By Rina Chandran
(Thomson Reuters Foundation) – The island of Penang on the northwest coast of Malaysia is known for its sandy beaches, the colourful wall murals of its capital Georgetown, and its fiery street food.
In time, it will also be known for three man-made islands that state authorities say are needed to provide housing and economic opportunities for an expanding population, while also generating funds for a modern transport network.
But the Penang South Reclamation (PSR) project, dubbed BiodiverCity, has pitted the government and businesses against fishermen and environmentalists who say it will wreck the lives of residents, and damage the coast.
“The area is rich in prawns and fish. If you build islands, what we will see is permanent environmental degradation,” said Mahadi Md Rodzi, chairman of the Penang Fishermen’s Association that represents about 6,000 fisherman.
“Fishermen have been told to upskill or get another job, but many of us are born fishermen and depend on the sea to live. The proposed compensation from the state is too insufficient for something that will affect our livelihoods forever,” he said.
Many fishermen have rejected the 20,000-ringitt ($4,950) compensation offered, as well as the Environmental Impact Assessment report, which conservationists say does not reflect the potential damage or propose adequate mitigation measures.
Authorities say BiodiverCity, which is a part of the Penang 2030 vision of improving liveability and sustainability, will be a “socially and economically inclusive development” with an emphasis on green spaces, clean energy and car-free transport.
The 4,500-acre (1,821 hectares) project comprising three lilypad-shaped islands will house about 15,000 people each, and use natural and recycled materials such as bamboo and timber for construction of homes and offices, according to the plan.
But the scale of the dredging and reclamation work over more than a decade will cause “massive and long-term environmental destruction”, said Evelyn Teh, an environmental researcher in Penang.
“Fifteen years of land reclamation is a long onslaught to any marine ecology and the fishery industry that depends on it. The reclaimed islands will bury existing fishing areas while deteriorating the surrounding marine water quality,” she said.
“Coastal communities who rely on the marine and coastal area for their livelihood will experience an irreversible negative impact,” she told the Thomson Reuters Foundation.
From Denmark to Singapore, planners have reclaimed land from the sea for decades for offices, apartments and tourism.
Cities and island states that are running out of space are reclaiming land, expanding vertically or going underground.
A United Nations-backed partnership is studying the prospect of floating cities that can help coastal cities at risk of flooding from worsening climate-change impacts.
In Asia, land reclamation has become a contentious issue, with Cambodia and Malaysia banning sand exports, while Jakarta has suspended its reclamation project, and a plan to build an artificial island in Hong Kong has drawn fierce criticism.
Malaysia has two other major reclamation projects underway: Melaka Gateway, a deep-sea-port and cruise terminal that is part of China’s massive Belt and Road infrastructure plan, and Forest City in Johor near Singapore, aimed at foreign investors.
Large-scale reclamation allows more flexibility in city planning, but also lets governments engage “more ambitiously and aggressively with the business of land-banking,” said Keng-Khoon Ng, a lecturer at UCSI University Kuala Lumpur.
“These island-making projects are designed to boost state coffers. They represent a colossal misappropriation of resources at a time of intensifying housing unaffordability and social injustice,” he said.
But the PSR is needed as Penang has “run out of land”, resulting in ad-hoc developments, fewer economic opportunities, and a shortage of affordable housing, said Eddie Chan, executive director of SRS Consortium, the project developer.
A quarter of residential units will be earmarked for affordable housing in the average price range of 350,000 ringgit, and a fishermen’s taskforce set up by the state government is addressing any social impacts, he said.
“With proper design and construction methods applied to dredging and reclamation, and pollution prevention and mitigation measures to minimise environmental impact, we are confident that reclamation can be done sustainably,” Chan said.
The PSR project, designed by Copenhagen-based Bjarke Ingels Group (BIG), is scheduled to break ground in March after approvals.
Reclamation has hugely benefited Penang, with parts of the Bayan Lepas industrial zone, as well as heritage clan jetties built on reclaimed land, said Joshua Woo, a former local councillor.
“There are fancy land reclamation projects for the wealthy, but there are also land reclamation projects for a city’s survival. PSR belongs to the latter group,” he said.
“The project will open up new economic opportunities and social spaces for us,” he added.
In fact, PSR is a “feasible solution” to address urgent environmental issues such as climate change and sea-level rises, said Farizan Darus, chief executive of government agency Penang Infrastructure Corporation that is overseeing the project.
“More than half of Penang island is hilly terrain, therefore the next best approach is land reclamation,” he said.
“Without strategic land, Penang’s growth will be stunted. Now is the best time to implement PSR to provide a much-needed economic boost to Penang, and prepare the state for the post-pandemic economy,” he added.
Meanwhile, an online petition by a local heritage advocate against the project, has garnered more than 115,000 signatures, while a group of residents have held several protests under the Penang Tolak Tambak (Penang Rejects Reclamation) banner.
In building PSR and using it to fund the 46-billion ringgit ($11.4 billion) transport network, the state is taking on a huge financial risk during an economic slowdown, and putting commercial interests above the environment and people, said Teh.
Particularly now, when the coronavirus pandemic has revealed deep-rooted inequalities in urbanisation, authorities should instead favour a “radical rethink on building back better”, she said, including low-carbon public transport networks.
“The government risks putting too much focus on a massively expensive and environmentally destructive project that will only benefit a small group of people at the expense of the wider population during an unprecedented economic crisis,” Teh said.
“Penang may be biting off more than it can chew.”
($1 = 4.03691 Malaysian ringgit)
(Reporting by Rina Chandran in Bangkok, with additional reporting by Beh Lih Yi in Kuala Lumpur; Editing by Astrid Zweynert. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)
HSBC curbs profit and payout ambitions, bets on Asia wealth
By Alun John and Lawrence White
HONG KONG/LONDON (Reuters) – HSBC Holdings PLC on Tuesday abandoned its long-term profitability target, and unveiled a revised strategy focused mainly on wealth management in Asia after the COVID-19 shock saw its annual profits drop sharply.
Citing the low interest rate environment and tough market conditions, HSBC ditched its goal of achieving a return on tangible equity of 10 to 12%, and said instead it will aim for 10% over the medium term.
The moves by Europe’s biggest bank underlined the tough outlook for the banking sector as low interest rates worldwide take their toll, even as a global markets rally boosted the prospects for the wealth management business.
The margin pressure and mounting losses in Europe have forced HSBC to redouble its focus on Asia which provided a dominant share of the bank’s profits in 2020.
“The big structural shift that’s gone on since we set out the plan last February has really been the shift in interest rates down toward zero in most markets that we do business in,” Ewen Stevenson, HSBC’s group chief financial officer, told Reuters.
“If interest rates were 100 basis points higher today across the board it would improve our returns by 3 percentage points.”
The bank said it would pay a dividend of $0.15 a share in cash, the first payout announced since October 2019, after the Bank of England blocked all big lenders from paying dividends or buying back shares in 2020 to conserve capital.
However, it said it would stop the previous practice of paying a quarterly dividend, and target a payout ratio of between 40% and 55% of reported earnings per ordinary share from 2022 onwards, well below the level in recent years.
HSBC also said it will make hefty cuts to some of its back office functions such as technology and operations, without specifying the number of jobs affected. The lender cut 11,000 jobs in 2020 and had signalled it would make further reductions.
The announcement came as HSBC reported profit before tax of $8.78 billion for 2020, down 34% from a year earlier but just above the $8.33 billion average of analysts’ estimates compiled by the bank.
HSBC’s Hong Kong shares were up 0.55% by 0750 GMT, lagging the benchmark Hang Seng index as investors considered the bank’s dividend cut and modest strategic ambitions.
Investors were resigned to HSBC’s more modest ambitions and growth target.
“It’s hard to have high ambitions in this climate, or at least dangerous to declare them if they exist,” said Hugh Young, managing director at Aberdeen Standard, the bank’s 9th-largest shareholder.
ASIA FOCUS, SHRINKING ELSEWHERE
HSBC said that its growth in Asia for the next five years will be driven by around $6 billion of additional investment in its wealth management and international wholesale business.
“Everyone realises how big an economic opportunity China and India are but HSBC is starting to realise no-one has the opportunity to serve that wealth creation like they do,” said Dan Lane, a senior analyst at UK digital broker Freetrade.
“The prospect doesn’t come cheap but it looks like the company is finally ready to pump cash into getting even more East Asian customers on board.”
Profit from the bank’s wealth management and personal banking division in Asia was $5 billion in 2020, but its cash cow Hong Kong accounted for almost all of this, despite its controversial decision to assist Hong Kong police with investigations into pro-democracy activists.
Elsewhere in the world, HSBC said it is in talks with a potential buyer for its troubled France retail banking unit, which it has been trying to dispose for over a year, but no deal has been confirmed.
It said it expected to make a loss on the sale given the business’ underlying performance.
The bank also said it is “exploring organic and inorganic options” for its U.S. retail banking franchise, suggesting it is trying to sell the unit where it has already closed 80 branches in the last year.
Reuters, and others, have reported the bank is trying withdraw from U.S. retail banking.
HSBC’s Mexico operations made a loss of $187 million in 2020, as many of its branches remained closed due to the pandemic, but chief executive Noel Quinn told Reuters he is confident about the prospects for a business the bank has in the past considered selling.
“We’re confident that (HSBC’s Mexico business) will be successful again post-COVID, and it is a business at scale,” Quinn said.
(Reporting by Alun John and Lawrence White; editing by Shri Navaratnam)
UK jobless rate hits 5.1% as Sunak readies more job support
By William Schomberg and David Milliken
LONDON (Reuters) – Britain’s jobless rate rose to 5.1% in the last three months of 2020, its highest in nearly five years but still lower than it would have been without a huge coronavirus jobs support scheme that finance minister Rishi Sunak looks set to extend next week.
Separate data from the Office for National Statistics showed that the number of employees on company payrolls in January rose by 83,000 from December, the second monthly increase and its biggest since January 2015.
The jobless rate – the highest since the first three months of 2016 – was in line with the median forecast in a Reuters poll of economists.
Unemployment has been suppressed by the government’s Job Retention Scheme which is supporting about one in five employees.
The programme is Britain’s most expensive COVID economic support measure and will cost an estimated 70 billion pounds ($98 billion) by its scheduled expiry date of April 30.
But figures based on tax data show the number of employees on business payrolls has still fallen by 726,000 since February 2020 – equivalent to just over 2% of the workforce – with the majority of job losses suffered by workers aged under 25.
The Bank of England has said it thinks the unemployment rate will jump to almost 8% in mid-2021 after the furlough scheme ends.
Sunak is expected to announce an extension of his jobs support, at least for sectors hardest hit by the government’s lockdowns, in a March 3 budget statement.
“At the Budget next week I will set out the next stage of our Plan for Jobs, and the support we’ll provide through the remainder of the pandemic and our recovery,” Sunak said after Tuesday’s data.
Prime Minister Boris Johnson announced his plan for easing England’s lockdown on Monday that would keep some businesses shut until the summer but allow a gradual, earlier reopening for others.
“The outlook for the UK economy is getting clearer and with continued support from the Treasury, it is likely the Bank of England’s peak unemployment forecast of 7.75% will prove too pessimistic,” Jon Hudson, a fund manager at Premier Miton, said.
Samuel Tombs, at consultancy Pantheon Macroeconomics, said he thought the jobless rate would hit 6% in the summer.
The ONS said the number of job vacancies in the three months to January was 26% lower than a year ago, a less severe fall than last summer when vacancies were down by nearly 60%, although the pace of improvement slowed in the past few months.
Pay growth was the strongest since 2008. Total pay including bonuses rose by 4.7% in the October-December period compared with the same three months of 2019.
The pick-up in pay growth in part reflects how the brunt of job losses has fallen on people working in lower-paid jobs in areas such as hospitality, and the ONS said pay growth was likely to be below 3% if this effect is stripped out.
Britain went into a new COVID lockdown on Jan. 5 due to a rapidly rising death toll that has passed 120,000, the highest in Europe.
($1 = 0.7108 pounds)
(Reporting by William Schomberg and David Milliken; Editing by Kate Holton)
Damage to United Boeing 777 engine consistent with metal fatigue – NTSB
By David Shepardson and Jamie Freed
WASHINGTON (Reuters) – Damage to a fan blade on an engine that failed on a United Airlines Boeing 777 flight is consistent with metal fatigue, based on a preliminary assessment, the chairman of the U.S. air accident investigator said on Monday.
The Pratt & Whitney PW4000 engine failed on Saturday with a “loud bang” four minutes after takeoff from Denver, National Transportation Safety Board (NTSB) Chairman Robert Sumwalt told reporters following an initial analysis of the flight data recorder and cockpit voice recorder.
There was minor damage to the aircraft body but no structural damage, he said.
He said it remained unclear whether the incident is consistent with an engine failure on a different Hawaii-bound United flight in February 2018 that was attributed to a fatigue fracture in a fan blade.
“What is important that we really truly understand the facts, circumstances and conditions around this particular event before we can compare it to any other event,” Sumwalt said.
The engine that failed on the 26-year-old Boeing Co 777 and shed parts over a Denver suburb was a PW4000 used on 128 planes, or less than 10% of the global fleet of more than 1,600 delivered 777 widebody jets.
In another incident on Japan Airlines (JAL) 777 with a PW4000 engine in December 2020, Japan’s Transport Safety Board reported it found two damaged fan blades, one with a metal fatigue crack. An investigation is ongoing.
The focus is more on engine maker Pratt and analysts expect little financial impact on Boeing, but the PW4000 issues are a fresh headache for the planemaker as it recovers from the far more serious 737 MAX crisis. Boeing’s flagship narrowbody jet was grounded for nearly two years after two deadly crashes.
The United engine’s fan blade will be examined on Tuesday after being flown to a Pratt laboratory where it will examined under supervision of NTSB investigators.
The U.S. Federal Aviation Administration (FAA) said on Monday it had already been evaluating whether to adjust fan blade inspections in the wake of the December incident in Japan after reviewing maintenance records and conducting a metallurgical examination of the fan blade fragment.
Boeing recommended that airlines suspend the use of the planes while the FAA identified an appropriate inspection protocol, and Japan imposed a temporary suspension on flights.
Pratt & Whitney, owned by Raytheon Technologies Corp., has recommended airlines increase inspections in a plan that is being reviewed by the FAA, sources with knowledge of the matter said. Pratt did not respond immediately to a request for comment.
The FAA has said it plans to issue an emergency airworthiness directive soon that will require stepped-up inspections of the fan blades for fatigue.
“United Airlines has grounded all of the affected airplanes with these engines, and I understand the FAA is also working very quickly as well as Pratt & Whitney has reiterated or revised a service bulletin,” Sumwalt said. “It looks like action is being taken.”
In March 2019, after the 2018 United engine failure attributed to fan blade fatigue, the FAA ordered inspections every 6,500 cycles. A cycle is one take-off and landing.
South Korea’s transport ministry said on Tuesday it had told its airlines to inspect the fan blades every 1,000 cycles following guidance from Pratt after the United incident.
Sumwalt said the United incident was not considered an uncontained engine failure because the containment ring contained the parts as they were flying out.
NTSB will look into why the engine cowling separated from the plane and also why there was a fire despite indications fuel to the engine had been turned off, Sumwalt added.
Industry sources said that although the engine is made by Pratt, the cowling, or casing, is manufactured by Boeing. Boeing referred questions on the part to the NTSB.
Nearly half of the global fleet of PW4000-equipped Boeing 777 jets operated by airlines including United, JAL, ANA Holdings, Korean Air and Asiana Airlines had already been grounded amid a plunge in travel demand due to the coronavirus pandemic.
(Reporting by David Shepardson in Washington and Jamie Freed in Sydney; additional reporting by Tracy Rucinski in Chicago, Joyce Lee in Seoul and Tim Hepher in Paris; Editing by Kim Coghill and Gerry Doyle)
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