Sometimes its so refreshing to travel. Had the chance to spend a few days in Kuala Lumpur.
Malaysia is still Malaysia. They've got a good economy going for them, but this thing about protection of Malays seems a bit antiquated. That European envoy who commented on the ills of this system got plenty of coverage in the Malaysian media and plenty of attention from Malaysians, including ministers and their cohorts. And they all rejected his comment. But will the protectionist policy work though? And who are they protecting the Malays against? Apparently Malaysian Chinese, who are also their own Malaysian citizens.
They keep saying that they need Foreign Direct Investments (FDI) to help them with their growth targets so as to sustain economic well being and employment levels in their countries (such as Malaysia, Indonesia, Thailand, Vietnam & the other Asian economies). However they keep citing percentage growth rather than what the FDIs are doing to help their economies. A certain minister would say they managed to increase FDI by "x" percentage points over that of last year or over the figure 5 years ago. But do they realize that if there had not been such antiquated protectionist policies, FDI figures could have, and would probably have reached, a different level?
As long as they look politically good, as long as they can report an increment in FDI, they're happy. They never look at what others are attracting in terms of FDI. Have you ever heard the Malaysian trade minister saying that FDI growth in Malaysia is a "net" gain over those of the other Asian countries? That would really have qualifies as an achievement, right? Not percentage growth with our "eyes wide shut"? What's the point of boasting about the growth in FDI in your country when the others in Asia are enjoying growth in real terms, terms which accord them the opportunity to not only grow their economies but also to restructure them so they are better geared towards the era of globalisation and to better handle the threats of emerging economic behemoths like India and China?
This isn't only about Malaysia. The Indonesians, and possibly the Thais, are the same. Just because they had an extra one or two billion in FDI, they're happy and able to report to their respective parliaments and people that they've done great jobs in attracting foreign investments ( and hence deserve to be re-elected). The technocrats in those governments are Harvard trained, or trained in a foreign tertiary institution of equivalent stature. Surely they must have their mathematical models designed for "non protectionist" parameters to predict investments and growth in the ideal scenario.
This all boils down to politics I guess; but the immaturity of their growing middle class cannot be absolved of blame as well. This "new found" middle class is easily manipulated; and in the case of Indonesia and possibly Thailand as well, they can be easily coerced or bribed into speaking on behalf of their politicians' ends rather than what is REALLY good for their country and for their people. Sad isn't it, considering they have so many people below the poverty line who are not likely to be able to get out of the poverty trap in their lifetimes, or maybe even the lifetimes of their children?
Perhaps they'll have to stick to lontong sayur for the rest of their lives, which isn't bad for nutrition. Most of the impoverished cannot even afford lontong sayur. They need money to buy rice to make lontong and have to till their lands for the vegetables (sayur), assuming their lands have not been appropriated by corrupt officials to build golf courses or shopping malls.
But why do they elect governments after governments who have no wish to tend to their interests? They don't, actually. For a few US Dollars, these poor and impoverished people are prepared to sell their votes to the highest bidder, thereby letting them decide their fates, as well as theirs of their children.
Money politics, they say. So do they have any hope at all?
Saturday 30 June 2007
Tuesday 19 June 2007
Where's the Chinese bubble & when will it burst
"Sir" Dr. Marc Faber is probably right - I think he deserves the "SIR" that I've added. Despite what was said by Messrs. Alan Greenspan, Li Ka Shing and other eminent economists and politicians, the Chinese bubble appears to be here to stay.
Considering that the savings rate in China is still much higher than what they've put into the stock markets (if I remember "Sir" Marc correctly, it's in the 70 to 80 percent region), it isn't surprising that "Sir" Marc's opinion differs from that of Messrs Greenspan,, Li and the others. Mr. Li, the richest man in Hongkong said on TV that PEs of 50 to 60 times cannot conceivably be unsustainable in China. But does the conventional rules of economics apply to the new-China we're seeing today? We'll have to wait and see.
Great thinkers, the likes of Adam Smith and Milton Keynes, studied trends and theorized the rules of macro and micro economics. But how could they have foreseen that the critical masses of one billion plus people in China and India can radically change the ground rules of 20th Century economic theories? It's not unlike the chain reaction in an atom or hydrogen bomb, I thought!
Remember what happened when stock markets went through continual downside corrections when oil prices shot up after escalating conflicts in the Middle East in the past, and most recently 2006? Then there's this latest round of oil price increases caused by Iran's seemingly uncompromising stance (so far at least) in their pursuit of nuclear "advancement" which hardly dented the global stock markets.
The world is going through changes, and global economies are constantly in a state of flux. Should we adapt to this changing world and start questioning economic theories of the years or decades gone by? Or do we hang on to these theories to lead us to the light at the end of the tunnel?
There are plenty of learned people on earth who constantly analyze and hypothesize through the use of sophisticated mathematical models and equations. I'm quite sure they are doing a great job, and earning lots of money along the way. But how many of these are open minded enough to realign their mindsets the way "Sir" Dr. Marc Faber did?
Don't get me wrong. I'm not a die hard fan of "Sir" Marc. But, I do honestly feel that he makes sense a lot of times I get to see and hear him comment. No disrespect to Messrs Greenspan and Li, whom I'm also a BIG fan of, mainly because of their achievements, stature and influence on this globalized economy which we're all a part of.
"So keep rocking "Sir" Marc", I would say to the man if I get to meet him face to face one day.
Considering that the savings rate in China is still much higher than what they've put into the stock markets (if I remember "Sir" Marc correctly, it's in the 70 to 80 percent region), it isn't surprising that "Sir" Marc's opinion differs from that of Messrs Greenspan,, Li and the others. Mr. Li, the richest man in Hongkong said on TV that PEs of 50 to 60 times cannot conceivably be unsustainable in China. But does the conventional rules of economics apply to the new-China we're seeing today? We'll have to wait and see.
Great thinkers, the likes of Adam Smith and Milton Keynes, studied trends and theorized the rules of macro and micro economics. But how could they have foreseen that the critical masses of one billion plus people in China and India can radically change the ground rules of 20th Century economic theories? It's not unlike the chain reaction in an atom or hydrogen bomb, I thought!
Remember what happened when stock markets went through continual downside corrections when oil prices shot up after escalating conflicts in the Middle East in the past, and most recently 2006? Then there's this latest round of oil price increases caused by Iran's seemingly uncompromising stance (so far at least) in their pursuit of nuclear "advancement" which hardly dented the global stock markets.
The world is going through changes, and global economies are constantly in a state of flux. Should we adapt to this changing world and start questioning economic theories of the years or decades gone by? Or do we hang on to these theories to lead us to the light at the end of the tunnel?
There are plenty of learned people on earth who constantly analyze and hypothesize through the use of sophisticated mathematical models and equations. I'm quite sure they are doing a great job, and earning lots of money along the way. But how many of these are open minded enough to realign their mindsets the way "Sir" Dr. Marc Faber did?
Don't get me wrong. I'm not a die hard fan of "Sir" Marc. But, I do honestly feel that he makes sense a lot of times I get to see and hear him comment. No disrespect to Messrs Greenspan and Li, whom I'm also a BIG fan of, mainly because of their achievements, stature and influence on this globalized economy which we're all a part of.
"So keep rocking "Sir" Marc", I would say to the man if I get to meet him face to face one day.
Saturday 2 June 2007
Thai politics - need a compass?
The Thai constitutional court has ruled at last. And the TRT party has lost, as expected. So where are the Thais headed?
Somewhat like Japan where the cushy bureaucrats and politicians would rather retain the status quo. Look at what happened to that young entrepreneur who tried to capitalize on the internet boom in Japan? He came up with something unconventional, and perhaps more in tune with current economic environment; yet the "old timers" can't seem to accept this young radical chap in changing, or perhaps reforming, the business landscape. Soon, it turned political, and a "sort of" witch hunt ensued. Obviously he was prosecuted.
Look at Thaksin, minus the alleged corrupt practises. He and his TRT party is the only one to have won a parliamentary majority in a land so used to coalition governments and coup d'etats. What he did to the poor northern peasants doesn't seem to ring the same bells with the "old boys" in Bangkok.
And then this sage about Singapore's Temasek Holdings who bought over Thaksin's telecommunications company, which also included control of a satellite. Suddenly the nation is gripped with nationalism and are being led to believe that Singapore can actually tap into their satellite communications detrimental to the security of Thailand. Common!
Like what the Indonesian Defense Minister said when he was lobbying his parliament to rectify the defense treaty signed between Singapore and Indonesia. Why should Indonesia feel threatened? It was reported in the press that he said words to the effect that Singapore has no offensive aspirations; and if Singapore were bombed, the island will sink. Which is true.
Singapore only has 4 million odd people while Indonesia has 200 million plus. Even if Sun Tzu were alive, he would have recommended that Singapore avoid direct confrontation and seek diplomatic means of resolving matters. Or if Singapore can, seek alliance with an immediate power who might counter balance the inferior numbers of Singapore viz-a-viz Indonesia. Or perhaps protect Singapore from further intimidation by her bigger neighbors. But who can this power be?
The USA is too far away and has her plates full with Iraq, North Korea and Iran. Australia isn't in a position to be that power for it need its neighbor Indonesia to ensure stability and to cooperate in anti-terrorism efforts. China? Well not for the next 30 years anyway for China is busy with its economic agenda and has to manage the deep economic divide between her rural poor and the urban rich. Furthermore, she also has to worry about the growing pro-independence drift in Taiwan.
Indonesia has become emboldened by Thailand's moves against Temasek Singapore. Suddenly, their own telcos like Indosat and Telkomsel are being accused of price fixing just because Temasek and its subsidiaries own the two companies. Is this the true spirit of a free market, or nationalist feelings at play, or is it part of a grander scheme orchestrated by some big Russian telco in cohort with corrupt Indonesian officials as reported in the Straits Times of Singapore and the Jakarta Post of Indonesia? Who knows.
One can never be certain in Asia. So many factors are in play. A young democracy in Indonesia, a junta in Thailand trying to appease their people and the international community, communist Vietnam trying to ride the wave and benefit from the allure of capitalism, a reforming Malaysia whose "somewhat militant" former premier handpicked a more reform minded premier to succeed him. Then there's China and India. The economic powerhouses of the new millennium!
But we mustn't forget the power the old kingdoms wield! Look at Iran. The slightest hint of nuclear armament is enough to throw the whole world into disarray. The USA, Japan, China, India and almost all economies in the world are dependent on oil to keep their economies growing. The more they need oil, the more petrodollars the Middle East will earn.
Perhaps a sort of holocaust will help to re-balance the whole equation. Perhaps. But the costs will be too heavy to mankind than mankind can handle.
Somewhat like Japan where the cushy bureaucrats and politicians would rather retain the status quo. Look at what happened to that young entrepreneur who tried to capitalize on the internet boom in Japan? He came up with something unconventional, and perhaps more in tune with current economic environment; yet the "old timers" can't seem to accept this young radical chap in changing, or perhaps reforming, the business landscape. Soon, it turned political, and a "sort of" witch hunt ensued. Obviously he was prosecuted.
Look at Thaksin, minus the alleged corrupt practises. He and his TRT party is the only one to have won a parliamentary majority in a land so used to coalition governments and coup d'etats. What he did to the poor northern peasants doesn't seem to ring the same bells with the "old boys" in Bangkok.
And then this sage about Singapore's Temasek Holdings who bought over Thaksin's telecommunications company, which also included control of a satellite. Suddenly the nation is gripped with nationalism and are being led to believe that Singapore can actually tap into their satellite communications detrimental to the security of Thailand. Common!
Like what the Indonesian Defense Minister said when he was lobbying his parliament to rectify the defense treaty signed between Singapore and Indonesia. Why should Indonesia feel threatened? It was reported in the press that he said words to the effect that Singapore has no offensive aspirations; and if Singapore were bombed, the island will sink. Which is true.
Singapore only has 4 million odd people while Indonesia has 200 million plus. Even if Sun Tzu were alive, he would have recommended that Singapore avoid direct confrontation and seek diplomatic means of resolving matters. Or if Singapore can, seek alliance with an immediate power who might counter balance the inferior numbers of Singapore viz-a-viz Indonesia. Or perhaps protect Singapore from further intimidation by her bigger neighbors. But who can this power be?
The USA is too far away and has her plates full with Iraq, North Korea and Iran. Australia isn't in a position to be that power for it need its neighbor Indonesia to ensure stability and to cooperate in anti-terrorism efforts. China? Well not for the next 30 years anyway for China is busy with its economic agenda and has to manage the deep economic divide between her rural poor and the urban rich. Furthermore, she also has to worry about the growing pro-independence drift in Taiwan.
Indonesia has become emboldened by Thailand's moves against Temasek Singapore. Suddenly, their own telcos like Indosat and Telkomsel are being accused of price fixing just because Temasek and its subsidiaries own the two companies. Is this the true spirit of a free market, or nationalist feelings at play, or is it part of a grander scheme orchestrated by some big Russian telco in cohort with corrupt Indonesian officials as reported in the Straits Times of Singapore and the Jakarta Post of Indonesia? Who knows.
One can never be certain in Asia. So many factors are in play. A young democracy in Indonesia, a junta in Thailand trying to appease their people and the international community, communist Vietnam trying to ride the wave and benefit from the allure of capitalism, a reforming Malaysia whose "somewhat militant" former premier handpicked a more reform minded premier to succeed him. Then there's China and India. The economic powerhouses of the new millennium!
But we mustn't forget the power the old kingdoms wield! Look at Iran. The slightest hint of nuclear armament is enough to throw the whole world into disarray. The USA, Japan, China, India and almost all economies in the world are dependent on oil to keep their economies growing. The more they need oil, the more petrodollars the Middle East will earn.
Perhaps a sort of holocaust will help to re-balance the whole equation. Perhaps. But the costs will be too heavy to mankind than mankind can handle.
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