IDEAS

The launch of IDEAS is something to be lauded. This new-fangled think tank will most certainly add to the corpus of analytical knowledge that Malaysia needs in order to develop its nationhood in an orderly and sensible manner.

I believe IDEAS will also be able to frame issues without the emotional melodrama that pervades the Malaysian polity of late.

The fact that IDEAS emphasised the monumental contribution of our first Prime Minister, Tunku Abdul Rahman at its launch also signals its aspiration to place a proper context and texture to the increasingly absurd and distorted debates that are swirling around recently. Tengku Razaleigh Hamzah, who spoke at the launch of IDEAS was consistent with this theme.

Pity I wasn't there. But, never mind, I look forward to more of IDEAS.

Tahniah, Datuk Rocky

I wish to offer my congratulations and felicitation to Rocky who is to be conferrred a Datukship by DYMM Yang Di Pertuan Agong later today. Way to go, bro!

pix from here.

Thaipusam

I wish to offer my warmest Thaipusam wishes to all Hindus.

pix from here.

A special shout out to bro Selva who's carrying his 11th kavadi in as many years. What a feat of devotion!

How To Measure Microfinance's Social Impact

This is an interesting piece offered by the people from Wharton on microfinance which policymakers should delve deeper into. There is always a concern that large allocations to institutions like Amanah Ikhtiar Malaysia may be altruistic but, suffers the risk that noble objectives are sidetracked by poor understanding of microfinance and its implementation.

Two recent studies have sparked debates over the benefits of giving out small loans to the world's poor.

For three decades, microfinance institutions have given out small loans to the world's poor--mostly women--and amassed hundreds if not thousands of case studies showing that the loans help alleviate poverty, improve health, increase education and promote women's empowerment. Skeptics, however, have argued there is not enough hard data to prove that microfinance transforms lives on a large scale, and they have called for more rigorous analysis.

Now two new studies have raised doubts about long-held beliefs in microfinance. The studies--which used randomized, controlled trial methodologies--did find that microloans helped poor entrepreneurs boost profits in their businesses. However, the studies found little impact on health, education, average consumption, women's decision making or self-reported well being.

The unexpected results, which were quickly picked up by The Economist and other media, created a stir in the microfinance community. "They don't capture what we believe is the real impact or dimensions of microfinance, which sometimes takes years to demonstrate," says Bruce MacDonald, senior vice president of communications at Accion International, a Boston-based non-profit involved in microfinance since 1973. "We would definitely disagree that microfinance doesn't have an impact on poverty because we have seen the impact over the past 30 years."

One problem with previous research, microfinance's critics respond, is self-selection--that is, studies only survey clients who successfully take out loans. The new studies differ from the past in that both attempt to measure the impact of microfinance by comparing two groups: one with access to microcredit and one without.

In the first study, researchers from the Massachusetts Institute of Technology (MIT) worked with a microfinance lender in India to look at 104 slums in Hyderabad. Half of the slums were randomly selected to receive a loan branch, while the other half were not. Fifteen to 18 months later, researchers interviewed 6,850 households in the community--about 65 per slum--in an attempt to gauge changes in economic and personal well-being.

The second study, by Dean Karlan of Yale University and Jonathan Zinman of Dartmouth College, used a similar method to analyze microfinance in the Philippines, but instead of communities they looked at individual borrowers, tracking a total of 1,601 marginally credit-worthy loan applicants in Manila. Half were randomly offered a loan; half were denied. Researchers interviewed the sample group 11 to 22 months later to see if anything had changed. In both cases, results were mixed.

"While microcredit succeeds in affecting household expenditure and creating and expanding businesses, it appears to have no discernible effect on education, health or women's empowerment," states the India study. "Of course, after a longer time, when the investment impacts (may) have translated into higher total expenditure for more households, it is possible that impacts on education, health or women's empowerment would emerge.

However, at least in the short term (within 15-18 months), microcredit does not appear to be a recipe for changing education, health or women's decision making. Microcredit therefore may not be the miracle that is sometimes claimed on its behalf, but it does allow households to borrow, invest, and create and expand businesses."

The Empowerment of Women
Alex Counts, president of Washington-based Grameen Foundation USA, calls the studies "preliminary" and believes the timeframe is too limited to be meaningful. He cautions against making sweeping generalizations about microfinance on the basis of two studies, given how environments can vary from country to country.

A better measure, he argues, is research his organization commissioned in 2005 that analyzed 90 major impact studies and found that microfinance had positive effects. Counts also questions the Manila results based on the lender involved. "They studied a microfinance institution that is in no way typical of good microfinance practice in the Philippines," Counts says.

For microfinance practitioners who focus on women's empowerment, the results of the studies were particularly surprising. The India study found no impact on women's decision making, while the Manila study found some evidence that microcredit helped men more than women.

"It surprised me but I also felt that it was leaving something out," says Mary Ellen Iskenderian, president and CEO of Women's World Banking. The 30-year-old New York-based institution, which works with 40 microfinance lenders in 28 countries, has "solid data" from numerous studies around the world that shows women who take out microloans experience a decrease in domestic violence. Women's empowerment is "infinitely harder to measure but every bit as important as the economic change," says Iskenderian, who sees the empowerment factor come up in many studies. "It's borne out by data as well as [by] speaking to the women themselves."

Indeed, it may not be practical--or even possible--to measure poverty alleviation or profound social changes with randomized controlled trials, some say. Microfinance is too complex, its programs too varied. Loans are all different sizes for different types of businesses, and villages and families are never exactly the same. As microfinance grows and expands, it has become more difficult to isolate a "control group," especially in urban areas, because communities not served by one microfinance institution may still have access to another. Iskenderian recalls hearing of one attempted study that had to regroup after researchers discovered women in the control group (the village denied microfinance) were secretly sending their daughters to apply for loans in the next village, where credit was available.

Despite controversy over methodology, the two studies reflect a recent push in the microfinance industry to better measure social performance, says Wharton management professor Keith Weigelt. In recent years, as an increasing number of for-profit lenders have entered a market once dominated by non-profits and aid agencies, experienced practitioners have become concerned that microfinance is straying from its original mission of social development--what those in the industry call the "double-bottom line."

Meanwhile, microfinance institutions and their donors have stepped up efforts in the past few years to improve transparency and impact assessment. The Grameen Foundation and the Consultative Group to Assist the Poor (CGAP), the microfinance research arm at The World Bank, commissioned the development of the Progress out of Poverty Index (PPI) to help microfinance institutions measure social impact.

In 2008, the MasterCard Foundation, a large microfinance donor, gave $740,000 to the Microfinance Information eXchange (MIX) to help launch a web platform to track performance. And large donors such as The Bill and Melinda Gates Foundation have financed increasing numbers of studies on microfinance. "It's an evolution of the industry that we are seeing more studies being done," according to Weigelt. Finding an accurate measure of social impact is "the holy grail."

Rachel Glennerster, executive director of the Abdul Latif Jameel Poverty Action Lab at MIT and co-author of the India study, believes her work attracted so much attention in the press because it filled "a gaping hole" in microfinance research. "There were lots of questions being asked: Does it work? What does it really achieve? And there just wasn't really good evidence to answer the questions," she said. "So you fill a gap. You answer a question that people desperately want answered."

The Complexity of Poverty

While most microfinance practitioners say they welcome the data and look forward to more studies, not everyone agrees how and what those studies should measure next. Some acknowledge that they always knew the limitations of microfinance, and never claimed it would work miracles. They say that 30 years of surveys provide ample support for microfinance's social benefits, and should not be dismissed because of two studies. Others find flaws in the new studies themselves: The timeframe is too short, the scope is too limited, and randomized controlled trials are more suited to measuring something very specific--like the effect of a drug--than something as complex as poverty. Still, others say this is a blessing in disguise--an opportunity to rethink and regroup as microfinance matures into its next phase.

Although inconclusive on their own, the recent studies "mark a milestone" in microfinance research, states David Roodman, research fellow at the Center for Global Development. Roodman, who admits he has "spent way too much time taking apart studies" on the impact of microfinance, says he has been "almost universally unconvinced" by studies of the past. In June 2009, Roodman co-authored a working paper titled, "The Impact of Microcredit on the Poor in Bangladesh: Revisiting the Evidence," with New York University professor Jonathan Morduch that appears to upend one of the industry's most oft-quoted bodies of research--field surveys done in Bangladesh in the 1990s that Grameen Bank founder and 2006 Nobel Peace Prize winner Muhammad Yunus often cites as proof that 5% of the bank's borrowers pull themselves out of poverty each year.

Roodman insists he isn't skeptical of microfinance itself, but believes the data gathered up to now have not conclusively proven any benefit on average. "The real problem is that this data doesn't answer what we want it to answer," he says. "My stance has always been 'show me.'" By using a randomized controlled trial method, considered "the gold standard in drug trials," the new studies offer more credible data than microfinance has had before, Roodman says. "An intellectual revolution has arrived at the doorstep of microfinance."

What purpose the data actually serve is not easily answered. Michael Chu, a management professor at Harvard Business School, an expert in microfinance and former president and CEO of Accion, points out that health, education, finance and poverty are often tightly intertwined. A microloan might help a family start a business, for example, but if a single family member suddenly falls ill, the borrower might be unable to keep the business going--and will probably sink every penny the family has into emergency health care, he says.

Using randomized controlled trials to test something very exact--such as effectiveness of working capital--could be useful, according to Chu. Aside from that, he questions if so much precision is necessary. "What are you trying to do? Are you trying to get to the precision of academia? Or decision making? Because for certain parts of the academy, it may make sense to see if it was 53% or 57%, the impact of X.

But for a decision maker, whether it's somebody in the government trying to act against poverty, somebody on the front lines managing microfinance institutions, or somebody in a philanthropic organization trying to decide where to deploy the dollars, that's another level of decision making. In that case, a) you need to act, and b) do something that's intelligent. ... What level of precision do you need? We're discussing poverty. Urgency matters. Of course you can sit on the sidelines and wait for all these trials, but if you need that kind of precision to act, you're never going to be at the forefront of social action."

Others say microfinance has never been a silver bullet to alleviate poverty, and that financial access itself is enough of a goal. "It's somewhat narrow to define the value of microfinance intervention just as poverty alleviation," says Eliza Erikson, who manages the microfinance portfolio for Calvert Foundation, a nonprofit in Bethesda, Md., that focuses on socially responsible investment. "The benefit of microfinance isn't necessarily poverty alleviation but extending access to financial services, which allows people to remain stable and not live such precarious lives. There's a very tenuous line between being poor and being destitute."

The Next Wave of Research
Most people who live in poverty actually have extremely sophisticated financial lives, in part because their incomes fluctuate wildly from one day to the next, says Morduch, the New York University professor, in his new book, Portfolios of the Poor: How the World's Poor Live on $2 a Day. Having access not only to credit but also to savings, insurance and remittances would bring benefits to the poor by helping them stabilize their lives, according to Morduch. A secure savings account or an insurance policy might not lift a person out of poverty, for example, but it might alleviate an enormous amount of stress and help him or her avoid financial catastrophe.

Those benefits are unlikely to show up in the results of a randomized, controlled trial, however. "Portfolios of the Poor shows that people are looking to better manage their resources--not to grow a business necessarily, but to cope better with the ups and downs," says Morduch. "They're looking for things that are not so easily picked up by these kinds of studies."

Others say more studies are needed on the different types of microfinance and how it can be used in conjunction with other programs. "Microfinance is only one tool," says Donna Katzin, executive director of Shared Interest, a New York-based nonprofit that facilitates microloans in South Africa. "It's most productively used when it's combined with other strategies to build social capital as well as financial capital." For example, microfinance programs can be paired with education or health programs to achieve greater social benefits than if they focused on business alone, she adds. The studies "will really become useful to us when they help us discern which microfinance strategies have the most impact."

Waiting in line to add to the new research is Wharton business and public policy professor Santosh Anagol, who is currently planning a study that might help answer such questions. Anagol is setting up a randomized, controlled trial in Uttar Pradesh, a province in northern India, to study about 70 rural villages split into three groups. One village will receive access to microcredit, most likely through a loan officer from a for-profit microfinance institution who will visit the villages on a regular basis. The second group will receive microcredit in conjunction with some type of training program focusing on women--possibly a program about health, literacy or empowerment. The final group will receive neither service.

Anagol hopes the study will yield findings not only about the impact of microfinance on poverty but also on gender empowerment. "One of the things that both the aid community and academics are thinking about is, 'Is there a way to leverage microfinance to [promote] other types of services?'" Anagol says. The project is still in the early stages and will likely take at least three years to complete. "That's one of the weaknesses of these randomized evaluations. They do take a lot of time and resources."

Katie Torrington, who facilitates studies about the impact of microfinance on clients for Washington-based FINCA International, is looking forward to the next wave of research. She says it's probably time for the industry to step back and take a fresh look at its work after years of rapid growth. In the 1980s, simple success stories were enough to fuel the industry, and in the 1990s, the focus turned to refining financial performance standards.

The next logical step is social performance. "Now, as the industry is maturing, quite rightly we're also refining our measurement processes," she says. "This is a jumping off point, and we need to replicate studies like these in more locations. ... Every 10 years or so you want to stop doing business as usual and say, 'How are things different now?' We don't view it with fear. It's an opportunity."

Mountbatten, Bruce Lee, Energy, Success

Malaysians are energetic people.

The only problem is that the energy is not channeled constructively sometimes. More so, lately.

For those Malaysians who want to direct their energies positively, read on... As for the others, well, do what you must....

To succeed in business and in one's career, one must learn to harness one's energy and channel it carefully.

Lord Mountbatten is credited for having uttered this reply when asked about the secret of success. He said, success is 1% inspiration and 99% perspiration.

You must have a burning ambition. You must have the hunger for success. You need to have a desire, a craving for success.

For most of us there is no magic formula. Most of us don't have rich parents. Most of us don't have sincere mentors. Most of us don't have government grants.

So, we have to struggle. We have to think hard. We have to crave to learn and to improve our skills. We have to dare to take some risks.

If success is defined as opportunity meeting preparation, then, the key word is "preparation".

Preparation means having the passion to pursue the field that we want. Read everything available on the area. Study how the people who have succeeded in your chosen field made it. Learning never ends. Talk about your chosen field with passion.

Many Malaysians try to be "cool". Many of us are thin-skinned. We feel embarassed to ask seemingly stupid questions. Because of this, many Malaysians miss out on learning vital lessons.

Those of us who have had dealings with the Japanese never fail to be struck by their constant note-taking. Even the most superficial remarks uttered by us are noted down. And, take it from me, the Japanese ask the most rudimentary and most obvious questions. No embarassment. Just fact-finding.

That is a very important thing to remember on the path to success. Be prepared to ask stupid questions. That's the first step to genuine learning.

Bruce Lee said that a wise man can learn more from a foolish question than a fool can learn from a wise answer. To re-jig the Great Bruce's piece of wisdom we may say that, by asking foolish questions a fool will become wise.

Bubble warning

This is a timely warning. There is a growing discomfiture with the fact that the recent surge of economic activity throughout the world is a false dawn.

It is a false dawn simply because such economic activities are fueled by government economic stimulus packages based on fiscal deficit policies.

The question is, whether the private sector is recovering fast enough to take over the economic momentum from the governments. I suspect that in Malaysia and elsewhere, the answer would be a resounding "NO!".

Another aspect is the extremely low interest rate regime in Malaysia and elsewhere which is fueling asset bubbles. Singapore is clearly experiencing an asset bubble of sorts due to low interest rates. People will shift their savings portfolio from fixed deposits to property. Surely, that is not the type of economic activity that is sustainable. This is merely the migration of savings portfolios. It is not green shoots that are sprouting.

Malaysia, as I have said previously, is not in such a desperate situation as many more advanced economies. But, we are not in a cocoon. We are not immune. Therefore, policy makers and investors need to be extremely wary in the coming months.

Read on:

Markets are too dependent on unsustainable government stimulus. Something’s got to give...

THE effect of free money is remarkable. A year ago investors were panicking and there was talk of another Depression. Now the MSCI world index of global share prices is more than 70% higher than its low in March 2009. That’s largely thanks to interest rates of 1% or less in America, Japan, Britain and the euro zone, which have persuaded investors to take their money out of cash and to buy risky assets.

For all the panic last year, asset values never quite reached the lows that marked other bear-market bottoms, and now the rally has made several markets look pricey again.

.......

Central banks see these market rallies as a welcome side- effect of their policies. In 2008, falling markets caused a vicious circle of debt defaults and fire sales by investors, pushing asset prices down even further. The market rebound was necessary to stabilise economies last year, but now there is a danger that bubbles are being created.

.........

Aside from high asset valuations, the two classic symptoms of a bubble are rapid growth in private-sector credit and an outbreak of public enthusiasm for particular assets. There’s no sign of either of those. But the longer the world keeps its interest rates close to zero, the greater the danger that bubbles will appear—most likely in emerging markets, where growth keeps investors optimistic and currency pegs import loose monetary policy, and in commodities.

Central banks have a range of tools they can use to discourage the growth of bubbles. Forcing banks to adopt higher capital ratios may curb speculative excesses. As Ben Bernanke, chairman of the Federal Reserve, argued this week, the rise in American house prices could have been limited through better regulation of the banks. The most powerful tool, of course, is the interest rate. But central banks are wary of using it to pop bubbles because it risks crushing growth as well. And, with the world economy in its current fragile state, they are rightly unwilling to jack up interest rates now.

But even if governments judge that the risks posed by raising rates now outweighs that of keeping them low, investors still have plenty of reasons to worry. The problem for them is not just that valuations look high by historic standards. It is also that the current combination of high asset prices, low interest rates and massive fiscal deficits is unsustainable.

Interest rates will stay low only if growth remains slow. But if economies grow slowly, then profits will not rise fast enough to justify current share prices and incomes will not rise far enough to justify the prevailing level of house prices. If, on the other hand, the markets are right about the prospects for economic growth, and the current recovery is sustained, then governments will react by cutting off the supply of cheap money later this year.

It doesn’t add up

But the more immediate risks may be posed by fiscal policy. Many governments responded to the crisis by, in effect, taking the debt burden off the private sector’s balance-sheets and putting it on their own. This caused a huge gap to open up in government finances.

Ku Li: Malaysia is in need of fundamental reform

The speech delivered by Tengku Razaleigh Hamzah at the ISEAS Regional Outlook Forum 2010 at the Shangri-la Hotel, Singapore on January 7, is a good reminder of the many challenges that needs to be addressed by a responsible Malaysian leadership. I have taken the liberty to highlight in bold, the pertinent parts of the speech that resonate with me.

The centre of gravity of global economic activity has been moving eastwards towards Asia for quite some time now. The present global financial crisis has accelerated that process.

Asian economies, led by China, seek to spur domestic demand and increase intra-regional trade. As the global appetite for treasuries and US equities decreases, it is likely that large flows of risk capital will start moving to emerging markets again over the next six months. The main destinations will be India and China, but the countries of Southeast Asia are also set to benefit from these flows of global capital to the extent that they have an economic story to tell. The two top performers are going to be Indonesia and Vietnam. Indonesia, the new “i” in BRIIC, has a market-size, natural resources and liberalisation story while Vietnam has a large and industrious labour force that is skilling upwards rapidly. The Philippines and Thailand, despite political worries, remain relevant for their large domestic markets while Singapore, as the financial hub of the region, benefits from any increase in regional economic activity. This year also sees the full implementation of AFTA and the signing of more regional FTAs. We can be cautiously optimistic about the basis for growth in trade and investment.

I mentioned the major Asean countries but not Malaysia in my list of investment destinations. That is because Malaysia has fallen off the map for much foreign investment. With neither the cost and scale advantages of Vietnam and Indonesia nor the advanced capabilities of Singapore, Malaysia is firmly caught in a middle-income trap and appears to have fallen off the radar screen of foreign investors. It might seem puzzling that this country, sitting at the heart of Southeast Asia, blessed with extraordinary natural, cultural and human capital, and once a beacon in the developing world, has become irrelevant.

I want to discuss how this happened, and reflect on what this story might teach about larger issues of common concern. Other members of Asean might be concerned that a country that was once at the forefront in spearheading regional initiatives is at a crossroads over its own future.

The general election of March 2008 was a watershed in Malaysian politics. The ruling Barisan Nasional coalition lost its accustomed two-thirds majority in the Parliament, and lost five states to the opposition, including the economic backbone states of Selangor, Perak and Penang. Compared to the ebb and flow of power in other parliamentary democracies, you might not find this a remarkable development. Against the backdrop of Malaysia’s political history, however, the entire political landscape had changed overnight. Gone was the invincibility of Umno, the Malay-based party that has dominated Malaysian politics since independence. The political credibility of Umno/BN had been more than just a set of racially-based political parties. Over its decades of ascendancy, history had been re-written, mythology created, and the party abolished and reinvented to reinforce the necessity and inevitability of a government led by Umno.

The formula of communal power-sharing that the Barisan Nasional and its predecessor were built on had started life as a political accommodation, a nation-building compromise, a way-station on the road to a fuller union of our citizens. Fifty years later it had ossified into the appearance of an eternal racial contract, a model replicated at every level of national life. The election results plunged this model, and the regime built upon it, into crisis.

The people are often ahead of their government. They are interested in more things than identity politics. Unable to respond to the reality that the BN formula is broken and the people want more than ethno-religious politics, the ruling party appears to be reacting by digging itself deeper into narrow racial causes with no future in them. This desperate response is self-defeating in a cumulative way. As Umno is rejected by the voters, party members pursue racial issues more stridently. They think this will shore up their “base”. They are mistaken about the nature of that base. As they do so, they become more extreme and out of touch with ordinary voters of every race and religion whose major concerns are not racial or religious identity but matters such as corruption, security, the economy and education.

Umno’s position in the present controversy over the use of the term “Allah” by non-Muslims is an example. In a milestone moment, PAS, the Islamic party, is holding onto the more plural and moderate position while Umno is digging itself into an intolerant hardline position that has no parallel that I know of in the Muslim world. Umno is fanning communal sentiment, and the government it leads is taking up policy lines based on “sensitivities” rather than principle. The issue appears to be more about racial sentiment than religious, let alone constitutional principles.

In a complex multiracial society a party and a government whose primary response to a public issue is sunk in the elastic goo of “sensitivities” rather than founded on principle, drawn from sentiment rather than from the Constitution, is already short of leadership and moral fibre. Public life is about behaving and choosing on principle rather than sentiment. Islam, in particular, demands that our actions be guided by an absolute commitment to justice for all rather than by looking inward at vague “sensitivities” of particular groups, however politically significant. It is about doing what is right rather than protecting arbitrary feelings. If feelings diverge from what is right and just, then it’s time to show some leadership.

“Sensitivities” is the favoured resort of the gutter politician. With it he raises a mob, fans its resentment and helps it discover a growing list of other sensitivities. This is a road to ruin. A nation is made up of citizens bound by a shared conception of justice and not of mobs extracting satisfaction for politicised emotional states.

As a mark of our decline, at some point in our recent history the government itself began to speak the language of sensitivities. In the controversy over whether Christians are allowed to use the term “Allah” the government talks about managing sentiment when it should be talking about what is the right thing to do. This is what government sounds like when a political system and its leadership have come unstuck from the rule of law. It goes from issue to issue, hostage to the brinksmanship of sensitivities. Small matters threaten to erupt into racial conflict. The government of a multiracial society that cannot rise above sentiment is clearly too weak or too self-interested to hold the country together. It has lost credibility and legitimacy. The regime is in crisis.

The deterioration of our political order did not happen overnight or in isolation. It is part of a more general pattern of the decline of democracy and the rule of law in many newer democracies. Many post-colonial societies that began with democratic institutions saw democracy collapse afterwards into dictatorship. I can think of Nigeria, Pakistan and Kenya, for example. What has not been said is that underneath the appearance of continuity, and over two decades, Malaysia has quietly undergone the same process. There has been, beneath the surface, a decisive rupture with the federal, constitutional and democratic system upon which we were founded, and which alone confers legitimacy. What replaced it was an authoritarianism based on personality. Policy was set according to personal whims of the leader, which is to say that in areas such as the economy and foreign affairs, the country was run according to the personal enthusiasms and pet peeves of individual leaders.

Power was consolidated and constitutional government turned back. The result was a recession to authoritarianism and the centralisation of power, abetted by the corruption of the ruling party. The ideology of the ruling party, which had combined Malay nationalism with an overriding national concern, was vulgarised into an easily manipulated politics of group resentment.

Umno started in 1946 as a grassroots-based party that commanded the idealism of my generation. After 1987 it was transformed into a top-down patronage machine. Party membership became a ticket to personal gain. The party attracted opportunists and ne’er do wells while good people stayed away in droves. For any organisation this is a death spiral.

The challenge of Umno and of Malaysia today is not simply reform but restoration, not simply democratisation but re-democratisation. This is because we are not building from scratch but trying to recover from the decline of once-excellent core institutions.

There are regional implications to Malaysia’s crisis. The formation of the Federation of Malaysia in 1963 precipitated a regional conflict to which, in part, the formation of Asean in 1967 was meant to be a solution. Now in a clear sign of the erosion of the rule of law, agreements that structured state-federal relations over matters such as the distribution of the petroleum revenue are casually ignored. Malaysia is a federation of sovereign entities, but one of the consequences of authoritarianism has been that it has come to be run habitually as a unitary state. We have to learn again how to be a federation.

Let me try to draw some conclusions:

Shortcuts in governance may appear to work for awhile, but they wreak long-term havoc on the institutional capability of a nation. Short-term boosts to the economy are difficult to evaluate when 40 per cent of the national budget come from a single source which does not report financial details either to the public or to Parliament.

What is clear is that there is no secure basis for long-term growth without a return to strong institutions, transparency and good government. The challenges of economic development, nation-building and institutional integrity are linked, more so in a complex country like Malaysia.

The success of Asean collaborative measures depends on the core countries taking a lead, and it is in everyone’s interest that these countries have strong democratic institutions and the rule of law. When countries lack good governance and transparency, domestic economies falter, domestic politics goes from crisis to crisis, and the country turns inwards and away from engaging constructively with the real world and with their neighbours.

The economic success of Asean economies up to the Nineties was based in part on the superiority of their institutional frameworks to those of Eastern Europe and South America. In the early days, Malaysia and Singapore played leading roles in Asean. Of late, Malaysia’s role has diminished, while that of Indonesia has grown. It is no accident that this is the result of successful reform and democratisation in Indonesia and the failure so far of any such process in Malaysia. Over the longer term, reform and democratisation must go hand in hand for there to be sustained economic development.

The present Prime Minister has made some helpful gestures towards liberalising the economy and pursuing more multiracial policies. These initiatives, however, must do more than skim the surface of what must be done. Malaysia is in need of fundamental reform. The reforms we need include, at minimum:

a. An overhaul of the party system which rules out racially exclusive parties from facing directly contesting elections. This will inaugurate a new era of post-racial politics.

b. The restoration of the independence of the judiciary and the freedom of the media.

c. An all-out war on corruption, the root of all the evils in nation-building and economic development.

The greater economic collaboration we aspire to in Asean requires that we pay attention to the internal conditions in each country that make it possible. We need to place the promotion of governance and institutional reform on the Asean agenda. I hope this is a matter you see fit to take up.

Rukunegara

The Rukunegara proclamation was made by the DYMM Yang Di Pertuan Agong in 1970 and it reads as follows:-

Our nation, MALAYSIA, being dedicated to achieving a greater unity of all her peoples;

• to maintaining a democratic way of life;

• to creating a just society in which the wealth of the nation shall be equitably shared;

• to ensuring a liberal approach to her rich and diverse cultural traditions;

• to building a progressive society which shall be oriented to modern science and technology;

WE, her peoples, pledge our united efforts to attain these ends guided by these principles-

• BELIEF IN GOD

• LOYALTY TO THE KING

• UPHOLDING THE CONSTITUTION

• RULE OF LAW

• GOOD BEHAVIOUR AND MORALITY.

BAHAWASANYA NEGARA KITA MALAYSIA mendukung cita-cita hendak :

• mencapai perpaduan yang lebih erat di kalangan seluruh masyarakatnya ;
• memelihara satu cara hidup demokratik ;
• mencipta satu masyarakat adil di mana kemakmuran Negara akan dapat dinikmati bersama secara adil dan saksama ;
• menjamin satu cara liberal terhadap tradisi-tradisi kebudayaannya yang kaya dan berbagai corak ; dan
• membina satu masyarakat progresif yang akan menggunakan sains dan teknologi moden.

MAKA KAMI, rakyat Malaysia, berikrar akan menumpukan seluruh tenaga dan usaha kami untuk mencapai cita-cita tersebut berdasarkan atas prinsip-prinsip yang berikut :

• KEPERCAYAAN KEPADA TUHAN
• KESETIAAN KEPADA RAJA DAN NEGARA
• KELUHURAN PERLEMBAGAAN
• KEDAULATAN UNDANG-UNDANG
• KESOPANAN DAN KESUSILAAN

The Rukunegara was accompanied by the following commentary that explained the 5 principles:-

Islam is the official religion of the Federation. Other religions and beliefs may be practiced in peace and harmony and there shall be no discrimination against any citizen on the ground of religion.

The loyalty that is expected of every citizen is that he must be faithful and bear true allegiance to the King.

It is the duty of every citizen to respect and appreciate the letter, the spirit and the historical background of the Constitution.

This historical background led to such provisions as those regarding the position of the Rulers, the position of Islam as the official religion, the position of the Malays and other Natives, the legitimate interests of the other communities, and the conferment of citizenship. It is the sacred duty of a citizen to defend and uphold the Constitution.

Justice is founded upon the rule of law. Every citizen is equal before the law. Fundamental liberties are guaranteed to all citizens. These include liberty of the person, equal protection of the law, freedom of religion, rights to property and protection against banishment. The Constitution confers on a citizen the right of free speech, assembly and association and this right may be enjoyed freely subject only to limitations imposed by law.

Individuals and groups shall conduct their affairs in such a manner as not to violate any of the accepted canons of behaviour which is arrogant or offensive to the sensitivities of any group. No citizen should question the loyalty of another citizen on the ground that he belongs to a particular community.

Man Utd 0 - 1 Leeds United

League One leaders Leeds United caused the biggest shock of the FA Cup third round by beating Manchester United 1-0 at Old Trafford.

Jermaine Beckford's winner gave League One leaders Leeds a famous FA Cup victory over their fierce rivals Manchester United in a thrilling tie at Old Trafford.

Forty-two league places separate the two clubs following the Yorkshire club's dramatic fall from grace during the last decade but Simon Grayson's side showed the rate of their recent revival with a memorable triumph.

Man Utd had never before lost in the third round of the Cup - or been knocked out of it by a lower-division side - during Sir Alex Ferguson's 23-year reign as manager - but they began 2010 on the wrong end of their biggest upset in this competition since they were dumped out by Bournemouth in 1984.

It was a fully-deserved win for Leeds too, who were full of endeavour coming forward before Beckford outpaced the Man Utd defence to score and, just as importantly, defended as if their lives depended on it afterwards.

Grayson's men came into the game unbeaten in 15 games and having lost only twice all season but they were still expected to be brushed aside by the Premier League side, who themselves have found form since their defensive injury crisis abated.

True, Ferguson made seven changes to the side that thumped Wigan earlier in the week, but he kept Dimitar Berbatov and Wayne Rooney together up front and Man Utd should have had far too much fire-power for the visitors to handle.

Instead, roared on by 9,000 fanatical supporters, Leeds set about by first frustrating the hosts and then taking the game to them.

Man Utd had most of the early possession but Leeds were not panicking when they did get the ball, and stunned the home crowd when they took the lead after 19 minutes.

Beckford escaped Wes Brown to latch onto Johnny Howson's superb lofted pass and, although his first touch was poor, he recovered to coolly slide the ball past Tomas Kuszczak and into the bottom corner of the net.

It was the kind of finish which showed why Beckford is one of the most sought-after strikers outside the top-flight and might mean Newcastle have to spend a little more than they hoped if they are to prise him away from Elland Road in the transfer window.

It almost got even better for Leeds two minutes later when the impressive Howson broke forward down the right and sent over an inviting cross that Luciano Becchio headed wide.

Only then did Man Utd come forward with intent and they came agonisingly close to levelling when Berbatov released Rooney down the right. The England striker made for goal and clipped his shot over keeper Casper Ankergren but Jason Crowe got back superbly to hack the ball off the line.

Rooney and Danny Welbeck both tried their luck with curling shots from the edge of the box that were both just off target and Jonny Evans headed wide after Ankergren flapped at a corner but otherwise the home side were unable to break down Leeds' determined defence.

The game continued in the same vein after the break, with Man Utd pressing but struggling to create clear-cut chances and Ankergren proving a reliable last line of defence when the home side did get a sight of goal.

He saved brilliantly from Welbeck but otherwise they failed to really threaten an equaliser until the final half-hour.

By then, Antonio Valencia and Ryan Giggs were off the bench - soon to be joined by Michael Owen - and at last Man Utd looked dangerous, only to be thwarted by some dreadful finishing.

Owen miscued with the goal gaping after Valencia teed him up and Rooney was also wildly off target when the ball fell to him in the box.

Leeds were not just defending either, and could have extended their lead before the end when Beckford fired wide after running through and substitute Robert Snodgrass smashed a rasping free-kick against the bar.

In the end, however, one goal was enough to send Leeds through to round four and show why Grayson is rated one the most promising young managers in the game.

To paraphrase Alexander Pope; Hope does spring eternal.

Iconic sites and profitability

Chris Boyd of Regroup is quoted as saying, “I like the idea of iconic sites because they give identity to the country. While they instill some civic pride, they are hard to justify on commercial terms. The office market in Malaysia has traditionally been inexpensive compared with other countries in the region and we may never see the rentals enjoyed by Singapore. It is hard to make iconic buildings work financially. They are there for other reasons.”

This is an excellent example of how to speak your mind and, still survive, in a place that is filled with touchy people who like to spend other people's money to build dubious (or, should it be "Dubai-esque"?) iconic buildings.

Leeds vs Manchester United

Sourced from here:

Tomorrow, the most eye-catching tie in the third round of the FA Cup will see old enemies Manchester United and Leeds United go head to head for the first time in nearly six years.

Back then, in February 2004, Leeds earned a 1-1 draw at Old Trafford thanks to a goal from Alan Smith — but the club was falling apart at the seams. A sustained bout of extravagant spending on expensive, high-earning players such as Robbie Keane, Rio Ferdinand, Mark Viduka and Olivier Dacourt had taken them to the semi-finals of the Champions League (in 2001), but also created a financial timebomb that was in the midst of exploding.

pix from here.

Leeds chairman Peter Ridsdale and manager David O’Leary had been gambling money they didn’t have in an over-ambitious attempt to become regular Champions League contestants and thereby earn back the money they had already spent. When those heady levels of success proved elusive, they were stuck with a debt mountain that nobody was in a position to pay off.

Players were sold in a desperate attempt to balance the books, leaving an inexperienced squad with insufficient quality to compete in the Premier League, never mind on the European stage. With Ridsdale, O’Leary and their superstar signings long since departed, Leeds were relegated in May 2004. But the financial scars remained and they continued to spend beyond their means. Three years later, they were relegated again, placed into administration and very nearly ceased to exist.

Now, it seems Leeds are making strides on the long road back to regaining the top-flight status they have enjoyed for the vast majority of their history. With their debts finally paid off (or waived), they’re currently eight points clear at the top of League One, promotion to the second tier looking almost certain. But there’s still a long way to go before former glories are restored, if they ever are.

Leeds’ descent and fall was so spectacular that you’d expect it to serve as a cautionary example for other ambitious clubs — a kind of textbook on how not to run a Premier League football club. But it hasn’t. Their tale of woe is far from solitary, and it seems inevitable that other clubs will continue to follow them all too eagerly down the fast-lane motorway to ruin.

Southampton, for example, spent 27 consecutive seasons in the top flight before getting too big for their boots, deciding they could become a top-six club and spending accordingly. One bad season was enough to relegate them in 2005, a year after Leeds, and they’re now in the middle reaches of League One after narrowly fighting off extinction in the summer.

A few miles along the south coast, Portsmouth’s situation looks even more perilous. Years of unsustainable investment brought the short-term glory of winning the FA Cup in 2008 but the long-term damage of massive debts and no way of paying them.

Having been forced to sell all their best players (Peter Crouch, Jermain Defoe, Glen Johnson and Nico Kranjcar, to name but four), Pompey are currently firmly rooted to bottom place in the Premier League, forbidden from conducting any transfers until debts from previous purchases are paid off, have just failed to pay their players on time for the third time in four months, and have been given a winding-up order over unpaid tax bills. Did they learn nothing from Leeds?

West Ham will be looking forward to tomorrow’s cup tie with Arsenal as an opportunity to cause an upset, but they’re not too far behind Portsmouth on the road to oblivion. The story is familiar –—over-investment in average players (£80,000 (RM440,000) per week for Lucas Neill?!), unsustainable spending, then panic selling of key assets, leading to an uncompetitive squad and the threat of relegation. If West Ham are relegated at the end of the season, they could become another Leeds.

These financial implosions will continue to unfold as long as the Premier League remains the unregulated free-market scramble for success that it is today. With no central controls on spending, clubs are left to make their own decisions about how and where they invest, leaving directors and managers free to chase their unrealistic ambitions and bring their clubs to the verge of meltdown.

When they watch Leeds taking on the champions at Old Trafford tomorrow, everybody connected with a professional football club in England should realise how far and how easily the mighty can fall if financial mismanagement is allowed to take control. They should see a club that was once regarded as one of the game’s powerhouses now reduced to enjoying an occasional day in the sun for a cup tie that has little meaning for their opponents. They should understand that splurging vast sums of borrowed money in the pursuit of success is not the wisest strategy. They should, but they won’t.

Malaysia's innovation challenge: New sources of rubber

I wish everyone a Happy 2010. May all good things come true and be achieved by you.

Malaysia has laid claim to being a world leader and pioneer in the rubber industry for more than a century. In spite of revisionist attempts, the incontrovertible fact is that H.N. Ridley and the British colonialists brought some economic advantage to us.

That said, in recent decades Malaysia appears to have decided to let go of one of our great products in becoming obsessed with industrialisation at the expense of channeling our resources to sustain research on rubber. We have permitted Thailand and Indonesia to grow rubber with hardly any active involvement. So, we let our upstream leadership go. Fair enough. But, why let our downstream world leadership of rubber research go? We have lost the lead to the petro-based industries that has been doggedly trying to completely replace natural rubber with petro-based synthetic rubber. Our only saving grace is that there are many, many things that synthetic rubber can't do, especially in high temperatures, since its compounds start disintegrating.

Here is a reminder that natural rubber is a valuable resource that Malaysia can still innovate and claim leadership to. All the talk about innovation rings hollow if insufficient focus is placed on rubber research. Rubber research was one of Malaysia's great innovative efforts.

The article that I am reproducing below is a reminder that this industry is still invaluable. Otherwise, the type of research reported below would not be taking place. 2010 should be more than a Year of Innovation for Malaysia, it should be a Year of Rubber Innovation:

OTHER than being an ingredient of the more recherché sorts of salad, herbal tea or wine, dandelions are pretty useless plants. Or, at least, they were. But one species, a Russian variety called Taraxacum kok-saghyz (TKS), may yet make the big time. It produces molecules of rubber in its sap and if two research programmes, one going on in Germany and one in America, come to fruition, it could supplement—or even replace—the traditional rubber tree, Hevea brasiliensis.

Despite the invention of synthetic rubbers, there is often no good substitute for the real thing, for nothing artificial yet matches natural rubber’s resilience and strength. This is because natural-rubber molecules, the product of a stepwise synthesis by enzymes, have a more regular structure than the artificial ones made by chemical engineering. Around a fifth of an average car tyre is therefore made of natural rubber. In an aeroplane tyre that figure can be more than four-fifths. Moreover, the price of synthetic rubber is tied to that of the oil from which it is made, rendering it vulnerable to changes in the oil price. Because oil is likely to become more costly in the future, natural rubber looks an attractive alternative from an economic point of view as well as an engineering one.

Natural rubber has problems, though. Growing Hevea in the Americas is hard. A disease called leaf blight means the trees have to be spaced widely. Even in Asia, currently blight-free, planting new rubber trees often means cutting down rainforest, to general disapproval. And trees, being large, take time to grow to the point where they can yield a crop. A smaller plant that could be harvested for its rubber therefore has obvious appeal. One proposal is to use guayule, a shrub that grows in arid regions and produces rubber that is free from allergenic proteins, which makes it useful for items such as surgical gloves. Desert plants, however, tend to be slow growing—guayule takes two years to mature. Yulex, a firm that has commercialised guayule, gets an annual crop of 400 kilograms per hectare. Hevea can yield four or five times that figure. Which is where TKS could come in. Dandelions are regarded as weeds for a reason—they are robust, fast-growing plants that can be pulled up for processing and resown easily, possibly yielding two harvests a year. If they could be turned into usable crops, they could outstrip even Hevea.

To this end, Christian Schulze Gronover of the Fraunhofer Institute for Molecular Biology and Applied Ecology in Aachen, Germany, and his colleagues have identified the genes that allow TKS to produce usable rubber. In particular, they have discovered an enzyme called polyphenoloxidase that is responsible for making its rubbery sap coagulate.

From the plant’s point of view this coagulation is a good thing. The evolutionary purpose of rubber, and the reason why it has appeared independently in plants as diverse as trees, guayule and dandelions, is that it gums up the mouthparts of herbivorous insects. Human users, however, do not want it to coagulate too soon, and Dr Schulze Gronover has found a way to switch polyphenoloxidase off, using a technique called RNA interference. This intercepts and destroys the molecular messengers that carry instructions from the polyphenoloxidase gene to make the enzyme, meaning that rubber can be extracted more easily from the plant.

Meanwhile, in America Matthew Kleinhenz of Ohio State University is working on increasing the yield of rubber from TKS. Dr Kleinhenz is doing things the old-fashioned way, growing different strains of TKS, grinding up the roots (where most of the sap is found) to see which have the highest rubber content, and crossbreeding the winners. His aim is to create a plant that is both high-yielding and has roots chunky enough to be harvested mechanically by the sort of device now used to pick carrots.

Combining the two approaches—high-tech bioengineering and low-tech plant breeding—may produce that rarity in the modern world, a whole new crop species. It would also mark a step on a journey that some see as the way forward: a return to the use of plant-based products that have, briefly, been overshadowed by the transient availability of cheap oil.

Risk Management: Dubai Crisis, a Test of Law and Islamic Banking

The Dubai financial crisis is throwing up very crucial legal issues involving Islamic financing instruments. Malaysia, being a pioneer in the field of Islamic finance, is a stakeholder in the unfolding drama of legal entanglements that will have a very direct bearing on the entire industry. Malaysia will do well to hold informal "watching briefs" over this matter.

If they aren't already doing so, agencies like Bank Negara, MOF and MITI should be scrambling to get some advanced intelligence on the unfolding drama and start working with private sector Malaysian Islamic finance institutions to anticipate the legal issues that may start to question the entire jurisprudential basis that underpins and buttresses Islamic finance.

As the acknowledged global leader of Islamic finance, Malaysia needs to get ready to lead.

Read the advance portent here:

The debt crisis in Dubai is about to test one of the fastest-growing areas in banking — Islamic finance — and put the emirate’s own opaque judicial system on trial, according to bankers and experts in finance, The New York Times’s Heather Timmons reports.

Issuance of loans and bonds that comply with Shariah, or Islamic law, has skyrocketed in recent years, as oil-rich Middle East nations ramped up spending and the global credit crunch led debt investors into emerging markets.

But the unique terms of these instruments, which technically make lenders partners with borrowers, have never been tested in a downturn.

“There have been very few major defaults in this market,” said Zaher Barakat, a professor of Islamic finance at the Cass Business School in London. There are no consistent rules about who gets paid back first if a company defaults on Shariah-compliant debt, he said.

The Dubai government announced last week that it was asking creditors of Dubai World, the emirate’s flagship conglomerate, to grant a delay of up to six months on payments of Dubai World’s $59 billion in debt. The announcement took world markets by surprise and led briefly to fears of a ripple effect into other emerging markets.

Bankers and analysts estimate that 10 percent of Dubai’s $80 billion debt load complies with Shariah, which prohibits lenders from earning interest.

Most urgent, the $3.5 billion bond owed by Dubai World’s real estate subsidiary, Nakheel, is a Shariah-compliant bond. Nakheel is due to pay the bond back on Dec. 14. If it does not make the payment, it will be in default, which traditionally kicks off legal proceedings against a borrower. But no one really knows what could happen next.

Lawyers and bankers who helped to issue some of Dubai’s Shariah-complaint debt declined to be interviewed for this article and spoke only on condition that they not be identified. Most of Dubai’s government offices are closed until Thursday for the Id al-Adha holiday.

“No one has tested the legal system or the documentation,” said one lawyer who formerly was a top executive at a Dubai company.

Holders of Nakheel bonds probably “are going to argue that they are in the secured position on the underlying asset,” said one bank investor, who did not want to be identified. That means that bondholders could insist on being repaid before bank lenders, who traditionally would come first in a bankruptcy.

Abdulrahman al-Saleh, director general of Dubai’s Finance Department, said Monday that Dubai World was not guaranteed by the government, and the creditors would need to “bear some of the responsibility” for the company’s debt.

The Nakheel bond’s prospectus does not provide much clarity. In the case of a bankruptcy by Dubai World or Nakheel, bondholders have no guarantee of “repayment of their claims in full or at all,” the 237-page prospectus says in its section on risks. Under Dubai law, it says, no debt owed by the ruler or government can be recovered by taking possession of the government’s assets.

Bloomberg News reported Monday that Nakheel bondholders have formed a creditor group that represents more than 25 percent of the debt due Dec. 14, according to Ashurst, a London law firm that has been appointed legal adviser. The group is in the “process of considering its options,” Jo Shepherd, a spokeswoman for Ashurst, told Bloomberg News.

Global issuance of Shariah-compliant bonds and loans grew 40 percent in the first 10 months of 2009 from a year earlier, according to Moody’s Investors Services. The total amount of Shariah-compliant debt outstanding is estimated at about $1 trillion, more than doubling in 10 years.

The surge in Islamic finance has spawned hiring sprees at banks, a series of new financial indicators like the Dow Jones Islamic market index, and filled classrooms at schools that teach bankers how to structure these loans and bonds.

Hoping to appeal the Middle East’s huge sovereign wealth funds, even non-Islamic institutions have started to raise money using Islamic finance. In October, the British Treasury released regulatory guidance that analysts say will allow Britain to issue Shariah-compliant government debt in the near future. The same month, the World Bank became the first non-Islamic entity to issue Shariah-compliant bonds with a $100 million deal.

While Malaysia was traditionally the hub of Islamic finance, much of this new activity has been centered on Dubai, and foreign and local law firms and banks there helped the emirate raise much of its debt. Dubai even has a school that promises to turn students into trademarked “C.I.F.E.’s,” or “Certified Islamic Finance Executives.”

The uncertainty hanging over the Nakheel bond is exacerbated by the fact that Dubai’s courts have never handled a major bankruptcy of one of the government’s own companies. Unlike most of the other seven emirates, Dubai maintains a judiciary system that is separate from the United Arab Emirates Federal Judiciary Authority. The decisions of the Dubai courts, which are controlled by the emirate’s ruling family, can be fickle, say lawyers in the region.

Most important, in order to bring a court case against a government-owned or government-run entity, a corporation or individual needs to get permission — from the government.

The risk section of the Nakheel prospectus offers scant guidance here, as well. “Judicial precedents in Dubai have no binding effect on subsequent decisions,” it says, and court decision in Dubai are “generally not recorded.”

Perhaps unnecessarily, the document adds, “These factors create greater judicial uncertainty.”

MERRY CHRISTMAS

A MERRY CHRISTMAS TO ALL

PIX FROM HERE.

The Case Against 'Avatar'

I found Reihan Salam's piece amusing and interesting. He argues against the premise of James Cameron's sublime and epochal 3D movie (it has to be watched in 3D to be fully appreciated) Avatar.

Avatar's premise is pro-naturalism and, it does highlight the perils of modern-day business paradigms that are obsessed with profits. This seems to have found dissonance with Mr Salam and, prompted him to write an interesting piece...at the risk of receiving a Na'vi arrow where it hurts:

pix from here.

For the last 200 years, humans have grown taller, stronger and healthier. This progress has been fastest in the countries that gave rise to the Industrial Revolution, yet it has spread throughout the world, sparking a transformation that economists Robert Fogel and Dora Costa call techno-physio evolution, "a synergism between technological and physiological improvements that is biological, but not genetic, rapid, culturally transmitted, and not necessarily stable."

After thousands of years of ignorance and stagnation, a kind of miracle happened that radically transformed humanity's relationship to the wider world. This explosion of wealth has been periodically interrupted by war and famine, yet it has never been fully undone. And though it has involved serious downsides, the prospect of returning to a primeval state strikes most of us as insane. Modern life can be exhausting and even demeaning. It is, however, preferable to spending most of one's waking moments foraging and hunting in a desperate struggle for survival.

Or is it? That is the question James Cameron asks in his brilliant science-fiction epic Avatar. The villains of Avatar are, well, you and me. Rapacious humans from an environmentally devastated Earth have arrived on an alien moon called Pandora in search of a precious resource called "unobtainium." The only hiccup is that the richest source of unobtainium lies beneath the habitat of the Na'vi, a race of long-limbed humanoids who live in blissful harmony with their environment. So naturally the humans, being ruthless and acquisitive by nature, decide that corporate profits matter more than the lives of the Na'vi, and they launch a brutal military assault that, as you can no doubt guess, ends in tragedy. Throughout the film, the Na'vi are portrayed as superior to the humans. The irony of Avatar is that Cameron has made a dazzling, gorgeous indictment of the kind of society that produces James Camerons.

Though the Na'vi are at least as intelligent as the humans, they have not built a technologically advanced civilization. Rather, they rely on the forest in which they live to provide them with sustenance and mental stimulation. Vicious predators constantly engage the senses, so there is little time to, say, write novels or play videogames. All flora and fauna are linked together in a shared consciousness that tribal leaders can access through concentration and chant. The only Na'vi we ever meet are part of this ruling caste, and so we have no sense of what keeps the Na'vi masses occupied. One has to assume that they live in a constant state of trembling awe at the beautiful world that surrounds them.

At the risk of sounding needlessly negative, I'm pretty sure that I'd prefer baking bricks in the hot sun, guzzling motor oil, or jumping rope with barbed wire to spending an afternoon living among the Na'vi, perhaps the most sanctimonious and frankly boring humanoids ever portrayed on film. But the Na'vi are actually worse than just boring. Because the struggle for survival is the only source of meaning in their lives, the Na'vi celebrate physical courage and martial valor above all else, with the possible exception of mastering the admittedly cool ability of talking to trees.

In a sense, capitalism is the villain of Avatar. Yet what Cameron fails to understand is that capitalism represents a far more noble and heroic way of life than that led by the Na'vi. As Abraham Lincoln noted in 1858, the unique thing about the industrial revolution wasn't that humans invented steam-power and other ingenious inventions. In fact, a steam engine was manufactured in ancient Alexandria without ever being used. But that society didn't value the invention and spread of labor-saving devices. Instead, it valued physical courage and martial valor. The truly revolutionary thing about the industrial revolution was the rise of entrepreneurship. An entrepreneurial society doesn't value the ability to murder mammoths or members of the neighboring tribe above all else. It values the ability to develop useful ideas and devices and practices that had never been seen before.

Malaysia beats Vietnam 1-0 in final

SYABAS MALAYSIA! SYABAS RAJAGOPAL! This is pretty much the same team that gave Manchester United a scare when they visited Malaysia only a few months ago. Here's the report:

Malaysia finally ended its 20-year gold drought in the SEA Games men’s football competition, when it defeated Vietnam 1-0 in the final played at the Main Stadium of the National Sports Complex in Vientiane on Thursday.

The National Under-23 boys, who came here as non-medal prospects, pulled off one of the biggest upsets of the Games to win the gold.

Malaysia last won the football gold in the Kuala Lumpur SEA Games in 1989, with a 1-0 victory over Singapore.

Vietnam's Mai Xuan Hop (right) weeps as the Malaysians celebrate their 1-0 victory in the Laos SEA Games football final. Mai's own goal proved to be the 'decisive winner' for the Malaysians. - AP Photo

The ‘winner’ came courtesy of an own goal by Vietnam’s Mai Xuan Hop’s in the 84th minute of a toughly-fought final. The football gold medal was also Malaysia’s 40th gold medal in Vientiane.

The victory was all the more sweeter as the Malaysians had lost 1-3 to Vietnam in a group match on Dec 6.

Earlier, the young Malaysians had knocked out defending champions Thailand 2-1 in the group stage to win a place in the semi-finals.

Then in the last four, they downed Laos 3-1 in front of a sell-out 20,000 fans.

The myth of homogenous ethnic Malaysians: The case of Chinese Malaysians

An interesting analysis has been done by Rita Sim, the Deputy Chairman if MCA's think-tank, INSAP, in a piece entitled, Untangling complexities of Chinese community where she proposed a framework of segmenting the Chinese Malaysian community into the following categories:

A proposed framework for segmenting the Chinese community is the "G1, G2, and G3" model. The majority can be identified as "G1s". They identify readily with traditional ideas of ethnic Chinese culture, language and expression. This group wholeheartedly supports Chinese media and schools. The existence of Huazong, Dong Zong, and other organisations -- including the MCA -- depends very much on the G1s.

The "G2s" are English-educated Chinese. Predominantly, if not exclusively, middle-class and urban, they identify more with specific civil society issues and are more likely to forge alliances with like-minded individuals or groups (church groups, for example, or Lions or Rotary Clubs) than with any of the traditional Chinese associations.

The "G3s" exist between these two groups in an overlap. G3 Chinese are those who, through language or work, have moved from one group to the other and survived, and perhaps even thrived.

The G2s and G3s are unlikely to associate themselves with any "Chinese" platforms at all, and may move in circles that are markedly multiracial as a factor of class and education. They are unrepresented politically by the MCA, as traditional communal dynamics cannot appeal to them.

This approach has been critically examined by Dr Daphne Loke in a 3-part series in the Malaysian Mirror.

Part 1: Political representation in M'sia

Part 2: Public issues and political actors

Part 3: Political representation in M'sia

The issue, essentially, involves the process in which one Malaysian community, the Chinese Malaysians, have sought channels through which their voices and aspirations may be heard.

The interesting insight offered in the above analyses is that formal political parties, be they BN or Pakatan, are a mere fraction of the channels through which Chinese Malaysian communities have used and, are using.

This should serve as a stern reminder to political leaders of all shades that like the Indian community, the Kadazans, Dayaks and other Malaysian communities, the Chinese Malaysian community is NOT homogenous in spite of all the racial stereotyping and profiling that political leaders often descend into. In the process of politicking and policy-making, the politcal players will find that the various Malaysian communities will defy ethnic and racial profiling and classification.

Malaysian political parties of all shades need to understand that the way forward is very likely to be that of preparing programmes that appeal to various Malaysian communities NOT on the basis of ethnicity but more relevant categories such as demographics, income-level, education and geography.

Failure to adjust to this reality will result in outright failure.

Malaysia, My Home

Only last night did I become aware of the 38-year old Malaysian film producer and director Wong Kew-Lit. It was through stumbling across the re-showing of the second episode of Wong's current effot, a 13-episode series called Malaysia, My Home: The Story of Sabah and Sarawak (YouTube ad only) shown in Astro's AEC Channel.

If you care to check out the Malaysia, My Home Facebook, you will find a robust chatter and following which points to the fact that good local documentaries may have a ready market.

This particular series is a socio-anthropological perspective of the experiences of the Chinese Malaysian community in Sabah and Sarawak. It promises to be a nostalgic journey for Sarawakians and Sabahans and, an informative one for the rest.

I have just discovered that the programme guide for further episodes in the series are available at Astro TV Guide. Anyway, episode three at 9 p.m. 13th December 2009 on AEC Channel 301 will apparently focus on the fishing community at Sungai Apong and Bintawa in Kuching which primarily involves the Heng Hua community.

pix from here.

Wong is an award-winning documentarist and, his body of work includes:

Year	Title	Chinese Title
1999	Momentum
2000/01	Momentum II
2001	Jejak Warisan	《文明的足迹》
2002/04	Homecoming I & II	《己子当归》
2004	3 in a Company	《听君一席话》
2005	Malaysia My Home	《家在马来西亚I》
	The Pig Commandments	《豕戒》
2006	Malaysia My Home 2	《家在马来西亚II》
2006/07	Rhythm of Vibration	《双城变奏》
	Sea Providence	《热浪岛》
2007	My Roots	《扎根》
	Malaysian Movers	《风云人物》
2008	My Malaysia	《活在我乡》
	Dynamic Malaysia	《前进吧•马来西亚》
	Living in Malaysia	《身在马来西亚》
2009	Earnest Cultivation Yields Fruitful Harvests	《生耕致富》
	My New Village Stories	《我来自新村》
	Malaysia My Home • Story of Sabah & Sarawak	《家在马来西亚》沙巴与砂拉越华人故事

I was also impressed with his interview with Berita Harian about the process of producing a documentary which I am reproducing in full here courtesy of filemkita.com:

Penerbitan dokumentari negara ada potensi

Temubual oleh: Suzan Ahmad
Sedar atau tidak, program televisyen berbentuk dokumentari semakin mendapat tempat di hati penonton tanah air. Ini menjadikan penerbit program tempatan lebih berani menerbitkan program berbentuk demikian. Rancangan terbitan TV3 berjudul Jurnal Alam misalnya antara jenama tempatan yang boleh dibanggakan. Berikutan saingan program dokumentari terkemuka antarabangsa mendorong anak tempatan, Wong Kew Lit, mengambil inisiatif menerbitkan sebuah dokumentari berjudul Momentum. Ditayangkan di saluran Astro Ria, Momentum mengupas segala cubaan, dugaan, halangan serta kejayaan di samping penjelajahan saintifik dan kajian oleh saintis serta pakar tempatan mencakupi pelbagai bidang di tanah air. Wong graduan Universiti Malaya (UM) dalam bidang perfileman memperjelaskan aplikasi teknik-teknik produksi dalam pembikinan Momentum di samping memberikan pandangannya terhadap jurang yang wujud di antara rancangan dokumentari terbitan tempatan dengan produk yang mendapat pengiktirafan antarabangsa seperti National Geographic dan Discovery Channel. Wartawan Bi-Pop, Suzan Ahmad menemu bual beliau untuk mendekati bakat muda ini.

Ceritakan secara ringkas pembabitan awal anda dalam penerbitan program bercorak dokumentari?

Wong Kew Lit: Saya mula membabitkan diri dalam pembikinan dokumentari pada 1999. Tetapi saya bermula dengan drama bersiri Cina, untuk beberapa tahun. Kemudian barulah beralih kepada program yang lebih serius berjudul Momentum pada 1999 untuk Astro. Musim pertama Momentum 1 sebanyak 26 episod mengambil masa setahun untuk disiapkan berjalan lancar di mana ia memfokus kepada pencapaian terkini sains dan teknologi di Malaysia. Antara topik yang dipaparkan termasuklah pembikinan KLIA, Formula One, Penjanaan Kuasa dan Pembedahan Pemindahan Jantung. Pada tahun 2000, Astro berminat untuk menyambung musim kedua Momentum. Memandangkan hampir semua bidang dari segi pencapaian tertinggi sains dan teknologi sudah diliputi, fokus kami beralih kepada manusia, iaitu saintis di Malaysia.

Berapa lamakah proses menerbitkan sesebuah dokumentari? Ceritakan secara ringkas perjalanan proses penerbitan dokumentari.

Wong Kew Lit: Ia bergantung pada topik yang difokuskan. Bermula dengan menghubungi ratusan saintis di Malaysia, menemu bual dan mendengar cerita mereka. Tugas saya ialah mengkaji cerita mereka; adakah ia kajian yang menarik; kemampuan kami melakukannya; boleh dirakam atau tidak; masa yang sesuai atau tidak; adakah memerlukan bayaran; adakah saintis ini mampu bercakap; aktif dan serasi dengan kamera. Daripada ratusan calon, hanya 30 saintis yang terpilih. Kemudian kami pilih yang terbaik dari pelbagai bidang seperti perubatan, hidupan liar, alam sekitar dan banyak lagi. Kami cuba mengehadkan masa penggambaran iaitu purata tidak melebihi tiga hingga empat hari untuk satu episod. Ada episod yang lama dan ada yang cepat, bergantung kepada topik. Tetapi kebanyakan saintis memberikan kerjasama yang baik. Momentum 2 misalnya memulakan penggambaran September 2001 dan berjaya disiapkan sepenuhnya Oktober 2001.

Apa yang mendorong anda untuk terus bergiat aktif dalam penerbitan dokumentari?

Wong Kew Lit: Malaysia sebenarnya kaya dengan saintis berbakat. Sayangnya golongan ini kurang mendapat pendedahan daripada pihak media. Tidak seperti National Geographic yang melakukan tugas cemerlang. Jadi apa nasib penerbit tempatan kita? Lihat saja Majalah Tiga, ia bukan dokumentari malah lebih kepada program majalah. Oleh itu, dengan gabungan kepakaran sekumpulan saintis yang bekerja bersama kami meletakkan satu standard untuk menghasilkan produk yang mampu diketengahkan seperti pendekatan dan standard ala National Geographic dan Discovery Channel. Negara kita semakin membangun, lebih saintifik, menjadikan sains sebagai salah satu elemen terpenting dalam proses itu. Untuk itu saintis wajar ditonjolkan.

Apa bezanya antara menerbitkan program berbentuk filem atau drama dengan dokumentari?

Wong Kew Lit: Dokumentari berkisar mengenai perkara yang benar, tidak boleh berlakon dan tidak boleh ditokok tambah. Jika kita mengkaji sejarah, dokumentari datang dahulu sebelum filem. Drama atau filem pula didasarkan pada kejadian sebenar dalam hidup dan bagaimana kita meletakkan rakaman itu dalam bentuk yang cerita yang sangat menarik untuk dipersembahkan dalam masa 30 minit. Drama adalah berbeza, ia umpama lakonan semula, walaupun ia berlaku dalam kehidupan kita tetapi tidak menggunakan watak asal seperti kejadian sebenar. Jika kita sentuh mengenai produksi pula, drama boleh dilakon dan dilatih semula sekiranya tidak menepati kemahuan pengarah. Sebaliknya, dokumentari tidak mempunyai peluang itu. Sekiranya kita terlepas maka rugilah. Dokumentari memerlukan kesabaran serta sikap kepekaan yang tinggi.

Teknik fotografi bagaimanakah yang digunakan untuk penggambaran dokumentari seumpama ini?

Wong Kew Lit: Kami menggunakan dua kamera sebenarnya. Saya mengendalikan satu kamera dan seorang lagi jurugambar. Bila bercakap mengenai teknik, sebenarnya seluruh dunia menggunakan teknik yang sama. Perbezaannya hanyalah bagaimana majunya teknologi kamera itu. Tidak seperti drama yang boleh dilatih, teknik yang digunakan lebih kepada kamera handheld. Dua kamera berjalan sekali gus. Kami juga menggunakan kamera khas dalam air untuk episod yang membabitkan penyu belimbing, dan juga kamera waktu malam untuk tidak mengganggu penyu yang sedang bertelur. Tetapi teknik bukanlah segala-galanya, paling penting ialah perancangan dan reaksi anda serta respon dan kepekaan. Masalahnya bagaimana kita merebut peluang yang ada, kesabaran dan sebagainya. Dalam dokumentari, apa yang paling penting ialah pemilihan topik yang difokuskan dan pendekatan apa akan digunakan.

Apakah antara halangan yang menyebabkan teknologi dokumentari tempatan masih belum mencapai tahap seperti karya Barat?

Wong Kew Lit: Wang menjadi antara halangan utama. Kewangan menyebabkan kita tidak mampu memperoleh pakar sendiri kerana tiada peruntukan bagi melatih dan membayar khidmat mereka. Mungkin ada, tetapi kebanyakan mereka bekerja untuk penerbitan asing di luar negara. Di samping itu, ia juga mengehadkan masa untuk penggambaran. Kalau kita ada banyak wang, kita boleh beli waktu yang lebih untuk menghabiskan satu episod. Tetapi dengan wang terhad, saya perlu melakukan perkara yang sama tetapi dengan episod yang lebih. Hakikatnya stesen TV hanya mahukan yang terbaik dengan bayaran yang kecil. Kalau stesen TV mahu menggalakkan penerbit tempatan menghasilkan produk terbaik, mereka patut bertanggungjawab memberi bayaran setimpal.

Adakah anda fikir karya dokumentari tempatan kalau dibawa ke festival filem di luar negara akan mendapat perhatian mereka?

Wong Kew Lit: Saya rasa kita punya potensi dan sedang menghala ke arah itu. Tidak mustahil suatu hari nanti kita akan di kenali di seluruh dunia kerana produk itu. Lebih-lebih lagi dengan sokongan daripada stesen TV tempatan. Malangnya situasi yang kami hadapi sekarang ialah keterbatasan yang wujud kerana stesen TV yang tidak mampu membeli program yang menelan belanja tinggi. Stesen TV hanya mempunyai peruntukan yang kecil untuk membeli program kami yang mahal.

Harapan anda dalam penghasilan karya dokumentari tempatan. Ke mana hala tujunya?

Wong Kew Lit: Saya harap semua stesen TV di Malaysia lebih menyokong produk tempatan. Beri kami lebih ruang untuk menjelajah dan membangunkan diri. Saya juga berharap lebih ramai lagi penerbit serta pengarah dokumentari muda tampil ke hadapan agar kita dapat bertukar-tukar pendapat dan berkongsi idea. Dalam satu industri perpaduan serta kerjasama yang erat perlu kerana suatu hari nanti, dokumentari bakal menjadi salah satu daripada produk terpenting negara. Negara kita terlalu kaya dengan khazanah yang masih belum diterokai. Jangan biarkan orang asing dengan sewenang-wenangnya meneroka khazanah tinggalan yang ada. Kita sebagai anak tempatan patut melakukan sendiri. Kita yang lebih tahu kerana ini bumi tanah tumpah darah kita. Kita lebih memahami budaya dan cara hidup kita. Di samping itu, saya juga berharap dapat menerbitkan sebuah program berkaitan kebudayaan Malaysia selain sains dan teknologi.

Sumber: Berita Harian Online (6 Januari 2002).

What Good Are Economists Anyway?

Peter Coy wrote an interesting piece that began thus:

Economists mostly failed to predict the worst economic crisis since the 1930s. Now they can't agree how to solve it. People are starting to wonder: What good are economists anyway?

And, he ends his piece thus:

What, then, is the way forward? Once this crisis is past, the next agenda for macroeconomists will be to help make the economy far more robust—enough to survive the blunders of politicians, bankers, and economists of the future. Taleb, the scholar of unpredictability, notes that nature achieves robustness through a redundancy that economists would consider wasteful: two hands, two eyes, etc. Blake LeBaron of Brandeis University suggests preventing huge crises by tolerating small disturbances, the way foresters use controlled burns to eliminate flammable underbrush. Perhaps out of the ashes of failure will emerge a better macroeconomics profession.

Having given you the Alpha and the Omega, to read everything that Coy wrote in between, click here.

Told ya

In case there were scepticism about the position taken in the previous post there is a report today where property industry players have made the observation that there is a property overhang. There are other additional factors that warrant some concern over the feasibility and viability of these mega property projects.

This is not about being cynical or, about being negative. It's about material investments in the Malaysian economy that have been vetted by the EPU (no less) and, yet, leaves the average Malaysian with the feeling that excessive risks are being taken.

If entrepreneurs want to burn their money that's their business.

But, where GLCs are involved and, where entrepreneurs have some land-swap deals with the government, then, every Malaysian taxpayer acquires an automatic standing to ask hard questions about mega property deals such as these.

GLCs and entrepreneurs having land-swap deals with the government must evaluate risks carefully since the failure of these projects will impact the rest of Malaysia in many ways.

100-storey skyscrapers planned for Kuala Lumpur

I share Mohd Hafiz Noor Shams and Reme Ahmad's perspective on the news that the Economic Planning Unit (no less) had briefed some unidentified economists that several iconic building projects are being implemented "as part of efforts to boost the country’s gross domestic product (GDP)".

Apparently three sites in the city have been identified for the development of iconic structures to spur growth in the economy. Sources say they are Dataran Perdana in Jalan Davis, the area surrounding Stadium Merdeka and the vicinity of the Matrade Centre in Jalan Duta.

All the plots of land are reported to be "privately owned".

It is also reported that two plots belong to government-linked companies — Pelaburan Hartanah Bumiputera Bhd and Permodalan Nasional Bhd (PNB) — while the Naza group owns 25ha in the vicinity of the Matrade Centre.

Two of the plots have building designs that contemplate 100-storey skyscrapers.

First, what's with the phallic urge? Many of us thought that the twin phalluses in KLCC has more than pointedly thrust Malaysia into the the global void (ahem!).

Second, and more (im)pertinently, what is the nexus between iconic buildings and GDP?

The wise people at EPU need to brief more than just unidentified economists. They should brief the rest of Malaysia on this new correlation between the construction of iconic buildings and the GDP. This is very unconventional thinking. It needs to be explained.

Third, what's with the obssession with iconic buildings? How come we're not fixating on building more iconic Malaysians?

Fourth, do iconic buildings have to be phallic in structure?

pix from here.

Fifth, what's with this Tower of Babel fixation?

Most importantly, how are these projects going to be funded?

I'm leaving aside the issue of feasibility because it is quite obvious that the EPU champions of these iconic projects are convinced with at least 3 things:

One, all iconic buildings are feasible, especially if they are at 100-storeys.

Two, because all iconic buildings are feasible they will contribute to the GDP.

Three, the hardware of buildings are still far more important than the software of developing human capital through education since building hardware yields short-term physical and quantitive results while the software of education is difficult to measure since it is qualitative.

Got it? I don't...

Banks+Innovation = Oxymoron?

The mind is a wonderful thing. Sometimes it creates an impulse. At other times it somehow makes some interesting connections at a subconscious level leading to an insight or some form of interposing of things with quite startling results. This is the startling albeit tongue-in-cheek startling connection for Monday:

Here's an extract from The Star that I read today:

Banks can innovate and support the high income growth model for which a basic ingredient is the setting up of industries that employ highly-skilled labour.

And, here's what I read last night in Time:

If we were too positive heading into the 2000s, we are almost certainly too negative heading into the next decade. But that's not such a bad thing. It means we will be collectively reluctant to lard on massive debts. It means we will be wary when some mortgage man tries to sell us an exotic loan predicated on our house's doubling in value. It means we will see "financial innovation" for what it often is: an oxymoron.

GST and removing subsidies - can the poor afford it?

Mr Jagdev Singh Sidhu has made some cogent points here.

Accounting Bonanza

The next 3 years will be a bonanza for the accounting fraternity.

First, the fair value accounting regime under FRS 139 will come into force on 1st January 2010. Lots of additional compliance work there.

Second, in the next following year GST is expected to come onstream. So, 2010 will be a frenetic year with clients running helter-skelter to put in place additional compliance procedures.

There's several hundred million Ringgit worth of billable work there. Good times.

If only the Securities Commission and Bursa Malaysia can come up with a special "Services Board" to enable accounting firms to list some equity-type interests for the rest of the investing public to get in on the action...

Double-dipping et al

It appears that people like me, who fretted over a "W" effect of economic health, may have our worst fears realised. Even sceptics like Paul Krugman are making observations like this:

I’ve never been fully committed to the notion that we’re going to have a “double dip” — that the economy will slide back into recession. But it has been clear for a while that it’s a serious possibility, for two reasons. First, a large part of the growth we’ve had has been driven by the stimulus — but the stimulus has already had its maximum impact on the growth of GDP, will hit its maximum impact on the level of GDP in the middle of next year, and then will begin to fade out. Second, the rise in manufacturing production is to a large extent an inventory bounce — and this, too, will fade out in the quarters ahead.

Such a view is shared by our own MIER, who had this to say:

Malaysia may need a third stimulus package should the US economy go into a relapse next year, according to the Malaysian Institute of Economic Research (Mier).

Executive director Prof Emeritus Datuk Dr Mohamed Ariff said in the event of a double dip recession in the US, Malaysia could use an additional RM8bil to pump prime the economy and “that is something we can afford to have.”

“We may need an additional RM8bil if there is going to be a double dip (recession) in the US and elsewhere,” he told reporters after the Mier National Economic Outlook Conference 2010-2011 yesterday.

Stimulus packages - good or bad?

The foregoing leads me to the several questions (some of which may overlap because I am writing on a first-draft basis, as always):

• Do stimulus packages cause economic players to defer painful decisions?
• Do stimulus packages have the unintended effect of protecting enterprises that either (1) took too many risks, (2) made too many mistakes and/or (3) are inefficient?
• Will stimulus packages create more long-term problems than solve short-term ones?

I have some intuitive feelings about the above questions but, no hard answers.

Mind you, in Malaysia's context, as MIER has pointed out, any double-dip effect in Malaysia's economic health are externalities i.e. when the U.S. so much as sneezes countries like Malaysia catches AH1N1 (pardon the macabre pun).

Statements on reforms - real or sandiwara?

That said, Malaysia's economic managers cannot be complacent. And, judging from the rumblings from Ministers about further economic reforms and revamp of divisive policies, the BN government is beginning a feeble and tentative attempt.

I say "feeble" and "tentative" because negative trends have not been reversed.

The indelible impression is that the government has been reacting to criticism and exposes rather than proactively earnestly correcting matters. This lends credence to the view that March 8, 2008 has not resulted in a genuine desire to reform a plethora of archaic socio-economic and socio-political policies.

Instead, it is quite obvious that in light of the apparent disarray in Pakatan Rakyat (mark the word "apparent"), the ruling coalition is exhibiting the type of behaviour that clearly points to the return of the old arrogance. The good 'ol "negotiated tender" is rearing its ugly head again.

A bit about "safe haven insurance" as a symptom

As if to underline the perception that "business as usual" is not a good thing we are witnessing the phenomenon of Malaysians of assorted ethnicity securing what I will term safe haven insurance by obtaining residential status in other jurisdictions.

Anyone who wishes to cast bilious remarks towards this category of Malaysians will only confirm the worst fears of these and many other Malaysians who only want a peaceful, progressive and prosperous Malaysia.

In this context, the challenge, therefore, is not to find a Thesaurus of invective but, rather, to remedy and remove the "push factors" that are causing Malaysian brains to consider leaving our fair shores by the droves. Mark the word "considering" because a Permanent Resident status is not a renunciation of citizenship, hence my invented aphorism, "safe haven insurance". The tide can be reversed if enough sincere effort is put into institutional and policy reforms.

And, let us not forget Hamlet's reminder about the insolence of office

There’s the respect
That makes calamity of so long life.
For who would bear the whips and scorns of time,
The oppressor’s wrong, the proud man’s contumely,
The pangs of dispriz’d love, the law’s delay,
The insolence of office and the spurns
That patient merit of the unworthy takes,
When he himself might his quietus make
With a bare bodkin? Who would fardels bear,
To grunt and sweat under a weary life,
But that the dread of something after death,
The undiscovered country from whose bourn
No traveller returns, puzzles the will
And makes us rather bear those ills we have
Than fly to others that we know not of?
Thus conscience does make cowards of us all;
And thus the native hue of resolution
Is sicklied o’er with the pale cast of thought,
And enterprises of great pith and moment
With this regard their currents turn awry,
And lose the name of action.

GST and reduction of income tax

The introduction of GST should have 2 key implications apart from the obvious ones of the GST, being a broadbased consumption tax, being a more efficient form of taxation than income tax.

First, there must be a commensurate reduction in personal income tax. I still maintain that the ultimate target should be an 18% top tax rate. This will help to put Malaysia back on the competitive map.

Second, given the trade liberalisations that Malaysia so strongly subscribes to, the GST's value-added tax features will ameliorate some of the losses of customs revenue from tariff reductions.

That said, platitudinous and suitably nebulous remarks have been made on how GST will not be a burden on the ordinary rakyat. I hope there is true sincerity and genuine understanding on the part of the government regarding the true effect of the GST because all consumption taxes have a regressive effect i.e. where the lower income groups pay more as a percentage of their income than the higher income groups. The rakyat will want to know how "gentle" the implementation will be and what are the measures to "safeguard the interest of the people".

There is a projected increase in government revenues to the tune of an additional RM1 billion when GST is implemented (and sales tax retired ... what about personal income tax reduction???).
______________________

Here's a useful excursus on the impending GST regime done by KPMG.

GST may be at 4%

No editorialising here. Thanks to bro Walla, here's the link to the GST Discussion Paper dated 18th July 2005 prepared by the Ministry of Finance. I'm just posting this report for the record:

The government plans to impose goods and services tax (GST) at 4%, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said Thursday.

"We are replacing the current sales and services tax, which is currently at 5% to 10%," he told reporters at the Culture, Ideas and Values Workshop organised by Foundation For the Future at Country Heights Resorts in Kajang.

He said the GST implementation was important for the country's future.

"The revenue source must be sustainable. If we can get sustainable revenues, we can get a good budget," he said.

He said the Consumer Price Index (CPI) would not increase as a result of the GST implementation.

Some selected items especially essential goods like rice, sugar, cooking oil and flour as well as domestic transportation would not be subject to GST.

Husni said the Bill on GST would be tabled in Parliament for the first reading this year, with a second reading in March next year.

GST would be implemented 18 months after the second reading.

The government expected an additional RM1 billion revenue annually after the first year of its introduction.

GST bill: Where can the public give comments?

A bill relating to the proposed introduction of the goods and services tax (GST) will be tabled for first reading at the end of the current Dewan Rakyat sitting.

Najib is quoted as saying that, "This will allow the public to give their comments, engage them, and if we find it necessary to fine tune it, we'll do so".

He stressed that if the government decided to introduce the GST in Malaysia, it would do so "very gently".

"It's not going to be an abrupt introduction," Najib said, adding that if the GST materialised, the rate would not burden the poor or middle-class Malaysians.

"And, it would not lead to inflation," he added.

Firstly, by tabling a Bill, the legislative process has commenced. There's a First Reading, then, there's a Second Reading and, then, a formal Third Reading whereupon the Bill becomes an Act of Parliament. The speed of the legislative process is at the discretion of the coalition in power.

A sincere effort at allowing public input should involve putting up the draft Bill in a suitable website, perhaps by the Treasury where comments can be received in an orderly fashion.

Tabling a Bill is a fait accompli which is, by definition, "an accomplished, presumably irreversible deed or fact".

Secondly, all consumption taxes has an inflationary effect even if it is a once-off effect.

Thirdly, "not be(ing) abrupt" is a relative view of the Prime Minister. If by "not be(ing) abrupt" he means that there will be lots of publicity about the Bill (and, therefore, following the reasoning, there should not be any psychological shock), then, he may be correct. But, the moment the Bill becomes an Act of Parliament and, it is given the Royal Assent and, is given a Commencement Date, then the implementation will still inevitably be felt by the public and the Malaysian economy as an "abrupt" phenomenon.

The question, therefore, is why the draft Bill should be tabled in Parliament when it can easily be posted at Treasury's website where public opinion can be sought for a period of, say, 6 months?

Why Malaysia lacks innovation hotspots

World Bank expert on development issues Dr Shahid Yusof Malaysia is reported to have informed our NEAC that Malaysia lacks innovation hotspots to propel the development of homegrown technology.

What are "innovation hotspots"?

Dr Shahid, who is also World Bank economic adviser, defined innovation hotspots as urban areas that are a rich source of technological findings and has the entrepreneurship to convert some of these findings into commercial innovations. This is important to note.

Artificial innovation hotspots won't work

He made the disturbing and devastating observation that despite huge investments over the years to create such centres like Cyberjaya and Iskandar Malaysia, Malaysia has yet to produce these innovation hotspots. This is a clear indictment of the wrongheaded strategy pursued all along. The Malaysian government has been building, building and building hardware. There has been an utter disregard for the "software". Our education standards has declined appallingly.

So, can such an innovation hotspot be created? The short answer is “yes”, Dr Shahid said, but - and, please note this Najib and Idris Jala - it would probably take five to 10 years to achieve.

It would also require 3 things:

• strong political commitment from the Government,
  

• raising the quality of education and
  

• a generous research funding policy.

FDIs don't engender innovation

“Foreign direct investment can help, but thus far spillovers have been weak,’’ the good Doctor said. This is an indictment of MITI and MIDA. I've read their charter about technology transfers for years. Yet, there's nothing to show in the form of budgrafting any technological prowess to Malaysians.

What it takes to create innovation hotspots

A key ingredient to develop hotspots is to have centres of basic and applied research that generate surplus ideas and entrepreneurial talents to commercialise them.

Above and, absolutely beyond everything else is the quality of Malaysian education.

There's really nothing more important than education. Without education there is no thinking mind, no inquisitive mind.

But, education must encourage a culture of questioning, a spirit of inquisitiveness.

My concern is that our nervous Malaysian government is not confident enough and intelligent enough to open the Pandora's Box of academic freedom in local universities that will push young Malaysian minds towards an innovative mindset.

Without local unversities being permitted to push the envelope in all respects, not just in science, and technology but equally so in sociology, economics, socio-economics and political science - for, all these fields are interconnected - there will be no light at the end of the tunnel.

That is why I place some hope with what Idris Jala and his team are trying to do. And, I fervently hope that I'm not wrong to place some faith in them.

They have to review the University and University Colleges Act 1971 which has probably snuffed out 2 generations of potential. Is there a political will for this?

English at work is 'weird'

It is this type of completely flabbergasting views from within the ruling coalition's senior ranks that rankles and baffles the rest of Malaysia. This is the report:

MALAYSIA'S deputy education minister has said that speaking English in the workplace is 'weird' and harmful to the nation's culture and identity, a report said on Wednesday.

Mr Mohd Puad Zarkashi said employees in the private sector used English 99 per cent of the time and should switch to Bahasa Malaysia in order to show pride in the national language, the New Straits Times reported.

'This also occurs in government-linked companies where we have this weird culture of people speaking to each other in English instead of the national language,' he said at the launch of a linguistics seminar. 'We are polluting our own culture and identity as a nation,' he said.

'It would be difficult to strengthen the position of Bahasa Malaysia if this culture continued,' he added, urging Malaysians to emulate the French, Japanese and Koreans, who stuck to their own language.

The New Straits Times said Mr Mohd Puad also criticised young people for using a mix of English and Bahasa Malaysia in SMS text messages and on the Internet.

He called on the nation's leaders to use Bahasa Malaysia for all meetings and events and said that when he receives letters in English he returns them and asks for them to be written in the national language.

It is hard to imagine the Deputy Education Minister being able to understand this piece of advice given by Vikram Nehru, chief economist for East Asia and the Pacific for the World Bank:

THE World Bank said on Wednesday that Malaysia must introduce sweeping reforms if it wants to achieve its ambitious goal of becoming a developed nation by 2020.

'To reach the 2020 developed status, the World Bank is proposing a four-pillar strategy,' Mr Vikram Nehru, chief economist for East Asia and the Pacific, told reporters.

'Malaysia must specialise the economy further, improve the skills of its workforce, make growth more inclusive and strengthen public finances,' he told reporters at the launch of a report on the Malaysian economy.

The World Bank said Malaysia's economy will shrink 2.3 per cent this year but rebound to a 4.1 per cent expansion in 2010.

Mr Nehru said the South-east Asian economy was on track to grow between 5.6 to 5.9 per cent in 2011 and 2012.

The report said Malaysia faced the challenge of shifting from an upper-middle economy to a high-income economy.

Nationalistic hubris and fervour may be a form of gallery-pandering. But, it is tragi-comedy in the context of the difficult and challenging task of re-positioning Malaysia's economic competitiveness.

We are heading towards a rock and a hard place, as the Americans say, when we are no longer a low-income destination and, nowhere near a high-income sophistication in terms of human resources and skill sets.

The significantly lower amount of foreign direct investments is a telling sign that Malaysia's previous comparative advantage as a low-income, low- to mid-skilled manufacturing hub is waning.

What this country needs are political leaders who understand what's going on, not some opportunistic superficial mouthpiece who only spew nonsensical, inane and unhelpful remarks that serves only to rankle the rest of us who are trying to get the job done.

Idris Jala has some positive strategies

If this report is accurate, it will be seen as the BN having recognised one of the key bugbears in Malaysia's nation-building and, earnestly working to remedy it. It appears that Idris Jala hasn't wasted any time:

Some of the most robust discussions about the future of Malaysia have been taking place in Putrajaya over the past several weeks. And if some suggestions are actually implemented, Datuk Seri Najib Razak could actually pull the rug from under his political foes.

This includes the idea to overhaul the controversial Biro Tata Negara or National Civics Bureau that has been seen to be more of a propaganda unit, the possibility of a mediation council to handle disputes among different religions and making the government procurement process more transparent.

Government officials told The Malaysian Insider that these proposals are part of initiatives being pushed by Datuk Seri Idris Jala and a task force set up to promote 1 Malaysia, Najib's concept announced when he took the top job on April 3.

1 Malaysia is one of several laboratories set up to push through ideas on Key Performance Index (KPI) and National Key Results Areas (NKRAs) that Najib knows will be the tipping point in the general election.

His ruling Barisan Nasional coalition was badly beaten in Election 2008 under the leadership of former Prime Minister Tun Abdullah Ahmad Badawi when it lost four more states and 82 federal seats to give up its customary two-thirds parliamentary majority.

But his recent appointment of Idris, the former Malaysia Airlines managing director, to the Cabinet as Minister in the Prime Minister's Department to take charge of KPIs could help make the difference.

Idris has started his work by setting up labs outside the government administrative complex with select people to test out ideas and strategies to move Najib's 1 Malaysia concept

Arguably the 1 Malaysia lab is the most important now because Idris and his team are incubating ideas which touch on race, religion and other stumbling blocks to better race relations which have deteriorated over the years.

Last week, Najib and several key ministers were given a briefing on some of the ideas and many of the Cabinet ministers appeared supportive of some of the initiatives. Among the ministers in the visit were Deputy Prime Minister Tan Sri Muhyiddin Yassin, Higher Education Minister Datuk Seri Khaled Nordin and Minister Datuk Seri Nazri Abdul Aziz.

It is understood that the lab felt the Biro Tata Negara needed a complete makeover to promote inclusiveness. Several young Pakatan Rakyat leaders have complained it was "brainwashing" students who were taught to hate opposition parties.

What is clear is that Najib remains Idris' strongest ally and is willing to push the envelope for changes in the government. Several Umno ministers are also more supportive of change than before, government officials said.

"Idris and his team's biggest task will be presenting their ideas at a Cabinet retreat next month. If there is buy-in, some of the biggest bugbears in our country will finally be addressed," one government official told The Malaysian Insider.

An analyst with knowledge of the 1 Malaysia lab activities concurred.

"If these initiatives are endorsed by the Najib administration and implemented, they could pull the carpet from under the Pakatan Rakyat," the analyst told The Malaysian Insider.

He said the key would remain in the implementation and also acceptance by the civil service.

One thing Malaysia can learn from China

According to this piece there are 5 things that the U.S. can learn from China. They are:

1. Ambition
2. Education
3. Looking after elderly
4. Save more
5. Look over the horizon

There's not that much that's in the piece that is new to us. What needs emphasising, though , to the people running Malaysia's education policy, is this part that I am extracting. We've told you once, Muhiyiddin and Wee and we'll tell you a million times ... it's education in English, education in English, education in English, education in English.....education in English.....education in English :

2. Education Matters
On a recent Saturday afternoon, at a nice restaurant in central Shanghai, Liu Zhi-he sat fidgeting at the table, knowing that it was about time for him to leave. All around him sat relatives from an extended family that had gathered for a momentous occasion: the 90th birthday of Liu's great-grandmother Ling Shu Zhen, the still spry and elegant matriarch of a sprawling clan. But Liu had to leave because it was time for him to go to school. This Saturday, as he does every Saturday, Liu was attending two special classes. He takes a math tutorial, and he studies English.

Liu is 7 years old.

A lot of foreigners — and, indeed, a fair number of Chinese — believe that the obsession (and that's the right word) with education in China is overdone. The system stresses rote memorization. It drives kids crazy — aren't 7-year-olds supposed to have fun on Saturday afternoons? — and doesn't necessarily prepare them, economically speaking, for the job market or, emotionally speaking, for adulthood. Add to that the fact that the system, while incredibly competitive, has become corrupt.

All true — and all, for the most part, beside the point. After decades of investment in an educational system that reaches the remotest peasant villages, the literacy rate in China is now over 90%. (The U.S.'s is 86%.) And in urban China, in particular, students don't just learn to read. They learn math. They learn science. As William McCahill, a former deputy chief of mission in the U.S. embassy in Beijing, says, "Fundamentally, they are getting the basics right, particularly in math and science. We need to do the same. Their kids are often ahead of ours."

What the Chinese can teach are verities, home truths that have started to make a comeback in the U.S. but that could still use a push. The Chinese understand that there is no substitute for putting in the hours and doing the work. And more than anything else, the kids in China do lots of work. In the U.S., according to a 2007 survey by the Department of Education, 37% of 10th-graders in 2002 spent more than 10 hours on homework each week. That's not bad; in fact, it's much better than it used to be (in 1980 a mere 7% of kids did that much work at home each week). But Chinese students, according to a 2006 report by the Asia Society, spend twice as many hours doing homework as do their U.S. peers.

Part of the reason is family involvement. Consider Liu, the 7-year-old who had to leave the birthday party to go to Saturday school. Both his parents work, so when he goes home each day, his grandparents are there to greet him and put him through his after-school paces. His mother says simply, "This is normal. All his classmates work like this after school."

Yes, big corporate employers in China will tell you the best students coming out of U.S. universities are just as bright as and, generally speaking, far more creative than their counterparts from China's élite universities. But the big hump in the bell curve — the majority of the school-age population — matters a lot for the economic health of countries. Simply put, the more smart, well-educated people there are — of the sort that hard work creates — the more economies (and companies) benefit. Remember what venture capitalist Tam said about China and the electric-vehicle industry. A single, relatively new company working on developing an electric-car battery — BYD Co. — employs an astounding 10,000 engineers.

China, critics will point out, doesn't produce (at least not yet) many Nobel Prize winners. But don't think the basic educational competence of the workforce isn't a key factor in its having become the manufacturing workshop of the world. It isn't just about cheap labor; it's about smart labor. "Whether it's line workers or engineers, we're finding the candlepower of our employees here as good as or better than anywhere in the world," says Nick Reilly, a top executive at General Motors in Shanghai. "It all starts with the emphasis families put on the importance of education. That puts pressure on the government to deliver a decent system."

And the Chinese government responds to that pressure in some intriguing ways. It insists that primary-school teachers in math and science have degrees in those subjects. (Less than half of eighth-grade math teachers in the U.S. majored in math.) There is a "master teacher" program nationwide that provides mentoring for younger teachers. Zhang Dianzhou, a professor emeritus of mathematics at East China Normal University in Shanghai who co-chaired a committee charged with redesigning high school mathematics programs across the country, says recent changes have begun to reflect more of a "real-world emphasis." Computer-science courses, for example, have been integrated into the math curriculum for high school students. And China is placing even more importance on teaching young students English and other foreign languages. If you think China's willingness to constantly fine-tune its educational system is not going to have much of an impact 20 years from now, there's a 7-year-old boy in Shanghai who'd be happy to discuss the issue with you. In English.(emphasis mine)

Microfinance: Amanah Ikhtiar and RM1 billion

I've previously written extensively about microfinance or microcredit and I have highlighted the good work done by Amanah Ikhtiar in this area.

What I haven't highlighted is that Malaysia's approach to microfinance/microcredit is what I characterise as an "institutional approach" where microfunds are disbursed to borrowers in a manner not much different from a regular bank (who are also in the microfinance/microcredit game...albeit reluctantly).

With RM1 billion allocated from the Malaysian Government for lending in 2010, Amanah Ikhtiar will be a busy organisation.

I wonder if the impersonal approach used by Amanah Ikhtiar in dispensing microfinance/microcredit may result in higher defaults and delinquencies than the original Grameen Bank approach which emphasised community-based microfinance/microcredit.

In its original guise, microfinance required groups of five community members to receive funding and they acted as a loose collective, having vouched for each other. This minimises defaults and delinquencies because other members of the group will rally around any ailing member. And, each member would not want to risk the ire and opprobrium of his/her community by having defaulted.

This was a fail-safe feature in Grameen Bank's lending paradigm.

Does Amanah Ikhtiar have this feature in mind?

If not, what is the provision that Amanah Ikhtiar plans to make on loan defaults? 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, 50% .... when do alarm bells start ringing?

Rupert Murdoch vs Google

As I read this piece on media mogul Rupert Murdoch's crusade against the search engines and portals like Google, I was reminded about the legend of King Canute.

pix from here

Wo ai Zhong-guo ren

Let's be tongue-in-cheek at the dawn of Friday the 13th. Let's start with a classic Monty Python song, The Chinese Song:

The world today is absolutely cracked.
With nuclear bombs to blow us all sky high.
There's fools and idiots sitting on the trigger.
It's depressing, and it's senseless, and that's why...

(singing)
I like chinese,
I like chinese,
They only come up to you knees,
Yet they're always friendly and they're ready to to please.

I like chinese,
I like chinese,
There's nine hundred million of them in the world today,
You'd better learn to like them, that's what I say.

I like chinese,
I like chinese,
They come from a long way overseas,
But they're cute, and they're cuddly, and they're ready to please.

I like chinese food,
The waiters never are rude,
Think the many things they've done to impress,
There's maoism, taoism, eging and chess.

I like chinese,
I like chinese,
I like their tiny little trees,
Their zen, their ping-pong, their ying and yang-eze.

I like chinese thought,
The wisdom that Confusious taught,
If Darwin is anything to shout about,
The chinese will survive us all without any doubt.

So, I like chinese,
I like chinese,
They only come up to you knees,
Yet they're wise, and they're witty, and they're ready to please

Wo ai Zhong-guo ren [Wo, I chumba run]
Wo ai Zhong-guo ren
Wo ai Zhong-guo ren
Ni Hao Ma? Ni Hao Ma? Ni Hao Ma? Zai zhen [Ne hamma? ... Chi Chen]

I like chinese,
I like chinese,
They're food is guaranteed to please,
A fourteen, a seven, a nine and li-chese

I like chinese,
I like chinese,
I like their tiny little trees,
Their zen, their ping-pong, their yin and yang-eze

I like chinese,
I like chinese,
(fade out....)

And, more to the serious side of things, here's the Bloomberg write-up on President Hu's brief, but materially significant visit to Malaysia a few days ago. I'm too lazy to editorialise. It's Friday...

Nov. 11 (Bloomberg) -- China will help Malaysia build up its transport infrastructure as it seeks to tap more of the Southeast Asian nation’s natural resources.

The two countries will work on railway, bridge, water and energy projects as China imports more Malaysian palm oil and timber, according to memorandums of understanding signed on the final day of President Hu Jintao’s state visit to Malaysia.

“We are looking at advancing strategic cooperation in all fields,” Hu told reporters after meeting Malaysian Prime Minister Najib Razak today in the administrative capital of Putrajaya, about an hour’s drive from Kuala Lumpur.

China is the world’s largest edible oil importer. The resource-hungry nation bought 357,570 metric tons last month from Malaysia, the world’s No. 2 palm exporter of the crop. Beijing has been scouring the world for natural resources to feed an economy that has grown at least 6 percent annually since 1997. In return, it has pledged financing and help with construction of infrastructure.

“China’s appetite for commodities is almost unquenchable,” said Dorab Mistry, director of Godrej International Ltd. “We expect growth of consumption per capita of between 3 and 4 percent in China even now, they will continue to be a very good buyer of Malaysian palm oil.”

The Malaysian government is opening up to more business from China as data from the Statistics Department showed that from January to September this year, China is the second-largest market for Malaysia’s exports valued at 46.8 billion ringgit. Malaysian exports to China jumped 16 percent last month from a year earlier, figures released in Beijing today showed.

Dam Builders

Malaysia will work with Chinese companies to build a dam in Penang state, Najib said. The Mengkuang Dam will be the biggest in the area with a storage capacity of 23,639 million liters of water, supplying both Penang and surrounding areas.

A Chinese company will be awarded a contract by the Malaysian government to help develop a double-track railway that will run from Johor Bahru, bordering Singapore, to Gemas in the state of Negeri Sembilan, Najib added. Global Rail Sdn. is leading the construction of the 28 billion ringgit ($8.2 billion) project, Malaysia’s Business Times reported on Oct. 8.

Malaysia will also work with Chinese companies to build a pulp and paper mill and aluminum smelter in Sarawak state, Najib said, without naming of the China businesses that will be involved in these projects.

Second Bridge

Export-Import Bank of China, a state export credit agency, signed a credit agreement with Jambatan Kedua Sdn. for a second bridge linking Penang Island to the Malaysian peninsula. Jambatan Kedua is building the superstructure for the bridge for main developer UEM Builders Bhd.

Meanwhile, Beijing Enterprise Water Group Ltd. will work with the Malaysian government to improve the country’s sewerage services, according to one MoU signed today.

Hu last visited Malaysia in April 2002 when he was China’s vice president, Malaysia’s foreign affairs ministry said in a statement dated Nov. 6. Malaysia started diplomatic relations with China in 1974.

"Potong" saga

Malaysia really needs to loosen up...a lot.

I thought the P1 Wimax advertisements were a hoot. It's the double-entendre that made it so funny...and memorable. It's just the type of brilliance and innovative thinking that we always need.

The response from TM Streamyx was equally brilliant. The "cut, cut, cut" jibes in the TM ads were just as brilliant.

This was, in my opinion, one of the sparkling friendly jibes that corporate rivals gave one another. The exchange over the airwaves was a reminder that Malaysians can be imaginative, innovative and, humorous.

I really don't see what the fuss is all about and, I do strongly recommend that those who took umbrage at the "potong" ad should improve the quality of their lives and attend courses on how to acquire a sense of humour and learn to appreciate creativity and innovative thinking instead of pretending to be guardians of public morals.

Cut it out, I say!