Killing the Mekong, Dam by Dam


November 30, 2016

Killing the Mekong, Dam by Dam

by Tom Fawthrop

Image Credit: Tom Fawthrop

SIPHANDONE, LAOS — Explorers, travelers, and traders have long been enchanted by the magical vistas and extraordinary biodiversity of the Mekong, especially here.

Swirling rapids roar through the surrounding forest to unleash the magnificent Khone Phapheng Falls in southern Laos. The surrounding myriad islands and forested islets, dotted among the tranquil waterways and braided channels of the Mekong, inspire awe and wonder. This is Siphandone (Four Thousand Islands) district of Southern Laos, nestled alongside the Cambodian border.

However, the serenity of Siphandone has recently been rudely disrupted by the dynamite-blasting of rocks, shattering the tranquil reverie of this ecotourism paradise.

Malaysia’s Mega-First and the Don Sahong Dam

The ugly intrusion of earth-moving trucks in this picturesque landscape has accompanied the launching of the Don Sahong dam, a joint venture of Malaysian company Mega-First (MFCB) and the government of Laos, in January 2016. The dam has gone ahead without approval from the Mekong River Commission and in defiance of wide-ranging protests from regional NGOs and downstream countries Cambodia and Vietnam.

In 2012 the bitterly contested first dam on the Lower Mekong, the Xayaburi dam, a $3.8 billion project based on Thai investment and controlled by Bangkok engineering company Ch.Karnchang, began its controversial construction.

According to scientists, both dams pose a major threat to fish migration and food security.

Chhith Sam Ath the Cambodian Director of the World Wide Fund for Nature (WWF), told The Diplomat, “The Don Sahong Dam is an ecological time bomb that threatens the food security of 60 million people living in Mekong basin. The dam will have disastrous impacts on the entire river ecosystem all the way to the delta in Vietnam.”

The Lao government plans to build nine dams on the mainstream Mekong, and hundreds more on other rivers and tributaries, claiming that this is the only path to development for one of the region’s poorest countries.

Just across the river from the Don Sahong dam site, on the Cambodian side of the Mekong, ecotourists gather at the Preah Romkel commune. This correspondent witnessed tourists poised with their cameras, trying to catch a glimpse of the three remaining Irrawaddy Dolphins clinging onto their fragile home despite being under daily siege from the dam-builders. This wetlands zone has been a popular destination for ecotourism in both Laos and Cambodia, but WWF warns that damming the Mekong will soon drive all the remaining dolphins to extinction.

The Malaysian dam developers and the Lao Energy Ministry have airily dismissed all the protests, claiming that their fish mitigation engineering – the expansion and widening of two other channels – can fix the problem.

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Irrawaddy or Mekong River Dolphin by Tammy Yee (pic above)

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Source: Google images

The future site of the dam across the Sahong Channel is recognized by fishery experts as the only one out of seven braided channels of the Mekong that is deep enough and wide enough for large fish to migrate, providing effective fish passage around the rapids, rocks, and waterfalls year round. Now the dam construction has diverted all the water from the channel, and it will permanently block this natural fish migration route and passageway.

The Malaysian dam developers and the Lao Energy Ministry have airily dismissed all the protests, claiming that their fish mitigation engineering – the expansion and widening of two other channels – can fix the problem.

The Xayaburi dam also claims that its “fish-friendly turbines,” fish ladders, and locks can protect at least 28 species of fish that have been targeted for special attention by Poyry Energy the Swiss-based company hired to supervise the engineering and fish mitigation.

However the Poyry presentation and research by fish consultants Fishtek shows there are at least 139 fish species that would be blocked from swimming past the dam.

Fish mitigation on these two dams may look impressive in presentation videos, but Dr. Ian Baird, who has published many studies on Mekong fisheries, notes that “this is a high risk experiment, as these sort of mitigation measures have never been attempted before on tropical rivers.”

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The Mekong Crisis: When Ecology and Economy Suffer in Tandem

The mighty Mekong, flowing for 4,630 km through the heart of Southeast Asia, is in deep crisis. The delta in Vietnam is both shrinking and sinking.

The loss of nutrient-rich sediment is wrecking havoc on the delta region. All large dams trap sediment and deprive the downstream areas of vital nutrients. Vietnam is suffering from huge sediment loss, running at 50 percent less than the regular flow. Rampant sand-mining in Cambodia and Vietnam has also aggravated the delta’s acute sediment shortage.

The miraculous but fragile ecosystem that connects the Four Thousand Islands in Laos, Tonle Sap in Cambodia, and the delta in Vietnam is directly threatened by these two dams – the Don Sahong and the Xayaburi (in addition to all the damage done by six Chinese dams upstream from Laos). Now a third dam at Pak Beng has been announced by the Lao government.

A new WWF report has drawn attention to how the dramatic decline in the health of the Mekong is not only an ecological disaster, but also a serious threat to the economy of the region. With a fresh perspective on how ecology and economy are intimately linked together, the report reminds all stakeholders, “Economic growth in the Greater Mekong region depends on the Mekong River, but unsustainable and uncoordinated development is pushing the river system to the brink.”

WWF’s lead coordinator for Water and Energy Security in the Greater Mekong, Marc  Goichot, sees the delta as crucial to Vietnam’s economic future. “It produces 50 percent of the country’s staple food crops and 90 percent of its rice exports. It is one of the most productive and densely populated areas of Vietnam, home to 18 million people. Vietnam cannot lose the delta.”

But right now Vietnam is losing it. The delta is shrinking and unless there is a major policy turnaround on the Mekong, scientists in Can Tho have warned that 27 percent of its GDP, furnished by the delta, could evaporate during the next 20 years.

The strong momentum toward damming the Mekong has been greatly assisted by the widely held perception that dams are a reliable source of energy, producing great economic benefits.

The Mekong River Commission, the World Bank, and USAID have promoted dam-building with this approach, billed as “Sustainable Hydropower.”

The prevailing assumption has been that trade-offs, including negative environmental impacts, are inevitable, but we should not worry too much because improved environmental impact assessments (EIAs) and effective mitigation would provide adequate safeguards to protect ecosystems. It is only recently that researchers have been submitting these assumptions to closer scrutiny.

The credibility of this narrative is increasingly being challenged. Dr. Philip Hirsch a Mekong specialist, concluded after decades of inspecting dams that “some hydro-power impacts can simply not be mitigated – only compensated. And compensation systematically falls short.”

Most fisheries experts in the region familiar with the Sahong and Xayaburi dam projects consider that the mitigation experiment is a risky venture into uncharted waters and cannot be relied on to protect fisheries and the ecosystem.

Whereas the apparent benefits of hydropower can easily be quantified in terms of electricity, the financial losses inflicted by dams have been consistently underestimated or ignored by economists and governments.

The combined fisheries assets for the MRC countries are now valued at $17 billion and vital to the food security of tens of millions.

On the other side of the ledger, energy from 11 scheduled dams may yield economic benefits valued at $33.4 billion according to an international study on hydropower impacts on the Mekong based at Mae Fa Luang University in Chiang Rai.

But set against losses from a denuded river system and huge losses of fisheries, sediment, agricultural produce, and livelihoods, this same study predicts a loss of $66.2 billion, resulting in an overall negative impact of $21.8 billion if all 11 dam projects go ahead.

According to one of the three authors, Dr. Apisom Intralawan, “hydropower benefits have been over-stated in these figures (2015) and based on current economic data we are about to revise them.”

Hirsch confirms that “many studies show that the real costs of hydropower outweigh the benefits but the projects still go ahead.”

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Can The Mekong Survive?

Wetlands ecology specialist  Nguyen Huu Thien, a Vietnamese scientist based in the delta’s capital Can Tho, concluded The sure thing we know, if the delta cannot support its population of 18 million, then people will have to migrate – migrate everywhere. The dams are sowing the seeds of social instability in the region.”

The only way forward, says the Vietnamese Director of Hanoi’s Institute of Economics, Tran Ding Thien, is for Mekong countries to move beyond what he calls “the small-pond mentality.”

That seems unlikely at the moment. In Laos, Daovong Phonekeo, director general of Laos’ Department of Energy Policy and Planning, told Voice of America: “For the development of the Mekong River, we don’t need consensus!”

It is true that the 1995 Mekong Agreement does not provide for any veto on controversial dam projects, but it does enshrine principles of international river cooperation and good water governance that are undermined by the Lao government’s penchant for unilateralism.

Stuart Orr, WWF’s leader for Water Resources Practice, observes that “Water underpins our agricultural systems, our energy production, manufacturing, ecosystems, food security, and our wellbeing as humans. So if economic growth is to continue better river management is called for, that respects the limits of the ecosystem.”

Can the once mighty Mekong alter its currently blighted course of unregulated development, and this alarming rate of depletion of its natural resources?

“One step is that before we build any more dams, new green energy technologies need to be explored,” argues Hirsch. “It would be a tragedy to see the world’s greatest inland fishery destroyed for lack of imagination in applying cost-effective innovative solutions”

There also needs to be a new river-wide consensus that ultimately will have to include China.

Tran decries this small-minded approach, which clings to the “little pond of sovereignty” and cannot grasp the bigger picture of sharing water resources and respecting the whole river.

In this perspective of international scientific cooperation the Mekong should not belong to any one nation. As Tran, speaking at Mekong conference held in Can Tho in April, declared:

“If the Mekong is turned into a series of ponds and reservoirs, it is a loss not only for the region it is a loss for the world. The water that fuels the dams belongs to us all. We need to create an International Mekong Foundation and protect it.”

Tom Fawthrop is a freelance  journalist and film-maker based in Southeast Asia.

Killing the Mekong, Dam by Dam

5 ways to really ruin an economy


November 29,2016

After Brexit: 5 ways to really ruin an economy–Any resemblance to the Malaysian situation is purely coincidental

https://intheblack.com/articles/2016/08/08/5-ways-to-really-ruin-an-economy?utm_source=Taboola&utm_medium=cpc&utm_content=3&utm_campaign=KCtrial

By Jason Murphy

 

The UK’s exit from the European Union may slow European growth over the next two years – but to truly and deeply wound an economy requires more dramatic strategies.

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No-one yet knows what will be the full economic impact of Brexit, the surprise British vote to leave the European Union. The British pound quickly fell by approximately 10 per cent, and share and bond prices dropped too. It’s less clear what will happen to the “real economy” – production, consumption and jobs. Whatever happens to the UK, though, should be kept in perspective. Even if the UK economy contracts by a percentage point or two, it will be a long way from the worst economic disasters of recent years.

To produce true economic disaster, you need to do something more misguided than deciding to leave an economic bloc. Here are five ways to really ruin an economy.

Price controls – Venezuela

To the late Venezuelan President Hugo Chavez, inflation looked easy to solve: issue a law that made it a crime to sell at high prices.Introducing the 2011 Law for Fair Costs and Prices, Chavez spoke about tortillas – priced at B7.50 at government supermarkets, they sold for up to B40 at private stalls. This could not stand – the price control law was “to advance the struggle against the injustices of capitalism,” Chavez said.Venezuela had a history of price controls. For a time a litre of petrol, for example, cost just US$0.01 under subsidy (which, not surprisingly helped spark a boom in smuggling fuel out of Venezuela).

The Law for Fair Costs and Prices didn’t use subsidies. It lacked anything more than government say-so. Shortages of food and other basic supermarket goods spread, black markets thrived, riots followed.

Neither the death of Chavez nor the collapse in oil prices that once made Venezuela viable has put an end to the policies. In May 2016, CNN reported that the country was not just running out of food, medicine and electricity but even lacked toilet paper.

According to the World Bank, 2016 will be Venezuela’s third consecutive year of shrinking GDP, and 2017 is forecast to be its fourth.

Debt – Greece

Greece’s problems were that it was allowed to build debt for too long, and that it was unable to adjust when it needed to do so. It joined the European Economic Community (later the European Union) in 1981, adopted the euro as its currency, and for years funded growing budget deficits at low rates as a member of the eurozone. The deficits pushed up Greek government debt; by 2010 it was reported at 120 percent of GDP, double the supposed Eurozone limit. But the real level of debt, audits found, was almost 150 per cent.

Analysts and foreign officials began to ask questions that ought to have been asked earlier. Greece’s annual government fiscal deficit – the gap between spending and revenue – was revealed to be larger than official statistics were letting on. It was by then in fact one of the highest in the world.

Such a situation would normally trigger a currency devaluation. As an EU member, however, Greece could not devalue – a problem which made its situation far worse. The EU eventually offered bailout funds in return for a series of 13 increasingly severe austerity packages. Gross domestic product, which reached US$354 billion in 2008, dropped to US$195 billion by 2015 and fell again in early 2016, according to World Bank reports.

The Greek unemployment rate – which was 8 per cent in 2008 – now sits at 23 per cent. The combination of high public debt and the country’s inability to adjust to changed circumstances has made Greece a byword for debt-driven economic mismanagement.

Self-sufficiency – North Korea

North Korea trades very little, boasting it is “self-sufficient”. The “self” part is these days mostly true, but the “sufficient” part is debatable.

The end of the Soviet Union was substantially less welcome in North Korea than in, say, Europe. The true reality of self-sufficiency was about to dawn, with terrible consequences. It is estimated that North Korean GDP fell by more than half in the decade after 1990, from around US$2700 per person to less than US$1000 in 2000.

This period, known officially in North Korea as The Arduous March (and named after a story of Kim il-Sung leading guerrilla fighters against Japan) included a famine that is estimated to have killed between several hundred thousand to several million people.

This is not to say self-sufficiency has been devoid of successes. North Korea is a leader in production of Vinylon. Invented by a scientist who defected from South to North Korea, Vinylon is a fabric produced from locally-sourced limestone and used in clothes, shoes, bedding and rope.

You can’t eat it, however. According to the World Food Programme, “one in every three children remain chronically malnourished or stunted” in North Korea. The country has recently allowed small-scale private business in an attempt to rebuild its economy.

Lack of property rights – Zimbabwe

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Robert Mugabe

Zimbabwe was never rich. But the lesson of meltdowns is you don’t need to climb high to start your plunge. In 1982, Zimbabwe’s GDP per capita was US$1060; by 2008 it was just US$300, according to the World Bank.

The reign of Robert Mugabe – elected Prime Minister in 1980 and President in 1987 – has had many economic policy errors, but two stand out.

The first is redistributing farmland via violence. In 2000 an existing program to move land from white to black ownership with compensation was trampled by a state-sanctioned land seizure program that helped create a famine.

The second error was the 2005 destruction of homes and businesses belonging to opposition supporters.

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Malaysians should do the Murambatsvina on Najib Razak, God’s chosen Prime Minister (Zahid Hamidi)

Operation Murambatsvina (“Clear the Rubbish”) was an attempt to clear illegal slums, the government says. The UN says it was politically motivated, coming shortly after an election at which the opposition did well.

The World Bank in its published overview says these and other crises between 2000 and 2008 “contributed to the nearly halving of its gross domestic product (GDP), the sharpest contraction of its kind in a peacetime economy, and raising poverty rates of more than 72 per cent, with a fifth of the population in extreme poverty.”

Lack of security over your possessions will never spur much in the way of investment, and with rich white and poor black alike at risk, Zimbabwe is going from bad to worse. In 2016, with Mugabe aged 92, Zimbabwe’s economic problems are said by the IMF to have “deepened” and activity is “severely constrained”.

Poor investment – Nauru

Perhaps the greatest swan dive on this list is that of Nauru. The world’s smallest independent country in terms of both population and land area, it was during the 1970s and 1980s the world’s richest, in per capita terms.

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Courtesy of its phosphate rock reserves, the country of 10,000 grew fat (quite literally – a 2007 World Health Organization report (PDF) identified 94.5 per cent of its residents as overweight). Nauru mined its tiny landmass like there was no tomorrow, digging up its dwindling phosphate reserves in the 1980s when prices were high.

The Micronesian country’s wealth was legendary, and it made attempts to diversify. Nauru bought commercial properties in Australia and the USA, and started its own airline. Among its investments was a West End musical about Leonardo da Vinci. On opening night, much of the cabinet of Nauru was in attendance. The musical (titled Leonardo the Musical: A Portrait of Love, and running for four hours) was short-lived, and so was Nauru’s status as a wealthy country.

Exactly where the incredible wealth went remains unclear, but Nauru’s eventual net debt – hundreds of millions of dollars owed all over the world – was not. Nauru is now impoverished and dependent on foreign aid.

In 2014, Sydney University geosciences professor, John Connell, told the Financial Times newspaper that mass emigration might be the only long-run solution.

Fidel Castro: A revolutionary, an icon for the Third World and a ‘genuine friend’ to India


November 29, 2016

Fidel Castro: A revolutionary, an icon for the Third World and a ‘genuine friend’ to India

By Muchkund Dubey

http://www.firstpost.com/world/tribute-to-fidel-castro-a-revolutionary-an-icon-for-the-third-world-and-a-genuine-friend-to-india-3126252.html

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Fidel Castro’s Legacy: “In spite of his continuing struggle for his country’s survival against the crippling measures imposed by the neighbouring imperialist power, what he achieved for Cuba during his lifetime has remained unachieved in the rest of the Third World. He established an educational system in his country of which there is no parallel in any developing country and in a number of developed countries. The quality health system under his leadership, accessible to every Cuban virtually without charges, has no match even in developed countries. He failed in his plan to industrialise Cuba, but that was in large part due to the trade embargo maintained by the United States. For, a small country like Cuba cannot set up viable industries without being a part of the regional and global economic system, which was persistently denied to Cuba”Dubey

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Fidel Castro, the great Cuban revolutionary and the icon of all those who have over the last half a century struggled for national liberation, freedom from colonial and capitalistic exploitation, and the establishment of a just and equitable world order passed away on Friday in Havana at the age of 90.

At the time of his death, he had become outdated just as the instrumentalities that he had chosen for his epic struggle, that is, the Non-Aligned Movement (NAM), Group of 77 (G-77) and Third World, had become anachronistic. He had remained merely a symbol of his strivings and achievements during his life time. He rode like a colossus in the global arena during the best part of the second half of the 20th century.

He was the only leader in the post-Second World War period who was vilified and adored both in a fairly large measure. He was constrained and crippled by a group of countries led by the United States. At the same time, he endeared himself to a much larger group of countries and among vastly wider sections of the world population. Coming from a tiny country, he was better known among the common people the world over and particularly in the Third World, than most of the great leaders of his era.https://dinmerican.files.wordpress.com/2016/11/ba368-moscow2bcuban2bembassy2bpeople2bmourn2bfidel2bcastro.jpg?w=545

Fond Farewell –“Hasta Siempre!”

In spite of his continuing struggle for his country’s survival against the crippling measures imposed by the neighbouring imperialist power, what he achieved for Cuba during his lifetime has remained unachieved in the rest of the Third World. He established an educational system in his country of which there is no parallel in any developing country and in a number of developed countries. The quality health system under his leadership, accessible to every Cuban virtually without charges, has no match even in developed countries. He failed in his plan to industrialise Cuba, but that was in large part due to the trade embargo maintained by the United States. For, a small country like Cuba cannot set up viable industries without being a part of the regional and global economic system, which was persistently denied to Cuba.

Under Fidel’s leadership, Cuba emerged as a great exponent of all that Third World stood for, that is, anti-colonialism, anti-imperialism, anti-Zionism, disarmament and development. There is hardly an example in recent history of a nation punching so unimaginably above its weight.

One of the greatest legacies of Fidel was the leadership both at the political and administrative level left behind by him. I have found Cuban politicians and diplomats among the most skilled, astute and far sighted negotiators in the world. They admirably combine their quest of national interest with concern for the world order and rule of international law.

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Given its overwhelming reliance on the Soviet Union for its survival, Cuba’s foreign policy remained tilted during the Fidel era towards the Soviet Union and socialist outlook of the world. However, I found the Cubans under Fidel’s leadership never missing the opportunity of using the narrowest of space available to them for manoeuvre for promoting the wider cause of humanity.

I cannot claim to have personally known Fidel or of having come close to him, but I indeed feel blessed to have been born, lived and pursued my vocation of diplomacy in the world, during the era coinciding with Fidel’s life. I met him twice in the second half of the 1970s at delegation level in closed doors meetings to review and give impetus to our bilateral relations. I found him to be a genuine friend of India, entertaining legitimate expectations of cooperation with our country mainly in the economic field but somewhat disillusioned because of our not being forthcoming in our response and because of our propensity to hold a balance in pursuit of what we perceived to be a policy of genuine non-alignment. Those days, preventing Cuba from tilting the Non-Aligned Movement towards the Soviet direction was regarded as an important part of our diplomacy. At times, we went too far in this direction at the cost of our own enlightened self-interest.

I saw Fidel at the prime of his authority nationally and prestige internationally as the Chairman of the Non-Aligned Summit in Havana in 1979. One of our major concerns at that time was to get the oil producing exporting countries (OPEC) committed to a dual pricing system for oil.

In this endeavour, Cuba extended its full support without, however, rocking the boat. Obviously as a host country, their primary objective was to get a Havana Declaration and Plan of Action unanimously agreed and they eminently succeeded in this even though it involved their walking at the razor’s edge in the negotiations on several fronts.

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At the time when the nuclear arms race had acquired ominous proportions and the threat of a nuclear winter seemed to be at our doorstep, Cuba took the initiative of getting convened in Havana a special Non-Aligned Conference on Disarmament. I had the privilege of steering the negotiations on the document that emerged out of this Conference, which was inaugurated by Fidel. Thanks to the highly positive, balanced and constructive attitude of the Cubans, we came out with one of the best documents on nuclear disarmament ever adopted in a large international forum like NAM.

And finally, I had the privilege of seeing from a distance this giant among the world statesmen when he came to New Delhi to hand over the Chair of the Non-Aligned Movement to Indira Gandhi in the NAM Summit in 1982.

I bow my head in gratefulness to all that Fidel has done for Cuba, developing countries and the world.

(The author is a former Ambassador and former Indian Foreign Secretary. Views expressed are personal.)

First Published On : Nov 27, 2016 08:14 IST

 

Free market alternatives


November 27, 2016

Here is something I wrote in The Phnom Penh Post in 1996, which may still be of interest. Of course, Cambodia has come a long way, having achieved average GDP of over 7 per cent p.a. over the last 20 years. It is enjoying peace and security, thanks to the strong leadership of Prime Minister Samdech Techo Hun Sen.–Din Merican

Logo of Phnom Penh Post newspaper

Free market alternatives

The Editor,

I read Mr Matthew Grainger’s balanced and interesting report on the recent CDRI International Roundtable on Structural Adjustment Programme in Cambodia (January 26, 1996). I also read Dr Walden Bello’s paper titled “Economic Liberalization in Southeast Asia: Lessons for Cambodia”, and Dr K.P. Kannan’s paper, “Economic Reform, Structural Adjustment and Development: Issues and Implications”.

Dr Bello of Chulalongkorn University’s Social Research Institute in Thailand and Dr Kannan, CDRIs research director, are reminding policy makers in Cambodia that there is an alternative paradigm for Cambodian economic development to the standard IMF/IBRD prescription of market economics.

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The trickle-down theory is attractive in concept, but it has limited relevance in the real world due to market imperfections. Government intervention, as a result, is necessary to ensure equity and development without degradation of the environment.

Growth and equity are two sides of the same coin. For that reason, real GDP growth, in my view, is alone not a good indicator, if we ignore the distributional or equity and environmental aspects of development. One has to look at Thailand and Malaysia to realize that this obsession with GDP growth rates among policy makers results in serious socio-economic imbalances with long-term political consequences.

Malaysia’s realization of this problem is now incorporated in its Second Outline Perspective Plan 1991-2000. Even as of yesterday (Feb 13), Malaysia’s Deputy Prime Minister Dato Seri Anwar Ibrahim was reported to have said that in the next Malaysia Plan, our seventh, the social and related aspects of development will receive greater attention. After nearly 40 years of economic management, Malaysia’s decision to evaluate its strategies and adopt new approaches to achieve more balanced development supports Dr. Bello’s call “to articulate an alternative future” and “to ponder carefully the consequences of fast track capitalism…”

We must remind ourselves what development is all about. Here I would quote Dr Kannan:

“In terms of development, the ultimate objective is that of human development and reducing inequities as between people and regions.”

I am, of course, reminded of great development economists of the sixties like Sir Arthur Lewis, Gunnar Myrdal, Jan Tinbergen and Ragnar Nurkse and my mentors in economics, Clifton Wharton Jr., and Ungku Abdul Aziz (Malaysia), who studied the processes of development and underdevelopment with a socio-cultural perspective.

Development is about bringing about systematic change, and providing meaning to the lives of people so that they have opportunities to progress as far as their abilities can take them. It is about ensuring that scarce resources are used responsibly so that succeeding generations can build on the efforts and achievements of their forebears.

It is about institutions, culture and people. It does not exist in a vacuum, certainly not in econometric models, computer simulations, scenario planning systems or in the air-conditioned offices of the World Bank, IMF and the ADB. Most of all, development is about responsibility and accountability for all stakeholders, not a power game.

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Because it is a grassroots process and culture bound, development must be driven by nationals, in the case of Cambodia by Cambodians, with a shared vision, not by experts who have no stake and who do not have to live with the consequences of their prescriptions. This is not to discount the contributions made by the international community, donor countries and multilateral agencies. But it does emphasize that the granting of technical and financial assistance does not confer on the provider the right to impose their own values, preferences and way of life, or to dictate what is best for the beneficiary.

Cambodian leaders know what they want for their country. They have a clear vision of their country’s future as reflected in their National Programme (NPRD) and this is more than what can be said about some countries in the Third World. They have a strategic purpose which is to create a fair, just and peaceful society and, through strong sustainable economic growth, to raise the living standards for all Cambodians.

Cambodia is committed to a democratic system of government with a Constitutional Monarchy, and free market economic system with the private sector as the engine of growth and government in the role of strategist and manager-mentor.

Cambodia is adopting a state-directed economic growth strategy. This approach accepts the price mechanism, and the market in general, as an efficient allocator of resources. It also taps the dynamism of the private sector, but recognizes that government activism is essential in the area of national strategy in a competitive and interdependent world and to tame the excesses of the profit motive and ensure that economic growth is sustainable, balanced and equitable in the long term.

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Their development will be on the back of agriculture which is today the step child of most economies in East Asia. It may not be the “sexy thing” to do, but Cambodia is making its first wise move. Modern agriculture backed by advances in bio-technology, efficient water resource management systems, and strong marketing and distribution networks is a profitable undertaking.

Since the private sector is going to be given a prominent role in the development of the Kingdom, the World Bank and other multilateral agencies should finance a master plan study on small and medium scale industries and businesses and recommend policies and strategies for developing this sector. In many countries in East Asia, this sector is the driver of economic activity with the greatest potential for growth.

It is more refreshing to talk about development than other issues, usually negative ones, about Cambodia. The country has done well since the formation of the Royal Government. The tasks and challenges ahead are daunting. Cambodia needs the understanding and the patient support and cooperation of friends. Credit when it is due should be given. Criticisms, on the other hand, should be constructive.

For democracy to survive in Cambodia, economic development is essential. I have not known of any situation in the world where democracy exists side by side with abject poverty, unemployment, illiteracy and social inequities.

I stand, therefore, to be educated by anyone who has had the privilege of seeing democracy in a symbiotic relationship with the aforementioned phenomena.

I hope your readers – especially those in the IMF, World Bank, ADB and UNDP here in Phnom Penh – will respond with their comments on my letter. If that happens, my purpose in writing this letter as a sort of rejoinder to the Cambodian development debate is well served.

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Din Merican 2016

– Din Merican, Phnom Penh. (Din Merican is an economist with an MBA degree from the United States, who worked for more than 30 years in the Central Bank in Malaysia and in the private banking industry. This letter represents his personal views.)

The Trump Effect and the UMNO-Red Shirt Buffoonery


November 27, 2016

The Trump Effect and the UMNO-Red Shirt Buffoonery on the Malaysian Economy

by Koon Yew Yin

http://www.freemalaysiatoday.com

 

I can see clearly that there are various push and pull forces at work in our economy. Some of these forces are linked to political ones which economists attached to banks or universities do not want to talk about publicly. But they are happy to do so privately or in coffee shops with their good friends.

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Other forces are more obvious but it is still useful to emphasise them in case they are easily forgotten.

Let me flag some of these which will be of special concern to investors in the market.Firstly, there is of course the “Trump effect”.

Readers will recall that I had predicted – contrary to many analysts – that the US stock market would head higher post-Trump. Well, for now, my prediction has proven to be correct.

One of the world’s foremost business newspapers, The Financial Times, in a lead article on November 26 noted that when Wall Street traders departed for Thanksgiving, they could celebrate a rare achievement. On Monday and Tuesday, the four most widely cited indices of US stocks — the S&P 500, the Dow Jones Industrial Average, the Nasdaq Composite and the Russell 2000 —hit all-time highs simultaneously. The last time a “grand slam” took place was on New Year’s Eve 1999, at the height of the tech bubble.

The article noted the breakthrough for stocks in the US which had moved sideways for two years since the Federal Reserve stopped its quantitative easing programme, seemed to confirm a regime change. Prompted by Donald Trump’s victory in the presidential election, the narrative has changed to preparing for an era of tax cuts, deregulation and fiscal stimulus, after eight years of markets being guided by the Fed’s historically low interest rates.

I also predicted in my article “Trump is better for business than Hillary, that the Malaysian stock market and other Asian markets will also strengthen as a result of the US economic recovery.”

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The UMNO Redshirt Buffoons

Specifically I had written: “History has shown that when the Dow goes up, almost all the stock markets in the world, including KLCI, go up.”

 Well, the second part of my prediction has still to happen.On November 10 when my article was published, the KLCI stood at 1652.74. At the close of November 25, it stood at 1627.26 – a drop of 25 points.

Of course it is much too early to say what will happen next but my prediction that our market will move in tandem with the US market – that is upwards during the next 12-18 months still stands.

There are two big dark clouds hanging over the market. One is the big black hole left by 1Malaysia Development Berhad (1MDB) which most analysts are aware of but are too afraid to talk or write about openly for fear of being branded as anti-national or taken under Sosma and put into solitary confinement.

I will not go into the size of the 1MDB financial hole but will leave it to our accounting experts to do the mathematics. My main concern is not so much the actual financial loss incurred by the government.

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CIC of the Red Shirt Buffoons

Although this will go down in history as one of the biggest scandals carried out on a nation’s financial guardians and gatekeepers, frankly the actual financial loss is really not that big and it is one which the nation’s treasury can well afford.

What we cannot afford is the loss of confidence among foreign and local investors which cannot be easily quantified. Should this lack of confidence continue, then my predicted Malaysian market upturn will be undermined.

There is a second dark cloud – and this is the Red Shirts phenomenon. We have now seen the Red Shirts political ‘mat rempits’ come to centre stage in our political life. I am not only referring to Jamal Yunos but also his supporters and leaders who are now engaging in the use of force, threats of violence and other provocative actions in Parliament, Komtar and elsewhere and aimed at whoever they see as opposed to their vision of party, racial and religious dominance.

Everyone who has access to a smartphone will have seen the behaviour of these street and parliamentary hooligans and how they are destroying the peace and harmony of the country. Well, perhaps not everyone. It seems like the country’s leaders including the Prime Minister, the entire Barisan Nasional cabinet, the Inspector-General of Police, the Attorney-General and others responsible for law and order in this country have not seen these videos.

Or if they have viewed them, they do not care.

Let me be very blunt. The business community and investors in the country – foreign and local – do not read Utusan Malaysia or any of the Malay papers. They do not listen to Radio Malaysia or view TV3.

They care about how their money and the market is affected by these thugs and hooligans. They can make up their own mind on which way our national politics is going.

And if the Red Shirts phenomenon gets worse, we can expect some of them to take out their businesses and money.

Koon Yew Yin is a retired chartered civil engineer and one of the founders of IJM Corporation Bhd and Gamuda Bhd.