The Story Behind CIMB’s Mega Islamic Bank Deal


July 13, 2014

The Story Behind CIMB’s Mega Islamic Bank Deal

by Yvonne Tan@www.thestar.com.my (07-12-14)

cimbmontagenazirzetishahril1207With Islamic finance gaining global acceptance, it’s only natural to set up the biggest Islamic bank in Malaysia.

INDIRECTLY, the seeds of the proposed merger between CIMB Group Holdings Bhd, RHB Capital Bhd (RHB Cap) and Malaysia Building Society Bhd (MBSB) were sown not in Kuala Lumpur but in the world’s financial centre – London.

When CIMB got the mandate to be one of the book runners for the first Islamic finance sukuk raised by a sovereign in the Western world, it was a sure sign that Islamic finance was gaining wider acceptance. Upon returning to Kuala Lumpur, CIMB’s Chairman Datuk Seri Nazir Razak spoke to a group of journalists during Invest Malaysia about how Islamic finance was at the tipping point for growth, considering that the Western world was embracing it.

 Malaysia has the cutting edge in Islamic finance but there have been no takers for a proposal by Bank Negara Governor Tan Sri Dr Zeti Akhtar Aziz to establish a mega Islamic bank with a capitalisation of US$1bil (RM3.2bil).

It’s easy to fathom why.

No bank would want to fork out US$1bil to establish a mega-Islamic bank as the returns are not there.But the landscape is fast changing and Nazir seized the moment.

On Thursday, he proposed the setting up of a mega-Islamic bank as part of a merger with RHB Cap and MBSB that would possibly create the largest bank in the country and one of the largest in the region. “The merger fulfils Bank Negara’s objective of the creation of a mega Islamic bank,” says an investment banker.

RHB Cap’s decision last month to call off its Indonesian PT Bank Mestika Dharma proposed buy, which it had been pursuing since 2009, as well as Nazir taking over as chairman effective September 1, were the telling signs of a much bigger plan that was brewing.

The three financial institutions announced this week that they had received the green light from Bank Negara to start exclusive talks for the proposed merger, which includes the formation of a mega-Islamic bank.

In this respect, MBSB, an Islamic financial institution, is slated to fill that role in the merger.Nazir says Islamic finance is at the tipping point for growth, considering that the Western world is embracing it. The parties have 90 days to decide on the pricing, structure and other relevant terms and conditions. Bank Negara’s approval is valid for six months from Thursday.

Amidst this, questions are being raised as to why there is an exclusivity clause in the 90-day agreement, which essentially means that there will not be any competing bids for RHB Cap during this period, suggesting that shareholders may be missing out on more competitive bids.

“There are two reasons for this. One is that RHB Cap is not being sold; it is a merger candidate, and secondly, it is to minimise disruptions,” says an official close to the Employees Provident Fund (EPF).

CIMB Deal

The fact that Bank Negara gave the three institutions approval in less than 24 hours after they wrote to it is a sure sign that it is not against the merger.If the mega-bank materialises, then it will not be difficult to see why it will easily give the country’s current largest bank – Malayan Banking Bhd (Maybank) – a run for its money.

Based on latest figures, the merged entity’s asset size is expected to be more than RM600bil, market value close to RM90bil and combined profits exceeding RM7bil.It will surpass Maybank, which had an asset size of RM578bil as of March 31.

CIMB has a strong commercial presence in Indonesia which is a major contributor to the group’s earnings. Operationally, RHB Cap and CIMB’s resources combined will give a boost to the merged entity’s regional presence.

For one, RHB Cap, which has a full banking licence in Singapore enabling it to venture into diverse businesses – consumer banking, business banking, corporate banking, treasury and investment banking – intends to grow this aggressively over the next few years. This will complement CIMB’s Singapore operations.

CIMB, meanwhile, has a strong commercial presence in Indonesia – something which RHB Cap is lacking – via its PT Bank CIMB Niaga Tbk, which is a major contributor to the group’s overall earnings.

Valuations

There is no doubt that the merged entity will be huge.Its market capitalisation will be more thanOctopus RM90bil, assuming the deal is concluded at about 1.70 to 1.75 times book value.

According to a source, the deal is likely to be done at 1.75 times book value based on CIMB’s current valuation of almost 1.70 times book and unlikely to be transacted at anything less.Recall, in 2012, RHB Cap had paid 1.77 times book value for OSK Investment Bank, lower than the 1.9 times book value Maybank had paid for Kim Eng Securities.

In this current merger deal, the EPF is said to be the main driver because it has significant stakes in all three entities.It is the major shareholder in RHB Cap with a 40.76% stake. The other major shareholders of RHB Cap are Aabar Investments PJSC with a 21.43% stake and OSK Holdings Bhd with a 9.91% stake.

The EPF has a 64.73% stake in MBSB and is the second-largest shareholder in CIMB with 14.46% after Khazanah Nasional Bhd.

It has been learned that the exercise would possibly involve a share swap between CIMB and RHB Cap at a book value of 1.75 times and an outright buyout of MBSB. The eventual merger will see the EPF emerge as the largest shareholder in the mega-bank, with a stake estimated to be more than 25%.

RHB Cap had been a takeover target as far back as three years ago, with both CIMB and Maybank being its suitors. However, the deal fell through because Aabar wanted a higher valuation. Nevertheless, RHB Cap has always been viewed as a takeover target even with the entry of OSK two years ago. This is because the block in RHB Cap that belongs to Aabar from Abu Dhabi has always been viewed as being up for sale and could be used as a launch pad to take over the bank.

Even in May, Taiwanese financial group Mega Financial Holding Co Ltd was reportedly in talks to buy into RHB Cap, leading to speculation that the interested seller was Aabar.

Aabar acquired its stake in RHB Cap from its sister company, Abu Dhabi Commercial Bank PJSC, for RM5.9bil or RM10.80 apiece in 2011, valuing RHB Cap at a hefty 2.25 times its book value then. The transaction between the two related companies was done to set the price for RHB Cap, should there be a takeover.

However, RHB Cap’s share price has never reached that price over the past few years.The counter was traded at RM8.72 on Wednesday before suspension.

Assuming the deal is concluded at 1.70 times, RHB Cap’s share will be worth RM11.40 per share, a 5.6 % premium to Aabar’s cost of RM10.80. But would Aabar be agreeable, or would it seek higher valuations?

Past Deals

RHB Cap, currently the fourth-largest banking group, is no stranger to banking deals.The latest is its merger with OSK Investment Bank that was completed about two years ago. However, its merger and acquisiton history goes back much further than this.

The RHB Banking group assumed its current name only in 1997.It came about via a merger between Kwong Yik Bank Bhd and DCB Bank Bhd (formerly known as Development and Commercial Bank Bhd) in 1997. That year saw entrepreneur Tan Sri Abdul Rashid Hussain emerge as the group’s executive chairman. The bank’s current initials are based on his name.

Kwong Yik Bank was founded by the Chinese community led by Wong Loke Yew, or better known as Loke Yew, in July 1913, while DCB Bank was established in 1966 by the-then Finance Minister Tun Sir Henry H S Lee.

In the aftermath of the 1997/98 Asian financial crisis, the troubled Sime Bank Bhd (formerly known as UMBC Bank) was merged into the RHB Banking group in 1999.Four years later, when Kuching-based Bank Utama Bhd, the banking arm of Cahya Mata Sarawak Bhd, became the latest bank to be merged into the RHB Banking group, Rashid made his exit from the group.

CIMB is also the result of a merger between CIMB, Bumiputra-Commerce Bank and Southern Bank Bhd which was completed in 2006. Both the RHB and CIMB groups have gone through more than their fair share of mergers. But this merger, if it happens, will probably be the last stop for RHB Cap, a bank founded by Rashid Hussain.

Between the two, CIMB Group has a bigger franchise in the region, a larger pool of tested managers and is likely to take the lead.This is something the EPF is not likely to object because it will enable the pension fund to go back to its role as a passive investor in financial institutions.

Gotta’ keep on learning


July 13, 2014

Schumpeternomics: Gotta’ keep on learning

by (Tan Sri) Dr. Lin See-Yan@www.thestar.com.my (07-12-14)

Lin See-YanI JUST returned from the summer meeting of the board of governors (on which I am a long-standing member) and the board of trustees of the Asian Institute of Management (AIM) in Makati, Manila. It celebrated its 45th anniversary…

To mark the occasion, AIM held its second Asian Business Conference against the backdrop of an emerging ASEAN Economic Community (AEC) by 2015. It was well attended by a wide cross-section of Asian businesses, research institutes and universities, under the banner: “2015 Approaching: Priming for ASEAN Integration.”

I spoke at the strategic session on banking and finance with particular focus on the need for Asia (and indeed ASEAN) to keep on innovating to create a truly learning society, in order to maintain its competitive edge and remain relevant in an increasingly hostile and uncertain world. To survive, we just gotta’ keep on learning!

Technological progress

I learned early as a Harvard graduate student in the 1970s from no less than Nobel laureate Robert Solow at the Massachusetts Institute of Technology (MIT) down the Charles, that rising output and incomes can only come about in a sustained way from technological progress (TP), not from mere capital accumulation. Put simply, Solow repeatedly emphasised that TP comes from learning how to do things better; indeed, there’s always a better way.

As a practising banker and economist at Bank Negara after my PhD, I quickly undertstood that much of the productivity increases we see come from small incremental changes – they all add-up, other than the lumpy gains arising from dramatic discoveries or from unpredictable phenomena. It all starts with nurturing our education system and the process of its development to ensure youths are properly educated, not just in terms of literary, quantitative and scientific skills, but also with the right moral values and civic outlook.

Broadly, along what Nobel laureate Joseph Stiglitz (pic) has been advocating – it always makes goodJ Stiglitz sense “to focus attention on how societies learn, and what can be done to promote learning, including learning how to learn.”

Innovation and creative destruction

The seeds of the critical role of innovation in economic growth were first planted about a century ago by Harvard economist and political and social scientist Joseph Schumpeter, a contemporary of John M. Keynes. His economics (hence, Schumpeternomics) is based on the ability and capability of the market economy to innovate on its own.

I recall reading his 1939 book Business Cycle: A Theoretical, Historical and Statistical analysis of the Capitalist Process, where he wrote “Without innovations, no entrepreneurs; without entrepreneurial achievement, no capitalist returns and no capitalist propulsion. The atmosphere of industrial revolutions – of “progress” – is the only one in which capitalism can survive.”

So, Schumpeter went about challenging conventional wisdom in three areas: (i) misplaced focus on competitive markets. He contended that what matters was “competition for the markets, not competition in the markets,” as rightly pointed out by Stiglitz. It is competition for the markets that drives innovation. Sure, this can (and do) result in the rise of monopolies; still this would lead to improved living standards over the long haul (eg. Microsoft, Nokia – acquired in 2013 by Microsoft). (ii) undue focus on short-run efficiency which can be detrimental to innovation over the long-term – classic example is helping “infant industries” learn.

But governments should not be in the game of picking winners; the market can do this better (witness Obama’s failed “clean energy” projects or Malaysia’s wasteful car-maker Proton). Sure, there are exceptions where government invests in research that has since led to development of the Internet and discovery of DNA with enormous social benefits.

Schumpeter

(iii) Innovation leads to creative destruction – it can (and do) wipe out inefficient industries and jobs. The Internet has turned businesses from newspapers to music to book retailing upside down. In their place, more efficient businesses have popped up. In his biography of Schumpeter – Prophet of Innovation, Thomas McCraw wrote: “Schumpeter’s signature legacy is his insight that innovation in the form of creative destruction is the driving force not only of capitalism but of material progress in general. Almost all businesses, no matter how strong they seem to be at a given moment, ultimately fail – and almost always because they failed to innovate. Competitors are relentlessly striving to overtake the leader, no matter how big the lead. Responsible business people know that they ignore this lesson at their peril.”

In 1983, the 100th anniversary of the birth of Schumpeter and Keynes, Peter F. Drucker proclaimed at Forbes that it was Schumpeter, not Keynes, who provided the best guide to the rapid economic changes engulfing the world, according to McCraw.

Higher education

The business of higher education has changed little since Plato and Aristotle taught at the Athenian Lyceum. With government patronage and support, close to 4 million Americans and 5 million Europeans will graduate this summer. Emerging nations’ universities are expanding even faster. I was told in Shanghai last month that China has added 30 million university places in the past 20 years.

Indeed, I do see a revolution coming for three main disruptive reasons:

  •  Rising costs – Baumol’s disease has set in, i.e. soaring costs reflecting high labour intensity with stagnant productivity; for the past two decades, costs have risen 1.6 percentage points above inflation annually.
  •  Changing demand – a recent Oxford study contended that 47% of occupations are now at risk of being automated and as innovation wipes out jobs and drastically change others, vast numbers will be needing continuing education.
  • Fast moving TP will change the way education is packaged, taught and delivered. MOOC (Massive Open Online Course) today offers university students a chance to learn from the world’s best and get a degree for a fraction of today’s cost. Harvard Business School will soon offer an online “pre-MBA” for US$1,500 (RM4,778)! The reinvention of universities will certainly benefit many more than it hurts. Elites like Harvard, MIT and Stanford will gain from this creative destruction process. Education is now a global digital market.

What then, are we to do

Corporate giants come and go in a competitive economy. Microsoft and Nokia used to rule the digital world. Now they don’t. No monopoly is permanent, unless enforced by government, which as everyone knows hardly changes, even as the rest of the world passes it by. In the United States, it is reported that the administration wants to prevent Apple’s iTunes and AppStore from abusing the network “lock-in” created by Apple’s tech ecosystem. But the judge has since ruled that “I want Apple to have the flexibility to innovate.” That’s something, isn’t it?

economics-poster-smallMy professor at Harvard, Nobel laureate Kenneth Arrow, used to extol about the importance of learning by doing. So, those who want to innovate, let them just do it – hopefully with no government intervention even though there is a compelling “infant” argument for industrial protection, which can be a double-edged sword when it comes to learning and innovating.

Most of the time, the infant seldom grows up. But reinventing the ancient institution of higher learning will not be easy. EdX, a non-profit MOOC founded (and funded) in May 2012 by Harvard and MIT, is now a consortium of 28 institutions worldwide. No one knows how big the online market will eventually be. It’s more akin to online airline-booking services – expanding the market by improving the customer experience.

Still, innovation at MOOC will definitely reduce the cost of higher education, grow market size but with widespread creative destruction collateral damage, and turn inefficient universities on their heads. MOOC estimates that university employment can fall by as much as 30% and 700-800 institutions can shut-down. The rest have to reinvent themselves to survive. Our learning society will change forever, whether we like it or not.

Former banker, Dr. Lin See-Yan is a Harvard educated economist and a British chartered scientist who writes on economic and financial issues. Feedback is most welcome; email: starbizweek@thestar.com.my. The views expressed are entirely the writer’s own.

“Friendly” Advice to Najib on Leadership


July 12, 2014

“Friendly” Advice to Najib on Leadership

by Nigel Aw@www.malaysiakini.com (07-11-14)

Taking a shot at Prime Minister Najib Abdul Razak’s comparison between Brazil’s devastating defeat in the World Cup semifinals and the need for strong leadership, Tun Dr Mahathir Mohamad offered some pointers.The former premier said a strong leader would reject the Trans-Pacific Partnership Agreement (TPPA).

“I think it is Najib himself who said we need strong leaders. What is the qualification of a strong leader? It is the ability and willingness to stand up against foreign pressure and protect the interest of this country. If you don’t do that then you cannot be considered a strong leader,” he told a press conference in Shah Alam.

Tun Dr. MahathirMahathir was speaking to reporters after launching a book entitled ‘TPPA: Malaysia is not for sale’ by the Malay Economic Action Council (Mtem). Asked if he thought Najib was a strong leader, Mahathir, who celebrated his 89th birthday yesterday, replied: “I don’t know.” “Because it all depends on the test or challenges he faces and how he handles it,” he said.

Asked if Najib’s stance last Friday that Putrajaya intends to go ahead with the TPPA but on Malaysia’s terms was assurance enough, Mahathir insisted the agreement should be scrapped altogether.

“In the first place, why is it (TPPA) done in secret if it is not to cheat people? I think the mark of a goodThe Silent One leader is the ability to reject what is not good for this country,” he said.

Earlier in his speech, Mahathir repeatedly made references to Najib’s statement on the need of strong leaders in making his case against the TPPA. He added that the country had been able to develop well even without free trade agreements in the past.

Mahathir was also asked about Pakatan Rakyat’s leadership in Selangor but he appeared to have mis-heard the question and instead commented on BN’s leadership in the state.

“I’m sorry to say, we should have done better in the last election but we did worse in 2008.There is a lack of leadership there or the system we used was all wrong and we should not continue to do wrong things,” he said.

Abide by the Constitution

On another matter, Mahathir said the country should abide by the constitution which provides for a constitutional monarchy and parliamentary democracy.

“If you break that, people will break other parts of the constitution then there will be chaos,” he added. He was asked to respond to readers’ comments in his latest blog posting which raised concerns about the Johor royal family’s involvement in the Iskandar region.

In the blog posting, Mahathir had weighed into the rapid development in southern Johor but expressed concern that it might become a region of foreigners like Singapore.

Asked what he thought about the comments to his posting on the royalty’s involvement in business, he replied: “If people feel we are a free country, we are very liberal, people can speak their mind, no more ISA so people can say what they like.

IMD (Switzerland) World Competitiveness Survey: Malaysia moves up to 12th position


July 8, 2014

IMD (Switzerland) World Competitiveness Survey: Malaysia moves up to 12th position

img_enewletter-issue7-01Malaysia  ranked 12 in List of 60 economies

Malaysia moved up the world competitiveness ranking again, securing a spot in the enviable top dozen and improving the country’s attractiveness to investors.

The International Institute for Management Development (IMD), a Switzerland-based top-ranked business school, lifted Malaysia to 12th position from 15th last year in a list of 60 economies.

“The improved rankings will renew interest and attract investments to the country,” IMD World Competitiveness Center director Professor Arturo Bris told the New Straits Times. The country also continues to be ahead of the United Kingdom (16th), Australia (@17th), Finland (18th), New Zealand (20th), Japan (21st) and South Korea (26th).

Malaysia, Bris said, improved its openness to foreign markets and attracted capital and investment at increasing rates.

In a separate statement, International Trade and Industry Minister Datuk Seri Mustapa Mohamed saidMiti's Mustapa 12th position was Malaysia’s best performance in the past four years and reflected the progress of the Government Transformation Programme and the Economic Transformation Programme.

“Malaysia expects a much better performance in the next three to five years as more of its initiatives begin to bear fruit,” he said.

The Survey

The World Competitiveness Yearbook 2014 is the 26th publication since 1989.The findings are compiled each year by IMD’s World Competitiveness Center in a survey of 60 economies called the World Competitiveness Yearbook.

The yearbook analyses and ranks the ability of each nation to create and maintain an environment that sustains the competitiveness of enterprises.The survey rates at the availability of fixed telephone lines, broadband, railroad network, part-time employment market, illiteracy, medical assistance and other criteria.

The report is based on statistical data and perception data obtained through a survey that reviews 338 criteria in four categories:

  1. Economic Performance covers the domestic economy, international trade, international investment, employment and price.
  2. Government Efficiency looks into public finance, fiscal policy, institutional framework, business legislation and societal framework.
  3. Business efficiency looks at productivity and efficiency, the labour market, finance, management practices, attitudes and values.
  4. Infrastructure rates technological, scientific, health, environmental and educational infrastructure.

In the category of countries with gross domestic per capita of less than US$20,000 (RM64,300), Malaysia remained at the top among 29 economies. Among countries with populations above 20 million, Malaysia climbed up to 4th position from 5th last year.

In ASEAN, Malaysia remains number two after Singapore and ranked third in the Asia Pacific region compared with fourth last year, while Thailand, Indonesia and the Philippines are fourth, fifth and seventh respectively.

Malaysia has consistently performed well in other international surveys, including being ranked 6th by the World Bank in Ease of Doing Business 2014, 24th in the World Economic Forum’s Global Competitiveness Report 2013-2014 and 32nd in the Global Innovation Index 2013 by INSEAD Business School.

Inequality Is Not Inevitable


July 2, 2014

J StiglitzAN insidious trend has developed over this past third of a century. A country that experienced shared growth after World War II began to tear apart, so much so that when the Great Recession hit in late 2007, one could no longer ignore the fissures that had come to define the American economic landscape. How did this “shining city on a hill” become the advanced country with the greatest level of inequality?

One stream of the extraordinary discussion set in motion by Thomas Piketty’s timely, important book, “Capital in the Twenty-First Century,” has settled on the idea that violent extremes of wealth and income are inherent to capitalism. In this scheme, we should view the decades after World War II — a period of rapidly falling inequality — as an aberration.

This is actually a superficial reading of Mr. Piketty’s work, which provides an institutional context for understanding the deepening of inequality over time. Unfortunately, that part of his analysis received somewhat less attention than the more fatalistic-seeming aspects.

Over the past year and a half, The Great Divide, a series in The New York Times for which I have served as moderator, has also presented a wide range of examples that undermine the notion that there are any truly fundamental laws of capitalism. The dynamics of the imperial capitalism of the 19th century needn’t apply in the democracies of the 21st. We don’t need to have this much inequality in America.

Our current brand of capitalism is an ersatz capitalism. For proof of this go back to our response to the Great Recession, where we socialized losses, even as we privatized gains. Perfect competition should drive profits to zero, at least theoretically, but we have monopolies and oligopolies making persistently high profits. C.E.O.s enjoy incomes that are on average 295 times that of the typical worker, a much higher ratio than in the past, without any evidence of a proportionate increase in productivity.

If it is not the inexorable laws of economics that have led to America’s great divide, what is it? The straightforwardDivide answer: our policies and our politics. People get tired of hearing about Scandinavian success stories, but the fact of the matter is that Sweden, Finland and Norway have all succeeded in having about as much or faster growth in per capita incomes than the United States and with far greater equality.

So why has America chosen these inequality-enhancing policies? Part of the answer is that as World War II faded into memory, so too did the solidarity it had engendered. As America triumphed in the Cold War, there didn’t seem to be a viable competitor to our economic model. Without this international competition, we no longer had to show that our system could deliver for most of our citizens.

Ideology and interests combined nefariously. Some drew the wrong lesson from the collapse of the Soviet system. The pendulum swung from much too much government there to much too little here. Corporate interests argued for getting rid of regulations, even when those regulations had done so much to protect and improve our environment, our safety, our health and the economy itself.

But this ideology was hypocritical. The bankers, among the strongest advocates of laissez-faire economics, were only too willing to accept hundreds of billions of dollars from the government in the bailouts that have been a recurring feature of the global economy since the beginning of the Thatcher-Reagan era of “free” markets and deregulation.

The American political system is overrun by money. Economic inequality translates into political inequality, and political inequality yields increasing economic inequality. In fact, as he recognizes, Mr. Piketty’s argument rests on the ability of wealth-holders to keep their after-tax rate of return high relative to economic growth. How do they do this? By designing the rules of the game to ensure this outcome; that is, through politics.

So corporate welfare increases as we curtail welfare for the poor. Congress maintains subsidies for rich farmers as we cut back on nutritional support for the needy. Drug companies have been given hundreds of billions of dollars as we limit Medicaid benefits. The banks that brought on the global financial crisis got billions while a pittance went to the homeowners and victims of the same banks’ predatory lending practices. This last decision was particularly foolish. There were alternatives to throwing money at the banks and hoping it would circulate through increased lending. We could have helped underwater homeowners and the victims of predatory behavior directly. This would not only have helped the economy, it would have put us on the path to robust recovery.

OUR divisions are deep. Economic and geographic segregation have immunized those at the top from the problems of those down below. Like the kings of yore, they have come to perceive their privileged positions essentially as a natural right. How else to explain the recent comments of the venture capitalist Tom Perkins, who suggested that criticism of the 1 percent was akin to Nazi fascism, or those coming from the private equity titan Stephen A. Schwarzman, who compared asking financiers to pay taxes at the same rate as those who work for a living to Hitler’s invasion of Poland.

Our economy, our democracy and our society have paid for these gross inequities. The true test of an economy is not how much wealth its princes can accumulate in tax havens, but how well off the typical citizen is — even more so in America where our self-image is rooted in our claim to be the great middle-class society. But median incomes are lower than they were a quarter-century ago. Growth has gone to the very, very top, whose share has almost quadrupled since 1980. Money that was meant to have trickled down has instead evaporated in the balmy climate of the Cayman Islands.

With almost a quarter of American children younger than 5 living in poverty, and with America doing so little for its poor, the deprivations of one generation are being visited upon the next. Of course, no country has ever come close to providing complete equality of opportunity. But why is America one of the advanced countries where the life prospects of the young are most sharply determined by the income and education of their parents?

Among the most poignant stories in The Great Divide were those that portrayed the frustrations of the young, who yearn to enter our shrinking middle class. Soaring tuitions and declining incomes have resulted in larger debt burdens. Those with only a high school diploma have seen their incomes decline by 13 percent over the past 35 years.

Where justice is concerned, there is also a yawning divide. In the eyes of the rest of the world and a significant part of its own population, mass incarceration has come to define America — a country, it bears repeating, with about 5 percent of the world’s population but around a fourth of the world’s prisoners.

Justice has become a commodity, affordable to only a few. While Wall Street executives used their high-retainer lawyers to ensure that their ranks were not held accountable for the misdeeds that the crisis in 2008 so graphically revealed, the banks abused our legal system to foreclose on mortgages and evict people, some of whom did not even owe money.

More than a half-century ago, America led the way in advocating for the Universal Declaration of Human Rights, adopted by the United Nations in 1948. Today, access to health care is among the most universally accepted rights, at least in the advanced countries. America, despite the implementation of the Affordable Care Act, is the exception. It has become a country with great divides in access to health care, life expectancy and health status.

In the relief that many felt when the Supreme Court did not overturn the Affordable Care Act, the implications of the decision for Medicaid were not fully appreciated. Obamacare’s objective — to ensure that all Americans have access to health care — has been stymied: 24 states have not implemented the expanded Medicaid program, which was the means by which Obamacare was supposed to deliver on its promise to some of the poorest.

We need not just a new war on poverty but a war to protect the middle class. Solutions to these problems do not have to be newfangled. Far from it. Making markets act like markets would be a good place to start. We must end the rent-seeking society we have gravitated toward, in which the wealthy obtain profits by manipulating the system.

The problem of inequality is not so much a matter of technical economics. It’s really a problem of practical politics. Ensuring that those at the top pay their fair share of taxes — ending the special privileges of speculators, corporations and the rich — is both pragmatic and fair. We are not embracing a politics of envy if we reverse a politics of greed. Inequality is not just about the top marginal tax rate but also about our children’s access to food and the right to justice for all. If we spent more on education, health and infrastructure, we would strengthen our economy, now and in the future. Just because you’ve heard it before doesn’t mean we shouldn’t try it again.

We have located the underlying source of the problem: political inequities and policies that have commodified and corrupted our democracy. It is only engaged citizens who can fight to restore a fairer America, and they can do so only if they understand the depths and dimensions of the challenge. It is not too late to restore our position in the world and recapture our sense of who we are as a nation. Widening and deepening inequality is not driven by immutable economic laws, but by laws we have written ourselves.

This is the last article in The Great Divide.

 

Malaysia in 2014–a perspective from Singapore


June 30, 2014

Malaysia in 2014–a perspective from Singapore

MALAYSIA-SINGAPORE-DIPLOMACYFor Singapore, due to history, geography, demography, economy and recent political experiences, Malaysia has perpetually been its lynchpin concern and preoccupation. In the past, S Rajaratnam, the Republic’s first foreign minister, had described Singapore’s relations with Malaysia as ‘special’ and there is nothing to suggest that this has changed in anyway.

If anything, the ‘specialness’ has been intensified and further reinforced due to a whole array of factors, not least being the imperatives of national, regional and international economics. A weakening United States, an assertive China, an unstable Thailand and a new nationalistic leader in Indonesia can change the political and security architecture in the region to the detriment of both states and hence, their bilateral ties.

In the 1950s and 1960s, culminating in Singapore’s expulsion from Malaysia in August 1965, the emotive dimension of Singapore’s view of Malaysia was dominant. Even though this has largely dissipated, it is not totally absent. Still, the pragmatism with which both states have moved forward is definitely a milestone achievement in bilateral ties in Southeast Asia.

For Singapore, continuity rather than change remains its key perspective on Malaysia. This was especially true after the May 2013 general elections where the Barisan Nasional (BN: National Front) was returned to power albeit with a weaker majority. Still, Prime Minister Najib, the United Malays National Organisation (UMNO) and the BN are in power and that is what matters even though the winds of change must also be disconcerting. The disquiet would be more, not so much from the economic aspect as it would be from the rising racial and religious polarisation of Malaysia in the last few years that was brought to the forefront during the last general elections. The ‘Allah’ issue has not been helpful and the recent firebombing of a church in Penang has merely raised the ante of what this will mean for Malaysia and possibly, even multiracial and multi-religious Singapore.

All that aside, the single most important development of late has been the rising warmth in Singapore-Malaysia bilateral ties under Lee Hsien Loong and Najib Tun Razak. While past imperatives of history, geography and demography remain relevant, most dominant in the new narrative has been the personal warmth of the two prime ministers and the strategic nature of their bilateral ties.

Most of the past issues have been addressed or settled such as relocation of Customs and Immigration Complex, land reclamation and even water. Most importantly, has been the breakthroughs that both leaders have made vis-à-vis two issues, namely, the resolution of the Tanjong Pagar Railway Station and the land exchange deal as well as Singapore’s support for the Iskandar Development Project in Johor. Other positive developments in ties include the holding of annual leader’s retreats, re-establishment of links between both countries’ stock exchanges, Malaysia’s agreement to sell electricity to Singapore, the agreement to build high speed train link from Kuala Lumpur to Singapore, the amicable post-Pedra Branca technical talks to resolve legacy issues over the islands’ dispute and finally, the establishment of a Singapore consulate in Johor Baru.

ST-Iskandar

If there is one key factor that has brought bilateral ties to a new height, it is the cooperation in the Iskandar Project. Not only is the Singapore Government supporting investments in the project through Government-linked companies such as Temasek Holding but also playing an important role in encouraging the private sector to invest in the project. Additionally, thousands of Singaporeans are expected to be permanently based in the Iskandar region and Johor as a whole, bringing interdependence to a level that was never seen before. To that extent, Iskandar has been the key game changer in Singapore-Malaysia bilateral ties of late.

The breakthrough in bilateral ties was a function of a number of factors. First, the decision by both sides to adopt a new approach to bilateral ties in order to garner win-win results. Second, the personal warmth of the top leaders was extremely helpful. Third, the calculation of the mutual benefits that would be gained by both sides in view of the increasing regional and global competition. Fourth, over the years, there has also been increasing economic interdependence with Singapore as one of the top investors in Malaysia over the last two decades or so. Two-way trade and investments are among the highest between the two states. Fifth, there is also the realisation of increasing security indivisibility of both states. Finally, the ideological pragmatism of both sides has also helped in boosting bilateral ties.

While Singapore expects Malaysia in 2014 to have a largely ‘normal’ year barring any unexpected events – all the more to be the case as the UMNO annual assembly has opted for status quo – the Republic is also mindful of the many uncertainties that can unexpectedly crop up to affect bilateral ties. While 2014 can expect the warming of ties to continue, this cannot be taken for granted. First, the warm ties of two prime minister, both of whom are sons of two former prime ministers  who were not close, may not survive personalities if a more nationalistic prime minister takes over in Singapore or Malaysia. Second, tensions could surface if the promised cooperation proves futile or produces one-sided benefits, say in Iskandar Project. Finally, growing domestic tensions in Malaysia, especially among the Malay and Chinese communities in Johor or in Malaysia could spill over into Singapore-Malaysia relations.

Hence, for Singapore, while Malaysia in 2014 is expected to continue ‘good business as normal’, there are also potential minefields that might explode, and hence, the need for caution. ‘Special relations’ are important but can never be taken for granted, and this also holds true of Singapore’s view of Malaysia in 2014.

Bilveer Singh is associate professor at the Department of Political Science, National University of Singapore, adjunct senior fellow at the S Rajaratnam School of International Studies and President of the Political Science Association of Singapore. 

Mustapa Mohamed:Malaysia’s Productivity grew by 2.3% in 2013


June 26, 2014

Mustapa Mohamed: Malaysia’s Productivity  grew by 2.3% in 2013

Report by BERNAMA dated June 25, 2014

Malaysia Productivity Report 2013-2014Malaysia registered a productivity growth of 2.3% last year to a productivity level of RM60,437 from RM59,064 in 2012

Based on the Productivity Report 2013/2014 which was launched today by the Minister of International Trade and Industry (Miti), Mustapa Mohamed, the growth has helped Malaysia’s Gross Domestic Product (GDP) to expand 4.7% to RM786.69 billion in 2013, supported by a growth in employment of 2.3%.

MUSTAPA MOHAMAD 02In his speech at the launch, Mustapa (left) said the 2.3% growth in labour productivity compared to two per cent in 2012 could be attributed to the performance of key sectors of the economy, as well as technological progress, capital deepening and widening and the quality of labour.

“The launching of the Productivity Report for 2013/2014, in its 21 years running, strengthens the government’s agenda to enhancing the nation’s productivity. In this report, Malaysia Productivity Corporation (MPC) has emphasised the productivity framework which is based on shared Malaysian values of collaboration, coordination, communication and competency that drives national development agendas such as the Economic Transformation Programme, the Government Transformation Plan and the Malaysia Plans,” he said.

According to the Productivity Report, the services and construction sectors performed well in 2013, with labour productivity growing by 4.8% and 5.2% respectively. However, labour productivity in the agriculture sector declined by 3.5%.

The reported added that MPC made a few recommendations to address the issues facing Malaysia’s productivity goals such as how to nurture a competitive and productive mindset, promote incentives within targeted industries and strengthen regulatory review to boost national productivity.

Mustapa said Malaysia’s productivity growth surpassed that of many advanced economies, including Australia (1.4%), Japan (1.3%), Singapore (1.6%), South Korea (1.7%) and the United States (0.9%).

On another note, Mustapa said in the first three years of the Tenth Malaysia Plan (10MP) implementation, the average contribution of Total Factor Productivity (TFP) to the country’s GDP was 19.7%. He said in terms of labour’s contribution, the country needed to improve the quality of labour by strengthening policies and offer firms the right incentives to create modern jobs that will attract higher wages and increase productivity through the application of technology.

“Thus, all of us, including those in the government and representatives in trade unions and associations, must make a concerted effort to ensure higher growth with improvements in technology, research and development as well as investment in human capital,” he added.

Malaysia’s Top Economist and Mr.Transformer speaks


June 24, 2014

Malaysia’s Top Economist and Mr. Transformer speaks

I missed this one dated June 20, 2014, posted in Malaysiakini because Dr. Kamsiah and I were away in Taipei. Reading it, I thought the authorities in Taiwan should have appointed Dato Seri Idris Jala as their chief propagandist.  So here it is:

idris guitarSenator Dato’ Seri Idris Jala is a Minister in the Prime Minister’s Department and CEO of Malaysia’s Performance Management and Delivery Unit (PEMANDU), an organization tasked with ensuring Malaysia meets the goals set forth under the National Transformation Programme (NTP).

He spoke with The Prospect Group about the Economic Transformation Programme’s (ETP) goals for 2014, which includes Gross National Income (GNI), investment, and job creation, and ensuring Malaysia’s economy is resilient in the face of global uncertainty.

Q: What are the ETP’s main focal points for 2014?

JALA:

Our focal point for 2014 is to make sure we implement. We have to implement what we promised under the ETP as well as the GTP. The public wants results and the way in which we have to fulfill those results is to execute the initiatives within the 12 National Key Economic Areas (NKEAs) that will achieve big results fast.

Q: What are your 2020 GNI, investment, and job creation goals?

JALA:
By the year 2020, we would like to have become a high-income economy that fulfills the GNI targets of $15,000 per capita. That is our long-term goal. To do that will require a lot of investment; something like $444bn is needed to propel the Malaysian economy to grow. We also need to create 3.3m jobs; you have to create a lot more high-paying jobs so that the citizens can benefit. So those are the three true-North targets: gross national income per capita, private investments that will drive it, and jobs that are created. The good news today is that, from when we first began, in four years, we have been able to grow our total GNI per capita by 50%. We are at the halfway mark today. So we are very pleased with the progress made on the GNI target. With regard to job creation, we are supposed to create 3.3m jobs, and we have created 1.3m jobs in the four-year period. So that is really very good.

We have met more than 60% of the investment targets, signifying we are well on the way to achieving this as well. My view today is that we would like this coming year to continue in the same way as we have experienced over the last three years. That means that everything is on the right trajectory. If things continue the way that they are, we will fulfill our targets before 2020.

 

Q: In terms of time frame and the trajectory you are on today, when do you anticipate these goals will be achieved?

JALA:
I think we should reach our targets by the year 2018. But, as you know, the world is not linear. If you look back over the last four years, it has been a good run for us, but we are subject to what happens in the global economy. We have to build in a lot more resilience within the Malaysian economy to face any global crisis or any global slowdown to ensure we can weather storms that happen between now and the year 2020. It has been a very good run for the last four years.
Q: In a world of constantly changing economic realities, how can Malaysia’s Economic Transformation Programme (ETP) and National Key Economic Areas (NKEAs) adapt?
JALA:

Adaptation is a very important requirement moving forward for Malaysia. So what we want to do in Malaysia moving forward is to ensure we build enough resilience in our economy.Let me begin by saying we must implement proper fiscal reforms. Public debt in our case should not exceed 55% of our GDP. Now there are many countries that have gone to 80%, 90%, 100%, and even 190% public debt to GDP. So if you make sure that you grow the economy and make sure the government debt is below the 55% threshold, we believe that is the way to go. You cannot and should not over leverage, so we are really focusing on that.The second thing about being resilient as an economy and being able to face any un-foretold difficulties with the global economy is to make sure we do not have a fiscal deficit that exceeds 6%. We have been steadily reducing our fiscal deficit. When we first started, our fiscal deficit was 6.6%. We have since cut that down to 5.8%, and then to 4.8%, and last year we reached 3.9%.

The other aspect of making sure we can adapt is obviously to make sure we have the right competent talent. A competent talent pool means that whatever structural changes take place in the economy, people are able to be mobile and will do what is needed to produce products and services that can compete in the world outside.

The other is that we made changes in the way the civil service operates. We have become a lot more efficient and the good news today is that we have been able to improve the ease of doing business. It is very easy to do business in Malaysia. The World Bank assessed Malaysia in 2009 at number 23. We then moved to number 18, and then to 12, and last year, for the first time, we moved to number 6 overall in the world in terms of the ease of doing business. So if it is easy for investors to put money and investment in Malaysia, and at the same time the government is fiscally prudent and we bring in all the fiscal reforms, and we have a talent pool in the country, then we can adapt very quickly to changes that are happening.

Q: How does this philosophy play into the ideology that Malaysia should move away from being a primary resource based economy and into a higher value added service based economy?

JALA:
If you look at the history of Malaysia, we were an agrarian economy during independence in 1957 and then we moved into a more commodities play. So what we are now doing is making sure that our manufacturing arm grows a lot bigger and we have started doing that. In fact, when it gets down to palm oil, we are now telling the industry it is fine and good for us to do a lot more primary products and selling that as crude, but it is much more important for us to start producing downstream products such as oleo chemicals and we gave a lot of incentives to allow this to happen as evidenced by the establishment of more refineries. That is happening as we speak today, the downstream component has to come in. At the same time, between now and 2020, we wanted to see that we increase the services sector of the GDP to become more than 60% and we have been growing that rapidly. You can see today that tourism is big for us, financial services are big, the health sector as a part of the economy is also growing, and the education sector. So all of these all together, they will become, by the year 2020, at least 60% of our GDP. So I think for the first time doing this, we will have to diversify the economy so that we do not rely entirely on the commodities play, but we get into the downstream part of the same sectors and at the same time we grow the services sector. I think if you add the two together, the Malaysian economy becomes more resilient.

Wajarkah Tengku Adnan Rob Malay Businesses ?


June 22, 2012

WAJARKAH TENGKU ADNAN ROB MALAY BUSINESSES?

dinmericanby Din Merican

On  June 6, 2014, Utusan Malaysia exploded a story about Sultan Johor’s interference in the Johor State Assembly (Dewan Undangan Negeri) by seeking to have executive control over the Johor Housing Board. The headline was a simple “WAJARKAH?”:

Utusan Malaysia then unfolded the real story. The real disaffection with Sultan Johor was that His Highness was seen as getting involved in businesses including selling large valuable parcels of lands in Johor to Singaporeans and lately to developers from China. This was further incensed by the fact that Malaysian billionaire tycoon Tan Sri Francis Yeoh of the YTL Group had made very damaging and insulting statements against the Malay leadership in the government accusing it of crony capitalism whereas it was a public secret that the YTL Group was the biggest beneficiary of Dr Mahathir’s privatisation policy. The TNB Employees Union then exposed that Sultan Johor’s power company SIPP was the JV partner of the YTL Group in the Pengerang IPP (independent power producer) project.

The Sultan of Johore's sale of 116-acres of prime land in Johor Bahru last December to China developers Guangzhou R&F last year as a major turning point. BN upset with royal housing bill too 01 The deal pocketed the Sultan RM4.5 billion.  The Sultan of Johore's sale of 116-acres of prime land in Johor Bahru last December to China developers Guangzhou R&F last year as a major turning point. BN upset with royal housing bill too 01 The deal pocketed the Sultan RM4.5 billion.

The Sultan of Johore’s sale of 116-acres of prime land in Johor Bahru last December to China developers Guangzhou R&F last year as a major turning point.
BN upset with royal housing bill too.
The deal pocketed the Sultan RM4.5 billion. 

So, the whole thing was really about UMNO’s anger towards Sultan Johor’s perceived betrayal by selling out on Malay rights. UMNO may be justified to come out strongly against Sultan Johor. UMNO is justified to chide any Malay Ruler and any GLC that disregards Malay rights. UMNO can do that because it perceives itself as the protector and guardian of Malay rights as guaranteed by the Federal Constitution. That’s what UMNO’s existence is for, and that is what most Malays expect of UMNO. But, is UMNO really the champion of Malays and Malay rights? Or, must the Malays also be protected from the rogues in UMNO?

Beside Johor Sultan, UMNO via Khazanah Nasional Berhad owns one of the largest development land in Johor. And UMNO is selling land at equally crasy rate to foreigners, disguised under the name of “joint development”.

Beside Johor Sultan, UMNO via Khazanah Nasional Berhad owns one of the largest development land in Johor. And UMNO is selling land at equally crasy rate to foreigners, disguised under the name of “joint development”.

For UMNO to regard itself as the Champion of Malay rights, UMNO must also not allow its politicians, its leaders especially the UMNO Ministers to betray and rob legitimate Malay businesses. UMNO must not allow Ministers like Tengku Adnan Mansor who is the Federal Territories Minister to do what is reported in MKini in the story below.

Damai Kiaramas was set up in early 2009 to provide a long-term solution for the former estate workers living on prime land of currently TTDI after their estate was closed down 32 years ago.

Damai Kiaramas was set up in early 2009 to provide a long-term solution for the former estate workers living on prime land of currently TTDI after their estate was closed down 32 years ago.

So, just as Utusan Malaysia had rebuked Sultan Johor by that simple phrase – “WAJARKAH?”, these Malay businessmen would equally be entitled to rebuke Tengku Adnan and ask him : “ WAJARKAH TENGKU ADNAN ROB MALAY BUSINESSES?”

I think it is time that UMNO admonish Tengku Adnan before UMNO loses Malay support in GE14!Now read what Malaysia kini reported below:

UMNO men’s firm gets injunction against Ku Nan

By Hafiz Yatim@www.malaysiakini.com

 A group of bumiputera entrepreneurs today obtained an injunction against Federal Territories Minister and UMNO Secretary-General Tengku Adnan Tengku Mansor and two others from being involved in a joint venture project involving a five-hectare plot of land in Bukit Kiara.

Last week, Damai Kiaramas Sdn Bhd, owned by UMNO members, filed a suit in the High Court in Kuala

WAJARKAH TENGKU ADNAN ROB MALAY BUSINESSES?

WAJARKAH TENGKU ADNAN ROB MALAY BUSINESSES?

Lumpur against Tengku Adnan, also known as Ku Nan, for breach of contract. The company claimed it had fulfilled all the conditions set by the ministry to develop the land, including getting the agreement of those living in longhouses in the vicinity for 32 years, to be placed in a mixed development project on the land.

However, the company claimed, Tengku Adnan had favoured a company owned by the Pavilion group to be given the project. Today’s ex-parte injunction was granted by judicial commissioner Kamaluddin Md Said.

Damai Kiaramas named its joint-venture partner Yayasan Wilayah Persekutuan, Tengku Adnan and the Pavilion group-owned Memang Perkasa Sdn Bhd as defendants in the suit. They had since 2008 proposed to redevelop the five-hectare land, which was then part of the Bukit Kiara estate, large portions of which have become the Kuala Lumpur Golf Club and Kelab Golf Perkhidmatan Awam.

The displaced estate workers are staying in dilapidated longhouses on the five-hectare plot and pay monthly rental to the Kuala Lumpur City Hall.Damai Kiaramas claimed it had obtained the backing of the then federal territories minister Raja Nong Chik Raja Zainal Abidin and got the cabinet’s support.

Yayasan Wilayah Persekutuan agreed to appoint Damai Kiaramas as a joint-venture partner on December 17, 2012, after it obtained signatures from all the longhouse residents to support the project, in which they would be placed in their new houses there.

A draft of the joint-venture company was produced several weeks later stating the terms that included the company having to pay RM60.702 million in land premium to Yayasan Wilayah Persekutuan.

A meeting was held between Raja Nong Chik, Yayasan Wilayah Persekutuan and Damai Kiaramas on Feb 22, 2013, at which they all agreed to the terms of the agreement and also agreed to the signing of the formal agreement only after the 13th general election.

Several declarations, general damages sought

However, with Raja Nong Chik having lost in the last general election, Damai Kiaramas had to deal with Tengku Adnan, the new minister in charge of the Federal Territories, and they held several meetings, last year and this year.

At subsequent meetings, the statement of claim from the firm states, Tengku Adnan requested that the land premium and return to be paid to Yayasan Wilayah Persekutuan, be increased from RM60.702 million to RM96 million. Tengku Adnan allegedly asked that the amount be increased further to RM140 million and then to RM160 million, to which Damai Kiaramas is said to have reluctantly agreed.

The joint-venture agreement between Damai Kiaramas and Yayasan Wilayah Persekutuan was formally signed and a copy was sent to the foundation on Sept 17 last year. However, on December 5 last year, Damai Kiaramas obtained a termination notice from Yayasan Wilayah Persekutuan, which stated that there was never an agreement between them, that Damai Kiaramas failed to comply with the foundation’s demand and had not presented a detailed development plan.

Damai Kiaramas maintained that it briefed Tengku Adnan and the foundation representative on this on Sept 25 last year. The company claimed the reasons for the termination of the joint-venture agreement came as an after thought, and that it tried to revive the project by agreeing to pay the RM160 million that Tengku Adnan sought for the foundation.

The company also demanded, in April this year, that Yayasan Wilayah Persekutuan reveals whether it had entered into an agreement with other companies to develop the project.Damai Kiaramas claimed that all the defendants had hidded from its knowledge that secret negotiations had been carried out with Memang Perkasa and further claimed that there was interference from the firm.

Damai Kiaramas further claimed that because it had agreed to pay the RM160 million as demanded, the joint-venture agreement stands and that the action of the other party amounted to breach of agreement.

Hence, the company is seeking a declaration that the joint-venture agreement dated September 17 last year is constituted and continues, and wants another declaration that the termination notice is set-aside.

Damai Kiaramas also wants Yayasan Wilayah Persekutuan to continue with the joint venture and an order that any agreement that the foundation has with Memang Perkasa should be declared null and void. It is also seeking general damages and any amount the court deems fit for loss of profit and exemplary damages.

READ HERE: by Ida Lim@www.themalaymailonline.com

June 21, 2014

http://www.themalaymailonline.com/malaysia/article/developer-insists-has-funds-for-ttdi-project-labels-ku-nans-claims-prematur

June 19, 2014

http://www.themalaymailonline.com/malaysia/article/ku-nan-shrugs-off-court-injunction-by-developer-says-firm-could-not-perform

On Taiwan


 

June 20, 2014

Taipei, Taiwan

On Taiwan

by Din Merican

image

My wife, Dr. Kamsiah, and I spent the last few days in Taipei and its surrounds and met a number  of her Taiwanese counterparts. We asked them a lot of questions about their history, culture, their economy and government. While my wife was occupied with her course, I was  able to interact with them. Although those  we met and talked to were hampered by their limited English vocabulary and  we have zero knowledge of their language (Mandarin), we are able to understand why they are very proud of their country and its economic success but they are critical of their government. Off the bat, we can say that their society is an open one founded on democracy. They are a very hardworking and disciplined people.

I searched google and found a report from the Heritage Foundation, which confirms our cursory impressions of the country.  See below:

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Paying Tribute to Integrity


June 14, 2014

Paying Tribute to Integrity

by Ahmad Zakie Shariff (received by e-mail)

Like many others of his generation, my late father rejoiced when the Union Jack was lowered, that fateful night in August 1957. We were finally independent and free to set our nation’s future course. He was a simple man of integrity and he admired the great qualities of our Founding Fathers and he passed on that admiration to me.

hj-ahmad-zakieAs I write I am paying tribute to the founding spirit of this nation; a spirit of collective optimism and idealism. True, we may not feature in this year’s World Cup in Brazil (we can still dream, 2030 anyone?), but Malaysia is still a place where people can dream and achieve lofty goals together. United we stand, divided we fall.

But for too long, the economics discipline has understated the critical role of cooperation in economic activity. Emphasis on the individual has risen above all else and overshadowed the profound ways we depend on each other. You may have recently heard a prominent business person say “I did it all myself. I had no help from other quarters.” I want to interrupt that point.

Every successful business venture requires the cooperative effort of many people – the policymaker who believes in the benefits of the project, the banker who believes in the business plan, the customer who believes in the product, the employee who devotes precious time to the business and its owners.

A relationship exists when trust and integrity exists, and when they do, remarkable efficiencies result. Partners are spared a multitude of worries – whether they’ll get paid, whether they’ll get what they think they’re paying for. They are freed to act quickly and with confidence, again and again.

Pervasive integrity is fundamental to our society and the growth of its economy. Integrity, therefore, is not something that’s nice to have. It’s something we have to have.

The dictionary defines integrity as adherence to moral and ethical principles, rectitude, honour, and honesty. These are certainly admirable qualities. But we need to understand integrity as not simply a virtue, but a shared asset that brings social and economic rewards. Sometimes we take integrity for granted. We learn from infancy to count on other people to tell the truth, to keep their promises, and respect the rights of others.

This trusting attitude is ingrained in our culture, learnt from the cradle and accumulated over the years. However in this era, where so much seems to be going wrong, many have lost trust in their fellow citizens. Some of us have lost faith in integrity.

The path forward can’t be to stop trusting. We need to build the trust that will power our nation for decades to come.If mistakes are learning experiences, the painful lesson of recent events that pervaded our nation is that integrity really does matter. Not just to our moral wellbeing but to our economic wellbeing too.

Conventionally, integrity is considered a “behind closed doors” topic: a personal issue, entirely up to the individual. If you are upright, good for you; if not it’s no one else’s affair. We should turn conventional wisdom on its head. The real value of integrity is not personal; it’s collective. It is the underpinning for all our social relationships. We are heirs to a huge stock of integrity, built up over the years by our predecessors and visible in every aspect of our society.

It is a shared asset that has made us quite wealthy.Without integrity, our nation cannot function. There would be no trust, no mega projects, no trading, no credit, no buying and selling. Our oft-praised economy would quickly degenerate into a primitive system, and our nation’s wealth would disappear long with it.

Integrity is collective action.To actually practice integrity, to deal honestly, there has to be someone on the other side of the transaction. That means that to really understand integrity, we have to appreciate it as a relationship of trust.

An example: The Asian financial crisis of 1998 was in my mind, first and foremost, a crisis of integrity. It was by far the biggest economic disruption of my lifetime, more so than the subprime crisis of 2008.  In both crises, the seeds were sown when a number of people sought their own short-term advantage, knowing that they were putting others at risk. There was no thought spared for the collective good.

The things that will destroy us are: politics without principle; pleasure without conscience; wealth without work; knowledge without character; business without morality; science without humanity; and worship without sacrifice.–Mohandas K. Gandhi

In that climate, greed great and small multiplied and spread like potent germs in a warm petri dish. The result of all that integrity and trust unravelling was an economic contraction so profound that it impacted vast populations and diminished wealth around the globe.

It was a wake-up call. Ignoring or, worse, abusing integrity isn’t just unpleasant forGandhi a few bad apples and their unlucky victims. It had profound economic consequences. At stake were the entire regional economic system and our way of life.

There is another way to think about integrity. What if we invested in integrity? What if we took a different approach and focused on “increasing the good stuff that people do” instead of highlighting the scandals, the frauds and the cheatings? What if?

The ultimate point is that if we invest in our collective integrity, we invest in our collective wealth. We can create wealth together in ways that are not possible alone. Despite all the dishonesty, the falsehoods, the cheating and even the outright fraud we’ve seen exposed, there’s actually a lot of integrity left in this world. Without it, financial activity and the vast majority of commerce would stop completely.

Mohandas K. Gandhi once said that there are seven things that will destroy a society – wealth without work; pleasure without conscience; knowledge without character; religion without sacrifice; politics without principles; science without humanity and business without ethics.I agree with the Mahatma. He was cautioning us against the loss of integrity.

A Gathering Storm over Johor Sultan’s Commercial Dealings (Part 3)


June 12, 2014

A Gathering Storm over Johor Sultan’s Commercial Dealings

PART 3: Is another constitutional crisis brewing in Johor?

by Khairul Khalid@www.kinibiz.com

khaled-nordinEven though Johor Menteri Besar (MB) Mohamed Khaled Nordin has pared down the Sultan of Johor’s proposed executive powers in the controversial new housing bill, many observers wonder if this is just the lull before the storm.

Could there be another constitutional crisis in the making similar to the one in the 1980s?

Although the constitutional crisis in 1983 that led to the diminishing of the monarchy’s powers occurred under different circumstances, compared to the current uproar over the Johor housing bill there are basic underlying themes.

In both cases, the executive and monarchy are trying to exert power and control over one another.

Although the previous constitutional crisis in 1983 was at a bigger national scale, it is not entirely inconceivable that a wider tussle between royals and state government could develop following the current situation in Johor.

“I wouldn’t call it a constitutional crisis just yet, but we have to keep monitoring the situation closely,” said According to Senai state assemblyperson Wong Shu Qi. Another observer says that there are very slim chances of it happening only because the current Prime Minister (PM) Najib Razak is not likely to go against the royals.

“In the previous crisis in 1983, there was Mahathir Mohamad (former Prime Minister) who campaigned aggressively against the royalty. I don’t think Najib is strong enough to do that,” said an observer.

For full story  READ ON :

http://www.kinibiz.com/story/issues/90591/is-another-constitutional-crisis-brewing-in-johor.html

 

A Gathering Storm over Johor Sultan’s Commercial Dealings (Part 1)


June 12, 2014

A Gathering Storm over Johor Sultan’s Commercial Dealings

PART 1: The RM 4.5 billion Backlash

By Khairul Khalid @www.kinibiz.com

http://www.kinibiz.com/?p=90213 (June 10, 2014)

Sultan-of-Johors-recent-business-deals-100614-updatedA quiet storm has been growing over the Sultan Ibrahim Ismail’s increased commercial dealings and business interests.

It looks to have come to a head with strong public and political opposition to Johor’s new Housing and Real Property Board Bill that was initiated to give the Sultan of Johor sweeping executive powers in the property industry. KiniBiz will examine that issue further tomorrow.

Many observers cite the Sultan’s sale of 116-acres of prime land in Johor Bahru lastSultan of Johore December to China developers Guangzhou R&F last year as a major turning point. The deal pocketed the Sultan RM4.5 billion. Although scant details have been released, unconfirmed sources told KiniBiz that much of it is prime land in the Johor Bahru (JB) city  centre and seafront designated as development zones in the Iskandar region.

Sources also told KiniBiz that the land was alienated to the Sultan of Johor by the state government for a lot less than the sale price. KiniBiz has not been able to verify this independently. It is not known whether the Sultan has any stake in the mixed developments to be undertaken on this land bank.

The China angle

The special economic zone of Iskandar has been buzzing with big Chinese mainland developers such as Country Garden constructing projects on a massive scale that has dwarfed other local developments.

The Sultan’s RM4.5 billion land sale to China developers clearly ruffled some feathers, not least among local developers who are worried that the local market could be swamped with units made by China developers and cause a property glut.

Ironically, only last July Iskandar Investment Bhd or IIB announced that it was limiting the sale of land in Iskandar through a “controlled release” strategy. The move was deemed necessary because Iskandar “is still a relatively small and fragile region” and to “allow investors to make money”, said IIB President and CEO Syed Mohamed Ibrahim then.

There were also concerns that selling prime state land to China was a politically insensitive move. Nevertheless, there was little vocal opposition at the time when the RM4.5 billion land sale was announced, although there were grumblings on the ground.

Fear factor

The Sultan of Johor is often treated with a mixture of respect, awe and even fear especially among Johorians. Open criticism of the Sultan is seen as social taboo. Local professionals and businessmen keep their lips pursed for fear of repercussions.

“Yes, there definitely is a fear factor,” said a local Johor businessman who did not want to be named.Things could slowly be changing with the furore over the housing bill.

“With all due respect, he (the Sultan) shouldn’t be involved in business. This is the first Sultan known to Malaysians to sell land to China. And it is prime city land. It is unprecedented. Even the previous late Sultan Iskandar (Sultan Ibrahim’s father whom the  Iskandar region was named after) did not engage in such public business dealings,” said a practicing lawyer in Johor who spoke on condition of anonymity.

In theory, the RM4.5 billion land sale to Guangzhou R&F alone could place Sultan Ibrahim among the richest men in Malaysia.

Business dealings

Vincent-Tan-Chee-YiounBased on the latest Forbes Malaysia’s 50 richest list, the Sultan of Johor would rank just behind Mahathir’s crony, Vincent Tan (a businessman that the Sultan has been closely linked to) who is at number 10 on the list with an estimated net worth of just over RM5 billion (US$ 1.6 billion).

The Sultan could have slipped quietly into the background after the mammoth land sale, but subsequently he made several other eye-catching moves in the corporate world. He has been acquiring shares in other existing businesses in deals worth more than RM600 million.

After the RM4.5 billion land sale, the Sultan of Johor bought a 15% stake in MOL AccessPortal (MOL) for RM396 million and 20% stake in Berjaya Times Square Sdn Bhd (BTS) for RM250 million.

Interestingly, both companies that the Sultan of Johor bought stakes in are linked to Batu Pahat-born Tan who is chairman of Berjaya Group and owner of Cardiff City football club.

Most recently, the Sultan of Johor made waves again, this time in the energy sector.A consortium of SIPP (SIPP) Energy Sdn Bhd, YTL Power International Bhd and Tenaga Nasional Bhd (TNB) was conditionally awarded the development of Project 4A, a new 1,000 megawatt (MW)–1,400MW combined cycle plant in Johor. The project is reported worth approximately RM6 billion, according to a CIMB report.

The Sultan of Johor owns a 51% stake in SIPP with the balance shareholding split between two company directors — Daing A Malek Daing A Rahman (24.5%) and Anuar Ahmed (24.5%).

With such high-profile business acquisitions, many have questioned whether it is appropriate for a sitting ruler to be so conspicuously involved in the business world.

Legal implications

“The constitution says that they (the royals) should be ceremonial bodies and above politics. They get a lot of remuneration and grants from the state government. These are all from public funds. They don’t need to be in business. It is also not right for a Sultan to be in competition with the rakyat for businesses. How can they compete? It is the Malay “adat” not to go against the Sultan, ” said the Johor lawyer to KiniBiz.

The lawyer is also concerned that the Sultan’s various business dealings could expose himself to potential lawsuits. “If the Sultan is involved in companies and business entities, he is liable to be sued in court if anything goes wrong. That could tarnish the royal family’s image and bring the country into disrepute,” said the lawyer.

lim-kang-hooThis is not the first time that the Sultan of Johor has been linked with prominent local businessmen. Previously, he was heavily linked with Lim Kang Hoo, majority stakeholder of Ekovest and Iskandar Waterfront Holdings (IWH).

Property tycoon Lim is ranked number 19 in the latest Forbes Malaysia’s 50 richest list with an estimated net worth of over RM3 billion (US$ 975 million).

During the 1997 financial crisis, Lim took over RM200 million debts of state investment agency Kumpulan Prasarana Johor (KPRJ) in return for land reclamation rights. With the value of land skyrocketing in Iskandar in recent years, so has Lim’s fortunes.

IWH is a public-private partnership between the state of Johor and Lim, with KPRJ having a 40% stake. Lim holds the balance 60% through his vehicle Credence Resources Sdn Bhd (CRSB). Lim is also executive chairman of public-listed property company Tebrau Teguh.

Lim owns vast tracts of land in JB’s waterfront especially in Danga Bay. Last April, Shanghai-based developer Greenland Group paid RM600 million to IWH for 13 acres of land in Danga Bay. IWH and Greenland will be in a joint venture (JV) for a mixed development worth a gross development value (GDV) of RM2.2 billion.

Previously, IWH sold 58 acres of land to Country Garden for RM900 million to develop its Danga Bay project that includes 9,000 units of high-end condominiums units and commercial development with a RM18 billion GDV.

IWH is also planning an initial public offering (IPO) later this year that could be worth up to $300 million (RM960 million).

Sultan of Johor confirmed that billionaire Lim is his business partner in a 2012 interview with a few local bloggers, including Ahirudin Attan (or Rocky as he is more popularly known as).

During the interview, the Sultan also angrily dismissed allegations that he is a “30% man” based on rumours that he was asking for a cut of major business dealings in the state. The Sultan explained that the “30% is for the state”, according to the 2012 interview.

Chinese companies have been investing huge sums of money and contributing to Iskandar’s growth substantially.

Feeding China’s love for property, land

Major Chinese developers in Iskandar include Country Garden, Guangzhou R&F, Agile Property Holdings and Greenland Group that have invested a combined US$6 billion (RM20 billion).

In 2013, Chinese institutional and retail investors poured US$1.9 billion (RM6 billion) into Malaysia properties.However, there has also been growing unease with the increasing Chinese ownership and presence in vast tracts of waterfront land in JB.

“Technically, it could compromise the security of the nation and is not in the best national interest. The Chinese have bought land all along Danga Bay up to Tanjong Pelepas. They are developing all sorts of projects without any restrictions such as the bumiputera quota that are imposed on local developers,” said the Johor lawyer.

The cocktail of big business, land, politics, royalty and foreign ownership could be a political time bomb for Johor. Both sides of the political divide are already up in arms over the Sultan of Johor’s potential involvement in state administration via the Housing and Real Property Board Bill.

Major developments and investments in the southern state such as Iskandar and Pengerang could be placed in delicate positions in light of these recent developments in Johor.

Get back on the right track,Mr. Jala


June 11, 2014

Published: Wednesday June 11, 2014 MYT 12:00:00 AM
Updated: Wednesday June 11, 2014 MYT 8:07:57 AM

http://www.thestar.com.my/Opinion/Letters/2014/06/11/Get-back-on-the-right-track/

Get back on the right track,Mr Jala

by Tan Sri (Dr) Ramon Navaratnam, Chairman,Asli Centre of Public Policy Studies

Ramon14I REFER to the article “Tackling income inequality” (The Star, June 9) by Minister in the Prime Minister’s Department and CEO of PEMANDU, Datuk Seri Idris Jala.

Jala shows compassion for the poor, having come up dramatically from a very poor village background himself.He explains the many achievements of the Government’s plans and programmes to fight poverty and states that Malaysia is on the right track to win the big war on poverty.

I would agree only generally with his assessment. It is true that we have come a long way to eradicating poverty. However, I would think that we are not necessarily on the “right track”. To put it aptly, we need to “get back on the right track!”

Why is this so? It is because we are still using the old strategies of fighting poverty through aiding small-time businesses and giving out grants to farmers, fishermen and giving out minor construction contracts to the poor.

All these uplift them in a very limited manner. That is why the Government often proclaims the individual aid given to Low-Income Households (LIH) and Amanah Ikhtiar Malaysia (AIM). But how effective are we in substantially solving the structural causes of poverty?

There are a limited number of poor individuals who gain from these small aid programmes in the short term. But what about the vast majority of the poor whose mean household income is only RM2,000 per month or lower for a family of four or about RM500 per person per month?

How do they survive and what are their prospects from getting out of poverty permanently?The public also needs to be told what proportion of the poor benefit from the schemes to uplift themselves permanently.

It is also good if Jala (pic-playing guitar) could provide the racial and geographical idris guitarbreakdown of these recipients.Unfortunately, there is this nagging perception that the very poor orang asli, the poor Sabahans and Sarawakians, and the very poor Chinese, Indians and others, are not given sufficient and equal attention by the Government.

If all the poor are treated fairly, then the Government should highlight it and be proud of this noble act. But is this being done? Although the Gini Coefficient that measures poverty is said to be improving, it’s a very slight improvement. Moreover, it is well-known that Malaysia’s Gini Coefficient is one of the worst in Asean, despite our considerable wealth in oil and gas and other natural resources and our relatively high income. They need to explain why this is happenning. Thus, in fighting poverty we need to review our old policies and “get back on track”.

While we need to carry on with short-term measures and perhaps the BR1M programmes for some time, we need to do much more to transform the structural causes of poverty.

Since Jala has rightly asked for “fair and reasonable comments”, I hope my recommendations will be considered, if not implemented.

First, increase the budget to fight poverty through long-term sustainable measures, like better infrastructure for the poor.Second, improve the quality of education. Our educational standards are rated poorly by international agencies.

Third, teach more and better English to help our dropouts, school leavers and even graduates to get higher income jobs to break out of the poverty cycle. Fourth, introduce more technical education so that the majority of our children who cannot benefit or are not interested in an academic education, can become independent and be gainfully employed as technicians. Then, they need not depend on government handouts or government jobs for the sake of employing them at taxpayers’ expense.

Lastly, instill the time-tested values of good conduct, strong discipline, racial and religious harmony and a sense of independence and competition. Tackling income inequality is a vital goal for social stability, progress and especially for national unity.

Therefore, we have to constantly review and revise our policies and practices to ensure we “keep on the right track” in fighting poverty, lest we lose our way in this tough struggle.

My message to Idris Jala, who may have forgotten his KPI on Corruption, comes from Ayn Rand, Author of Atlas Shrugged below. Minister Paul Low, what are doing in the Prime Minister’s Department, apart from earning a fat salary? –Din Merican

ayn-rand-“When you see that trading is done, not by consent, but by compulsion – when you see that in order to produce, you need to obtain permission from men who produce nothing – when you see that money is flowing to those who deal, not in goods, but in favors – when you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you – when you see corruption being rewarded and honesty becoming a self-sacrifice – you may know that your society is doomed.”–Atlas Shrugged

 

Malaysia must tackle its high public and rising external debts


June 9, 2014

Malaysia must tackle its high public and rising external debts

http://www.themalaysianinsider.com

Malaysia risks seeing its economy contract and losing its global market share in key export sectors if it fails to tackle its high levels of public and rising external debts, a United Kingdom-based economist has warned.

 ????????????????????????????????????Sarah Fowler from Oxford Economics said while the nation’s shrinking current account surplus was not a major concern as it was expected to stay in excess in the next few years, there are worries over Malaysia’s capital account due to rising external debt, which has shot up close to 40% of its gross domestic product (GDP) in recent years.

The country’s public debt-to-GDP ratio has been hovering at an all-time high of more than 50% since 2010 because of large fiscal deficits incurred when an aggressive stimulus package was launched to bolster the country’s economy during the global financial crisis.

“Addressing the concerns would enable Malaysia to achieve a higher growth path, reaching a higher per capita income sooner. We expect the economy to grow by just more than 4% over the next five years but if the concerns were addressed growth could exceed 4.5%,” she told The Malaysian Insider in an email.

Fowler, who produced a report on “Why Malaysia is now a more risky prospect than Indonesia” which was highlighted by global financial news site Bloomberg’s columnist William Pasek last week, used 17 indicators to develop a scorecard to assess emerging market vulnerability to external economic and financial shocks.

Among the indicators are capital inflows, external financing, the current account and budget balances, credit markets and the economy. “Our scorecard assesses Malaysia as a more vulnerable economy than Indonesia, Thailand or India,” she wrote in her report.

Touching on external debt, Fowler had reported that non-foreign direct investment capital inflows averaged 6.6% of GDP a year between 2009 and 2012, the highest in their sample of 13 emerging markets and more than Indonesia’s average of 2.2%.

“More than half of all portfolio investment in Malaysia went into debt securities between 2010 and 2012, up from close to a third between 2005 and 2009.”

She had also noted in her report that the short-term component of external debt was also increasing, which is risky as it requires repaying or rolling over earlier. Short-term debt as a share of GDP reached 15.2% by the end of last year, up from 10% in 2007. In contrast, India’s and Indonesia’s short-term debt accounted for less than 5% of their GDP.

Overall, external indebtedness in Malaysia is low relative to exports, however, which means that funding the debt may not be a problem.But Malaysia has an unusually open economy; exports are equivalent to more than 80% of GDP, lower only than in Singapore and Hong Kong.

On public debt, Fowler said although Putrajaya has reduced its fiscal deficit as aPM Najib share of GDP from 6.5% in 2009 to 3% last year, there was a need to continue to manage the public finances carefully to trim the deficit further.This, she said, could be done by broadening the tax revenue base in order to try to raise revenues.

“Public debt has risen in recent years and reducing this would be good because money that currently has to be spent paying the interest on the debt could be spent in more productive areas.”

However, Fowler expects the public debt to GDP ratio to remain above 50% for the next five years, saying Indonesia’s, Thailand’s and Korea’s public debts amount to no more than a third of their respective GDP.

Fowler is not the first person to sound the alarm bells on Malaysia’s economy.In October last year, financial analyst Jesse Colombo warned that Malaysia’s economic bubble will burst after China’s economy takes a tumble and global and local interest rates continue to rise.

Writing in Forbes online magazine, Colombo said: “Malaysia’s bubble will most likely pop when China’s economic bubble pops and/or as global and local interest rates continue to rise, which are what caused the country’s credit and asset bubble in the first place.

“The resumption of the US Federal Reserve’s QE taper plans may put pressure on Malaysia’s financial markets in the near future. Malaysia’s rapidly deteriorating current account surplus due to weaker exports is another worrisome development.” –June 9, 2014.

Malaysia–A Paradise Lost


June 7, 2014

Malaysia–A Paradise Lost

by Cogito Ergo Sum@http://www.malaysiakini.com

COMMENT: Superficially, Malaysia, for all and sundry, is a nation that is not onlyhype_najib1 doing well, but even thriving in all its endeavours. Foreigners and locals are told that we are a model of tolerance and harmony in a plural society and that others must emulate our ways if they want to succeed.

Unfortunately, even a cursory look at the state of things will give away this lie, so lyrically waxed in the mainstream media. And unless one has access to news portals like Malaysiakini, we would be blissfully ignorant under the onslaught and media blitz of the government controlled media machinery.

For one, we seem to be on a runaway train towards an Islamic state, when the Federal Constitution has overtly stated that we are secular nation.

So-called defenders of the faith and race like ISMA and PDRKASA have become not only very vocal, but also dangerously influential. They promote laws and legal systems that are in opposition to a multi-ethnic and plural society, and is deemed inappropriate for a modern economic system that can compete on an equal footing with our neighbours.

These so-called NGOs, considered to be on the fringes, seem to be getting theirIsma President funding and encore from a benign government that that is even seen as fanning these inciting and seditious pronouncement by its very silence and inaction.

And yet, we have an official propaganda that is portraying our ‘moderation’ and moderate ways to foreigners and foreign investors. But walking the talk is futile as the antics of such official ‘guardians of the faith’ like JAIS, are a stumbling block to this false mirage we are trying to project in a desert of what used to be an oasis of goodwill.

And as if to prepare us for the inevitable, the government has even set up a ‘hudud implementation committee’ for the day when the shariah system becomes law of the land. And if this carries on, we are well on track to go the way of Brunei, Sudan and several other failed states which have adopted hudud laws. And we are a ‘moderate’ nation with moderate policies and people?

Intruders beware

But we are indeed a nation of tolerance. Pushed to the limits of accommodating preferential treatment and affirmative action, Chinese and Indians are declared ‘intruders’ who have no business to have any business or rights as equal human beings.

And despite these provocative and obviously false, seditious accusations by radicals and self-proclaimed ‘fundamentalists’, we have either a mute BN which distinguishes itself  as a multi-racial coalition, or one that is too stupefied to respond decisively.

Newspapers that are unofficial mouthpieces of the authorities like Utusan Malaysia have a penchant of publishing rubbish and peddling it as sacrosanct news. Racial and religious slurs are printed and sold as if it is bread butter of the nation. Yet, the authorities are impotent or choose to be, against such slurs and often given official sanction by remaining dumb and unresponsive to such blatant lies. The tolerance and moderation, unfortunately is from the victims of such hate-filled messages.

Our Education system sucks

Bakri Musa's BookA serious flaw in the fundamentals of this nation is the education system. Our school system and education promotes learning by rote and regurgitating facts for examinations. No attempt is made to foster critical thinking and questioning of subject matter. Facts of history, and now even geography, are being manipulated to fit a distinct political agenda.Well accepted historical facts have been altered and even changed to leave out pertinent points of history that made this nation once great.

The roles of our forefathers like the late Tan Cheng Lock and VT Sambanthan are either missing or dealt with in passing. These men (and many women) played an integral part in getting the British to give us independence.And it was the Malay, Chinese and Indian Police officers whot beat the communists in a urban and guerrilla warfare.

No one race could have achieved this as Malaysia became the only nation to beat the BRAIN DRAINmovement in open combat. No other country has achieved this in the history of warfare.By the time students reach universities, their language skills in English can only be described as atrocious. Research papers and standard texts are written in the English language.

An erstwhile student in at a university is required to not only know the current trends in whatever fields he or she is pursing, but also critically evaluate such studies. That ability to valuate studies by others is a critical component in the pursuit of higher learning. Learning by rote and spewing out wrong facts at public exams are of no use in evaluating research papers because it does not require thinking. And the vicious cycle goes on when these graduates become teachers themselves. Results have shown that our students performance in science and mathematics is among the poorest in Asia.

We need a revolutionary education system to set thing right. A system that will ‘uneducate’ our children from the current ‘copy and paste’ mentality so prevalent that the word plagiarism is as alien as the concept of unity in diversity.

Economic descent

From a house of plenty, we have now become a nation of borrowers. Our household debt is at its peak at 80 percent. Families in urban areas find it impossible to meet ends and unless you are a favoured despot, you will find yourself drowning in a sea of personal debt.

Poverty cuts across racial and religious barriers. Despite government efforts to prop up the rural population, the urban Malays are finding it hard to meet the expenses of daily city life.

The sheer weight of managing and balancing a domestic budget is actually a microcosm of the national economy.Our current account (money received from imports minus the money that goes out for exports) has fallen.

Malaysia's Current Acc to GDP RatioAnd the figure has been steadily falling according to numbers released by the Department of Statistics, Malaysia since the year 2004 (see chart above).

John Milton’s ‘Paradise Lost’, is an epic poem of the fall of man. Like the Garden of Eden, Malaysia was once an advanced and prosperous nation in not just Southeast Asia, but Asia. But sin crept into Paradise and it all was lost. And like Eden, we have allowed corruption, decay and prejudice to destroy the once paradisiacal state we were in.

In his poem, Milton painted the devil in such colourful language, that some haveMilton's epic poems even argued that Satan was the hero in ‘Paradise Lost’! And, much like Milton’s Eden, we seem to have fallen to the devilish ways of religious and racial bigotry that is transforming us, from the proverbial paradise, to a living hell on earth … for the average person.

One is left to contemplate if there is a way out of this runaway train that we have seemingly boarded. Will sanity, in the end prevail and will there be economic, social and political salvation? Milton pointed to a new future with his second epic poem entitled ‘Paradise Regained’.

As Malaysians, we have a duty to regain that lost paradise. We owe it to the next generation and the generations to come so that the story of Malaysia will be remembered as one of victory over darkness, of good over evil, of sanity over insanity and of one of moderation over extremism.

Let us not end up as an epic tragedy.

Malaysia truly Asia’s weakest link


June 7, 2014

Malaysia truly Asia’s weakest link thanks to Putrajaya, says Bloomberg

Published: 5 June 2014 | Updated: 5 June 2014 10:33  PM

http://www.themalaysianinsider.com

kuala-lumpur-skylineKuala Lumpur: Beautiful  outside but Rotten Inside

Putrajaya’s one-party policy and its 40-year-old pro-Malay affirmative action programme will spell trouble for the country’s economy, effectively turning Malaysia into the weakest link in Asia, a Bloomberg columnist said today.

http://www.bloombergview.com/articles/2014-06-05/is-malaysia-asia-s-weakest-link

William P2William Pesek is a Bloomberg View columnist based in Tokyo and writes on economics, markets and politics throughout the Asia-Pacific region. His journalism awards include the 2010 Society of American Business Editors and Writers prize for commentary. Since joining Bloomberg in 2000, Pesek’s columns have appeared in the International Herald Tribune, the Sydney Morning Herald, the New York Post, the Straits Times, the Japan Times and many other publications around the world. Pesek began his journalism career writing for the American Banker and Bond Buyer newspapers.

He also worked for Dow Jones Newswires, where he wrote the daily credit markets column for the Wall Street Journal. Pesek earned a bachelor’s degree in business journalism from Bernard M. Baruch College-City University of New York

Citing Putrajaya’s poor handling of opposition politicians and the search for MH370, William Pesek said Malaysia will continue to hog headlines for all the wrong reasons if Putrajaya continues to be complacent in economic matters.

“Its 40-year-old, pro-Malay affirmative-action program chips away at the country’s competitiveness more and more each passing year. The scheme, which disenfranchises Malaysia’s Chinese and Indian minorities, is a productivity and innovation killer. It also has a corrupting influence on the political and business culture,” Pesek said.

Pesek based his observations on a new report from Sarah Fowler of UK-based Oxford Economics, which ranks Malaysia the “riskiest country in Asia of those we consider,” more so than India, Indonesia and even coup-ridden Thailand.

In the report, Fowler said: “Prompted by its high levels of public debt, rising external debt and shrinking current account surplus, there has been a shift in the perception of risks towards Malaysia and away from Indonesia”

Pesek added that current-account surplus is dwindling, from 16% of GDP in 2008 to 3.7% last year, while household debt, according to Fowler, is “worryingly high” at more than 80% of GDP compared to less than 60% in 2008.

Fowler also wrote that Putrajaya’s “climate of entitlement amongst the Malay community limits entrepreneurialism and vested interests within UMNO still resist change.”

Pesek said that the only thing holding Malaysia back is its insular political culture.“The government’s handling of Malaysia Airlines flight 370 said it all. Its deer-in-the-headlights response to the plane’s disappearance was the product of an insular political culture.

“The trouble is, that insularity is holding back a resource-rich economy that should be among Asia’s superstars, not its weakest links.” – June 5, 2014.