Season's Greetings

                                              We will resume on Monday, 3 January 2022!

Dubai’s Economy as a Model for PAS?

The UAE (United Arab Emirates) is the third-richest country in the world, behind Qatar and Luxembourg on a per capita basis. Contrary to popular belief that Saudi Arabia is the richest Gulf state in the Middle East, it’s actually Qatar and the UAE that are wealthier. 

Dubai is more popular than Abu Dhabi despite the fact that both are part of the 7 richest emirates in the UAE. While Abu Dhabi has over US$1 trillion worth of assets, accounting for about two-thirds of the roughly US$400 billion UAE economy, Dubai’s wealth relies on revenues from trade, tourism, aviation, real estate, and financial services. Oil production contributed less than 1% of Dubai’s economy. 

Source: https://www.viator.com

Dubai is a city of skyscrapers, ports and beaches and it is where serious business takes place alongside sun-seeking tourism. Why? It adopts liberalism. The UAE is one of the most liberal countries in the Gulf, with other cultures and beliefs tolerated. Without economic liberalism, there would not be night clubs, discos, and other late-night entertainments.

Like it or not, without a very tolerant Emirate that respects the needs of non-Muslims, expatriates and foreign investors would not choose to live and work in Dubai. That has transformed the Emirate. That is exactly what Saudi Arabia’s “liberal” Crown Prince Mohammed bin Salman wants to duplicate. 

In Dubai many hotels, restaurants and bars serve pork and alcohol. Unlike Malaysian Muslims, somehow the 10 million Muslims in the UAE know how to read “pork” being served in hotels and restaurants, and they would happily ignore the forbidden meat. But not in Malaysia.

And unlike Malaysia, which is getting more radical, extremist and racist, the UAE has been getting more tolerant at creating a model of religious coexistence. Dubai actually declared 2019 as the year of tolerance. It’s mind-boggling that a conservative UAE recognizes the importance of tolerance, while a multiracial Malaysia promotes religious intolerance and bigotry. After the award-winning “Timah Whisky” fiasco, the government of Ismail Sabri has banned the sales of alcohol in sundry shops, grocery stalls and even Chinese medicine outlets in Kuala Lumpur. Now, Malaysia’s northern Kedah state, governed by extremist Islamist party PAS, has taken another drastic step to deny – and destroy completely – non-Muslims’ rights by banning licensed gambling.

The Parti Islam SeMalaysia (PAS) announced that it would not renew licences for gambling operators, in addition to the sale of alcohol. Kedah’s notorious Chief Minister, Muhammed Sanusi, who had previously mocked and insulted Indians (calling them “drunk on toddy”) and demolished Hindu temples, said gamblers eager to buy lottery tickets can go to neighbouring state Penang.

Sanusi was the same Muslim who threatened to cut the water supply from Kedah to Penang, unless he is paid RM50 million annually. The ban on alcohol and 4D lottery numbers are clear interference and encroachment of non-Muslim rights in the country. The Chinese business owners were merely selling the products to the Chinese community, not to the Muslims.

Like Timah Whisky, which had nothing to do with Prophet Muhammad’s daughter, the sale of alcohol and lottery tickets too had nothing to do with Malay Muslims in the country. In fact, Muslims are not allowed to buy alcohol or lottery.

The above developments explain the reticence of local and foreign investors to Malaysia. IBM had closed down its Global Delivery Centre (GDC) in Cyberjaya and relocated to Singapore. Shell moved its IT operations from Cyberjaya to India. Citigroup exited retail banking in Malaysia, where Citi has been in for more than six decades, and shifted to Singapore. German IT company T-Systems sold its business in Malaysia and quit the country.

Instead of Malaysia, Toyota Motor Corp invested US$2 billion to develop EVs (electric vehicles) in Indonesia from 2019 until 2023 starting with hybrid vehicles. Likewise, Tesla and SpaceX boss Elon Musk has agreed to explore investment opportunities in the electric car battery – and even space launch station – in Indonesia following a talk with President Joko “Jokowi” Widodo.

Facebook, Lazada, Tencent, ByteDance, Alibaba are some of the big names that have made Singapore as its regional hub, strategic location or data centre hub, leaving Malaysia behind. Indonesia, the Southeast Asia’s largest digital market, has attracted investments from four American tech giants – Google, Microsoft, Facebook and PayPal.

Zoom Video Communications has chosen Singapore over Malaysia for their first R&D center and new data centre in the region. To make matters worse, Google and Facebook had bypassed Malaysia for the Apricot 12,000-km internet subsea cable project due to the unresolved cabotage policy.

Years before Malaysian internet entrepreneur Anthony Tan and Tan Hooi Ling founded Grab (originally called MyTeksi) and moved its head office to Singapore, “Sugar King” Robert Kuok and gaming giant Genting Berhad have moved their business head office to Hong Kong and Singapore respectively.

By forcing non-Malays to give up 51% of their business, it simply means the owners (mostly Chinese), who have been working very hard for decades building their businesses, can no longer control and run their companies. 

The radical path towards extremism will spook investors, both domestic and foreign – of threats to economic liberalism which ensures individual liberty, equality, pluralism and tolerance. There’s no guarantee how far the PAS extremists will go after Kedah’s stunt. One thing is sure – it has made the country more extreme and hostile to the business community. How can the “cake” grow when the leaders are bent on acquiring rather than creating an enabling environment? If Singapore cannot be a benchmark for Malaysia, please use Muslim Dubai as your model!

Reference:

Interfering non-Muslim rights who pay 90% of national income tax – why PAS alcohol and 4D ban will do more damage to the country’s economy, Finance Twitter (https://thecoverage.my)

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This is the last article for the year!

We will resume on Monday, 3 January 2022!

High Divorce Rate Among Muslims?

The Covid-19 pandemic has exposed some serious flaws in relationships. On Oct 12, deputy law minister Mas Ermieyati Samsudin (Mas) told Parliament that about 140 divorce applications had been filed a day from March 2020 to August this year. Of these, 121 cases a day were attributed to Muslim couples.

Did the high divorce rate of 66,440 cases filed by Muslim couples with the e-shariah system ring alarm bells among the Malay community? Registering 121 divorce cases a day, or five every hour, among Muslims is worrying. Was there a breakdown in the relationship? Was the couple saddled with financial trouble, especially as many people had lost their jobs during the pandemic? Was it being cooped up at home during lockdown that caused the union to fail? Did the husband want to divorce his wife to marry another woman? Mariam Mokhtar examined this in FMT, 16 October 2021.

Will the authorities find out the real reasons for these divorces?

According to Mas, the highest divorce rate among Muslims was recorded in Selangor (12,479). The rates for the other states were Johor (7,558), Kedah (5,985), Kelantan (5,982), Perak (5,921), Terengganu (5,098), Pahang (5,058), Sabah (4,010), the federal territories (3,854), Negeri Sembilan (3,473), Penang (2,978), Melaka (2,402), Perlis (1,081) and Sarawak (561). That totals to over 66,000 divorce applications among Muslims.

In contrast, only 10,346 divorce applications were filed among non-Muslims from March 2020 to August 2021. This works out to 18 divorces a day. As with Muslim couples, Selangor recorded the highest application rate (3,160), followed by Kuala Lumpur (2,893), Perak (1,209), Johor (1,197), Negeri Sembilan (861), Melaka (449), Pahang (386), Kedah (76), Kelantan (45), Perlis (41) and Terengganu (29)

In 2016, it was reported that in the preceding six years, 274,000 couples were divorced. During the first eight months of 2015, statistics by the shariah judicial department showed that 38,035 couples were divorced, which equates to 156 couples per day going their separate ways. The high divorce rate was blamed on family interference, infidelity, monetary woes and irreconcilable differences.

Source: https://www.todayonline.com

In reality, nothing much has changed. This may suggest the authorities are not addressing the seriousness of the problem.

When couples divorce, many women suffer, as do their children. Women who sacrificed their careers to bring up their families have less money to provide for them. Those who married young may have left school early and have no educational qualifications. Moreover, they may not be equipped with suitable skills for the employment market. Children may lose a father figure and a male role model.

Federal Islamic family law requires a Muslim male to fulfil five conditions before taking a second wife. He must have adequate financial means to provide for his wives. He should guarantee equal treatment of the wives. He must ensure that no harm is caused to the existing wife or wives. The additional marriage must be deemed to be “just and necessary”. The proposed marriage should not lower the existing wives’ and dependents’ standard of living, either directly or indirectly.

Many men have found it easier to obtain permission for a polygamous marriage by exploiting legal loopholes without fear of legal or social rebuke.

When the male finds that he cannot fulfil any of the five conditions for a polygamous marriage, he knows that he can get married across the border in Thailand. The border may be closed, for now, but many men are safe in the knowledge that when they return to Malaysia, the marriage can be registered after a nominal fine of RM3,000 is paid. The fine is a small sum, and is not a deterrent.

The authorities should encourage couples to build happy, lasting and meaningful relationships. But many women will always feel vulnerable because they have no faith in the law. In a patriarchal society, Malaysian shariah laws favour men. 

Another way is for couples facing difficulty in relationships is to go through a Marriage and Parenting Course before making a decision. The Sarawak Government has a program that has proved to be useful and hence it has the lowest divorce rate among the states.

Reference:

Will authorities address high divorce rate among Muslims? Mariam Mokhtar, FreeMalaysiaToday, October 16, 2021 (https://www.freemalaysiatoday.com)

Malaysia’s Worst Floods?

Floods have affected more than 200,000 people in a decade or so, caused losses of over RM6 billion in damages and killed over 150 people. Malaysia’s worst flooding in decades took place in 2014, forcing about 118,000 people to flee their homes.

In the last one week, more than 64,000 people were evacuated from their homes in Malaysia according to the authorities. Downpours since last Friday have caused rivers to overflow, submerging many urban areas and cutting off main roads, leaving thousands stranded. Of this, more than 14,000 of the people were from Pahang.

Source: Malaysiakini.com

Nearly 10,000 people fled their homes in Selangor. Ismail Sabri Yaakob, the PM, expressed surprise at the severe flooding in KL and Selangor.

A Government website showed water exceeding dangerous levels in six states on Sunday afternoon. As flood waters receded from the capital, business owners went back to their shops to clean up the damage left by the downpours.

And what was the Government’s response?

The PM promised RM100 million or RM1,000 per household for flood victims. And beyond that?

1. It was a photo-opp:  

From the yellow umbrellas and full-suited minders to a VIP standing at the back of a touring 4x4 as if inspecting the troops, it gave the rakyat the chance to see which VIPs really care about the suffering of the rakyat.

2. Time to pass the buck:

The MKN, NADMA, ARMY, MB, CIVIL DEFENCE, DOs, BOMBA and district disaster relief committees, all had their share of blame for the tardiness, confusion and the uncaring attitude of the authorities.

It's a waste of time to talk about these people because their sense of reality is different from ours. That's why they do what they do. They don't feel what the rakyat feels. 

3. The rakyat rules:

It was heart-warming to see the rakyat trying to take care of themselves without concern for race, religion, class or creed! That, is not a welcomed thing to some, and the fact that the rakyat were on their own.

4. Unity or hair-splitting:

The defenders of the status quo are quite irritated by the government- bashing. But then nobody blames anybody for an act of God. It is the lethargy that annoys the rakyat! Amazing what dismal leadership can unearth, it is like having Trump in a Covid situation.

So what can we do?

After all the recriminations and pontification, there are several things to do:

• Dredge the rivers;

• Try to clean the rivers;

• Provide retention ponds and pumps where required

• Re-forest areas which have been logged;

• Give the army a standing instruction to assist in a crisis;

• Galvanise a couple of individuals to coordinate rescue, relief, restoration work; and

• Give local housing associations basic amenities for rescue and relief

The above is not an exhaustive list – and you don’t need a “Jawatankuasa” to put this into action. Leaders are born in a crisis and there were many from the residents and NGOs. Forget about race or religion, it is a human being that needs help!

References:

1. Malaysia’s worst flooding in years leaves 30,000 people displaced, The Guardian, 19 Dec 2021

2. A natural disaster hits the nation, Umar Mukhtar

3. Malaysia flood evacuees rise to 64,000, 8 deaths reported, xinhuanet.com, 20 Dec 2021

The Greed and Fear Cycle

There is an old saying in Wall Street, “Financial markets are driven by two powerful emotions – Greed and Fear”. Legendary investor, Warren Buffet in his 1986 letter to Berkshire Hathaway shareholders wrote that, “Occasional outbreaks of those two super-contagious diseases, Fear and Greed, will forever occur in the investment community”. Investor behaviour driven primarily by Greed and Fear is responsible for the dizzying highs in bull markets and subsequent crash in bear markets.

Jeff Bezos, the CEO of Amazon once asked Warren Buffet, “Your investment thesis is so simple. Why doesn’t everyone just copy you?” Buffet responded to Bezos by saying, “Because no one wants to get rich slow”. What Warren Buffet said to Jeff Bezos is the essence of Greed in investment behaviour. Investors want to make profits quickly and bull markets provide a great opportunity to make profits in a short period of time. When price keeps rising, more and more people invest more and more money in stocks. Stock prices follow the law of demand and supply. With higher demand (more money), prices keep rising further and profits grow. Growing profits fuel more greed and more money get invested raising prices to excessive levels. At very high prices, asset bubbles are created i.e. prices are much more than intrinsic or fundamental value of assets. Like all bubbles, asset bubbles eventually burst and prices crash. Investors who had bought stocks at very high prices face big losses when market corrects.

Bear markets (falling markets) can be triggered by a number of factors but the most common factor is slowing or sluggish economy. It has generally been seen that a stock price fall faster than it rises. Just like a ski slope. When prices fall sharply, investors fear that it will fall more and sell in panic. In a bear market, supply of stocks is high since most investors want to sell in panic. Panic selling causes stock prices to fall sharply. Ultimately, prices fall to such low levels that stock valuations become attractive (cheap) and the markets eventually bottoms out.

You cannot control the market but you have control over your actions. Your actions will determine whether you make a profit or loss in stocks or mutual funds.

By now you know that there are only three ways the markets could move – up, down or sideways. Nearly everything will depend on inflation, Federal Reserve’s policy pronouncements, Biden’s infrastructure implementation, Omicron’s impact and prospective GDP in the U.S. and other developed nations, including China.  That’s fundamental. But what is the Black Swan or Shiller’s Index (CAPE at 38) or Buffets’ Indicator (at 2.1 standard deviation or strongly over-valued) say? The latter two are pessimistic and suggest value stocks. The Black Swan is an event which we cannot foresee – so that may trigger a panic sale – and the best strategy to follow is to remain cautious in your continued investments.

Reference:

Importance of investor behaviour in market correction – Greed and Fear Cycle, Mirae Asset Mutual Fund (https://www.miraeassetmf.co.in)

Chopsticks, Mahathir and Country Garden

Malaysians have not taken kindly to former premier Tun Dr Mahathir Mohamad’s recent remark citing chopsticks as an example of why there are divisions in the country. During the launch of his book Capturing Hope: The Struggle Continues For A New Malaysia on Sunday (12 Dec), Dr Mahathir said: “The Chinese eat with chopsticks, they don’t eat with their hands. They have not adopted the Malaysian way of eating food. They retained the chopstick, which is an identity from China, not Malaysia, and many other things,” he said, adding that some Malaysians clinging to their ancestral roots only divides rather than unifies the people.

Source: https://linkjapancareers.net

Former prime minister Najib Razak mocked Dr Mahathir Mohamad by praising him for his “expert skill” in using chopsticks, a day after the elder statesman had made the controversial comments on chopsticks and the Chinese community.

Malaysian Chinese Association (MCA) secretary-general Datuk Chong Sin Woon said the outdated world view expressed by the 96-year-old senior statesman cannot be allowed to undermine the country’s race relations. Datuk Chong urged all Malaysians not to be easily swayed by the words of the former premier.

Mr Lim Guan Eng, secretary-general of DAP described Dr Mahathir’s remarks about chopsticks as simplistic and offensive to the Chinese community. Mr Lim said the chopsticks, like other forms of cutlery such as forks and spoons, are an integral part of Chinese culture. Mr Lim said Dr Mahathir’s view was also logically wrong. “Does a Malay using chopsticks or fork and spoon to eat lose his Malayness? In fact, many non-Chinese Malaysians and westerners are proud of their ability to use both chopsticks as well as fork and spoon without any loss of their national identity,” he added in the statement.

With uncalled statements from Mahathir, how do we expect to attract new foreign investments, especially from mainland China? 

Nothing to do with chopsticks, but Country Garden Holdings (the largest foreign real estate developer in Malaysia) had trimmed its workforce and sales team by two-thirds over last two years. Sales have slowed to a trickle. Total sales was expected to hit USD100 billion for the Forest City township. Country Garden was first hit in 2017 by China’s freeze on foreign remittances. The second was deterioration of relations between Malaysia and China, brought on by Mahathir’s comments on land sold to mainland Chinese. Then the Covid-19 situation of 2020 with its lockdowns and travel ban crashed sales.

The project is on four reclaimed islands which could accommodate 700,000 residents in 30sq.miles when fully completed in 2035. The company had earlier pledged to invest USD100 billion over two decades. Country Garden owns 60% of the project while Johore state the balance. With MM2H on moribund status, Chinese investors have little hope of a 10-year visa. Now we have chopsticks to pick up the pieces?

How can we have foreign investments, especially from China, when we have a former PM playing the racial/cultural card?

References:

Malaysians slam Dr M’s “chopsticks” remark, say it avoids the real issues, Blake Chen, The Star, 13 December 2021

Najib mocks Mahathir’s “expert skill” at handling chopsticks, FreeMalaysiaToday, 13 December 2021

Critics pick apart Mahathir’s remarks on Chinese and chopsticks, The Straits Times, 15 December 2021

Country Garden reduces its headcount by two-thirds due to poor sales at Forest City, Sharen Kaur, New Straits Times, 1 September 2021

What Does NFT Stand For?

NFT stands for non-fungible token. “Fungible” is an economic term which refers to a good or asset that can be exchanged for another good asset of equal value. For instance, a dollar bill is fungible, because it can easily be swapped for another dollar bill of the exact same value.

Source: https://www.businessinsider.com

If something is “non-fungible,” it means it can’t be swapped for something of completely equal value. A tract of land would be non-fungible, since land is unique, and finding another tract with the exact same value would be difficult. Art is another example of a non-fungible asset, since its value is highly subjective—and this is where NFTs come in. An NFT shows exclusive ownership of a particular digital asset (e.g., a piece of art, an in-game purchase, or a tweet). You might purchase an NFT at a certain price, but because it’s non-fungible, its market value is likely to fluctuate.

How do NFTs work? Are they cryptocurrency?

While NFTs are often bought and sold using cryptocurrencies such as Bitcoin and Ethereum, they are not cryptocurrencies themselves. Like dollars and other currencies, cryptocurrencies are fungible. If you trade one bitcoin for another bitcoin, they both have the same value. You’ll still be left with one bitcoin. Since NFTs are unique, they have no equivalent value other than what the market is willing to pay for it.

What do you get when you buy an NFT?

Since an NFT can only have one owner at any one time, when you buy an NFT, you purchase the exclusive ownership of a particular digital asset. However, this doesn’t mean that you own the exclusive rights as to who gets to look at or share that particular artwork.

For example the most expensive NFT sold (USD69.3m) to date: Beeple’s Everydays: The First 5000 Days, a 5,000-piece digital collage. The owner of this NFT is Vignesh Sundaresan, founder of the Metapurse NFT project and the bitcoin ATM provider, Bitaccess.

While Sundaresan is the official owner of this NFT, this image has been copied, shared, and seen by millions of people around the world—and that’s fair game! So, when you buy an NFT, it’s a little like buying an autographed print. The NFT is signed exclusively to you, but anyone can view the work.

An NFT can be any digital asset. So far they’ve included:

• Artworks

• Tweets

• GIFs

• Songs

• In-game purchases

• Essays

• Domain names

Why would anybody buy a non-fungible token?

Scarcity

There’s nothing like a perceived sense of rarity to increase interest in a particular item. As NFTs can only have one owner, they create this sense of scarcity.

Think of it like when you find a pair of sneakers you want to buy and the site tells you that there’s only ‘one pair left.’ If you’re like most of us, this increases your sense of scarcity and encourages you to commit to making the purchase—even if it doesn’t make financial sense for you.

Collectability

Like swapping football jerseys on the playground, NFTs are essentially trading jerseys for the super-rich. While there’s no inherent value in these jerseys other than what the market ascribes to them, their fluctuating worth makes their collectability and trading potential like a high-risk gambling game. As a result, it’s easy to make comparisons between the NFT and the art market.

Is it worth investing in NFTs?

Appealing to the risk-taker investor, NFTs offer a unique, high-stakes opportunity to make some huge profits—but be warned, this only happens rarely. Though not as flashy, and without the same cultural cache, if you’re looking for a more reliable way to invest your money, consider investing in an index fund rather than a Pop-Tart cat GIF.

However, if you want to take your chances and enter the world of nonfungible tokens, you’ll first have to open a digital wallet. This is where you’ll store your cryptocurrencies and your NFTs. You’ll then need to look for NFTs on the likes of OpenSea.io or Rarible, find one you like, then buy the right cryptocurrency for that particular NFT then make your purchase. Then it’s a waiting game. As the value of your NFT is dependent upon how much someone else is willing to pay for it, you and your Pop-Tart cat are at the mercy of the market.

A safer way to jump on the NFT bandwagon is to look for the companies that are using the technology and invest in them instead of going in headfirst and buying digital assets. There are a lot of opportunities to look at as this new market continues to grow.

References:

What is an NFT and should you invest in them? N26 (https://n26.com/en-eu/blog/what-is-an-nft)

Are NFTs just a fad or here to stay? Jonathan Hung (https://jonathanhung.com/are-nfts-a-good-investment/)

From Soft to Hard?

Normally, you take Viagra to get something soft to turn hard! And for Covid, the Malaysian Government intends to use Prevention and Control of Infectious Diseases Act 1988 (Act 342) as the draconian approach to manage it.

Compounds are raised 10 to 1,000 times from the current maximum fine of RM1,000. Penalties are raised to a maximum of RM10,000 (or 7 years jail or both) for individuals and up to RM1 million for corporate bodies. Act 342 also authorises the use of force to quarantine people.

Further, Act 342 is used to criminalise a breach of Covid-19 standard operating procedures (SOPs), that includes not wearing face masks, not practising physical distancing, breaching quarantine and engaging in prohibited activities like visiting a pub or a nightclub.

Currently, general penalties under Act 342 stipulate that a person convicted of an offence is subjected to an imprisonment term not exceeding two years or to a fine or both, for the first offence. For a second or subsequent offence, the penalty is imprisonment for a term not exceeding five years or a fine or both, and a further maximum fine of RM200 for each day during which the offence continues.

It is important to note that the maximum seven-year jail sentence for offences under the Act 342 amendment Bill is equivalent to punishment for voluntarily causing grievous hurt (Section 325 of the Penal Code); punishment for criminal intimidation to cause death, grievous hurt, or destruction of property by fire under Section 506 of the Penal Code; as well as theft (Section 379 of Penal Code).

A proposed Section 22A imposes a presumption of guilt on corporate bodies, stating that an organisation is presumed guilty of an offence, unless it proves that the offence was committed without its knowledge or consent; and that the organisation had taken all reasonable measures and efforts to prevent the offence from being committed.

Section 10 of the amendment Bill mandates all medical practitioners who get to know, or who have “reason to believe or suspect” the existence of any infectious disease in any premise, to inform the nearest health officer without delay. 

Where is the Government going with this? Why don’t we have a Covid-19 police force? Why can’t we have Covid informers or Covid Special Branch? What about capital punishment for repeat offenders? Why don’t we seize property, assets or companies in the name of Covid? 

Is this Government attacking a mosquito or virus with a missile? Can Act 342 be applied for dengue and other viral flu as well? Can we have some sanity in this? No one wants Covid. There are a few who break the rules. And these are the elite or politicians. Find another, more humane way to deal with Covid. Stick with an alpha-blocker not Viagra please.

Reference:

Government plans to treat Covid SOP violations worse than attempted homicide, Alifah Zainuddin and Boo Su-Lyn, 13 Dec 2021 (https://codeblue.galencentre.org)

Of Pygmies and Infants

Dr Sukhdave Singh, the former Deputy Governor of Bank Negara Malaysia recently published an excellent article entitled “When Infants Do No Grow Up”. He describes the NEP and its drawbacks on the Malay community. It has hindered their advancement rather than accelerate their progress.

Source: https://www.malaysiakini.com

Incentives and penalties play a key role in social behaviour in any society. That can be observed in corporate life, traffic enforcement or in other aspects. A corollary to this is infant industry. The fundamental idea is for an industry to grow in a incubator-like environment till it is ready to compete. The creation of taxes, permits and licenses on others (competitors) is to allow the “infant” industry or company to survive in its initial years. Proton is a great example. So was the “Ambassador” of Hindustan Motors, India. The former ended in Chinese hands and the latter stopped production with market reforms (in India)  in the 1990s.

The key issue is, it is difficult to breed competitive champions in a protected environment. You only get a “Jaguh Kampung” or a “Jagung”. The latter is at least edible.

Protection under the NEP has been on for 50 years. Although there was a “jump” in holdings of corporate equity in the 90s, it has largely remained stagnant at around 17-23% over the last 20 years. Why? The equity value is at par (no idea of what is mark-to-market); the elite who subscribe to the allocated shares dispose them at the earliest opportunity; then you have GLCs and the GLICs not included in the computation. It is this “suppressed” figure (of failure) that entitles extension of a defunct policy forever.

A consequence of the above is that the Nons have learned to be more resourceful while the Malays have become increasingly dependent on their political masters. That is the tragedy.

We are behind South Korea, Taiwan and Singapore. And we are now unable to understand UAE or even Saudi Arabia. Muslim societies more conservative than us at one time are throwing the shackles of bondage for progress.

In the end it is the mindset, no reset, restoration or rebuild can help if the mind is still in 1971. Only the elite will enjoy the fruits of corruption, greed and avarice. It takes a benevolent leader (or leaders) to change the status quo, otherwise we will plod on with 3-4% growth when it should be double that!

Reference:

When infants do not grow up, Sukhdave Singh, Dec 6, 2021 (https://www.linkedin.com)

China’s High-Speed Railway and Its Debt Trap

In 2009, China’s first long-distance high-speed rail (HSR) service covered the 968 kilometres between Wuhan and Guangzhou at an average speed of around 350 kilometres per hour. In the decade that followed, China’s HSR network spanned over a track length of 38,000 kilometres, the highest in the world. With a share of 26 percent of the country’s total railway network, HSR today connects almost every major city in China. 

In the mad rush to gain the rich economic dividends that the HSR delivered on several profitable lines, especially the Beijing-Shanghai and Beijing-Guangzhou lines, provincial governments across the country blindly emulated the feat. However, most of such provincial construction has ignored the low- to zero- potential of the expensive routes to attract similar volumes of passenger traffic and are running at high idle capacity.

Source: https://www.businessinsider.com

Most new HSR lines in China have witnessed a sharp decline in their “transportation density”. Measured in passenger-kilometres, it is an indicator that projects the line’s operating efficiency in terms of annual average transport volume per kilometre. For example, while the 1,318-kilometre Beijing-Shanghai HSR corridor’s transportation density was 48 million passenger-kilometres in 2015 and continues to be high, the 1,776-kilometre Lanzhou-Urumqi line has only 2.3 million passenger-kilometres of transportation density. China’s overall transportation density of HSR was 17 million passenger-kilometres in 2015, while it was 34 million passenger-kilometres for Japan’s Shinkansen in the same year.

Most new HSR lines in China have witnessed a sharp decline in their “transportation density”. Measured in passenger-kilometres, it is an indicator that projects the line’s operating efficiency in terms of annual average transport volume per kilometre.

HSR construction costs nearly three times more than a conventional rail line. Given the absence of freight tariffs, its operational viability is hinged solely on passenger fares to cover the capital expenditure and operating costs. The demand for HSR has made China neglect the construction of conventional systems.

In the past few years, mega borrowings by provincial governments to monetise its HSR lines have created a debt trap, which is now pinching the coffers of the state-owned China Rail Corporation (CRC). CRC’s financial woes started nearly four years ago when more than 60 percent of the HSR operators each lost a minimum of US $100 million in 2018. The least profitable operator in Chengdu reported net loss of US $1.8 billion. In the same year, transport economists in China had predicted an impending debt crisis for the country’s HSR that was dependent on “unsustainable government subsidies with many lines incapable of repaying the interest on their debt, let alone principal”, and were caught in a vicious cycle of “raising new debt to pay off old debt”. Consequently, since 2015, CRC’s interest payments have been significantly higher than its operating profits, shrinking its bottom line.

Four years later, in March 2021, China’s State Council, the highest organ of state power, has waved a red flag to curtail investments in HSR to prevent the slide into a deepening debt trap. The new guidelines have stopped the construction of new HSR corridors, primarily on underutilised routes that are operating at less than 80 percent of prescribed capacity. For China, which has seen the length of its high-speed railway network increase by 91 percent between 2015 and 2020, the new guidelines indicate that the country’s pursuit for speed has come at a high price.

In September 2020, CRC’s quantum of debt rose to RMB 5.57 trillion (US $850 billion) – up from RMB 5.28 trillion as of September 2019, catapulting its debt-to-asset ratio to 65.8 percent.

The guidelines have asked governments to avoid blind competition, obsolete and redundant construction, and “improve the early-warning mechanism over railway-related debt.” It has suspended all construction in regions where the debt burden is high and surpasses its fiscal strength. Debt-ridden cities building underground or light railway systems too have been suspended.

Within just three days of the guidelines being released, Beijing stopped work on two HSR projects worth over RMB 130 billion (US $20 billion) in Shandong and Shaanxi provinces. Shandong’s 270-kilometre line had sought to connect its capital Jinan with its southern city of Zaozhuang. Shandong was also ordered to stop work on the RMB 71.6 billion Guanzhong Chengji project, which consists of 13 lines in Northwest China’s Shaanxi. 

The financial burden and returns from a long gestation period project has to be viewed circumspectively. That requires some level of courage. The KL-Singapore HSR may make good sense, if assets are held by the government/s and operations are done by the private sector. Cost per kilometre and traffic density are two key issues to define viability of the project. This is also an opportune time to review and revive a project that will find its full fruition in the latter half of this decade, if debt is by way of long-dated papers (50 years or more) issued by the government/s.

Reference:

China’s high-speed railways plunge from high profits into a debt trap, Dhaval Desai,

(https://www.orfonline.org)

Of Language, Beer and Perks!

As Aziz Bari (assembly person) puts it, Senate President, Rais Yatim is a “born-again nationalist”. Rais Yatim echoed MP Nazri Aziz and PM about the “disgusting” practice of using English names for various locations/condominiums: Bangsar South, Ainsdale, Bloomsdale, Petalz, Ukay Heights, The Cove etc. And Rais is known to chide members of Dewan Negara for using English expressions. This obsession for English names is also seen with some Chinese using nicknames like Michael Chong, James Song or George Tan. He wants everyone to change their attitude.

Little did he realise that his Phd is from King’s College, London, his party UMNO, stands for United Malays National Organisation, his children have English names and he has written several books in English. Pray tell me why do you communicate in Malay, English and Cantonese?

In Sarawak, English or Bahasa Malaysia is its official language. That’s from Datuk Seri Dr Wan Junaidi Tuanku Jaafar. Sarawak has freedom to continue using English as stated in Article 161(3) of the Federal Constitution. We can tolerate Sarawak but not individuals or private sector using English for branding or marketing purposes. Usage of a language is cultural and in some cases contextual and not by fiat!

Then we have beer! Sometimes you may think some politicians really need beer or whiskey to get their heads sorted. Coffee shops and restaurants are required to pay over RM1,000 in customs liquor licenses in 2022 to sell beer. This is at a time then there is a slump in sales.

With the banning of 4D, and other gaming activities in certain state/s, we have no beer to drown our sorrows. Why can’t we look at Dubai or Albania for direction? Even Saudi Arabia is moving to liberalise! Others who have imposed strict laws/rules have regressed – Kelantan, Aceh, Pakistan or Afghanistan.

For all the above “hard” work by our politicians (MPs) they are paid generously:

• Pay RM16,000/mth

• Attendance in parliament RM400/day

• Attending briefings, meetings seminars, workshops RM300/day.

• Entertainment allowance RM2,500/mth.

• Special payment (?) RM1,500/mth.

• Daily subsistence allowance outside Malaysia RM170/day.

• Food allowance outside Malaysia RM340/day.

• Hotel room charges outside Malaysia RM340/night.

Then there are miscellaneous expenses met by the rakyat:

• Fares for public transport, telephone and telegram charges, laundry charges, airport service charge,               parking and toll charges. 3% of the total travelling claims abroad as compensation for loss in respect of foreign       exchange. Conveyance allowance – when using own car.

• Fixed monthly travel allowance RM1,500.

• Fuel allowance RM1,500.

• Toll allowance RM300/mth.

• Driver’s allowance RM1,500/.

• Warm clothing allowance (amount not stated).

• Ceremonial attire allowance RM1,500.

• Subsidised payment for black tie attire RM1,000 every 3 years.

• Free motor vehicle licence.

• Free firearm licence.

• Correspondence free of charge in Malaysia.

• Telephone free direct line to house. Telephone free direct line to office.

• Free installation cost and rental for above.

• Free cell phone.

• Telephone allowance RM900/mth.

• Free First Class medical (this covers the whole family plus the parents of the MP).

• Free medical in private hospital in emergency.

• Free medical overseas.

• Free computer.

• Claim for purchasing personal computer up to RM6,000.

So, do we want to regress or progress? Make a mountain out of a molehill? Resolve real issues of consumer prices, downturns and bankruptcies or deflect them with language, beer and gaming? And to do that do we need politicians in Malaysia to be remunerated well?

References:

The scamming of Malaysians... The rakyat have been stung big time, Mariam Mokhtar, 30 November 2021(https://www.mariammokhtar.com) 

Aziz Bari: “Born-again nationalist” Rais Yatim should ask UMNO to change name, Martin Vengadesan, Malaysiakini, 6 December 2021

Jan 1 beer licence rule for coffee shops shocks Guan Eng, FreeMalaysiaToday, 5 December 2021

Bonhoeffer’s Theory of Stupidity

“Stupidity is a more dangerous enemy of the good than evil,” wrote Dietrich Bonhoeffer, a German theologian. Penning this sentence ten years after the accession of Adolf Hitler, these words reflected tough lessons soaked in blood. Bonhoeffer formed part of a small circle of resistance to the dictator in Germany (Peter Burns in a recent article explains Bonhoeffer’s Theory of Stupidity).

You can fight evil. You can expose it. Evil makes people uneasy. As Bonhoeffer continued, “evil carries with itself the seeds of its own destruction.” To prevent willful malice, you can always erect barriers to stop its spread. Against stupidity you are defenseless.

“Against stupidity we have no defense. Neither protests nor force can touch it. Reasoning is of no use. Facts that contradict personal prejudices can simply be disbelieved — indeed, the fool can counter by criticizing them, and if they are undeniable, they can just be pushed aside as trivial exceptions. So the fool, as distinct from the scoundrel, is completely self-satisfied. In fact, they can easily become dangerous, as it does not take much to make them aggressive. For that reason, greater caution is called for than with a malicious one. Never again will we try to persuade the stupid person with reasons, for it is senseless and dangerous.” — Dietrich Bonhoeffer

Source: https://sproutsschools.com

After writing down those words, Bonhoeffer was soon arrested. He died two years later, executed in a concentration camp by the Nazis. The man lived in what now seems like a completely different era. Yet, the ideas he left us with have an application in any century. For stupidity hasn’t disappeared. It is eternal.

 “If we want to know how to get the better of stupidity, we must seek to understand its nature,” wrote Bonhoeffer in his treatise. And the nature of stupidity has its roots deep in the subconscious. It is driven by the fundamental mechanics of the human experience. As ancient philosophers noted, humans are social animals. It is this very sociability that is at the base of stupidity.

“We note further that people who have isolated themselves from others or who live in solitude manifest this defect less frequently than individuals or groups of people inclined or condemned to sociability. And so it would seem that stupidity is perhaps less a psychological than a sociological problem.” — Dietrich Bonhoeffer.

Stupidity is a group phenomenon. An individual can act stupidly, but that has no effect on the greater whole. However, when a group acts stupidly, that greatly impacts the individual, compounding the entire effect. 

Herd behavior is among the pre-eminent causes of stupidity. Numerous scientific studies have shown how individual humans can be swayed by the crowd to adopt positions which go against all logic. In a classic examinationof human folly, psychologist Solomon Asch looked at how individual people respond to the majority group around them.

 “The power of the one needs the stupidity of the other. The process at work here is not that particular human capacities, for instance, the intellect, suddenly atrophy or fail. Instead, it seems that under the overwhelming impact of rising power, humans are deprived of their inner independence, and, more or less consciously, give up establishing an autonomous position toward the emerging circumstances. The fact that the stupid person is often stubborn must not blind us to the fact that he is not independent. — Dietrich Bonhoeffer

People overcome with stupidity act as if possessed. Their logical part of the brain is shut down. Such a person starts acting as a political zombie, with whom any type of logic or discussion of facts fails. Instead, they function on the level of slogans, catchwords, and low-level rallying cries.

Stupidity facilitates the process of the capture of society by spineless, evil forces. A narrative is created that incorporates simple explanations for complex problems, offering “solutions” and scapegoats. Whoever doesn’t conform to this standard orthodoxy becomes the “other”, an enemy to be destroyed.

The 21st century is seeing these internal failures of the human mind unfold in full swing. Pro-Trump rallies, the attack on The Capitol, the “Big Lies” by Trump,  the slogan “Brexit is Brexit” and no one knew what it meant. Not even the Brexiteers.

Are our politicians doing the same?

Myocho Kan believes so and I reproduce the viral post (reduced and adapted):

Instead of learning and empowering, they ask for vernacular schools to be shut so that all students are equally low in intellect and intelligence.

Instead of enhancing the economy, they call for cap on retirement so that young graduates have a job.

Instead of being prudent and put an effort in building the economy, they say doing business in Malaysia is cheaper.

Instead of developing the economy, they ask the People to grow their own veges and rear their own produce.

Instead of learning, they ban other languages and force through their own.

Instead of studying to do business, they hijack businesses through quotas and permits.

Instead of managing the “sin” activities, they ban 4D and allow illegal and online gaming to flourish.

Reference:

Bonhoeffer’s Theory of Stupidity explains the world perfectly, Peter Burns

(https://medium.com)

China’s Competition for Living Space

From what used to be only 20%, over 60% of China’s population live in modern megacities (This used to be only 20% before). The growth in number persists. Sadly, the majority of these migrants never reach the glamorous streets with skyscrapers, but end up in dark homes in the narrow, loud and dirty streets, hidden behind all the shiny structures of the city. 

Source: https://www.china-briefing.com

China’s Competition for Living Space is a documentary that sheds light upon what really lies within China’s metropolises; the struggles and conflicts between the people and the law, and the appalling and conditional livelihoods the working class lead. This 42 minutes long documentary was created and released on May 30th, 2021, by Deutsche Welle (DW), a German International Broadcasting service. DW is a German-based media organization. 

Intended towards an audience of any kind, especially those interested in housing and urban development, this documentary reveals the complications of national laws and their effects on its domain and people, even though made in the hope of the country’s advancement.

This documentary takes us to several homes of migrant workers in Guangzhou and Shenzhen, giving us a visual understanding of what an ‘urban village’ in China really is. The most populated country in the world does not have a dense population, but the urban villages in its cities do at an alarming amount. 

The film introduces Erk Schaffarczyk, a German architect, and author David Bandurski who have both lived and worked in China for over a decade. The two individually explain the forces that drive people towards the urban lands even though there are no ideal homes available for them, in spite of being the major contributors as a working and middle class for the city’s thriving economy.

Professor of Architecture Juan Du at Hong Kong University is also introduced in this documentary to unfold the law systems of the People’s Republic. Being a specialist in large metropolitan areas and urban villages, she elucidates how the people have no legal rights of ownership on their rural lands as well as no official rights to settle in a city. Step by step, she explains how these lands, which used to be farmlands, end up in the hands of authorities and contractors, even if it takes brutal force. Juan Du, Erk Schaffarczyk and David Bandurski provide the viewers with a vivid understanding of what China’s urban real estate has come to and what happens to those who oppose the authorities.

To comprehend what happens when one takes a stand, the documentary takes us to Li Qizhong’s home in Guangzhou. He is one of the very few who dared to defend his home and fight back against the city administrator and an obstinate contractor. DW visited Li Qizhong in 2012 when he was one of the last residents who remained in his building. The film documented how Li fortified his home, and his perseverance to protect his family and land, despite threats and violent approaches. Li’s example in the film provides the viewers with an understanding that when it comes to China’s land and its potential, whether you’re protecting it or fighting to own it, people have resorted to extreme and savage tactics.

China’s Competition for Living Space is an eye-opener to how city development can affect people’s lives and mindsets.  This film has the capability to ignite curiosity in viewers’ minds about how urban development, planning, and housing works not only in China but in other countries as well, what hidden or unpleasant truths may lie within, and what can be done to alleviate such situations. 

It is useful reminder of us in Malaysia of the plight of the poor. And how successive governments promise but never deliver on basic human need of a home. Have a review of the DW documentary in the reference below.

Reference

Youtube for architects: China’s competition for living space – DW Documentary, Rethinking the Future (https://www.re-thinkingthefuture.com)

Malaysia: Reset, Restore or Rebuild?

The “Better Malaysia Assembly” of Nazir Razak has enlisted 54 so-called eminent persons for resetting Malaysia. He has made a plea to the Conference of Rulers and the YDPA on his proposal for a reset. The King and the Conference of Rulers are apolitical – so how does this work?

He wants to propose key reforms for the reset and needs up to 24 months to do so. Isn’t this the purview of Parliament and the Government in power to reset, restore or rebuild? Biden has a “Build Back Better” slogan, a copy of a U.N. document in 2015. Are we doing the same?

Based on IMF GDP data for 2020, Malaysia’s economy is now ranked 6th in ASEAN. About 10 years ago, Malaysia was the 3rd largest economy in ASEAN. Philippines and Singapore overtook Malaysia in 2015 when Najib Razak was the Prime Minister and Finance Minister.

Now, Malaysia’s economy is smaller than that of Vietnam. Shown below is the 2020 IMF GDP data:

Country	US$’b
1. Indonesia	1,059.54
2. Thailand	510.89
3. Philippines	362.24
4. Vietnam	340.82
5. Singapore	339.98
6. Malaysia	338.28
7. Myanmar	81.26
8. Cambodia	25.95
9. Laos	19.08
10. Brunei	12.02

There are several reasons for this decline and many have pointed it out. It doesn’t take 24 months to establish the reasons and what reforms are needed:

Issue	Reform
1. Islamisation and role of Jakim	·         Move back to a secular state approach, similar as in Indonesia
2. Ketuanan Melayu	·         Keluarga Malaysia and affirmative action on needs based approach is superior
3. Dominance of Civil Service by majority race (88% Bumiputera)	·         Restructure to reflect population distribution by race and gender
4. NEP target of 30% equity interest  (Government believes it is only 17.2%)	·         Have an independent party verify equity control by Bumiputera interests ·         Remove the requirement over a set period with no extension
5. Education – national schools are more “Islamic”	·         Reset schools on merit based and curriculum that promotes learning not rote learning ·         Support learning of English and a vernacular language. This is beyond Malay as medium of instruction
6. Employment – low skill and low cost labour force	·         Make concrete steps to a technology-based economy ·         Innovation, incubators and clusters are encouraged ·         Wage reform to a higher cost economy ·         Automate dirty, dangerous and difficult jobs
7. Entrepreneurship – “forced” acquisitions of non-Malay enterprises	·         Promote entrepreneurship with tax incentives for Nons to partner Bumiputeras ·         Create/promote companies reflecting merit and diversity
8. Corrupt practices – political donations, contracts, GLC appointments	·         Revamp MACC and others and have people with integrity ·         Create a Truth Commission as a watchdog ·         Transparency and accountability to Election Commission
9. Legislative review and reforms             -PM’s power             -State and Federal             -MA63	·         People’s Ombudsman for feedback and resolution ·         Fulfill MA63

The above is not an exhaustive list.  And it doesn’t take 24 months to detail issues and solutions. Why? Because most Malaysians know the “brakes” and what will accelerate growth. But we sure have to reset, restore, rebuild the institutions of government, policies that help community and work for a better Malaysia without the lenses of race and religion (Please refer to Sarawak or Sabah).

Reference:

Nazir and 54 others seek royal backing for “national reset”, Malaysiakini, Nov 26, 2021

Malaysia needs a restoration, not a reset, Terence Netto, FreeMalaysiaToday, Nov 28, 2021