Water Deal between Selangor and Putrajaya: Time to Come Clean, Khalid Ibrahim


March 1, 2014

Water Deal between Selangor and Putrajaya: Time to Come  Clean, Khalid Ibrahim

Commentary by the Malaysian Insider

UAE had written to Prime Minister Datuk Seri Najib Razak and Selangor Mentri Besar Tan Sri Abdul Khalid Ibrahim last April 12, seeking their intervention on the dispute, but no reply was received, lead counsel Rosli Dahlan said last month.

What’s the real deal, Mr. Khalid Ibrahim?

The Putrajaya-Selangor memorandum of understanding (MOU) for the acquisition of state water assets and construction of a RM1.2 billion water treatment plant does not seem to pass the smell test.

And if something does not smell right, it is not right.First off, Deputy Prime Minister Tan Sri Muhyiddin Yassin today described the MOU signed on Wednesday as a binding agreement, although PAS central committee member Dr Dzukefly Ahmad pointed out it was not, unlike a memorandum of agreement (MOA).

Lawyers have chipped in too on the matter, saying MOUs are not legally binding as they just reflect an intention to work together to a common goal.

“It is normally signed when two parties want to work together, but do not want a legally binding agreement with each other,” lawyer Syahredzan Johan told The Malaysian Insider.

“However, I am speaking from the perspective of not having seen the contents of the MoU signed between the Selangor state government and the Federal government.”

“What is important is the contents of the document, not the labeling. One can have a perfectly legally binding document and still call it a MoU,” Syahredzan said.

The lawyer zoomed in on the main contents of the MOU, saying, “I think in the instance of the current MoU signed by Selangor and Putrajaya, it is in relation to buying over the water concessionaires and the approval for the Langat 2 water treatment plant.”

For the two components to conclude, he said there would be legal agreements to acquire the water concessionaires and also to build the RM1.2 billion water treatment plant in Langat, Selangor.

Would the MOU expire if any of the two components do not take off? Does the MOU have a time-frame for each component? The only thing that is public knowledge is that the Selangor government must approve Langat 2 once the tender is issued for the construction.

Is it just about water supply or who will benefit from the construction contracts, one wonders.

While connected businessmen can shout with glee that they would get RM9.65 billion for the four concession holders, others will be happy that there is another infrastructure project to profit from after five years of haggling.

Media reports last year said three companies — Salcon Bhd, MMC Corp Bhd and Ahmad Zaki Resources Bhd (AZRB) — have been shortlisted to build the RM1.2 billion Langat 2 water treatment plant project.

The Pahang-Selangor interstate water transfer tunnel is being built with a soft loan of RM2 billion from the Japanese International Cooperation Agency (JICA). There is a 40-year repayment period for the 45km tunnel through the Titiwangsa mountain range.

Apart from that, the project entails the building of a dam and a pumphouse in Pahang, and a water treatment plant in Selangor with the total value said to be about RM7 billion.

While those living in Selangor and Kuala Lumpur will benefit from the project once it is completed as early as 2017, critics say the Langat 2 water treatment plant can only provide water capacity until 2025, and the government would require more plants and dams built after that in the country’s most densely populated area.

That would mean more projects in the future, and higher costs. Unless Putrajaya and Selangor insist that the water concessionaires take steps to cut down leaks that lead to a higher portion of non-revenue water (NRW).

There is a need for more treated water to cater to the rising population, but in the rush to provide that, the government should look into more ways to conserve water because more projects just means the taxpayers will have to bear the burden of underwriting the deals, while companies show the profits.

Muhyiddin also said today, “The MoU between the federal and state governments are for the benefit of the people to alleviate the water crisis in the Klang Valley with the construction of the Langat 2 treatment plant.”

This would take another three years. Nowhere does the MOU talk about ways to stop leakages and NRW. If PKR and Barisan Nasioanl (BN) politicians think they are doing Selangor a favour with the deal, they have to think again. The only ones benefitting appear to be the contractors. — February 28, 2014.

 

Southeast Asia and The Challenge of Managing Fractured Societies


January 13, 2014

Southeast Asia and The Challenge of Managing Fractured Societies

by Rodolfo C Severino, ISEAS(01-11-14)

SeverinoPolitical unrest, economic divisions, social turmoil, outright insurgency and civil war are common problems in the modern age.

In Southeast Asia such problems are pertinent currently in Thailand and perennially in the Philippines. Elsewhere, they seem to be characteristic of the troubles in Ukraine and in Egypt, Tunisia, Syria and other Arab countries. What do these countries have in common?

Some have to do with ethnicity.Some with religion. Some with geography. Others with gaps in income. Others with differences in education and exposure. Others with the rural–urban divide. Still others with a combination of two or more or all of these at once.

Media commentators and academic analysts emphasise one or another of these phenomena in their analyses of developments in individual countries.

The current upheavals, some violent, others unarmed, all unsettling, it seems can be best summarised as being caused by cultural divides or gaps between the forces of modernisation and those of tradition, between the educated elite mostly in the cities and the teeming masses mostly in the countrysides.

The eruption of all this telegenic conflict heightens the perception of social inequality within nations, affecting social cohesion at a time when cohesion is needed most.For example, the rule of law may bring advantage to those who know the law. Thus, they may wave pieces of paper issued by governments giving them title to certain parcels of land. Others may think that they own what they and their forefathers before them have cultivated for centuries, but have no legal title to it. Thus they cannot get the legitimate sources of credit to consider that piece of land as rightful collateral. The former measure real-estate property by square metre, for instance, while the latter measure it by how long it takes for a stick of cigarette to be smoked.

What may be condemnable, regrettable and/or punishable corruption or ‘vote-buying’ to the city-slicker may be just another source of livelihood or survival for others. They have different conceptions or interpretations of justice, with the former adhering to and invoking laws passed by an elected legislature and the latter focusing on social justice.

The former generally uphold the sovereignty and writ of the state within internationally recognised national boundaries. The latter regard those boundaries — drawn and laid down in any case by foreign colonisers long ago — as irrelevant to their daily lives and to their dealings with brethren on either side of what to them are artificial national borders, even assuming that they are aware of such borders at all.

Not least, and perhaps most important, is the notion of one-man, one-vote elections — the right to rule bestowed by the ballots of the majority of electors. It is the idea of democracy itself.

Related to all this is ‘populism’: what some may consider as vote-buying through ‘populist’ measures, others may regard as long-overdue manifestations of attention to the downtrodden masses whose interests have long been ignored by the ‘urban elite’.

What happens if the person or persons elected, admittedly by the majority of the people in a state, rides roughshod over the interests, if not the lives, of people now becoming a minority and fearful of the loss of their privileges, if not their lives and livelihoods? Will that minority be justified in seeking the overthrow or replacement, through extra-legal means, of those who had been voted in according to laws that the elite themselves — or, more accurately, those whom they themselves had used to consider as their representatives — drafted, passed and accepted?

These are difficult questions. As far as I know, no text book, on civics or otherwise, provides any answers to them. Each society will have to resolve them by itself, as they are being resolved in some countries today.

In any case, the traditional, mostly countryside masses seem in all societies to be moving towards the rule of law, anti-‘corruption’ as a form of social justice, and rationality as against tradition or what they regard as tradition.

This trend is largely caused by the general opening up of societies, the market-driven operation of technological developments in transportation and communications, and the resulting efficacious and widespread transmission of ‘universal’ norms, which have exposed state decision-making to the influence of increasing numbers of people and generally shortened the tenures in office of many elected national decision-makers.

The convergence may take place slowly in some societies, suddenly in others, and at different paces in all; but the trend seems to be inexorable. In all cases, the process will take time, and patience.

No small degree of humility, and the ability to consider the argument on all sides, is called for.–http://www.eastasiaforum.org

Rodolfo C Severino, a former ASEAN Secretary-General, is head of the ASEAN Studies Centre in the Institute of Southeast Asian Studies in Singapore. The views expressed here are solely his own.

Bits and Barbarism


December 23, 2013

Bits and Barbarism

by Paul Krugman@http://www.nytimes.com

Paul KrugmanThis is a tale of three money pits. It’s also a tale of monetary regress — of the strange determination of many people to turn the clock back on centuries of progress.

The first money pit is an actual pit — the Porgera open-pit gold mine in Papua New Guinea, one of the world’s top producers. The mine has a terrible reputation for both human rights abuses (rapes, beatings and killings by security personnel) and environmental damage (vast quantities of potentially toxic tailings dumped into a nearby river). But gold prices, while down from their recent peak, are still three times what they were a decade ago, so dig they must.

The second money pit is a lot stranger: the Bitcoin mine in Reykjanesbaer, Iceland. Bitcoin is a digital currency that has value because … well, it’s hard to say exactly why, but for the time being at least people are willing to buy it because they believe other people will be willing to buy it. It is, by design, a kind of virtual gold. And like gold, it can be mined: you can create new bitcoins, but only by solving very complex mathematical problems that require both a lot of computing power and a lot of electricity to run the computers.

Hence the location in Iceland, which has cheap electricity from hydropower and an abundance of cold air to cool those furiously churning machines. Even so, a lot of real resources are being used to create virtual objects with no clear use.

The third money pit is hypothetical. Back in 1936 the economist John Maynard Keynes argued that increased government spending was needed to restore full employment. But then, as now, there was strong political resistance to any such proposal. So Keynes whimsically suggested an alternative: have the government bury bottles full of cash in disused coal mines, and let the private sector spend its own money to dig the cash back up. It would be better, he agreed, to have the government build roads, ports and other useful things — but even perfectly useless spending would give the economy a much-needed boost.

Clever stuff — but Keynes wasn’t finished. He went on to point out that the real-life activity of gold mining was a lot like his thought experiment. Gold miners were, after all, going to great lengths to dig cash out of the ground, even though unlimited amounts of cash could be created at essentially no cost with the printing press. And no sooner was gold dug up than much of it was buried again, in places like the gold vault of the Federal Reserve Bank of New York, where hundreds of thousands of gold bars sit, doing nothing in particular.

Keynes would, I think, have been sardonically amused to learn how little has John-Maynard-Keyneschanged in the past three generations. Public spending to fight unemployment is still anathema; miners are still spoiling the landscape to add to idle hoards of gold. (Keynes dubbed the gold standard a “barbarous relic.”) Bitcoin just adds to the joke. Gold, after all, has at least some real uses, e.g., to fill cavities; but now we’re burning up resources to create “virtual gold” that consists of nothing but strings of digits.

I suspect, however, that Adam Smith would have been dismayed.Smith is often treated as a conservative patron saint, and he did indeed make the original case for free markets. It’s less often mentioned, however, that he also argued strongly for bank regulation — and that he offered a classic paean to the virtues of paper currency. Money, he understood, was a way to facilitate commerce, not a source of national prosperity — and paper money, he argued, allowed commerce to proceed without tying up much of a nation’s wealth in a “dead stock” of silver and gold.

So why are we tearing up the highlands of Papua New Guinea to add to our dead stock of gold and, even more bizarrely, running powerful computers 24/7 to add to a dead stock of digits?

Talk to gold bugs and they’ll tell you that paper money comes from governments, which can’t be trusted not to debase their currencies. The odd thing, however, is that for all the talk of currency debasement, such debasement is getting very hard to find. It’s not just that after years of dire warnings about runaway inflation, inflation in advanced countries is clearly too low, not too high. Even if you take a global perspective, episodes of really high inflation have become rare. Still, hyperinflation hype springs eternal.

Bitcoin seems to derive its appeal from more or less the same sources, plus the added sense that it’s high-tech and algorithmic, so it must be the wave of the future.

But don’t let the fancy trappings fool you: What’s really happening is a determined march to the days when money meant stuff you could jingle in your purse. In tropics and tundra alike, we are for some reason digging our way back to the 17th century.

Malaysia needs a comprehensive Polar policy


November 9, 2013

Malaysia needs a comprehensive Polar policy

by BA Hamzah[1]

Route

[The redline shows the Northeast Passage and the yellow line indicates the traditional international shipping route]

BA HamzahClimate change and global warming has become an immutable part of our life. Our earth is rarely warm, humid, stormy and wet as it is today. For many, the weather has been unkindly punishing especially at sea and for those living by the coast and along riverbanks.

One significant impact of global warming is the rapid melting of the Arctic ice sheet. Once free of the ice sheet, the maritime Polar Route (PR) is open 24/7 to navigation. The PR will become the preferred alternative shipping route to the current strategic waterways like the Suez Canal, Panama Canal and the Straits of Malacca and Singapore for ships from Europe to East Asia and vice versa.

The Polar Route, especially the Northern Sea Route (NSR), will transform the global structure for seaborne trade with geopolitical implications that Malaysia can only ignore at its own peril.

The NSR will hug the Siberian coastline as it approaches the Kamchatka Peninsula before turning to Japan, South Korea, Taiwan, Hong Kong and southern part of China. Apart from Russia, benefiting most from the opening of the Arctic Routes are trading giants like Japan, China, Taiwan and South Korea. The Polar Route will also benefit India and Southeast Asian countries, the Nordic states including Permanent members of the Arctic Council.

Bypassing the Suez Canal and the Straits of Malacca and Singapore, the Polar Route can cut sailing times by 12-15 days from the current sailing times. According to the Financial Times, “a ship travelling at 21 knots between Rotterdam and Yokohama takes 29 days if it goes via the Cape of Good Hope, 22 days via the Suez Canal and just 15 days if it goes across the Arctic Ocean.”

Besides, free of pirates the route is safer. Insurance charges will also be more attractive. Translated into dollars and cents, the saving could be considerable. For example, in 1992 a study showed that the Japanese shipping industry could save up to US $ 1 billion annually by going through the Straits of Malacca and Singapore, based on a saving of 3 ½ days.

Besides being shorter, the Polar Route are easily navigable. The new generation container ships may not meet the 3.5 metre Under Keel Clearance (UKC) in the Straits of Malacca and Singapore and too large to pass through the Suez and Panama Canals.

Two weeks ago, a Chinese- flagged vessel sailed from Dalian to Rotterdam via the NSR. The 3,800-mile journey days, is quicker by fifteen days. Yong Seng was not the first to test the waters; two years ago, some forty- six vessels flying different flags have successfully plied the same route.

Most pundits agree that the PR will raise the international profile of Russia globally. An ice- free NSR will also expedite the opening of Siberia, rich in hydrocarbon resources and other strategic minerals. This will further boost the economic standing of nuclear- armed Russia seeking to redeem itself following the disastrous Cold War era (1945-1989).

Barring unforeseen circumstance, the current strategic alignment between China and Russia should remain intact. This stable relationship will greatly reinforce the political-strategic stature of China as an emerging global maritime power. For China, the Polar Route provides the much-needed additional access route for its brown- water Navy and merchant marine. In geo-strategic terms, with the additional access route, it becomes more daunting for any power to contain China militarily.

Driving the Arctic dynamics is geopolitics. This explains why some Asian countries like India, China, South Korea and Singapore are exerting themselves to become members of the Arctic Council.

To benefit fully from the opening of the Polar Route, Malaysia too needs to design a comprehensive polar policy. One that encompasses all aspects, including rethinking over new routes for international trade, developing new ports, the status of the Straits of Malacca as a sea-lane of communication, its pollution and other environmental security concerns as well as the larger geostrategic concerns arising from the new Polar dynamics.

Joining the Arctic Council will be a wise move. There is already precedence: in 2011, Malaysia acceded to the 1959 Antarctic Treaty for scientific research purposes. With slight changes, the existing domestic legislation (including the proposed Bill on Antarctica) could be used for the Arctic. An excellent opportunity to steer Malaysia into the new mainstream of international trade would be missed should policy planners continue to procrastinate.

[1] A keen student of maritime geo-strategy. He can be contacted at:  bahamzah@pd.jaring.my

 

What Happened to Our Education after 56 (50?) Years of Independence?


September 9, 2013

What Happened to Our Education after 56 (50?) Years of Independence?

BY RAHMAN HUSSIN@www.themalaysianinsider.com
September 09, 2013
Latest Update: September 09, 2013 10:37 am

“The whole art of teaching is only the art of awakening the natural curiosity of the mind for the purpose of satisfying it afterwards.” Anatole France.

malaysia-at-50-Malaysia-Day_129_100_100I grew up listening to many stories of how wonderful an experience of going to school in the early years following the declaration of Independence in the year 1957. Irrespective of your differences, everyone sort of bonded together during their school years.

Picnics at the park during the weekend with your schoolmates, regardless of religious and racial creed, was the norm back then. In fact, in the words of my now deceased grandmother, “It would mean the end of the world for me if I didn’t go to the park with my friends.” Such was the bond they had back then.

Politicians messing up with our education system !

Politicians messing up with our education system !

But, I aim to not discuss the strong social bonds that exist back then but instead I want to talk about the learning experience of the yesteryears. More precisely, the freedom of thought and the soul of the education experience that they went through.

As I grew up, I have this habit of talking to people and asking them what it was like learning and being educated in the early 1950’s, 60’s and 70’s. I liken this exercise as my time-travel machine, getting insights and stories from various people, since I was born in an era where some believe was the beginning of the decline of Malaysia’s intellectual progress.

In summarising all these experiences, I arrived at the conclusion (at this point I hear someone disagreeing with me on scientific grounds of my methods) that they were all learning and being educated in an environment that not only encourages questioning but also indulges curiosity and freedom of thought.

Not only was I convinced that the conclusions I made were one of the primary drivers of excellence, I believe wholeheartedly that the aforementioned environment sets these individuals up for greater success in the coming years of their lives.

A businessman I met in my secondary years in school said this to me, “Back then, we pride ourselves in asking tough questions in class and the teachers will reward us accordingly, even when we ask the most menial of questions, such as why do we have to learn in school, why can’t we just play all day?”

Swat TeamOn this one, we all can be smart

Until today, I remain regaled by stories from the glory days of yesteryears. I went through a different learning experience altogether compared with the uncles and aunties that I hear stories from. I, like most of my peers today, went through the daily Sekolah Kebangsaan and Sekolah Menengah Kebangsaan in our bid to realise our dreams.

I started my schooling years believing in the fact that this was the place where all my questions will be answered, a place where I could begin the long and arduous journey of realising my dreams and achieving my full potential, after all at the back of my first exercise book; there it was the National Education Philosophy that reads:

“Pendidikan di Malaysia adalah satu usaha berterusan ke arah lebih memperkembangkan potensi individu secara menyeluruh dan bersepadu untuk melahirkan insan yang seimbang dan harmonis dari segi intelek, rohani, emosi dan jasmani berdasarkan kepatuhan dan kepercayaan kepada Tuhan. Usaha ini adalah bertujuan untuk melahirkan warganegara Malaysia yang berilmu pengetahuan, berketrampilan, berakhlak mulia, bertanggungjawab dan berkeupayaan mencapai kesejahteraan diri serta memberikan sumbangan terhadap keharmonian dan kemakmuran keluarga, masyarakat dan Negara.”

mahathir baruAsk Him Coz he should know

Surely, an important piece to realise, if not the fundamental guidelines of this philosophy is to promote and nurture the sense of curiosity. In addition, an environment that supports curiosity and allow for questions to be asked goes a long way in creating critical-thinking among students, who undoubtedly will be an important asset to this country.

Boy, was I in for a rude awakening. At the age of 10, I was made to sit outside the classroom as a result of me asking the teacher how does scolding students in public help achieve the National Education Philosophy. Curiosity wasn’t a welcome guest when I went through school, and today it is still not welcomed in classroom.

Why are we doing this to ourselves and, more importantly, to the future generation of my beloved nation?

Deaf EarsThat’s What we Have become!

Fifty years on since the inception of Malaysia, curiosity has gone from a celebrated trait to a trait no one cares about. Let us change this Malaysia. We can start by encouraging and allowing our kids to ask questions and not punish them for doing so.For a better Malaysia. – September 9, 2013.

* Rahman Hussin runs Akademi Belia.

NGO, Piracy and Maritime Crime in Southeast Asia


September 5, 2013

APB-EWC

Number 228 | September 4, 2013

ANALYSIS

NGOs, Piracy and Maritime Crime in Southeast Asia

By Joon Num Mak

Over the past two decades, piracy activities in Southeast Asia have been recognized as a serious threat to regional security. While states have played a leading role in fighting maritime piracy, anti-piracy nongovernmental organizations (NGOs)–ranging from industry and seafarer associations to think tanks and Track II scholarly networks–have also been influential in addressing this problem. These NGOs, especially the International Maritime Bureau (IMB), were able to successfully portray piracy as a threat to navigational safety, maritime trade, energy security, and a potential source of terrorism. The pressure exerted by NGOs on littoral governments in Southeast Asia resulted in greater state-to-state and regional military cooperation, as exemplified by the 2004 landmark maritime initiative between Malaysia, Singapore, and Indonesia–MALSINDO–to patrol the Strait of Malacca. Operation MALSINDO has been successful in curbing the number of pirate attacks and industry watchers assume that the current approach is working.

However, while the actual number of piracy cases may have dropped, the total number of maritime crimes in the Strait of Malacca has actually increased since 2005. In short, equating piracy with national and regional security has deflected attention from the fact that piracy is just one maritime crime among many other illegal activities committed by members of impoverished coastal communities in Southeast Asia. In particular, the smuggling of people and goods is rampant in the region. Each boatload of 50 to 100 undocumented migrants traveling between Malaysia and Indonesia across the Strait of Malacca, for example, earns the smuggling syndicates between US$15,000 and US$30,000, making the return high and the risk relatively low.

Unfortunately, undocumented migrants are just one commodity for smuggling syndicates. Other illegal but very profitable items include drugs, stolen motorcycles and outboard engines, cigarettes, timber, fish, sand, gravel and soil for reclamation work, not to mention maritime kidnappings for ransom. These unlawful activities offer coastal communities along the Strait of Malacca and in the Sulu Sea–between Sabah in Northern Malaysia and the Southern Philippines–a highly lucrative business that is in fact more predictable and less dangerous than actually boarding and robbing ships–an activity otherwise known as maritime piracy.

While anti-piracy NGOs, in particular the IMB, have played an important role in trying to frame the debate on maritime security, their efforts have focused primarily on the symptoms rather than the root causes of maritime crime, especially piracy. Anti-piracy patrols and other military approaches can, and are, effective short-term deterrents, but in the long-run the more important issue is not apprehending and incarcerating pirates but rather preventing coastal communities from turning to piracy and other maritime crimes in the first place.

Piracy, in the final analysis, is a human security problem. It therefore requires a more critical nontraditional security approach that allows a wide range of NGOs to help target and wean impoverished coastal communities away from their dependence on maritime crime–including piracy and maritime kidnappings–for a livelihood. Research by this author along the Malacca Strait and the Sulu Zone indicates that many coastal communities in Southeast Asia are dependent on illegal maritime activities as a source of income. Overfishing in the Strait of Malacca in the 1990s–exacerbated by large-scale commercial fishing and illegal fishing by foreign trawlers, especially Thai boats–depleted fish stocks, leading to dwindling incomes for local communities. This, combined with political instability, in West Sumatra (Indonesia) and the Southern Philippines bordering Sabah, along with a lack of other economic opportunities forced many coastal residents to resort to piracy and other illicit activities for economic survival.

The areas in Southeast Asia where maritime crime is most prevalent, namely along the coast of Sumatra bordering the Malacca Strait, and areas along the Sulu and Celebes Seas, are characterized by poor governance, at both central and local levels, weak institutions, widespread poverty, corruption, and the existence of underground economies rivaling that of the formal economy. Significant numbers of the population in these areas do not have access to land, property rights, or resources, and have been excluded from meaningful political participation. This disenfranchisement of already poor communities makes them more open to illicit economic activities. The issue then becomes one of how to improve overall governance, curb corruption, and facilitate the political, economic, and social inclusion of marginalized coastal communities. This is where NGOs, and particularly development and political advocacy NGOs, can make a positive difference.

For instance, there are a large number of NGOs that have been working on peace building in Aceh in Indonesia and Muslim Mindanao in the Southern Philippines. Other NGOs work more broadly in the region to promote democratization, government accountability and transparency. However, there are no NGOs focusing on addressing the root causes of piracy and maritime crime. Similarly, anti-piracy NGOs, as noted above, are not looking at the developmental and political issues that lead to piracy. Furthermore, NGOs in the region operate independently of each other, seemingly unaware or oblivious of each other’s potential contribution in mitigating the impact of piracy and maritime crime.

There is clearly a need to bring anti-piracy, development and political advocacy NGOs together in order to exchange views and ultimately to cooperate together in developing a more holistic solution to the maritime security problem–one that addresses both root causes and symptoms. The establishment of a regional forum where NGOs can meet to discuss a comprehensive strategy to end the problem of piracy and maritime crime in Southeast Asia over the long-term would be a very important development. This could be funded by both external and regional governments, along with think tanks that currently tackle piracy and private foundations.

Policies also need to be implemented to frame maritime crimes in a wider perspective. Many of the actions currently characterized as criminal could be classified as economically legitimate activities. For instance, is it people smuggling when kumpits (barter boats) travel between Sabah and the Southern Philippines, or is this a necessary but informal goods and passenger service? A review of what is identified as piracy and maritime crime could potentially help tackle these issues in a more farsighted and sustainable manner. Otherwise, responses to piracy in Southeast Asia are likely only to continue to address the symptoms rather than the fundamental causes and miss the other more salient illicit activities that lead to this problem.

About the Author

Joon Num Mak is an Independent Analyst based in Malaysia. This article draws on a chapter authored by Mr. Mak in a new JCIE book titled A Growing Force: Civil Society’s Role in Asian Regional Security. He can be contacted via email at makjnum@gmail.com.

The East-West Center promotes better relations and understanding among the people and nations of the United States, Asia, and the Pacific through cooperative study, research, and dialogue.

Established by the US Congress in 1960, the Center serves as a resource for information and analysis on critical issues of common concern, bringing people together to exchange views, build expertise, and develop policy options.

The Asia Pacific Bulletin (APB) series is produced by the East-West Center in Washington.

APB Series Editor: Dr. Satu Limaye, Director, East-West Center in Washington
APB Series Coordinator: Damien Tomkins, Project Assistant, East-West Center in Washington

The views expressed in this publication are those of the authors and do not necessarily reflect the policy or position of the East-West Center or any organization with which the author is affiliated.

Hageling for prolonged military presence in the Philippines


September 4, 2013

Hageling for prolonged military presence in the Philippines

by BA Hamzah[1]

Chuck HagelUnited States Defence Secretary Chuck Hagel was in Manila last Friday haggling with his counterpart, Voltaire Gazmin, reportedly for a prolonged military presence that the Philippines Senate is unlikely to grant.

Hagel-Gazmin talks on security matters must be seen in the context of the United States’ strategy of rebalancing its military forces to Asia, which many view as a policy to wean the region from China, the world’s second largest economy.

As they get closer to the US, both Vietnam and the Philippines have been extra-critical of China’s policy in the South China Sea. Japan too has been strengthening its military ties with the Philippines.

Unable to restrain China in the Spratlys on its own, Manila has asked friendly powers to help. From Washington, Manila has requested for more aid, additional troops and more naval vessels. Washington has transferred some fifty-million dollars’ worth of military aid including two retired Coast Guard cutters to the Philippines. From Japan, the Philippines will get ten retired vessels for its Coast Guard.

Some say, the Philippines’ military strategy to re-engage the Yankees is too little too late. Many in the region believe a financially weakened US can no longer flex its military muscles effectively and it does not plan to get involved militarily in Manila’s conflict with China.

US Coast Guard Cutters for the PhilippinesSluggish world economy will slow down US economic growth and this will impact its military expansion programme. While the US has the resources to support six- hundred soldiers it has deployed since 2002 in Mindanao jungles or sending a few combat littoral ships to the region as part of the policy of pivoting to Asia, sustaining a permanent military presence in the Philippines is something else.

Not all Filipinos are pleased to welcome back the Yankees especially after they fought hard to remove the American bases from their soil. The cynics have accused their leaders of historical amnesia as bringing back the Yankees would be tantamount to swallowing their pride.

Some Filipinos say it is unconstitutional under the 1991 Constitutional Amendment to deploy American troops without a plebiscite and Senate approval. Pro-Government groups disagreed claiming the Visiting Forces Agreement (VSA) allows US military a prolonged presence.

Manila is unhappy with Beijing for militarising the Spratlys (renamed West Philippine Sea), especially in areas nearby Mischief and Second Thomas Reefs. Manila has also accused Beijing of constructing permanent structures at the Scarborough shoal, following April 2012 spat.

Beijing became more assertive after Manila referred it to the International Tribunal of the Law of the Sea in January 2013 over its nine-dash line maritime boundary. Tit-for-tat, China has unexpectedly turned international diplomacy on its head by withdrawing its invitation for President Aquino to the 10th ASEAN-China Trade Expo (September 3-8).

The presence of additional US troops may temporarily embolden political elites at Manila. Street protests by those who opposed US military presence can undermine the Presidential election in 2016. In the hour of need, Filipino elites may find the 1951 US-Philippines Mutual Defence Treaty toothless; the Treaty does not cover attacks on maritime features in the Spratlys.

No one in their right mindime, expect the two Permanent members of the United Nations Security Council who share many common strategic interests to be drawn into the maelstrom of proxy wars in Asia.

As both parties strive to upgrade their strategic convergence, the Philippines may become a sideshow and eventually reduced to a footnote, an unintended victim, in the US-Sino geo-strategic calculus in the near future. Do not, therefore, expect Pax Americana and Pax Sinica to clash!!

[1] A specialist in regional maritime security.

Thorstein Veblen’s Singapore?


August 16, 2013

Thorstein Veblen’s Singapore?

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Thorstein Veblen’s vision of a society run by “engineers” has been realized  in contemporary Singapore: a country increasingly ruled by economists, engineers, and other technocratic experts with First Class Honours undergraduate degrees, Oxbridge and Ivy League Masters degrees and PhDs. Whether this society truly fulfills his dreams and meets his expectations is a question worthy of debate.

by PHUA Kai Lit, PhD

Introduction

Thorstein Bunde Veblen (1857 – 1929) was an unorthodox American economist of Norwegian ancestry. He was an economist of the institutional school who made a distinction between “industry” (production for the satisfaction of human needs) and “business” (profit maximization through market manipulation, restriction of production and other similar practices). He hoped that “engineers” – a group dedicated to productivity and not profit maximization  – would seize power from the vested interests and run society for the good of all (Borus, 1995).

 Other intellectuals have also envisioned societies run by elites who are civic-minded and dedicated to the creation of the “good society” or to the improvement of societal welfare. Plato’s “philosopher kings” and H.G. Wells’ “Samurai” are useful examples.

 Interestingly enough, Singapore’s present political leaders are composed heavily of technocrats (economists, engineers and other technically-trained experts in contrast to the lawyers of the U.S. Congress). They are also some sort of  “philosopher kings” in the sense that they are almost invariably high academic achievers and come from the ranks of the “best and the brightest” (with each succeeding generation of leaders, the ruling elite has become even more and more technocratic).

Singapore’s first generation of political leaders such as Lee Kuan Yew, Goh Keng Swee, S. Rajaratnam, Toh Chin Chye and C.V. Devan Nair were initially followers of Fabian socialism – just like H.G. Wells (in this essay, Chinese names are listed in the East Asian manner, i.e., last names first). However, the ruling political party in Singapore, the People’s Action Party (PAP), gradually drifted away from Fabian socialism towards technocratic pragmatism and finally quit the Socialist International in 1976 as the effort of some of the other parties to get it expelled from the organization was gathering steam. Ironically, C.V. Devan Nair published a book called “Socialism That Works – The Singapore Way” in the same year! Today, there is no more talk of socialism and brotherhood/sisterhood among the leaders of the PAP – instead, there is continuous pressure on its people to compete with each other and excel.

Some American conservatives regard Singapore as an example of a “Capitalist Paradise”. The Guru of monetarism, Milton Friedman, was actually invited to speak in Singapore as an honored guest in the lecture series named after Lee Kuan Yew. Nothing can be further from Fabian welfare state socialism than Friedman’s brand of libertarianism and monetarism of course.

 “First Generation” Leaders

 Lee Kuan Yew: the first Prime Minister of independent Singapore and currently “Senior Minister” in the Singapore Government. He graduated in law from Cambridge University and the Middle Temple, London with highest honors. He helped to found the ruling People’s Action Party (PAP) and became Prime Minister when he was only 35 years old.

Goh Keng Swee: one of the prime architects of Singapore’s highly successful economic development programs, he received a PhD in economics from the London School of Economics and Political Science (LSE). He has served as economic adviser to the post-Mao Government of the People’s Republic of China.

Toh Chin Chye: He served as Deputy Prime Minister under Lee Kuan Yew. A PhD holder in one of the biological sciences, he eventually became an internal critic of the People’s Action Party and its increasing authoritarianism.

S. Rajaratnam: Educated at King’s College, University of London, he became a journalist and the first Foreign Minister of Singapore.

 CV Devan Nair: He was an activist in the teachers’ trade union and built links between the PAP and the trade union movement. He fled into exile after his fallout with Lee Kuan Yew and is now a strong critic of the Singapore Government.

 “Second Generation Leaders”

 Goh Chok Tong: He graduated with First Class Honours in economics from the local university before completing a Masters degree in economics at Williams College. He managed the state-owned shipping company, Neptune Orient Lines, before being recruited into politics by the PAP. He was selected by his peers to take over as Prime Minister from Lee Kuan Yew although Lee had always made it known that Goh was not his first choice as a successor. He has been Prime Minister since late 1989.

BG (Brigadier-General) Lee Hsien Loong : The eldest son of Lee Kuan Yew, he received First Class Honours in mathematics from Cambridge University. Subsequently, he earned a Masters degree in computer science from Cambridge University. He is one of the leading contenders to succeed the current Prime Minister of Singapore Goh Chok Tong.

Tony Tan Keng Yam: He was a PhD science lecturer at the National University of Singapore and subsequently, Chairman of the local bank Overseas Chinese Banking Corporation (OCBC). He was recruited into politics by the PAP.

Richard Hu Hsu Tau: Dr Hu was a former Chairman of the Monetary Authority of Singapore (the central bank) who was recruited into politics and into the position of Minister of Finance by the PAP.

Ong Teng Cheong: Educated as an architect in Australia, he served as President of Singapore from 1993 to 1999 (a largely ceremonial position until the PAP enhanced the powers of the Presidency just before Ong contested for the position). Apparently, he was keen to run for a second term as President but did not gain the support of other top political leaders in the PAP. After leaving the position, he made known his unhappiness to the public and traded sharp exchanges with his erstwhile former political colleagues.

 Wong Kan Sen: A graduate of the local university, he also received a Masters degree from the London Business School. He worked as a teacher, civil servant and human resources manager with a leading multinational corporation before becoming a politician.

 “Third Generation Leaders”

 BG (Brigadier-General) George Yeo Yong Boon:– He received a degree in engineering with First Class Honours from Cambridge and an MBA from Harvard University with high honors. He is one of the more philosophically-minded of the PAP’s top leaders.

Lim Hng Kiang – Another top PAP leader with an honors degree in engineering from Cambridge University. He served as the top manager of the Housing and Development Board (HDB – Singapore’s highly successful public housing entity) before being recruited by the PAP.

Rear Admiral Teo Chee Hean – An engineer by training, he studied at the University of Manchester Institute of Science and Technology, Imperial College and Harvard University.

David Lim Tik En – One of the newer technocrats recruited by the PAP. He studied engineering at the University of Melbourne. He was the Chief Executive Officer of the Jurong Town Corporation before entering politics.

As with other things in Singapore, the process of leadership renewal has to be a thoroughly planned operation. (Then) Prime Minister Lee Kuan Yew and his associates were entirely certain that the key objectives of state policy, and the broad strategies to achieve them, that they had devised and introduced were the only correct ones, the only ones suited to the realities of Singapore. Therefore, what was required was a second generation leadership that had the necessary technocratic-managerial skills and capabilities to be able to pursue those objectives and strategies effectively. They did not see any special need for new leaders who possessed political skills, who were “word spinners” in the words of S. Rajaratnam.

As Vasil indicates, the PAP has established a unique system of recruitment of its top political leaders and Ministers. Talented individuals are “spotted” and have to pass through a barrage of observations, interviews, attachment to a veteran MP and allegedly, even psychological tests before being offered safe parliamentary seats to contest (under the PAP banner) in General Elections. After winning these safe seats, they may be offered responsibility as junior ministers and if they pass this test, they would then be offered higher level positions with greater responsibilities. Individuals who fail to perform would be unceremoniously dropped back into political oblivion. This would effectively spell the end of their careers as would be politicians and ministers.

Singapore’s Achievements

 By conventional economic indicators, Singapore’s economic development program has been a great success. When the PAP first came to power in 1959, unemployment was a major problem. By the early 1970s, high rates of economic growth had led to the resolution of this problem. Today, there are many foreign workers in Singapore. These range from Filipino maids and Thai construction workers to Malaysian, Indian, Australian, Hong Kong, Japanese, European and American professionals and managers. A high percentage of service sector workers such as hotel employees in Singapore are Malaysian citizens.

Recently, an American was hired to run the government-owned Development Bank of Singapore. Economic growth rates have been consistently high and Singapore’s foreign exchange reserves are certainly impressive relative to the size of its population. Its per capita GNP is among the highest in the Asia-Pacific region. It is not uncommon to find Singaporean women working as professionals and holding high level managerial positions in both the government and the private sector.

 When Singapore was expelled (after only two years) from the Federation of Malaysia in 1965, its economy was heavily dependent on the entreport (transshipment) trade through its excellent natural harbor. It was also heavily dependent on the economic effects of the British Naval Base in the northern part of the island. Today, it has managed to diversify its economy and has built up a thriving export-oriented electronics industry and a significant banking and finance industry.

Singapore’s economic growth is also reflected in its other socioeconomic indicators such as those pertaining to health, education, housing, and transport and communications. Its infant mortality rate is lower than that of the United States. The life expectancy of its citizens is comparable to those of the richest Western countries. There is universal literacy among its younger generation.

The public schools are excellent: it is not uncommon for parents from the neighboring Malaysian state of Johor to send their kids to study in Singaporean public schools – including the primary and secondary schools. The National University of Singapore and the Nanyang Technological University are two of Asia’s leading universities. Singapore is also one of the most wired nations in the world.

Singapore’s housing program is one of its great success stories. The Housing and Development Board (HDB) has been instrumental in relocating the population from the overcrowded and unhealthy slum housing of the colonial era to high rise apartment blocks in the many satellite townships scattered all over the island nation. Although some of the lower end HDB-built apartments may be small, all of them are built with flush toilets and piped water supply and this has contributed to the improvement in health indicators. The newer, high end HDB apartments in the township of Pasir Ris at the eastern tip of the island are of such high quality and design that they can almost pass for the condominiums built by private sector developers.

Singaporeans who live in HDB-built high rises (more than three quarters of the population) own their apartments and pay for them through usage of part of their CPF funds (the Central Provident Fund is Singapore’s compulsory, publicly-managed retirement scheme financed by payroll deductions and employer contributions into individual accounts). Only a small percentage of Singaporeans are so poor that they have to rent apartments from the HDB.

The transport and communications systems of Singapore are excellent. The road and light rail system (MRT or Mass Rapid Transit) and Changi International Airport are efficiently maintained and well run. Singapore’s port facilities are also well known for their efficiency. Road traffic volume is kept under control by a deliberate policy of making ownership of a car beyond the financial capability of the majority of Singaporeans.

All these undoubted successes are impressive when contrasted with the problems of the 1950s and early 1960s:

When Singapore achieved its Independence in the mid 1960s, there was political instability and ethnic tension. Unemployment was a serious problem. There was industrial unrest in an economy heavily dependent on entreport trade and the British Naval Base in the northern part of the island. There was even some doubt about whether Singapore could survive its expulsion from the Federation of Malaysia. Lee Kuan Yew wept bitter tears at a televised press conference as he broke the news of the expulsion of Singapore from Malaysia to his people.

A great contrast with the Singapore of today indeed: “politically stable” under the dominance of the PAP, full employment, little labor unrest and relatively harmonious interethnic relations. The economy is diversified and becoming increasingly high tech and sophisticated. The Singapore bureaucracy is also famed for its efficiency and lack of corruption.

The Dark Side of Singapore

“When I see my leaders do what they have done, I feel like an outcast – that this is no longer my home – that it is PAPs (sic) home and that I am only their guest and have to play by THEIR rules or get out”.

Paul Sands (quoted in The General Elections are Over, 3  January, 1997)

The Government of Singapore is strongly authoritarian and paternalistic by Anglo-American standards. Although things have loosened up under Goh Chok Tong (e.g. male Singaporeans can now openly sport long hair whereas they could not do so when Lee Kuan Yew was the Prime Minister. During the Lee era, male foreign tourists were even required to get their locks shorn before they could enter the Republic), the regime continues to maintain tight control of its citizens. Resident foreigners who wrote critically on the Lees or the regime such as Christopher Lingle have had to flee from the country in haste when the authorities started investigating them. Singaporeans like C.V. Devan Nair (a former President), Francis Seow (a former Solicitor-General) and Tang Liang Hong (a former election candidate for the opposition Workers’ Party) have had to go into exile after falling foul of the Governments of Lee Kuan Yew and Goh Chok Tong. Nevertheless, to be fair to the PAP government, “responsible” opposition politicians, i.e., those who manage not to antagonize the Government such as Chiam See Tong and Low Thia Kiang are tolerated in Parliament. Foreign newspapers and periodicals such as the International Herald Tribune, the Far Eastern Economic Review, Time, Asian Wall Street Journal, Asiaweek and the Economist have been either forced to eat humble pie and publish apologies to Lee Kuan Yew or the Government for allegedly publishing libel or have had the permitted circulation of their periodicals slashed to small numbers within the island Republic from time to time for “interference” with Singapore’s domestic politics (see Lingle, 1996). The PAP politicians have been accused by the opposition of continually devising ways to put the latter in positions of disadvantage: these range from old-style gerrymandering of electoral districts and restriction of access to the mass media, to the creation of Group Representation Constituencies (GRCs), multimillion dollar libel suits against certain opposition politicians and latterly, threats to withhold public spending in districts which elect opposition Members of Parliament. For opposition political candidates to contest in multi member GRCs during the election (in contrast to the traditional single member electoral districts), they have to come up with a team of between three to six candidates. The ethnic composition of the teams was even specified when GRCs were first introduced in 1988 (see Ooi, 1998). GRCs put the opposition parties at a significant disadvantage since most Singaporeans are reluctant to participate openly as candidates for opposition parties in the elections.

In the area of economics, although official statistics claim low rates of inflation, these are probably underestimated because certain goods are not included in the basket used to calculate the index of inflation. Singaporeans routinely complain about the high cost of car ownership and the high prices of private, landed property and privately-built condominiums. The counter-argument is that high housing prices in the private sector are not surprising because of scarcity of land in Singapore and also that HDB-built apartments continue to remain affordable for most citizens. The Government has recently identified the emerging problem of increasing income differentials between highly educated employees (including those who work for multinational corporations) and those who are lowly educated and possess low skills. This problem, however, is attributed to the globalisation of the economy and the “digital divide”. The use of Government powers to reduce income differentials through increased income redistribution is not favored as the PAP leaders believe that this would promote an undesirable “welfare mentality”.

In social matters, the Malays are the most disadvantaged of the major ethnic groups in Singapore. They are over-represented (in terms of their percentage composition of the total population) among the less well educated and lower paid and among “problem” sub-groups such as drug addicts and educational underachievers. The Malays are also subjected to de facto discrimination as a high percentage of job ads openly state ethnic preferences (as well as gender and age preferences) for the job being advertised. Unskilled foreign workers are another category of underprivileged residents of Singapore. Cases of abuse of maids (domestic workers) from the Philippines, Indonesia, Sri Lanka and so on are reported from time to time in the local mass media.

The education system of Singapore is openly (and proudly) elitist and there is considerable pressure on schoolchildren to excel in their studies. High achievers are rewarded well, e.g., as Presidential Scholars and Singapore Armed Forces Scholars and sent for further studies at top knotch universities overseas. These Scholars are likely to end up eventually in high level positions in the bureaucracy, Government-linked corporations (GLCs) or the armed forces. Thus, high achievers like Lee Hsien Loong and George Yeo were sent to places like Cambridge and Harvard for tertiary-level studies and served as high-ranking officers in the Singapore military before moving into politics.

One of Singapore’s most popular comic book characters is “Mr. Kiasu” – a personification of Kiasuism, i.e., a person who hates losing out to others (“kiasu” literally means “afraid to lose” in a local Chinese dialect), are overly competitive, highly envious of the success of others and eager to sabotage, backstab and undercut others so as to protect one’s position or chances for advancement. The motto of Mr Kiasu in Singaporean English is “Everything Also I Want”, i.e., “ I Want It All For Myself” (and perhaps even “And I’ll be Damned if Anyone Tries to Stop Me”).

Ask Singaporeans what the “5 Cs” are and they will tell you with a snicker that it refers to Cash, Car, Career, Credit Card and Condominium. My belief is that the rise of Kiasuism and materialism in Singapore is directed related to the Government’s constant exhortations to students to excel in academic studies, in its promotion of elitism, e.g., schools are regularly ranked – even secondary schools – and the list of rankings are published in the local newspapers), its strong emphasis on economic growth and constant reminders to Singaporeans of potential competition from neighboring countries and so on. The pressure on Singaporeans to excel is so great that significant numbers of Singaporeans (in relation to its population) emigrate every year.

Conclusion

I have discussed Singapore’s undoubted and widely-recognized economic success. I have also discussed its less well known “dark side”. Veblen’s “engineers” are indeed in firm control of the Singaporean polity. With each new generation of PAP politicians, Government ministers becomes even more and more technocratic in composition. Singapore functions like a well-oiled piece of sophisticated machinery. Perhaps this is why some Singaporeans feel like they are just like cogs in a highly efficient economic machine overseen by highly qualified and brilliant (and even arrogant) engineers.  The Veblenian “engineers” of Singapore have ensured that the basic needs of Singaporeans are being met. But this is at a price. The price is having to live under a hierarchical system and having to follow the directives handed down by the technocrat-politicians. Veblen’s “engineers” in Singapore, interestingly enough, have collaborated with multinational capital to mutual benefit in the building of a dynamic economic machine – a case of successful collaboration between national technocrats and international capitalists. Singapore’s economic growth depends on investment by multinational corporations and well-run Government-linked corporations (GLCs). Local capitalists are weaker and subordinate to the technocrat-politicians of the PAP.

Veblen also came up with the concept of  “conspicuous consumption”. This is very obvious in Singapore. Badges of “conspicuous consumption” are literally worn with pride in Singapore. These are the “branded goods” or “designer goods” with conspicuous labels especially favored by Singaporeans. Those who can afford to own cars prefer luxury models. In short, Veblen’s “engineers’ have taken over in Singapore and have created a dynamic, highly rational and efficient society. But they have also created a society which functions in ways that Veblen never envisioned. Indeed, contemporary Singapore can be better labeled as “Max Weber’s Singapore” rather than “Thorstein Veblen’s Singapore”, i.e., a society which emphasizes (overemphasizes?) instrumental rationality to the point where the “iron cage of rationality” is a real threat to the social and mental well-being of individual Singaporeans and resident foreigners.

K.L. Phua is a sociologist who teaches public health at the International Medical University in Malaysia. He has also lived and worked in Singapore as a manager for a number of years.

If you are interested in Singaporeana, check out Sintercom – Singapore Internet Community

 Bibliography

Asiaweek 2000 The Next Generation, August 1, 2000

Borus, D.H. 1995 Thorstein Veblen in Fox, R.W. and J.T. Kloppenberg eds. A Companion to American Thought Blackwell: Cambridge, Massachusetts pp. 702-703

Leifer, M. 1995 Dictionary of the Modern Politics of South-East Asia,London: Routledge

Lingle, C. 1996 Singapore’s Authoritarian Capitalism Barcelona: Edicions Sirocco and Fairfax: The Locke Institute

Ooi, C.S. 1998 Singapore in Sachsenroder, W. and U.E. Frings eds. Political Party Systems and Democratic Development in East and Southeast Asia Volume 1: Southeast Asia pp 343 – 402,Aldershot: Ashgate Publishing Limited

Sands, P. 1997 in The General Elections are Over. Singaporeans Share Their Joy, Their Pain and Their Thoughts on the Results

http://sintercom.org/sef97/postelection.html

Selvan, T.S. 1990 Singapore: The Ultimate Island Melbourne: Freeway Books

Vasil, R. 1992 Governing Singapore Singapore: Mandarin

Milton Friedman, Unperson


August 15, 2013

Op-Ed Columnist

Milton Friedman, Unperson

by Paul Krugman : August 11, 2013

Recently Senator Rand Paul, potential presidential candidate andSenator Rand Paul self-proclaimed expert on monetary issues, sat down for an interview with Bloomberg Businessweek. It didn’t go too well. For example, Mr. Paul talked about America running “a trillion-dollar deficit every year”; actually, the deficit is projected to be only $642 billion in 2013, and it’s falling fast.

But the most interesting moment may have been when Mr. Paul was asked whom he would choose, ideally, to head the Federal Reserve and he suggested Milton Friedman — “he’s not an Austrian, but he would be better than what we have.” The interviewer then gently informed him that Friedman — who would have been 101 years old if he were still alive — is, in fact, dead. O.K., said Mr. Paul, “Let’s just go with dead, because then you probably really wouldn’t have much of a functioning Federal Reserve.”

Which suggests an interesting question: What ever happened to Friedman’s role as a free-market icon? The answer to that question says a lot about what has happened to modern conservatism.

Milton FriedmanFor Friedman, who used to be the ultimate avatar of conservative economics, has essentially disappeared from right-wing discourse. Oh, he gets name-checked now and then — but only for his political polemics, never for his monetary theories.

Instead, Rand Paul turns to the “Austrian” view of thinkers like Friedrich Hayek — a view Friedman once described as an “atrophied and rigid caricature” — while Paul Ryan, the G.O.P.’s de facto intellectual leader, gets his monetary economics from Ayn Rand, or more precisely from fictional characters in “Atlas Shrugged.”

How did that happen? Friedman, it turns out, was too nuanced and realist a figure for the modern right, which doesn’t do nuance and rejects reality, which has a well-known liberal bias.

One way to think about Friedman is that he was the man who tried to save free-market ideology from itself, by offering an answer to the obvious question: “If free markets are so great, how come we have depressions?”

Until he came along, the answer of most conservative economists wasKeynes, JM basically that depressions served a necessary function and should simply be endured. Hayek, for example, argued that “we may perhaps prevent a crisis by checking expansion in time,” but “we can do nothing to get out of it before its natural end, once it has come.” Such dismal answers drove many economists into the arms of John Maynard Keynes.

Friedman, however, gave a different answer. He was willing to give a little ground, and admit that government action was indeed necessary to prevent depressions. But the required government action, he insisted, was of a very narrow kind: all you needed was an appropriately active Federal Reserve. In particular, he argued that the Fed could have prevented the Great Depression — with no need for new government programs — if only it had acted to save failing banks and pumped enough reserves into the banking system to prevent a sharp decline in the money supply.

This was, as I said, a move toward realism (although it looks wrong in the light of recent experience). But realism has no place in today’s Republican Party: both Mr. Paul and Mr. Ryan have furiously attacked Ben Bernanke for responding to the 2008 financial crisis by doing exactly what Friedman said the Fed should have done in the 1930s — advice he repeated to the Bank of Japan in 2000. “There is nothing more insidious that a country can do to its citizens,” Mr. Ryan lectured Mr. Bernanke, “than debase its currency.”

Oh, and while we’re on the subject of debasing currencies: one of Friedman’s most enduring pieces of straight economic analysis was his 1953 argument in favor of flexible exchange rates, in which he argued that countries finding themselves with excessively high wages and prices relative to their trading partners — like the nations of southern Europe today — would be better served by devaluing their currencies than by enduring years of high unemployment “until the deflation has run its sorry course.” Again, there’s no room for that kind of pragmatism in a party in which many members hanker for a return to the gold standard.

Now, I don’t want to put Friedman on a pedestal. In fact, I’d argue that theKrugman_New-articleInline-v2 experience of the past 15 years, first in Japan and now across the Western world, shows that Keynes was right and Friedman was wrong about the ability of unaided monetary policy to fight depressions. The truth is that we need a more activist government than Friedman was willing to countenance.

The point, however, is that modern conservatism has moved so far to the right that it no longer has room for even small concessions to reality. Friedman tried to save free-market conservatism from itself — but the ideologues who now dominate the G.O.P. are beyond saving.

Crime in Malaysia is just Perception, think again


August 12, 2013

Crime in Malaysia is just Perception, think again

by Mariam Mokhtar (08-05-13) @http://www.malaysiakini.com

“Malaysia is more dangerous than South Africa,” were the parting words of a retired couple who returned to Johannesburg after a failed attempt to live in Malaysia under the ‘Malaysia My Second Home’ (MM2H) programme. Friends of the couple said they had feared for their own and their family’s safety.

Unlike this South African couple, ordinary Malaysians are trapped in a vicious cycle of emboldened criminals, an inept Police force and a government in denial.  Few have access to guns like the Tan Sri who recently shot dead a thief at a clinic in Kuala Lumpur.

Owning a gun is not what Malaysians desire. We want a police force which is committed to tackling crime and not being the lapdog of UMNO Baru. Cabinet ministers deny that a state of lawlessness exists. They issue statements and are then trapped by their own spin.

hishammuddin-hussein-in-lahad-datu-300x225Former Home Minister Hishammuddin Hussein (left), more noted for his incompetence than his achievements in office, had complete disregard for the concerns of the public. He ridiculed the rakyat after they complained about rising crime levels and told them that increased crime was only a “perception”.

In October 2012, the government’s efficiency-monitoring unit Pemandu released data which appeared contradictory. This prompted the DAP’s Tony Pua to request from the Home Minister, a detailed breakdown of statistics, according to categories of crime.

Hishammuddin said the statistics were not available: “…the ministry is of the view that it is not plausible to present the detailed statistics for each crime category according to the various districts in Selangor and all states…” He knows that BN’s fabricated crime figures would be exposed if the statistics were released.

What would Hishammuddin and his family know about crime when they have 24-hour security and well-guarded properties? Many UMNO-Baru politicians enjoy the trappings of high office which closely resemble an aristocratic life of pomp, pageantry and pampering.

In 2010, PKR’s Tian Chua revealed that the Police had lost 36 semi-automatic pistols, 51 revolvers and two sub-machine guns since 2001. The loss also included 49 motorcycles, three cars, one van and one 4WD.

Were these items lost through carelessness or were they stolen? What steps have been taken to ensure that the mistakes are not repeated?

Three years ago, the MCA Pesident Dr Chua Soi Lek allegedly called Penang Chief Minister Lim Guan Eng a liar, when a Bernama report alleged that Lim had said that kidnappings were common in Johor.

Chua said: “If he really said that, then Lim Guan Eng is a liar….As I come from Johor itself, I say the statement is very unfair. The crime rate has gone down and Johor is almost all the time the country’s top investor destination.”  Today, Chua is trapped by his own words.

‘Political meddling’

The country has seen an unprecedented rise in gun crime, with sixHussain Najadi shootings recorded last week. Why did it take the murder of the Arab-Malaysian Development Bank founder Hussain Ahmad Najadi (right), to wake UMNO Baru President Najib Abdul Razak from his hibernation?

Did Najib address the nation because the high-profile murder of a foreigner would dent his image overseas? Was he afraid that his silence could be used against him in the UMNO general assembly?

Najib said he was prepared to consider giving the Police “whatever they required” to fight crime, provided these requests were reasonable and affordable.

Why the hypocrisy? His spirit is not willing and his flesh is even weaker. The police will never be given the independence they need to operate effectively. UMNO-Baru finds the police useful for hounding opposition politicians, activists and dog trainers.

If Najib were sincere, he would push for the Independent Police Complaints and Misconduct Commission (IPCMC). Deputy Home Minister Wan Junaidi Tuanku Jaafar fears that, with the IPCMC, Police personnel would end up being treated worse than criminals. Only an UMNO Baru politician would be capable of making stupid remarks like that.

When the former Police chief Musa Hassan exposed corruption in the Police force, we were angry with him for waiting until he had left office before making the revelations.

musa hassanMusa (left) had also complained about political interference. So, has Najib stopped this political meddling? Has Najib even begun to investigate any of the points raised by Musa? Have any conclusions been drawn, or is Najib afraid of revealing a can of worms?

Musa’s allegations of the Police being linked to criminal syndicates are not new. We heard about them over 20 years ago, but what has been done?

Last week, Inspector-General of Police Khalid Abu Bakar fumed over the Singaporean newspaper The New Paper’s headline, ‘Welcome to Malaysia where… death is cheap and staying alive costly’.

There is some truth in the claims of the article, although it omitted to khalid-abu-bakar mention that inflation has increased the cost of arranging contract killings. In the nineties, an Ipoh man claimed that hacking off a limb would cost RM200 and that taking someone’s life would cost RM400.

Why two reports?

Today, Ipohites who are victims of crime, are angry when told to make two police reports; the first brief report must be made at the police station which covers their area of residence or where the theft occurred, whilst the second detailed report is to be made with ‘Team A’ at the police headquarters, opposite the Ipoh railway station.

Why two reports? Have the Police so much time on their hands, that they feel it necessary to waste the rakyat’s time and taxpayer’s money, too?

Victims of crime are already traumatised. Must they go through more agony, this time at the hands of the police? Not everyone can spare money for travel, or time off from work or their hospital bed, to make several reports.

There are many stories of police incompetence or delay in reaching the scene of the crime. Some victims claim that the police are either too lazy or incapable of taking any forensic evidence.

In one case, the victim whose car was a write-off after a drunk driver drove into him, was told by the police not to mention the drunkenness in his report. Why? Others allege that the police brow-beat the victims into making very brief police reports. Is this to save Police time or reduce their work load?

Khalid accused the Singaporeans of being busybodies, whilst Utusan Malaysia went further and claimed that jealousy was a contributory factor in the controversial headline.

Instead of quibbling about newspaper headlines, Khalid should act to reduce the crime rate of Malaysia. He faces a difficult task because he will be trapped in a mire of corruption created by rogue Policemen, a corrupt Judiciary and corrupt UMNO Baru politicians.

 

Mr. Sang Comes to Washington


August 6,2013

Mr. Sang Comes to Washington

by Greg Rushford of The Rushford Report (07-25-13)

The White House1600 Pennsylvania Avenue, Washington DC

Vietnamese President Truong Tan Sang — a powerful senior member of the ruling Politburo, where the major governmental decisions are hammered out for the Central Committee of the ruling Communist Party — will meet with U.S. President Barack Obama in the White House on July 25. One way or the other, Thursday’s meeting for the two heads of state will be important. It comes at a time of increased tensions that have been holding back closer strategic and economic ties between the two former war enemies.

Sang and Obama have an opportunity to forge a deeper (mutually respectful) bilateral relationship. But it is not at all clear whether either leader has the vision or the necessary political instincts to seize it.  The two heads of state may just try to put out an attractive spin, hoping to gloss over important differences on the core issues that presently divide Washington and Hanoi. The two most difficult of those: Vietnamese human-rights practices that insult accepted international legal norms (as seen from Washington’s perspective), and insulting rich-country economic pressures (Hanoi’s view).

The White House has listed “human rights” as the first of three topics that will be on the agenda when the two leaders meet on Thursday. “Climate change” is the second named priority, followed by the Trans-Pacific Partnership trade talks involving the United States, Vietnam and ten other Asia-Pacific countries.

But the real agenda is broader, involving fundamental decisions that need to be made by both countries on whether to deepen their strategic and security cooperation. The sharp-eyed David Brown, a special correspondent for the Asia Sentinel, has written that President Sang and the Politburo appeared to have been “shaken” when Sang visited Beijing in June. Apparently in his private talks with top Chinese leaders, including President Xi Jinping, the Vietnamese president came away with nice words, but little of substance. Because of the “evidently jolting encounter with China’s leaders,” Brown wrote, a “hurried” visit to Washington was then arranged. In Washington, the Politburo wants Sang to find out whether President Obama — a politician who, in some Asian eyes, has acquired a certain reputation for offering mostly happy talk in his dealings with his foreign peers — will be any more helpful.

Neither government was divulging further details of what Sang and Obama will have to chat about on Thursday. A White House spokesman refused even to say in what room of the White House Presidents Obama and Sang would be talking, much less identify who else might be in that room.

A close look at each of the three specific items on the Sang-Obama agenda suggests that for each president, any truly “frank” diplomatic exchanges would pose awkward questions, not to say outright mutual embarrassments.

For Sang, the most awkward question would be to explain to Obama what benefit Vietnamese leaders think they really gain by holding hostage more than 160 political prisoners. These are Vietnamese citizens who have committed no “crimes” — other than to peaceably voice their complaints that their government is seen as becoming increasingly corrupt and unaccountable.  And Obama might ask about a July 15 Hanoi decree that is aimed at prohibiting speech that goes “against the state of the socialist republic of Vietnam,” or any criticism that the party fears could “jeopardize national security,” Radio Free Asia has reported. The targets are popular internet icons like Google and Facebook.

Of course, it’s always tricky business for Americans to express reasonable opinions on human rights without sounding arrogant and self-righteous to always-sensitive Vietnamese leaders. Press too hard, and too publicly, and the commies could just arrest more innocent bloggers to stick it to the Americans. Press too quietly, and the authorities in Hanoi could just keep on doing whatever they please. Nobody’s ever really figured out the most appropriate diplomatic language.

And if Obama’s tone on human rights offends Sang, the Vietnamese President might bring up the subject of dioxin. Sang might ask if the U.S. leader feels a sense of shame over the fact that a spokesman for the U.S. Embassy in Hanoi has recently denied to McClatchy reporter Drew Brown that many Vietnamese citizens today are still suffering from the tragic effects of dioxin sprayed by the U.S. Air Force on Vietnam during the shooting war.]

For Obama, perhaps the most embarrassing thing is that his White House — for purely domestic parochial reasons involving his political ties with U.S. organized labor and the globally uncompetitive U.S. textile lobby — has been stridently making demands of the Vietnamese in the TPP trade talks that the Politburo would be foolish to accept. Obama’s rather crude economic pressures, in fact, have been playing into the hands of those in Hanoi who increasingly question the value of closer commercial and strategic ties with the United States.

Beyond the mutual embarrassment potential, it turns out that what the White House wants to talk about regarding climate change illustrates — most likely, unwittingly for both Sang and Obama — just how complicated deepening the bilateral economic relationship has become.

President Truong Tan Sang with President ObamaPower Politics

On climate change, it could be that all Obama wants to do is burnish his “green” credentials by giving President Sang a nice lecture on the importance of nations’ working together to combat global warming.

But there’s something else important going on between Washington and Hanoi that illustrates how the politics of climate change have interjected themselves into the bilateral relationship. It’s not certain that the White House staff — which seems to be spread pretty thin these days — has briefed Obama on the implications of a decision last week by the U.S. Export-Import Bank to deny U.S. export financing to build a 1,200-megawatt coal-fired power plant in Vietnam’s Thai Binh province. But for sure, President Sang wouldn’t need a special briefing to understand fully the implications of the American act. This is because the Ex-Im decision goes directly to the heart of how political power is exercised in today’s Vietnam — and touches sensitive nerves in the Politburo.

Greenpeace, Friends of the Earth and other environmental groups complained in a July 17 letter to Obama that “this dirty coal plant will emit unacceptable air pollution that will worsen climate disruption and poison local communities.” Obama’s climate action plan, they (rightly) noted, is against U.S. financing of overseas coal projects, on grounds they increase greenhouse gas emissions.

The green lobbyists portrayed the Obama climate-action policies correctly. Ex-Im’s guidelines basically discourage financing for high carbon density overseas projects like coal plants. These days, Ex-Im is more interested in participating in viable renewable-energy projects. Anyway, after conducting an environmental “due diligence” examination, the U.S. export-financing agency found that the Thai Binh plans failed to pass muster. Because of that, the bank did not examine the other details of the project: financing, credit-worthiness, and so forth.

Most of the above was reported by U.S. wire services — but the best part of the story has gone unreported: precisely who wanted U.S. export financing for the Thai Binh coal-power plant?

Ex-Im doesn’t put such details on the public record before projects are approved.  But a little digging reveals that the Ex-Im financing was sought to help one of Vietnam’s giant state-owned enterprises, PetroVietnam Power Corporation, which refers to itself as PV Power. PV Power is a subsidiary of the Vietnam National Oil and Gas Group, which goes by its acronym, PVN. According to a 2011 Vietnamese news report, PV Power’s Thai Binh 2 Thermo Power Plant is a $1.6 billion project. The main players are Korean and Japanese construction firms.

On August 3, 2012 the Charlotte, Va.-based Babcock & Wilcox Co. announced that a Beijing-based subsidiary — Babcock & Wilcox Beijing Co. Ltd. — had won a $300 million Thai Binh-related contract from South Korea’s Daelim Industrial Co. Ltd.  Babcock & Wilcox said that it would do the engineering work in Beijing for two coal-fired boilers for the Thai Binh project, and would also participate in the manufacturing.

While a Babcock & Wilcox spokesman was unable to respond to questions asking about Thai Binh before this article went to press, it seems logical that PetroVietnam and the Korean company could have sought financing from the U.S. Ex-Im Bank to buy U.S.-manufactured equipment. How many American jobs would have been supported with the financing is not on the public record. (Nor is it clear what role coal plays — or perhaps should play — in addressing the energy needs of a developing country like Vietnam.)

The involvement of PetroVietnam, for those who know how what might be called the Vietnamese “political economy” works, suggests that the story’s ramifications go way beyond a normal fight over money and jobs with just one construction project.

State-owned corporations control perhaps a third of the Vietnamese economy. Inefficient, secretive and widely considered corrupt, SOE’s are also cash cows for senior members of the Communist Party. They report to the Prime Minister’s office, and are thus an important source of political patronage. (Imagine if President Obama would appoint the top echelons of a third of the Fortune 500, the likes of Boeing, General Electric, Microsoft, Google, Exxon, and so on.)

In the Trans-Pacific Partnership trade talks, the Americans are demanding that the Vietnamese enact transparency reforms, and also that steps be taken to bring SOEs more market-oriented. It’s asking a lot, considering that the same government corporations have been making a lot of senior party officials — including at the Politburo level — very rich. The Politburo has been wrestling for most of the past decade over what to do about all this.

PetroVietnam  has become controversial in Vietnam. Last October a report by Thanh Nien Daily, a Vietnamese newspaper, noted that PetroVietnam had been cricitized by economist Le Dang Doanh on grounds it “needs to disclose its finances and profit numbers.”

The Thanh Nien report added that the giant government corporation had denied accusations made publicly by National Assembly members that it had been using its taxpayers’ money to engage in real estate speculation. Then the Vietnamese newspaper asked why PV Power and other wholly-owned subsidiaries of PVN have their own real estate companies. The newspaper even ran a photo of the Nam Dan Plaza in Hanoi, described as “a new luxury department store project developed by PV Power.” (From the view of SOE executives, speculating in real estate ought to be more commercially attractive than power, because the government forces them to set electricity rates too low for Vietnamese consumers to be commercially viable.)

This week, Vietnamese officials who will be travelling with President Sang will be pressing their case with their Ex-Im counterparts. It is unlikely they will succeed. The U.S. officials might wonder whether PetroVietnam officials might just take any profits obtained from low-cost U.S. Ex-Im financing to speculate in even more dicey property deals.

A delicate mix

The Obama administration has turned up the pressure on Vietnam’s human rights practices. The price of Vietnam’s admission to the TPP, and of forging a genuine strategic relationship with Washington, will be explicitly linked to “demonstrable” progress on human rights, as U.S. Ambassador to Vietnam David Shear put it on June 1 to a Vietnamese-American audience in Orange County, California. The ambassador’s context was unambiguous: “I have been telling senior Vietnamese officials since my arrival in Vietnam in August of 2011, that if the Vietnamese people want a Trans-Pacific Partnership, if they want stronger cooperation in regional diplomacy leading to a strategic partnership, then we need to see demonstrable progress on human rights in Vietnam.”

Traditionally, it has not been official U.S. policy to make such an explicit link with human rights in any commercial negotiation. Shear’s remarks — which he declines to comment further upon — were initially dismissed as unserious by some veteran trade observers who cautioned that they should not be taken literally. Shear was just telling his California audience what it wanted to hear, according to this interpretation. Vietnamese-Americans and their representatives in the U.S. Congress have been critical of Shear, on grounds he has not done enough to improve Vietnamese human-rights practices.

Still, Shear is a senior, well-regarded American diplomat with considerable experience in Asia — he’s served in Japan, China, and Malaysia, and speaks Japanese and Mandarin. Nor does Shear have a reputation for loose talk. In his June 1 Orange County appearance, the ambassador spoke slowly and deliberately, conveying the impression that he was reciting officially authorized talking points. Also, Shear’s reference to how lack of human-rights progress has been the biggest obstacle to closer U.S.-Vietnamese strategic ties was fully consistent with official U.S. foreign policy as expressed often by senior State Department officials. The official State Department position is that U.S.-Vietnam strategic ties will not improve until there is “demonstrable, sustained improvement in the human rights situation.”

U.S. Trade Representative Michael Froman has declined to engage in any diplomatic walk-back that would put distance between U.S. trade policy and Shear’s remarks in Orange County. So it appears that the White House is comfortable with the notion that the Vietnamese should take Amb. Shear’s words at face value.

Enter the U.S. trade police

From the Vietnamese perspective, what Obama is asking them to do on “human rights” in the TPP trade talks appears, well, insulting.

Obama’s trade negotiators have been insisting in the TPP that the Vietnamese agree to the U.S. labor lobby’s demands that they permit independent union organizing — which U.S. officials insist must be enforceable. Such could be considered “human rights” progress, in American eyes.

Before it signs onto this idea, the Politburo might consider how similar arrangements have worked out for other countries that have struck recent trade deals with the Americans.

In the U.S.-Colombia bilateral trade agreement, that Latin country has been required to set up an “action plan” on labor that contains measurable “milestones” and a “robust enforcement regime,” with American officials playing their roles as the enforcers. The way this works practice in Washington, the American officials pay close attention to AFL-CIO labor activists, who never seem to be satisfied that foreigners are doing enough to live up to American standards.

On April 11, 2013, the Office of the U.S. Trade Representative and the Labor Department touted how they had pressed Guatemala to submit to “a robust enforcement plan to resolve concerns” that had been raised in a labor complaint by the United States in the preferential trade agreement involving the U.S. and the Latin country. The American officials congratulated themselves for making Guatemala come up with an 18-point plan to satisfy Washington’s demands. The plan “includes concrete actions with specific time frames that Guatemala will implement within six months to improve labor law enforcement.”

This is the first labor case that the U.S. has brought in any of its preferential trade deals — but the Vietnamese would have good reason to suspect that the American labor police have plans for them.

U.S. double standard

Enter the outright embarrassing part of the story for Obama. The reason the Vietnamese find the TPP talks attractive is the possibility of gaining additional access to protected U.S. clothing- and footwear markets — protected by high tariffs that hover in the 16-18 percent range, but for some lines, twice that. The Obama trade negotiators have been demanding essentially that the price of any tariff cuts  for shoes and apparel be that the Vietnamese agree to purchase their fabric from U.S. suppliers.

The idea is hardly attractive to Hanoi. First, as I reported in “Imperial Preferences” in this space on Sept. 11, 2012, one of the main reasons that Napoleon III sent the French navy to take the port of Saigon in 1859 was to force the Vietnamese to open their markets to exports of French textiles. Economists would agree that current American pressure in the TPP is just a modern-day version of French colonialism.

Secondly, the so-called “yarn forward” rules of origin don’t work. Only about 17 percent of U.S. imports of clothing from Mexico and other Latin American countries that have been forced by U.S. trade negotiators to accept the cumbersome rules actually get duty-free treatment. The importers prefer to pay the duties, rather than jump through the bureaucratic hoops, bear the costly paperwork burden, and such.

And last, think of how President Sang — under fire from Washington because of the Vietnamese government’s many interventions in its economy —  could turn the tables on Obama. Sang might ask: Is it right for the U.S. government to pressure such major American corporations like the iconic Levi, Strauss & Co. and Gap, to agree to buy their (heavy) denim from U.S. suppliers and ship it all the way across the Pacific to Vietnam? Is it right for the White House to pressure Hanesbrands, which has its underwear plants and supply chains in nearby Asian countries like Thailand and China, to buy its cotton instead from the continental United States, and ship that cotton across the ocean? How about Patagonia, which makes down vests in Vietnam from high-tech Japanese materials? Why would the U.S. government want to disrupt the global operations of other respected private-sector corporations: Nike, Adidas, Macy’s, Nordstrom, and so many others?

Obama would, of course, be hard-pressed to respond with credible economic answers to such questions. But the White House has repeatedly insisted that Vietnam swallow the “yarn forward” rules of origin for textiles, and also the high tariffs on footwear.

From a Vietnamese perspective, Obama’s TPP negotiating strategy is reminiscent of how Presidents Lyndon Johnson and Richard Nixon once based American policies during the Vietnam war upon the premise that, with enough pressure from the rich superpower, this small Southeast Asian nation would ultimately bend to America’s will. But unless the Vietnamese get meaningful additional U.S. market access they are seeking in the TPP, it is difficult to think of good reasons why they should cave.

Prospects for closer U.S.-Vietnamese relations?

The final uncertainties involve just what the Vietnamese really want from their relations with Washington.

V-C“There’s a delicate game going on” presently in the Politburo, explains scholar Carlyle Thayer of the Australian Defence Force Academy. Hardly for the first time in its long history, Vietnam is striving to balance it’s always-contentious relations with China, the Southeast Asian country’s closest neighbor, and at the same time with the United States. “Some in Hanoi want better ties with the U.S., while another group would sabotage those ties,” observes Thayer.

It’s the latter group that currently appears to have the upper hand, according to Thayer and other experienced Vietnam watchers interviewed for this article. That would help explain why Vietnam has arrested more than 40 peaceable bloggers this year, more political prisoners than all of 2012 — perhaps a deliberate hostile signal to the U.S. State Department and the White House.

To be sure, with any issue involving Vietnam there are so many nuances that nothing is ever what it seems to be. Sang’s three-day visit to China that began on June 19 could be interpreted as a sign that closer Vietnamese-Chinese ties were being considered. Even if it’s true that Chinese intransigence marred those meetings, Beijing could recover (by being less aggressive in claiming waters in the South China Sea that are clearly Vietnamese, for instance).

But how to interpret a visit that Vietnam’s Deputy Defense Minister, Sen. Lieut. Gen. Do Ba Ty, made to the Pentagon on June 20, while Sang was in China? The Vietnamese general met with Chairman of the U.S. Joint Chiefs of Staff Martin Dempsey. Gen. Ty’s was the first such visit by a Vietnamese chief of staff to the United States, a Dempsey spokesman observed. The senior Vietnamese military delegation also notably included Lt. Gen. Pham Ngoc Hung, the deputy chief of the general intelligence department. Something’s afoot.

The only reasonably clear conclusion at this point in time is that the traditional Vietnamese foreign-policy balancing act will continue. And because the issues and differences that divide Vietnam, China, and the United States are so difficult to resolve neatly, the situation will continue to remain messier than it should.

rushphotohttp://rushfordreport.com

Malaysia’s Most Improved School, SK Lemoi


July 22, 2013

Malaysia’s Most Improved School, Thanks to the Headmaster and his Team

http://www.businesscircle.com.my/the-secrets-of-the-most-improved-school-in-malaysia/

What’s most important is this: the teachers here teach with wholehearted love. The teachers see the students are their own children. What’s important is that we care for our teachers, students and community. When there’s love, we can overcome everything else.”–Omardani Mohd Noor

On a sunny day in June, the Headmaster waited for me in full motocross gear: helmet, goggles, leather gloves, boots. He stood next to a Kawasaki KLX 150 scrambler. Right away, I felt nervous.

The Headmaster’s name is Omardani Mohd. Noor, 47, a stocky man with a perpetual smile. He’s in charge of Sekolah Kebangsaan Lemoi, the most improved school in the country. The school, located in the deep jungles of Pahang, could possibly be the most rural school in Peninsular Malaysia.

Encik Omardani addressing the assembly

Encik Omardani addressing the assembly

Four years ago, when Omardani became headmaster of SK Lemoi, not one student passed the benchmark UPSR Year Six exam. This school for Orang Asli kids languished near the bottom of the country’s nearly 7,700 primary schools. But in three consecutive years, the pass rate soared: 8 percent (2010), 28 percent (2011) and 60 percent (2012). In less than three years, SK Lemoi became one of the best Orang Asli schools in the country.

What are the secrets for accelerating improvement in rural schools? And if we can unlock these secrets, can we use it to dramatically improve more schools in the country? These were the questions that drove me – along with my driver, and a video crew – to the town of Ringlet in Cameron Highlands. From here the journey would take another three hours in a four-wheel drive vehicle.

So I felt anxious when the Headmaster stared at our vehicle: a black Toyota Fortuner 4WD with city tires. “I’ve never seen a car like yours make it to the school. But I promise you that I can get you at least halfway there,” Omardani said. On that reassuring note, he gunned his dirt bike. Away we went.

Within minutes, the tar road, which wound past vegetable farms, degraded into a rugged cement road. An hour later, the cement road vanished, leaving behind a narrow mud track with large rocks on the side and menacing holes in the middle.

When it rains, the road turns into a river of mud. The primary school teachers who go in and out every week on bikes have faced landslides, falling trees and swollen rivers. Once, a former principal fell off his bike, slid into a gorge and had to be rescued by villagers. It took us two hours to travel the final four kilometers.

So we weren’t expecting much when we arrived. Maybe a school on stilts, with chickens running around.But what we saw was an actual primary school with well-kept grounds located on a hill slope encircled by primary rainforest. Potted plants and flowering shrubs lined the walkways that led to six classrooms (one for each yeaer), a hall, a small library, a computer room, an office for teachers and a hostel housing fifty children.

SK Lemoi with the Cameron Highlands in the background

SK Lemoi with the Cameron Highlands in the background

Then there’s the high-tech stuff in the middle of the jungle: a hybrid solar-cell generator that provides electricity day and night; an Astro dish for the kids to watch documentaries and cartoons; and a VSAT broadband Internet service, slow and spotty, but nonetheless a lifeline for the twelve Gen Y teachers to connect to the world.

On his first day at school, Omardani told me that all the roads were much worse. There was no high-tech stuff or electricity at night. The primary school offered only three years of education.

“Back then, I gave myself a fifty-fifty chance of success,” said Omardani, who has served under the Ministry of Education for 23 years. “But I saw that the teachers were young and spirited. There were four women. If they could do it, so could I,” he said with a laugh.

Teachers morning briefing

Teachers morning briefing

In several extended interviews with Omardani, I concluded that a major factor to the school’s accelerated success was not due to Omardani himself. It’s thanks largely to a combination of hardware and human resources that converged at the school between 2009 and 2010. Omardani and the first women teachers arrived at that time. A hostel was being built by the Ministry of Education. The solar generator came in a year later. And piped water.

These were life-changers: children who had to walk one or two hours to go to school from the two closest villages could now stay at the hostel during the school semester. The kids ate well and drank milk daily. They were taught physical hygiene. And they could do homework at night. Simple things like that improve grades.

The best school systems in the world, such as Finland’s, are funded based on need, so that the most struggling schools get the most resources. Such a policy would make a big difference for Malaysian schools as well – given that Malaysia’s student performance across all subjects now ranks among the bottom third of 74 countries. Amid the bleak outlook, SK Lemoi has proven that the right resources at the right time will improve student outcomes.

The Education Director at PEMANDU, Tengku Nurul Azian Shahriman, said that SK Lemoi is a case study of how a strategic plan such as the “School Improvement Programme” (SIP) made a difference. “All schools in the country were ranked for the first time in 2010, and that year, SK Lemoi was ranked as a low-performing Band 7 school,” Azian said.

The SIP was then targeted to improve four key levers: principals, teachers, students and infrastructure. The Ministry of Education focused its support on the lowest ranking schools (Bands 5-7). As a result, SK Lemoi improved its performance every year. In 2012, it catapulted into a Band 4 school. “This is a remarkable achievement, and more so considering that 60% of orang Asli schools are still in Bands 5-7,” Azian said.

The school complex

The School Complex

Besides government support, Omardani has proactively raised money from private foundations, politicians and the public. In 2011, Omardani dreamed of building a school hall. He mobilized the teachers and the community to bring in sixty bags of cements by bike, and haul in sacks of sand and rocks from the river. The hall was built by hand. A local politician donated funds for the sound system. Now the school hall is used for PIBG meetings and community events.

But there’s one more thing that’s game-changing. All the resources above are meaningless if you don’t have this secret ingredient: love. It’s not enough to know your students as students; you’ve got to know your students personally, and love them as your children.

Cik Anidah checking one of her students work

Cik Anidah checking one of her students work

I saw love in action when I sat in an extra evening English class taught by Noor Afidah Ahmad, 29, who used the additional time to prep six students for the upcoming UPSR exam. It was obvious she had a personal – not just a professional  – relationship with her students. “If any of you pass in English, I’ll bring you back with me to my hometown in Penang,” Afidah told her students.

A few years ago, Afidah, and her colleague, Hanisah, the first two (and only) women teachers at the school, were instructed to help the Orang Asli girls adjust to life at the newly built hostel. The girls insisted that the hostel was haunted. So Afidah and Hanisah moved in with the girls. The ghosts disappeared.

“Everyday, we had to teach the Year One kids how to bathe,” said Afidah. Last year, Afidah and Hanisah walked that extra mile, literally, when they accompanied two seven-year-old students on a two-hour trek back to Cenan Cerah, an Orang Asli village across the mountains. “It was my first time seeing such deep forest. We were exhausted, but the girls were used to it,” Afidah said. She spent time eating and talking with the villagers who comprised ten families in ten houses. Afidah has also brought a handful of her UPSR back to her hometown in Penang. These were just a few of the numerous examples of how the teachers forged a bond of love with their young charges.

One teacher – motivated by love – can make a huge difference. Since Afidah’s arrival, the student pass rate in English has improved from zero percent to 92 percent. In just three years.How do you identify such teachers?Paradoxically, some hardship can be a good thing. The remoteness of the school’s location, the ruggedness of the road, and the scarcity of resources forced everyone to band together. Journeying through the narrow road – so to speak – weeds out teachers who don’t have the resilience to go that extra mile.

One of the students who stays in the hostel gets ready for school

One of the students who stays in the hostel gets ready for school

“What can other schools learn from SK Lemoi?” I asked Omardani. Each time I posed that question, Omardani suggested there was nothing unique he did. However, he later on he said: “I still think other schools can do what I’ve done. What’s most important is this: the teachers here teach with wholehearted love. The teachers see the students are their own children. What’s important is that we care for our teachers, students and community. When there’s love, we can overcome everything else.”

In association with the ETP

Book on Malaysia


July 17, 2013

BOOK REVIEW: Malaysia’s Development Challenges

ANU's Hal HillAny book on Southeast Asia that has Hal Hill’s name on it is likely to be interesting and thought-provoking. This book is no exception. Hal, together with Tham Siew Yean and Ragayah Haji Mat Zain returns to a familiar stomping ground – Malaysia, its economic growth and development challenges – at an opportune time, as Malaysia seeks ‘ideas and solutions’ to not only move to a high income economy but also to realign the interests of its political elites with the Rakyat.

In the past two decades, Malaysia has received several book length treatment as individuals and institutions investigate and attempt to identify the variables that have contributed to Malaysia’s spectacular economic growth story, as well as to identify ones that could/are contribute/ing to its growth slowdown. Volumes such as “Restructuring the Malaysian economy: development and human resources” (Lucas and Verry 1999),  “Industrialising Malaysia – policy, performance andJomo prospects” (Jomo 2002), “Modern Malaysia in the Global Economy” (Barlow 2001), “Malaysian Economics and Politics in the New Century” (Barlow and Loh 2003),  “Sustainable Growth and Economic Development – a case study of Malaysia”(Mahadevan 2007) , and “Tiger economies under threat: a comparative analysis of Malaysia’s industrial prospects and policy options” (Yusuf and Nabeshima 2009) are among notable attempts to understand, explain and possibly forewarn Malaysians of the challenges that they face through either the discipline of economics and/or of political science.

This volume follows on in this tradition. It is comprehensive in its scope with a strong policy dimension. The volume contains 13 chapters, written by 17 authors addressing a multiple set of issues. Analysing a country involves many moving parts and possibly moving in various directions simultaneously. Hence making a coherent argument of the causality and organising it in a logical sequence can be challenging. To address that, this book takes the following logic. Chapter 1 by Hal, identifies 6 stylised facts about Malaysia [rapid economic growth; rapid structural change; consistent openness; competent macroeconomic management; social progress; and institutional quality, political economy and ownership structures], and 3 broad and inter-related factors [microeconomic, macroeconomic and distributional] that are central to the Malaysian graduation challenge. The following twelve chapters then speak to these six stylised facts and provides the basis for analysis, assessment and then solution within the 3 broad factors on what needs to be done in Malaysia to overcome the middle income trap.

The volume begins with an excellent preface by one of Malaysia’sm-ariff intellectual giants, Emeritus Professor Datuk Dr. Mohamed Ariff. He provides a broad sweep of Malaysia’s economic history since independence, identifying succinctly the theoretical basis to Malaysia’s economic and political development strategies, the inherent problems – internal and external – faced over time, and the policy success and failures that successive administrations had made which contributed to Malaysia’s economic growth as well as creating the challenges that it must now face. If one needed a fifteen minute in-depth introduction to the Malaysian economy and its challenges, this preface would be sufficient.

Chapter 1 is the most important chapter in the book, with all other chapters providing the supporting evidence. Chapter 1 not only provides the logic of the book, but also narrates Malaysia’s economic development path, summarises the key factors that has contributed to its success, evaluates which are the factors that will continue to put Malaysia in good stead as well as identify factors that will contribute to Malaysia being stuck in the middle income trap. Chapter 1 makes the analysis by bringing to bear the various growth theories (e.g. evolutionary economics, convergence theory, institutional theories, etc.) but also compares with the actual experience of other countries (e.g. Argentina, New Zealand, South Korea, Singapore, etc.) while identifying the unique issues that Malaysia faces.

The 12 chapters that follow then discusses the following aspects to articulate Malaysia’s development challenges in more detail. Each chapter provides a brief historical overview and then identify where policies have succeeded or failed: Chapter 2 – political reforms; Chapter 3 – corporate ownership and control; (iii) Chapter 4 – economic crisis management; (iv) Chapter 5 – monetary policy and financial sector development; (v) Chapter 6 – public finance management; (vi) Chapter 7 – microeconomic reforms; (vii) Chapter 8 – services sector liberalisation; (viii) Chapter 9 – technological upgrading in the electronics sector; (ix) Chapter 10 – education sector reforms; (x) Chapter 11 – poverty and income inequality; (xi) Chapter 12 – demographic change and labour force issues; and (xii) Chapter 13 – sustainable development.

Dani RodrikThe problems identified in each of the chapter[i] appears to be many, multi-faceted, well-known and well-researched. Using’s Rodrik’s conceptualisation of growth factors into deep determinants (institutions, trade, and geography) and proximate determinants (factor endowments and productivity) as a way of classifying these problems (Rodrik et al. 2004), the usual suspects identified in this volume when traced to its root cause appears to be institutional in nature. Problems such as the debilitating effects of political patronage on a whole range of issues; poor quality human capital development; mismatches in the labour markets; protectionism in key services sector; technological level and innovation that is not keeping pace with the income level of the country; poor quality tertiary education system; underdeveloped private sector especially small and medium scale enterprises (SMEs); fiscal profligacy; mismatch between stated public policy objectives and implementation; and environmental degradation can all be classified as institutional failures.

The more interesting question which this volume appears to haveTerence Gomez neglected is why a government as successful as the Barisan Nasional – the world’s longest continuously elected government – has failed after more than a decade to address the growth slowdown Malaysia is experiencing. This question is all the more interesting as it has been researched extensively for more than a decade. The works of Professors’ Gomez (Gomez 1994; Gomez and Sundaram 1999), R RasiahNarayanan (Narayanan 1996) and Rasiah (Rasiah 1996, 1995) are illustrative as more than a decade ago they had already breached these issues – Gomez on money politics and institutional degradation, Narayanan on fiscal profligacy and Rasiah on labour and technological upgrading. Furthermore, many studies – from individuals and institutions – have identified what Malaysia needs to do, as this volume does. But nothing much has changed in Malaysia, and some would argue that the situation has regressed further.

Here is where this volume could have done better especially with the array of Malaysia experts at hand. The million dollar question for Malaysia is not what needs to be done but how should it be done. Identifying the problems are often the easy bit. Prioritising, sequencing, implementing, monitoring and recalibrating them when needed as it unfolds is the tough part. Intelligently, academics have left these to the politicians. However, a chapter which addresses the ‘how to’ would have been most beneficial and would have made this book a stand out.

As Malaysia’s challenges are institutional in nature implies that what is14766-mushtaq-khan-medium needed is reforms at the very top of the institutional hierarchy. One approach that comes to mind in addressing the ‘how to’ question would be Mushtaq Khan’s revisit of political settlements or as he states it, finding ‘growth enhancing governance’ (Khan 2010). This growth enhancing governance is not the ideal but the practical; a settlement among the competing elites and important stakeholders that allows for institutional stability, while allowing for payments to powerful vested interests, does not negate the overall opportunities for growth and its distribution to the majority of its populace. The ruling coalition in Malaysia may have figured this out in the past but it is clear that this political settlement is not working anymore. It therefore necessitates a new political settlement to graduate into a high income country.

Malaysia can be a model for many countries for many reasons as this volume affirms. More importantly its attempts to reform peacefully is a distinctive feature among developing countries. This volume is much welcomed as it is one source which compiles in a comprehensive manner the issues, analyses them, and suggests reform measures. It should be read by all those who want to understand the challenges Malaysia face as a middle income country and does it in a forthright manner. Most importantly it also makes good reading.

References

Barlow, Colin. 2001. Modern Malaysia in the global economy: political and social change into the 21st century: Edward Elgar Publishing.

Barlow, Colin, and Francis Kok-Wah Loh. 2003. Malaysian economics and politics in the new century: Edward Elgar Pub.

Cooray, Arusha. 2012. “Malaysia’s Development Challenges: Graduating from the Middle, by Hal Hill, Tham Siew Yean and Ragayah Haji Mat Zin (Routledge, London, UK, 2012), pp. 376.” Economic Record 88 (283):597-8.

Gomez, Edmund Terence. 1994. Political business: Corporate involvement of Malaysian political parties: Centre for South-East Asian Studies, James Cook University of North Queensland Townsville, Queensland, Australia.

Gomez, Edmund Terence, and Jomo Kwame Sundaram. 1999. Malaysia’s political economy: Politics, patronage and profits: Cambridge University Press.

Hirschman, Charles. 2013. “Malaysia’s Development Challenges: Graduating from the Middle edited by Hal Hill , Tham Siew Yean , and Ragayah Haji Mat Zin (eds) PB – Routledge , London and New York, 2012 Pp. xxvi + 348. ISBN 978 0415 63193 8.” Asian-Pacific Economic Literature 27 (1):163-5.

Jomo, Kwame Sundaran. 2002. Industrializing Malaysia: policy, performance, prospects: Routledge.

Khan, Mushtaq. 2010. “Political settlements and the governance of growth-enhancing institutions.”

Lucas, Robert E. B., and Donald Verry. 1999. Restructuring the Malaysian Economy: Development and Human Resources: St. Martin’s Press.

Mahadevan, Renuka. 2007. Sustainable growth and economic development: A case study of Malaysia: Edward Elgar Publishing.

Narayanan, Suresh. 1996. “Fiscal reform in Malaysia: Behind a successful experience.” Asian Survey 36 (9):869-81.

Rasiah, Rajah. 1995. “Labour and industrialization in Malaysia.” Journal of Contemporary Asia 25 (1):73-92.

———. 1996. “Innovation and institutions: Moving towards the technological frontier in the electronics industry in Malaysia.” Journal of Industry Studies 3 (2):79-102.

Rodrik, Dani, Arvind Subramanian, and Francesco Trebbi. 2004. “Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development.” Journal of Economic Growth 9 (2):131-65.

Yusuf, Shahid, and Kaoru Nabeshima. 2009. Tiger economies under threat: a comparative analysis of Malaysia’s industrial prospects and policy options. Vol. 566: World Bank Publications.


[i] Those interested in a chapter by chapter analysis should read Arusha Cooray’s review of the same book (2012) while Charles Hirschman (2013) provides a more historical review.

http://asiapacific.anu.edu.au/newmandala/2013/07/05/malaysias-development-challenges/

Kalla caught in murky Malaysian Politics


July 8, 2013

MY COMMENT: It is most unfortunate that former IndonesianDin Merican (2) Vice-President Jusuf Kalla, a past GOLKAR party chief, chose to meddle in our politics. He ought to know that like people elsewhere and Indonesians too, Malaysians do not welcome foreign interference in our affairs. Despite that, he assumed that he had enough influence to broker a “peace/reconciliation” deal between Najib and the leader of the Opposition, Anwar Ibrahim. When there was no deal, he had to change his tag. But he can be forgiven for this judgemental error, if he openly admits that it was all a mistake.I suppose it is too much to expect from a man of stature and strong ego.

He should have used his connections in Indonesia, Malaysia and Singapore to try and resolve this haze problem, which threatens to damage relations between these countries. He should be more  like Al Gore who became a strong advocate of clean environment.–Din Merican

Jalla caught in murky Malaysian Politics

by Amir Ali@http://www.freemalaysiatoday.com

A psychologist by profession, writer and observer of Indonesian affairs, Isa Selamat said to this writer that Yusuf Kalla has only two main reasons for running amuck against Anwar Ibrahim, accusing the Malaysian leader of all the sins including foreign assistance and foreign money.

J KallaYusuf, he said, is either fearful of Anwar or in full expectations of a carrot from some quarters for his diatribe against the Opposition leader. He explains that in anything we do, we either want to get something positive or to get rid of some obstacles to something. It is the human psychology and Yusuf is not immune to that.

Instead, Yusuf is showing signs of despair towards Anwar, perhaps because Anwar’s Black 505 has to do with Yusuf’s potential for losing favours with the current administration in Putrajaya.

If not, then Yusuf is fearful that Anwar’s Black 505 will cause enough ruckus in Malaysia, to the extent that it could expose something that Yusuf wants to remain hidden, he said.

After the haze and the numerous accusations against foreign companies said to be guilty of the massive burning that choked Malaysia and Singapore, the Yusuf Kalla bashing of Anwar takes a different turn, certainly with the new binding rules surrounding maid agencies.

Little is known of the consequences to the companies accused of open burning in Riau, where the problem is an acute and recurring one.

At times, the problem seem irreversible while the Malaysians and the Singaporeans will have to bear the brunt of the haze again and again over the coming years.

Yusuf failed to speak his mind on the open burning by Malaysian companies or companies backed by Malaysian investors in Riau. He also did not give any concrete ideas on how to handle the haze, the most urgent matter for all and sundry in Riau, Singapore and Malaysia.

But he found time to take on his old friend Anwar on issues of no consequence to the haze situation that almost sent everyone to hospital in the three nations.

Little is also known of the inner and hidden costs that will drive the hiring of maids from Indonesia to astronomical figures for Malaysians, since there is a lack of transparency on who really benefits from the price hike.

And Yusuf said nothing on the pressing situation regarding the maids and their tribulations in Malaysia. It is surprising that he did not defend the hike in agent fees, nor condemn such hikes. Does his silence on both the haze and the maid situation show his guilt?

Yusuf dumped

The murky waters turns murkier, with Yusuf’s persistent accusations against the Malaysian Opposition leaders. Accusations that does not please the Indonesians in their vast majority. To the least, it does not please the Riau inhabitants, that is for sure.

That is not only because Anwar is revered in these parts of the world, and like some in Bengkalis – an island that forms part of Riau – would say if Anwar was an Indonesian he would be elected President by now – but because they are disappointed with Yusuf’s overall political performance.

Malaysians should learn, with this reporting from the heart of Riau, that Yusuf is seen as a puppet, a lost cause within Indonesia. He lost the bid to the Presidency of the Golkar Party and turned sour, blaming a large number of people for his lost.

He also blames Anwar for allegedly supporting other political figures within Golkar, where Anwar is seen as a hero by some. At best, he is known as the sour grapes of Indonesia having failed to win the Presidency of the country which he seemingly blames on Anwar! Had the Indonesians were to choose between Yusuf and Anwar, they would dump Yusuf out to the seas, that can come with an assurance.

As much as the Malaysians and Singaporeans, the Indonesians of Riau origin, sufferers of the haze with even deeper consequences than the foreign nations victim of the so called criminal acts, are also worn out by Yusuf’s nod for Najib Tun Razak and for what the local media in Riau calls the cheated elections in Malaysia.

Yusuf is going against the mainstream Indonesian belief that Malaysia’s elections were not fair, and that Anwar is wrong. These alone are becoming dark shadows in Yusuf’s image in Indonesia itself. His meddling in the Malaysian political affairs is also adding a heavy spot on his credibility.

During his political career, Yusuf fought against any foreign meddling in Indonesia, except for the settlement of the Aceh violence, but then this is only apparent. In the dark shadows of the corridors of power, Yusuf welcomed Singapore’s and Australia’s meddling in the nations battle against terrorism.

Perhaps his short stay at the vice-presidential palace has given him a different perspective on the issue and the need for foreign assistance on issues where he himself, the second most powerful man of Indonesia at that time, could not settle?

In Riau, the most common statement from those who are following the Yusuf-Anwar tussle would ask why is it not possible for Anwar to seek foreign aid to battle a regime that people in Indonesia believe is corrupt to the core?

They add that if that was possible for Yusuf in his political career, and if the Malaysian regime too seeks help from foreign investors and powers at some point when they face crises, then why can’t the opposition in a country do the same?

KL-based Amir Ali works for an Indonesian NGO called the Warisan Melayu Riau, which is based in Bengkalis, Riau.

Foreign Direct Investment and National Security: United States and Japan


July 3, 2013

ANALYSIS

Number 219 July 2, 2013
East West Center Asia Pacific Bulletin

Foreign Direct Investment and National Security: United States and Japan

By Rikako Watai

The United States and Japan are the first and third largest economies in the world respectively, and major recipients of inward foreign direct investment (FDI). However, FDI from competitor states can raise national security concerns, as was the case in the United States concerning FDI from Japan during the 1980s through to the 1990s. Economic security, akin to national security, is prioritized by countries throughout the world as is evidenced by the Security Exceptions of the 1948 General Agreement on Tariffs and Trade (GATT) that preceded today’s World Trade Organization (WTO) charter. However, national security has never been defined either in the United States or in Japan.

The only legal reference found on this subject is from US Supreme Court Justice Hugo Black, who in his 1971 concurring opinion on the Pentagon Papers, wrote that national security is a “broad, vague generality.” Any attempt to adopt regulations on FDI based on national security is coupled with ambiguity and interpretations that vary both in the United States and Japan.

The US Approach

The call for new regulations in the United States concerning FDI began to gain momentum in 1987 when Fujitsu, a Japanese computer company, tried to acquire Fairchild, an American semiconductor company. Fujitsu withdrew the acquisition plan when it faced severe objections from the Reagan administration. This culminated in the enactment of the Exon-Florio Amendment (Exon-Florio) in 1988. Exon-Florio empowered the president to stop foreign takeovers if they were perceived to pose a threat to national security. The new law did not contain a clear definition of national security and due restraint was exercised. In only one case was an acquisition blocked, when in 1990 the China Aero-Technology Import & Export Corporation (CATIC) tried to purchase the aircraft parts manufacturer MAMCO. However, in a number of other instances, foreign governments and companies voluntarily renounced their plans before been officially blocked, as in the case of Fujitsu-Fairchild.

Exon-Florio was amended in 2007 during President George W. Bush’s administration to the new Foreign Investment and National Security Act (FINSA). This was, in part, a response to the failed attempts by the Chinese company CNOOC to acquire the US oil company Unocal in 2005, and Dubai Ports World to manage six US ports in 2006. Both attracted attention because of national security concerns.

President Barack Obama, citing national security concerns, used his power under FINSA in September 2012 when he blocked the Chinese-owned US company, Ralls Corporation, from acquiring wind farm projects located close to a US Navy training facility in Oregon. This was the first time since the blocking of CATIC in 1990 that a president exercised his power to stop a foreign acquisition. Ralls subsequently filed a lawsuit in US Federal Court but most of the claims were dismissed because FINSA has a provision that actions by the president shall not be subject to judicial review. Since this decision, US government officials have made it clear that there have been no policy changes regarding FDI coming into the United States.

Furthermore, the Ralls case has highlighted problems within FINSA, specifically regarding due process. The president clearly has broad discretion in exercising his power under FINSA, but any presidential decision has to be open to accountability, explanation and transparency-the fundamental elements of the rule of law. The on-going Ralls case continues to attract attention from foreign investors and its outcome could influence future FDI into the United States, as will the outcome of the bid by the Chinese company Shuanghui International to purchase Virginia-based Smithfield Foods.

The Japanese Approach

Beginning in the 1990s, foreign-affiliated companies began entering the Japanese economy in growing numbers. While this is a good move for the economy as a whole, it raises a number of questions related to national security. Japan’s approach initially was to regulate FDI based on the 1949 Foreign Exchange and Foreign Trade Act (FEFTA). While this law contained provisions for controlling FDI, Japanese authorities preferred to utilize a mechanism known as “administrative guidance.” This informal practice came under criticism from foreign investors for creating a regulatory regime that lacked legal grounds. In response to these criticisms, rules under FEFTA were revised in 2007-the same year as FINSA -for the purpose of promoting international investment while also ensuring national security, and were patterned on the Exon-Florio review mechanism that created FINSA.

The new regulations introduced a list of designated industries important to Japan, and foreign investors are required to give the government prior notice of their plans to purchase one of those designated industries. In such cases, when a foreign acquisition is deemed to be problematic from the perspective of national security, the first course of action is for the Minister of Finance, or the minister with jurisdiction over the industry in question, to issue a recommendation to the parties calling for a specific change or suspension. If the parties fail to abide by the recommendation, an order is then issued to enforce the specific changes or suspend the transaction. Such an order was issued in 2008 citing national security concerns in a case involving a share purchase of Electric Power Development Co., Ltd. (J-Power) by the London-based Children’s Investment Fund (TCI). Unlike FINSA, it was possible to challenge the order, but TCI decided not to bring the case to the Japanese courts.

Future Reforms Required

The critical issue is how to balance the legitimate demands of national security with free trade and FDI, but citing opaque national security concerns for justifying protectionist measures clearly obstructs the GATT-WTO premise of free trade.

Both the United States and Japan can do more to refine their regulations regarding FDI by making the process more accountable. In the case of the United States, producing a public list of industries that will be subject to strict scrutiny for FDI would be a good start, somewhat along the lines of what Japan has done.

For its part, Japan has to acknowledge that foreign takeovers of Japanese companies that are not on the list of designated industries are completely exempt from giving prior notice to the government. Therefore, the list has to be precise and not ambiguous. Regulation of FDI will always be a policy challenge, and in order to realize the full potential of market globalization countries will have to be more transparent in communicating to foreign investors when national security concerns will prevail over free trade.

About the Author

Rikako Watai is a Japan Studies Visiting Fellow at the East-West Center in Washington and Professor of Law at Keio University Law School in Tokyo. She can be contacted via email at rwatai@gmail.com.

The East-West Center promotes better relations and understanding among the people and nations of the United States, Asia, and the Pacific through cooperative study, research, and dialogue.

The Asia Pacific Bulletin (APB) series is produced by the East-West Center in Washington.

APB Series Editor: Dr. Satu Limaye, Director, East-West Center in Washington
APB Series Coordinator: Damien Tomkins, Project Assistant, East-West Center in Washington

Reinvigorating Rural Malaysia: New Paradigms Needed


July 2, 2013

MY COMMENT: The rural sector of the Malaysian economy has been for din-merican5over 3 decades treated with benign neglect as the government forged ahead with rapid industrialisation driven by foreign direct investment, particularly from Japan. Agriculture should be the backbone of any economy. Take Japan or the United States. Both these countries have not abandoned this important sector of the economy.There is now a need for Malaysia to have balanced economic development, not rapid growth. It makes economic and political sense.

I, therefore, congratulate Murray Hunter for this article. We cannot alleviate poverty if we continue to treat the rural economy as a step child. Politically, it is also not sustainable since the increasing urban-rural income will lead migration of rural less skilled labour into the cities, thereby creating social problems for the government. As Murray says, “[T]here must be a renewed interest in sustainability on the part of both policymakers and communities, as Malaysia’s sustainability is tied up with rural evolution. New forms of community education are needed outside of the traditional education system to deliver community needed skills. The failure to achieve this will result in continued population depletion as the youth abandon rural areas for the cities”–Din Merican.

Reinvigorating Rural Malaysia: New Paradigms Needed

by Murray Hunter (06-30-13) @http://www.themalaysiainsider.com

rural-in-malaysia2

There has been a remarkable change in the composition of Malaysia’s rural-urban mix. In the 1980s approximately 70 percent was considered rural, where today 72 percent are urbanized and with the change taking place at about 2.4 percent annually.

It is a change that is taking place all over Asia, from China to India to Indonesia and more. Very few countries outside China have even attempted to cope, with the result that the rural-urban divide has grown and with very little being done to directly alleviate problems of poverty and rustication.

Ranau, SabahIn Malaysia, rural sector development has been debated little, even though the primary sector still represents almost 12 percent of GDP and employs more than 11 percent of the population. Many rural issues affect the future in much greater magnitude than the rural contribution to GDP and employment. The sustainability of Malaysia as an eco(n)-system, the country’s cultural basis, and even political destiny are tied up with rural evolution, with the vote in the kampung remaining a potent fiction if nothing else

In the meantime, deterioration continues in what was once one of the world’s most lush environmental green lungs. Forest cover is decreasing on a daily basis. Conservation has lost out to greed and development. Palm oil, rubber plantations and urban expansion are eating into the forests, with very poor land enforcement on the ground. Well-connected businesses get concessions that are extremely financially lucrative, at great environmental cost. Roads and new townships have divided rural habitats, playing havoc with biodiversity.

Rural Malaysia3The precise needs of rural societies are best obtained from inside those communities. A “bottom up” problem identification process would ensure development objectives and implementation scenarios would remain relevant. Community shura (consultation) committees could be set up at the village level to identify and discuss needs, problems, and desired solutions, and advise village heads.

Such a democratic approach to community would provide policymakers with the guidance they need in setting objectives and programs, and assist in minimizing funding leakages during implementation. This measure alone would signal a very strong redistribution of policy decision-making to the communities themselves, empowering communities to have more say in deciding their own future destinies. The shura system should develop new leaders and champions who are willing to lead and help shape a new community sense of wisdom. Policies will never succeed without people to drive them.

Self-sufficiency and a vibrant local trade economy are the keys to future rural communities. However, rural SMEs should be facilitated to enter national and international markets. There are now many compliance procedures such as Good Agricultural Practice (GAP), necessary for agricultural produce to enter international supply chains. These practices need to be introduced within rural communities so products produced are accepted in international markets.

These compliance processes can be locally enhanced to include halal (Islamic compliance) certification, thus widening the compliance process to one inclusive certification, which would greatly enhance the desirability of Malaysian produce, especially within the exponentially growing halal markets worldwide.

Paddy FieldsWhole sectors like rice paddy production need to be reconfigured from the bottom up so they can become competitive. The paddy production process requires the hands of a number of contractors during field preparation, planting, cultivation, harvesting, and processing stages. Paddy production is an uncompetitive sector.

New methods like System of Rice Intensification (SRI) could be adopted, and more popular aromatic varieties of rice cultivated to increase industry viability. The rice monopoly held by the government regulator Bernas could be ended to allow new approaches to rice products and marketing by entrepreneurial individuals. Such an approach could drastically decrease production costs and add value to rice products, redistributing this added value back to farmers.

University and institutional research should change focus towards communities rather than using scare research funds to chase medals at exhibitions that have no research or commercial significance in places like Geneva and Seoul. The technology developed by Malaysian institutions should be simple, applicable to community enterprise, and appropriate to the size of the enterprises operating in rural areas.

This appropriate technology, if effective and viable is itself a source of competitive advantage that would enable rural enterprises to compete in the marketplace.

This is a major challenge to Malaysian researchers to come out from their academic institutions and into the community with solutions that can enrich society. If state awards with titles were recommended for those who developed technology benefiting the community, one would be sure there would be great focus and resources allocated towards solving rural problems by academic researchers.

Locally relevant new crops research programs should be undertaken to identify locally viable new crops, which are developed as close as possible to the communities it is intended to benefit, with the community’s input and cooperation through Participatory Action Research (PAR), rather than centralizing research under a national agenda. New crops research should adopt an ‘farm to folk’ research and development approach, including the development of know how for processing new downstream products.

FowlThis requires support through developing new supply/value chains that will carry new micro-enterprises to new markets, with new products. The Federal Agricultural Marketing Authority (FAMA) has a superb distribution infrastructure that could be used to do this. Primary and processed food products can be supplemented with handicrafts, traditional Malay wedding items, batik, leather goods, pewter, and Malay fashion products to develop a national range of indigenous products that can be marketed through franchised retail outlets.

These products could be the result of a host of new rural activities that are developed at micro-SME level. If Fairtrade shops in Europe and OTOP shops in Thailand are any indication of the viability of this proposition, these shops would be extremely profitable.

The nature of entrepreneurship education also needs reconsideration. Currently universities play a primary role in training entrepreneurs, but current courses tend to be academically full of theory, teaching more about entrepreneurship rather than how people can become entrepreneurs. Entrepreneurship is more about creativity than intelligence. Yet universities focus on measuring intelligence through assignment and exam, rather than project formats. Entrepreneurship education should be technically based and taught with a ‘hands on’ approach, rather than the stiff classroom theory approach.

Entrepreneurship education needs to be refocused towards vocational and community education mediums to reach those in rural communities who need assistance through this form of education.

An entrepreneurial community requires finance which the established banks are hesitant to provide, even with the government sponsored credit guarantee program under the Credit Guarantee Corporation (CGC). Rural community savings cooperatives can be developed as savings and micro-lending institutions, owned by the community, run for the community, by the community itself.

These savings cooperatives can operate according to Islamic finance procedures where venture risk is shared by both the entrepreneur and institution, and as supplementary activities, run special education, Haj and Umrah funds for community members.

These measures would create a new community enrichment rather than a ‘KPI’ orientated development paradigm. All of these measures individually exist and operate successfully in other member ASEAN states today.

New crop research is very much needed to ensure communities are able to successfully adapt to a changing environment due to climate change. Over the next few years, some crops may provide better yields, while others will drastically decline in their productive capabilities. In addition food production for increasing urban populations and restoring water quality will become very critical issues.

There must be a renewed interest in sustainability on the part of both policy makers and communities, as Malaysia’s sustainability is tied up with rural evolution. New forms of community education are needed outside of the traditional education system to deliver community needed skills. The failure to achieve this will result in continued population depletion as the youth abandon rural areas for the cities.

For more than five years there has been talk about the need for change. This has usually been expressed in political terms at the cost of looking at the cultural, economic, and spiritual development. Current development paradigms have eroded traditional Malaysian society values to the point where it is just a national memory and a long gone narrative.

These old narratives once housed Malaysia’s sense of unity in being collectively proud as a nation, where the rituals of ‘balik kampong’ (returning home) during festivals, smelling the scent of durian during season, rendang during festivals, fishing in the longkang (irrigation drains), and flying kites over paddy fields. These activities once signified what was most valued by communities.

Logo FAMA Malaysia BestHere lies the opportunity to enrich rural society along the vibrant cultural traditions that the country once thrived upon; building self sufficient and sustaining communities. These communities would be much better immune to economic downturns. Communities based upon indigenous knowledge and skills will develop much greater cultural pride which has become exhausted through Malaysia’s occidental industrial growth paradigm.

This is the fundamental issue at stake for Malaysians to decide whether the same country will spiritually exist in the future, or be gone and replaced with something else. The rural communities are the last custodians of Malaysia’s culture and this is where efforts must be made to preserve the spirit of Malaysia, if it is to survive.

The role of government linked corporations (GLCs) in Malaysia’s corridor development projects has not necessarily taken into account the best interests of the communities they have sought to ‘develop’. The collateral damage of this ‘development’ may be too much to bear. If rural development serves vested interests, it will surely be piece meal, unbalanced and ultimately destructive. Future development must enrich rather than destroy culture with blind materialism produced through current paradigms. This requires a rethink on rural development in Malaysia before what once mattered to Malaysians is destroyed forever.

The Haze 2013: News From Jakarta


June 25, 2013

Waldoff-Astoria, New York City

image

In the Background–The Statue of Liberty

The Haze 2013: News From Jakarta

Weird sense of humour from Jakarta. The Indonesian Government says that Singapore is behaving like a child. How would it react if the haze  had come from Malaysia to affect the health of Indonesians in Sumatra and other parts of the republic?  The haze problem is almost a yearly affair and there is no serious attempt on the part of the Indonesian authorities to come to grip with this matter. Offers of assistance  from its neighbours  have not been well received.

If the plantation owners have been responsible because of their practice of open burning, they should fined punitively. Malaysian companies like Sime Darby and others who own oil palm plantations in Indonesia should be hauled up.  I wonder why the Indonesian authorities have not moved against them. –Din Merican

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