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Saturday, 1 September 2012

Pitching for the Asean 10

Asean countries are still developing because there is still much to do, and much to learn about how to do it.


IF Asean is sometimes accused of being a talking shop, it also vividly demonstrates the value and virtues of some talking shops.

Officials’ meetings at various levels are legion, growing in number and scope over half a century until they average a few a day for every day of the year.

Between these are the summits, being more prominent in comprising heads of governments. Besides the content of the proceedings, the frequency of the summits themselves may indicate the state of the South-East Asian region.

When leaders from Indonesia, Malaysia, the Philippines, Singapore and Thailand met in Bangkok in 1967 to found Asean, that was somehow not considered a summit. So the “first” summit came only in 1976 in Bali, with the “Treaty of Amity and Cooperation in South-East Asia” and the “Declaration of Asean Concord.”

The second summit came the following year in Kuala Lumpur, coinciding with an Asean-Japan dialogue. Although this was only one year after the first, it was a whole decade after Asean’s founding and would be another full decade before the next.

The third summit (Manila, 1987) decided to hold summits every five years. By the seventh (Bandar Seri Begawan) it would be every year, then after skipping 2006 the Philippines hosted the 12th in Cebu amid local protests.

The 14th summit slated for 2008 in Thailand was postponed to early 2009 over domestic disturbances, then put off for another two months in the broken Pattaya gathering. From then on, summits would be biannual affairs.

Between and beyond the summits, whether or not local scandals and protests add to the news value of Asean gatherings, the original five member nations seem to attract more attention if not also more interest. This is anomalous since Asean membership confers equal status on all members regardless of size, age, clout or political system.

The newer members can actually be quite pivotal in their own way, as Vietnam and then Cambodia had been, and as Myanmar may be now. And several of the older members need not be particularly significant to the Asean 10 as a whole, much less beyond.

With such issues in mind, Malaysia’s Foreign Policy Studies Group last week held another roundtable conference in Kuala Lumpur on how relations between Malaysia and the CLM countries (Cambodia, Laos, Myanmar) can contribute to Asean consolidation.

An earlier roundtable comprised delegates from Indonesia, Thailand and Vietnam in assessing how their countries’ relations with Malaysia could progress in the same vein. Vietnam, as the largest and most developed of Asean’s newer CLMV members, had also introduced reforms earliest to qualify to join the earlier dialogue with some of the original members.

Other CLMV countries have progressed on other fronts on their own. It is now 20 years since Cambodia, for example, reached agreement with Malaysia on visa-free travel.

Laos is another country that Malaysia has assisted, with the establishment of bilateral relations (in 1966) even before Asean was founded. Since then, relations have flourished, particularly after Malaysia worked to welcome Vientiane into Asean.

Myanmar today is still undergoing a transition, and therefore also very much a focus of world media attention. Its people now have a greater sense of nationhood following a raft of reforms, mindful of the national interest from economic priorities to the prerogative of rejecting foreign military bases on its soil.

A Malaysian delegate said that the US, following news reports last Sunday, was now looking for a suitable site for a new “missile shield” system in the region. The US and China were the two proverbial “elephants in the room”, and the geopolitical rivalry between them very much an issue for all delegates.

No individual, organisation or country at the roundtable, whether officially or unofficially, was left undisturbed by major power rivalry contaminating the Asean region. This was the more so when preparations abroad tended to centre around a military build-up, with the US “pivot to Asia” involving stationing 60% of its military assets in the Asia-Pacific.

According to one recent analysis, at current and anticipated rates China’s economy could surpass the US’ as early as 2016, and US overall decline could become evident by 2020. Ironically, as with its former Soviet adversary before it, the decline would be underscored by excessive military expenditure and a warlike mindset.

Given these scenarios, it is important to be reminded of some pertinent underlying issues. These may be framed by some telling questions that must be asked, for which answers are vitally needed.

First, are the CLM countries necessarily more dependent on a regional superpower-as-benefactor like China economically, compared to Asean’s older and more developed members. Not so, especially when considering that the latter, with larger economies, have more at stake in dealing with a rising China.

Second, is China even likely to consider challenging US dominance in the region? Despite occasionally dire pronouncements by some there is no evidence of that, indeed quite the reverse: beyond assertions of its old maritime claims, Beijing’s relations with all countries in the region have been progressing and progressive.

US military dominance in the Asia-Pacific is often credited with keeping the regional peace, particularly in the high seas. Is this assumption merited if piracy and terrorism are not included in the calculus, since there may not be any other military force out to wreak havoc in the region post-1945?

Fourth, how much value is there still in the assumption that the US military posture is and will remain the status quo entity in the region? The status quo is helping China’s economy grow, with secure shipping and harmonious development, while the US economy is continually taxed by its large and growing military presence.

Fifth, and by extension, how much pulling power is there today in US efforts at soliciting allies? The problem with enlisting in an alliance for other countries is that to be identified as an ally of a major power is also to identify as an ally against another major power.

Dividing the region in Cold War fashion does not help anyone, and never did. To enlist with a (relatively) declining superpower creates further problems of its own for such allies.

Sixth, can China’s reported flexing of its muscles in the South China Sea and the East China Sea in any way be a show of strength? Since it only gives Beijing a negative image just as it needs to look good, without any gain in return, it is instead a point of weakness.

Seventh, can US efforts to contain China ever work? There is no shortage of instances that verify containment, a situation confirmed by official denials.

So, eighth, why try to contain China at all when in the process the US only loses goodwill before losing face? Perhaps old habits die hard, but more likely the military-industrial complex dies harder.

Smaller countries in Asean and elsewhere have much to learn from the major powers, notably the US and China. Sadly, the lessons are just as much what not to do as they are about what to do.

BEHIND THE HEADLINES By BUNN NAGARA sunday@thestar.com.my

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The rising K-economy in Asia


HOW big is the impact of the Internet potential on Asia, including the impact on development of the knowledge economy in Asia?

We all have a sense that the Information and Communications Technology (ICT) industry has transformed social media, education and the way business is done. But we are not sure what is the best way to use the Knowledge economy to propel our future growth.

In 1973, American sociologist Daniel Bell predicted the arrival of the Post-Industrial Society by 2000 with a world dominated by service industry, high value professional and technical employment and innovation driven by scientific research.

In 2000, the number of global Internet users was only 360 million, rising to 2.3 trillion with an annual growth rate of 528% between 2000-2011, of which 45% reside in Asia. The highest penetration of Internet is in North America (78.6%), whereas penetration in Asia is only 26.2%, pointing towards huge potential for Asian growth.

According to Internet World Statistics, the top Internet country in Asia is China, with 513 million users, followed by India (121 million), Japan (101 million) and Indonesia (55 million).

Within Asia, the highest penetration is South Korea (82.7%), Japan (80%), Singapore (77.2%), Taiwan (70%) and Hong Kong (68.7%). China has 38.4% Internet penetration.

However, the highest number of Facebook users in Asia is India (45 million), Indonesia (43 million) and the Philippines (27 million). Asia has 195 million Facebook users as at March 2012, or 23.3% of 835 million worldwide, compared to 44.8% penetration in Internet usage. The reason is of course Facebook is not used in China, but even then, there are 447,000 recorded users, less than the number in Cambodia (449,000).

Did you realise that 26.8% of Internet users are English-speaking (565 million), and 24.2% are Chinese speaking (510 million). The third most important language is Spanish (165 million). The Malay language, which is common to Indonesia and Malaysia, is not counted yet among the top 10 languages, mainly because the penetration of the Internet in Indonesia (245 million people) is only 22.4%.

Malaysia has a web usage rate of 61%, with over 17 million people online. The Post-Industrial Society has already arrived in the advanced countries, with the service sector accounting for 76.7% of US GDP, compared with only 1.2% for agriculture and 22.1% in industry. Employment in the service sector already accounted for 77% of total employment in the United States, with the increase in the service sector employment driving employment growth in the coming years.

Within the service sector, three sectors - education services, healthcare and professional and business services (all knowledge industries) are expected to grow at double the speed of employment of the US employment as a whole. In contrast, manufacturing employment is only 10% of total employment in the United States, compared with 28% employed in manufacturing in China. But the service sector in China accounts for only 43% of GDP, compared with 55.2% for India.

What is the relationship between information, knowledge and value creation?

In 1991, one of the pioneers on information theory, Robert Lucky, argued that the information value chain is a pyramid, with the bottom data having no value, classified data becoming valued information, with applied knowledge (technology) having more value, and wisdom, the highest value, being learnt, experienced and useful not only to understand but perhaps predict events.

What the Internet revolution has achieved is to distribute information and knowledge very quickly to the masses across the world. Indeed, the main benefit of the Internet is that it broke down “silos” of specialised information and data that could be shared and used by everyone with access to it.

Indeed, the Internet has enabled “Wiki-knowledge production”, which has produced a huge public good, available to all, with free input by thousands of anonymous volunteers. Public goods are no longer produced by governments, universities or firms, but by the collaboration of thousands of empowered individuals.

There is no doubt that as Asia ponders its own Post-Industrial Society, how it adapts to the new knowledge economy will make a difference between future success or failure.

Leading economies like Singapore and South Korea have devoted tremendous resources into education, research and development in key areas. South Korea even revived its Five-Year Plans to transform itself into a high growth, high knowledge green economy.

Both the Chinese and Indian 12th Five-Year Plans have ambitions to become creative and innovative economies.

In this regard, it is useful to compare and contrast the IBM way towards innovation and value creation versus the Indian approach. In the IBM book Making the World Better (2011), it uses a methodology insiders call SMUBA, an acronym for Seeing, Mapping, Understanding, Believing and Acting.

It is a process to master complex systems and to move from data, analytics and implementation.

Multinationals like IBM now realise that it is impossible to innovate alone by having centralised research laboraties the work is shared and done through key research labs spread throughout the world, through connecting research to product development, academic and government collaboration, internal collaboration across departments and labs, collaboration with clients, innovation by acquisition and open innovation.

In contrast, the Indian model of innovation and value creation is distinct in three ways producing frugal, affordable solutions for the masses without compromising quality, innovation in organisational and process models that improve quality and service delivery, and innovations in the process of innovation (frugal cost solutions through frugal cost of innovation).

The race is already on to produce Asian multinationals and create products to compete with Apple, Amazon, Google or Facebook.

The setback that Samsung faced recently will probably accelerate that process of innovation and competition across Asia.

THINK ASIAN By ANDREW SHENG

Tan Sri Andrew Sheng is president of Fung Global Institute.

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Friday, 31 August 2012

Apple patent claims stifling innovation; Japan court rules in favour of Samsung

Is Apple stifling innovation?

A US jury decision against Samsung and a Japanese court decision for the Korean conglomerate raise questions over the entire patent issue


WOULD anyone have expected the Apple-Samsung case to be decided in favour of Samsung by a US court in a jury verdict and against Apple, which is by now even more American than apple pie? I certainly didn’t.

But there is an appeal on the cards and it is still anyone’s guess if Apple will be allowed to claim such things as shape and “pinch to zoom out” as its right. But if it is, then that’s a big setback for other smartphones.

Samsung, however, scored a victory in a Tokyo court which ruled yesterday that the Korean electronics giant, and supplier to Apple, did not violate any patents. That victory will no doubt raise questions as to how fair the US jury was in making an award in favour of Apple, including US$1bil in damages.

The US decision means eventually consumers there may have to pay more for Apple’s iPhone, iPod and devices because others may not be able to emulate features that may have made their devices a success. That will have repercussions on prices elsewhere as well.

In the motor industry there have been many trends in shape over the years, moving from angular to rounded designs. If some car company had decided to sue every other car manufacturer for a similar look and feel and succeeded, car shapes may have had great difficulty evolving.

But the best manufacturers of cars did not. In fact some of them deliberately did not register safety patents just so that others could use the innovations to increase passenger safety.

If Samsung is said to have infringed on shape, then there are a number of other manufacturers who are in trouble too. Rectangular faces with rounded edges are a natural evolution in the mobile phone industry. Certainly, other manufacturers are going to hope there will be a reversal on appeal.

Apple did not invent the touch screen. Thus, it seems strange that it has a patent to “pinch to zoom” which is basically one way of many ways to use a screen. That’s like patenting a particular method of driving a car!

Apple has already followed up on its US victory, seeking an injunction to prevent Samsung from selling eight of its smartphones in the United States including some in the best-selling Galaxy range.

However, hearing of the injunction will only be in December and some of Samsung’s models may be phased out by then, which offers some consolation for Samsung.

Some US commentators view the case as a proxy war against another US company Google which makes the Android operating system used in Samsung, HTC and other smartphones.

An article in the San Francisco Chronicle says that the late Apple chief executive Steve Jobs was once a friend of Google’s co-founders but considered Google’s move into mobile a betrayal that demanded revenge.

“I’m going to destroy Android, because it’s a stolen product,” he told his biographer Walter Isaacson. “I’m willing to go thermonuclear war on this.”

But despite the nice rhetoric, revenge from the grave it is not. Apple’s strategy seems quite clear cut. Patent everything. Then tie up competitors in court if there is any semblance of product infringement and keep its competitive advantage intact as long as possible.

Reports put its profit margins on its iPhone at as high as 50%, a huge mark-up in a cutthroat market which it has been able to achieve by parlaying an excellent product with some very deft marketing and public relations.

That made it the biggest company in the world. Many would say that the product, however, is not necessarily the best anymore if ever it was, especially since competitors are fast catching up with their own nifty designs and features. And marketing and PR too – Galaxy is getting a name for itself and no doubt the cases around the world will help.

Thus it makes much economic sense for Apple to prolong this by any legal means it can for as long as possible. Does Apple care that it may be stifling innovation, raising costs and hurting consumers in the process?

Probably not. And why should it? It is a company based on the profit motive. But it needs to remember that all publicity is not good publicity and if it gets a reputation as a bully, its entire image and that of its products could change.

American companies can carry this patent thing too far and they have. Recall a few years ago when some of them tried to patent the production of pesticides from neem trees. For thousands of years, extracts from the leaves of the neem have been used for precisely that.

The American jury system cannot but be expected to favour a US icon such as Apple which is seen as brash, innovative and successful, the very image of the US itself. But that’s not going to be the case in the rest of the world. And even in the US, if learned judges make the decisions instead of a jury, the results may well be different.

Really, no one is going to benefit and there may well be detriment, if we allow patents to get the better of us and stifle innovation and hinder the development of new products and services at lower costs.
It would be a travesty of sorts and ironic indeed if Apple is now seen as a technology inhibitor instead. Beware!

A QUESTION OF BUSINESS By P. GUNASEGARAM starbiz@thestar.com.my


P Gunasegaram is an iPhone user but only because the service provider gave such a good deal.

 Japanese court rules for Samsung over Apple


In this Aug. 25, 2011 file photo a lawyer holds an Apple iPad and a Samsung Tablet-PC at a court in Duesseldorf, Germany. The Duesseldorf state court ruled Tuesday, Jan. 31, 2012, that neither the South Korean company‘s Galaxy Tab 10.1 nor the Galaxy Tab 8.9 could be sold in Germany because they were in violation of unfair competition laws. A German appeals court has upheld a decision prohibiting Samsung Electronics Co. from selling two of its tablet computers in Germany, agreeing with Apple Inc. that they too closely resemble the iPad2. (AP)

Samsung wins one battle in the multinational conflict over patent and innovation


By Jeong Nam-ku, Tokyo correspondent


A Japanese court has ruled in favor of Samsung over Apple in a patent lawsuit. In the August 31 verdict, Tamotsu Shoji, the Tokyo District judge, declined Apple’s claim that “8 models of Samsung Galaxy series infringed on Apple’s patents.”

Apple had sued Samsung for infringing on its synchronization of music and other data with remote servers. It asserted that “Samsung’s products use Apple’s technologies of synchronization, which constitutes patent infringement,” and demanded both compensation of 100 million Japanese Yen (around US$1.27 million) and a block on eight Samsung products.

According to Jiji Press, judge Tamotsu stated, “Samsung’s products are technologically distinct from Apple and can’t be considered infringements.”

As a first trial, this does not hold much importance beyond being an indication of what the final verdict might end up being. However, because the verdict ordered a ‘dismissal’ on Apple’s injunction, there is only a slight possibility for an overturn in the final verdict.

Apple has also sued Samsung for infringing on its ‘bounce back (technology that springs back when the document has reached the end)’ patent, a claim that is still ongoing.

This verdict is the first ruling out of the 9 lawsuits Apple and Samsung Electronics have against each other. Samsung also filed lawsuits against Apple in April and October of 2011, arguing that Apple also infringed on 6 of Samsung’s patents.

Samsung and Apple have ongoing lawsuits in different 10 countries. In the US, a judge ruled that Samsung had infringed Apple patents, ordering the Korean electronics giant to pay $1.05 billion in damages.  

Translated by Yoo Hey-rim, Hankyoreh English intern

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