US Military Strategy to Asia: Poke a Stick In China's Eye

A military pivot to Asia

By TANG SIEW MUN

‘Pivoting to Asia’ is fast becoming the centrepiece of US strategic and diplomatic objectives.

IF there were doubts about America’s “return” to Asia, all were dissipated with the release of the new strategic guidance report by the Pentagon on Jan 5.

Washington’s grand objective can be gleaned from the title of the report, “Sustaining US Global Leadership: Priorities for 21st Century Defence”.

While the report affirms US interests worldwide and renews its pledge to uphold its commitments to its allies and friends, it unambiguously stresses the importance of Asia. It states that the US “will of necessity rebalance towards the Asia-Pacific region”.

The report follows through the grand strategic vision enunciated by Secretary of State Hillary Clinton in an article published in Foreign Policy where she declared that “the future of politics will be decided in Asia, not Afghanistan or Iraq, and the United States will be right at the centre of the action”.

“Pivoting to Asia” is fast becoming the centrepiece of US strategic and diplomatic objectives.

Before “pivoting” became the cornerstone of the US-Asia policy, the region was abuzz with the US “return” to Asia. China, understandably, was especially agitated.

Indeed, there are segments in China who view the US “return” to Asia with a sense of foreboding, as US initiatives are seen as stratagems to contain China’s growing influence and power in the region.

If hitherto there were concerns about the US return to Asia, then Washington’s “pivot movement” to Asia will certainly generate more discussion and potentially countervailing measures.

To be sure, “pivoting” is different from “returning”. In general, a US return would be marked by its heightened diplomatic engagement, especially with its newfound interest and support for multilateral initiatives such as the East Asia Summit.

A US “return” to Asia would be largely viewed by South-East Asia as a positive development, especially in an uncertain strategic environment punctuated by China’s expanding economic and military power.

In this regard, the US is seen as a reliable and indispensable power to balance and, if necessary, to check Chinese aggressive designs.

However, pivoting in the context of the Pentagon report may see an increased US military presence in the region.

South-East Asia is no stranger to the US military. Up until November 1991 when the Clark Air Base was returned to the Philippines, the US had maintained a large military footprint in the region.

The US has close relations with its treaty partners Thailand and the Philippines. In November 1990, the US negotiated an arrangement with Singapore that gave it access to and use of facilities in the city state.

Singapore is also home to the US Navy’s Logistics Group Western Pacific that provides logistics support for the US Seventh Fleet.

For many decades, the US had consistently maintained a high strategic profile through bilateral and multilateral military exercises and other military-to-military cooperation.

The hubs-and-spokes system of bilateral security treaties, which includes South Korea, Japan and Australia, has long been regarded as the backbone of the region’s security.

The strategic presence of the US in, and its engagement with, the region is often quoted as one of the primary reasons for South-East Asia’s stability and growth.

The argument goes that the US provided the security umbrella which allowed South-East Asian states to limit their defence outlays.

This argument was certainly valid during the Cold War era when the Asean states were undoubtedly pro-American and cooperated to varying degrees with the US.

In fact, when the US Air Force pulled out of the Clark Air Base, there was a sense of trepidation and the perception that the US was withdrawing from the region.

There was genuine fear about a power vacuum which would “invite” other major powers to supplant the US’ dominant role in regional security.

Fortunately, these fears were unfounded as the expected jostling for primacy in Asia and the feared US retreat did not materialise.

While the US’ diplomatic and political “return” to the region is applauded and welcomed, reception for its “pivot to Asia” may be less enthusiastic.

There are several reasons for such pessimism. Granted that the pivot strategy will be multifaceted and not uni-dimensionally focusing on military power.

However, it is the latter component of the pivot strategy that may prove to be most controversial.
To the extent that pivoting entails an enlarged and more visible military footprint, it will be destabilising and anathema to regional security.

An increased US military profile will generate what academics understand as a “security dilemma” and make China feel uncomfortable, to put it mildly.

A case in point is the recent announcement of the deployment up to 2,500 US Marines on a “rotational” basis in Darwin, Australia.

Washington and Canberra were quick to emphasise the transient nature of the deployment, but whichever way one attempts to slice and dice “Darwin”, in the eyes of the Chinese and the rest of South-East Asia, this move puts hundreds of well-trained and highly mobile US military personnel at the edge of the region.

It is a potential “beach head” for the US to organise and launch military expeditions into South-East Asia and the Indian Ocean.

We can also expect to see more of the Stars and Stripes in the region.

Last month, Chief of Naval Operations Admiral Jonathan Greenert wrote in the US Naval Institute’s Proceedings that the US is contemplating deploying littoral combat ships in Singapore and “other places” in South-East Asia.



We must ask ourselves whether there is an imminent threat in the region that necessitates increased fire power from the US.

There is a point beyond which an increased military presence provides a negative marginal return. More is not always necessarily better.

There may be quarters in South-East Asia that embrace a larger US military role and profile. Notable among these are the “hedgers” who no doubt see the US as the ultimate “insurance policy” to guard against strategic uncertainty.

When it is diplomatically untenable and militarily impractical to balance against China’s expanding military might, then the growing presence of the US is reassuring, to say the least.

It cannot be denied that the People’s Liberation Army’s (PLA) growing muscle is being closely monitored and analysed.

While there is no unified response to this phenomenon, it is accepted that South-East Asia cannot match the PLA gun for gun.

A military response is destructive and ultimately futile. The preferred modality is to embed China in a web of regional and multilateral cooperation mechanisms.

The Asean China Free Trade Area (ACFTA) and the Asean Plus Three (APT) are but two examples.

South-East Asia should stay the course and continue its ongoing successful engagement of China. However, the military component of “pivoting” may serve to amplify the strategic divide and suspicions between China and South-East Asia.

The implications of “pivoting” are multiple. For a start, the US will seek a larger voice and role in the region.

Secretary Clinton spoke for many Ameri­cans when she asserted that Asia is the future and correspondingly the US must be in Asia.

The substantive question that needs to be asked is, “When the US leads, should Asia fall in line and accept US leadership?”

It would be unrealistic for Washington to assume that Asia will do this. Acceptance of US leadership is not universal, nor is it automatic.

Support for the US in Indonesia, South-East Asia’s largest country, is slipping. The Pew Global Attitudes Survey showed it has declined from 56% in 2009 to 49% in 2010.

Asia does not dance to the tune of Washing­ton, nor does it march to the beat of the Chinese.

While Washington sees its future in Asia, it needs to be mindful that the success of its “pivot” strategy is contingent on the concurrence and support of Asia.

The operative words are cooperation and collaboration.

The region’s strategic uncertainty – read as fear of China – cannot be resolved by the placement of more US troops in the region or through military grandstanding.

It is not about being pro-US or anti-China but how to build a stable, secure and prosperous future. The US pivot to Asia should be welcomed to the extent that it contributes constructively to a better and brighter future for Asia.

> The writer is Director (Foreign Policy and Security Studies) at the Institute of Strategic and International Studies (ISIS) Malaysia. The views are his own.

Obama's New Defense Strategy: Poke a Stick In China's Eye And See What Happens 

This new "Defense Strategy" of President Obama's is a deliberate provocation of the Chinese, as was his trip to Asia last month when he made his none too cute "We're Back" declaration.  

Last Month in Australia Obama was quoted as saying, “Let there be no doubt: in the Asia-Pacific in the 21st century, the United States of America is all in.” 

If there was doubt in anyone's mind in Beijing, about American intentions Obama dispelled that doubt and any room for reasoned diplomacy by elaborating that this is a “deliberate and strategic decision” America is “here to stay”.    What an affront to the Chinese!  We were hoping the State Department would let this new offensive go quietly away.   Unfortunately, that is not to be.  Obama's "Strategy" is a dangerous road to take.  If it is intended to assist him in his re election efforts it will seriously backfire.  Unfortunately, the consequence won't be just Obama's and the Democrat Party.  The outcome of this foreign policy fiasco  will fall squarely on the shoulders of America and it's allies.  This new policy is literal insanity. It would appear Obama is playing right into the hands of Hu Jintao and the Chinese military leaders who are just chomping at the bit for a fight.    An Article in the Economist in a much more nuanced and cautious fashion discusses the concerns many other's have about the manner in which Obama is flexing his muscles and apparently bullying for a fight with the Chinese.  

China hasn't issued a stamp with this ferocious a dragon
since 1878 (Photo Xinhua)

This is the year of the dragon and they must be deft dumb and blind over in foggy bottom to have missed the significance the Chinese attribute to this auspicious event.  The dragon was a symbol of  China's Imperial Power and today it is a not too subtle symbol of China's Military, Political and Economic power.  That China chose to reissue such a ferocious stamp this year is no coincidence.

We have to ask ourselves why has Obama picked this time to insult and bully a world power that is vastly superior to our own, certainly in it's own backyard.  Does anyone think the Chinese are going to stand idly by as Obama in his arrogance, asserts his "right" to "ensure China's peaceful rise to power".    The implied threat in that statement from Obama and the Clinton State Department is palpable.  The US, in the person of Obama, is saying, "We're going to come into China's sphere of influence

and arbitrate and adjudicate any and all issues we decide have a national security interest to us."  Certainly, the United States should not cede it's position as a world power and it's interests but to do so in such an ignorant and arrogant fashion is inexcusable.

A bizarre thought occurs to us that given Obama's own love of Socialism and Marxism maybe his provocation of China is intended to give Hu and General Lin Yuan, (A possible successor to Hu) an excuse and license to go to war with America.

Posted by FarmerRicky

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Yes, Facebook addicts, must get out to socialize more!

 

Facebook addicts should get out and socialise more

The Star/Asia News Network

WITH every new level of technology comes a corresponding wave of casualties.

From theft victims careless with their bank ATM cards to gullible folk cheated in online scams, the story is familiar enough.

So today we see the rise of Facebook addicts. The fact that this involves victims without criminal perpetrators does not make it any less serious.

Facebook addiction has been known to affect the psychological and physical health of its victims.

It also affects the personal relationships that victims had, or might have had, with others around them.

It is therefore a personal, domestic and social problem. The affliction is universally acknowledged by health professionals who have dubbed it Facebook Addiction Disorder (FAD).

It is compulsive, invasive of one's personal life, distorts priorities, damages one's capacity to relate to others around them and disorientates one to reality.

There are withdrawal symptoms, pangs of “cold turkey” and it is all downright senseless and wasteful.
How can it then be addressed effectively?

Relying on addicts to stop their addiction is not going to work. Neither will legislation, since Facebook can all too easily be accessed through computers or smartphones.

With children and young adults, FAD is particularly pernicious because it eats away at their health in their formative years.

Yet, it is with young addicts that the problem is perhaps easier to avoid with prudent parental intervention.

Adults as parents or guardians therefore have a responsibility to ensure that those under their care do not fall victim to FAD. And as adults anyway, with or without others under their care, they need to set an example by not falling victim themselves.

If push comes to shove, there is always the off switch.

For Malaysians to “have the most Facebook friends in the world” may at first sound gratifying, but in reality it is a condition ridden with problems and liabilities.

The best friends tend to be those you encounter in the flesh. A “friend” in cyberspace may be very unreal, whether as a notional friend of a friend, a fictional character, or even a predator.

If Malaysians have the most virtual friends in the world, it may well be that we have the least real friends in the world. And that would be another tragedy in itself.



Hi, I was a Facebook addict

I REFER to “Hooked on FB”  (Jan 20), on Facebook Addicton Disorder (FAD), and agree with Dr Nivashinie Mohan’s statement that people with this disorder “continue to go undetected because most addicts do not realise or admit they have a problem”.

If there had been a circle of addicts on the floor at the FAD forum, I would have introduced myself and said: “Hello everyone, I was a Facebook addict”.

When I decided to navigate to the “deactivate account” button last December, I thought I was making the hardest decision I would ever make, having been a Facebook member since 2006.

I did not have hundreds and thousands of friends (most of whom we ignore anyway and just concentrate on the five to ten so-called friends), but it was the excitement of waking up every morning literally dying to know what the rest of the world was up to.

I was an active lurker looking into my friends’ beautifully edited photos of where they went on holiday, what they cooked for their children last night, friends updating their status every five minutes (as if having a huge following on Twitter wasn’t enough) somebody’s wedding, graduation and etc.

After a while, I felt funny. Why is this so important? Why can’t we call, visit or text each other instead? Wouldn’t this be more intimate, more humanly possible to touch base sans the social network?

Aren’t we concerned about the security of our information over the Internet? A paedophile would have a field day ogling at our children’s profiles and the repercussions would be devastating.

And aren’t political and racial updates overly nauseating?

Don’t make me start with friends who actually upload positive thoughts by the dozen until you actually think they are really closet pessimists who crave attention (yes, that is yet another disorder).

Then again, self realisation is the best way to overcome any disorder, and admitting it is the next step to get oneself out of the problem. Who knows, maybe FAD sufferers may get help from support groups or toll free numbers in future.

To each his own, as the old saying goes.

For the majority, it is necessary to maintain one’s Facebook account as it is a vital part of one’s life and we are, as long as we are the ones in control.

For the minority, like me, we choose not to be the norm and will find other alternative communicating routes to get our messages across.

SUZLENE ZAKARIAH,
Seri Kembangan.

Have clear policy on FB for workers 

Bosses must devise solutions to deal with this IT challenge!

I WOULD like to share my opinion in relation to “Bosses face problem with workers wasting time on FB” (The Star, Jan 20). The use of social networking websites and its easy accessibility has posed a lot more challenges and problems to the employer than has been pointed out.

Social network, depending on the nature of the work, can be good or bad for productivity. For some it’s one of the most cost and time effective way to promote and achieve sales targets.

Some government agencies and NGOs use it in their work to reach more people and to better know their stakeholders.

For those who work long hours or are on the graveyard shift and are detached from family and friends, it may help reduce stress.

Social networking can be a recruitment tool. Some employers and recruitment agents use it to do background checks on employees.

On the converse, it can severely affect productivity as employees waste countless hours on social networking. When done in the office, it increases unwarranted Internet traffic and slows down office network speed.

A major issue which has got a lot of attention globally is employees making statements about their employers that are considered negative by the employer.

While statements which tend to lower the reputation of the employer in public can be considered libel, it is more complicated when it comes to employment relationships. There are two schools of thought.

In the UK, the employment tribunal upheld a decision by Apple to sack an employee for posting on Facebook his displeasure about his iPhone and various aspects of his company even though his remarks only reached certain people due to the privacy settings.

In the US, the National Labour Relations Board (NLRB) came to an opposite conclusion and found illegal a company’s decision to fire an employee based on disparaging remarks about her employer and on a work place incident she sent from her home computer 
.
I feel the UK approach is better. A negative statement by an employee can severely affect the employer. The company’s reputation is at stake, and it may affect the employer’s business goodwill and profits. Some job seekers might shun the company purely based on hearsay.

And, in a more sinister way, social networking can be used to disrupt industrial harmony by organising illegal strikes to cripple an entire industry and bring down the economy.

I don’t feel that a strict policy on social networking may discourage young ones from joining a particular company.

The main concern for the working young, or everyone for that matter, is the pay and benefits, and of course job satisfaction.

An employee frequently using social network at work should face disciplinary action to serve as a reminder to the perpetrator and to show others how serious the employer views such complacency.

And of course for the company to take disciplinary action it has to have rules to begin with. As long as there are no sanctions, employees will continually flout company rules and slack.

But again some might argue that it may not always be practical in real life as the world and society are addicted to social networking.

Some young employees, fresh to the working world, have no clue on responsible working etiquette and may think that employers don’t mind them engaging in social networking during work hours.

It is important that a clear policy is drawn up by the employers and brought to the attention of employees on how the company feels about it and how it affects them.

The responsibility of discipline at work does not start with the HR/IR practitioners. Our education system should have an active role in educating and shaping young ones who will be joining the work force one day.

Not only institutes of higher education like colleges and universities but schools as well should inculcate responsible work etiquette which includes being on the social network during work hours, among other things. Sadly, this is lacking.

While it is almost impossible to prevent employees from accessing social network sites, as it can be easily accessed through their smart phones, both employers and capable HR/IR practitioners have to come up with proper solutions to deal with whatever challenges advancement of technology throws at them.

JOHN MARK,Segamat.

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The natural evolution of markets

THINK ASIAN By ANDREW SHANG 

 

Market change: A general view of ebay headquarters in San Jose, California. Websites like ebay and Alibaba has eliminated geographical space by allowing transactions in rural markets to be done online. —Reuters

Man is a social animal. The 19th century sociologist and philosopher Georg Simmel argued that trade and exchange is “one of the purest and most primitive forms of human socialisation.” Last month, while travelling through remote parts of West Timor, in Indonesia, I was able to study first-hand how rural markets operate. I could not help wondering why so-called primitive markets such as these work so well when complex financial markets can be so dysfunctional?

Rural markets in East Timor are wonders of trade. Men and women in tribal costume converge on different villages on different days of the week. Everyone knows when to go to which village for these markets, which typically start at dawn when produce is fresh and often finish by 11am. Economists would surely call this scene of bustling rural commerce a “concentration of liquidity.”

As the late Stanford economist John McMillan argued, the market is a human construction- a tool. The market has features to make it work smoothly: mechanisms to organise buying and selling; channels for information flow; laws that define property rights, and self-regulating rules that govern behaviour.

Most rural markets are much more complex than they appear. They sell everything needed for daily life and have their own hierarchies. The stalls of wealthier, established traders are sheltered and in the best locations, while poorer traders just spread their wares on the ground. Specialisation is evident even in this basic setting there are designated places to buy textiles, fresh meat or fish, vegetables or household goods. These markets also function efficiently as information exchanges. Prices differ depending on who you are and what you know. Tourists pay more because they do not know the local language or rules, while locals bargain vigorously.

In these basic markets, you can observe the entire range of business evolution, from simple production, to wholesaling to final sale. Everything is designed for convenience and to reduce transaction costs. For instance, there are no roadside petrol pumps. Instead, petrol is sold in small bottles because the most common transport are motorbike taxis that carry as many as three passengers plus the occasional chicken or bag of rice.

The permeation of technologies like mobile phones and the internet even into these remote rural areas has accelerated the speed at which information travels through these markets. This means even lower transaction costs between business, between consumers, and from businesses to consumers. In some instances, use of websites like eBay and Alibaba have eliminated geographical space by allowing transactions in such markets to be done online.

With technology ending the isolation of rural markets and linking them to global markets, the production and marketing game is changing beyond recognition. A similar phenomenon occurred in the airline industry. Budget airlines use the internet to sell forward excess capacity at below average cost, thus filling their planes to capacity and maximising profits. This created a new market because before, many people could not afford to fly.

You see the effect of high transportation costs clearly in rural markets. Here, locally produced goods are ludicrously cheap, but imported good are very expensive.

The study of modern, sophisticated supply chains enables us to appreciate the fact that producers do not necessarily make most of their money in the product-to-consumer chain. The rule of thumb is that if a product costs US$1 to make, the distribution and transportation costs may account for US$3 of the US$4 final sale price to the consumer. Common conceptions of innovation still focus largely on creating new products, whereas services or process innovation are probably much more profitable and add more value than is generally understood.

To illustrate, the global trade regime still has a “hardware” focus, concentrating on physical trade rather than the more complex and less measured services trade. Apple innovated not in manufacturing, but in design and lifestyle. This means that it can sell a product at much higher prices than its competitors. Once it has captured a market, value creation comes from downloading new apps for the iPhone and iPad.

Financial services have emerged as one of the most profitable businesses, certainly until the last financial crisis. For a time before the 2007 crisis, the turn on capital in the financial sector was 20% per annum, significantly higher than for manufacturing and other real sector businesses.

With the benefit of hindsight, we now know there were two major reasons for the large profits in finance. The first is that the physical cost of creation of a financial derivative is almost zero, as it is an abstract product of its creator's imagination. For many, the reason to buy a derivative is to hedge and reduce risk. If a buyer believes that the hedge is useful, which it can be under specific circumstances then he or she will be willing to pay a premium for that hedge. A second reason is leverage. The greater the leverage, the larger the profits are for both lender and borrower. But there is a catch it adds systemic risk to the entire market and can be fatal to the over-leveraged borrower.

The FX Accummulator is a good example. It is a financial product that looks and feels like a wonderful foreign exchange hedge that yields good profits for the speculator. However, many were not aware that at certain price levels, the amount of margin called by the lender could be greater than the total assets held by the speculator. Thus, what appears to be a “safe” hedge can turn out to be toxic, particularly when markets are volatile.

This raises the question whether financial markets have evolved beyond the limits of social safety. University of Southampton Professor Richard Werner is one of the first to point out that there are two aspects of credit creation one that contributes to real value creation and one that does not. Financial markets have evolved into highly complex systems that consumers, financial experts or regulators do not fully understand. Increasingly, they contribute less to social utility and become systemically fragile.

As McMillan presciently pointed out, “markets are not miraculous. There are problems they cannot address. Left to themselves, markets can fail. Viewed as tools, markets need be neither revered nor reviled just allowed to operate where they are useful.”

Rural markets arise from communities that have organised their commerce in such a way that reinforces social utility and stability. The Holy Grail of financial theory and practice in the world's advanced economies is to identify at what level of complexity financial markets exceed the limits of social stability.

Andrew Sheng is President of Fung Global Institute.

Auditing in hard times

OPTIMISTICALLY CAUTIOUS By ERROL OH

HOW bad will things be this year? Everybody has some thoughts on that, but nobody really knows, of course. But if you're thinking of turning to the accountants and auditors for some reassurance and optimism amid the gloom, you're definitely barking up the wrong tree.

The fact is, this fraternity is already bracing for the worst and is calling upon members to be on the lookout for signs of trouble as they carry out their work.

On Dec 28, the International Auditing and Assurance Standards Board (IAASB), the New York-based independent standard-setting body, issued a press release to draw attention to the challenges that accounts preparers and auditors currently face.

“The global economy continues to experience difficult conditions as the effects of the financial crisis for example, on corporate cash flows and access to credit persist. Volatility in capital markets, and issues including measurement and disclosure of exposures to sovereign debt of distressed countries, continue to create uncertainty,” says the board.

“The impact of these issues and uncertainty has wide-ranging financial reporting implications that often extend beyond national borders.”

The IAASB points out that such conditions make it challenging for management of entities, those charged with governance, and auditors to do their jobs.

According to the board, among the tough aspects of this groups' responsibilities are assessing an entity's ability to continue as a going concern and making relevant disclosures in the financial statements and auditor's report.



(In accounting, the going-concern concept assumes that an entity will continue operating indefinitely. Therefore, its accounts are prepared accordingly and there's no need to reflect the possibility that the entity will soon grind to a halt and its assets sold off.)

The board reminds auditors of the requirements of the International Standards on Auditing (ISAs). It adds that in every assignment, an auditor must weigh whether it's appropriate for the management to use the going-concern assumption.

Said IAASB chairman Professor Arnold Schilder: “Difficult economic conditions give rise to many important audit considerations, but none more important or more difficult than evaluating management's assessment of an entity's ability to continue as a going concern and determining the appropriate auditor reporting in the circumstances.”

What's interesting is that the board has asked auditors to refer to a three-year-old document titled Audit Considerations in Respect of Going Concern in the Current Economic Environment.\

“While this Audit Practice Alert was released in context of the 2008-2009 credit crisis, many of the matters addressed in it are equally relevant today,” said Schilder.

“For example, an entity may be experiencing a decline in its financial health, or may have material uncertainties arising from direct or indirect exposures to sovereign debt of distressed countries. Auditors are therefore encouraged to review the Alert and, importantly, the relevant requirements in the ISAs.”

On Wednesday, the Malaysian Institute of Accountants (MIA) came out with a circular that's largely based on the IAASB press release.

Says MIA executive director Ho Foong Moi in the circular: “Auditors in Malaysia similarly should take cognisance of the currently-challenging global economy and accordingly must remain alert throughout the audit to identify and critically examine evidence of events or conditions that may exist nationally or globally which may cast significant doubt on an entity's ability to continue as a going concern.

“Auditors must continue to exercise professional scepticism and judgment in evaluating financial-statement disclosures and the implications for the auditor's report when a material-uncertainty exists relating to events or conditions that, individually or collectively, may cast significant doubt on the entity's ability to continue as a going concern.”

So, the message is clear these days, auditors have to be more questioning about the standard-management assumption that a business is in a position to go on and on. After all, which management will readily admit that the entity is reaching the end of the road?

The truth is, many businesses fail, even in the best of times. And when the economies and industries go through rough patches, it's harder to hide flaws in business models and weaknesses in how businesses are run. And when this happens, many people depend on the accountants and auditors to raise the red flags.

Therefore, the huge economic uncertainties we're experiencing now are as much a test of the profession's alertness and integrity as they are a test of the businesses' strength and resilience.

Executive editor Errol Oh didn't like tests when he was in school and that hasn't changed. But now he at least recognises that testing serves a purpose.

Here is the Dragon, the best to come?

The Dragon is here and the best is yet to come

BRICKS AND MORTAR By TEH LIP KIM

COME midnight tomorrow, as we usher in the Year of the Dragon, most of us will not help but stop to wonder what the next 12 “moons” of the lunar calendar have in store for us.



The Dragon the fifth and incidentally the only mythical animal of the 12 animal signs in the Chinese zodiac is a symbol of power and good fortune.

Those born under this sign are considered to be dynamic, flamboyant, colourful and vibrant. People born under the sign of the Dragon include historical figures Joan of Arc and Martin Luther King Jr, author Pearl S. Buck and artiste John Lennon.

This year is the year of the Water Dragon and astrologers believe will be a year of many opportunities for growth and expansion.

But astrology aside, what exactly can we expect in the year ahead for the property sector? If one is to listen to the rumblings on the ground, it sounds like it's a mixed bag up ahead.

Built quality: A worker inspects a dragon lantern decoration made from recycled materials and energy-saving LED lights at a temple in Jenjarom, Selangor. The Chinese year of the Dragon ushers mixed feelings about the property sector but with the right design concept like this environment-conscious dragon lantern, homebuyers will still make that commitment. -AFP

For many in the business from those who are building and selling or just analysing its investment climate there still is room for growth in the Malaysian property market, at least in the next few years.

Initiatives by the government, such as the proposed high-speed rail link from Kuala Lumpur to Johor Baru and the MRT project, are expected to give the property sector a boost.

Areas that currently are not nearly as easily accessible will soon be easily reached by rail or MRT, and this will certainly be a boost for the value of property in these areas.

Take a look at the route for the first phase of the MRT between Sungai Buluh and Kajang and you will see that major residential centres will soon be linked by rail to popular commercial and entertainment centres.

Of course the finer details such as where all the stations will eventually be located are still being worked out.



On the other hand, some players in the property market are painting a rather gloomier picture, citing conditions in Europe and the United States as reasons for caution. The European debt crisis does not seem any closer to resolution and, some analysts fear, export driven economies such as China, Brazil and Malaysia, are not likely to come off the turmoil unscathed.

Across the Atlantic, the US economy is, as some economists there put it, “still messed-up”. In Japan, hit by the mega earthquake and tsunami of 2011, the economy is still experiencing long-term problems that are considered even worse than that in the United States.

Back home, some players in the property market are expecting a more moderate growth in 2012. In some areas, there may even be a price correction, going by what these people are saying.

According to them, commercial properties as well as high-end residential units are likely to be most susceptible to a market downturn. These are the first to be hit when confidence in the market ebbs.

Nevertheless, there is a bright spot of sorts in the midst of this gloomy outlook. A bubble is unlikely in the Malaysian property market.

So what do we think? Do we see a boom or bust, or something in between? Predicting what will come is a game of chance. Who really knows what the future holds for us anyway?

On the other hand, we can always analyse our own experience in the preceding 12 months to find hope in the corresponding period ahead.

As we have seen, Malaysian property prices are still among the lowest in the Southeast Asian region. As I wrote in this column sometime last year, Kuala Lumpur is only the sixth most expensive city in this region to invest in property, behind Singapore, Phnom Penh, Bangkok, Jakarta and Manila.

That means there still is room for upward price movement. Of course other factors will come into play. As most property investors will tell you, location is a prime consideration.

Areas that are well served by public transportation facilities will certainly be preferred over those that are not and, logically, will command higher demand and thus fetch higher prices.

Entry price is, of course, another factor. Take a look around you and you will see that many new launches, even in the Klang Valley, have remained unsold. These mostly luxury homes have unfortunately been priced way above most investors' affordability.

At RM3mil to RM4mil a unit, even for landed property, landing a buyer is a tall order.

Of course this does not mean that million-ringgit homes are no longer in demand. Our experience shows that anything priced between RM1mil and RM1.75mil, and in the right location can still find buyers.

At that price, such properties still meet the needs of those who purchase with the intention to occupy as well as those who hope to see their property appreciate in value. At the same time, the repayment amount is still within the means of a fair number of Malaysians, especially those in their 30s or 40s and who are already fairly established in their careers.

For instance if a couple were to purchase a home at RM1.75mil, they are likely to be able to get a loan of up to 80% of the cost of the property or about RM1.4mil.

At an interest rate of 4.35% (BLR-2.25%) for a repayment period of 20 years, their monthly repayment amounts to RM8,744 a sum that a fair number of working couples can afford.

The right designs and concepts also add to the value of such properties. Many property purchasers today do not have the time and some not even the inclination to fuss over how to spruce up an apartment before moving in.

To meet their needs, developers also provide many fixtures and appliances so one can move in with just clothes and perhaps a new bed.

Overall, I think there still is room for growth in the Malaysian property sector. There will certainly be many more new launches whatever the doomsayers say. At the right price, in the right location and with the right design concept, homebuyers will still make that commitment.

Our economy is expected to grow about 5% or more and unemployment is at a low 3%. The outlook remains positive, as reflected in the stock market.

So if you are still looking to invest in property, the Year of the Dragon may be as good as any year to make that commitment. Remember, it is supposed to be a year when there will be many opportunities for growth and expansion.

Teh Lip Kim is the MD of SDB Properties Sdn Bhd, a lifestyle property company. Bouquets and brickbats are welcomed. Send by email to md@sdb.com.my

Dragon year roars !

May this Water Dragon roar?

WHY NOT? By WONG SAI WAN

Much is pinned on 2012, and as we enter the Year of the Dragon, let it also turn out to be a watershed.



THE dragon is both feared and revered not only by the Chinese but also by almost every ancient civilisation. Fables tell of the wisdom and beauty, as well as the evil and tyranny, of the majestic mythical beast.

The Europeans – whether the Anglo-Saxons of middle Europe or the Vikings of the North – have their favourite tales of the dragon.

The English-educated among us will remember the fable of St George, who rescued a fair maiden from being sacrificed to a mean and ferocious fire-breathing beast.

The Vikings believed that the dragons fought with their gods, and very often won such battles. The ancient Scandinavians hero-worshipped these creatures, and even named and designed famed war boats after them.

The ancient Greeks and Egyptians shared the Vikings’ belief that the dragons fought constantly with the gods, and their battles were responsible for earthquakes, floods and all sorts of disasters that we blame today on nature.

 

Festive colours: Workers decorating a dragon-shaped sculpture in preparation for a dragon dance for the upcoming Chinese New Year in Wenzhou, Zhejiang province, China. — Reuters

Basically, in the ancient west, dragons were always portrayed as baddies, if not evil itself. Even these days, Hollywood movies would, more often than not, portray the mythical flying and fire-breathing beast as a destructive force.

However, in the east, the dragons were the good guys – often seen as divine beings or blessings from the gods. Regardless of the myth being of Chinese, Vietnamese, Japanese, Bhutanese or Korean origin (all these cultures share the same lunar calendar), the dragon is always a symbol of wisdom, wealth and power.



To the ancient Chinese, not all dragons are created equal because, historically, the winged serpent was the symbol of the Emperor of China. In the Zhou Dynasty, the five-clawed dragon symbolised the Son of Heaven (Emperor), the four-clawed the nobles and the three-clawed the ministers.

This changed in the later Qin Dynasty. The five-clawed dragon became exclusive to the Emperor. Everyone else was free to use the various other claw combinations.

{China hasn't issued a stamp with this ferocious a dragon since 1878 (Photo Xinhua)} >>

On Monday, January 23^rd-2012 the new moon in Aquarius heralds in the Chinese New Year. The year of the Water Dragon begins and the year of the Metal Rabbit ends.

Even in Malaysia, we have our own dragon legends, with the one supposedly in Tasik Chini being the most famous. The Chini Naga fought off the Sri Kemboja Naga, forcing it to flee north to where Cambodia is today.

Many people living in Tasik Chini still talk about the monster that lives in the lake which at one stage was drying up due to logging at its tributary rivers. However, the lake is now flourishing again and is a popular local tourist spot, especially for anglers.

The animal sign for this lunar year is the dragon whose element is water. The last Year of the Water Dragon was between Jan 27, 1952 and Feb 13, 1953.

Yes, just like 12 years ago when the dragon last visited us, there will be a rush “to make dragon babies” because people born under this sign are deemed to be very lucky in life.

Among famous dragon personalities are actors Christopher Reeves, Patrick Swayze, David Hasselhoff and Liam Neeson, and author Amy Tan.

In Malaysia, among those born 60 years ago – and thus also water dragons – are PKR president Datin Seri Dr Wan Azizah Wan Ismail, tycoon and Berjaya boss Tan Sri Vincent Tan, and Finance Minister II Datuk Seri Ahmad Husni Mohamad Hanadzlah.

A water dragon may sound harmless enough but that depends on which astrologer, feng shui master or seer one speaks to.

Some see it as the most thinking of all dragons because the person born under this sign is serene, calm and unhurried – just like water. He or she is also very persuasive and can wear down anyone with charm and diplomacy.

However, other readers of the stars call the water dragon the tsunami dragon because water is the only element that can destroy the other four elements – wood, fire, metal and earth.

They expect those born this year to be able to sweep away all those standing in their way, just like a tsunami.

Personally, I hope that the 2012 dragon will bring about definite decisions to the many questions that have been thrown up in the past few years.

For one thing, I hope that Prime Minister Datuk Seri Najib Tun Razak will call a general election soon and that Malaysians respond by making a firm decision on what they want.

Another thing that needs thorough cleaning is the world’s economy. There has been so much uncertainty in the world’s economy because there doesn’t seem to be an end to financial crashes – first in the United States, then in Europe.

Ratings by rating houses are supposed to indicate for sure what the value of various financial instruments is. Instead, these rating houses’ downgrading of various European Union states’ credit ratings as well as the rescue package has only caused further uncertainty.

Rating houses, just like hedge funds, need to be fried by the dragon.

Hopefully, the Dragon Year will bring about a total collapse of the world’s economic system so that we can replace it with one that actually works. It’s time to wipe the slate clean.

It is time for the water dragon to roar and show its colours.

Executive editor Wong Sai Wan wishes everyone Gong Xi Fa Cai, and may the dragon year be a blessed one.

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You addicted to Facebook ?

Hooked on Facebook

By P. ARUNA aruna@thestar.com.my

PETALING JAYA: If you prefer to interact on Facebook rather than have a normal conversation, you could be suffering from a psychological disorder, an expert warned.

Gleneagles Hospital Kuala Lumpur neuro-psychologist Dr Nivashinie Mohan said that Facebook Addiction Disorder (FAD) continues to go undetected because most addicts do not realise or want to admit that they have a problem.

With Malaysians spending more hours and having the most number of friends on Facebook, many had become addicted to it, she said.



“A lot of people do not see it as a real problem because they don't think it is as harmful as addiction to tobacco or drugs.

“But it is a problem that needs to be treated like any other addiction that prevents you from going on with your daily activities,” she said, adding that the disorder could cause anxiety and depression.

The disorder term FAD was coined by American psychologists to describe the addiction to Facebook.

Dr Nivashinie said that Facebook addicts had difficulty carrying on a normal conversation with people as they preferred to “poke”, “like” or comment on what their friends posted on the website.

She said the addicts felt the need to be connected to their Facebook friends all the time.

“They fear that they may miss out on something important if they don't constantly check the website,” she added.

On average, Dr Nivashinie said people spent about an hour each day on the website.

“But if you are cancelling plans with friends and family so you can spend the time on Facebook, it is a clear sign that you are addicted,” she said.

She added that addicts usually lost interest in school or were not productive at work because they were constantly on the website.

Stressing that the problem could be very serious, she said: “Sometimes these addicts don't even enjoy logging on to Facebook. They just feel they have to.

“Some people even break into cold sweat at the thought of not going on Facebook for a day or two. And they feel depressed when nobody communicates with them or responds to something they posted on the website.”

To overcome the disorder, she said addicts must first acknowledge that they have a problem.

“It may not be possible for them to quit Facebook immediately or completely,” Dr Nivashinie said. “They can begin by reducing and limiting the hours they spend on the website daily.”



Disconnected from real life

By WONG PEK MEI pekmei@thestar.com.my

PETALING JAYA: Social networking can be addictive and stunt personal interaction, say experts.

People frequent websites like Facebook due to easy access via mobile devices, but “such convenience is distracting people from having real social interaction with another human being”, said psychologist and counsellor Adnan Omar.

“For example, a couple missed an opportunity to have true interaction with each other by going out for dinner, only to be surfing the Net or checking e-mail on their mobile devices,” he told The Star recently.

It was reported on Jan 10 that a nationwide study showed that Malaysian mobile web users on average spend 20% of their time on social media like Facebook and Twitter, 18% on music or videos, 17% on playing games, 14% on searches for general information and 13% on e-mail.

Clueless condition: Many Malaysians may not be aware that they have Facebook Addiction Disorder.

 

Adnan was concerned that society might lose its ability to connect with the people within.
“We may know people in Russia but we do not know our own neighbours although they are just one wall away,” he said.

“If you're spending more than 25 hours per week social networking for other than work or academic reasons, you're addicted to it. It does not help that the Internet is readily available and you don't have to turn it off.”

Adnan said addicts had the urge to check their phone constantly and felt “empty deep inside” if they did not do so.

“When people post their pictures and updates, they are waiting for compliments to make them feel fulfilled. The other reason is that they need to kill time and would feel useless or uncomfortable if they do not do anything.

“Technology creates activities but not necessarily productivity although it makes us feel that way,” Adnan said.

Psychologist Dr Goh Chee Leong said the phone has become an important companion for “in between” times like when a person is waiting for someone.

The dean of HELP University College's Behavioural Sciences Faculty said people who often network generally have an active social life although “there are extreme cases”.

Facebook takes over mind and body

PETALING JAYA: Facebook addict Lim said her life now revolves around the social networking website.

Lim, who is in her 50s, admitted to a psychologist that she no longer had normal conversations with her family as most of her free time was spent in front of the computer.

She said she was addicted to Facebook games “Farmville” and “Baking Life” and would plan her daily activities around the website.

Lim said she would start her virtual “crop planting” or “baking” in the morning before work to make sure that it was completed in time for her to resume the game during lunch break.

“I have not had a good night's sleep in a long time as I can't log off until the wee hours of the morning,” she said.

Another addict, who wanted to be known only as Satish, said he logged on to Facebook every half hour.
“If I can't go on Facebook for some reason, I feel uneasy and can't concentrate on my work,” said the 30-year-old engineer.

His addiction became worse after he bought a smartphone.

Bosses face problem with workers wasting time on FB

PETALING JAYA: Employers are increasingly faced with the problem of employees wasting their time on Facebook and other social networking websites during office hours.

“Many companies have blocked their employees from accessing Facebook in the office, but this measure is not always effective as many of them can still access the website on their smartphones,” said Malaysian Employers Federation executive director Shamsuddin Bardan.

Although most employers wanted to stop employees from chatting or playing games online, he noted that companies in fields such as entertainment and media needed to access the social websites to keep up with the latest trends and news.

How the problem of time-wasting on websites was handled depended on “the nature of business” of the companies concerned, said Shamsuddin.

He added that young people might not be interested in working for companies which were too strict and did not allow them to log on to Facebook.

MCA Public Services and Complaints Department head Datuk Michael Chong said that Facebook users were “inviting trouble” if they constantly updated their status with information on their whereabouts and what they were doing.

“There are young girls who even update their status to say that they are going to take a bath,” he said.

He added that 14 female Facebook users had reported to the department that they were cheated and blackmailed last year.

World Bank warning of another global recession; Mier: Worse to come!

Image via Wikipedia

(Shanghai Daily)
 

THE World Bank is warning developing countries to prepare for the "real" risk that an escalation in the eurozone debt crisis could tip the world into a slump on a par with the global downturn in 2008/09.

In a report sharply cutting its world economic growth expectations, the World Bank said Europe was probably already in recession. If the debt crisis deepened, global economic forecasts would be significantly lower.

"The sovereign debt crisis in the eurozone appears to be contained," Justin Lin, chief economist for the World Bank, said in Beijing yesterday. "However, the risk of a global freezing-up of the markets as well as a global crisis similar to what happened in September 2008 is real."

The World Bank predicted world economic growth of 2.5 percent in 2012 and 3.1 percent in 2013, well below the 3.6 percent growth for each year projected in June.



"We think it is now important to think through not only slower growth but sharp deteriorations, as a prudent measure," said Hans Timmer, the bank's director of development prospects.

The report said if the eurozone debt crisis escalates, global growth would be about 4 percentage points lower. It forecast that high-income economies would expand just 1.4 percent in 2012 as the eurozone shrinks 0.3 percent, sharp revisions from growth forecasts last June of 2.7 percent and 1.8 percent respectively.

It cut its forecast for growth in developing economies to 5.4 percent for 2012 from its previous forecast of 6.2 percent.

It saw a slight pick up in growth in developing economies in 2013 to 6 percent. But the report said threats to growth were rising.

It cited failure so far to resolve high debts and deficits in Japan and the United States and slow growth in other high-income countries.

On top of that, political tensions in the Middle East and North Africa could disrupt oil supplies and add another blow to global prospects.

China's growth - forecast in the report at 8.4 percent - could help bolster imports and gives it "big fiscal space" to respond to changing conditions, Lin said.

But the World Bank report added: "No country and no region will escape the consequences of a serious downturn." 

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Mier: Worse to come

By LEONG HUNG YEE  hungyee@thestar.com.my

Eurozone crisis, slower China growth likely to hurt economy

KUALA LUMPUR: The Malaysian Institute of Economic Research (MIER) expects gross domestic product (GDP) for 2011 to be 4.9% but to decelerate to 3.7% in 2012.

MIER executive director Dr Za-kariah Abdul Rashid said this year would not be as bad as 2008 or 2009 but might not be as good as 2011, pulled down by the eurozone crisis as well as slower growth in China's economy.

He said if the eurozone crisis turned worse, the country's economy might be affected and the GDP could reach the 2008/2009 level.

“There's some avenue if the Government wants to spur the economy by spending on development. It will depend on the private sector whether our economy turns out to be strong this year,” Zakariah said at a briefing to present Malaysia's economic outlook.

Zakariah: ‘The private sector has done a lot for the economy.’

“However, the private sector has done a lot for the economy. We can't expect much more from the private sector.”

He said MIER had previously forecast 2011 GDP growth to be 4.6% but revised it upwards after looking at the latest numbers and the crisis in the eurozone.

“Growth in the last quarter of 2011 is expected to be much lower on account of external developments. The latest monthly economic indicators are already suggesting that,” MIER said in a report.

It added that economic growth would likely get “bumpier” in the months ahead.

Meanwhile, Zakariah said that there was “room for 25 to 50 basis-point downward revision” in the overnight policy rate (OPR). However, he said the revision would depend on the situation and had to be done vigilantly.

Based on MIER's Business Conditions Index (BCI), the business sentiment had worsened from the second quarter of last year. The BCI fell to 96.6 in the fourth quarter of 2011, the first time it had dipped below the 100 threshold since the fourth quarter of 2010.

“It usually shows a contraction mode when the index sinks below 100. The BCI had been dropping since the second quarter of 2011,” Zakariah said.

Sales, local and foreign orders, as well as capacity utilisation were significantly lower in the fourth quarter of 2011, with companies expecting to scale back production over the next three months as inventory builds up.

Concurrently, consumer sentiment also fell to a two-year low of 106.3 on the Consumer Sentiments Index as household incomes lost momentum, and finances and job became a growing concern.

Zakariah said the index pointed out that consumers were also holding on to purchasing big tickets items as spending plans took a backseat.

Separately, Zakariah said it would be better for the Government to call for general elections early as uncertainty over the nation's political future would hurt the economy.

He said private investors were currently holding back investments on concerns that government policies could change due to the political climate here.

“If you ask me as an economist, I would rather see the problem solved once and for all. The earlier they settle the political matters, the better, we can focus on the economy.

“Right now everything is still hanging. People are postponing because of the elections. So if they settle it once and for all and immediately, it would be better,” Zakariah said.  

Ethics – an asset to justice

Image via Wikipedia

Getting judges to publicly declare their assets is a significant step towards improving the integrity of our judiciary and changing the perception of the bench.

DARE to declare! That seems to be the slogan of the moment, in the wake of the move by Penang Chief Minister Lim Guan Eng and his state executive council to declare their assets publicly last week.

Based on the list of properties, investments and cars along with the loans taken, Penang is being run by a motley crew of wealthy and not-so-rich politicians.

Lim owns two shop lots in Malacca, worth RM435,000 and RM530,000 respectively and has taken RM650,000 in loans to pay for them.

He has RM298,785 in fixed deposits, with more than RM53,000 in earned interests besides investments in Amanah Mutual Bhd and Public Mutual Fund.

But there were no clues about the assets of the spouses and relatives, though. When asked about this, the CM was reported to have replied that the pledge was only for the assets of its leaders to be disclosed.

In the case of Selangor, the declaration of assets by the Mentri Besar and exco members in 2009 was basically in the form of their current earnings in salaries and allowances.

They decided not to include assets owned before the exco members held office, on the grounds of not being able to assure security for them or their family members.

Excos disclosed their assets privately to the MB’s office. The information, however, can be released for legitimate reasons, subject to conditions set and approved by the Special Select Committee on Competence, Accountability and Transparency or Selcat.

For political parties, Parti Sosialis Malaysia (PSM) holds the record for being the first to deliver the promise of declaring the assets of its elected and appointed representatives.

Since 2008, it has made public statutory declarations about what they own.

PSM’s sole MP, Michael Jeyakumar Devaraj – who unseated MIC supremo Datuk S. Samy Vellu in Sungei Siput – has been quoted as saying: “Once you become an assemblyman or MP, you must reveal the assets of yourself, your wife and your immediate family every year.”



An increasing number of countries have adopted similar ethics and even have anti-corruption laws requiring public officials to declare their assets and income, in addition to that of their spouses and dependant children.

In the US, for instance, the main law governing this is the Ethics in Government Act of 1978.

Based on last year’s declaration, President Barack Obama has assets worth at least US$4mil (RM12.48mil).

The amount includes book royalties, retirement funds, US Treasury bills and notes and other holdings.

In Malaysia, would all elected representatives from both sides of the political divide agree to be subject to such scrutiny?

As it is, many of our YBs are seen to be extremely well-heeled. They always claim to champion the cause of the rakyat but live in mansions worth millions and lead luxurious lifestyles.

Of course, they can always declare that they were already rich before being elected or appointed.

So, instead of waiting until they are elected, why not make it mandatory for all nominated candidates for Parliament and state seats to disclose their wealth and means of income and those of their immediate family?

Perhaps one way to ensure this is through compulsion – by an Act of Parliament.

One wonders if there would still be many people clamouring to be elected representatives or appointed representatives under such rules.

But we are at least making progress when it comes to the judiciary.

Chief Justice Tan Sri Arifin Zakaria has made a laudable move towards getting judges to declare their assets.

It is indeed a significant step towards improving transparency and integrity of our judiciary and changing the current public perception of the bench.

“I’m sure all of you have nothing to fear, so we have to work together with the MACC on this matter,” the CJ said at the judges’ conference last week.

The MACC has since set up a task force to identify the process under the civil service for the implementation.

The CJ has also told judges to maintain the independence of the judiciary and not to put up with any interference, including from their spouses, when making their decisions.

According to Transparency International’s Bribe Payers Index of 2008, the judiciary was perceived by surveyed business executives to be one of the most corrupt institutions in the country.

Business executives surveyed by the World Economic Forum Global competitiveness Report 2010-2011 identified the judicial system as being under enough influence of members of government, certain individuals and companies to constitute a competitive disadvantage.

They also found the efficiency of the legal framework for private companies to settle disputes and challenge government actions and/or regulations as another disadvantage.

The CJ’s move to boost the integrity of the judiciary is noteworthy in view of such negative perceptions.

The country cannot afford to have a judiciary perceived to be ethically compromised. It would be a millstone around the neck of any anti-corruption strategy.

As such, it needs the full support and cooperation of the people, members of the Bar, the Attorney-General’s Chambers and more so from the political leaders.

> Associate Editor M. Veera Pandiyan likes to share these wise words of Gandhi: “There is a higher court than courts of justice and that is the court of conscience. It supercedes all other courts.”