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After winning bid for Khazanah's SilTerra stake, DNeX bags three-year national single window contract extension

KUALA LUMPUR (March 11): Dagang NeXchange Bhd (DNeX), fresh from winning the bid from Khazanah Nasional Bhd for its stake in loss-making wafer foundry SilTerra Malaysia Sdn Bhd last month, today announced that its unit has been granted an extension contract for a period of three years to operate the National Single Window (NSW) for trade facilitation.

In a statement today, the group said its wholly-owned subsidiary Dagang Net Technologies Sdn Bhd has received a letter from the government regarding the contract extension from Sept 1, 2021 until Aug 31, 2024 for the NSW.

“Under the contract extension, the company will continue to provide six core e-Services of the NSW for trade facilitation namely eDeclare, eManifest, ePCO, ePermit, ePermitSTA, and ePayment in providing the trading community with connectivity to Customs and relevant agencies for import and export document processing.

“In addition, the company will also be providing services for the ASEAN Single Window,” said DNeX.

Despite getting a contract extension, shares of DNeX settled two sen or 2.25% lower at 87 sen with some 226.78 million shares done. This valued the group at RM1.89 billion.

However, year to date, the stock has quadrupled from 23 sen on Dec 31, 2020.

DNeX has been the operator of the NSW for trade facilitation since 2009 and thus has so far received a couple of extensions to this concession, initially for two years each from Sept 25, 2016 to Sept 24, 2018 and from Sept 1, 2019 to Aug 31, 2021.

The NSW, which was developed by Dagang Net, entails the facilitation of electronic Customs-related transactions and duty payments, and electronic document transfers among manufacturers, importers, exporters, forwarders, shipping agents, terminal and port operators, banks, port authorities and permit-issuing agencies, among others.

The group said the contract has been a key contributor to DNeX’s financial performance, contributing about RM90 million in revenue per year.

“We would like to thank the Government of Malaysia namely the Ministry of Finance and the Royal Malaysian Customs Department for their continued confidence in us. The contract extension is a strong testament to our strength and capabilities as a leading eServices provider in trade facilitation,” said its group managing director Datuk Seri Syed Zainal Abidin Syed Mohamed Tahir, who is also Dagang Net chairman.

The company, he said, is also expanding the offering of its trade facilitation eServices with the introduction of business-to-business (B2B) initiatives that can contribute to the country’s digital economy push.

“We strive to position ourselves as the digital trade facilitation partner for not only the government agencies but also businesses towards improvements and efficiency in their processes,” he added.

In a bourse filing, DNeX said: “There is also no effect on the gearing of DNeX Group resulting from the contract extension as the contract will be funded via internally generated funds. Barring any unforeseen circumstances, the contract extension is expected to contribute positively towards the earnings, earnings per share and net assets per share of DNeX Group during the contract extension period.”

It was reported on July 11, 2018, that the Malaysia Competition Commission (MyCC) has proposed to fine Dagang Net RM17.4 million for abusing its position as a monopoly in the provision of trade facilitation services under the NSW.

According to MyCC, the investigation has provisionally found that Dagang Net had abused its dominant position by refusing to supply new and/or additional mailboxes to end-users who utilized front-end software from software solutions providers which were not considered to be Dagang Net's authorized business partners.

DNeX said it would challenge the penalty fine imposed by MyCC by submitting a written representation to the commission to make its case.

On Feb 26, 2021, the company announced that MyCC had lowered its proposed fine to RM10.3 million after it had deliberated that Dagang Net had infringed Section 10 of the Act concerning exclusive dealing.

"However, MyCC did not find any infringement in respect of the allegation on refusal to supply electronic mailboxes to end-users of unauthorised software providers," it said.

DNeX said it would be appealing the decision.

https://www.theedgemarkets.com/article/dnex-bags-threeyear-national-single-window-contract-extension

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