Dangers of U.S. Export Control Law & the Cybersecurity Market

Andrew Bigart

This article examines the export controls applicable to the field of cybersecurity, an increasingly global industry in which U.S. companies sell their products and services to multinational companies, U.S. agencies with overseas operations, and even foreign governments, when permitted. The cybersecurity market – both public and private – hit $60 billion in 2011 and is expected to increase steadily over the next several years. Indeed, cybersecurity is one of the few defense “growth” areas to buck recent U.S. budget cuts.

As U.S. companies continue to expand in the market, however, so too does the risk of non-compliance with the confusing web of U.S. laws and regulations that govern export-related activities. U.S. law places the burden of complying with export controls and economic sanctions squarely on U.S. companies and their officers and employees. The cybersecurity industry is no exception, and may be particularly vulnerable to government scrutiny given the strategic need to protect U.S. technological advantages, critical infrastructure, and access to confidential information. In this regard, violating U.S. export laws can result in criminal law enforcement actions, jail time, and significant fines and penalties, including debarment from federal contracting.

U.S. Export Controls

The U.S. government maintains a complex set of regulations that govern the export of goods – including technology, software, and technical data – to foreign countries and specified foreign entities and individuals.

The State Department’s Directorate of Defense Trade Controls (DDTC) regulates the export of defense articles, related technical data, and defense services listed on the United States Munitions List (USML) through the International Traffic in Arms Regulations (ITAR). All manufacturers, exporters, and brokers of defense articles, related technical data and defense services are required to register with DDTC. Registration with DDTC is a prerequisite to applying for export licenses.

The Department of Commerce’s Bureau of Industry and Security (BIS) regulates anything that is not listed on the USML, including the export of commercial and dual-use commodities, software, and technology through the Export Administration Regulations (EAR). Both DDTC and BIS regulate exports depending on an item’s technical characteristics, destination, end-user, and end-use. In this regard, cybersecurity products and services present a challenge because the exports may contain a mixture of different software, encryption functions, and controlled technical information.

Finally, although not the focus of this article, it’s import to note that the Department of Treasury’s Office of Foreign Assets Control (OFAC) enforces trade embargoes and economic sanctions against specific countries (Cuba, Iran, North Korea – you get the picture) and individuals and entities (terrorists, narcotics traffickers and other bad guys). OFAC publishes the names of these ne’er-do-wells in the “Specially Designated Nationals” or “SDN” list. (BIS also maintains several lists of prohibited persons). Together, the Commerce and State export controls and OFAC sanctions programs are designed to protect U.S. foreign policy interests and to prevent U.S. persons from doing business with the wrong types of customers.

Classifying Cybersecurity Products and Services for Export Purposes

Whether an export license or other authorization is required for the export of a cybersecurity product is a fact-specific determination that includes a review of the items or services being exported, the destination, end-user and end-use. Given the complexity in classifying cybersecurity-related items, many companies request commodity jurisdiction determinations from the export agencies for guidance on whether their products are properly classified under the DDTC or BIS frameworks. These determinations, which are published, in part, by DDTC and BIS, highlight the breadth of USML and EAR classifications that potentially cover cybersecurity products and software. For example, DDTC has advised that a company’s “Customizable USB thumb drive that conducts targeted searches of digital assets for critical files” is classified under the USML section XI, which covers military electronics, as are certain military-grade GPS and cryptography products.

On the other hand, data manipulation software that uses Security Socket Layer (SSL) encryption usually qualifies for BIS’s “Mass Market Encryption” exception for items classified under Export Control Classification Numbers 5A992 and 5D992. This exception allows certain “publicly available” software to be exported to most countries without a license if the exporter registers with BIS by obtaining an Encryption Registration Number.

Moreover, both DDTC and BIS regulations define an export as including the disclosure (orally or visually) of technical information or software to a foreign person. Thus, a “deemed export” takes place when technology or software is released to foreign a person or national for visual inspection (such as reading technical specifications, plans, blueprints, etc.); when technology is exchanged orally with a foreign person or national; or when technology is made available by practice or application to a foreign person or nationals under the guidance of persons with knowledge of the technology. Depending on the nature of the technology and the country to which the technology is disclosed, releasing technology to a foreign person or national may require an export license (or in the case of ITAR possibly a Technical Assistance Agreement, depending on the individual circumstances).

Why Should The Cybersecurity Industry Care?

As the importance of cybersecurity has grown from a national defense perspective, so too has the U.S. government’s focus on regulating the export of sensitive technology. A number of recent U.S. government enforcement actions involve U.S. persons selling software, encryption products, and other cybersecurity related information abroad:

• In 2010, a resident of China was sentenced by a federal court to serve 96 months in prison for his efforts to obtain sensitive encryption, communications, and global positioning system equipment without a DDTC license.
• In 2009, a U.S. national working for Technical Integration Group was sentenced to six years in prison and paid $1.1 million for exporting mobile telecommunications equipment containing encryption properties to Iraq, in violation of the then U.S. embargo on Iraq.
• In 2008, two companies paid administrative penalties to settle BIS allegations that the companies exported U.S.-origin engineering software to Iran and to companies on the BIS Entity List without the required licenses.
• In 2002, Neopoint Inc. paid a $95,000 civil penalty to settle charges that it unlawfully exported 128-bit encryption software to South Korea.

The consequences for non-compliance with U.S. laws overseas are severe and can include large monetary fines per violation for businesses, and similar monetary fines and imprisonment for individuals. On top of that, in cases of significant violations, the consequences can include a denial of future export privileges and federal contract debarment, which is particular onerous for cybersecurity companies dependent primarily on business from U.S. government contracts.

What Can My Company Do To Minimize Risk When Selling Abroad?

The first step in minimizing export-related risk is to understand the nature of your business and potential customers, including the who, what, and where of every export transaction. The U.S. government expects companies that export to inform themselves of the facts of any export transaction and exercise reasonable care in complying with applicable U.S. export requirements. This process requires companies to determine the appropriate export classifications for their products and services. If any of your products or services falls under the USML, then you must register with DDTC as a manufacturer, exporter, or brokerer.

The next step is to develop a compliance plan that is tailored to your company’s specific export needs. A compliance plan should address, at a minimum, the following:

• Overview of applicable laws;
• A list of prohibited activities and employee responsibilities;
• Regular compliance training for employees;
• Required checking of all business partners and customers against OFAC’s SDN list on a transactional basis;
• Rigorous internal financial and audit controls to monitor export and FCPA compliance; and
• Required due diligence on all agents or independent contractors and required written contracts with export, economic sanctions, and FCPA prohibitions and certifications.

Finally, under U.S. law, exporters that become aware of – or should be aware of – “red flags” are required to resolve them before proceeding with a transaction. Monitoring the activities of your business partners overseas is particularly important because the conscious avoidance of knowledge of wrong doing is not a defense. Typical red flags include:

• Transactions with incomplete information regarding end users, country of origin or destination;
• Exportation of products that do not not fit the buyer’s line of business;
• Unusual contract terms, payments in cash, or requests for high commissions;
• Direct or indirect payments to government officials or their families or payments to persons outside the normal scope of a transaction;
• Payment for travel, lodging, or business expenses or extravagant gifts or entertaining of government officials or their families; and
• Consultants who are connected with a foreign government or political party.

What if a Potential Violation Arises?

Unfortunately, for some companies the legal risks of doing business abroad are not apparent until something goes wrong. If you discover questionable business practices regarding your export-related activities, stop the conduct in question immediately and report the activities to your company’s compliance officer. If your company finds itself in such a position, consider the option of a voluntary disclosure. Each of the agencies discussed above – Commerce, State, and OFAC – maintain procedures that encourage companies to self-report violations under certain circumstances. Although these programs do not allow companies to evade liability completely, they do offer reduced penalties and other incentives.

Conclusion

There is no doubt that the export market for cybersecurity products and services remains an attractive and growing market for U.S. exporters. Before taking the leap overseas, however, take the time to review and understand your company’s responsibilities under U.S. export control and economic sanctions. An ounce of prevention in this regard goes a long way in keeping your business profitable and out of trouble.

Eric Savitz, Forbes Staff  -  Guest post written By Andrew Bigart
Andrew Bigart is an associate with Venable LLP, a Washington-based law firm.
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China successfully launches two more Beidou navigation satellites

China has moved a step closer to completing its own navigation and positioning satellite network with the launch of two more navigation satellites.

China plans to launch 35 navigation satellites

It brings the Beidou system, which became operational with coverage of China last December, to 13 satellites.

To have global coverage, the country eventually aims to have 35 satellites in orbit by 2020.

China hopes that Beidou will wean it off the US Global Positioning System.

Just like GPS, the Chinese system is designed to let users determine their positions to within a few meters.

Beidou, also known as Compass, has been developed for both military and civilian uses.

The two satellites went up on Monday morning from the Xichang Satellite Launch Centre in southwest Sichuan province.

They were carried on a Long March-3B rocket, according to the state-run Xinhua news agency.

"The two satellites will help improve the accuracy of the Beidou, or Compass system," Xichang Satellite Launch Centre said in a statement carried by the agency.

• Sat-nav systems determine a position by measuring the distances to a number of known locations - the spacecraft constellation in orbit
• In practice, a sat-nav receiver will capture atomic-clock time signals sent from the satellites and convert them into the respective distances
• A sat-nav device will use the data sent from at least four satellites to get the very best estimate of its position - whether on the ground or in the sky
• The whole system is monitored from the ground to ensure satellite clocks do not drift and give out timings that might mislead the user

Now partially operational, Beidou makes China only the third country in the world, after the US and Russia, to have its own navigation system.

Russia's Glonass satellite network has 31 satellites in orbit, but only 24 of them are operational. Four more are in reserve, one undergoing trials, and two under maintenance.

According to the Russian Space Agency, Roscosmos, Russia plans to spend $694m (£427m) on its Glonass system this year.

At a recent annual Satellite Navigation Forum in Moscow, Russia's deputy prime minister Vladislav Surkov said that more than 300 billion roubles (£6bn, $10.2bn) have been budgeted to further develop Glonass and bring 30 satellites into operation by 2020.

Europe has also been building a navigation system, called Galileo, which has two satellites in orbit, launched in October last year. The next two are scheduled to follow later this year.

The space project of the European Commission, the EU's executive arm, plans to have all 26 Galileo satellites in orbit by the end of 2015. - BBC Newscribe : get free news in real time

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China has successfully launched a pair of navigation satellites. The launch took place on Sunday Morning from Xichang Satellite Launch Center and marks the first time the Long March 3B launch vehicle has been used for this kind of mission.

The Compass Navigation Satellite System is China’s second-generation satellite navigation system, capable of providing continuous, real-time passive 3D geo-spatial positioning and speed measurement.

The Long March-3B rocket carrying two satellites blasts off from the launch pad at the Xichang Satellite Launch Center in Xichang,southwest China's Sichuan Province,on April 30,2012.China successfully launched two satellites into space Monday morning,the 12th and 13th of its indigenous global navigation and positioning network known as Beidou, or Compass system,the launch center said.(Xinhua/Tao Ming)

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Bersih 3.0: the good, bad and ugly Malaysians

When people who want change take to the streets, some stick to the perimeters of the law while others, with ulterior motives, break barriers and turn things unruly. 

BERSIH 3.0 co-chairman Datuk Ambiga Sreenevasan's call for people to show their displeasure and demand for electoral reforms on Saturday brought out thousands of Malaysians from all races and walks of life in a colourful expression of free will.

But Ambiga's calls also brought out the professionals the hardcore saboteurs who dreamt of regime change and the provocateurs who simply wanted chaos and trigger a mass protest that could eventually lead to the toppling of a democratically-elected government.

These people dream of sustained protests on the streets that eventually drive away tourists and worry investors.

Taking law into their own hands: Rioters using sticks and helmets to smash a car carrying the TV3 news crew as it was leaving Jalan Tun Perak, Kuala Lumpur, in 1999, soon after the verdict on Anwar was delivered.

 

Such sustained protests were last seen during the reformasi years in the 1990s with the arrest and jailing of the then Deputy Prime Minister Datuk Seri Anwar Ibrahim.

The same man was present on Saturday, after warning months earlier that Middle East-style protests could hit South-East Asian countries if the reforms were delayed.



If Ambiga thought she could keep everyone within limits, then she was sadly mistaken.

Different people read differently into a mass protest and the hardcore politicians in the crowd have other ideas too.

Reportedly, PKR deputy president Azmin Ali had egged on the crowd to break down the police barriers at Dataran Merdeka that were put up due to a court order declaring the place “out of bounds”.

Ambiga had given the order to disperse at about 3pm, but some marched forward and broke thorough the barriers.

They pelted a police car with bottles and stones, jumped on it and smashed the windscreen and later overturned it. They then attacked a police motorcycle and tried to grab a policeman's gun.

The attack on the police car was reminiscent of an incident in 1999 when a TV3 car was set upon during the reformasi protest.

At a press conference later, Ambiga expressed shock over the turn of events.

The initial carnival mood where people were giving flowers to FRU personnel, who reciprocated by wearing them, was hijacked by a section of the crowd.

Ambiga described the violence as “highly unusual” and suspected that it could have been instigated by agent provocateurs.

The problem is that while Ambiga heads a civil rights movement which is winning support by the day from young people, who incidentally make up the bulk of new voters, she has chosen to tie that movement with Opposition politics.

She has given Opposition leaders an opportunity to ride on the Bersih movement.

Ostensibly, independent non-politicians fill the Bersih steering committee but they are also enthusiastic Pakatan Rakyat supporters.

The Opposition leaders are hardened politicians who have served time in jail, have courted arrest many times and are willing to take greater risk to trigger mass action.

During the two previous Bersih rallies in November 2007 and July 9 last year, a similar scene took place; a section of the crowd taking over the protest and turning it violent.

The same police force, which was peaceful in the morning, was forced to fire tear gas and arrest protesters in the afternoon.

It brings to mind DAP vice-chairman Senator Tunku Abdul Aziz Tunku Ibrahim's warning that by not using the stadiums offered, Bersih 3.0 “encourages Malaysians to break the law”.

He had said he supported an individual's constitutional right to assembly but felt that it must be exercised within the provisions of the law. “As a lawmaker I am not willing to break the law.”

That same advice could also apply to Ambiga, a lawyer, but for politicians who desire regime change it is another matter.

The clock has been turned back on a burgeoning civil rights movement, and what could have been a shining example of peaceful protest, turned into a violent demonstration.

There were no warnings of reprisals in the days leading to Bersih 3.0, no roadblocks set around the city and no arrest of people streaming in for the protest.

But all that was blown away after some protesters breached the police barriers.

Many of the protesters who turned up on Saturday were those who genuinely wanted to bring about positive change. They had meant well and they represented middle Malaysia.

And, for the thousands of young Malaysians who braved Ambiga's call for a sit-in protest over the slow pace of electoral reforms, it was their first baptism of fire and one that they can wear as a badge of honour.

Comment by BARADAN KUPPUSAMY

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A father's lament: The real world is not a game!

Learning should be fun, but that doesn't mean we should be trying to hook kids into playing computer games that just happen to teach. 

There was something about the Mama Bear family tech conference a week ago that creeped me out. I am the father of a 5-year-old boy, and perhaps a third of the people at this conference were trying to build apps for him. All the apps were well-intentioned. All were, at some level, educational.

Still, all the apps felt wrong to me. I wanted my son to have nothing to do with any of them.

I've been trying to understand why these educational apps were getting under my skin to this extent. It's not like I'm anti-technology when it comes to my child. He plays Angry Birds. We watch TV (together). He's a child of technology; how could he live in my house and not be?

A psychiatrist friend, listening to me rant about how these apps are trying to wilt my son's brain, sympathized, but not completely. Yes, he said, computer games can be addictive. In fact, in his opinion, teaching kids to expect the world to work like a computer game deprives them of learning real-world life skills.

But, he said, a truly good educational app can be effective like a book, or a teacher. You can't stick everything that pops up on a kid's iPad into the "evil" category.

So where are the really good apps?

The Vinci Tab II is an Android tablet preloaded with educational software for kids up to 5 years old. 

(Credit: Rafe Needleman/CNET)

A few days ago, I handed my son a Vinci tablet to try out. This is another well-intentioned product for young children. It comes with pre-installed educational games carefully geared to kids up to about my son's age (actually he's a little old for it, but I occasionally make him earn his keep as a product reviewer).

I had the same feeling of foreboding about this product as I did about many children's apps I see. The Vinci reinforced this, unfortunately. While the game did in fact have educational payloads, the mechanics were, for the most part, dumb. How does pressing a button at exactly the right time to jump over a beach ball on-screen teach anything but how to operate a game, no matter what the game says it's supposed to be about?

The boy liked the tablet and its apps. But it's how he liked them that bothered me. The software sucked him in, and whatever lessons it tried to teach him were obstacles that seemed about as interesting as the flatly drawn beach balls. The real red flag came when I told my boy it was time to put the tablet down. He was so dialed in to the game mechanics that he panicked. He wasn't in learning mode, he was in addiction mode.

Did he retain the factoids and basic math and spelling skills he learned while playing? I think so. But I don't want him learning this way.

There is hope, though.

On the DIY app, kids snap pictures of their projects. On the Web site, shown, family and friends can award badges.

(Credit: Screenshot by Rafe Needleman/CNET)

 

Yesterday, I read about the launch of DIY, a site and app for kids that's supposed to be a social destination for them to share their creative projects. They upload photos of stuff they've designed, built, written, or drawn, and then their friends and family members can award them badges.

Something about this site appealed to me as a father. Why was it better than all the learning games, with their impressive educational pedigrees? I couldn't put my finger on it. So I called up DIY's CEO, Zach Klein (formerly of Vimeo). Klein isn't a father himself, but he understands the child's mind. In a few words he crystalized for me what I find distasteful about most kids' programming.

"They are gravity-fed," he says. "There's a path of least resistance to get to the next screen." The player's job is to find that path, he says. Games like this "infantilize children."

The real world doesn't work like this. There are no shortcuts in life. You don't get a big reward for each tiny action. Real rewards take real work.

DIY, he says, "gives children more responsibility than they are used to, not less." And the rewards aren't programmed. They come from peers and family. "We want kids to feel satisfaction, but we're suggesting it will take time and craft and love to earn it."

DIY is in a very early stage, and is too basic at the moment. In the interest of protecting kids, there's no personal information anywhere on the system; kids' identities are masked behind handles, and if a family member awards a kid a sticker, the kid can't see who it came from. But the thinking of DIY is right, at least to me: Encourage kids to engage with the real world. Use social-networking mechanics to reinforce it.

I loaded the DIY app on to my old iPhone 3G. I plan to let my boy use the app on this device without supervision. It's the first app I've seen that passes that test for me. I'm not sure he'll use it, but I bet he will. And I like it, because it's an accessory to his physical world, not a replacement for it.

Rafe Needleman

Rafe reviews mobile apps and products for fun, and picks startups apart when he gets bored. He has evaluated thousands of new companies, most of which have since gone out of business. Feeling lucky? Send pitches to rafe@cnet.com. And watch Rafe's tech issues podcast, Reporters' Roundtable.

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When the Malaysia's Elections will be after Bersih 3 & Occupy Dataran?

Elections won’t be in June

The probability of the Prime Minister calling for polls in June will be unlikely from a strategic planning point of view.

FORGET about June; the more likely time for the polls will be in the first week of September.

If Bersih 3.0 and Occupy Dataran were meant to peak before the polls, then they have been premature.

On the government side, while the Prime Minister has made several nationwide trips, his series of visits, which emphasises his government transformation plans on services for the people, has only just started.

Both sides have also not finalised their list of candidates despite their bravado in making declarations that they are ready for elections.

With a tough fight ahead, being winnable candidates is not good enough; they have to be trustworthy too. Both sides do not want defections after the general election.

This is especially so for Pakatan Rakyat whose elected representatives defected after the polls.

For the Barisan Nasional, it would not want to deal with a situation similar to Datuk Seri Anwar Ibrahim’s attempt to woo Barisan MPs to cross over.

So far, only the DAP’s Karpal Singh has consistently argued for a law to stop defections. The rest from both sides have refused to be drawn into such a commitment, preferring perhaps to keep the options open.

Then there is the matter of seat swapping. Both sides are still at the negotiation table and, in the case of Pakatan Rakyat, the unhappy components have gone to the media to voice their frustrations.

In Sabah, the local opposition want the Pakatan Rakyat to stay out but the DAP, especially, is adamant in contesting. It will lead to a crowded fight if no compromises are made within the opposition.

In the Barisan, the seat-swapping issue is still being sorted out and has not even gone to the supreme council level yet.

Datuk Seri Najib Tun Razak’s diary is packed with commitments, including overseas visits. The media has already been informed of his trips to the United Kingdom and United States in mid-May.

It does not look like a red herring as planning for his meetings has been completed and he would also take a short holiday with his family after his official duties, which include meeting members of the Global Science and Innovation Advisory Council in New York.

The council was set up to enable the country to make a quantum leap from a middle-income status to a high-income one.

By the time Najib returns, it would be the last week of May, and calling for polls in June will be unlikely from a strategic planning point of view.

The push for rural votes – the core of Umno’s support – will continue in June, especially after the windfall for Felda settlers has been declared from the listing of Felda Global Ventures Holdings (FGVH) Bhd, either in end May or early June.

The windfall will be in two forms – cash and equity – but the excitement would be the amount of the quantum. But word is that the rewards would be good.

Over the next few days, Najib will also be announcing details of the minimum wage plan and there is also talk that the Government will unravel the nine-month Malaysia Airlines-Air Asia alliance as early as Wednesday.

The alliance has been a source of discontent for the 22,000-strong staff of the national flag carrier. Their number is big, and given the fact that they are believed to be supporters of the ruling coalition, and their family members who are voters would be too, this issue is significant.

Over in Sabah and Sarawak, there will be two major celebrations – the Kaamatan festival of the Kadazandusun community on May 30 and 31 and Gawai for the Sarawakian Dayaks on June 1 and 2.

As these festivals are the most important events on the calendars of the two main communities in these states, no one would be expected to campaign for elections during this period.

Many Sabahans and Sarawakians, especially those working in the peninsula, are also expected to take a long break at this time.

Those who talk about a June 9 general election obviously have no idea of what’s happening in Sabah and Sarawak.

By July, it will already be the fasting month, which means there won’t be any election campaign. After this, the whole month of August will be taken up by the Hari Raya celebrations.

That means the first week of September will be the last window period.

The general election cannot be in late September as the haj season would have begun, ending only in October.

Then there is the Parliament meeting from Sept 24 to Nov 27, where the Budget needs to be tabled.

Once it is tabled, it has to be approved by the Dewan Negara, which means the session will drag on until next year.

If you are planning a holiday or a major corporate event in May or June, go ahead, your plans won’t be disrupted.

In fact, Malaysia is hosting Asia’s largest oil and gas event from June 5 to 7, bringing top people from this industry to Kuala Lumpur.

If you have planned for the Olympics in London, enjoy the Games, which starts on July 26 and ends on Aug 12.

But don’t be away too long because the drumbeats of the general election would be very loud by then.

ON THE BEAT  By WONG CHUN WAI

Malaysian police fire tear gas at more than 25,000 protesters, Bersih 3.0 rally

Riot police use force to disperse crowd of 25,000 protesters seeking electoral reform in capital, Kuala Lumpur.

 
Lawyer Malik Imtiaz Sarwar tells Al Jazeera the demonstrators should have been allowed to protest peacefully

Malaysian riot police have fired tear gas and used water cannon on a crowd of demonstrators demanding an overhaul in electoral policies in the centre of the capital, Kuala Lumpur.

At least 25,000 demonstrators have swamped Malaysia's largest city on Saturday in one of the Southeast Asian nation's biggest street rallies in the past decade.

They massed near the city's historic Merdeka (Independence) Square that police had sealed off with barbed wire and barricades.

Authorities say Bersih, or Coalition for Free and Fair Elections - the opposition-backed pressure group that organised the rally - has no right to use the square.

Some of the demonstrators apparently breached the barriers and police began firing tear gas at them.



Al Jazeera's Harry Fawcett, reporting from Kuala Lumpur, said: "The protest organisers said that they would simply sit down at the barrier’s edge. But an hour after the main part of the protest, they broke through and this confrontation happened."

The rally reflects concerns that Prime Minister Najib Razak's long-ruling coalition will have an unfair upper hand in elections that could be called as early as June.

Activists have alleged the Election Commission is biased and claimed that voter registration lists are tainted with fraudulent voters.



March to the barricades

"We will march to the barrier," Ambiga Sreenivasan, Bersih's chairwoman, said.

Our correspondent added: "As far as the protesters are concerned, the government haven’t met their demands. They want a series of improvements to the electoral system. They are calling for better electoral role. They also want the electoral commission, which runs elections this country, to be entirely reformed.

Saturday's demonstration was organised by an opposition-backed reform group, Bersih [AFP]

“The protest was not what both sides [government and protesters] were talking about. They were talking about peaceful protests. Ideally, the protesters wanted to protest inside Independence Square."

Saturday's gathering follows one crushed by police last July, when 1,600 people were arrested.

That rally for clean elections prompted a police crackdown with tear gas and water cannon.

A resulting backlash prompted Najib, Malaysia's prime minister, to set up a parliamentary panel whose eventual report suggested a range of changes to the electoral system.

But Bersih and the opposition are demanding a complete overhaul of a voter roll considered fraudulent and reform of an Election Commission they say is biased in favour of the governing coalition.

Najib has launched a campaign to repeal authoritarian laws in a bid to create what he called "the greatest democracy".

His ruling coalition has governed Malaysia for more than five decades but made a dismal showing against the opposition in 2008, and Najib is under pressure to improve on that.

Source:

Al Jazeera and agencies

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More than 20,000 Malaysians march for election reforms, Bersih 3.0 rally

Protesters of the Bersih (Clean) group shout slogans near Dataran Merdeka, also known as Independence Square, in Kuala Lumpur Photograph: Bazuki Muhammad/REUTERS

Up to 20,000 protesters calling for fair elections and greater accountability marched on Kuala Lumpur's centre on Saturday in a show of force that will test the Malaysian government's reformist pledges and may affect the timing of national polls.

Police shut down much of the city centre and closed off the historic Merdeka (Independence) Square with barriers and barbed wire, enforcing a court order that the protesters should not enter the symbolically important site.

The Bersih (Clean) group that is leading the protest says it will obey the ban but will march as close as possible to the square, raising the possibility of a repeat of violent clashes that marred Bersih's last major protest in July 2011.

"Now it looks like we will have to fight for our right to gather at Merdeka Square as well as fight for free and fair elections," said Muhammed Hafiz, a 28-year-old store clerk who was preparing to join the protest.

Organisers hope the protest will draw 100,000 people, including thousands demonstrating against a controversial rare earths plant being built by Australian firm Lynas on the country's east coast. That would make it the biggest protest since the "Reformasi" (Reform) demonstrations in 1998 against then Prime Minister Mahathir Mohamad.



A police official estimated the protesters numbered 15,000 to 20,000 by midday with just one arrest reported.

The protest is a delicate challenge for the government of Prime Minister Najib Razak, possibly affecting the timing of elections that he is preparing to call as early as June.

A violent response by police would risk alienating middle-class voters and handing the advantage to the opposition in what is shaping up as the closest election in Malaysia's history, possibly forcing Najib to delay the poll date.

But Najib must be mindful of conservatives in his party who are wary that his moves to relax tough security laws and push limited election reforms could threaten their 55-year hold on power.

Last July's rally, more than 10,000-strong, ended in violence when police fired tear gas and water cannons at the yellow-shirted protesters, drawing criticism of a heavy-handed response and sending Najib's popularity sliding. His approval rating has since rebounded to 69%, according to one poll.

Police helicopters buzzed overhead on Saturday morning as protesters gathered. Reuters correspondents saw about 200 riot police stationed in the square and five water cannons heading to the site where Malaysia declared independence from Britain.

Bersih, an independent movement whose goals are backed by the opposition, has a history of staging influential rallies as Malaysians have demanded more freedoms and democratic rights in the former British colony that has an authoritarian streak.

Younger Malaysians have become more politically active in recent years, chafing at restrictions on student activism.

"The younger generation, especially my generation, want to be involved. Look at Lynas and Bersih. We cannot be quiet," said 19-year-old university student Chan Mei Fong.

The July protest was a watershed moment for Najib, prompting him to promise reform of an electoral system that the opposition says favours the long-ruling National Front coalition.

The National Front is trying to recover from its worst ever election result in 2008 when it lost its two-thirds majority in parliament, giving the diverse, three-party opposition led by former finance minister Anwar Ibrahim real hope of taking power.

Najib has replaced tough security laws - ending indefinite detention without trial - relaxed some media controls, and pushed reforms to the electoral system that critics have long complained is rigged in the government's favour.

A bipartisan parliamentary committee set up by Najib this month issued 22 proposals for electoral reform, including steps to clean up electoral rolls and equal access to media.

But the government gave no guarantee that any of the steps will be in place for the next election.

Bersih says the proposals do not meet most of its key demands, including lengthening the campaign period to at least 21 days from the current seven days. It also wants an independent audit of the electoral roll and international observers at polling stations. Bersih and opposition parties say they have unearthed multiple instances of irregularities in voter rolls, including over 50 voters registered at one address.

Source: guardian.co.uk

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Bersih 3.0 rally: Malaysia braces for electoral reform protests

KUALA LUMPUR (April 27, 2012): The Police have obtained a court order to bar the organisers of Bersih 3.0 and members of the public from entering Dataran Merdeka beginning April 28 until May 1.

Kuala Lumpur Police Chief Datuk Mohmad Salleh said that the court order obtained from the Kuala Lumpur Magistrate Court last night under Section 98 of the Criminal Procedure Code (CPC) bars the respondent and the public from gathering or having any activities in Dataran Merdeka beginning tomorrow (April 28) until May 1.



He added that taking into consideration the safety and peace of the public in Kuala Lumpur, especially Dataran Merdeka, the police have obtained the court order.

The areas that are barred is all the land surface bordering Jalan Sultan Hishamuddin, Jalan Raja and Jalan Kelab except the area the area occupied by the Royal Selangor Club.

"Seeing that the Kuala Lumpur City Hall (DBKL) has denied the permission for Bersih 3.0 to have its gathering at Dataran Merdeka, therefore the respondents and the members of the public are prohibited from being or taking part in any gathering in these areas beginning tomorrow until May 1," said Mohmad in a press conference at the Kuala Lumpur Police Contingent headquarters today.

He explained that anyone who defies the court order will violate Section 188 of the Penal Code which carries a jail term of six months, a penalty of up to RM2,000 or both.

Asked if there will be road closures in areas surrounding Dataran Merdeka or leading to the gathering points, Mohmad said it depends on the situation.

When probed further on the matter: "We don't need to inform, that depends on us."

Asked if people are allowed to gather at the six planned meeting points by Bersih, Mohmad said they are allowed to gather but are prohibited from marching as stipulated under the Peaceful Assembly Act 2011, which was enforced on Monday, adding that those who march or conduct street protests may face possible arrests.

The six planned meeting points are Masjid Negara, Jalan Sultan, Jalan Masjid India, Central Market, Brickfields and Kuala Lumpur City Centre (KLCC).

Asked if there will be road closures during the marching of environmental coalition Himpunan Hijau which will make its way from KLCC to the Australian High Commission tomorrow, Mohmad said: "It depends on the situation "

On the Bersih related paraphernalia, including the famous yellow colored T-shirts, Mohmad said people are entitled to wear what they want.

At the last year's Bersih 2.0 rally in July, any paraphernalia related to the election reform coalition was banned from making its appearance in public.

DBKL and Bersih 3.0 organisers are deadlocked over Dataran Merdeka as the venue for the rally, with either side refusing to yield on their respective stands.

Both the Home Ministry and DBKL have offered alternative venues, including Stadium Merdeka, Titiwangsa Stadium and Bukit Jalil Stadium, but the election reform group has rejected the suggestion, saying it had come at too short a notice.

By Hemananthani Sivanandam newsdesk@thesundaily.com

Malaysia Braces for Latest Round of Bersih Protests

 By James Hookway and Celine Fernandez

Today is Bersih day in Malaysia. It’s an increasingly regular phenomenon where prodemocracy activists gather to push for more transparency in elections and complicating life for Prime Minister Najib Razak, who previously has found it difficult to keep the country’s riot police under control.

Last year, police broke up a similar rally with tear gas and water cannons, and briefly detained around 1,600 members of the Bersih group, whose name means ‘clean’ in Malay. That earned Mr. Najib’s government international condemnation, and prompted him to move forward on a series of political reforms, including ending Malaysia’s feared Internal Security Act, which allows for indefinite, warrantless detention.

Despite the changes, Malaysia’s authorities are still leery of letting protesters do anything they like. Analysts say that Malaysia, one of Southeast Asia’s powerhouse economies and a major global exporter of computer parts, energy and palm oil is still a conservative place where many voters and political power-brokers are fearful of large street protests despite the rapid growth of Internet penetration and a proliferation of independent news websites which often are critical of the government.

For instance, the organizers for today’s rally want to muster at Merdeka, or Independence, Square, the swath of land in downtown Kuala Lumpur where Malaysia first hoisted its national flag after securing independence from Britain in 1957. They are demanding that the country’s electoral rolls are cleaned up to prevent fraudulent voting and that alleged biases within the country’s election agency are removed. In addition, they want international observers to monitor the polls – which must be called by next March – and also ensure that all political parties get similar access to government-controlled broadcasters and newspapers, who dominate the media landscape in Malaysia. The protests also want to enable Malaysians living overseas to be able to cast ballots.

Authorities, though, don’t consider Merdeka Square an appropriate venue, and have offered to provide nearby stadiums for the protesters. Bersih leaders say the offer came too late.

Now, Merdeka Square is cordoned off with barricades and razor wires, and the Bersih protesters intend to mass outside the area instead – a move which could lead to another confrontation with police and further embarrass Mr. Najib who has been trying to make a name for himself as one of Asia’s quieter, but more effective, reformers. Commuter trains leading from Kuala Lumpur’s suburbs to the center of the city meanwhile are carrying large numbers of protesters wearing Bersih’s distinctive yellow t-shirts.

“It is a bit déjà vu, isn’t it?” Ambiga Sreenevasan, one of the Bersih group’s co-founders, said Friday. “To be fair, it is not the same (as last year). There is a recognition that we have the right to assemble. I think no one has disputed that. There is a recognition that we are not a security threat… I think the only dispute is where (we can protest).”

That alone seems to be a difficult point for both sides to resolve, however. Ms. Ambiga said the easiest way for the authorities to handle the problem is to simply lift the barriers to Merdeka Square – but that’s likely a move too far for Malaysia’s cautious leaders.

Malaysia braces for electoral reform rally

Security tightened in the capital as protesters gather to demand reform of the electoral system.

Malaysian authorities sealed off Independence Square on Friday ahead of the sit-in [AFP]

Hundreds of police and civilian security officers have been deployed in the Malaysian capital Kuala Lumpur, where protesters began to gather hours before a scheduled mass rally calling for electoral reforms. Supporters of the Coalition for Free and Fair Elections gathered in an open park in central Kuala Lumpur for Friday's demonstration. The Kuala Lumpur city government on Friday cordoned off the park after securing a court order to prevent the protest. Protesters have said they will march to the barricades and demand access but vowed to remain peaceful. "We will march to the barrier," said Ambiga Sreenivasan, chairwoman of Bersih, an electotal reform pressure group. Al Jazeera's Harry Fawcett reporting from Kuala Lumpur says: "Already we are hearing that thousands are near Independence Square, there will be a significant turnout." "The police say they will intervene if people defy the order and cross into the square," said our correspondent. Public backlash The mass rally follows one crushed by police last July, when 1,600 people were arrested, and marks a major test for Prime Minister Najib Razak ahead of widely expected elections. Last July's rally for clean elections brought tens of thousands to the streets of the capital, prompting a police crackdown with tear gas and water cannon. A resulting backlash prompted Najib to set up a parliamentary panel whose eventual report suggested a range of changes to the electoral system. But Bersih and the opposition are demanding a complete overhaul of a voter roll considered fraudulent and reform of an Election Commission they say is biased in favour of the ruling coalition. The rally is a direct challenge to Najib, who since last year's crackdown, has launched a campaign to repeal authoritarian laws in a bid to create what he called "the greatest democracy". His ruling coalition has governed Malaysia for more than five decades but made a dismal showing against the opposition in 2008, and Najib is under pressure to improve on that. Elections are not due until next year but speculation is rife that Najib could call them as early as June.

Source: Al Jazeera and agencies

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PTPTN student loan, Bersih 3.0, 'Occupy Dataran' ...

The case for PTPTN to stay....

Higher education is not a right but a privilege and the Government cannot provide subsidies for everything. And European countries famous for fully subsidising tertiary education are moving away from that system. 

A PROPOSED overhaul in the way tertiary education is funded in our country has added to the number of causes being combined with Bersih 3.0 due tomorrow.

The suggestion is that the National Higher Education Fund Corporation (PTPTN), which provides loans to students pursuing their higher education, should be replaced by a fully subsidised system in which (most/all) students receive fully government-funded tertiary education.

PTPTN abolitionists charge that it is administratively inefficient and unfair to leave graduates with a mountain of debt, costly to the taxpayer because of low repayment rates (and subsequent costs of having to forcibly recover dues), and un-Islamic due to the charging of interest.

Though I was not a beneficiary of PTPTN, I routinely meet young people who are, through the education sub-committee of Yayasan Munarah, the royal foundation funded solely by private and corporate donations.

Since the start of our education fund last year, we have screened over a thousand applications for financial aid and I have personally interviewed hundreds of them at our office in Seremban.

Of the nearly RM500,000 disbursed so far, most cases involve the “topping up” of the amount students had already received from PTPTN, Mara and private sources.

In these 15-minute interviews, no student has ever complained about PTPTN; rather, the hardworking students often show gratitude to the fund, providing a contrast to the attitude of the Dataran Merdeka protesters.

What has impressed me in the denunciation of replacing a voluntary loan system with a compulsory subsidised system is that many commentators in the mainstream and alternative media object to the loss of individual responsibility that this will entail; young citizens will no longer feel that they owe anyone anything in exchange for the tuition, and this does not encourage responsible citizenship.

Higher education is not a right but a privilege, they say, and the Government cannot provide subsidies for everything.

Articles also point out that European countries famous for fully subsidising tertiary education are moving away from that system, though even so, those countries embedded competition between universities enabled by sponsoring students directly, rather than fully funding universities, so that a market mechanism is at work to reward the cleverest students and the best universities.

Indeed the potential impact of this proposal on our universities needs to be highlighted.

European universities possess much more autonomy than ours do – even if they are state-funded – allowing for areas of specialisation and different preferences to be accommodated.

Our public universities are not used to such competition, and may end up decomposing into a stultifying heap of monotonous, mediocre institutions unless autonomy is granted first.

The opposite approach is taken in the US, where universities are very independent and often expensive; but a deep tradition of alumni endowments for scholarships and bursaries enable academic merit to remain the main criteria of admission.

At the same time, one of the assumptions in effect in this whole debate is the idea that the primary purpose of tertiary education is to prepare one for a job that can pay back the cost of that education while contributing to national economic growth.

This offends the very principle of education for its own sake as well as the idea that the arts have merely an economic value.

I have long objected to Government attempts to engineer society by providing scholarships or loans for some subjects and not others.

If public money is being used to subsidise education, then it must grant every young Malaysian access to that money without discrimination.

I have met dozens of young Malaysians whose dreams of becoming historians or performers have been scuppered because they are discriminated against in favour of those who want to become doctors or engineers (tellingly, Aswara comes under the Culture Ministry, not the Higher Education Ministry).

The academic profile of the next generation of Malaysians should be shaped by their own preferences and perceptions of their futures, not by the dictate of someone with a crystal ball in Putrajaya.

If you agree that tertiary education funding should be designed to allow maximum freedom for students on the one hand to pursue the disciplines of their choosing without guilt, and institutions of higher learning on the other to compete amongst themselves – then it is more likely that this will be achieved by reviewing the current loan system (including repayment mechanisms), developing vocational options and granting much more autonomy to universities, including on financial matters.

> Tunku ’Abidin Muhriz is President of IDEAS.

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UK Banking Rules Risk Bank's Future Market Value

Royal Bank of Scotland Group Plc may lose as much as 20 billion pounds ($32 billion) from its future market value because of planned U.K. regulatory changes, Chief Executive Officer Stephen Hester said. 

The “regulatory environment has changed even more dramatically than we bargained for,” Hester said in the text of a speech at the Manchester Business School yesterday. “U.K. regulatory reforms on their own have probably cost 10 to 20 billion pounds from our future market value.”

The government-sponsored Independent Commission on Bankingrecommended in September the U.K.’s biggest banks should boost capital, implement plans for an orderly bankruptcy and erect fire breaks around their consumer units to boost the stability of the financial system.

The proposals also mean that banks will no longer be allowed to use their consumer units to provide cheap funding for investment-banking units.

Greater regulation is adding to a slower-than-expected economic recovery and turbulent markets, said Hester, 51. The British economy shrank in the first quarter as Britain slid into its first double-dip recession since the 1970s, figures from the Office for National Statistics showed.

“We can cope with these extra challenges, but they use up the outperformance we have achieved and they mean that our shareholders, indeed all bank shareholders, will see value recover less well than hoped,” he said.

Two More Years

The government was forced to rescue RBS at the height of the financial crisis, injecting 45.5 billion pounds of taxpayer money into the lender, making it the costliest bailout of any bank in the world.

Hester said in the speech that the cost of cleaning up the lender he inherited from former CEO Fred Goodwintotals 43 billion pounds so far.

RBS still has two more years of “heavy lifting, significant clean-up costs and vulnerability to outside events” as it restructures its business, Hester said.

RBS fell 0.3 percent to 23.2 pence at the close of London trading yesterday. The shares have rallied 15 percent this year, boosting the Edinburgh-based lender’s market value to about 26 billion pounds. The U.K., which owns 82 percent of the lender, paid an average of 50.2 pence a share for its holding.

To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net

To contact the editor responsible for this story: Edward Evans at eevans3@bloomberg.net

Fragile British economy enters double-dip recession

LONDON, April 25 (Xinhua) -- Britain's economy has fallen into double-dip recession after official figures showed its economy shrank in the first quarter this year.

The Office for National Statistics (ONS) said Britain's gross domestic product (GDP) contracted 0.2 percent in the first three months 2012, meaning the country has slipped back into recession.

Technically, a recession occurs after two consecutive quarters of negative growth. The ONS figures said Britain's GDP in the last quarter of 2011 dropped by 0.3 percent. Britain last experienced recession in 2009.

A HEAVY BLOW

The worse-than-expected economic growth figure has dealt a heavy blow for the ruling coalition led by Prime Minister David Cameron.

The prime minister and Finance Minister George Osborne were "very disappointed" at the figures.

Cameron said: "I don't seek to excuse them. I don't see to try to explain them away. There is no complacency at all in this government in dealing with what is a very tough situation that frankly has just got tougher."

Osborne in his March budget forecast growth of 0.8 percent this year and 2 percent next year. In 2014, 2.7 percent was forecast, followed by 3 percent growth the following years.

The current 0.2 percent contraction in GDP is bad for the coalition government as it desperately seek to grow the economy and eliminate the country's large budget deficit over the next five years.

The government is set to unveil new measures to further limit public spending as part of the government's efforts to meet its austerity targets. Under the new rules, government departments will have to set aside 5 percent of their annual budget to cover unexpected expenses in a bid to discourage them from asking for more money from the central government when emergencies arise.

Osborne said: "It's a very tough situation when you're recovering from these enormous debts that Britain built up in the good years."

Cameron added it was "painstaking, difficult" work, but the government world stick with its plans and do "everything we can" to generate growth.

Labor party leader Ed Milliband said the figures were catastrophic, blaming the government's economic policies for landing the country back in recession.

A GLOOMY OUTLOOK

The latest data from the ONS is consistent with a report released by the OECD predicting the British economy would shrink in the first quarter of 2012, taking it back into recession.

Meanwhile, economists and research institutes have warned that Britain's economy will continue to struggle with factors such as high inflation, rising unemployment and uncertainty in its exports market, which is strongly affected by eurozone debt.

According to the ONS, the recession was mainly driven by a sharp fall in construction sector, which contracted 3 percent and 0.2 percent in the last two quarters. At the same time, the manufacturing sector failed to return to growth.

The services sector, which accounts for a third of the economy, grew only 0.1 percent in the first quarter this year, after a decline of 0.1 percent in the previous quarter.

Production industries output also declined 0.4 percent in the first quarter of this year, and 1.3 percent in the previous quarter.

The latest report issued by the Ernst & Young Item Club said Britain's jobless rate is forecast to rise to 9.3 percent in the middle of next year from the current 8.4 percent, with the number of those seeking work rising to almost 3 million.

Britain's Consumer Price Index (CPI), a major gauge for inflation, will reach 2.8 percent this year and drop to 2.1 percent next year.

The country's consumer spending power continued to deteriorate in March, dropping by 1.1 percent compared to a year earlier, reaching the lowest level since February 2011. - Xinhua

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