Record temperatures and heatstroke cases engulf South-East Asia nations

 

SINGAPORE, May 14 (Bloomberg): South-East Asia continues to grapple with blistering heat amid reports of record temperatures and cases of heatstroke that further add to signs of extreme weather changes.

Singapore posted its highest temperature in 40 years at 37C (98.6F) on Saturday and the warm and dry conditions will continue, the National Environment Agency said in a Facebook post. The temperature also surpassed the previous record for May of 36.7C, recorded last year, the agency said.

In Malaysia, as many as 14 heatstroke cases were reported by the Health Ministry as of Friday, and the government expects the number of victims to increase given the hot weather, which will likely run through August, Deputy Health Minister Lukanisman Awang Sauni told reporters Saturday according to state media Bernama.

"The situation is still under control and can be accommodated in health facilities,” Lukanisman said. "Ministry facilities and hospitals are prepared to receive heatstroke victims and heat cramp victims.”

The country recently reported the death of a child from heatstroke, which prompted the Health Ministry to issue a public advisory.

Dangerous Heat

With scientists warning 2023 will likely be another year marked by dangerously high temperatures, signs of strain are emerging across Asia as the heat wave that started in April continues to blast through the region, following a pattern of increasing extreme weather caused by the accumulation of greenhouse gases in the atmosphere.

Vietnam reported its highest ever temperature of 44.2C early this month and the Philippines cut classroom hours after the heat index reached the "danger” zone.

Expectations of shrinking palm oil supplies due to the scorching heat keep investors on edge as nearly all of the world’s oil palm is grown in Southeast Asia.

Thailand’s Joint Standing Committee on Commerce, Industry and Banking also warned that the threat of an El Nino-induced drought later this year could drive up food prices.

With climate change and a looming shift in patterns toward El Nino conditions, heat waves and large storms could become more frequent or intense.

Bangladesh and Myanmar are evacuating hundreds of thousands of people as Cyclone Mocha is set to make landfall Sunday, potentially causing widespread destruction to one of the most vulnerable areas in the region. - Bloomberg 

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Taps flowing again for almost all water consumers in Penang

 

Penang water cuts from May 14 until 17 due to sudden drop in Sungai Muda water level

 

https://www.msn.com/en-my/news/national/penang-water-cuts-from-may-14-until-17-due-to-sudden-drop-in-sungai-muda-water-level/ar-AA1ba9Xl?cvid=2d31eb69041e418eb047e9ee7b252961&ei=14 

GEORGE TOWN: Certain areas in the state will face water supply disruption from Sunday (May 14) until Wednesday (May 17) due to a sudden drop in the water level at Sungai Muda.

Penang Water Supply Corporation (PBAPP), in a statement, said the sudden extreme drop in water level at 5am on Sunday in Sungai Muda at the Lahar Tiang Intake inlet has affected treated water production at the Sungai Dua Water Treatment Plant (WTP).

"We are drawing water from the expanded Mengkuang Dam as an emergency response measure.

"However, the volume of water being drawn from the dam is insufficient to make up for the shortfall from Sungai Muda.

"The Sungai Dua WTP cannot produce the normal volume of about 1,000 million litres per day (MLD) of treated water to meet water demand in Seberang Prai and some areas on Penang Island.

"Production has been limited to between 600 MLD and 650 MLD until raw abstraction at Lahar Tiang can be restored to 100%.

"This is subject to the recovery of the Sungai Muda water level,” it added.

It said that consumers in some areas in the state will also experience low water pressure until Wednesday.

"Consumers who still have water supply are advised to store water for use over this period of time.

 

MOH records 14 cases of heatstroke as of Friday

Brutal heat continues to grip Asia in warning for the world

Total of 14 heatstroke cases recorded nationwide so far...

Gold reserves on uptrend

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Why Gold Still Shines Through Inflation, Banking Crises and More | WSJ

 Storage of bullion seen as key in inflation fight. Gold likely to perform better than the US$

PETALING JAYA: Asian central banks, including Bank Negara, were seen upping their gold reserves in the past decade given the versatile use of the precious metal as a hedge against inflation and, a protective measure against purchasing power risks.

Malaysia has emerged as having the fifth-highest increase in gold reserves between 2013 and 2022 among Asian countries, said Singapore-based brokerage firm City Index, which released the data yesterday.

The brokerage noted that Bank Negara has overseen a 6.84% increase in the country’s gold reserves, from 36.4 tonnes to 38.88 tonnes over the period under review.

This is 90% more than Indonesia, whose gold reserves only increased by 0.64% between 2013 to 2022

However, the republic continues to hold 50% more gold than Malaysia with 78.57 tonnes.

The increase in Malaysia’s gold reserves also paled in comparison to third-placed Singapore’s 20.7% climb in bullion stock at 153.7 tonnes, which itself is dwarfed by China’s near-doubling of its storage of gold to 2,010 tonnes, taking the top spot among Asian nations.

“Gold reserves in China averaged 1,694.78 tonnes from 2013 until 2021, reaching an all-time high of 2,010.51 tonnes in the fourth quarter of 2022, accounting for 3.6% of its total foreign reserves,” City Index pointed out.

Notably, the brokerage firm said China’s increase in gold imports is largely considered to be the result of an effort to reduce its reliance on the US dollar and to diversify holdings of the People’s Bank of China.

According to City Index head of market research Matt Weller, the surge in gold investment demand signals a growing concern among investors regarding the inflationary pressures in the market.

“As central banks continue to use gold as an inflation hedge, it’s not surprising to see individual investors following suit in the form of coins or jewellery, especially in countries such as India and China, where gold has long been considered a traditional store of value,” he said.

Meanwhile, the brokerage firm said Thailand has had the second-largest increase in gold reserves in the last decade, increasing by 60.2% from 152.4 tonnes to 244.1 tonnes.

Quoting the World Gold Council, City Index said gold remains a popular and effective inflation hedge amid global economic uncertainty in Thailand, exemplified by a 40% increase in demand for the metal year-on-year in 2022, fuelled by the rebound in tourism.

The debate, though, continues on whether gold could live up to its reputation as a buffer against inflation compared to other means employed to stem the inflationary tide, namely bonds, the greenback, and much more recently, cryptocurrencies such as bitcoin.

This is evidenced by the price of gold taking a beating from mid 2022, coinciding with the Federal Reserve’s 50-basis-point hike in May which was followed by four giant 75-basis-point surges, sending gold price from approximately US$1,800 (RM8,032) an ounce to just over US$1,600 (RM7,140) by November as the US dollar strengthened.

Meanwhile, Bernard Aw and Eve Barre, economists at Singapore-based Coface Services South Asia-Pacific Pte Ltd, pointed out that the relationship between the dollar and gold tends to be inverse, although this negative correlation has weakened since 2018.

“Although there is an easing trend, inflation rates are expected to be above historical trend at least through 2023, while global growth remains sub-par. Gold may therefore perform well relative to the dollar since the United States rate hike cycle appears to be nearing its peak.

“Moreover, geopolitical factors have also contributed to emerging market central banks stocking up on gold reserves, pushing up demand for gold, amid a very gradual shift away from the US dollar,” they told StarBiz.

Concurrently, chief executive of Centre for Market Education Dr Carmelo Ferlito also believes the decision to increase gold reserves among Asian countries may be seen as a signal of worry among these countries, and their consideration of the dollar as a less dominant currency in the future.

“Thus, despite the decrease in its price last year, gold is perceived as a more stable store of value,” he said.

Ferlito opined that the cessation of the gold standard has been the biggest source of inflation in history, as inflation in the last 50 years have exceeded any before it.

“In fact, currently measuring inflation through the Consumer Price Index is meaningless with the fiat system. A more effective way would probably be to measure price indices against wage indices,” he said.

With Asian central banks embarking to fortify their bullion stockpile in an apparent effort to mitigate inflation, Ferlito said returning to the gold standard would be ideal but practically impossible at this point in time, as the quantity of money in circulation is exceedingly high.

“Free banking and competition among currencies may be a better option for the current financial climate,” he added.

Coface’s Aw and Barre too did not advocate a return to the gold standard, believing the system will deeply restrain the ability of governments to support economic activity when needed since money supply would be limited to the amount of gold detained.

They said: “Considering the way central banks acted during the last two economic crises by expanding their policy instruments, as well as the massive fiscal support provided by governments during the lockdowns, it is difficult to imagine a return to the gold standard, which would imply the end of this important interventionism.”

Providing an interesting balance to the gold against inflation idea, Forbes in an article published earlier this month reported that gold has at times in history been found wanting as an inflation hedge.

“From 1980 to 1984, annual (US) inflation averaged 6.5%, but gold prices fell 10% on average each year. Returns not only fell short of the inflation rate, but they also underperformed real estate, commodities and the S&P 500. Annual inflation averaged about 4.6% from 1988 to 1991, but gold prices fell approximately 7.6% a year on average,” the report revealed.

On the other hand, while concluding that gold has been an inconsistent inflation hedge, Forbes recommended holding some amount of the precious metal as a diversification strategy.

“Gold has historically had a low or even negative correlation to both stocks and bonds, suggesting it offers value as a tool of diversification,” it said. 

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Why nations fail or succeed ?

This is much the East can learn from the West on economics

 

AUGUST is the holiday month – the time when we pause to take stock of a hectic first half year, and wonder what lies ahead.

Nestled in the hills of northern Laos, the ancient city of Luang Prabang sits around a bend in the river Mekong, isolated for centuries and renowned today as a city of 15th century Buddhist temples, protected as a Unesco Heritage site. It is a good place to catch up on one’s history to try to comprehend the uncertain future.

The recent best-seller by Massachusetts Institute of Technology economics Prof Daron Acemoglu and Harvard political scientist James Robinson, Why Nations Fail: The Origins of Power, Prosperity and Poverty (Penguin 2012), argued that national failure were all due to man-made factors, more specifically, how political institutions became extractive, rather than inclusive.

Acemoglu and Robinson is provocative because they stir up the debate on why Latin American economies never quite made it, even though they are resource rich. They did not succeed despite huge wealth because their political institutions remained extractive, meaning a few hundred families or elite essentially controlled the key resources of the continent for their own benefit.

Another obvious example is the difference between North Korea, one of the poorest countries around, and South Korea, an innovative and dynamic economy capable of challenging the best of the West, by learning from the West.

The Acemoglu and Robinson book touches on a raw nerve because many in the West are unsure whether they will continue to be dominant in the years to come. They argue that China will sooner or later stop growing because the institutions there are becoming extractive. But as one review argued, it cannot be ruled out that Chinese institutions would evolve into inclusive systems. After all, China could not have succeeded without being inclusive – taking more than half a billion out of poverty

In the same genre, Stanford Professor of Classics and History, Ian Morris’ 2011 book, Why the West Rules – For Now: The Patterns of History and What They reveal about the Future, takes also the grand sweep, arguing not only about the factors of biology and sociology, but also about geography.

So instead of Acemoglu and Robinson’s dictum, “institutions, institutions and institutions”, Morris considers that it is more about “location, location, location.” He argues that biology and sociology explain the similaries in development between the East and West, but “it is geography that explains why the West rules.”

This view concurs with Asian historian Wang Gung-wu’s perceptive insight that the West developed maritime and today air and cyberspace technology and power, whereas China remains essentially a continental or land-based power. Geography does shape behaviour and perception.

Personally, I am less persuaded by what caused nations to fail than what caused them to succeed, and not just succeed for a few decades, but remain relevant for centuries.

Most people forget that the first modern economy in the world was not Portugal or Spain, or England, but Holland. Even though the Portuguese and Spaniards opened up the maritime routes to America and the Spice Islands, they remained feudal powers that never evolved the institutions to manage their colonies efficiently and professionally.

Last month in Amsterdam, I was given a copy of Marius van Nieuwkerk’s history of Dutch Golden Glory: The Financial Power of the Netherlands through the Ages (2006). This wonderful gem of a book, beautifully illustrated, attributed the rise of Holland as a conquest of man over water. As we all know, Holland has only a population of 16.6 million, in an area 20% larger than the island of Taiwan, ranked 17th in the world in terms of GDP, and 14th in terms of GDP per capita, at US$46,100 just behind the United States (US$50,000) and Japan (US$46,700), but ahead of old rivals, UK (US$38,600).

Historically, because of constant flooding in its low-lying land, the Dutch learnt to work cooperatively to build dykes, through “poldering” – constant irrigation, drainage and pumping of water. Thus, in their constant struggle against flooding and weather risks, the Dutch developed their infrastructure cooperatively, learning how to manage risks through precaution (high savings), consultation (constant feedback) and inspection (maintenance of strict standards). To do so, they built highly inclusive, flexible and innovative institutions that opened up to global trade.

Their constant struggle against water meant that the Dutch had superior shipbuilding technology, drawing on timber from the Baltic areas and arbitraging the trade with northern Europe. By 1598, the Dutch had established the first Insurance Chamber, the largest trading company by 1602 (VOC), and forerunner of the first central bank, the Amsterdam Exchange Bank in 1609, Merchants Exchange 1611, and Grain Exchange in 1616.

VOC, which had trading monopoly for the East Indies in the spice trade, was so profitable that between 1602 and 1796, the average dividend was 18.5% annually! Indeed, the Dutch were successful because they were not only good traders, but also insurers and bankers to the rest of Europe. One tends to forget that as late as 1750, 30% of the share capital of the Bank of England was owned by the Dutch.

What is remarkable about the Dutch model is not that it has not been taken over by other larger powers, but its sustainability and durability. The Dutch runs one of the largest pension funds in the world, and a recent study has shown that there are over 400 Dutch companies with over a century of history, including one that survived from1530. It goes to show that a country may be small, but through thrift, hard-work, openness, and good governance, the country could succeed despite the odds.

There is much that the East has still to learn from the West. No history is a straight line, and there is nothing inevitable about success or failure. Whether it is Abenomics or Likenomics, the key to sustainable and inclusive growth is about strong social institutions with the right checks and balances.

  
Think Asian by Tan Sri Andrew Sheng

TAN SRI ANDREW SHENG is president of the Fung Global Institute.