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Saturday 8 February 2014

Interesting times in East Asia

South-East Asia is in a strategically unenviable spot – too small to shape North-East Asia, and too near to it to avoid the havoc of conflict there.

Troubled waters: South Korea conducting a drill to guard a maritime science research station set up on the South Korea-controlled underwater reef of Ieodo. Conflicts can result from miscalculation, misperception or misinterpretation of an adversary’s actions or intentions. -EPA

IF outright aggression between nations often results in conflict, conflicts need not result directly from aggression alone.

Conflicts also arise from doubts, uncertainty and lingering suspicions. They can result from miscalculation, misperception or misinterpretation of an adversary’s actions or intentions.

Several of these “triggers” are on full display in North-East Asia today. Contributory factors include historical grievances between Japan and its immediate neighbours China and the Koreas, China’s growth and assertiveness, Japan’s brashness, Korea’s sensitivities and US ties to Japanese security interests.

That these countries are major players does not insure against open conflict between them. These major powers have the means to initiate and sustain full-scale war.

Nor is the location of potential conflict in North-East Asia a comfort to South-East Asia. Whether individually or together, Asean countries are not strong enough to deter or resolve such conflict, yet are not sufficiently far away to avoid its fallout.

Several of the disputes stem from Japan’s 2012 nationalisation of the Senkaku/Diaoyu/Diaoyutai islands also claimed by China and Taiwan in the East China Sea. As with other provocations, this occurred against the backdrop of Japanese atrocities against Chinese and Korean populations during the Second World War.

Then last November, China declared an Air Defence Identification Zone (ADIZ) over disputed islands and waters. After the United States declared the first ADIZ in 1950, Britain, Canada, India, Japan, Norway, Pakistan, South Korea and Taiwan followed. 

A country’s ADIZ requires foreign civilian vessels to identify themselves before entering. Essentially controversial and provocative, it is unilateral, unregulated and unauthorised multilaterally.

Beijing presumably thought that all countries had equal rights to declare such a zone. It may not have anticipated the protests it received, particularly from countries that had done the same thing before.

In December, Chinese and US warships narrowly avoided a collision. Despite both countries downplaying the incident subsequently, different versions of the event resulted.

Spats had erupted between China and Vietnam, and the Philippines, over the People’s Liberation Army (PLA) Navy’s presence in disputed territories in the South China Sea. Then in mid-2013, a China-Vietnam summit cooled tensions, leaving the Philippines somewhat in the cold.

But as if to sow doubts about Beijing’s own diplomatic competence, PLA(N) ships were reported in disputed waters off Sarawak late last year and early this year. This surprised Malaysian diplomatic and policy circles, since China had previously avoided upsetting Malaysia.

Countries in the region puzzle over why China is putting on such provocations, beyond testing the reactions of the other claimant countries. However, such tests can be made by other countries as well.

Late last month, Japan’s Asahi Shimbun newspaper reported that China was preparing to declare an ADIZ in the South China Sea. The area includes disputed islands and waters claimed by China, Taiwan, Malaysia, Brunei, the Philippines and Vietnam.

The report suggested the new ADIZ would initially cover the Paracel Islands and eventual­ly include virtually the whole sea. Beijing immediately retorted, warning Japan against spreading baseless rumours.

The Japanese report was either a truthful account or an attempt to test China’s response. That response has been clear enough.

The Japanese government, meanwhile, has been working hard producing its share of follies and fumbles.

In mid-December, Tokyo called a meeting with Asean countries to discuss defence concerns vis-à-vis China. That meeting flopped, as Asean leaders downplayed the defence aspect and preferred discussing economic relations with Japan.

Then after Prime Minister Shinzo Abe’s controversial visit to the Yasukuni Shrine in December, Tokyo announced plans to nationalise another 280 islands. It coincided with the National Security Council’s launch to streamline the operations of security agencies and military forces under the office of the nationalist Abe.

That month, Abe criticised China’s ADIZ, calling it an attempt to change the regional status quo “by force”. Observers in the region were baffled by Tokyo’s definition of “force”.

Then the Japanese government revised textbooks to instruct schoolchildren that the islands in dispute with other countries were “an inherent part” of Japan. That again brought Beijing and Seoul together to condemn Tokyo.

At the same time, Japan planned military exercises with US and Indian forces, incorporating a US$2bil (RM6.65bil) loan to India. Days later, Tokyo planned more military exercises with US and Australian forces.

Such military responses with major countries outside East Asia do nothing to improve fraying relations within the region. But that disconnect apparently fails to concern policymakers in Tokyo.

Within Japan, Abe’s government is expanding its military forces over the Nansei Islands, covering Okinawa and the Senkakus. But reactionary nationalists had long seen the restrictions of Japan’s post-war “pacifist” Constitution as a hindrance.

Abe is now on a personal crusade to revise the Constitution to allow for a more assertive military. In his “historic mission”, Abe’s target is Article 9 which bans the use of military force to resolve disputes abroad.

The problem for Abe: a news survey last month showed 53.8% of the Japanese public opposing changes to the Constitution. How would a democratic Japan reject that majority view?

Abe seeks changes to permit Japanese force­s to make pre-emptive strikes, amounting to unilateral attacks on another country where self-defence may not be invoked.

After the US government advised US commercial airlines in November to abide by China’s ADIZ, Tokyo expressed bewilderment. Abe promptly concluded that the US had made no such decision.

Reports early this month said that Japan and the US had agreed to ignore China’s ADIZ in their military manoeuvres. But an ADIZ customarily applies to civilian, not military, vessels.

In other matters, however, there has been less agreement between Washington and Tokyo. A senior US military official warned against revising Japan’s Constitution. Since the overriding purpose was to build a trilateral alliance in North-East Asia comprising the US, Japan and South Korea to alienate China, a revised Japanese Constitution would instead alienate South Korea and disrupt the alliance.

In December, the US expressed “disappoint­ment” over Abe’s visit to the controversial Yasukuni war shrine. The following month, Ambassador Caroline Kennedy objected to the cruelty of Japan’s annual dolphin hunt, provoking protests.

Three US Congressmen have lobbied Secretary of State John Kerry to address the “comfort women” issue with Japan. It involved more than 200,000 Korean women and girls who had been sexually abused by Imperial Japanese forces.

When NHK broadcast chief Katsuto Momii trivialised the issue, suggesting Japan’s wartime actions were acceptable, he caused more controversy. Momii was Abe’s pick for the top media job.

Kerry is due in China and South Korea in a week to discuss North Korea. Japanese observers note that he will be bypassing Tokyo. However, Foreign Minister Fumio Kishida was in Washington on Friday to discuss with Kerry the Abe-Obama summit in Tokyo in April. Abe has found a compelling need to reaffirm bilateral ties with the US.

While the scheduled summit will bear on the “US pivot” to East Asia, other countries may also do a pivot or at least a pirouette. Russian Prime Minister Dmitry Medvedev has directed major state-owned companies to relocate their head offices to Russia’s far east to help develop the region.

Where political and economic concerns converge, strategic considerations are never far behind. Such concerns, never lacking in East Asia, are now set to multiply.

 Behind The Headlines by Bunn Nagara Asia News Network

  • Bunn Nagara is a Senior Fellow at the Institute of Strategic and International Studies (ISIS) Malaysia.
  • The views expressed are entirely the writer's own. 
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Rosy outlook for Penang 2014: Strong growth, rise in FDI seen


A roundtable organised by KPMG Penang this week at KPMG new office, the Hunza Tower in Kelawei Road, George Town concludes that Penang will continue to enjoy high economic growth in 2014 and attract foreign direct investors.

Its tourism and property sectors will stay buoyant this year and the recovery in its electrical and electronic sector will continue into 2014.

Penang’s GDP growth in 2013 is estimated to be slightly less than 5%, according to official data.

“Penang remains a highly attractive location for local and foreign investors alike. It is also noteworthy that Penang ranks as one of the top emerging business processing locations worldwide.

“We certainly see healthy prospects for Penang across several industries,” said Johan Idris, managing partner of KPMG in Malaysia.

Penang’s property sector was also expected to maintain its 2013 growth momentum through 2014, he added in a KPMG statement this week.

“The uptrend in businesses and Penang as a desirable location has led to the consistently high demand for both residential and commercial properties on the island.

KPMG Penang, which highlighted tourism as a key sector for the state, expected tourism to remain a mainstay for the state in terms of revenue.

“As a designated UNESCO World Heritage site since 2008, tourist arrivals have steadily increased 14% as at October 2013 recording 4.4 million tourists.

“Penang’s hospitality industry is expected to chalk good returns, particularly as occupancy rates are slated for an upswing. Tourist arrivals are not limited to the ASEAN region but also from across the globe.”

KPMG Penang’s partner, Ooi Kok Seng, said: “The electrical and engineering sector, specifically solar energy equipment manufacturers, has seen a renewed demand.

“We believe that the positive turnaround will continue into 2014 due to the government’s allocation of additional land bank in Batu Kawan. Slated for development, Batu Kawan is an extension of the Bayan Lepas Free Trade Zone which is currently facing limited land space due to rapid expansion.”

KPMG Penang also said foreign direct investments (FDIs) were expected to escalate in 2014 as a result of the completion of major restructuring projects in Penang.

It foresaw additional advisory work in relation to mergers and acquisitions (M&A), transaction and restructuring projects. –The Edge

Rosy outlook for Penang


PENANG can expect strong economic growth this year following the upgrade in ranking by Moody’s Investor Service outlook in November.

KPMG Penang Partner-in-Charge Ooi Kok Sheng said the rating upgrade was an encouraging sign for the country.

“With active steps taken by the Government to implement fiscal reforms, Malaysia remains resilient amidst global economic uncertainty,” said Ooi.

He was speaking during KPMG Penang’s inaugural Economic Outlook Roundtable session at their new office at the Hunza Tower in Kelawei Road, George Town.

“Penang remains a highly attractive location for local and foreign investors alike.

“It is also noteworthy that Penang ranks as one of the top emering business processing locations worldwide.”

He said KPMG Penang saw tourism as a key sector for the state and expected it to remain as the mainstay for the state government in terms of revenue.

“Penang’s hospitality industry is expected to chalk good returns, particularly as occupancy rates are slated for an upswing.

“Tourist arrivals are not limited to the Asean region. The state has many visitors from all over the globe.”

Ooi also anticipated a sustained demand for audit, tax and advisory work in 2014.

“With Penang as a manufacturing and export hub for the northern region and dubbed the semiconductor Silicon Valley of Malaysia, many public-listed companies have based their operations in the state,” he said.

Malaysian Association Hotels (Penang Chapter) chairman Mary Ann Harris said prospects for the state’s tourism sector looked good in Visit Malaysia Year 2014.

“However, we are not without our problems as we are in urgent need of a viable public transportation system,” said Harris.

Penang Rehda chairman Datuk Jerry Chan said the state should benchmark according to international standards, rather than local.

“We have been noted as one of the best food destinations in the world and one of the most liveable cities in the world,” he said.

“It is time for us to set a global benchmark in other sectors.”

- The Star/Asia News Network

'Penang set for healthy growth'


THE opening of the Second Penang Bridge, six new hotels and an influx of medical tourists into the state are expected to keep Penang's economy healthy this year, say captains of various industries.

Malaysian Association of Hotels (MAH) Penang chapter chairman Dr Mary Ann Harris said the soon-to-be opened longest bridge in Southeast Asia is expected to be a tourism draw.

"There is definitely going to be more tourists drawn to the new bridge and we expect many of them to participate in the Penang Bridge International Marathon 2014, which is expected to be held at the second bridge," she said.

The RM4.5 billion Second Penang Bridge, which connects Batu Maung on the island to Batu Kawan in the mainland, serves as a second land crossing after the first Penang Bridge was opened in 1985.

Harris was speaking after presenting Penang's economic outlook for 2014 at a roundtable session hosted by audit, tax and advisory firm KPMG Penang here yesterday.

The roundtable, which was opened by state executive councillor Datuk Abdul Malik Abdul Kassim; also saw presentations from the Real Estate and Housing Developers Association (Rehda), Penang branch chairman, Datuk Jerry Chan; the Free Industrial Zone, Penang, Companies' Association president Heng Huck Lee; investPenang general manager Loo Lee Lian; and Malaysian American Electronics Industry (MAEI) Association chairman Datuk Wong Siew Hai.

Also present were KPMG Malaysia managing partner Johan Idris and KPMG's northern region partner-in-charge Ooi Kok Seng.

Harris said the state's tourism sector is expected to see the entry of six new hotels of two- to five-star, and the availability of some 1,000 room keys.

MAH Penang's membership is made up of 50 hotels with a total of 10,000 room keys.

Among the new properties expected to open their doors include the Royale Bintang and Rice Miller Hotel, which are both located at Weld Quay.

Other projects are said to include a hotel in Seberang Jaya and serviced apartments in Teluk Kumbar on the island.

Meanwhile, Penang Health Association chairman Datuk Dr Chan Kok Ewe told the roundtable session that seven private hospitals in Penang (with a total of over 1,000 beds), which are members of the association, had recorded RM370 million in revenue from medical tourists last year.

"Prospects for this sector are encouraging. There have also been suggestions to make Yangon in Myanmar a sister city of George Town in Penang, due to the shared heritage of the two cities.

"There is also anticipated demand from medical tourists in China but whether our hospitals, which have been making significant investments with expansion programmes to cater to medical tourists, can cope with the capacity is the question," he added, saying that private hospitals in the state are also experiencing manpower shortage.

Meanwhile, Johan in his welcoming address, said KPMG Penang expects the state's property sector to maintain its momentum throughout this year.

"The industry has certainly fared positively with healthy uptake in retail, residential and industrial lots and is indeed diverse, given the many types of businesses operating in there."

- Business Times

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There’s no place like Penang, said Briton

Briton lured by multiracial culture to settle down in the Pearl of the Orient

Home sweet home: Makins, in his Scottish kilt, posing for a photograph with several hikers during a recent hiking trip up the Moon Gate Point Five trail in the Penang Municipal Park.

BRITON Jonathan Makins has travelled far and wide and lived in various places around the world but Penang has a special place in his heart.

Makins, 59, born in Italy to a Scottish father and an English mother, has been living in Penang since February 2012.

He hopes to continue staying in George Town, which he now calls home.

Currently enrolled under the ‘Malaysia, My Second Home’ programme, Makins has lived and worked in Africa, London and Sweden.

The avid traveller, who considers himself a global citizen, also spent four years in Bangkok before coming to Penang.

“I wanted to stay in an Asian country as I love the climate here, which is better than in Europe,” he said.

“Besides, my Thai visa was coming to an end and I was also not very happy in Thailand.

“I visited Penang about four times before settling here, and I find that it is the right place for me.

“I visited Kuching, Sarawak, once but it is very quiet, while travelling to other areas there takes long hours. I have also been to Kuala Lumpur a few times but it was too noisy and dusty,” he said.

After he was born, Makins’ parents briefly brought him back to England before taking him to Tanzania when he was two.

“After Tanzania, I was raised in Nairobi, the capital of Kenya, when I was about six, before I left for school in England at the age of 10, while my parents remained in Kenya.

“After university, I worked as a civil and structural engineer in South Africa and Botswana for about nine years before becoming a cabinetmaker in London, England, for seven years,” he said.

Makins then went on to become an English teacher in Sweden for nine years before settling down in Thailand, where he spent the following four years.

“Having been to so many places, I consider myself a citizen of the world.

“As of now, I hope to continue staying in Penang. I love how it is so multiracial and everyone has friends of different races, religion and beliefs,” he said, adding that among his favourite delicacies were Indian vegetarian meals and simple home-cooked Chinese dishes.

Makins, who lives on his own at a condominium unit in Tanjung Bungah here, said besides the unique culture and heritage, he also found it easier ‘to make friends’ with the locals in Penang.

“The people here are friendlier and more hospitable when compared to some in other places that I have been to,” he added.

To keep fit, Makins goes hiking at the Moon Gate Point Five trail in the Penang Municipal Park at least twice a week, and recently he drew curious stares from hikers when he went there dressed in a Scottish kilt on Christmas Day.

“I also swim and keep in touch with friends through the Internet during my free time. Music is my main companion.

“I play the flute and am teaching myself the piano,” he said.

Makins, who was born in the Year of the Horse, added that he travelled to Bedong, Kedah, for the Chinese New Year celebrations with some friends.

By  Cavina Lim The Star/Asia News Network