ framework, investors could leverage duty-free access for a wide range of products, making exports more competitive and in the process reap cost savings due to the elimination of import taxes. This is undoubtedly a huge advantage and a striking contrast to tariffs now being imposed by developed economies. Gadoev elaborated that Uzbekistan provides tax exemptions and other benefits depending on the volume of the investment, adding that if investors pour in US$15 million (RM66 million) and more, they could enjoy a 10-plus years of tax exemption. He revealed that businesses undertaking investments within its free economic zones (FEZ) and special industrial zones could enjoy similar privileges. “We discussed the proposed joint special industrial zone between Uzbekistan and Malaysia (in Uzbekistan) as a free economic zone.” This means if Malaysian investors bring more investments, they will have tax exemption for everything, he said. “They could also enjoy comprehensive benefits such as zero taxes on income, land, water and electricity for qualifying investments, access to developed infrastructure and essential utilities and simplified customs procedures to facilitate business operations,” he said. The proposed joint industrial zone came about after talks between Prime Minister Datuk Seri Anwar Ibrahim and Uzbekistan President Shavkat Mirziyoyev during the latter’s official visit to Malaysia on Feb 4 and 5. Uzbekistan is currently Malaysia’s second biggest trade partner among Central Asian countries with total trade amounting to RM369.8 million in 2024, mainly in Malaysia’s favour. Gadoev said Uzbekistan offers huge opportunities for trade and economic linkages with Asean as well as tourism with Southeast Asia’s population close to 700 million making it one of the largest and fastest-growing regions in the world. Tourism was a significant sector for economic growth, and Uzbekistan sees Malaysia and Indonesia as strategic partners in developing tourism, he said. “Malaysia and Indonesia could be good

Gadoev sees strong trade and travel potential between Uzbekistan and Asean, driven by Southeast Asia’s large, growing population. – PIX COURTESY OF EMBASSY OF UZBEKISTAN

tourism activities in the country. “AirAsia would like to make Uzbekistan the hub between Asia, Asean countries and the CIS, and further extending links to Europe and its surrounding regions. “This would make Uzbekistan a bridge between East Asia and Europe and some other regions of the world,” he said. Gadoev said he had a meeting recently with Capital A Bhd chairman and co-founder Kamarudin Meranun and AirAsia X CEO Benjamin Ismail on the airline’s inaugural flight to Tashkent. He said low-cost airline AirAsia X would begin ticket sales for the Kuala Lumpur– Tashkent–Kuala Lumpur route in May, with regular flights set to commence in September this year, operating four times a week. Besides Uzbekistan’s capital city, Gadoev suggested that AirAsia could introduce a direct flight to Samarkand, which is the centre of Islamic scholarly study and was strategically located along the ancient silk route between China and India.

partners for Uzbekistan in developing tourism, especially halal tourism and ziyarat tourism or pious visitation which includes pilgrimages to holy places, tombs and shrines. According to reports, the holiest place in Samarkand is the Shah-i Zinda necropolis, a complex of mausoleums and tombs, particularly revered for housing the tomb of Kusam ibn Abbas, a cousin of Prophet Muhammad and considered a place of pilgrimage. “We are now working very closely with Malaysia to establish the umrah plus packages, whereby Malaysian pilgrims could enjoy a three to four-day stay in Uzbekistan after their umrah or hajj. Flight time between Tashkent and Jeddah is slightly more than five hours. “We are trying to involve regions in Indonesia into this initiative as well,” said Gadoev. AirAsia’s flights from KL International Airport to Tashkent are set to begin in September, which would be key in increasing

Kim Loong registers RM22.8m net profit in fourth quarter of FY25 KUALA LUMPUR: Kim Loong Resources Bhd (KLR) reported a 54.4% quarter-on-quarter (QoQ) decline in net profit to RM22.8 million in Q4 of FY25. crude palm oil (CPO) prices. The average realised CPO price rose 12.4% year-on-year to RM4,291 per tonne, helping offset a 5.9% decline in FFB production.

The milling segment, which includes palm product processing and electricity sales, recorded a 6% year-on-year increase in EBIT to RM117.4 million. However, the EBIT margin slipped to 7.1% in Q4 due to tighter FFB supply and elevated operational costs. “We believe flooding disruptions in Johor partly caused the FFB shortage. “We maintain ‘buy’ on KLR with a lower target price of RM2.75 from RM3.09 a share previously. “We have reduced KLR’s FY26 net profit by 11% and FY27 net earnings by 9% to account for higher operational costs and a lower FFB production from our earlier estimates. “We have assumed that KLR’s FFB output would improve by 6.9% in FY26 compared to a 5.9% decline in FY25,“ AmInvest Research said.

Decline in earnings due to shortage of fresh fruit bunch supply and higher operational costs in the milling segment. – KIM LOONG RESOURCES WEBSITE