COINCIDENTLY, two major reports were released on June 1 on the decline of our national productivity and competitiveness. The first was our own Productivity Report 2016/2017, which was launched by Minister of International Trade and Industry Datuk Seri Mustapa Mohamad (pic) and the second one was the World Competitiveness Yearbook WCY issued by the Institute for Management Development.
This coincidence in decline is understandable since both productivity and competitiveness are closely inter-related. Lower productivity leads to lower international competitiveness.
Productivity
Our labour productivity fell short of our 11th Plan target of 3.7% growth by 0.2% to 3.5% last year. This is a small decline and has been rightly explained with confidence by the Minister of Trade in positive terms when he said that Malaysia was “on track”.
I think he will agree that we must be concerned enough to ask what are the causes and whether this is just a mere slip or could it be the beginning of a trend.
We have to take this fall as a wake up call, in case this decline happens again next year and later on. We have to review many recurrent and uncomfortable issues like brain drain and unemployed graduates - who could number over 200,000 - also reflect the low productivity of many graduates who are newly employed. The lower productivity can be attributed to our low use of automation, high employment of unskilled foreign and cheap labour and the new challenges of the digital economy.
The Minister’s proposal for the Government and private sector to “join forces to embark on initiatives” to improve productivity in nine sectors “of lower productivity”, is most welcome. The private sector has to make profit unlike the Government. Hence it has a greater sense of urgency in wanting to improve not only labour productivity but productivity from all factors of production, including good governance and integrity and quality services to the public. Thus it will be very interesting for the public to be made fully aware of the productivity improvements that should materialise not only in the private sector, but for the Government as well. For instance government departments can learn from the private sector how to provide better or excellent services in the fields of health and education and counter services at police stations, Customs, Immigration, etc .
Productivity in both the private sector and the government machinery should improve to raise our total national productivity. Only then will our nation be able to compete much more efficiently and effectively in the global economy.
We can have the best Productivity Blueprint like that which was launched on May 8 but our productivity can continue to slip and even slide, if we do not ensure that the blueprint is fully implemented and its progress diligently monitored and improved along the way. One way to seriously pursue our goal to raise productivity would be to increase the small sum of only RM200mil for a new Automation Fund. Modern machinery and equipment are expensive but the returns in terms of higher productivity can be very significant. So let’s go for higher productivity with greater automation and not approach the challenge on an ad hoc and piecemeal basis. The Treasury would need to support the Productivity Blueprint much more productively!
Competitiveness
Malaysia registered its lowest ranking in five years in the WCY.
This reflects our decline in productivity as competitiveness is the other side of the coin. However, I am surprised that the relationship is so sensitive. Just a drop of 0.2% in productivity can cause a drop in our international competitiveness ranking from 19th place to the 24th!
What this could show is that while we are sluggish in our productivity, other countries are much more aggressive in improving both their productivity and competitiveness.
There is thus no point in taking pride that we scored better in our ranking compared to the industrial countries like Austria (25th) Japan (26th) and Korea (29th). They are highly developed countries which enjoy much higher standards of living and a better quality of life that we do. They have reached the top of Mount Fuji and other mountains, while we are still climbing up from a lower economic base.
The drop in our competitiveness is significant and we have to take this decline very seriously. Malaysia slipped in all four sectors, that is, economic performance, business efficiency, government efficiency and infrastructure. That is why it is essential to investigate in depth into all these major falls in performance and tell the public what is being done to improve our rankings and ratings.
It is appreciated that Malaysia Productivity Corp’s Director General Datuk Mohd Razali Hussain has established Nine Working Cluster Groups to examine these poor indicators and report on improvements that must be made expeditiously.
Conclusion
It is good that we have these reports on productivity and international competitiveness to benchmark our national performance against them. We have to take advantage of these annual indicators and ensure that we keep improving rather than falling in productivity and competitiveness .
Our efforts to improve will be watched closely by our domestic and particularly international investors and international competitors .
We can only hope that these declines are not just coincidental but are also not developing declining trends. This could spell pessimism and falling confidence in our socio-economic management.
Instead we should take these set backs as warning signals and rededicate ourselves to a greater commitment to higher competition, more meritocracy and building a better socio-economic and political environment in Malaysia.
Apr 6, 2016 ... So if both the US and Malaysian Governments couldn't stem the fat tide in their
respective countries, who can? ... Putrajaya the obese-city!
IN Washington, the swamp Donald Trump is trying to drain is in tumult. The centres of the established order are fighting back against the elected president with a mandate who is doing what he wants.
On the one hand, there is a system of governance based on the rule of law which accords rights and limits the exercise of power. On the other, a president with a style of rule that transcends and challenges that order.
Whether it is working with the enemy, government by executive order, unrestrained authority in a centralised executive arm, president Trump who is already temperamentally in accord with it feels fully supported by those marginalised and on the periphery who had elected him. He sees it as a battle against the elites. Indeed, he increasingly depicts himself as a victim of the elites, especially the media.
The media wants him impeached. This is not going to happen – at least, not any time soon. The Republican-dominated House of Representatives and Senate would not have it. But Trump has to understand he cannot continually push at the boundaries and violate constitutional authority with impunity. If not Congress, the courts will have him.
Fired FBI director James Comey is expected to appear before the Senate to relate if Trump tried to influence investigation into links with Russia he and his aides forged during and after the election campaign. Already, a special counsel, Robert Mueller, has been appointed by the Attorney-General’s office to establish if there had been criminal violations in those links.
The American president is impetuous, sneering and always up for a fight. This is not the way to govern – anywhere.
He chops and changes. He does not use established institutions, even of the executive branch, like the State Department, which he wholly distrusts as a Hillary Clinton bastion.
There is conflict in Washington, not orderly governance. America is bitterly divided. Trump represents the other side. In this conflict, it is a strong incentive for Trump to ride on populist policies to attack his enemies in the swamp in Washington.
Both the disorder in Washington and particularly the populist policies – many of which are not properly thought through – also have an impact on the rest of the world.
It is difficult to know whom to deal with and which way policies may turn. His “America First” policies, like on climate change and on trade, harm and disregard other countries.
Small countries like Malaysia are down the list of his concerns. Yet we are on the list of 16 with whom the Trump administration claims America has trade deficits which are not tolerable.
The cut-off value of US$10 billion just manages to leave out Israel from the black list. What countries like Malaysia would like to know is what the United States proposes to do about it.
With respect to China, which tops the list with a whopping surplus of US$347 billion, Trump has eased from hanging tough to being pliable. No more talk of China as a serial currency manipulator and of slapping a 45% tariff on Chinese exports to America.
Last month the US entered into a so-called trade deal with China which encompassed a 100-day programme as part of a “comprehensive economic dialogue.” There is to be a 10-point action plan covering topics ranging from meat to financial services to biotechnology.
But American companies are dissatisfied, contending matters such as overcapacity, forced technology transfer and equal treatment of US companies should have been covered.
White House professionals in the National Economic Council and the US Trade Representative’s office say there is work in progress on Chinese steel, after which the administration would decide how to pursue the matters of subsidies and overcapacity – either through the World Trade Organisation (WTO) or bilaterally.
This is an interesting twist. Trump does not have any time for the WTO. Yet with China, he might go for the multilateral approach rather than his favoured bilateral dealing.
The officials say they do not want a trade war. So perhaps some sobriety is sinking in.
Meanwhile, Vietnamese Prime Minister Nguyen Xuan Phuc made haste to Washington this week – Vietnam is sixth in that list of 16 – and ended up with extravagant praise from Trump for the deals he entered into worth US$8bil (the prime minister claimed US$15bil), including US$3bil of US-produced content that would support 23,000 jobs. General Electric is the biggest beneficiary with deals worth US$5.58bil in power generation, aircraft engines and services.
Commerce Secretary Wilbur Ross pronounces Vietnam is the fastest growing market for US exports. US Trade Representative Robert Lighthizer is deeply concerned about the rapid growth of the trade deficit with Vietnam (2016: US$32bil). Phuc gets the double squeeze in the firm handshake with President Trump. One must hope he knows where he stands at the end of his visit last Wednesday.
Phuc was the first Asean leader to visit Washington since Trump’s election as president. Philippines president Rodrigo Duterte has not taken up Trump’s invitation. Neither has Thailand’s Prime Minister Prayut Chan-o-cha.
Apart from a report that the Vietnamese prime minister said he was waiting to welcome Trump to Danang for the Apec summit in November, and a statement he made expressing disappointment that America had withdrawn from the Trans-Pacific Partnership, there has been no indication that anything pertaining to Asean had been raised – apart, of course, from Vietnam’s position on the South China Sea.
This is the way of Asean. National concerns and the national interest come first. There is not even some kind of debriefing or discussion on or before a visit of such import. Such a shame.
Perhaps Malaysia should take the lead and try to make a difference. As Trump will be coming for the Asean summits in Manila, including US-Asean and the EAS, would it not make sense to prepare a regional position paper on trade with the US?
We can leave the South China Sea issue pretty much alone as it divides more than unites Asean. But surely there must be consensus on free trade, as the AEC is founded very much on that principle.
Should not Asean take a common position on free trade in discussion with the American president? Not one based on generalities but on specifics and benefits, including to those on the supply chains (in terms of employment, revenue and taxes) before imports reach the US destination, not to mention the benefits to consumers in respect of choice, price and inflation.
Instead of just all the normal niceties, could not the leaders meeting incorporate a short, sharp presentation on the benefits of free trade to America and the costs to its economy of subsidy, support and inefficiency?
Already, it has been estimated about three quarters of job loss in America is attributable to employment displacement through technological development. Not through exports to America.
Everyone wants that 20 minutes with Trump. Asean should not fritter it away with amiable general chatter.
Of course, Malaysia has its own particular issues with the US which could be raised in a visit by the prime minister, perhaps at the end of the year or early next year.
By that time, of course, the 90-day “investigation” into the surpluses of countries on the list of 16 (Malaysia’s US$25bil puts it ninth on that list), which technically began on April 7, would have been completed.
There would be plenty to discuss then, even as bilateral representations would have been made at the working level before and after expiry of that period and whatever subsequent American actions.
Other issues, of course, are outstanding on which views can be exchanged, including on investment and technology. Hopefully, by that time, things would have settled down, that sense can be made out of the disorder in Washington.
Tan Sri Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute.
By Tan Sri Dr Munir Majid
Tan Sri Dr Munir Majid, chairman of Bank Muamalat and visiting senior fellow at LSE Ideas (Centre for International Affairs, Diplomacy and Strategy), is also chairman of CIMB Asean Research Institute.
Continuing the climate battle, without the US
https://youtu.be/vDyZy-VRyAY
With President Trump pulling out from the Paris agreement, the US has lost membership of the community of nations that subscribe to humanity's fight for survivial against climate change.
SO in the end President Donald Trump decided to pull the United States out from the Paris Agreement on climate change.
Just as disturbing as the withdrawal was Trump’s speech justifying it. He never acknowledged the seriousness or even the existence of the global climate change crisis, which poses the gravest threat to human survival. He lamented that the Paris accord would displace US jobs, mentioning coal in particular, while ignoring the jobs in renewable energy that would increase manifold if the United States tackled climate crisis seriously.
His main grouse was that the Paris agreement was “unfair” to the United States vis-a-vis other countries, especially mentioning China and India. And he grumbled that the United States would have to contribute to the Green Climate Fund.
The speech was riddled with misconceptions and factual errors.
For example, Trump said the Paris agreement would only produce a two-tenths of one degree Celsius reduction in global temperature by the year 2100, a “tiny, tiny amount”.
But scientists from the Massachusetts Institute of Technology said Trump badly misunderstood their study. “If we don’t do anything, we might shoot over five degrees or more and that would be catastrophic,” said MIT’s programme co-director John Reilly.
Condemnation came fast and furious from within the United States and around the world. Said John Kerry, former Secretary of State: “He’s made us an environmental pariah in the world ... It may be the most self-defeating action in American history.”
The Trump decision to leave Paris may well be a milestone marking an immense loss to the United States of international prestige, influence and power.
In a world so divided by ideology, inequality and economic competition, the Paris agreement was one rare area of global consensus to cooperate, on climate change.
For the United States to pull out of that hard-won consensus is a shocking abdication not only of leadership, but of its membership of the community of nations in its joint effort to face its gravest threat to survival.
The lack of appreciation of this great challenge facing humanity and the narrow-mindedness of his concerns was embarrassingly evident when Trump made his withdrawal speech.
He was more interested in reviving the sunset coal sector than in the promise of the fast-developing renewable energy industries.
He was convinced reducing emissions would cost millions of jobs, ignoring the record of other countries that have decoupled emissions growth from economic growth.
He was miserly towards poor countries which are receiving only a fraction of what they were promised for climate action, while celebrating hundreds of billions of dollars of new armaments deals.
He complained that the United States is asked to do more than others, when in fact the nation has the highest emissions per capita of any major country and its pledges are significantly lower than Europe’s.
He saw the speck in everyone else’s eyes while being oblivious to the beam in his own.
With or without the United States, the negotiations on how to implement the agreement will continue in the years ahead.
A complication is that America has to wait four years before the announced withdrawal can come into effect.
The United States will still be a member of the Paris agreement for the rest of Trump’s present term, although he announced he will not implement what Barack Obama had committed to, which is to cut emissions by 26%-28% from 2005 levels, by 2025. This defiance will likely have a depressing impact on other countries.
While a member, the United States could play a non-cooperative or disruptive role during the negotiations on many topics.
Since Trump has already made clear the United States wants to leave the pact, and no longer subscribes to its emissions pledges, nor will it meet its US$3bil (RM12.8bil) pledge on the Green Climate Fund, it would be strange to enable the country to still negotiate with the same status as other members that remain committed to their pledges.
How to deal with this issue is important so that the United Nations Framework Convention on Climate Change negotiations are not disrupted in the four years ahead.
Finally, Trump’s portrayal of developing countries like India and China as profiting from the US membership of the Paris Agreement is truly unfair.
China is the number one emitter of carbon dioxide in absolute terms, with the United States second and India third. But this is only because the two developing countries have huge populations of over a billion each.
In per capita terms, in 2015, carbon dioxide emissions were 16.1 tonnes for the United States, 7.7 tonnes for China and 1.9 tonnes for India.
It would be unfair to ask China and India to have the same mitigation target as America, especially since the United States has had the benefit of using or over-using more than its fair share of cheap fossil-fuel energy for over a century more than the other two countries.
A recent New York Times editorial (May 22) compared the recent performance of India and China with the recent actions of the United States under President Trump.
It states: “Until recently, China and India have been cast as obstacles ... in the battle against climate change. That reputation looks very much out of date now that both countries have greatly accelerated their investments in cost-effective renewable energy sources – and reduced their reliance on fossil fuels. It’s America – Donald Trump’s America – that now looks like the laggard.”
President Trump has taken the United States and the world many big steps backwards in the global fight against global warming. It will take some time for the rest of the world to figure out how to carry on the race without or despite the United States.
Hopefully the absence of America will only be for four years or less.
By Martin Khor
Martin Khor is executive director of the South Centre. The views expressed here are entirely his own.
Anger as Trump announces US withdrawal from global climate deal
WASHINGTON: President Donald Trump announced America’s shock withdrawal from the Paris climate accord Thursday, prompting a furious global backlash and throwing efforts to slow global warming into serious doubt.
In a sharply nationalistic address from the White House Rose Garden, Trump announced the United States would immediately stop implementing the “bad” 195-nation accord.
“I cannot, in good conscience, support a deal that punishes the United States,” he said, decrying the “draconian financial and economic burdens the agreement imposes on our country.”
Trump repeatedly painted the pact — struck by his predecessor Barack Obama — as a deal that did not “put America first” and was too easy on economic rivals China, India and Europe.
“I was elected to represent the citizens of Pittsburgh, not Paris,” he said. “We don’t want other leaders and other countries laughing at us anymore. And they won’t be.”
Trump offered no details about how, or when, a formal withdrawal would happen, and at one point suggested a renegotiation could take place.
“We’re getting out but we’ll start to negotiate and we will see if we can make a deal that’s fair. And if we can, that’s great. And if we can’t, that’s fine,” he said.
That idea was unceremoniously slapped down by furious allies in Europe, who joined figures from around the United States and the world in condemning the move.
“The agreement cannot be renegotiated,” France, Germany and Italy said in a joint statement.
Worst polluters
The United States is the world’s second largest emitter of greenhouse gases after China, so Trump’s decision could seriously hamper efforts to cut emissions and limit global temperature increases.
Amid Trump’s domestic critics was Obama, who said the United States was “joining a handful of nations that reject the future.”
Nicaragua and Syria are the only countries not party to the Paris accord, the former seeing it as not ambitious enough and the latter being racked by a brutal civil war.
Hillary Clinton, Trump’s opponent in last year’s White House race, called the decision to pull out a “historic mistake.”
“The world is moving forward together on climate change. Paris withdrawal leaves American workers & families behind,” she said in a tweet.
The Democratic governors of New York, California and Washington states formed a quick alliance, vowing to respect the standards agreed on under the Paris deal.
In New York, some major buildings, like the World Trade Center and City Hall, were lit green in solidarity with the climate agreement, echoing a move in Paris.
With much of the implementation of the accord taking place at the local level, the Paris accord’s supporters hope the deal will be in hibernation rather than killed off entirely.
Trump’s decision is likely to play well with the Republican base, with the more immediate damage on the diplomatic front.
The US president called his counterparts in Britain, Canada, France and Germany to explain his decision.
But traditional US allies were uncharacteristically blunt in their condemnation of the move, which comes amid already strained relationships with the hard-charging president.
Germany said the US was “harming” the entire planet, and European Commission President Jean-Claude Juncker called the decision “seriously wrong.”
Trump the showman
Ever the showman, the 70-year-old Trump had given his decision a reality TV-style tease, refusing to indicate his preference either way until his announcement.
Opponents of withdrawal — said to include Trump’s daughter Ivanka — had warned that America’s leadership role on the world stage was at stake, along with the environment.
A dozen large companies including oil major BP, agrochemical giant DuPont, Google, Intel and Microsoft, had urged Trump to remain in the deal.
Ultimately, the lobbying by Trump’s environmental protection chief Scott Pruitt and chief strategist Steve Bannon urging the president to leave won out.
In the wake of the announcement, Tesla and SpaceX boss Elon Musk and Disney chief Robert Iger announced they would no longer take part in presidential business councils.
“Climate change is real. Leaving Paris is not good for America or the world,” Musk said.
GE head Jeff Immelt said he was “disappointed” with the decision: “Climate change is real. Industry must now lead and not depend on government.”
'Morally criminal'
White House officials acknowledged that under the deal, formal withdrawal may not take place until after the 2020 election.
Hours ahead of Trump’s announcement, China’s Premier Li Keqiang pledged to stay the course on implementing the climate accord in a joint press conference with German Chancellor Angela Merkel, and urged other countries to do likewise.
China has been investing billions in clean energy infrastructure, as it battles to clear up the choking pollution enveloping its cities.
China and the US are responsible for some 40 percent of the world’s emissions and experts had warned it was vital for both to remain in the Paris agreement if it is to succeed.
The leader of Asia’s other behemoth, Indian Prime Minister Narendra Modi — who is due to visit the White House shortly — has said failing to act on climate change would be “morally criminal.”
Trump’s announcement comes less than 18 months after the climate pact was adopted in the French capital, the fruit of a hard-fought agreement between Beijing and Washington under Obama’s leadership.
The Paris Agreement commits signatories to efforts to reduce greenhouse gas emissions that cause global warming, which is blamed for melting ice caps and glaciers, rising sea levels and more violent weather events.
They vowed steps to keep the worldwide rise in temperatures “well below” two degrees Celsius (3.6 degrees Fahrenheit) from pre-industrial times and to “pursue efforts” to hold the increase under 1.5 degrees Celsius.
THE biggest concern among Malaysians, as we head towards the general election, is the cost of living. It’s as simple as that.
There have been plenty of political and religious side shows, but for many Malaysians, regardless of race, settling the many bills each month is what worries them the most.
Although Malaysia remains one of the cheapest countries to live in, its citizens have been spoilt for too long.
We are so used to having so many food items subsidised, including sugar, at one time, to the point that some of us have had difficulties adjusting ourselves.
Our neighbours still come to Malaysia to buy petrol, because ours is still cheaper than theirs.
But, as in any elections, politicians will always promise the heavens to get our votes. One of the promises, we have already heard, is the abolishment of the Goods and Services Tax.
No doubt that doing away with GST would appeal to voters, but seriously, even the opposition politicians calling for this are aware that it is a counter-productive move.
In the words of Tan Sri Mohd Sheriff Mohd Kassim, a highly-respected retired government servant, “it is too much of a fairy tale.”
The danger, of course, is that populist electoral pledges are always appealing, even if they are not rational.
Malaysia cannot depend on just about two million tax payers to foot the bill in a country of over 30 million people. It is unfair and unsustainable.
Taxing consumption gives more stability to revenue because income tax is regarded as highly volatile, as it depends very much on the ups and downs of businesses, according to Mohd Sheriff. When the market is soft, revenue collection always sees a dip.
For the government, which has already been criticised for having such a huge civil service, without GST, it could even mean its workers may not get paid when there is a downturn in the economy.
In the case of Malaysia, we have lost a substantial amount of revenue following the drop in oil price.
So, when politicians make promises, claiming plugging leakages is sufficient to end GST, it is really far-fetched and irresponsible.
The Malaysian tax system needs to continue to be more consumption-oriented to make it recession-proof, and, more importantly, the tax net just has to be widened. The bottom line is that, it is grossly unfair for two million people to shoulder the burden.
The government has done the right thing by widening the tax base and narrowing the fiscal deficit. The move to implement GST, introduced in 2014, has been proven right.
GST is needed to provide a strong substitute as a tax consumption capable of off-setting revenue loss from personal and corporate tax.
Beginning next month, India will join nearly 160 countries, including Malaysia, in introducing GST. Like Malaysia, when GST was first introduced, plenty of loud grumblings and doubts have rolled out.
Unlike Malaysia’s flat 6% across the board, India is introducing a more complicated four-tier GST tax structure of 5%, 12%, 18% and 28%, with lower rates for essential items and highest for luxury and demerits goods that would also attract additional cess.
In Singapore, GST was introduced on April 1, 1994, at 3%. The rate was increased to 4% in 2003, then 5% in 2004. It was raised to 7% on July 1, 2007.
Some politicians came under fire recently for purportedly calling for the abolishment of GST, however, some others clarified that they had merely called for a reduction in the tax’s percentage.
Another top opposition politician has come out as the strongest opponent of GST, reportedly saying the claim that Malaysia needs GST is false.
Some other politicians have described GST as regressive, but have not come out with clear ideas on how it should be tackled.
Nonetheless, the ruling party should not make light of these electoral promises.
For many in the urban middle class, they feel the squeeze the most.
They have struggled against the rising cost of living, paying house and car loans, and earning deep levels of debt, as one report aptly put.
The middle class, consisting of over 40% of Malaysians, is also in the income tax bracket, it must be noted.
Last year, an economist was quoted saying that 2016 was a year of a shrinking urban middle class and a happy upper class.
Shankar Chelliah, an associate professor at Universiti Sains Malaysia, said that the Malaysian middle class shrank in metropolitan centres across the country, and that most of its members would end the year almost 40% poorer than they were in 2015.
He said this would be due to the withdrawal of cooking oil and sugar subsidies, depreciation of the ringgit, decrease in foreign inflows and increase in outflows, among other factors.
For many in this middle class range who do not qualify for BR1M handouts, the government clearly has to come up with a range of programmes which can relieve them of these burdens.
It isn’t race or religious issues that will appeal to voters – they want to know how they can lead better lives, and if the opposition thinks contentious issues will translate into votes, they will be in for a surprise.
It is true that the heartland will continue to deliver the crucial votes, and the ruling party will benefit from this, but Malaysia has also become more urban and more connected.
At the end of the day, it is the bread and butter issues that matter most. Let’s hear some solid ideas and programmes which will reduce the burden of Malaysians.
By Wong Chun Wai On the beat, The Star
Wong Chun Wai began his career as a journalist in Penang, and has served The Star for over 27 years in various capacities and roles. He is now the group's managing director/chief executive officer and formerly the group chief editor.
On The Beat made its debut on Feb 23 1997 and Chun Wai has penned the column weekly without a break, except for the occasional press holiday when the paper was not published. In May 2011, a compilation of selected articles of On The Beat was published as a book and launched in conjunction with his 50th birthday. Chun Wai also comments on current issues in The Star.
PUTRAJAYA: The entry of a major Chinese carmaker into Proton Holdings Bhd will not only ease its financial woes, but also bring fresh capacity to the group’s underutilised factories.
Zhejiang Geely Automotive Co Ltd plans to turn Malaysia into its global hub to manufacture all of its right-hand drive cars, including its premium Volvo brand.
Geely will take a leadership role in production, sales and marketing. Proton will be responsible for distribution of the brand in Malaysia.
These were among the highlights mentioned at the signing ceremony in Putrajaya between DRB-Hicom, the parent company of Proton, and Geely.
Proton and Geely yesterday signed an agreement that would see Geely take a 49.9% stake in Proton. Both parties have not finalised the price Geely would pay for the stake.
Through the partnership, Geely executive vice-president and chief financial officer Daniel Li said Geely would focus on assisting Proton to sell 500,000 cars in Malaysia and around the region by 2020.
He said Geely would be contributing technology, talent and money to Proton. These include platform-sharing that would see the development of Proton’s first-ever SUV model from Geely’s best selling model – the Boyue.
DRB-Hicom group managing director Datuk Seri Syed Faisal Albar said in the competitive automotive industry, partnership among carmakers globally was common.
A partnership would also further expand Proton’s reach to other markets and give it better economies of scale.
“This partnership with Geely will create more jobs in Proton,” he told reporters yesterday.
Proton has a workforce of about 10,000 which produces about 100,000 cars a year. In 2016, sales of Proton cars dropped 30% to 72,290 units from 102,174 previously.
The company reported a loss of almost RM1bil last year.
Proton’s Tanjung Malim plant, which is designed to produce a million cars every year, will be made a new manufacturing hub for Geely.
Syed Faisal said Proton would relocate its entire production from Shah Alam to Tanjung Malim within five years.
Despite the entry of a new foreign partner, Proton will maintain its national car status. This means its industrial linkages, including vendors and dealers, will not be affected by the change in shareholding.
Under the heads of agreement signed between DRB-Hicom and Geely, the Chinese carmaker will take a 49.9% equity interest in Proton and also a controlling stake in Lotus, the British sportscar maker, from Proton.
No financial details were disclosed in the sale of a stake in Proton, while for Lotus, Geely would be paying £51mil (RM284mil) for a 51% stake in Lotus.
Syed Faisal said DRB-Hicom planned to sign a definitive agreement with Geely in July.
Also present at the signing ceremony was Second Finance Minister Datuk Seri Johari Abdul Ghani, who clarified that with the partnership with Geely in place, Proton would need to repay its RM1.25bil soft loan from the Government.
As part of the conditions for the soft loan, Proton was required to collaborate with a well-known strategic partner.
The requirement to collaborate with a well-known strategic partner was imposed on Proton as part of the conditions issued by the Government for its approval of the RM1.25bil soft loan to Proton, in which a bulk of the money was used to pay its vendors.
Separately, Johari said Proton was entitled to a RM1.1bil reimbursement from the Government for its RM3.5bil spent on research and development in the past.
Johari also said there would be no more “subsidy” for Proton from now on, and that the Government would no longer have a golden share in Proton with Geely entering into a partnership with the national carmaker.
Source: The Star by intan farhana zainulandizwan idris
IPOH: The decision by Proton to embark on a partnership with China’s Zheijiang Geely Automotive Co Ltd is timely because cars are predicted to be next in line to undergo sweeping innovations.
International Trade and Industry Minister II Datuk Seri Ong Ka Chuan said that in light of Industrial Revolution 4.0, bringing in Geely as Proton’s strategic partner would ensure the Malaysian company’s survival as cars increasingly adopt digital technology.
Industrial Revolution 4.0, or Industry 4.0, is the current trend of automation and data exchange in manufacturing technologies which include cyber-physical systems, the Internet of Things and cloud computing.
“After attending the Hannover Messe, the world’s biggest trade fair for industrial technology, I learned that self-driving cars are the next big thing.
“This means that you are looking at a future where cars will have no steering wheel.
“With just the touch of a panel, the car will bring you to your destination,” Ong said after witnessing the swearing-in of the new committee of the Perak Chinese Cemeteries Management Association yesterday.
He said Geely would be Proton’s channel to embracing technological innovations.
“I’m not saying to expect Proton to be a frontliner in this, but at least with a strategic partner it can move along with the times,” he added.
He said Geely would also open a new market for Proton, which was important for the national carmaker’s survival.
He said it was not a decision made purely in favour of China.
“Over the years, it’s been no secret that Proton accumulated losses and will need a big market to cater to in order to settle all the debts. This is the reality.
“Proton only narrowly met its sales target of 580,000 units last year, while Chinese brands sold 28 million units,” he said.
In view of its small volume, Ong said it would be difficult for Proton to fund sophisticated research and development initiatives.
“We need a larger market for things to work out. The Industrial Revolution 4.0 is all about innovation. We can’t do it ourselves, which is why working with advanced nations is our best bet,” he added.
A textbook bubble in Bitcoin prices is developing right now.
And it has everything to do with Bitcoin's investors.
I'm probably not going to gain any friends
with this perspective. But there are inarguable factors that suggest
Bitcoin's own buyers are irrationally driving up prices. And their
exuberance is setting the market up for a crash.
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Money is typically used in exchange. And while Bitcoin can
be used in exchange, it's largely not. Gary Schneider, Professor of
Accounting at California State University, says only about 10% of
Bitcoin is held by people who use it as currency. The large majority are
speculators hoping to sell at higher prices.
The fact that the market is dominated by
speculators is not necessarily the problem for Bitcoin. And here's where
I'm sure to piss some people off... The problem for Bitcoin is its
buyers.
Who are they?
Well, according to a recent survey, approximately 60% of Bitcoin owners are under 35 years old.
In short, most Bitcoin buyers are
millennials. And that's all we need to know about them to make an
inarguable point (told you I wouldn't be making any friends here).
The fact is this: A 35-year-old speculator
intrinsically has much less experience in risk management than a
60-year-old. And remember, most Bitcoin owners are mostly speculators,
as opposed to users of the product.
AND remember they're speculating on a currency, which is among the most volatile of financial instruments.
AND remember they're speculating on what essentially amounts to a new, experimental currency.
All this considered, Bitcoin looks to me as one of the (if not the) most speculative financial instruments available...
Expect for Bitcoin's derivatives, of course.
Yes, believe it or not, Bitcoin has a
futures market. And there are products that offer even more risk. On its
Perpetual Bitcoin/USD Swap Contracts, BitMEX offers up to 100x
leverage!
But to really understand why I think
Bitcoin is eventually headed for a crash, let's consider the most famous
market bubble in history...
Dutch Tulip Mania
In the 17th century, formal
futures markets developed in the Dutch Republic, providing the
infrastructure for a massive bubble in the price of tulip bulbs.
The tulip first became fashionable in
France, where early modern ladies of the aristocracy began sporting the
flower on their dresses. From there, the tulip became the flower to show
off social status and wealth. The demand for bulbs subsequently
skyrocketed, and prices immediately followed.
At the peak of Tulip Mania in 1637, a
single tulip bulb could cost as much as 10,000 gilders, the price of a
nice middle-class townhouse in Amsterdam. According to one author, 12
acres of land was once offered for one rare bulb. For a flower bulb!
The Semper Augustus was the most coveted of all Dutch tulips.
Of course, the bubble eventually burst. The
price of tulip bulbs collapsed, and fortunes in perceived value
disappeared over night.
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If we consider whom the people were who
took part in Dutch Tulip Mania and compare them to the majority of
Bitcoin owners, it seems both groups share the same shortcomings.
First, we know both groups are speculators
betting on the hot new product. But I think we can also make good
assumptions to compare the investment sophistication of the Dutch tulip
investors and today's Bitcoin buyers.
Because formal futures markets were only
recently developed, the Dutch tulip buyers were inherently
unsophisticated investors. All of them. They simply didn't have the
experience.
The majority of today's Bitcoin buyers are
generally younger, so they share the same inexperience. For many Bitcoin
buyers, I imagine it represents their first real investment. They
simply don't have experience in risk management. And I think that's
pretty clear considering some are buying products with 100x leverage!
Bitcoin could be the tulip of the 21st
century with the development of a textbook bubble. And I think could be
setting itself up for an eventual crash.
Now, even though I've been talking about a
crash in Bitcoin prices, there's an epilogue to the Dutch tulip story
that's often overlooked... and that actually provides a bullish outlook for the technology.
Truth is, the Dutch tulip bubble never
really ended... it evolved. The price of tulip bulbs collapsed in the
17th century. But the flower industry at large eventually recovered and
has never been bigger. Global floral production value is currently
estimated at $55 billion.
People still pay thousands for rare
flowers. In fact, an anonymous buyer paid over $200,000 for a rare
orchid in 2005. And that's not even considered the most expensive flower
in the world. Rose breeder David Austin spent 15 years and $5 million
to develop Juliet rose.
My point is, the tulip as an individual
product lost favor. But the collapse of the tulip market didn't
completely kill the flower market. In the same way, I don't expect a
collapse of Bitcoin prices to completely kill the blockchain-based
currency market.
Bitcoin is simply one product of many blockchain-based currencies. A crash in Bitcoin would throw a wrench in the blockchain-based revolution. But there is little doubt that blockchain technologies are the future.
As we speak, every major central bank and
large financial institution is researching how to implement blockchain
into its own systems. It has already been proven to eliminate
verification redundancies and improve security, and new applications are
being tested every day.
So while I think Bitcoin itself could
eventually be headed for a crash, the blockchain technologies that are
supporting all these digital currencies seem set for unprecedented
growth.
Our labour productivity fell short of our 11th Plan target of 3.7% growth by 0.2% to 3.5% last year. This is a small decline and has been rightly explained with confidence by the Minister of Trade in positive terms when he said that Malaysia was “on track”.
Trump tilts 'America First' toward 'America Alone' 
Geely confirms 49.9% stake in Proton | 
