Thursday, 31 December 2020

Antitrust and the Powerful Tech Giant – Amazon

Getty Image

The European Commission has laid out a first set of antitrust charges against Amazon. The company is focused on its dual role as a platform for other sellers but also as a retailer itself on its own platform. More so, is its cumulative use of third-party merchant data to underpin Amazon’s own retail decisions.

Competition chief Margrethe Vestager said its preliminary conclusion is that the ecommerce giant has abused its market position in France and Germany- these are its two biggest markets in the EU. How?  Via its use of big data to “illegally distort” competition into online retail markets.

“Amazon is data driven. It’s a highly automated company — where business decisions are based on algorithmic tools,” said Vestager. “Our investigation shows that very granular, real-time business data relating to third party sellers’ listings and transactions on the Amazon platform systematically feed into the algorithm of Amazon’s retail business. It is based on these algorithms that Amazon decides what new products to launch, the price of each individual offer, the management of inventories, and the choice of the best supplier for a product.”

The competition chief said its preliminary concern is that third party sellers are unable to compete on the merits as a result of the big data advantage Amazon gleans from its access to third party sellers’ data.

“Amazon has, for example, access to data on the number of ordered and shipped units of sellers’ products, revenues on the marketplace, the number of visits to sellers’ offers, information relating to shipping — including the past performance of the seller, the consumers’ claims on the sellers’ products including the activated guarantees. And Amazon gets this data from every seller, every listed product, every purchase on its platform.”

Amazon may have set certain rules on its platform that artificially favours both its own retail offers as well as the offers of sellers that use Amazon’s logistics and delivery services.

Under current US law, monopolies are legal. But what is not allowed is the corporate malfeasance designed to preserve monopoly power, at the expense of competition. Like Amazon, other tech giants have also maintained their monopoly position by using the vast amounts of data they have gathered on both sellers and consumers. They use the data to muscle out rivals, gain an advantage in new product markets and reduce innovation by others. That conduct, according to the House antitrust report, is anti-competitive.

In line with the move of US and EU in curbing the power of internet giants, China too has proposed new regulations to define anti-competitive behaviour for the tech sector. This could affect China’s tech giants like Alibaba, Ant Group, Tencent as well as Meituan.

What about Malaysia? We are so simple and trusting in surrendering our data to huge telcos, banks, government agencies, e-wallet payment systems and many others. Its possibly fine if they are only using it for marketing purposes. But what happens if you have great scammers who use the data to fleece you? Police reports are futile. We need a more transparent data reporting and data monitoring system that provides confidence to the consumer. The likes of Amazon will procure, sell and profit from data that leads them not only to be a monopoly but destroy any competition.   



1.     Natasha Lomas, Europe lays out antitrust case against Amazon’s use of big data

2.     'Near-perfect market intelligence': Why a House report says Big Tech monopolies are uniquely powerful, 10 Oct 2020, CNN

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Wednesday, 30 December 2020

Is Malaysia Falling Behind?

Moaz Nair (FMT, Dec 21) examined why Malaysia was falling behind in attracting new investments. Vietnam, a one-party socialist republic, is set to become one of the world’s fastest-growing economies, next to Singapore and Indonesia. A conducive business ecosystem and political stability are reasons why investors flock to these countries.


Singapore is said to be the least-corrupt country in Asia. Its political stability, strong legal framework and sound financial regulatory environment are its ingredients. The city-state is fast attracting investments from firms caught amid the US-China trade war.

Facebook is planning a US$1 billion purpose-built data centre in Singapore. The facility will be gradually fitted out in 30 MW increments up to its full capacity of 150MW.

Grab, which started as My Teksi in Malaysia, rebranded itself into Grab Taxi after moving to Singapore. Singapore’s advantage is that start-ups get government subsidies and tax breaks. More importantly, the well-developed ecosystem provides start-up funding that helps attract international financiers and bring higher valuations for public offerings. All this has made Grab into what it is today.

Singapore has vigorously encouraged innovation and entrepreneurship and has managed to create a resilient start-up ecosystem. It now has Garena, Lazada and Razer Inc as billion- dollar start-ups.

The country has become home to many Chinese tech investments. Tencent of China has become the latest Asian tech giant to officially settle on Singapore as its new regional hub in the Asia-Pacific region. One of China’s largest internet companies as well as the region’s biggest gaming and eSports provider, Tencent joins domestic rivals Alibaba Group and ByteDance among others in setting up new global hubs in the city-state.


Amazon plans to spend as much as US$951 million in Indonesia. The investment will be on introducing the company’s cloud computing service to the local market. With a population of more than 270 million and with increasing internet and smartphone penetration, indisputably Indonesia represents a significant market for growth in both e-commerce and cloud computing.

Indonesia now has SpaceX to assess the possibility of setting up a rocket launch site in the country. This aerospace manufacturing and space transport venture is going to be a mutual investment opportunity for Indonesia and Tesla Inc.

Hyundai Motor is investing about US$1.55 billion in the Indonesian auto manufacturing plant within the next ten years, including product development and operation costs. Hyundai plans to make small sport utility vehicles (SUVs) and multi-purpose vehicles (MPVs), as well as electric vehicles (EVs) designed for the Southeast Asian market. Production is scheduled to start in late 2021, with an annual capacity of 150,000 vehicles and a plan to grow that to 250,000 vehicles a year.

Contemporary Amperex Technology, China’s largest producer of automobile battery packs, plans to build a US$5 billion plant in Indonesia to establish a strategic position in the world’s fourth-most populous nation as electric vehicles are gaining popularity.


The new Google Cloud Platform (GCP) region in Jakarta, their first GCP region in Indonesia and ninth in the Asia-Pacific, has started operations. Indonesia is fast becoming one of the most resourceful and entrepreneurial countries in Southeast Asia, and also one of the fastest growing economies in the world.

It has reduced corruption, red tape and other disincentives that investors used to face.


Despite it being a communist country, global manufacturers flock to Vietnam. This is because investors are assured of the country’s political stability. Vietnam’s low costs, investor-friendly policies, seemingly zero tolerance for corruption and state-backed efforts to promote tech start-ups make the country appealing to investors.

Apple Inc has joined Samsung in consolidating Vietnam’s growing audio expertise in manufacturing its AirPod headphones as part of the company’s long-term expansion plans. Vietnam is becoming an audio manufacturing hub as firms move away from China for sales into the US market. This growth has also been driven by Samsung Electronics Co Ltd.

Singapore, Indonesia and Vietnam are politically stable, resourceful, the government is pro-business and they offer economic incentives for businesses.


Malaysia was an Asian tiger in the 1990s. But these days it fancies itself as a pussy cat! Political instability, racial hegemony, religious fervency is more important than growth. Productivity, knowledge workforce and control of corruption are side lined for racial and religious dominance and power. Why will investors choose Malaysia when large, stable markets are in Indonesia and Vietnam? Even Singapore provides a conducive environment to Asean and the rest of Asia. Have some humility and learn from others, then maybe we have a reasonable future!



Moaz Nair, Is Malaysia falling behind in attracting investors? 21 Dec 2020, FreeMalaysiaToday

Tuesday, 29 December 2020

The Ideal Cloud Kitchen: How Did Domino’s Grow?

Food delivery is one of the new normal today. People order food online and wait for it to be delivered straight to their doorstep. Although this is so convenient, especially during the lockdown period, there is one factor that may stop people from doing so: the high price.

Some people believe that the kitchens in our homes may soon become antiquated, for the same reasons we don’t sew our own clothes anymore. Longer working hours has led to shorter dining time. People working in the city have no time to prepare their own meals. This presents an interesting problem: the demand for food delivery is high, but the barrier (price) is also high.

The price is high not because the restaurants or delivery companies are hoarding profits, but because of high fixed costs with food delivery. The courier requires a minimum wage. The ingredients can only be so cheap. There aren’t a ton of things through the food delivery value chain that restaurants can innovate without significant technological advances.

One way to solve the problem is to transform into cloud kitchen. Businesses can rent smaller spaces with less foot traffic, cutting down their biggest operational expenses: real estate cost. And this is what Domino’s Pizza has been doing for years.

The similarities between cloud kitchens and Domino’s:

·       Stores have small / no dining space and are optimized for delivery

·       Location of real estate is focused on the best routes, not the best foot traffic

·       Food product travels well and can feed a lot of people inexpensively

Stock Returns (%)

Additionally, Domino’s adopts the franchise model. This helps the business grow incredibly. Unlike other businesses, a franchise model allows a business to expand without huge capital to fund growth. They can source the capital required to open new locations through their franchisees.

However, not every business can adopt a franchise model. The reason Domino’s can do this, is because their pizza is cheap and a standard product that is easy to make. Simple ingredients and repeatable baking steps. They do not need high quality control on their dining environment like Starbucks.

Because of the capital efficiency of franchises, consistency of growing revenue, and strong asset base — they are able to maintain a high debt level (4.5x - 5.0x EBITDA). And with interest rates at all-time lows, their interest expense does not cripple their operations.

Domino’s business model made them perfectly situated in a quarantine, delivery-first world. It is still one of the leading Pizza brands with strong international presence. Its revenue has also risen sharply in the last five years. All this to say that Domino’s is the platonic ideal of future cloud kitchens. The company’s foresight to optimize for delivery, place stores in low-cost and route-optimized retail locations, and build a digital brand and app is now paying off.



1.     Adam Keesling, How Domino’s Stock Returned 4,595%

2.     Abhijeet Pratap, Revenue Model of Domino’s Pizza

Monday, 28 December 2020

DuPont, Teflon and “Dark Waters”

In the 1930’s DuPont, a U.S. firm, invented and began to market a substance called Teflon. Teflon is used today primarily as a non-stick coating for pots, pans and other cookware. Teflon also has applications as a coating for textile based products such as clothes, apparel, carpeting and furniture. When manufacturing Teflon a chemical called perfluorooctanioc acid, or PFOA is used. Teflon and PFOA are not the same – PFOA is a chemical, Teflon is a name brand. This chemical, which some scientists have said is a likely human carcinogen, is the reason lawsuits have been filed.


The United States Environmental Protection Agency addresses PFOA, or “C8” as it is sometimes called, giving specific attention to its potential harmful effects. The EPA points out that they are unaware of any information that the general public is being exposed to PFOA through the routine use of non-stick cookware. The website also says that the EPA knows of no reason for consumers to stop using non-stick cookware. The EPA points out that Teflon is not PFOA, but that PFOA is used in the manufacture of Teflon.


DuPont also denies the claims that Teflon or the PFOA contained in the Teflon causes cancer. Their product is safe. However, in 2004, DuPont did agree to an out of court settlement in a class action suit brought on behalf of approximately 50,000 residents living near a DuPont plant in West Virginia. The basis of this class action was that DuPont had polluted the water in the Ohio River south of their plant with PFOA. This resulted in birth defects and other hazards, though DuPont admitted no liability in settling this suit. Given the resolution of this class action, it is not surprising that attention has now been focused on Teflon and the PFOA contained within it.


The main result has been that a number of lawsuits have been filed across the US alleging that DuPont failed to properly warn of the potential hazards of the exposure to PFOA in cookware. On May 12, 2006, a class action lawsuit was filed in the United States District Court located in Des Moines, Iowa.


The basis of the suit is the allegation that DuPont knew of the harm exposure to PFOA could cause. Further, the PFOA in Teflon could become toxic when the cookware reached certain temperatures that are easily attainable on a household stovetop. The lawsuit also alleges that in addition to having this knowledge, DuPont repeatedly lied to the public and government in saying that Teflon was safe. The plaintiffs in the class action lawsuit have sought to:


1. establish a fund to provide for the independent study of the harmful effects of Teflon;

2. immediately cease the manufacture and distribution of Teflon;

3. to replace or compensate the owner of any Teflon coated product; and

4. to provide warning labels indicating the potential harmful effects of Teflon.


However, despite the numerous allegations raised in the suit and the relief that has been requested, the lawsuit does not allege that anyone has become ill or that the PFOA in the Teflon has ever made anyone sick. The crux of the lawsuit is that the potential for injury may exist.

The lawsuit also alleges that DuPont has concealed documentation that addresses the harmful effects of the PFOA in Teflon. While the suit does not specify a specific dollar amount, it has been estimated that the suit, if successful, could cost DuPont in excess of $5 billion.


The case is quite interesting for a number of reasons. DuPont, having paid many of millions of dollars to settle a suit related to PFOA exposure takes this matter quite seriously and recognizes the potential exposure by way of this lawsuit. The scope and potential impact of this case is perhaps one of the most far reaching of any class action ever filed in the United States. There have been class actions in the past that have had a far reaching impact based upon the members of the class; however, this Teflon case has the potential to reach even further – clearly into the majority of the homes in the United States.


In 2017, Bilott, the corporate lawyer turned environmental crusader, won a $671 million settlement on behalf of more than 3,500 plaintiffs. Those people claimed they had contracted diseases, among them kidney cancer and testicular cancer, from chemicals DuPont allegedly knew may have been dangerous for decades, and allowed to contaminate their drinking water anyway.




In Dark Waters, Todd Haynes (the director of the movie) emphasizes the seemingly endless fight taken up by Bilott, as DuPont brings its considerable resources to bear to defend itself over the course of two decades. Watch the movie and understand the power of MNCs!



1. DuPont, Teflon and the potential impact of a class action lawsuit,

2. Dark Waters Tells the true story of the lawyer who took DuPoint to court and won, Alejandro De La Garza, November 25, 2019 (


Friday, 25 December 2020

Merry Christmas!

 May your Christmas be filled with peace, joy and love.
Have a Blessed Christmas!

Thursday, 24 December 2020

What’s Next for Remote Work?

According to McKinsey’s report ‘What’s next for remote work: An analysis of 2,000 tasks, 800 jobs, and nine countries (November 2020)’, the potential for remote work is determined by tasks and activities, not occupations. It depends on the mix of activities undertaken in each occupation and on their physical, spatial, and interpersonal context.

The first diagram shows the potential for remote work according to different activities:

The researchers found that remote work potential is concentrated in a few sectors. Finance and insurance have the highest potential with three-quarters of time spent on activities that can be done remotely without a loss of productivity. Next will be management, business services, and information technology. These sectors are characterized by a high share of workers with college degrees or higher.

The third diagram shows remote work potential varies across countries. Advanced economies have higher potential in remote work. For instance, in UK, business and financial services constitute a large share of the country’s economy. The workforce could theoretically work remotely one-third of the time without any loss of productivity.

A hybrid model that combines some remote work with work in an office is possible for occupations with high remote work potential. In the US workforce, McKinsey found that 22 percent of employees could work remotely between three and five days a week without affecting productivity, while only 5 percent could do so in India.

With nine months of experience working remotely, more employers are seeing somewhat better productivity from their remote workers. Some managements express confidence that remote work can continue. Meanwhile, some others say they see few positives to remote work.

Employees too have gained experience working remotely during the pandemic, and their own confidence in their productivity has grown. The number of people saying they worked more productively has increased by 45 percent.

Some forms of remote work are likely to persist long after the pandemic. This will require many shifts, such as investment in digital infrastructure, freeing up office space, and the structural transformation of cities, food services, commercial real estate, and retail. It also risks accentuating inequalities and creating new psychological and emotional stresses among employees, including from isolation. However, by removing the requirement to be in a physical office, businesses can provide access to new talent pools like working mothers, veterans and people with disabilities. No matter what, the new working normal may transform us into a better society with more flexibility and higher productivity.



What’s next for remote work: An analysis of 2,000 tasks, 800 jobs, and nine countries, McKinsey Global Institute (November 2020)

Wishing you a Merry Christmas!

Wednesday, 23 December 2020

Ringgit Could Appreciate to RM3.90 to the Dollar?

As the greenback continues to weaken, Ringgit rose to 4.0472 on 16 Dec. 2020, its highest level since July 2018. This breached the year’s previous high of 4.0515 against the US dollar in January.


The greenback is weak due to super-low interest rates in the U.S., but economists and currency strategists also attributed the Ringgit’s strength to the global economic recovery fuelled by the development of Covid-19 vaccine and strong crude oil prices.

The Covid-19 vaccine rollout would allow the reopening of the economy, which could stimulate global economic activities. This, in turn, would increase the demand for fuel. The Opec+ member countries’ decision to reduce oil production by 0.5 million barrels per day (mbpd) from 7.7. mbpd to 7.2 mbpd in 2021 should also support crude oil prices.

AxiCorp Financial Services Pte Ltd chief global market strategist Stephen Innes told The Malaysian Reserve that the Ringgit could appreciate to RM4 to the dollar, if Brent trades at US$60 per barrel (currently trading at US$50.70 per barrel, 15/12/2020). For the Ringgit to gain further, it may require domestic economic activity to rebound and a drop on interparty political tension. If this does happen, according to Innes, the Ringgit could rally to RM3.90 to the dollar soon. This is also predicated that the US dollar will continue to weaken.

“With the vaccine rollout, the ringgit also stands to gain from more exports heading west. Simultaneously, the thriving Malaysian travel industry should receive a huge bump in tourist activity once air travel lanes finally open up more freely,” he said.

Oanda Corp Asia-Pacific senior market analyst Jeffrey Halley pointed that the resumption of interstate travel in Malaysia will also boost domestic economic recovery, but its effectiveness depends entirely on containing the spread of Covid-19.

Bank Islam Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid told StarBiz that he anticipates that the overnight policy rate to remain unchanged at 1.75% next year. From an interest rate differential perspective, he said Malaysian assets would provide better yields and attract investors looking for higher returns.

However, from the Nominal Effective Exchange Rate (NEER), the ringgit may still hover below 100 points. In that sense, the Ringgit is weaker against certain currencies, namely the euro, South Korean won, Aussie dollar, Chinese yuan, Japanese yen and Singapore dollar. As of 16/12/2020, Malaysia is still one of the countries in Southeast Asia with the highest number of Covid cases recorded in the last 24 hours. The spike in Covid-19 cases is posing uncertainties to the recovery of the country’s economy.

Covid-19 cases by country (16 Dec 2020)


A strengthening of currency is not particularly welcome by most exporters. Importers see it as a boon while imported inflation, if any, is further dampened. Outbound tourists see it as a benefit for travel in 2021. The real issue is whether we provide higher value through enhanced productivity or are we relying on short term measures to resolve long term problems.


1.     Daljit Dhesi, Room for ringgit to appreciate, 14 Dec 2020, The Star

2.     Nur Hanani Azman, Ringgit set to gain on stronger oil prices, 14 Dec 2020, The Malaysian Reserve


Tuesday, 22 December 2020

Electric Vehicles: Why Isn’t Malaysia Leading In ASEAN?

In October 2020, Hyundai started construction of a RM 1.22 billion, 30,000 electric vehicle a year plant in Jurong, Singapore. When completed in 2022, the Hyundai Mobility Global Innovation Centre (HMGICs) will be the Hyundai Motor Group’s (which also includes Kia) regional hub for electric vehicle (EVs) production and development. Out of the 30,000 EVs to be built there, about 5,000 to 6,000 units will be sold in Singapore, while the rest will be exported (Hans,

Why did Hyundai choose Singapore instead of Malaysia when Singapore’s wage structure is high? Even more surprising is that Hyundai Motor has a 15 percent stake in the Inokom assembly plant in Kulim but chose to overlook Malaysia and picked Singapore and Indonesia.

Malaysia sold 2,256 units of Hyundai cars in 2019, far below Singapore’s 5,618 units but more than Indonesia’s 1,365 units. Hence, the sales volume is unlikely to be a factor on Hyundai’s decision.

What attracted Hyundai is the push for electric vehicles in Singapore and Indonesia. Singapore is phasing out combustion engines by 2040 and has established test-bed zones for autonomous vehicles. Singapore has also gazetted 1,000 km of roads to test autonomous vehicles in real-world driving conditions.

In January 2018, the Hyundai Motor Group invested in Singapore’s Grab and started rolling out EV variants of the Hyundai Ioniq. By November, Hyundai invested RM1.04 billion into a South East Asia-wide EV partnership with Grab. Grab has also launched its GrabCar Elektrik service in Jakarta and will roll out 500 units of Hyundai Ioniq EV there.

Hyundai knows that it will be difficult to get consumers to migrate to EVs in a big manner, and this is where Grab comes in. Car sharing, e-hailing, even driverless taxis are logical, more acceptable touch points to get consumers become familiar with EVs.

Indonesia holds 25 percent of the world’s nickel reserves, a crucial element in the manufacture of high voltage batteries for EVs. Their President, Widodo, wants to establish Indonesia as a centre for EV batteries and vehicle manufacturing, targeting to see 2,200 units of EVs, 711,000 units of hybrids, and 2.1 million units of electric motorcycles in Indonesia by 2025.

Since January, Indonesia has banned exports of nickel. This is despite protests from mining companies. The Indonesian government is showing great resolve by putting its foot down in prioritizing their country’s longer term good.

In future, cars are less likely to be purchased and owned privately but will evolve into a shared or subscribed service. Mobility as a service is the keyword here, which is why Hyundai isn’t too bothered about its present low sales in Indonesia and Singapore. Their priorities are forward thinking government policies and a rich pool of intellectual technical talent.

Apart from Hyundai, Toyota, BMW, and Mercedes-Benz too have completed their electric/plug-in hybrid vehicle battery plants in Thailand. Where is Malaysia? As the only Asean nation with the capability to fully design, engineer and manufacture cars from the ground up, shouldn’t Malaysia be at the forefront of this EV charge in the region? The National Automotive Policy was announced on 21 February 2020. It has a lot of new policies and ambitions—next generation vehicles, mobility as a service and Industrial Revolution 4.0. It is now close to a year. Lots of MoUs signed but no actual development. Is that Malaysia?




1.     Hans, The Malaysian link behind Hyundai’s decision to build this sexy EV in Singapore,

2.     Daniel Fernandez, Why isn’t Malaysia leading the charge in EV development?

Monday, 21 December 2020

Why Colonialism Was Bad (Part 2)

Perhaps the easiest way to understand why colonialism was horrific is to imagine it happening in your own country. Visualise you are invaded, conquered, and occupied by a foreign power. Existing governing institutions are dismantled and replaced by absolute rule of the colonizers. A strict hierarchy separates the colonized and the colonizer; you are treated as an inconvenient subhuman who can be abused at will. The colonists commit crimes with impunity against your people. Efforts at resistance are met with brutal reprisal, sometimes massacre. The more vividly and accurately you manage to conjure what this scenario would actually look like, the more horrified you maybe.

One may think this revulsion was now universally shared. But that is far from being the case. The majority are still proud of colonialism and the Empire. Americans continue to show an almost total indifference to the lasting poverty and devastation inflicted on the indigenous people in the U.S. Harvard historian Niall Ferguson has long defended the British Empire as a force for good in the world. And, Princeton PhD and Portland State University professor Bruce Gilley has published an unapologetic “Case for Colonialism” (in Third World Quarterly) in a respected academic journal (Nathan J. Robinson reviewed Bruce Gilley’s article on 14 Sep 2017,

Gilley’s article takes a very clear stance: not only was colonialism a force for good in the world, but anti-colonial sentiment is “preposterous.” What’s more, Gilley says, we need a new program of colonization, with Western powers taking over the governing functions of less developed countries. Gilley’s article is a truly extraordinary piece of work.

Gilley’s argument is, roughly: opposition to colonialism is reflexive rather than reasoned. This has caused terrible consequences, because postcolonial governments have hurt their people by attempting to destroy beneficial colonial institutions. The “civilizing mission” of colonialism was valuable and had a positive effect. Colonialism was legitimate because it helped people and many were willing to tolerate it. Anti-colonial arguments are often incoherent, blaming colonial governments for all ills rather than examining what would have occurred in the absence of those governments. And colonialism should cease to be a dirty word; in fact, it should be re-instituted, because many developing countries are incapable of self-government.

If you are unfamiliar with history, Gilley’s argument could appear superficially persuasive. But a moment’s examination of the record reveals why the case he makes is abhorrent. Gilley says he is simply asking for an unbiased assessment of the facts, that he just wants us to take off our ideological blinders and examine colonialism from an empirical perspective. But this is not what he has done. Instead, in his presentation of colonialism’s record, Gilley has deliberately excluded mention of every single atrocity committed by a colonial power. Instead of evaluating the colonial record empirically, he has distorted that record, concealing evidence of gross crimes against humanity. It is morally tantamount to Holocaust denial.

First, Gilley says he is making a “case for colonialism,” to rescue Western colonial history’s “bad name.” But he restricts his examination to “the early nineteenth to mid-twentieth centuries.” He does so because if he were to include the first 300 years of Western colonialism (i.e. the majority), it would be almost impossible to mount any kind of case that the endeavour benefited indigenous populations. The civilizations of the Americas were exterminated by colonialism. Disease, displacement, resource depletion, one-sided warfare, and outright massacre, and their populations suffered a “catastrophic collapse.”

Next, Gilley’s method of defending colonialism is through “cost-benefit analysis,” in which the harms of colonialism are weighed against the “improvements in living conditions” and better governance. Where colonial rule had, on balance, a positive effect on training for self-government, material well-being, labour allocation choices, individual upward mobility, cross-cultural communication, and human dignity, compared to the situation that would likely have obtained absent of European rule, then the case for colonialism is strong. Conversely, in times and places where the effects of foreign rule in these respects were, on balance, negative compared to a territory’s likely alternative past, then colonialism is morally indefensible according to Gilley.

This is a poor way of evaluating colonialism. It is favoured by colonialism’s apologists because it means that truly unspeakable harms can simply be “outweighed” and thereby trivialized. Gilley and other colonial apologists are like the husband telling his wife that while she may not like being hit, she should remember who provides for her. To exonerate colonial powers by suggesting that enough economic growth could somehow make a “strong case for colonialism” even if there had been constant mass rape and torture is unconscionable.

But even if we assume that “cost-benefit” analysis is the correct way to examine colonialism, Gilley has to distort the evidence in order to prove his case. For example, he says “since gaining independence, Congo has never had at its disposal an army comparable in efficiency and discipline” to that it had under the Belgians. “Maybe the Belgians should come back.” If one knows anything about the history of the Belgian Congo, one knows that this statement is equivalent to saying “Maybe the Nazis should come back”. Belgian King Leopold created possibly the most infamous colonial regime in history. Contemporaries called it “legalized robbery enforced by violence,” and Leopold “turned his ‘Congo Free State’ into a massive labour camp, made a fortune for himself from the harvest of its wild rubber, and contributed in a large way to the death of perhaps 10 million innocent people.” Belgian rule in the Congo was a reign of terror that scandalized the world.

What happened in India under British rule: the horrific Amritsar massacre, the mass famines that killed millions, and the horrors of the partition are real costs. French crimes in Algeria, Indo-China, and other places; German genocide in Namibia are other examples. One of the cruellest aspects of colonialism is the way it forces the colonized into servility and obedience. This is a “cost” and not a benefit.

What does it take to restore warm, cordial relations between former colonials and the ones who were colonized?

On 1 September 2019, the 80th anniversary of the start of the Second World War, the German President apologised to his Polish counterpart for the Nazi invasion of Poland. Earlier in the year, on the 100th anniversary of the Amritsar Massacre, Theresa May expressed ‘regret’ for what had happened, but stopped short of an outright apology.

“A simple sorry would do” (as Shashi Tharoor puts it).

But beyond being ‘sorry’, genuine remorse could lead to:

       i.         ‘A Day of Atonement’, one day in the year when everyone colonised and the colonisers remember the atrocities perpetrated. It is like a Memorial Day for WW1 or WW2;

     ii.         An unvarnished account of the ‘Colonial Era’ taught in schools of both the colonisers and those former colonies;

    iii.         An education/ scholarship fund which is enough to educate 100,000 students annually from former colonies;

    iv.         A health assistance programme to bring modern facilities into former colonies;

     v.         A poverty eradication scheme to help people in former colonies have self-sustainable lives.

There could be many more ideas to bridge peoples if there is genuine feeling of compassion and love. And that truly is Christmas!



1.     Nathan J. Robinson, A Quick Reminder Of Why Colonialism Was Bad, 14 Sep 2020

2.     Shashi Tharoor, Inglorious Empire: What the British did to India

Friday, 18 December 2020

Should You Invest in Airbnb?

Airbnb’s share (ABNB) was priced at $68 a share on the NESDAQ but the company started trading at over $150 a share on the first day of listing (10 Dec 2020) and closed the day at $144.70.

Founded in 2008 after co-founders Joe Gebbia, Brian Chesky and Nathan Blecharczyk came up with the idea of renting air mattresses in their San Francisco apartments. Airbnb now has more than 7m short-term listings worldwide. And at $100bn, it is valued at twice the value of Marriott, the largest hotel operator.

Source: Harvard Business Review

What makes ABNB so valuable?

The Marketplace: As of Sept. 30, 2020, the company reported 7.4 million available listings, 5.6 million of which are considered active listings. That scale is more of an advantage than one might realize. Airbnb's marketplace has strong network effects, in that the more people who use it, the more powerful and useful its platform becomes. It's a trait shared by several leading online operators, including Facebook (FB), Alibaba (BABA) and eBay (EBAY).

Organic reach: The company says that during the first nine months of 2020, 91% of all traffic to Airbnb came through direct or unpaid channels.

Economic improvement: Any advances against COVID-19 – specifically, potential vaccines from the likes of Pfizer (PFE) and BioNTech (BNTX), Moderna (MRNA) and others – are expected to be a boon for the entire travel industry, Airbnb included.

Market opportunity: Airbnb estimates the size of its total addressable market is a staggering $3.4 trillion. This includes $1.8 trillion for short-term stays, $1.4 trillion for travel experiences, and $210 billion for long-term stays and $1.4 trillion for travel experiences. There's plenty of room for multiple operators.

The "Google" effect: Airbnb is beginning to become Google-fied. The word "Airbnb" is becoming at the top-of-mind, the way people describe this new form of vacationing. This, even when one is not actually using Airbnb itself.

The experience: Airbnb's service allows for more compelling experiences than the ordinary hotel room. It's described well in the S-1: "Instead of traveling like tourists and feeling like outsiders, guests on Airbnb can stay in neighbourhoods where people live, have authentic experiences, live like locals, and spend time with locals in approximately 100,000 cities around the world."

Meanwhile, ABNB faces several risks which investors should consider too:

Legal uncertainty: While renting out one's home has been normalized thanks in large part to Airbnb, it's still not a settled area from a legal standpoint. And the powerful hotel industry lobby has been aggressively working to get municipalities to enact strict regulations against these sorts of home-renting services.

Risks to hosts and guests (part 1): Hosts and guests alike take on numerous risks in these home-renting transactions. Airbnb admits that "there have been shootings, fatalities, and other criminal or violent acts on properties booked on our platform," as well as "sexual violence against hosts, guests, and third parties," and "undisclosed hidden cameras at properties." A growth in such issues could deter hosts from continuing to engage with the platform.

Risks to hosts and guests (part 2): In many cases, hosts have made claims seeking compensation for several violations committed against them and their homes. "These claims subject us to potentially significant liability and increase our operating costs and could materially adversely affect our business," the company writes.

Competition: Airbnb must contend with online platforms such as Booking Holdings (BKNG), Expedia (EXPE) and It even faces competition from search engines and meta-search sites, including Google, Baidu (BIDU), TripAdvisor (TRIP) and Trivago (TRVG) that control huge web traffic. There are also competitors like Airbnb, such as Vrbo and Expedia's HomeAway. And of course, there's an entire hotel industry to deal with.

The analysis of ABNB above is largely reposted from Yahoo Finance. Remember, whether you decide to buy ABNB shares ultimately comes down to your own risk appetite and investing horizon. MPCA accepts no responsibility or assumes any liability for your decision to invest or otherwise.



1.     Airbnb soars to near $100bn valuation as shares more than double in IPO, 10 Dec 2020, The Guardian

2.     The Airbnb IPO: Should You Buy ABNB? 10 Dec 2020, Yahoo Finance


Thursday, 17 December 2020

Migrant Workers: An Inconvenient Truth?

In Malaysia, there are at least two million migrant workers mostly from Indonesia and Bangladesh, making up 15% of the total employed persons. Since Malaysia went into lockdown in March 2020, the Malaysian Trades Union Congress (MTUC) has reported cases of violation of migrant workers’ rights by their employers, including unfair termination, unpaid wages, poor living conditions and more (Top Glove is a good example). Those who were laid off would have lost their work passes, forcing them to become undocumented. Since May 2020, the Malaysian government has conducted several immigration raids, detaining more than 18,000 undocumented migrant workers. Many became infected as the over-crowded detention centres became coronavirus hotspots. These cases are just the tip of the iceberg—without any official account, the fate of other undocumented migrant workers remains largely unknown.

The Malaysian government has arguably provided only limited assistance to the migrant population. So far, one of the most prominent government initiatives related to the workers is the 25% cut for the migrant worker levy for the rest of the year.

However, even from a purely economic perspective, the “citizens’ welfare-comes-first” ideology must give way to an inclusive protection measure. Although some may argue that given limited resources, governments have an obligation to prioritise its citizens over migrants, there are several strong economic arguments against the marginalisation of migrant workers.

Malaysia’s economy has long been reliant on the migrant workforce. In 2019, migrant workers made up more than 30% of the workforce in the agriculture sector, and more than 20% in both the construction and manufacturing sectors (Figure 1). Almost half of the low-skilled workers in Malaysia were of foreign origins. For semi-skilled jobs, where the bulk of jobs are, more than one in 10 were migrant workers. Overall, it has been estimated that 22% of the establishments in Malaysia hired migrant workers.

Figure 1: Migrant workers are important to Malaysia’s economy


Figure 2: The importance of migrant workers in the manufacturing and services sector

In July 2020, the Malaysian government announced that migrant workers are limited to working only in the agriculture, plantation and construction sectors, as part of its strategy to keep Malaysians employed.

Despite their relatively low share of migrant workers, the manufacturing and services sectors actually hired the largest number of migrant workforce, totalling almost 1.5 million persons (Figure 2). The number of migrant workers employed in both sectors is the fastest-growing ever since 2010. Furthermore, the manufacturing sector also recorded one of the highest percentages of establishments (63%) that employed migrant workers in 2018.

The idea that without migrant workers, firms can easily hire locals to replace them misses an important point—migrant and local workers are generally imperfect substitutes. Between 2010 and 2019, most of the migrant workers who entered the labour market had at most a secondary education (Figure 3). By contrast, the Malaysian labour force is getting more educated—there have been fewer people with only primary education or less, and nearly two million more who are tertiary-educated. This partly explains why within the same decade, most migrant workers tended to go into low-skilled jobs, whereas Malaysians were mostly hired in skilled and semi-skilled occupations.

Figure 3: Migrant and local workers occupy different occupational space

Lower-educated, low-skilled migrant workers often take on jobs that are deemed dirty, dangerous and difficult (3D), which are also jobs that Malaysians usually shun. Indeed, based on a survey conducted by the Malaysian Employers Federation (MEF) involving 101 member companies, around 78% of the companies reported that the main reason for them to recruit migrant workers was the “shortage of local workers to fill vacancies”.

Hence, in requiring employers to hire only local workers post-lockdown, the government may be putting employers in a very challenging position. For example, following the government’s directive to stop hiring migrant workers, market traders at the wholesale and wet markets have found it hard to hire. The jobs that migrant workers do are often too demanding for the locals, that it now takes two locals to handle one migrant worker’s workload. As such, the market has been functioning at less than 20% of its full capacity due to the manpower disruption.

It is also observed that industries with low productivity have a high share of low-skilled foreign workers (Figure 4), with a greater reliance on longer working hours to produce output. One study found that South Korea increased real GDP per hour from USD4.7 in 1980 to USD25.4 in 2010, while Malaysia only registered an increase to USD7.1 in 2010 from USD5.3 in 2000. South Korea did this while reducing average weekly working hours from 49 hours to 44 hours from 2000 to 2008, while Malaysia  held steady at 49 hours. Malaysia’s labour-intensive methods and longer working hours are clearly less efficient than those obtained through technological advancement and automation. This is seen through the gap between Malaysia and Asia’s average usage of industrial manufacturing robots (Figure 5).

Figure 4: Productivity and Share of Foreigners by Industries


Figure 5: Robot Density in the Manufacturing Sector (2016)

From the workers’ perspectives, automation and new technology are bound to replace jobs, and it is Malaysians who are at the highest risk of job displacement, not migrant workers. Based on the findings by KRI, in the next two decades, 54% of all jobs in Malaysia could be displaced by technology. Four out of five of these high-risk jobs are semi-skilled jobs. Malaysians will be most affected because 86% of all semi-skilled jobs are held by Malaysians. The hollowing out of semi-skilled jobs by technology has already been evident since 2000 (Figure 6). The void is only expected to deepen further with the rapid progress in technology.

Figure 6: The disappearing middle

The road to economic transformation comes with its own set of labour and industrial challenges. Reducing Malaysia’s reliance on migrant workers could be an important policy lever to drive transformation. That pre-supposes sound labour, industrial and education policies that will see a sustainable creation of quality jobs, and prepare all Malaysians for the rapidly evolving employment landscape.

What can we do in the immediate term? We need to improve our thoughts (and deeds) on migrant workers. They are here as our guests. We cannot and will not do their jobs. There is need for compassion and basic improvements to work and living conditions. Next, we need to reduce the levy or create a graduated scale for different sectors. In addition, we need to review our automation/robotics strategy. If South Korea can do it, why can’t we?

For Malaysians, it is good if the Government planners work closely with industry and tertiary institutions. Otherwise, we may have surpluses in humanities, Islamic knowledge and/or medicine. It is disheartening for parents when their children graduate but cannot find a suitable job. Then we want more people to do STEM when the prospects seem so limited. Learn from Singapore, how to do R&D clusters or other similar strategies to encourage start-ups and innovation.

Don’t think too long! Don’t need a Vision 2030! Just look at Vision 2020, and what a disaster that has become – and as usual, no review or audit of that failure.

Going forward, Just do it! (if not buy a Nike?).


1. The economic case against the marginalisation of migrant workers in Malaysia, Tan Theng Theng, Jarud Romadan, October 1st, 2020 (

2.Low-skilled foreign workers distortions to the economy, Ang Jian Wei, Athreya Murugasu, Chan Yi Wei, Economics Department, Bank Negara Malaysia, March 2018

3. Migrant workers: A forgotten economic muscle, G Vinod, Focus Malaysia, 01/12/2020