Tuesday, 31 August 2010

Bank Loan Price War, Banks to try to prevent speculation on property prices, Possible mortgage cap on property not a concern

There may be a price war to give out cheaper bank loans

By TEE LIN SAY
linsay@thestar.com.my

KUALA LUMPUR: There may be a new round of price war among banks for consumer loans, with the new mortgage rate going down to as low as base lending rate (BLR) -2.3%. The current BLR rate is 6.3%.
Some analysts said this comes as a surprise to the market after a mutual understanding was reached earlier to set a minimum rate of BLR-1.9%.

The new mortgage rate is now down to BLR-2.2% since end-July and some banks have started offering BLR-2.3%.

A home loan officer from CIMB Bank Bhd told StarBiz that housing loans have been revised downwards.

Which one shall I take? So many choices! Can't believe it.
 
“Previously we were offering BLR-1.9%. Now, we are revising the rate to BLR-2.1%. We had been losing some market share to foreign banks and decided to join in the price war,” he said.

The BLR is a minimum interest rate calculated by banking institutions based on a formula which takes into account the institutions’ cost of funds and other administrative costs. The BLR is measured against the overnight policy rate (OPR). This year, Bank Negara has raised the OPR by 75 basis points in three rounds of rate hikes points to 2.75%.

This means that the BLR also goes up by 75 basis points to 6.3% currently. The BLR is one of the major components used by banks to determine the pricing of home loans.

StarBiz called up the customer service departments of some of the major banks for verification. While rates change depending on the mortgage taken, some banks have become very aggressive in their rates.

It appears that CIMB’s rate is now BLR-2.1%, Hong Leong Bank Bhd is BLR-2.3%, OCBC Bank (M) Bhd is BLR-2.3% and UOB Bank is BLR-2.3%.

While the website of Malayan Banking Bhd shows that it is offering BLR-1.8%, one of its home loans officers contacted said it could offer up to BLR-2.2% depending on the loan taken.

“The price war has also spilled over to credit cards, with offers to absorb the government annual service tax. This was previously borne by card holders,” said an analyst from UOB KayHian.

The analyst added that the start of government infrastructure projects and robust property launches would drive business loan demand in the second half, in time to mitigate the impact from slower external trade.
Business loan is now 44.7% of total loans as at end of July 2010.

Property brokers agree that the outlook for the property sector has been improving.
Zerin Properties CEO Previndran Singh has a “neutral to positive” outlook on the property sector in Malaysia.

“Prices are not moving up as fast, but interest is returning. Yes, there are issues of products being mismatched, but they are not big issues,” he said.

A real estate agent from Reapfield Properties Sdn Bhd said interest in Malaysian property was moderate. People were adopting the “wait and see” attitude because of the rising interest-rate environment.

However, she said there was “lots of interest in our properties below RM2mil”. There was less movement among the higher end homes.

She added that her client list included foreigners from Singapore who were keen to invest in Malaysia due to its affordability.

The UOB analyst said banks’ net interest margin was expected to trend up again after Bank Negara made another 25 basis points hike to the overnight policy rate on July 8. Average lending rate inched up to 5.19% in July from 5.05% in June.

This impact might be offset by the new round of price war among banks for consumer loans.

Loan growth fell from 12.5% in June to 11.9% in July due to higher repayment by the real estate and finance sectors. Consumer loans remained the driver on resilient demand for big-ticket items.

The banking system’s capitalisation remained strong with risk-weighted capital ratio and core capital ratio sustained at 15.1% and 13.2% respectively.

The level of non-performing loans including impaired loans remained stable, accounting for 2.1% of net loans. Loan loss coverage was stable at above 90%.

Banks to try and prevent speculation on property prices

By ANGIE NG and SHARIDAN M. ALI
starbiz@thestar.com.my

PETALING JAYA: Bank Negara is engaging with banks on possible measures to curb excessive speculation on property prices while developers caution that it should not be imposed across the board to avoid dampening the property market.

Responding to queries on whether the central bank will be imposing a 80% loan-to-value ratio (LVR) for mortgages to avert the risk of a potential property bubble, the central bank said: “Bank Negara regularly engages with industry players as part of its surveillance and supervisory activity. The engagements cover a broad range of issues and areas that relate to developments on the ground, safety and soundness of the institutions and the overall system.”

Datuk Michael Yam ... 
‘Bank Negara should not impose a mandatory LVR cap on loans.’
 
It added that to ensure prudent management of credit risk in the banks’ balance sheets, the central bank regularly engages with the industry on developments in the underwriting and selling practices of financial institutions.

The share of housing loans to total loans is about 26%, according to the central bank.

When contacted, banking industry players said it was likely that any measures to be introduced would be pre-emptive measures to target certain quarters of purchasers and would not be across the board.

The measures are believed to be targeted at the high-end and non-owner occupied house purchasers.
Currently Bank Negara does not impose any standard policy on mortgage loans but leave it to the banks to manage.

But following a rise of between 10% and 30% in the prices of landed houses in some parts of the Klang Valley (including Kuala Lumpur) and Penang in the past one year, banking sources said Bank Negara might be looking at discontinuing the 5:95 and 10:90 housing loan packages, and preferred banks to impose higher downpayment for property purchasers.

Tan Sri Leong Hoy Kum ... ‘We hope that any implementation of the 80% loan to value ratio will take into proper consideration the industry’s feedback and current market conditions.'

The bank sources concurred that over the longer term, there must be the flexibility to allow more relaxed loan quantum if the market needs it, especially if there is a recession.

OCBC Bank (Malaysia) Bhd head of secured lending Thoo Mee Ling said part of the rationale for the 80% LVR for mortgages could be to curb speculative property prices in the market currently.

“If it is implemented, home buyers will have to self-finance a higher amount than they do now. In the short term, coupled with entry costs such as legal, stamp and valuation fees, the property market will take a dive and it will subsequently dampen the mortgage business.

“In the long term, the measure would curb speculative property buying and promote a healthier property market. Therefore, both the banks and property market will become more resilient to any potential crisis,” she said.

Datuk Michael Yam, the president of Real Estate and Housing Developers’ Association Malaysia (Rehda), said Bank Negara should not impose a mandatory LVR cap on mortgage loans at this juncture as it would dampen buying sentiment with spillover effects on other related industries such as construction and building materials suppliers.

“The local banking industry is well regulated and banks are very prudent and stringent in their credit assessment of borrowers. Banks have, on their own initiative, cut down loan margins to borrowers and only those who are credible and can afford to repay their loans will be offered a higher loan margin.
“Banks also are very selective of what projects they extend loans to.”


Caution and prudence should be exercised when considering any measure for mortgage loans, said Yam, adding that it should not be across the board.

“It is better to leave it to market forces to decide as the banks’ stringent lending criteria is enough to ensure the quality of loans in the market,” he added.

Yam said that up to 90% of the country’s population are living in affordable houses priced below RM250,000, and the current low downpayment for property purchases has promoted home ownership among the lower to middle income group.

Mah Sing Group Bhd group managing director cum chief executive Tan Sri Leong Hoy Kum said a conducive financing environment was important to support the property industry, which was a significant engine of growth for the economy.

“We hope that any implementation of the 80% loan to value ratio will take into proper consideration the industry’s feedback and current market conditions.”

Leong said there was no property bubble at this juncture “as property price increases have not been across the board.”

“The properties which have been enjoying price appreciation are those with good concepts by branded developers, and sited in good locations.

“One must also take into account the construction cost, and also increasing price of good land in considering the prices of properties, which have gone up by 10% to 25% in the past 1½ years,” Leong added.

Possible mortgage cap on property not a concern

By TEE LIN SAY
linsay@thestar.com.my

Buoyant consumer sentiment, demand for good locations seen supporting property purchases, say analysts

KUALA LUMPUR: Preemptive measures to curb purchases in certain property segments may yield temporary results as buoyant consumer sentiment and demand for good locations are expected to sustain.

Property analysts said there could be a short-term knee-jerk reaction to Bank Negara’s possible imposition of an 80% loan-to-value ratio (LVR) for mortgages to avert the risk of a potential property bubble.

CIMB research head Terence Wong is not overly concerned over such moves, pointing out that the previous imposition of a 5% real property gains tax last October had only resulted in a short-term cooling of demand.

“This will be effective in cooling down the market for a few months. People will step back and pay more attention to the launches and product offerings instead of simply jumping onto the bandwagon,” he said.


Wong, however, feels that the measure should not be imposed across the board. It should be applied to landed homes rather than condominiums, as it is mainly the prices of landed properties that have gone up extremely fast.

On the other hand, price increases for high-rise condominiums and apartments have been relatively subdued due to an oversupply situation.

“We know there is a finite supply of land in the Klang Valley. Everybody wants his own plot of garden. So logically, that is why prices of landed properties are going up. In that sense, this potential move (to curb certain property loans) is not a serious concern,” said Wong.

Analysts are not surprised by the possibility of a cap on the LVR as the prices of selected properties in prime locations in the Klang Valley have shot up in recent months due to a combination of factors including pent-up demand and speculation.

Bank Negara is currently exploring this measure to reduce excessive speculation and prevent the housing market from overheating as the economy recovers amidst a low interest rate environment.

Developers have enjoyed record sales this year and in some instances, sales have been so strong that some developers have the luxury of slowing down their launches.

NewAsia Capital associate director Sherilyn Foong agreed that the possible measures would, to an extent, cool down speculation in the property sector.

In Foong’s view, these potential measures could affect the take-up rates, especially among the higher value primary transactions which have benefited from innovative financing schemes.

“Pending more details, if the cap is only imposed on higher value transactions of say, RM1mil and above, the lower-middle range should, technically, not be affected.

“This is unless the entire sector turns bearish against the sentiment induced by sector-specific measures such as impositions of capital gains tax,” she said.

Credit Suisse research head Tan Ting Min, in her report on Tuesday, said capping the LVR at 80% would put a dent on the Malaysia property sector and dampen sentiment in the near term.

“The cap on LVR will indirectly reduce affordability and may cool demand in the mass market and mid- to high-end segments.

“We may also see some downtrading as affordability will be determined by the higher 20% equity upfront requirement.”

In the longer term, Tan views the preemptive role taken by Bank Negara as positive.

“It is critical in ensuring the sustainability of the Malaysia property market and reducing the risk of a major ‘shock’ to the sector should the economy slow or interest rates rise,” she said.

In the region, similar moves have been made to cool the property market over the past 12 months.

Singapore announced another round of cooling measures on Monday, including lowering the LVR to 70% for buyers with one or more outstanding loans, from 80% previously.


Monday, 30 August 2010

Broadband pricing in US and Europe falls

Broadband pricing in Europe and the US fell €5 a month, on average, as broadband speeds went up by an average of 20 per cent during the last year, says researcher Analysys Mason. This is after a relatively flat period during the past recession, when prices held up.

Now the average price paid for a fixed broadband service bundle, which includes any single service or double and triple play bundles, has come down to €40.7 a month. Analysys Mason says that it tracks over 1000 fixed broadband-based bundles in Europe and the USA to track this pricing. Our guess is that this tracking is done on web sites and that these are published prices. In the US, cablecos are well known for using call centers to match rival pricing, going below published prices, so the real number may be far lower.


Martin Scott, Senior Analyst at Analysys Mason said, “Almost 20% of the tariffs we tracked during the second quarter of 2010 offered down- stream bandwidths of 30Mbps or greater although the proportion of subscribers that actually take these ultra-fast services is likely to be much lower than 20%. Consequently, the average price per Mbps per month has declined from €7.5 in the fourth quarter of 2009 to just €5.8 in the second quarter.” Competition from mobile broadband services contributed to the downward pressure on fixed broadband tariffs, the company said.

But it also warns that the premium which cellular providers charge for mobile broadband services is also eroding. Prepaid mobile broad- band services with usage caps of 3GB or more now undercut entry- level fixed broadband propositions.

Over a six-month period the median price of fixed broadband services, excluding voice and TV services – fell €25.9 a month. When all service bundles are included, it was €40.7, down from €45.8 six months ago.


Copyright © 2010, Faultline
Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology.

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Sunday, 29 August 2010

Mathematicians Create Objective Quality of Life Index

The US comes second in a new quality of life index designed to be mathematically objective
 

Here's a thorny problem: to develop an objective way to rank countries according to the quality of life they offer their citizens.

There are various ways of approaching this problem. For example, the Economist Intelligence Unit compiles its quality of life index using surveys, a useful technique but one that is hard to show is objective. Another widely quoted index, the Life Quality Index is based on life expectancy at birth and the gross domestic product per person but is only able to rank countries by applying a correction factor for each country that some critics say is open to bias.

Is there another way? Andrei Zinovyev at the Institut Curie in Paris and Alexander Gorban at the University of Leicester in the UK think so, using a mathematical technique developed in the mid-90s that can cut through this kind of problem .

They chose several widely-measured and well-studied indices on which to base their index: GDP per capita, life expectancy at birth, infant mortality rate and the incidence of tuberculosis. This data from 2005 is available for 162 countries.

Zinovyev and Gorban then plot this data in four-dimensional space. To create a ranking, the important question is whether there is a linear function that reduces this four-dimensional dataset to a one-dimensional set. Unsurprisingly, the answer turns out to be no. "Any linear mapping will inevitably give strong distortions in one or other region of data space," they say. That's what makes this problem tricky.

However, in the mid-90s a group of mathematicians devised a technique for reducing the dimensionality of complex data sets. This technique is essentially equivalent to connecting various data points together with springs and allowing the system to relax; hence it's name: elastic mapping. The trick is to find an arrangement of springs that "flattens" the data set, or in other words, reduces its dimensionality.

And that's basically what Zinovyev and Gorban have done, creating what they call the Nonlinear Quality of Life Index in the process.

Here are the top and bottom 5 from 2005:
1. Luxembourg
2. USA
3. Norway
4. Ireland
5. Iceland
.
.
.
158. Zambia
159. Mozambique
160. Zimbabwe
161. Kenya
162. Swaziland

No real surprises there, although there are some interesting features of the list. For example Equatorial Guinea is ranked at 140 although its GDP per capita is more than Saudi Arabia's ranked at 37. That's because of Equatorial Guinea's appalling health statistics: 123 infant mortalities per 10,000 inhabitants, for example, compared to 21 in Saudi Arabia.

For similar reasons, Russia is ranked 71st despite having a GDP per capita that is significantly higher than other countries with a similar ranking.

Every list throws ups anomalies like this. The important point about this one is that it is done objectively and transparently.

That's important because these kinds of indices are widely used by economists and politicians as a measure of economic and social development and so used to determine spending polices and legislation.
Objectivity is hard to come by when making these kinds of decisions. If the people who matter would agree to use it, this index could help.

Ref: arxiv.org/abs/1008.4063: Nonlinear Quality of Life Index


Source: Technology Review
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Threat of a double-dip deflation

What’s happening in the US, euro zone and Japan points to a hard slog ahead.

MORE than a year ago (on May 9) I wrote in this column – “Deflation is not an option”, worried as the world was then of the possible coming to pass of the worse-case scenario, and that “the brutal truth is, less-worse is not recovery. The world is not out of the woods yet …”

But by late September, things had begun to brighten up. The Pittsburgh G-20 Summit pronounced triumphantly that the vast global stimuli “had worked” – indeed, it rescued the world from the knife’s edge of the most severe recession since the Great “D”.

What a difference a year makes. In May this year, I wrote “PIIGS can’t fly: the Greek tragedy”, brought about by Greece’s insolvency spreading ripple effects all over the euro zone. Overall, the Greece debacle casts a long shadow over market sentiment which has since become dormant, as of now. But many risks still remain.

Double-dip talk amidst unusual uncertainty

It is amazing how fast things do change. My column in mid-June –“In for a bumpy ride: perhaps even a double-dip?” reflected the fragility of the evolving situation. In the face of a weakening economy, premature tightening raises the risk of a relapse into recession.

Markets have since moved with greater volatility, essentially nervous about fiscal deterioration in US and many euro zone nations, and a darkening growth outlook outside Germany. Any upheaval there raises further the risk of a double-dip.

Indeed, Wall Street has since become increasingly convinced fiscal tightening by UK and euro zone nations and recent lack of confidence in US have dramatically shifted global macroeconomics for the worse. I hear many leading fund managers are already acting to re-position their funds for a double-dip recession – just in case. Some have even started to aggressively de-risk their portfolios.

How real is the risk of a double-dip? For sure, recovery has lost momentum. Second quarter (Q2) GDP growth in the US is lacklustre at 2.4% annual pace, down from 3.7% in Q1, and below expectations. Key components exports and consumption contributed less to growth than in Q1.

In the 12 months since the onset of recession, the economy grew just 2.3%. In contrast, during the equivalent period after the ’81-’82 recession, output rose 5.6%. It is clear the initial boost to demand from inventory build-up has faded.

The housing bust still casts a long shadow. US home sales fell 27.2% in July to a 15-year low. Households are saving more to work off debts. Worse, firms fearful of the future are preferring to squeeze yet more output from existing employees.

So, unemployment is stuck at 9.5%, even though US corporates are flush with cash. Yet, bank credit is scarce. Bankers have turned risk-adverse. All these stand in the way of a wholesome recovery. Little wonder businesses are reluctant to hire with such “unusual uncertainty” as Fed chairman Bernanke puts it.

No doubt, the risk of double-dip has since increased. So much so the Fed recently made a U-turn to counter a weakening US recovery by resuming quantitative easing (dubbed QE2) through re-investing cash from nearly US$1.3 trillion of maturing mortgage-linked debt.

By buying new debt, the Fed pushes bond prices up and long-term interest rates down (since bond yields move inversely to prices). This way, it increases money supply and stimulates growth as credit eases. The message to the market is clear - the Fed will do everything and anything to put a back-stop on the risk of a double-dip!

But, as Professor N. Roubini aptly describes it, “whatever letter of the alphabet the US economic performance ultimately resembles, what is coming will feel like a recession.”

According to Prof M. Boskin of Stanford, double-dip downturns are technically more the rule than the exception. The US ’01 recession was one brief, mild double-dip. Within the current recession, there is already a “double-dip”: a dip at the start of ’08, some growth, another long deep dip, then renewed growth.
Another dip is still possible – it will represent a triple-dip. But not yet an outright second recession which is what most are concerned. In Europe, in the early ‘80s, UK, Japan, Germany and Italy all had double-dips.

History suggests economies seldom grow out of recessions continuously, without occasional subsequent falls. Dips – double, triple and even quadruple – have been part of the US recessionary experience since WWII. So, it should not be surprising to see another decline in growth before sustained stronger growth emerges.

I note the Fed has become concerned over the long time it will take the US to achieve full recovery (and restore the eight million odd jobs lost since the onset of recession) as economic growth turned more sluggish. In addition, the downside risk of a double-dip recession and a deflationary spiral has since increased. Fears of deflation on the back of a still faltering inflation and worries about the return of recession is now flavour of the month.

Deflation is poorly understood

What is deflation? Why worry about it? Deflation refers to persistent and sustained falls in prices. It is usually associated with the Great Depression and its cause – a sharp drop in demand. With it, incomes, consumer prices and asset prices fall. Interest rates move towards zero.

But the cost to borrowers in servicing doesn’t fall, sucking live out of the economy and pushing prices further down. This bad situation gets worse. In 1932, US consumer prices fell 10%; between ’29 and ’33, they fell 27%.

The most recent experience is in Japan but it pales in comparison. Rather than being deep, destructive and concentrated in a few years, Japanese deflation is a mild, drawn-out affair. Consumer prices faltered for 15 years, but never by more than 2% a year. It has been a morass but not a destructive downward spiral.

Why? Economics don’t have a way to rationalise steady multi-year flat deflation. Japan remains a puzzle because its problems persisted for so long. Some turn to the psychology of households and businesses for the answer – if people believe prices will fall, they act to create the environment that becomes self-fulfilling.
Government plays a role through intervention to keep the economy from going through the floor. Other explanations include consumers who are aging and thus, more inclined to save for old age instead of spend.

But deflation is not all bad. For some, falling prices are good because incomes and assets can buy more. Such “good deflation” occurred in US in 1870-95 in the face of strong economic growth, during a period of rising productivity and technological innovation.

Falling electronic goods prices are a modern-day example of good deflation. However, deflation has its bad side – falling prices are associated with falling wages, rising unemployment and falling asset prices. In the US in the ‘30s and more recently in Japan, deflation reflected economic collapse and rising unemployment made worse by high debt and falling asset prices. This delays spending and weakens economic activity.

In today’s environment of high household and public debt, deflation raises the real value of debt in the face of falling asset prices and declining incomes and public revenues. To the extent households and government attempt to reduce their debt burden by cutting spending and selling assets, a “debt deflation” spiral can set in, and so will a double-dip recession.

With “core” inflation (i.e. excluding fuel and food) now below 1% in the US, euro zone and Japan and headline inflation falling again, it is little wonder deflation worries have re-surfaced. The key to inflation outlook lies in capacity utilisation.

Historically, inflation falls or remains weak when business capacity utilisation is well below normal (as in ’08-09 recession). The bottomline is simple: as long as recovery in the US, euro zone and Japan remains anaemic and excess capacity in industry and labour markets remains high, inflation will likely fall further.

If major developed nations return to recession, the risk of deflation will rise. As a general rule, deflation favours cash and government bonds over equities, property and corporate bonds, as well as defensive shares like utility stocks. It’s now clear more aggressive QE2 and sticky service prices are being relied upon to break the back of possible sustained deflation. But with oodles of global spare capacity, I see risks favouring deflation rather than a return bout of inflation.

Concern but not panic

Make no mistake, the threat of deflation is taken seriously on Wall Street. Bond fund heavyweights like El-Erien (who manages US$1 trillion plus in assets) bet US has a 25% chance of falling into deflation. Put it this way: if I told you that my kid has chicken pox and there is a 1 in 4 chance of passing it on, would you allow your kid to come over and play?

To many, the US faces a serious risk of falling into deflation. As slowdown takes hold, consumer prices fell 0.1% in June after falling 0.2% the month before. Growing increasingly wary of deflation (which eats into corporate profits and raises real borrowing costs), many fund managers are prompted to hedge against stock falls, while buying interest-bearing assets.Indeed, it has altered behaviour by encouraging firms to accumulate cash, unthinkable a year ago. Investors pile onto public bonds where fixed interest payments provide good returns when prices and stocks are falling. Investors are positioned well ahead of the Fed.

This surge in bonds has pushed yields to multi-year lows. Ten-year US Treasuries yield dropped to a 20-month low of 2.418% in late August, while its 2-year yield marked an all time low of 0.498%. I think there is still room down; yields are still too high. After all, the yield on 10-year Treasuries is still 1.7 percentage points higher than the Japanese. In euro zone (considered to be more prone to deflation than the US) the gap is still 1.5 percentage points. As I see it, bond investors are slow to catch on, as Japanese were when deflation began. Since late 1992, average Japanese inflation was negative 0.1%, but it took six years for yields on 10-year bonds to move from 5% to less than 2%. Today, it’s 0.9%. The question remains: are US bonds selling at too high a price? Only time will tell.

Biflation

The risk of deflation varies between regions. Japan is already in deflation. The risk is highest in the euro zone because recent fiscal tightening and hard-line approach to monetary easing imply rising risk of a faltering economy. In contrast big nations in Asia (notably China and India) have had strong growth with less spare capacity, and hence higher inflation; the risk of deflation is much less.

That’s the real world where biflation exists, i.e. where deflation and inflation co-exist in different parts of the world. It even exists in different parts of the same economy: rising prices for globally traded commodities and falling prices for homes and autos bought with credit domestically.

As I see it, the anxiety about a double-dip deflation is well founded. The Fed has sent the right signal – one of concern but not panic. It is unclear more stimulus will create more jobs, suggesting unemployment may have deeper roots. What’s happening in the US, euro zone and Japan point to a hard slog ahead. Asia seems able to hold itself. But clearly, its ability to decouple from the developed world has still to be fully tested. Much interdependency remains.

Yet, not so long ago, the US was confidently moving forward and the euro zone the laggard. The dollar was riding high as investors fled from Euro’s debt crisis. Within months, the roles were reversed, with Asia still squeezed in the middle – but confident and kicking. This underlines the critical point for public policy: the economic fortunes of the US, Europe and Asia are as tightly bound as ever.

B the Former banker, Dr Lin is a Harvard educated economist and a British Chartered Scientist who now spends time writing, teaching & promoting the public interest. Feedback is most welcome; email:
starbizweek@thestar.com.my.

The power of Randall

Review by ABBY WONG

The Zeroes: My misadventures in the decade Wall Street went insane
Author: Randall Lane
Publisher: Portfolio

“WE WANT YOUR MONEY!” shouted a pair of crass property developers on stage at a party in London’s trendy Penthouse Club which was jam-packed with opulent and sleek-looking hedge funds managers spawned by the recent financial bubble.

While these financial wizards, with or without the necessary Midas touch, were making billions managing “Other People’s Money”, lots of other people outside Wall Street were salivating and trying to get even a small clump of their wealth.


During the swelling years before the financial markets cratered, hedge funds managers were the new rock stars everyone wanted to meet or aspired to be mainly because they were abysmally rich. And they still are.

Strange enough, the role of facilitator at this definitive crossroad of morphing hedgies into celebrities and making their gluttonous ways of life de rigueur landed on Lane Randall, a former editor who founded one of Wall Street’s most popular magazines, the now defunct Trader Monthly, yet unceasingly purported to be skint.

Whether he was genuinely poor or simply was not an entrepreneur crafty enough to gain from a great number of billionaires with whom he rubbed shoulders with, Randall, by writing this book, has opened our eyes to the financial bacchanalia, a decade-long gold rush in which Wall Street and its constituents were in their quixotic pursuits of wealth.

Randall aptly calls this period The Zeroes.

While recounting his experience at Trader Monthly, as well as a handful of other luxury magazines he founded, Randall discloses the wanton earnings, spending and squandering of some of the mega traders his magazines featured in or he collaborated with as a magazine publisher.

The wealth of these arrivistes was as unbelievable as their ways of living.
“No longer were the best financial industry players content with a payday. Instead, sometime around 2002 or 2003, compensation hit a new stratosphere mimicking the GNP of small countries.”

But with so much money made or to be made, there simply wasn’t enough stuff of real value to buy.
Hence, money went to buy watches, real estate, cars, private jets, paintings, wine or even burgers at ridiculously insane prices.

The swindling of money, unfettered and slowly becoming the spirit of the time, was shocking and could easily make one foam at the mouth.

If a US$175 Kobe beef burger was not a good enough lunch, then most possibly neither was a US$1,000 lobster-and-caviar pizza.

If you marvel at the materialistic euphoria at the time, cringe you will at the ways these nouveau-rich made their money.

Some – if not all – hedge fund managers might have made their winning bets by sheer luck and then extorted their members a 20% share of the profit.

Others, private equity speculators, swelled their bank accounts with money made by swapping companies that were bloated with overpriced assets and wasteful costs.

Likewise, if you are agape while reading this book, another reader may hurl it across the room, feeling aghast by the notoriety of denizens of financial markets, Wall Street in particular.

Though Randall writes not to condemn the rich traders whose appearance in his magazines had helped bring in lucrative advertising revenues, he does damn a host of business partners with whom he unpleasantly got involved.

But what Randall never admits is that he seemed like a lousy businessman who made the same mistakes over and over. Quite possibly, as readers can easily surmise, he, too, had fallen prey to the mind warp prevalent at the time – the breathless and reckless pursuit of more zeroes.

As the market careened towards disaster in 2008, so did Randall’s media empire.
His company eventually filed for bankruptcy and he personally lost half a million dollars.

“Maybe, in that example,” he concludes, “there was a lesson for Wall Street.” But no.
While the epic mess is being dealt with, the game played on, timeless and unabated.

Randall has been ejected but the trading community continues to toast for yet another record bonus payout in 2009.

Hopefully, the sales of this book will help Randall recover some losses.
After all, it is a highly readable and entertaining book.

The power of Randall lies in his depiction of the decadence of Wall Street during the Zeroes as well as the cupidity of some of the hucksters who forcefully joined the revelry.

I highly recommend this book to businessmen, traders, bankers, deal makers, funds managers, finaglers, charlatans, or rogues as a useful lesson for their respective endeavours to enrich themselves in fanaticism of the 21st century.

Friday, 27 August 2010

MBA can still go far in the local job market; Harvard Business School Drives Yale and MIT's Edifice Complex

MBA can still go far in the local job market

 By FINTAN NG
fintan@thestar.com.my

MIT-building.jpg
MIT Sloan School of Business Management's newest building, E62, in Cambridge, Mass. Elite business schools are locked in an "arms race" of building bigger and more elaborate business campuses.

THE MBA (Master of Business Administration) is still a qualification that is much sought after by Malaysian employers for the skill-sets and knowledge-base that comes with it.

Many point out that getting the MBA from a reputable business school is important, but there are those like Boston Consulting Group Malaysia (BCG) managing director and partner Vincent Chin who believe that MBAs are not really necessary in certain cases.

“For those working in large and well-run companies such as the Fortune 500 ones, the vigorous training provided by them is as good as a reputable MBA,” he tells StarBizWeek.

However, Chin says that when companies including BCG hire MBA holders, they are looking for those with a combination of talent and faith.

He adds that if people are prepared to invest up to US$200,000 for their MBAs, it shows that they are bright enough to enter a good school and ambitious enough to invest in themselves.

Since Harvard Business School of Harvard University pioneered the programme, US-based MBA programmes are highly sought after. However, admissions for such courses to the better business schools are highly selective and prohibitively expensive.

According to the US News & World Report, which surveyed 426 MBA programmes for 2010, Harvard and Stamford tied for first place.

But US MBA programmes are not the only good ones out there. London Business School, Instituto de Empresa, Said Business School of Oxford University and Judge Business School of Cambridge University are just as reputable.

In Asia, according to the Financial Times global MBA rankings, Hong Kong University of Science & Technology’s MBA programme ranked the highest at 14 among the top 100.

This is followed by the Indian School of Business at 16, China Europe International Business School at 22, Nanyang Business School at 27 and Chinese University of Hong Kong at 28.

How much of an impact does it have on salaries? That will really depend on which school a person attends, with those from reputable schools having the most increase.

According to the same global rankings, most MBA holders will see their salary increase anything from 80% or more to over 120% based on average salary across industries in the current year compared to one or two years before they attend business schools.

However, there is a catch. Most employers expect those armed with MBAs to have at least five to eight years of working experience.

This can be judged from the vigorous admissions standards of reputable MBA programmes, where those applying must have some working experience, preferably with several years in management-level positions.
Kelly Services (M) Sdn Bhd managing director Melissa Norman says pursuing post-graduate qualifications are recommended for talents aged 30 and above.

She says these are people who are looking to improve their skills and knowledge as part of their career growth as some organisations require such qualifications for selected senior management positions.

Melissa says that because MBA and other post-graduate qualifications command higher salary, this qualification is not ideal for entry- or junior-level positions.

“Most organisations, especially multinational corporations prefer a basic degree for management trainee positions,” she points out.
She adds that employers seek and value MBA qualifications in job candidates or employees based on the jobscope, nature of work and the type of industry.

“Since mid- to senior-level talent predominantly are armed with an MBA qualification, employers value their skills set, knowledge, maturity of mindset and work experience in order to build a sustainable talent pipeline and leadership bench strength to meet the ever-growing expectations from their clients and other stakeholders,” she says.

Melissa singles out communication skills as an area where MBA programmes should beef up on. She says that out of 1,340 senior decision-makers in a survey carried out by Kelly Services, 90% identified communication as most important and also one of the top five skills in short supply.

Besides communucation, the other critical skills MBA programmes should focus on are problem-solving, decision-making, people management and strategic thinking.

Harvard Business School Drives Yale and MIT's Edifice Complex

MIT Sloan School of Business Management
A 15-ton sculpture of a linked chain by Chinese artist Cai Guo-Qiang, carved from a single piece of stone, sits outside the MIT Sloan School of Business Management's newest building. Photographer: Kelvin Ma/Bloomberg 

The Chicago Booth Charles M. Harper Center
The Chicago Booth Charles M. Harper Center. Source: The University of Chicago via Bloomberg 

The Yale School of Management
A view from the interior common area and promenade of the planned new structure of the Yale School of Management is shown in this artist rendering. Source: Fosters + Partners via Bloomberg 

The Yale School of Management
A facade street view of the planned new structure of the Yale School of Management is shown in this artist rendering. Source: Fosters + Partners via Bloomberg 

MIT Sloan School of Business Management
Furniture sits in a lounge on the first level of the faculty offices at the MIT Sloan School of Business Management's new building in Cambridge, Massachusetts. Photographer: Kelvin Ma/Bloomberg 

MIT Sloan School of Business Management
The main mezzanine is designed to be lit almost exclusively by daylight from the south-facing windows at the MIT Sloan School of Business Management's new building in Cambridge, Massachusetts. Photographer: Kelvin Ma/Bloomberg 

Yale University’s School of Management, which aspires to be among the world’s best business schools, crams its students and faculty into 19th-century homes and former astronomy buildings linked by a rabbit-warren of basements. That’s a far cry from Harvard Business School’s 33- building riverfront campus, which boasts a chapel, health club and its own art collection.

To help catch up, Yale is planning a glittering $180 million structure designed by Lord Norman Foster, who built London’s “Gherkin” tower. The new building, scheduled to open in 2013, will help the school keep pace with its rivals, said Dean Sharon Oster.

“You can’t be in a dump if everyone else is in a spectacular building,” Oster said.

Elite business schools are locked in an “arms race” of building bigger and more elaborate business campuses to recruit the best students and faculty and climb magazine rankings, said Yale finance professor Matthew Spiegel. New buildings mean more office space for faculty and more classrooms for profitable executive education programs. Larger schools can also enroll more students, who pay as much as $80,000 per year in tuition, room and board and other expenses.

Business schools are now splurging on high-profile architects to create imposing glass-and-steel structures, with everything from meeting rooms for student teams to cafeterias with organic cuisine and health clubs.
Good Feelings

“The better the experience people have, the better they feel about the place, the more likely it will be that they would support it at some point,” said Robert Dolan, dean of the University of Michigan’s Ross School of Business, in Ann Arbor, which opened a 270,000-square feet (25,084 square meter), $145 million building in 2009.

Since the Wharton School of the University of Pennsylvania opened its 324,000-square foot, $140 million Jon M. Huntsman Hall in 2002, rival business schools have scrambled to keep up.

The University of Chicago opened its $125 million Harper Center in 2004, while Michigan’s building debuted last year. Massachusetts Institute of Technology’s Sloan School of Business, in Cambridge, Massachusetts, will open new facilities this year, and Stanford Graduate School of Business, near Palo Alto, California, will follow in 2011.

Along with Yale, Columbia Business School in New York and Northwestern University’s Kellogg School of Management, in Evanston, Illinois, are also planning new buildings.

Koi Pond
Harvard’s buildings, the first of which were built in 1927, sit on a 40-acre (16-hectare) bend in the Charles River across from the rest of the university. More recent additions include a glass-and-concrete chapel with a koi pond, housing for 400 visiting executives, a health club with three basketball courts and a student union designed by Robert A.M. Stern.

The University of Chicago’s new business school building, designed by Rafael Vinoly who was inspired by Frank Lloyd Wright’s 1910 Robie House across the street, is oriented around a six-story, glass-and-steel atrium that acts as the school’s “living room.”

The social space has helped change the view that the business school is a haven for math geeks and social misfits, said Stacey Kole, a deputy dean.

“We’re working hard to break that perception,” Kole said. “When you come to campus, you see more activity. It’s a much more positive place to be.”

Rising Applications
Applications jumped 30 percent the first year Chicago used the new building in its marketing, although improved rankings helped drive the increase as well, she said.

While a business school’s physical condition isn’t the most important consideration, “you do consider the facility, you do consider what school will allow you to access the latest technology,” said Ashil Ann, 26, a prospective applicant from Los Angeles to Columbia, New York University’s Stern School of Business and McDonough School of Business at Georgetown University in Washington.

The high cost of attendance contributes to students’ rising expectations -- and the growing size and complexity of the new facilities, said Jonathan Levav, an associate professor at Columbia. Two years at Columbia Business School costs an estimated $168,307 for tuition, room and board and other expenses.
While universities across the U.S. have cut back on construction because of falling endowments, business schools are immune from the reductions because of their ability to raise money, said Ronald Ehrenberg, an economics professor at Cornell University, in Ithaca, New York, who studies higher education.
‘Wealthiest Alumni’

“Graduates of business and law schools are often the wealthiest alumni,” Ehrenberg said. “It is easy to raise the funds to build buildings from donors to those schools.”

For its new complex of buildings, Stanford’s business school secured $105 million, the largest gift in its history, from Phil Knight, the alumnus who founded Nike Inc., in Beaverton, Oregon. The business campus, which will cost about $350 million, will be named the Knight Management Center in his honor.

At Columbia, faculty offices are in Uris Hall, a 12-story gray slab considered so ugly it was picketed by architecture students when it was dedicated, according to a New York Times article from 1962. Classes are split between Uris and Warren Hall, which opened in 1999 and is shared with the Columbia Law School. The school’s Ph.D. students work in windowless cubicles, the cafeteria overflows with students at lunch time and a former basement storage area serves as a laboratory.

“Our students get an excellent education here, and it’s despite the facilities,” Levav said.

Executive Education

New buildings can also provide more room for executive education, the profitable, non-degree programs for business employees paid for by their corporations.

MIT Sloan’s new building has a wing dedicated to executive education, with more elaborate lighting and furniture than the rest of the school, and its own dining room. Currently, many Sloan executive education classes are held off campus.

“It is on campus, it is clearly part of the Sloan school complex and it makes it easier to say ‘yes,’” said Rochelle Weichman, the associate dean for executive education.

MIT’s building consolidates offices for 107 professors who were spread across five structures, and the four floors of offices are designed to encourage interaction between professors of different departments to help spur innovative thinking, said Lucinda Hill, director of capital projects at Sloan.

Halfway There
Yale has raised about half of the $180 million needed for its building, and will seek another $25 million from donors and borrow the remainder, Oster said in an interview conducted in a full-scale mockup of Yale’s future classrooms, erected in a warehouse off-campus. Naming rights for the building will cost a benefactor $100 million, she said.

Founded in 1974, the Yale School of Management is the youngest business school in the Ivy League, a group of eight U.S. colleges in the Northeast.

“We want to build a great business school,” Yale President Richard Levin said in interview. Levin said he wants the business school to be on par with Yale’s law and medical schools and “be thought of among the best” in the world.

Yale business faculty now work in buildings that date back to 1836, in offices designed as bedrooms and dining rooms with fireplaces and plaster moldings. Many classrooms and staff offices are in a sunken building constructed in 1961, which first housed Yale’s computer and later its astronomy department.

Hurt Recruitment
“The current facility doesn’t look and feel like a business school,” Levin said. “I think it does hurt us in attracting students.”

Having more students will allow Yale to assure its programs are fully enrolled and to justify the size of its faculty, Oster said.

“You don’t want to be in a position where you have three students in each category because you’ll never get enough recruiters and you won’t get classroom excitement if the electives have too few people in them,” Oster said. “We don’t have enough students to go around.”


Students Need Help to Save Money, but Don't Always Know It, Study Finds

ScienceDaily (Aug. 27, 2010) — Students could use help saving more money, but they don't always know it, says a University of Waterloo study.

Most people intend to save more money, and spend less, than they currently do. If they were offered a simple way to do so, would they take it? New research suggests the answer is no.

And the reason is that their very good intentions can give rise to a sense of optimism that leads them to undervalue opportunities that could make it easier to actually achieve a long-term savings goal.

"Our results highlight the costs of being too optimistic," said the study's senior author, psychology professor Derek Koehler.

Researchers at Waterloo asked students in the university's co- operative education program to set a savings goal at the beginning of a work term, and then asked them again at the end of the term whether they had met their goal. Co-op students alternate work and study terms, and most plan to save much of their earnings from the work term for use during the subsequent study term.

At the beginning of the term, the students expressed strong intentions to save and estimated their chances of doing so to be quite high, around 85 per cent on average. If those self-predictions were accurate, then about 85 per cent of the students would have been expected to achieve their goal by the end of the term.

But only 65 per cent of the students reported having been successful. In short, at the beginning of the term, students were overly optimistic about their chances of reaching their savings goal.

Some of the students were offered enrolment in a program that could help them to save. The program required them to monitor their savings and report their progress every other week during their work term. It turns out that the students in the program were more successful at achieving their savings goals.

Although the progress-report program helped the students to save, the students failed to recognize its benefits.
When they were asked at the beginning to predict the impact it would have, most students thought the program wouldn't do anything to help them. After all, they were very optimistic (in fact, too optimistic) that they could achieve their savings goal without any outside help.

In a second study, the progress-report program was described to another group of students, who were asked how much they were willing to pay to be enrolled in it. (The cost was deducted from an $8 payment the students received for being in the study.)

Students were typically unwilling to pay more than $1 for the program, and the most common response was zero. In reality, the progress-report program seems to have been worth quite a bit more, given that it increased students' chances of achieving their savings goal, which averaged around $5,000, by a full 10 percentage points.

The study's authors suggest that being overly optimistic about achieving future goals, whether in saving money or in some other aspect of life, can be costly if it leads people to overlook ways in which they could make it easier to accomplish those goals.

Take RSPs as an example. Many people intend to make a contribution every year but fail to do so. Optimism that they will manage to make a lump-sum contribution by the end of the year might lead them to undervalue the benefits of setting up automatic monthly (and less painful) withdrawals from a bank account to a RSP.
As the authors conclude, optimism "can be costly if the disproportionate focus on good intentions leads people to overlook steps they could take to make their futures brighter."

Interestingly, the optimism the students exhibited in predicting their own success in achieving their savings goals did not extend to their predictions of how other students would fare.

In fact, the same students who had undervalued the progress-report program for themselves, thought it would be helpful for others.

The study's authors say that being "in the grip" of a strong intention to accomplish an important goal makes people's self-predictions of their own future behaviour more susceptible to excessive optimism than their predictions of how others will behave.

The stud is scheduled to appear in a forthcoming issue of the journal Social Psychological and Personality Science.

The two other researchers involved in the study are Rebecca White, a postdoctoral fellow with the Center for Decision Research at the University of Chicago Booth School of Business, and Leslie John a doctoral candidate in behavioural decision research at Carnegie Mellon University.

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Thursday, 26 August 2010

Why Do Printers Still Suck?

HP Printer
Image via Wikipedia

About an hour ago I wanted to do a very simple thing: Print a single page document onto a sheet of card stock paper.

Anyone who has ever used a printer will not be surprised at the result of my labors. Error messages. Frustration. Anger. Fury. Kicking inanimate objects.

No printout.

In the last two decades our computing infrastructure has changed pretty dramatically. The desktop PC I was using in 1990 had a 33Mhz CPU –today, even my cell phone is 25 times faster. Back then I connected to the Internet with a 2.4 kilobits per second modem –the ethernet connection I’m using now clocks in at about 30 megabits per second. That’s more than 12,000 times faster.

Back in 1990 I printed to a crappy black and white laser printer that frequently jammed, had an incomprehensible user interface, and never worked the way I wanted it to. Today I’m printing to a crappy color laser printer that frequently jams, has an incomprehensible user interface, and never works the way I want it to.

Yes, there are some legitimate reasons why printers haven’t advanced as far as the rest of our computing world. To be fair, these are complicated mechanical devices, forced to process physical objects, not just data. And in an office environment, one printer might be used by dozens of people. No personal computer has to deal with those sorts of stresses.

But my printing problems today have nothing to do with paper jams, low toner, or any other error caused by the actual putting of words on paper. Instead, it was all software –I couldn’t get the hateful thing (a Canon iR C3080/3480/3580 PCL5c, for what that’s worth) to accept a document loaded into its bypass tray.

You’ll have to trust me that it wasn’t user error. I’m no computing naif and I know the problem was the machine’s. What’s more, when I tried to print to another printer of the exact same model, I got a totally different error –one that subsequent web searches have revealed is due to the fact that the printer is not licensed to print Postscript files. Seriously — I can’t print a PDF because the printer wants me to pay Adobe for permission, first.

I have never used a printer on a regular basis and not hated it. And while image quality may have improved, they seem as unreliable and difficult to use as ever. Canon, Xerox, Lexmark, Hewlett Packard and their ilk should be embarrassed, because their printer units are the used car sales lots of the computing world. They churn out half-functional and often disposable junk, and haven’t innovated in years. (And I haven’t even gotten into the rip-off that is printer ink cartridges. PC World estimates that buying a gallon of printer ink over the lifetime of your device could cost $4731.)

This rant goes nowhere productive, but ends here: you suck, printer makers, and your products suck too. What does it say about your business when the most famous scene from one of the most popular cult comedies of our age looks like this?

David M. Ewalt
 
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Wednesday, 25 August 2010

Merdeka! Stand up and be counted, Malaysia; Stop feeding rats and racists, What the NEP meant and means? Rethink the spirit of Merdeka

Stand up and be counted, Malaysia

BRAVE NEW WORLD
By AZMI SHAROM

It is strange that in the 21st century, we are still having to face the problem of institutionalised racism.

"Article 153 of the Federal Constitution is seen as the holy grail for those who hold this view"

OVER the past week or so, there have been some developments in our country which are more disturbing than usual.

In particular, the two cases of alleged racist remarks by school heads; the accusations that Penang mosques have replaced the Yang di-Pertuan Agong with the Chief Minister’s name in their prayers; and the continued insistence that Article 153 of the Constitution is equal to an inalienable right that could not be questioned.

These events are interrelated and it seems to me that they indicate that there is a battle of ideology going on in the country now.

On one side is the idea that a person’s ethnicity and religion entitles him to be treated better than anyone else who is different. On the other side is the idea that equality is an aspiration that is both noble and necessary for nation building.

It is strange that in the 21st century we are still having to face the problem of institutionalised racism.

Looking at our history, one can see why this has occurred. The combination of race-based politics and poorly interpreted constitutional provisions have meant that the idea of racial and religious superiority has been allowed to grow and become the norm rather than something undesirable and out of the ordinary.

How else can one explain the possibility that teachers, the very people to whom we entrust the education of our children, can have such warped values and also have the gall to express those views publicly?

How else can we explain the near rabid attack on the Penang Chief Minister for something which he and the state religious department have vehemently denied and in fact would have been insane to attempt?

Let’s analyse this one step at a time. When the dominant political parties in this country do not have any political ideology to speak of and are instead, based on the principle that each race-based component has a duty to safeguard the interest of its community, what one has is a recipe for the kind of policy and rhetoric that divides rather than unites.

Historically, one can see the reasons why the politics of the nation was forged in this way. It was a necessary evil in the face of the divide-and-rule policy by the British to show that even when separate, the three major communities of the nation can still work together politically.

However, it is an unsustainable model and what started life as a fairly rosy example of racial cooperation too easily descended into crude racialist type politics.

Which is why the early aspirations that our founding fathers had for a society treated with equality has now been all but buried by the idea that one race is superior to others and in fact is the only race with any right to be here in Malaysia.

This is because in the battlefields of politics, it is easiest to appeal to base racialist emotions, especially when without those types of ideas, a party based on race will have no collateral to work with.

In this kind of political atmosphere, it is of no surprise that what has been forgotten is that the basis of this nation was one of justice and equality. And the document that is meant to protect that, the Federal Constitution, has been misinterpreted to the extent that there is no longer any trace of this aspiration in the mainstream discourse of the day.

Let us be absolutely clear on this matter, the Constitution does give powers to the government to take affirmative action and it does acknowledge the fact that Islam has a special place in the public life of the nation.

What it does not intend to do however is create a perpetual system of ethnic-based favourable treatment nor does it advocate the idea that all other religious beliefs must be subservient to Islam.

However, instead of this reasonable position, what we have today is the idea that affirmative action for Malays is unquestionable and to be continued in perpetuity becoming the norm.

This cannot be further from the truth as there are no legal justification for it at all.

Article 153 of the Federal Constitution is seen as the holy grail for those who hold this view. However, if we examine the provision closely we will notice two things.

Firstly, affirmative action is not a Malay right. Article 153 does not endow a right. What it does is to merely give government the power to take affirmative action despite the overarching ideal of equality which is enshrined in Article 8 of the Constitution.

To support this contention, we see that Article 8 clearly states that all citizens in this country are equal except for situations specifically provided for in the Constitution. Those “specific provisions” are found in Article 153 and there are not many of them.

They include the power to establish quotas for the civil service, permits and licences, scholarships and education.

Therefore anything other than these areas should not be subjected to affirmative action.

Furthermore, any affirmative action has to be reasonable. The idea of what is reasonable must surely be open to research and debate otherwise there will always be the risk of abuse and wastage of resources.

This being the case, although questioning the existence of such a power to have affirmative action is moot, discussion on the efficacy of affirmative action policies and programmes surely is not.

The way the discourse is today, and not merely by the racialist fringe but by mainstream politicians in power, is that even the implementation of Article 153 is not to be questioned at all.

This is surely wrong based both on the meaning of the Constitution as well as the principle held by the founding fathers that Article 153 was an unfortunate but necessary aberration from the ideals of equality and that it was to be used not in perpetuity.

With these kinds of distortion of law, is it any wonder then that we still get people actually classifying whole swathes of the citizenry as having no right to be here?

Is it any wonder then that a crazy accusation against a Chief Minister whose government has given twice as much money to the Islamic bodies in the state than the previous administration, can give rise to the belief that he is a threat to the faith?

If this country is to have any future as a true nation, the time has come for those who believe in the ideals of equality, ideals which were held by the political founding fathers of the country as well as the traditional Rulers of that time, to stand up and be counted.

To not be cowed by the bigots and to say that this is our country and it stands on noble humanitarian ideals, not opportunistic racialist thinkin

Stop feeding rats and racists


ALONG THE WATCHTOWER
By M. VEERA PANDIYAN

Failure to act promptly and appropriately against racism will only encourage more racists in the country.

"Over the past two decades, our leaders have shown their inability to mend old tears and prevent new frays"

IN five days, we will mark 53 years of Merdeka but frankly, how many Malaysians are in the mood to celebrate? The political milieu is sickening; no thanks to the raving racists and their apologists who help fan the flames of hatred.

It is the season of the Hungry Ghosts when the gates of hell are supposedly cast open for the spirits of the dead to enter the realm of the living, according to believers.

The real scare, however, is not from any such spirits but from rats and the filthy folks among us who help the rodents spread leptospirosis.

The water-borne disease caused by bacteria in rats’ urine has already killed more than 10 people, the latest being a 17 year-old boy from Kedah who swam in a river.

Parks located near rivers and waterfalls have barred to members of the public who have also been warned against wanton dumping of rubbish (which the rats feed on) and wading in flood waters.

But while the threat that the rats pose can ne handled with medication, the other diseases that’s really gnawing at the very fabric of the country – the scourge of racism – is a far more difficult one to handle.

Over the past two decades, our leaders have shown their inability to mend old tears and prevent new frays. The latest flare-up involves two school heads.

The first principal, who is from SMK Tunku Abdul Rahman Putrain Kulai, Johor allegedly called the non-Malays penumpang (passengers) during a school assembly to launch Merdeka celebrations.

The headmaster of SMK Bukit Selambau in Kedah allegedly accused Chinese students of being insensitive to the Muslims for eating in the school compound during the month of Ramadan by telling them “to return to China” if they could not respect the cultures of others.

Politicians from both sides of the fence have called for disciplinary action if they are found to be guilty.

At the directive of Deputy Prime Minister and Education Minister Tan Sri Muhyiddin Yassin, Education director-general Tan Sri Alimuddin Mohd Dom has set up a panel to probe the matter, although he initially said that it was a “misunderstanding”.

About 20 police reports have been lodged against Siti Inshah, who is currently on leave and the case is being investigated under Section 504 of the Penal Code for provocation, which carries a maximum imprisonment of two years, a fine, or both.

But the Kulai school principal is getting her fair share of support from a group of vocal bloggers who believe that she has done nothing wrong.

She’s also creating a stir on Facebook through a fan page with more than 1,900 people supporting her. A tit-for-tat page against her had more than 400 fans as of early Wednesday.

The strongest response from someone within the government has come from Minister in the Prime Minister’s Department, Datuk Seri Nazri Aziz. Kudos to him for saying that there should be “zero tolerance” for racist educators, irrespective of where they are from.

“If it had been my teacher, I would have smacked his (sic) face. You are a teacher and you are supposed to be teaching us right things but yet, you talk like this,” he was quoted as saying by a portal.

But as Nazri noted, the Government’s failure to respond quickly and appropriately on racism has only encouraged more of such acts.

However, how can it respond when many government servants and agencies are not sensitive to the feelings of the people and have little understanding of 1Malaysia concept.

As in the case of the rats, we need to stop feeding this source of national debility and discord.

A friend of mine who is known to be a dedicated teacher, underwent a course (it is compulsory as a prerequisite for upgrades in salary and promotions) in June and returned utterly devastated.

She said there was no emphasis on national unity throughout the course, only a sense of intimidation and being “put in her place” through the emphasis of “Ketuanan Melayu” and the unwritten social contract between the races.

In her email she wrote: “The epitome was in the last module where a video was screened with a tinge of racial slurs, depicting the fall of the Islamic empire and the building of churches, Hindraf, communist memorials in Chinese cemeteries and finally a Muslim extremist killing a child. There was a weeping voice-over asking:
 “What else do you want?”

What right-thinking Malaysians want is quite simple: mutual respect, a sense of fairness and acceptance that all of us belong to this blessed country.

> Associate Editor M. Veera Pandiyan likes this observation by H. G. Wells: Our true nationality is mankind.

What the NEP meant and means?

Question Time
By P. GUNASEGARAM

We need more debate and less rhetoric in ironing out the real issues of affirmative action.

WITH all the brouhaha over Malay and non-Malay rights and the relentless rhetoric of race-based politics coming to the fore in the economic arena yet again, it is time to revisit the tenets of the original New Economic Policy (NEP) and separate fact from fiction.

Sadly, the major problem with the NEP is that the 30% equity target for Malays and other bumiputras became the very visible and de facto criterion for measurement of the very success of the NEP.

The other contentious part was quotas for all manner of things and preference given to bumiputra companies and individuals when it is related to procurements and contracts from the Government, often as a means to achieve that 30% target.

Both of these were administrative measures and targets and did not even form part of the policy aims of the NEP.

Very few people, if any, are likely to disagree that the broad twin aims of the NEP, formulated in the wake of the racial riots of 1969, were to eradicate poverty irrespective of race and to eliminate the identification of race with economic function.

The first aim, according to government figures, was very much achieved with hardcore poverty being virtually eradicated. And there have been major strides made in terms of Malays and bumiputras, and jobs with them making major inroads into all areas.

These are achievements of the NEP which no one can deny, although there are valid arguments and concerns such as whether the poverty line figure is a realistic one and whether there is too high representation of Malays in Government services even as they made inroads into the private sector.

While no one questions the twin aims of the NEP — everyone, including the Opposition, is in agreement — the problem is with the administrative measures that have been put in place.

These are being challenged by all sides: some sides want more and some less, some want them to be dismantled and others want them to not only be continued but reinforced.

So, let’s agree on the aims – and move on from there.
Thus, it will not be seditious if someone questions the 30% bumiputra equity target or says the measurement criteria are seriously flawed.

If someone said quotas should be reconsidered given the progress that Malays have made in some areas, that should not be interpreted as questioning Malay rights. Under the Constitution, the Government has the right to undertake affirmative action provided it is justified and it has the right not to.

The NEP (technically, the NEP has expired but the present policy still relies on the original NEP) and its future form will benefit substantially from the right kind of debate about it without emotions clouding the issues.
But there are some bodies and people who are bent on bringing in emotions precisely because it will cloud the issues. They must not be allowed to have their way.

Let’s take the 30% equity target for instance. It cannot be taken as the sole or even the most important part of NEP achievement because there are other things which are far more important – poverty eradication and racial balance in employment to name just two.

There is therefore nothing wrong in asking that this target be reviewed so that we can have better measurement of Malay and bumiputra participation in the economy and to avoid all the perils of patronage that come with this.

The same applies to quotas and bumiputra discounts for high-end property.
It is because the NEP has done so much in narrowing the gap between the races that there is a need to review some of its administrative targets to ensure that the wrong people do not benefit from it.

Bumiputras who have already made it don’t need quotas and affirmative action anymore. But others might.
But we must expect that some of those who will lose their so-called privileges will fight a rearguard action to preserve them, for that’s a way to quick riches when abused. These are the people who will benefit most by obscuring the real issues under a cloud of emotional rhetoric.

The time has come for all Malaysians to see beyond these and do what is right for everyone. Help everyone who is needy and if any particular race is more needy than another, it will automatically be helped more too.
Move to a needs-based system and you eliminate racial posturing and fighting just like that.

> Managing editor P Gunasegaram believes too many sins are committed in the name of race.

Rethink the spirit of Merdeka

Putik Lada
By H. R. Dipendra

Merdeka must now include independence of thought, ability and nation building in a globalised environment where each and every one are important stakeholders.

THE Merdeka month, at best, can be described as an opportunity for Malaysians to remember and understand the events leading up to Merdeka Day.

It usually encompasses the role played by various politicians, the forgotten heroes and culminating in a re-enactment of the raising of the right hand by our first Prime Minister Tunku Abdul Rahman Putra Al-Haj.

To further instil a sense of patriotism, Malaysians are exhorted to drape buildings with the Jalur Gemilang, wave mini-flags or fly these atop cars at every conceivable opportunity.

To top it all, Malaysians get to enjoy various heartwarming advertisements extolling what a proud nation we are, and how we can all live harmoniously under one roof. No doubt, the Merdeka message is clear.

Then, it is back to business as usual.
This begs the question: What should celebrating Merdeka be all about? Hasn’t 53 years of independence brought about any other reflection?

Would it be presumptuous to suggest that we are an independent modern developed nation given that we have mostly all the physical attributes normally associated with a modern developed nation?

What if we were to explore deeper into the social and cultural fabric of current Malaysian society, would we then be brave enough to suggest that we are truly independent and modern?

Given that time and again we have this fascination to revert to the history of Merdeka, it would seem, albeit an unfair one, that our major achievement after 53 years of independence is simply managing to emancipate ourselves from the British.

My consternation is really about how we have continuously failed to realise that Merdeka is more than just a mere physical event to be celebrated.

It should be about Malaysia and a celebration of what the nation is about and not what it was. No one really celebrates Malaysia for its thoughts, aspirations and assimilation of a nation.

I realise the value of the historical events leading up to Merdeka day. But I would be failing as a patriot if I do not recognise that we have somehow lost our way in making us a proud nation.

Politics and socio-economic matters have become fraught with divisions. Perhaps the politicians are too embarrassed to admit this, but we should take heart that something is being done about it.

The noble initiatives put forward by Prime Minister Datuk Seri Najib Tun Razak in making us a high-income country and his concept of 1Malaysia are indeed positive starts.

But it is disappointing to note that many of his initiatives have been met with derision and been reduced to sloganeering.

This should not be the case at all when we should be doing all that we can to make Malaysia a proud and strong nation.

It is easy to get trapped in a deep racial and social malaise.
A good starting point would be to do away with the prevalent siege mentality, a mentality where we feel it is a case of us vs them.

We cannot be constantly afraid of our own shadows as doing so will only make us a nation of cynics and sceptics.

The time is ripe for all Malaysians, irrespective of race, religion and persuasion to embrace a new thinking about what Merdeka is all about.

We have come a long way from being reliant on mining and agriculture.
The economic growth in the 1990s bore testament to that. Since the Asian Financial Crisis, we have struggled to create a value and niche for ourselves.

The fact that we are abundantly blessed with natural resources should not lull us into a false sense of wealth as ever so often this can be viewed as a curse because it impedes us from actually moving out of our comfort zone and casting a strong future for the coming generations.

My Merdeka Day message is simply that we have to confront our shadows, banish them and forge ahead. This country needs character as it strives to be independent.

As Abraham Lincoln once said: “You cannot build character and courage by taking away a man’s initiative and independence.”

We simply must not be held back by prejudices and the wanton desires of small-minded people that only seek to gain from other’s misfortune.

Merdeka must now include independence of thought, ability and nation building in a globalised environment. It must include how we can all contribute to nation-building, how we treat each other and how kind we are to our animals.

It is a time to recognise that all of us are important stakeholders and not merely squatters or rent-seekers.
Malaysians know deep down that there is no nation like ours. As much as some of us feel that the grass is greener on the other side, nothing beats the lifestyle choices offered in Malaysia.

It is time that Malaysians once and for all decide how we want this country to be shaped in the years ahead.

If the Germans are known for their automotive technology, the French for their food, the Italians for la dolce vita (the sweet life) and the South Koreans for their embracing of the Internet, what should Malaysia be known for?

Is it not time that we define what Malaysia should stand for?

> The writer is a member of the National Young Lawyers Committee of the Bar Council. Putik Lada, or pepper buds in Malay, captures the spirit and intention of this column – a platform for young lawyers to articulate their views and aspirations about the law, justice and a civil society. For more information about the young lawyers, please visit www.malaysianbar.org.my