RECESSION WITH MALAYSIAKINI: changing disaster recovery landscape

Businesses have been urged not to reduce spending on disaster recovery and business continuity, despite the impact of the economic downturn.

Many experts believe that the current business climate makes a coherent disaster recovery plan more important than ever before, as John Robinson of Inoni states in a recent article on continuitycentral.com.

According to Mr Robinson, "recession amplifies risk" and should put renewed emphasis on business continuity plans among enterprise leaders.

However, many organisations mistakenly assume that a business making less money will therefore need to spend less on disaster recovery.

The industry expert describes this reasoning as "convenient but invalid", stating that although the landscape for risk assessment and protection has clearly changed, businesses are also likely to be less resilient in the wake of the financial crisis.

As a result, disaster recovery systems should not be considered a luxury or a "dispensable overhead", but are in fact an essential tool for ensuring business survival in troubled times.

"We need to be more aware of the new risks we face and ensure we have the information we need to negotiate them," Mr Robinson comments.

Nicholas Tan, general manager of IBM Singapore's general business division, recently identified several typical flaws in the attitudes of smaller enterprises towards disaster recovery.

Writing in the Business Times, he concedes that it may be "human nature" for small firms to save money by neglecting to develop a business continuity plan.

However, he also believes that no company can really afford to be without some form of disaster recovery planning in the event of a power outage or other technological upheaval.

"Stop and think about what it would cost your small or mid-size business to be without power or IT systems for 24 hours," Mr Tan states.

The IBM expert also claims that recent developments in technology are making disaster recovery in the small business sector more accessible and straightforward than ever before, even for the inexperienced risk planner.

"Affordable and feature-rich software, server and storage technologies mean that businesses can start small, establish a base level of disaster recovery, and build on it over time," he explains.

Mr Tan disputes the claim that "only big companies can afford it" when it comes to disaster recovery.

Like Mr Robinson, he stresses that business continuity is not a luxury confined to the large enterprise sector, but something that all organisations should regard as essential.

"Today's new hosting models and cost-effective off-site backup and recovery systems mean peace of mind is available for companies of any size," Mr Tan explains.

Alan Calder, chief executive of IT Governance, believes that business continuity forms an essential part of an enterprise's IT security profile. He claims that neglecting this area can have potentially fatal consequences for businesses of all kinds.

In a recent article on securitypark.net, he states:"Those organisations concentrating on a search for cost cuts in their risk and business continuity management activities are, in effect, accelerating their own possible demise."

[ el ]

SURVIVAL WITH MALAYSIAKINI: going through economic depression

Over a recent breakfast with the boys, discussion turned to economic depression – what each of us might do for a living if worse comes to worst. Some of the great strengths of human beings are resourcefulness and creativity, without which we would never have scrambled out of the savannah and invented the Chevy Nova.

When the economy is strong and many jobs are available, our creativity is often put to rest. We find out what other people are offering, and shop for jobs like we shop for apples. When we find one that looks good, we choose it. When the economy is weak and few jobs are available, our creativity is heightened; if not, we succumb to mental depression and visions of Hooverville. So keeping an upbeat attitude is not just half the battle, it’s the whole shebang.

Our Friday morning, post-yoga breakfast group consists of aging men who love to talk, but not about sports or cars. This group, as a post-yoga group would, talks metaphysics, personality disorders, recent surgeries, the benefits and liabilities of bacon, the humor of tragedy and – based on the jokes that are told – the tragedy of humor.

As to the depression survival ideas, they flowed forth in abundance. “Dumpster diving for pizzas outside Pizza Shack,” said Michael. “Growing bean sprouts, the super health food,” said Scott. “Writing financial bailout applications,” offered George. “I plan to be a beggar, and pray,” Ed said, bowing his head. “I’m moving to the jungle and going naked,” Mike pronounced. I suggested, “Selling Danishes from a pushcart, also roasted chestnuts and pretzels.” “I already have my depression job,” said Ira, “I teach school in Vallejo.”

All of us have things we know and things we can do. Some can cook, some know how to plant a vegetable garden. Others can fix a motor, build a table, wire a lamp, make a birdhouse, climb trees, whistle, recite poetry from memory, train dogs and so forth. Some of these things are useful in predepression jobs, but all are useful all the time to someone. In a depression, all these things form the deep pool of human talent that overcomes famine, war and disease. As the monetary system shifts and changes, it’s human talent that always saves the day and rescues humanity from the clutches of disaster. Except on Seinfeld.

Money, after all, is just a token for objects and activities. It has no intrinsic existence of its own, which is why it has any value at all. As a token, it can be used for anything, and thereby assume any form. This magical quality has made money the biggest celebrity of human culture. We think nothing of throwing away a dollar’s worth of leftovers, but would never throw away a dollar bill. This is because we know that leftovers are just leftovers, but a dollar bill can be anything.

In a depression economy, talents and ambition matter all the more. The talents don’t have to be extraordinary, because we simply need what others can do and others need what we can do. Our common humanity becomes more obvious, our need for each other more plain. Like Kramer tells Jerry, “I’m your buddy!”

[larry barnett]

STAKES WITH MALAYSIAKINI: trillion dollar US deficit

Whats at stake with Kuala Terengganu by election? We can discuss in Malaysiakini and come out with a long list. But trillion dollar deficit in US has caused ripples, and many think something worst could happen soon....

Lets see what
Reuters
got to say about
this massive deficits:

(Reuters) - President-elect Barack Obama has said trillion-dollar U.S. budget deficits could stretch into the coming years -- a prospect that some worry could wreak havoc on the dollar, interest rates and the country's top-notch credit rating.

The non-partisan Congressional Budget Office has also said the U.S. budget deficit will swell to a record $1.186 trillion in fiscal-year 2009 and come in at $703 billion in the 2010 fiscal year, which begins October 1, 2009.

The actual budget gaps for both years may be significantly wider as Washington prepares to jolt the economy with stimulus spending that could total $775 billion over two years.

Obama has promised a massive program of new public spending and tax cuts to pull the economy out of the current recession, likely to be the longest since the Great Depression.

The cost of ending the recession will be enormous deficits, potentially mortgaging the well-being of future generations, though some note that the United States has had to resort to huge borrowing when faced with such difficulties in the past.

Former Labor Secretary Robert Reich, an Obama transition adviser, said Congress should not be wary of borrowing to pay for a stimulus, pointing out that U.S. debt at the end of the World War Two was more than 100 percent of gross domestic product.

The U.S. public debt is currently around 40 percent of GDP. Still, the trillion-dollar deficit milestone has forced some to consider how things could go wrong.

The following are several scenarios that could result from runaway budget deficits:

FALLING U.S. CREDIT RATINGS:

A string of trillion-dollar deficits could undermine investors' faith that the U.S. government always pays its debts and put in danger the country's triple-A credit ratings. This could lead foreign investors to shun U.S. Treasuries, the bonds the government sells on the open market to finance its borrowing. Treasuries are currently expensive by historic standards since the financial and economic turmoil of the past year has boosted their global appeal as a safe-haven investment. Serious danger to U.S. credit ratings could send the debt market downward and burst what some are calling a bond-market bubble.

SKY-HIGH INTEREST RATES:

A loss of faith in U.S. government bonds would send interest rates throughout the economy soaring since Treasuries serve as the benchmark for loans in the private sector. A rout in that market would dramatically lift the cost of borrowing for buying homes, cars and paying for university education. If it happens any time soon, this in turn would jeopardize the Federal Reserve's efforts to stabilize the ailing economy.

DUMP THE DOLLAR:

A crisis of confidence in U.S. debt would devastate the dollar. The world's reserve currency, the greenback is used globally by countries and companies to pay for a wide range of basic commodities, most notably oil. If investors dumped U.S. debt, they could do the same with the dollar. A dollar crisis might end its status as the preeminent currency of world commerce, deeply undermining its value and further raising the cost of borrowing for the United States.

SOARING INFLATION:

A plummeting dollar and sky-rocketing interest rates could push the inflation rate through the roof. The United States imports far more than it exports and would be hard pressed to pay for oil and manufactured goods it buys from abroad with the greenback's value withering. Currently, though, rapidly falling prices, or deflation, appears to be a much more imminent problem than the more distant prospect of inflation. Continued... [ SCENARIOS: What's at stake with trillion-dollar US deficits Reuters ]

beritadarigunung

NEWYEAR WITH MALAYSIAKINI: a blowup worldwide.

As malaysiakini is inching into 2009 with advances into the protection of human rights and greater transparency in governance, the world is witnessing a gloom and a blowup.

2. Years ago, human rights has been extensively used as an acid test by the Americans on determining status of a country. Once China had been marked down. They bulldozed through with their brand of human rights. China is easily the biggest market now. If local politicians are eager into human rights and transparency, then by all means. For comparison sake, Singapore is quite an example to probe deeper, or Siam being closest may provide lessons into human rights, airport seizure, mass demonstrations, street politics and frequent change of government.

3. But worldwide, the scenario is definitely not all encouraging. Petrol is at lowest low. Workers are laid off. Even SIA is hinting at the idea of giving no pay leave to pilots. Billionaires became penniless. Read further:-

Dozens of the world's wealthiest lost billions in recent months, but these 10 distinguish themselves for some of the biggest flops.

It was a dreadful year for the world's wealthiest as markets and currencies around the world tumbled.

More than 300 of the 1,125 billionaires we tallied on our annual list last March have since lost at least $1 billion; several dozen lost more than $5 billion. The 10 richest from our 2008 rankings dropped some $150 billion of wealth, dragged down by steel tycoon Lakshmi Mittal, estranged brothers Mukesh and Anil Ambani and property baron K.P. Singh, who together dropped $100 billion. America's 25 biggest billionaire losers of 2008 lost a combined $167 billion.

But even in such an awful year, the stories of a few billionaires and now former billionaires stand out as particularly dreadful.

Take David Ross, one of the U.K.'s most successful entrepreneurs. Earlier this month, Ross notified four public companies in which he was a major shareholder and director that he had borrowed against his shares to fund real estate investments that had soured. He will likely have to sell some of those stakes to pay off his debts. So far he has resigned from three of the four boards and stepped down from his post as an Olympics adviser. His fortune, which we estimated at $1.4 billion in March, is now worth about $150 million.

Bjorgolfur Gudmundsson, former chairman and a large shareholder in Landsbanki, Iceland's second largest bank, saw the firm seized in October as the worst of the credit crisis tore through the island nation. The failure wiped out his $1.1 billion fortune. He has since had to put his holding company, Hansa, into voluntary liquidation and is selling his U.K. soccer team, West Ham.

Russians were some of the biggest losers in the past year. Vladimir Lisin's Novolipetsk Iron and Steel is down three-fourths since its June peak. Dmitry Rybolovlev's fertilizer company, Uralkali, has fallen 90% since it peaked around the same time.

But those losses pale compared with the troubles facing Oleg Deripaska. In March he was the world's ninth richest person and Russia's richest man, with a fortune we estimated to be worth $28 billion. Since then Deripaska has been forced to sell shares in Canadian carmaker Magna International and German construction firm Hotchief, and had to borrow $4.5 billion from a state-controlled bank to hold on to his stake in Norilsk Nickel. He will likely sell off additional assets to avoid losing even more of his fortune, now estimated at $10 billion. Or less.

The biggest loser of all was Anil Ambani. Touted on the cover of our 2008 billionaires issue for having added $24 billion to his fortune in one year, Ambani has dropped $30 billion since then. But don't worry too much. His Reliance Entertainment is investing $500 million in a new studio venture with Steven Spielberg's DreamWorks. Plus, he remains quite wealthy, worth $12 billion That's something many others can't claim.

In Pictures: Billionaire Blowups, 2008

1. Anil Ambani

March net worth: $42 billion
Current net worth: $12 billion

© AP Photo

Oleg Deripaska

The biggest billionaire gainer last March is now the year's biggest loser. Ambani lost $30 billion in the past nine months, more than anyone in the world. Stock of his telecom company dropped after his estranged brother helped scuttle a deal with African telecom MTN. It's quite an achievement in a year in which three of his fellow countrymen--estranged brother Mukesh, steel tycoon Lakshmi Mittal and Indian KP Singh, all of whom ranked earlier among the world's 10 richest--lost more than $20 billion apiece.

2. Oleg Deripaska

March net worth: $28 billion
Current net worth: less than $10 billion

Former metals trader survived Russia's gangster wars but may not withstand collapsing markets and heavy debts of at least $14 billion. Russia's one-time richest man recently received a $4.5 billion loan from a state-controlled bank in order to keep his 25% stake in Norilsk Nickel, which faced a margin call by Western banks from which he had borrowed. Other margin calls forced him to divest a $1.5 billion stake in Canadian carmaker Magna International and a $500 million stake in German construction company Hotchief. He's also selling stake in insurance company Inogsstrakh.

3. Anurag Dikshit

March net worth: $1.6 billion
Current net worth: $1 billion

Dikshit designed the software for PartyGaming's successful PartyPoker game, which allowed live gambling over the Web. He left the company and sold a chunk of shares in 2006, the year the U.S. government banned gaming. He recently pleaded guilty to violating U.S. gaming laws and agreed to forfeit $300 million. He could face up to two years in jail but apparently won't be sentenced until 2010. He has already paid $100 million of his fine and will pay the rest in two installments next year.

© Carl de Souza/AFP/Getty Images

Bjorgflur Gudmundsson

4. Bjorgflur Gudmundsson

March net worth: $1.1 billion
Current net worth: zero

The October collapse and government seizure of Iceland's second largest bank wiped out the $1.1 billion fortune of Gudmundsson, the bank's chairman and biggest shareholder, along with his son Thor. His holding company, Hansa, has since gone into voluntary liquidation and is looking for a buyer for its U.K. soccer team, West Ham. It's not the first time he's run into trouble. A former shipping executive, he was charged with fraud and embezzlement in relation to the firm's 1985 collapse, and was eventually found guilty on five minor counts and sentenced to 12 months' probation.

5. Luis Portillo

March net worth: $1.2 billion
Current net worth: $15 million

Spain's short-lived real estate gold rush left one of its most visible speculators holding a nearly empty bag. Portillo--who acquired real estate firm Inmocaral three years ago, then led the takeover of the larger Inmobiliaria Colonial in 2006--personally borrowed a reported $1.4 billion from more than a dozen banks during boom times, using his stock as collateral. He resigned as chairman in December 2007 and then tried to sell his stake to a Dubai fund earlier this year. When the deal fell through, he had to sell most of shares to pay debts.

Click here for the full list of the Billionaire Blowups of 2008.

beritadarigunung

Clock ticking for Chrysler and GM to slash debt or go bankrupt

By AUTO BAILOUT

Saturday December 20 2008

The clock is ticking for General Motors and Chrysler. The automakers have 102 days to slash debt, renegotiate labour contracts and lay plans to cut thousands of jobs or face a government-mandated bankruptcy.

The Bush administration threw them a $13.4bn lifeline from the US bank-bailout programme, with $4bn more for GM in February provided Congress expands that fund. In exchange, the government gets warrants that will allow it to profit if the rescue succeeds and seniority over much of the companies' debt if the effort fails.

Yesterday's move means the US will have wide authority to call the shots in the auto industry for the first time since the 1980s bailout of Chrysler Corp and keeps GM and Chrysler alive long enough for a broader reorganisation plan from the incoming Congress and President-elect Barack Obama.

Maryann Keller, an independent auto analyst and consultant in Greenwich, Connecticut said: "The restructuring they're going to have to go through will be huge. This is money to tide them over. They're going to come back for more money. That's when the government is going to have to decide whether they're viable businesses."

The White House stepped in after a compromise plan backed by President George W Bush and House Democrats failed to pass the Senate, thwarting Bush's aim to avoid a "disorderly" bankruptcy that would have further weakened the US economy.

Chrysler and GM have until March 31 to meet the government's conditions. Without an infusion of cash, the companies said they were only weeks away from insolvency.

GM is reeling from almost $73bn in losses since 2004 and a 22pc slump in US sales this year. The biggest US automaker reported $16.2bn in cash as of September 30, and needs $11bn to pay monthly bills.

Chief Executive Officer Rick Wagoner said: "Our focus now turns to rapidly and fully implementing our restructuring plan."

Cerberus Capital Management LP's Chrysler has been battered by a 28pc plunge in US sales through November, the most among major automakers. It ended the third quarter with $6.1bn in cash and needs at least $3bn to operate, Chief Executive Officer Robert Nardelli told Congress on November 18. Ford Motor Co has said it doesn't need emergency aid.

In exchange for the federal loans, the automakers must provide warrants for non-voting stock, limit executive pay, open up financial records, not issue dividends until the debt is repaid and give the government veto power over transactions larger than $100m.

Government debt will become senior to other borrowing, to the extent allowed by law, and the automakers must cut their debt by two-thirds in an equity exchange.

Changes

Bush also linked the assistance to changes in automakers' union agreements, stipulating that half of the companies' payments to a United Auto Workers retirement fund be made in equity.

A programme that pays UAW members when they don't work must be eliminated, and union labour costs and rules must be recrafted so they're competitive.

The requirements could be modified by negotiations with the union and debtholders.

GM will get $4bn by the December 29, $5.4bn by January 16 and the final $4bn by February 17, provided Congress agrees to release the second $350bn of the funds allocated for the $700bn Troubled Asset Relief Programme. (Bloomberg)

Clock ticking for Chrysler and GM to slash debt or go bankrupt
Irish Independent

Economic slump began earlier than thought

Census data from 2005-07 show signs of widespread downturn

By STEPHEN OHLEMACHER
THE ASSOCIATED PRESS

WASHINGTON -- Things really are bad all over -- and they had gone bad even before the housing and finance industries crashed and sent the economy into a tailspin.

New census data show that throughout the first half of the decade, the slumping economy touched nearly every community in the country. Incomes dropped while poverty and unemployment rose in the vast majority of the nation's cities and towns.

Small and medium-sized cities in the Midwest, already suffering from an ailing auto industry, were hit the hardest, with unemployment rates doubling or tripling in communities throughout Michigan, Ohio, Indiana and Illinois.

The numbers weren't as bad in other parts of country, but no region was spared, with incomes dropping as home prices escalated. The result: an unsustainable housing market that ultimately fueled the current economic crisis.

"For a while we were on a binge of living beyond our means," said David Wyss, chief economist at Standard and Poor's, the credit rating service. "We were financing our spending habits by treating houses like giant ATMs."

The data, which are being released Tuesday, constitute the first detailed economic, social and demographic information for small- and medium-sized cities since the 2000 Census. It was collected from 2005 through 2007, providing a middecade snapshot of every community with at least 20,000 residents.

The data come from the American Community Survey. Census takers interview 3 million households a year for the survey, which produces annual data for geographical areas with populations of 65,000 or more. For areas with at least 20,000 people, the survey produces three-year averages.

The new numbers explain why the housing bubble burst and why the economy was such a big issue in this year's presidential campaign. They also explain why voters soured so much on President George W. Bush's handling of the economy, even before the current financial crisis.

The years covered by the report include the housing market at its peak. Incomes had started to rise while poverty and unemployment rates had begun to fall, after the recession earlier in the decade.

But in the vast majority of the United States' cities and towns, economic conditions never fully reached the prosperity that marked the beginning of the decade.

The Associated Press analyzed economic data from the 2,000 or so cities and towns across the nation with populations of 20,000 or more, comparing the 2005-07 data with figures from the 2000 Census.

Among the findings:

Median household income dropped in 79 percent of the cities and towns. Incomes dropped in the wealthiest communities as well as the poorest. Charleston, Ill., home to Eastern Illinois University, saw the biggest drop -- 31 percent -- to a median household income of just under $21,000.

Nationally, incomes dropped by 4.3 percent during the period, to $50,007.

The poverty rate increased in 70 percent of the cities and towns. Athens, Ohio, home to Ohio University, had the highest poverty rate, at 52.3 percent, in the 2005-07 period.

Nationally, the poverty rate increased from 12.4 percent to 13.3 percent since the start of the decade.

The unemployment rate increased in 71 percent of the cities and towns. Muskegon, Mich., a city of about 40,000 near Lake Michigan, had the highest unemployment rate, at 22.1 percent.

Nationally, the unemployment rate increased from about 4 percent in 2000 to 6.6 percent in the 2005-07 period.

Median home values increased in 92 percent of the cities and towns studied -- doubling and tripling in many cities, mainly in California. Nationally, the median home value increased 26 percent, to $181,800.

It's not surprising that many communities were doing better in 2000 than they were middecade, said Scott Hoyt, senior director of consumer economics at Moody's Economy.com.

"The year 2000 was at the end of an incredible boom that lasted a decade," Hoyt said.

Incomes were up, unemployment was down and the dot-com bubble had not yet burst on Wall Street.

"We just didn't have enough years of expansion" this decade, he said.

Economic slump began earlier than thought
Seattle Post Intelligencer

Jobless to hit 8 million : OECD

A man wears a sign that reads 'almost homeless' and walks through Times Square seeking employment

. -- PHOTO: AP

PARIS - THE number of unemployed in leading industrialised nations is set to rise by eight million in the next two years as rich countries battle their worst recessions in 25 years, the OECD said on Tuesday.

'Jobless numbers could rise to 42 million by 2010 from 34 million currently,' the OECD said in a report, forecasting the jobless rate to rise from 5.5 per cent in early 2008 to 7.25 per cent in 2010.

The figures are for the 30-country OECD area which includes North America, most of Europe and leading industrialised Asian and Pacific nations.

'Historical experience suggests that youth, immigrants, low-skilled and older workers are more likely to bear the brunt of rising unemployment,' the OECD said in a statement released with its biannual Economic Outlook report.

'Workers holding temporary contracts are also particularly vulnerable to an economic downturn,' it added, highlighting the auto and construction industries as sectors that were shedding jobs.

The rise in unemployment is set to be most pronounced in countries which have been hit hardest by the financial crisis.

By the end of 2009, the unemployment rate was forecast to be at least 2.0 percentage points higher than at the end of 2007 in the United States, the United Kingdom, Iceland, Ireland, New Zealand and Spain.

The rate would rise by between 1.0-2.0 percentage points in nine other OECD countries, including France, Italy, Canada and Australia.

In the United States, the origin of the financial crisis and the world's biggest economy, the unemployment rate rose to 6.5 per cent in October and an estimated 2.8 million people lost their jobs in the last 12 months.

The US jobless rate was forecast to peak at 7.6 per cent in the first quarter of 2010, while unemployment in the eurozone would reach a maximum 9.1 per cent in the same period.

Unemployment in Japan was forecast to rise from 4.1 percent this year to about 4.4 percent for 2009 and 2010.

In its report on Tuesday, the OECD warned that many leading industrialised nations faced their worst economic downturn for 25 years, with the US, European and Japanese economies set to shrink next year.

Unemployment will rise by eight million, house prices will continue to fall in many countries and there is a risk the financial crisis has further to run, with fragile banks exposed to new bad debts.

'Many OECD economies are in or are on the verge of a protracted recession of a magnitude not experienced since the early 1980s,' said OECD chief economist Klaus Schmidt-Hebbel. -- AFP

Jobless to hit 8m: OECD
Straits Times, Singapore

Australia: Billions more to fight crisis

AUSTRALIA will join the other G20 countries in a new round of stimulatory spending after the world's 20 largest economies vowed to work together to tackle the worst global economic crisis since the Great Depression.

The emergency meeting of world leaders in Washington has agreed to take immediate co-ordinated action on fiscal and monetary policy as well as a series of reforms over the next four months.

These include making markets for complex financial instruments more transparent, reforming each country's prudential regulations and accounting standards, tackling excessive executive pay and restarting global trade talks.

Speaking after the meeting, the Prime Minister, Kevin Rudd, flagged spending more of the budget surplus than the $10.4 billion already promised.

However, this would not take place until next year when the effect of the multi-billion rescue package was known.

In the interim, the Government will use tomorrow's local government summit in Canberra to unveil more than $100 million in spending on council projects. Small projects such as footpaths and bridges that are approved and only awaiting funding that would be spent this financial year have been given priority.

Mr Rudd said the next big step would be the announcement next month of the first projects to be paid for from the $12.6 billion Building Australia Fund. Similar infrastructure funds will pay for health and education projects.

The process was brought forward by about three months to get the money into the economy as soon as possible. This "will add to the dimensions of our overall stimulus package" before Christmas, Mr Rudd said. He was determined "to take whatever additional action is necessary to support growth and jobs in what will be a very difficult year for the global economy in 2009".

The Finance Minister, Lindsay Tanner, said the Government would know by June whether it needed to spend the remaining $5.4 billion of this year's surplus.

"Clearly one of the options that we've got is to spend some of the remaining surplus for additional stimulatory activity."

The Government is prepared to go into deficit but will not countenance it publicly because it would fuel speculation and erode confidence. The other G20 countries are expected to unveil stimulus packages, although no details were revealed immediately after the Washington summit.

Mr Rudd said all nations must make good on their pledge.

Billions more to fight crisis
Sydney Morning Herald

Auto bailout backers offer to cut $25 billion size

WASHINGTON (AP) - Facing an uphill battle in Congress and stiff opposition from President George W. Bush, supporters of a government bailout for the sinking U.S. auto industry are offering to reduce its $25 billion size.

General Motors Corp., Ford Motor Co. and Chrysler LLC, battered by an economic meltdown that has choked their sales and frozen credit, are lobbying lawmakers furiously for an emergency infusion of cash. GM has warned it might not survive through year's end without a government lifeline.

Other auto suppliers and dealers with showrooms empty of customers plan to join the effort Monday when Congress returns following the Nov. 4 elections. The key Senate vote on preventing opponents from blocking the package could occur as early as Wednesday.

"There's a need for immediate action,'' Alan Reuther, the United Auto Workers union's legislative director, said Friday. He said one option under consideration was a smaller, more targeted amount of funding "that would get the companies through to March.''

Sen. Debbie Stabenow, a Michigan Democrat, said negotiations were taking place among senators on what the amount should be. "This is about getting enough votes to be able to solve the problem,'' she said.

Democrats want to carve a portion of the $700 billion that the Bush administration is using to bail out banks, insurance companies and other financial institutions.

The White House on Friday came out firmly against the approach.

White House press secretary Dana Perino said the administration would rather Congress expedite the release of a separate $25 billion loan program for the development of fuel-efficient vehicles and have the loans used for more urgent purposes as the companies struggle to stay afloat.

"Democrats are choosing a path that would only lead to partisan gridlock,'' Perino said.

Environmentalists and House Speaker Nancy Pelosi have vehemently opposed using that money for anything other than designing and building vehicles that get higher gas mileage and produce less pollution.

Democrats hold a 37-seat majority in the House and bailout supporters foresee little difficulty winning its passage there.

But the measure needs 60 votes to survive in the Senate, where Democrats will hold a razor-thin 50-49 majority when President-elect Barack Obama gives up his seat on Monday. A furious search was on for a dozen Republicans to break the anticipated delaying tactics from opponents.

Democrats are modeling their bill on the bailout terms that the Bush administration has used for doling out $290 billion to banks and insurance companies. The government would get an ownership stake in the auto companies in exchange for the loans to ensure that taxpayers would get their money back if they return to profitability.

Several Republican senators have already lined up against it. "Like most Americans who are concerned about the direction of our economy and more federal spending, I must also ask - when is enough, enough?'' said Republican Sen. John Cornyn.

Two Republican senators have said they will back the plan and several others have signaled they might accept a rescue if strict conditions are put on U.S. automakers, such as management and salary changes, union concessions and a commitment to making more fuel-efficient vehicles.

However, United Auto Workers President Ron Gettelfinger said workers will not make any more concessions. He said it is unfair to call on workers to make more sacrifices, noting that previous cuts workers have agreed to have helped steady their employers.

Getting the automakers back on their feet means figuring out a way to turn around the slumping economy, the union leader said. "The focus has to be on the economy as a whole as opposed to a UAW contract,'' Gettelfinger told reporters on a conference call, noting the labor costs now make up 8 percent to 10 percent of the cost of a vehicle.

Gettelfinger blamed the problems the auto industry is suffering from on things beyond its control _ the housing slump, the credit crunch that has made financing a vehicle tough and the 1.2 million jobs that have been lost in the past year.

"We're here not because of what the auto industry has done,'' he said. "We're here because of what has happened to the economy.''-AP

Commodities boom ends as speculative bubbles evaporate

Vincent Lingga, The Jakarta Post, Jakarta

Indonesia benefited greatly from the boom in the prices of primary commodities since the middle of last year as palm oil, rubber, coffee and cocoa as well as coal, pushed up the Jakarta stock market index to its peak of over 2,800 in April, 2008, bolstering exports and generating greater purchasing power for millions of smallholders in Sumatra, Kalimantan and Sulawesi.

However, the boom cycle abruptly ended last August after the United States financial crisis turned into a crash, setting off a global credit crunch and driving the global economy into a recession-led economic downturn, bringing down the Indonesian (IDX) stock index at one point to below 1,100.

The prices of most commodities collapsed to as low as one third of their market quotations only three months before. Crude palm oil tumbled down from its peak of US$1,300/ton to below $400 last month, rubber from $0.33/kilogram to $0.15, coffee from $2.54/kg to $1.5 and cocoa from almost $3/kg to $1.8.

This development validated analysts' views that what had so far been dubbed as speculative bubbles did play a big part in the earlier sky-high prices of commodities.

Growing global demand probably was the reason for the gradual rise in palm oil prices from an average $470/ton in 2006 to $780 in 2007, but speculative bubbles fueled the rise up to the range of $1,000-1,300 between January and July this year.

The fundamentals of the supply and demand equation were also responsible for the gradual rise in crude oil prices from $20 a barrel to US$40 earlier in the 1990s, and even up to US$60 by mid-2005, but speculative sentiments helped fuel the steep increase to as high as $147/barrel last July before falling steeply to below $60 now.

Even such high-growth emerging economies as India and China with a combined population of more than 2.3 billion people could not have all of a sudden gobbled up enough palm oil, rubber, coal and other commodities to generate such steep price rises in the first half of this year.

The problem is that the price elasticity of both demand and supply is low for commodities like palm oil, cocoa, coffee and rubber. Put another way, neither the underlying supply nor the demand for such commodities could have changed so quickly.

Consumers will still drink one or two cups of coffee even if its price rises sharply, but will not suddenly take ten cups when its price falls. Likewise, people do not abruptly stop frying food even if the price of palm oil skyrockets.

As debt instruments suddenly became illiquid and risky, investors sought safety in commodities. That surge of cash created a new bubble which has recently burst.

Investors such as hedge funds and even such solid institutions as pension funds made speculative purchases as they diversified into alternative investments away from the uncertainties in the financial market.

The sub-prime mortgage crisis started raising its ugly head in the United States in early 2007.

Analysts observed the flood of money from investors into the commodity futures markets, thereby distorting spot markets for physical commodities.

However, speculation by investors to avoid the uncertainty within the financial market was not the only factor behind the one year boom-cycle.

The fundamentals of the supply-demand equation also played a part as the global economy enjoyed one of its high growth periods.

According to the International Monetary Fund, the world economy grew faster, expanding by an average 4.5 percent, 50 basis points higher than most analysts had forecast earlier.

As most analysts have often noted, global economic expansion had been driven mainly by major emerging economies, notably China and India, which grew at an annual average rate of nearly 10 percent for several consecutive years. Given their large populations, this development generated a dramatic rise in demand, particularly for natural commodities.

However, rising prosperity and the speculative bubble were not the only drivers of the commodities boom.

Government-induced distortions have also blunted price signals. In many emerging economies, including Indonesia, governments control the prices of important fuels such as gasoline and food staples.

Even though several countries have removed such price distortions, many others, notably major producers, kept prices fixed, thereby blocking the transmission of market reactions from higher prices to weaker demand.

To reduce carbon emissions, the U.S. government encouraged biofuel production by subsidizing these fuels. Consequently, the demand for biofuel feedstocks such as maize and vegetable oils exploded.

The World Bank estimated biofuel demand was the biggest single reason why food prices soared in the past two years.

Hence, all in all, demand shocks caused by speculative bubbles, higher-than-estimated economic growth and misguided government policies combined together to fuel the commodities boom in the first half of this year.

But now, the world economy is suddenly accelerating into a recession-led downturn and the financial market has crashed, leaving behind a liquidity crunch which has consequently removed the demand shocks caused by previous robust economic growth and speculative bubbles.

The strongest message of this roller-coaster market development is that only the fundamentals of supply and demand are able to generate sustainable price trends in primary commodities.

The writer can be reached at v_lingga@yahoo.com

USA elections: Impact on Southeast Asia

Ashwini Devare, Contributor, Singapore

The fine sand is accelerating through the hourglass as the U.S. presidential race enters into the homestretch. With both candidates locked in a dead heat, the drama and ballyhoo in the world's largest economy has the rest of the world in a state of heightened anticipation.

Against the backdrop of what is being termed as the biggest financial crisis since the Great Depression, the denouement of the race is of utmost significance. Irrespective of the theory of decoupling, what transpires in the United States will have far-reaching implications for the rest of the world, including Southeast Asia.

With a population of about 560 million, Southeast Asia is a kaleidoscope of cultures and ethnicities, encompassing communist Vietnam to capitalist Singapore. Over the past few years, the region has emerged as a vibrant and dynamic hub, bursting with trade and business activity.

As of 2006, the Association of Southeast Asian Nations (ASEAN) had a combined gross domestic product of over US$1,100 billion and a total trade of about US$1,400 billion. With the emergence of ASEAN as an important political and economic body on the world stage, there are many expectations and much optimism about furthering the U.S.-ASEAN relationship and taking it to the next level.

This is something that U.S. President George W. Bush has failed to do during his eight-year term, says Professor T. J Pempel, professor of political science at the University of California at Berkeley. Bush bungled Asia, he says. "The United States under George Bush has seen a decline and demise in its importance in Asia," Pempel argues. "Under Bush's reign, the relationship with Southeast Asia was marginalized as U.S. foreign policy became driven by Iraq, Afghanistan and dominated by ideology. It is the excessive militarization of U.S. foreign policy that has hurt relations."

Over the last four decades, the United States has enjoyed a long, undisputable economic and military position in Asia. During the Cold War, Asia was the arc of stability for its sphere of influence and a bulwark against communism which the United States reinforced through a series of strategic and regional alliances. Security became the paramount geopolitical interest for it under its Cold War containment policy.

It was in 1967, at the height of the Cold War when the Vietnam War was raging, that ASEAN was conceived and founded. The emergence of a pro-western grouping in Southeast Asia was a welcome development for the United States which extended its full support to the newly formed entity.

Following the end of the Cold War in 1991, the U.S.-Southeast Asian economic relationship blossomed as the tiger economies across the region boomed. Relatively free from military conflict, Southeast Asia saw an extraordinary transformation through the 1970s and 1980s on the back of market reforms and export-led growth.

Early fissures began to appear in the relationship during the Asian Financial Crisis of 1997 to 1998 when the United States was perceived as insensitive in its perception and handling of the crisis. Post 9/11, the its preoccupation with fighting terrorism resulted in a reduced focus on Southeast Asia. U.S.-ASEAN relations took a dip when U.S. Secretary of State Condoleeza Rice skipped the ASEAN Regional Forum three years ago. While Myanmar remains an occasional flashpoint that attracts U.S. attention, by and large it has became more remote and removed from the region.

Professor Pempel says this so-called indifference has actually been a blessing in disguise for Southeast Asia. Far from suffering from a lack of U.S. attention, the region has in fact thrived, with new bilateral and multilateral alliances sprouting right in its own backyard.

Southeast Asia has proactively courted economic giants China and India, accelerating trade and business ties with both. ASEAN has concluded a plethora of free trade agreements, including those with China, Japan, South Korea, India, Australia and New Zealand, and the region is becoming more interlinked than ever before.

Experts also point to the fact that the United States is no longer part of many of the important regional groupings in Asia. The Shanghai Cooperation Organization which includes China and Russia was started in 2001 and does not include it; ASEAN+3 includes the 10 Southeast Asian nations plus Japan, China and Korea. The East Asia Summit is another regional forum which began in 2005 and includes ASEAN, China, Japan, Korea, India, Australia and New Zealand.

Experts say the U.S. disinterest in Southeast Asia has paved the way for the other economic juggernaut to spread its footprint across the region. Dr. Kesavapany, Director of the Institute of Southeast Asian Studies in Singapore says: "It is not so much the decline of USA as the relative rise of China in economic and soft power terms, as well as the astute Chinese diplomacy and its charm offensive in Southeast Asia. The United States also suffered from negative international Muslim sentiments arising from the conflicts in Afghanistan and Iraq."

But Dr. Kesavapany adds it is also up to ASEAN to enhance ties with the United States. "There is a long queue of countries and regions wanting the attention of the new U.S. Administration which hopefully will not be distracted by new crises, such as any with N. Korea, Iran or Russia. Southeast Asia is not a front-burner issue for the USA. ASEAN should also creatively and proactively suggest some areas where USA and ASEAN can cooperate closely -- in energy or climate change, for example."

The U.S. diminishing interest in Southeast Asia coincides with its falling status in the region. According to the 2007 Pew Global Attitudes survey published by the Washington, DC-based think tank in which over 47 countries are surveyed, anti-Americanism is as extensive as it has been for the past five years. The report shows that the U.S. image has taken a battering in most Muslim countries in the Middle East and Asia. In Indonesia, for example, the report points out positive opinions of Americans have fallen from 65% in 2002 to 42% last year.

The United States cannot afford to neglect one of the world's most dynamic areas. The new administration will have to revisit its policy toward Asia and resurrecting its image will certainly have to be top priority. Which candidate will have better synergy with this part of the world is a question on the minds of many Asians these days, as the presidential blitzkrieg roars to the finish line. Both candidates have a connection with Asia.

Senator McCain was a naval pilot during the Vietnam War who spent five years imprisoned in Hanoi. As a senator he consistently pushed for improved relations between the United States and Vietnam. Both McCain and Obama have pledged to reinvigorate alliances in Asia and with ASEAN.

Some believe if Senator Obama becomes president, he will be more sensitive to Southeast Asia, particularly Indonesia. The importance of Indonesia, the fourth most populous country in the world and the biggest in Southeast Asia, cannot be eschewed and there is a view that Senator Obama is better positioned to appreciate its diversity.

An archipelago made up of over 17,000 islands stretching across some 5,000 kilometers, Indonesia is a country most Americans have little knowledge of and if not for Obama, would have continued to escape its radar completely. By dint of an old childhood connection, he shone a spotlight on the country during the campaign.

As a young boy, the democratic presidential nominee spent a few years in Jakarta attending local schools. This childhood connection was undoubtedly brief, but it still remains an irrevocable piece of his early life. An Indonesian stepfather, Indonesian half-sister and the fact that his white American mother went on to study anthropology, focusing on the traditional artisan culture of Indonesia, is what gave the Obama factor an exotic appeal in the early days of the campaign, when Obamamania engulfed the United States like a huge tidal wave.

In fact, Obama has said his early exposure to multiethnic cultures and societies such as Indonesia and Hawaii played a key role in shaping his political and social outlook in the years to come.

The current global financial maelstrom has sucked Southeast Asia right in, arguably mitigating the decoupling theory. The destinies of the United States and ASEAN countries remain closely intertwined, whether they like it or not.

It remains one of ASEAN's biggest export markets and the largest foreign investor in the region. It cannot afford to turn its back to Southeast Asia, a region uniquely complex and diverse.

Politics is taking center stage in Thailand and Malaysia, Vietnam is battling double-digit inflation, and Myanmar is a hotbed of unpredictability. Thailand's southern provinces remain highly inflammable and Indonesia is vulnerable to terror elements as is the Philippines. Singapore is on the brink of a technical recession with exports in August falling the most in 20 months. Slowing economic growth and high inflation are a lethal combination, the spectre of which could haunt many as the economic malaise continues to spread.

At this very critical juncture, having a U.S. president who is committed to Southeast Asia is not merely wishful thinking, but a sine qua non.

SOURCE: USA elections: Impact on Southeast Asia
Jakarta Post, Indonesia

Malaysia safe from global financial turmoil: Kadir

Published Date: October 26, 2008
By Ben Garcia, Staff Writer

KUWAIT: "We are not seriously affected by the global financial turmoil, we are not saying nil, but on a minimal level," disclosed Mohammad Rafik Kadir, Deputy Governor of Central Bank Malaysia, speaking with the local media on the sideline of their seminar conducted at the Sheraton Hotel in Kuwait recently. Kadir's delegation was composed of over 30 Malaysian businessmen who visited the country with the aim of strengthening bilateral economic ties with Kuwait.

Khadir was accompanied by high-level economic delegations comprising of Omar Merican, Chief Operating Officer of Malaysian Stock Exchange, Raja Nazrin Shah, Crown Prince of Perak, Jalila Baba, Director General Malaysia Industrial Authority and Kris Azman Abdullah, Securities Commission Malaysia. Malaysian Ambassador to Kuwait Ashaary Sani hosted the economic delegation.

Just looking at the records, we are not seriously affected. We only have 12 percent of the total export with the US. We have 11 percent trading with the EU and about 15 percent in the Arab world. The majority of our trading was with the Association of South East Asian Nations (ASEAN), which constitutes about 64 percent of our trading overseas," he said.

The Malaysian Stock Exchange however admitted to a downfall of 38 percent on their stock index. But Omar Merican, Chief Operating Officer of Bursa Malaysia Stock Exchange, noted that Malaysia is still very fortunate compared with their ASEAN neighbors.

We are still lucky compared to other ASEAN neighbors, like the Philippines, the stocks are down by 45 percent, Jakarta is 51 percent, Korea is down by 44 percent, Taiwan is 44 percent," he said.

The foreign direct investment according to Jalilah Baba, Director General Malaysia Industrial Authority was thriving. "Despite global financial turmoil, we have a mass of inquiries from abroad and we have some positive and ongoing negotiations. We might experience a slowdown in foreign direct investments in 2009 since many are cautious on spending, but it won't affect us much," she said.

Asked on the status of their meetings with their counterparts, Kadir pointed out that 'everything went well'. "Our meeting with our counterparts in Kuwait was very successful. Our mission here was to create awareness about the Malaysia International Islamic Financial Center (MIFC) initiatives. MIFC was introduced by the Malaysian government in 2006 and was aimed at issuing licenses to Islamic banking in Malaysia. With this regard, we have met with the chairman of the Al-Aquila and Leasing Company and we br
iefed them about business opportunities in Malaysia," he added.

Taking the lead as a center for Islamic Finance, MIFC provides for a coordinated regulatory framework, fiscal incentives and facilitative business environment. It has also actively initiated dialogues, road shows and spoken at seminars throughout the world in showcasing economic and trade opportunities leveraging on Islamic finance.

We are keen to share with our Kuwaiti counterparts and key stakeholders the many opportunities and mutual benefits available under the MIFC initiative, in advancing the trade relationship and investment opportunities between our countries," Razif added.

Kuwait and Malaysia enjoy a growing bilateral trade relationship that has seen Kuwait's trade accounting for 0.2 percent of Malaysia's total trade alone in the first seven months of 2008. Exports to Kuwait consist of fats and oil (dairy products and palm oil), electrical products and furniture, while imports from Kuwait are mainly minerals, plastics and ships.

Kuwaiti investments continue to play a growing role in Malaysia's financial market, insurance, real-estate and business service sub-sector, accounting for some 0.2 percent of total foreign direct investment since 2004. This proportion, however, is expected to rise in the coming years.

Kuwait's largest bank, Kuwait Finance House was granted the first foreign Islamic bank license to set up operations in Malaysia in 2004 and continues to be a key player forging new heights in Malaysia.


source:

Malaysia safe from global financial turmoil: Kadir
Kuwait Times, Kuwait

Najib: Local fuel price to be lowered

The Cabinet has give the go-ahead to reduce the pump price of fuel soon in view of the continuing decline in global oil prices, Deputy Prime Minister Datuk Seri Najib Tun Razak said.

”We promised that if the global oil price goes down, the domestic fuel price will reflect the actual price market.

”So, just give the Government some time to make the decision. The Cabinet has already given the mandate to the economy council exco chaired by the Prime Minister to make the decision,” he told reporters at his residence on Saturday after presenting gifts to 180 recipients who would be performing the haj in Mecca.

Najib, who is also Finance Minister and Pekan MP, was asked to comment about the oil price which had continued to fall and registered about US$62 per barrel on Friday.

On when the new price would be announced, Najib said the people would not have to wait that long.

”It can be within a week, depending on when the meeting will be held,” he added.

To another question related to the price of essential items which did not reflect the decline in oil price, Najib said the prices of certain goods and products would be reduced in a day or two.

He added that several hypermarket owners had agreed to work together with the Government on this matter.

On whether the global recession would hit Malaysia, Najib replied: ”Can you wait for Nov 4? I will come up with a complete response.”

On Nov 4, Najib is expected to list measures to buffer the country from the impact of the current global financial crisis during his winding up speech in Parliament.

When asked about the global crude palm oil slipping to RM1,500 per tonne recently, Najib said the income of Felda land scheme settlers would definitely be lower.

However, they had earlier enjoyed very high incomes, generating between RM3,000 and RM4,000 monthly, he said, adding, he hoped that they had set aside some of the cash as savings.

He also said the RM144.44mil productivity incentive bonus that they would get in December would help to weather the hard times and that they would receive between RM700 and RM2,000 each. ”We have also given the assurance that their income will not be lower than RM1,000.

”We will also encourage them to venture into non-farming activities such as business, handicrafts and growing vegetables so that they will not be financially only dependent on palm oil or rubber trees,” he said.

As for smallholders, Najib said the Government would have to look into ways to help stabilise the price.

This matter was expected to be discussed by the Cabinet Committee on palm oil soon and might eventually involve other countries, he added.

Meanwhile, in Johor Baru Domestic Trade and Consumer Affairs minister Datuk Shahrir Abdul Samad said the expected reduction of petrol prices at the end of the month would not be more than 15sen.

"We do not want a big reduction in petrol prices resulting in huge losses suffered by petrol station operators nationwide. "That is why we are reducing it gradually but sooner or later we will reach a reasonable price for the consumers," he told pressmen after launching the Financial Awareness Week or dubbed the M2K fair on Saturday.

He explained that it was the government's intention to reduce petrol prices as soon as possible but such a move must be done gradually and accordingly so that everybody reaped the benefits.

"We must take into account the consequences of a huge reduction that could have a negative impact on the operators. "The present method in reducing the petrol prices gradually will not disrupt the country's oil industry," he said.

He also said there was no reason for transport cost for bus or lorry companies to increase as diesel was sold to the companies at a subsidised price of RM1.43.

In fact, 70% of diesel sale was sold at the subsidised price.

Express, school and intercity buses as well as lorry companies were presently reaping benefits of the subsidised price, he said.

Najib: Local fuel price to be lowered
Malaysia Star, Malaysia

Living Water For The Economy

If everything goes like what finance minister Datuk Seri Najib Tun Razak has said, the recent market performance is only a matter of investment sentiment, then there is hardly any need for KWSP's RM5bn loan to invest in undervalued stocks!

Britain's bailout programme has been designed to inject money directly into ailing banks to restore public confidence in the country's banking sector. The full guarantee of bank deposits by governments, including ours, is one of the ways that will help shore up waning public faith.

What Southeast Asian countries should be concerned about is not the magnitude of this financial storm, but whether the Chinese economy will eventually be implicated, and the severity of its impact upon fringe economies.

Most regional countries have been relatively immune to the Wall Street meltdown because of their limited involvement in the US subprime mortgages. But if the United States and Europe slip into recession, which will deal a direct blow on Chinese manufactures, then the nightmare of Southeast Asian economies, major raw material suppliers to China, is just beginning to take shape.

"The point now is not whether the sum is enough or not, but whether it is necessary and practical."

Although basically Malaysia is not encountering any credit crisis for the time being, that does not mean we have sufficient investment inflows or liquidity in the market to meet the capital demands of SMEs.

Instead of putting the RM5bn in the equity market to lift the thinning market confidence, why not offer special loans to SMEs to revive commercial activities so that their operations will not be stalled because of a dearth of funds.

Besides, substantial policies should also be liberalised further to lure foreign investments. If the government insists not to cut back on the development expenditures outlined in the Budget, the only solution will be to look for new sources of living water for the national economy.

Compared to our neighbours, Malaysia is undeniably at an advantage in terms of software and hardware development. Although this advantage is being slowly undercut by lower costing in other countries, we still have our unique edge over the competitors in luring foreign investors.

In view of this, the deregulation and liberalisation of various policies seem more important now than ever, including those on quota restrictions and ceiling stakes for foreign participation.

If we take this opportunity to liberalise these policies, more foreign investors will be lured to our shores, for we are somehow more attractive than our neighbours in utility supply, educational and linguistic standards of our workforce, as well as broadband infrastructure, among other things.

Tun Mahathir has said RM5bn is not enough, but to the people in the street, this amount of money will very much see them through their retired years.

The point now is not whether the sum is enough or not, but whether it is necessary and practical. (By YANG HANQIANG/Translated by DOMINIC LOH/Sin Chew Daily)

source: Living Water For The Economy
Sin Chew Jit Poh, Malaysia

Itchy feet: If you're not fearful, you're crazy

Itchy feet

CPA Australia's director of international development Paul Wappett tells Business Spectator's Isabelle Oderberg why in the tough economic climate, professional service providers should be looking overseas for business growth opportunities.

Isabelle Oderberg: What are the key geographic markets that CPA Australia is encouraging professionals to be looking at?

Paul Wappett: Well, predominantly through the Asia Pacific region just we see that a number of the growth economies in the world are in that region at the moment anyway and moreover I guess there’s an opportunity with the fact that some of them are in either emerging, developing or transition economy status, I suppose. There’s more of a need for the expertise and the capability that the Australian professional scene has to help build their financial infrastructure there. So we’d be saying that throughout the Asia Pacific region, but predominantly on the developing nation and transition economies.

IO: So you’re talking about India and China and places like that?

PW: Yeah. And even further afield than that because those ones are clearly the obvious ones, but there’s great growth in markets like Vietnam and Thailand and Indonesia at the moment for example as well.

IO: What sorts of sectors would be people be looking at? I mean are you talking about M&A or are there particular sectors where professionals should be sort of seeking out opportunities?

PW: Well, in fact we’re even talking at a more fundamental level and it’s about how to set up good structures and good professional underpinnings to provide the level of competency within those markets themselves. So what do I mean by that? For example, we fundamentally believe in the importance of accountants, as you’d expect I guess. The measurement and the reporting and the analysis and the controls that accountants provide and perform - they provide the stability to underpin capital markets and to give confidence to the owners of foreign capital about the types of performance and position of the investments that they’re making in those countries, and ultimately to underpin economic growth. So unless there’s a strong, confident, ethical and independent accounting profession, then the owners of foreign capital are likely to look for markets where they can get certainty. So we’re even talking at the fundamental level of Australia, which has the ability to be able to set up and enhance the capability of the accounting profession in those developing nations, so that that certainty is provided.

IO: I understand that the membership diversity is quite strong in CPA Australia. Could you tell me a little bit about that? I understand that you’ve got a huge number of members overseas.

PW: We do, we have just under 25,000 of our 120,000 members living and working outside of Australia. Most of those from within the Asia Pacific region, but we actually have CPAs working in over 100 countries now throughout the world. That growth in our international membership numbers has largely come on the back of the Australian higher education sector dating all the way back to the Colombo Plan. We’ve had a big influx of international students come to Australian universities and then return home, but the challenge for a body like ours in the future is how we can establish our qualification and our certification as a global standard so that we can attract members in those developing markets who may have no nexus with Australia and no intention of working in Australia in the future.

IO: You mentioned in a press release that CPAs should be looking to be high quality accounting professionals. What are some of the skills that a graduate with an accounting qualification should be looking to supplement it with?

PW: The stock in trade for an accountant is measurement, reporting, analysis, controls and assurance and we think every accountant in the world should have those, no doubt, but what it takes to be a CPA is also a fundamental insistence on or a focus on ethics and integrity and independence on strategy and on leadership, on governance and on how to do business internationally. So those are the hallmarks of a professional accountant and certainly we think that sets CPAs apart from other accountants throughout the region.

IO: How easy is it for a CPA to go and work in other countries in Asia? Are the qualifications recognised?

PW: It’s becoming increasingly easy. CPA Australia has set up for our members a series of mutual recognition agreements which means that they can take their qualifications and either get exemptions from a number of the requirements for local qualifications or in some cases, for example in Malaysia, in Singapore and in Hong Kong, our members can become members of the local body and have those qualifications recognised directly.

source: Kohler: If you're not fearful, you're crazy
Business Spectator, Australia

Decision to review projects will not affect FDI inflow, says Muhyiddin

Foreign direct investment (FDI) inflow into the country will not be affected by the government’s decision to review and shelve some projects, including those in the economic corridors, due to the global economic slowdown, International Trade and Industry Minister Tan Sri Muhyiddin Yassin said today.

He said the decision to review the projects was related to those involving government expenditure and not those from the private sector.

“If there are those in the private sector keen to invest, they can do so as a large portion of the component cost in investment involves the private sector and not the government,” he told reporters after officiating the Eisenhower Fellowships Regional Conference here.

Muhyiddin said the government’s decision should not reduce the interest of foreign and local investors to take part in the development of the economic corridors.

According to him, there are still plenty of prospects for investors in the south, north and east coast of Peninsular Malaysia as well as in Sabah and Sarawak.
Yesterday, Prime Minister Datuk Seri Abdullah Ahmad Badawi said the government would review several projects, including those in the economic corridors, due to the global economic uncertainty.

He said for projects in which work has yet to start, the government might consider postponing them for the time being.

source: Decision to review projects will not affect FDI inflow, says Muhyiddin
New Straits Times, Malaysia

Wall Street wore only false pretenses

By Corazon P. Guidote
Philippine Daily Inquirer
First Posted 06:57:00 10/04/2008

The meltdown in the United States was caused by a mix of factors, not entirely politics. The biggest factor is the loss of an effective moral compass for the government, regulators, a large portion of corporate America and, sadly, even the US academe.

The whole situation reminds me so strongly of the "Emperor's New Clothes" where Wall Street for many years now has been cloaked in nothing but false pretenses of knowing what exactly was being offered on the table. Even Ivy Leaguers working in credit-rating agencies couldn't see past the sophisticated packaging of exotic derivatives. Instead of digging deeper, they put glorious ratings on these items and used elaborate words to mask their doubts and their inability to admit to their clients that many of their products didn't really make much sense.

But beholden as they are to those who pay them, they agreed to many undesirable terms which, if such terms were attached to emerging market products, would fetch noninvestment grade ratings. Now only do we hear of "ninja" loans that are backed by no income, no job and no assets packaged so well as to fetch triple-A ratings.

Second and just as important is the double standard and hypocritical approach that the US Fed has been adopting all these years. They advocate free-market economies, but there was the narcissistic Greenspan suppressing interest rates for so long, even when times called for some tightening and correction. What that created was a monstrous financial bubble that was blown up by the thought that interest rates would forever stay low in the United States.

Greenspan erased from the minds of global banks the risk perception that the American economy can also be vulnerable. This created unimaginable greed and excesses on Wall Street and other allied markets such as the London bourse. Knowingly or unknowingly, Greenspan made it easy for fraudsters in the investment banking world to keep coming up with more and more exotics to satisfy the insatiable thirst for bigger profits and capital gains. Moderation lost its glamour. It was a virtue left only to the most prudent to exercise in near isolation. So, where art thou, Greenspan? Why are you so painfully quiet now ...?

I saw how this greed was eating up governments, including ours. Tough as it is to prove, there is a probability that some government institutions may have been "duped" into buying these exotics, just because they were made to feel "super gwapo" doing it. Believe me, there was so much ego, wining and dining, and rebates that went into the decision-making process of acquiring these exotics.

Third is the long denial of Americans and Europeans that the the bubbles were bursting. When the subprime crisis started to prick the bubble back in August 2007, many large fund managers sold down Asia instead of unloading Wall Street stocks, when Asian fundamentals looked so much better. No one dared to say there was nothing to be gained from hanging on to many US stocks lest they be accused of sounding stupid by the Emperor who was starting to look more and more naked by the day. Many of those fund managers are now paying the heavy price, with the massive wealth destruction we are now seeing and tens of thousands of jobs being lost on Wall Street.

It might be true, therefore, that the United States may go into a depression and some months of disinflation before it finally recovers. My only wish is for egos and deceptive attitudes to go with the disrobing of Wall Street and the massive correction in the global system, so we may begin to witness an era of greater stability and solid wealth creation. Wishful thinking as it may seem, we all got to start somewhere.

Moving forward, putting good money after bad like a massive bailout will mean doubling the damage. The problem is so widespread and does not involve just a few banks. A bailout is to avoid a systemic risk. What the United States has is more than systemic, it's fundamental. The solution, therefore, needs to be surgical, painful as it is, but the guilty should suffer, and I am not referring to the taxpayers.

Here at home, we were lucky to have had the Asian crisis earlier – a blessing in disguise that brought sobriety and grounded our financial markets, save for a handful. But there's no telling where the contagion will take us if we are not careful. There is a great need for transparency, provisioning and vigilance. If certain valves need to be closed just like Mahathir did in Malaysia back in the 1990s, so be it, because a commonsensical solution to a global problem is to go insular in order to protect our system.

Our economy will remain resilient and hedged with manpower exports growing faster in oil-rich nations. Needless to say, we can't just place all our bets solely on our OFWs. That would be unfair. We all have to be part of the solution: Stay calm and take stock of what's good for the soul. It's our best compass during these very turbulent times.

Going back to where I started, what brought this problem to the United States was the loss of things most important: Decency and intellectual honesty.

(The author is former managing director of UBS Securities Philippines Inc. and Citibank Securities Philippines Inc. She was also former chief operating officer of ABN-Amro Securities Philippines Inc. She also served as presidential consultant on investor relations of the Arroyo administration.)

source: Wall Street wore only false pretenses
Inquirer.net, Philippines

Asian Central Banks Cut Rates to Counter Impact of U.S. Crisis

By Shamim Adam

Sept. 27 (Bloomberg) -- Asia's central banks have started to cut interest rates, judging they need to counter the effect of the U.S. financial crisis on their export-dependent economies as inflation peaks.

Taiwan cut borrowing costs on Sept. 25, joining China, Australia and New Zealand in easing the price of money this month. Inflation rates have slowed in Thailand and Sri Lanka, and policy makers in the Philippines, India and Indonesia forecast price gains will cool before the end of the year.

Lower borrowing costs may spur growth as the economies of the U.S., Europe and Japan weaken and the deepening credit crisis threatens to tip the world into a recession. Still, some analysts say the inflation fight isn't over and that loose monetary policy or a surge in oil costs may spark another bout of higher prices.

``The bias may be shifting too quickly to growth and that is not wise,'' said Jan Lambregts, head of Asia research at Rabobank International in Hong Kong. ``It's too early to declare victory over inflation.''

The credit crisis led Lehman Brothers Holdings Inc. to file for bankruptcy and prompted the sale of Merrill Lynch & Co. to Bank of America Corp. this month. U.S. regulators have seized at least nine lenders since July, including Washington Mutual Inc. yesterday, the fastest pace in 15 years.

While the contagion from the turmoil isn't likely to infect Asia's banking systems, the credit crisis is hurting exports.

Fewer orders for made-in-Asia goods are cooling industrial production in China, Singapore and Taiwan among others. Bank of Korea official Kang Myung Hun, who opposed a rate increase last month, said the nation's slowing economy is more of a concern than accelerating inflation.

Growth Forecasts

Merrill Lynch & Co. this month cut its forecast for Asia's growth in 2008 and 2009. The region will expand 7.7 percent this year, and ease further to 7.3 percent in 2009. Both forecasts were reduced from previous predictions of 7.9 percent growth.

``The U.S. is deteriorating and investors are increasingly pessimistic about the European economy,'' said Tomo Kinoshita, chief economist for Asia outside Japan at Nomura Holdings Inc. in Hong Kong. ``These are major destinations for Asian exports, and the implications of slower growth cannot be ignored.''

Taiwan's central bank unexpectedly reduced interest rates 12.5 basis points to 3.5 percent on Sept. 25, saying the global financial crisis had heightened the risk of an economic slowdown.

The People's Bank of China reduced its one-year lending rate to 7.20 percent from 7.47 percent on Sept. 15 and Australia's central bank lowered borrowing costs on Sept. 2, its first reduction in seven years.

In Malaysia and Sri Lanka, central bank officials refrained from raising rates even as inflation accelerated to the highest in decades.

Philippines, Indonesia

The Philippine central bank may not need to raise interest rates further as inflation may have peaked at 12.5 percent, Economic Planning Secretary Ralph Recto said Sept. 17.

Bank Indonesia's Deputy Governor Hartadi Sarwono last month said an interest rate of 9.5 percent may be ``adequate'' to slow inflation. The central bank's key rate is at 9.25 percent now.

``They're all pretty much done with raising interest rates, and those who didn't move probably won't have to,'' says Joseph Tan, chief economist for Asia at Credit Suisse Private Banking in Singapore. ``Asia needs to cushion against further downside risks to growth and guard against the fallout in the global financial system.''

Some economists are concerned the interest-rates cuts will rekindle inflation.

`Inflation Genie'

``Put the inflation genie back in the bottle now,'' said Asian Development Bank Chief Economist Ifzal Ali. Asia needs to ``tighten monetary policy even if it requires a temporary sacrifice of growth.''

Inflation in Asia will reach 7.8 percent this year, higher than an April forecast of 5.1 percent that was already the most in a decade, the ADB said. Prices may ease to 6 percent next year, it predicts.

``Lower rates will increase domestic demand and inflation pressures will start to kick in once again, exactly what central banks were trying to avoid in the first place,'' Lambregts said. ``It's a risky move and they'll pay a price for it.''

source: Asian Central Banks Cut Rates to Counter Impact of US Crisis
Bloomberg

Commenting Malaysiakini: FDI outflow at record high

• FDI outflow at record high
• Andrew Ong
• Sep 25, 08 8:37am

Foreign direct investment (FDI) outflow in Malaysia has exceeded inflow for the first time ever, underscoring fears that investors might be losing confidence in the government and its economic policies.

• Outflow up, inflow down
• M'sia worst performer in Asean

• Free ISA detainees or lose more investments
• Sep 25, 08 2:35pm

Transparency International Malaysia today called on the government to free all ISA detainees or risk losing further foreign investments.

• Nation suffers drop in tranparency rankings
• Perceptions will improve if laws reviewed

beritadarigunung

1 Capital inflows to Asia will slow, says Fitch. For the first six months of the year, foreign net selling in Asian equity markets totalled $13.7 billion, the worst in seven years. Capital inflows to Asia have started slowing down and this trend will likely continue, according to Fitch Ratings. Fitch attributes the slowdown to the heightened risk aversion of global investors and Asia’s deteriorating economic fundamentals.

• source: Capital inflows to Asia will slow, says Fitch FinanceAsia, Hong Kong
  

2 UNCTAD sees decline in FDI flows this year
The UN Conference on Trade and Development (UNCTAD) foresees a perceptible decline in foreign direct investment (FDI) flows in the world economy in 2008, though developing countries would likely to be less affected.


3 While global foreign direct investment trends are up 30 per cent from 2007, New Zealand’s share of cash coming in has declined significantly. The report also highlights the growing importance of sovereign wealth funds, the importance of infrastructure investment, and notes that the current US financial crisis is likely to slow foreign investment next year.

4 Foreign direct investment (FDI) inflows to Taiwan amounted to a new high of US$8.16 billion for 2007, an increase of nearly 10 percent over the year-earlier level, according to the U.N. World Investment Report 2008 released Wednesday. The amount made Taiwan the seventh largest FDI recipient in South, East and South-East Asia behind China, Hong Kong, Singapore, India, Thailand and Malaysia, stated the report published by the United Nations Conference on Trade and Development (UNCTAD)

5 The Executive Director of Tanzania Investment Centre (TIC), Mr Emmanuel Ole Naiko, said in Dar es Salaam yesterday during the launching of World Investment Report 2008 that increased exploration and exploitation of natural resources were behind the increase. "Globally, FDI inflows grew at 30 per cent in 2008 from 1,300 billion US Dollars in 2006 to 1800 billion last year thus surpassing the record set in 2000," Mr Ole Naiko said.

6 It is perhaps no surprise that the advisory body is headed by V. Krishnamurthy, a former chairman of Maruti Udyog. He couldn’t have missed a cue from South Korea, where the 1962 automobile industry promotion policy banned all foreign automobile companies, except in partnership with domestic firms. Toyota first and then General Motors partnered with the South Korean firm that went on to become Hyundai Motors.

7 "Outward FDI is likely to grow even more as Asian firms are increasingly aspiring to become significant regional and global players in their respective ..."Outward FDI is likely to grow even more as Asian firms are increasingly aspiring to become significant regional and global players in their respective industries — particularly in telecommunications, finance, and manufacturing," the UNCTAD said.

beritadarigunung

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