Big boost for Asia with the Asian Infrastructure Bank (AIIB) launch, a positive step!

Financing required as Asia remains with looming infrastructure needs

Chinese President Xi Jinping's (C-R) meeting with the members of the Asian Infrastructure Investment Bank (AIIB) in the Great Hall of the People in Beijing, China 24 October 2014. 21 Asian countries are the founding members of the AIIB, an initiative by China. - EPA

THE launch of the US$50bil Asian Infrastructure Bank (AIIB) is a positive step for the development of Asia where large areas remain with looming infrastructure needs.

There has been good work done by other international bodies, but due to the vast financing needs of the region, there is always place for another major bank to put in the good work.

The AIIB was launched in Beijing last Friday at a ceremony attended by Chinese finance minister Lou Jiwei and delegates from 21 countries including India, Thailand and Malaysia, said Reuters.

It aims to give project loans to developing nations with China set to be its largest shareholder with a stake of up to 50%.

In a speech to delegates after the inauguration, Chinese President Xi Jinping said the new bank would use the best practices of the World Bank and the Asian Development Bank, said Reuters.

The authorised capital of the bank would be US$100bil; the AIIB would be formally established by the end of 2015 with its headquarters in Beijing.

There was a huge demand for infrastructure investment in Asia; the Asian Development Bank (AIIB) put that at around US$8 trillion of investment during the current decade, said the Singapore Business Times (SBT) in a report earlier.

A principal motive in proposing the AIIB was to invest part of China’s US$4 trillion foreign reserves in higher-yielding assets than US Treasury bills, said SBT, also quoting diplomatic sources.

In addressing the potential rivalry between the AIIB and other international aid bodies, one has to look at the big picture in what will benefit Asia in the long run.

If carried out successfully, infrastructure development across Asia will help narrow the gap between the more and less developed areas.

China is already in partnership with India to develop infrastructure and industrial parks in India.

Spreading its infrastructure investments over the rest of Asia would be a natural step towards that development.

After warning on excessive speculation in currency and debt markets, the Reserve Bank of India (RBI) is looking at the low hedging levels by companies and the currency risks they face.

If indirect pressure on companies via their bankers failed, the RBI may consider forcing companies to submit detailed financial information through their lenders, said Reuters, quoting bankers who met with RBI officials earlier this month.

The RBI’s warnings signalled its concern that unhedged firms could be a vulnerable link should global markets buckle, said Reuters.

The central bank had worked hard to build up its defences after India last year weathered its worst rupee crisis in two decades, said Reuters.

Hedging, meanwhile, is expensive because India’s elevated interest rates mean forward premiums are high, said Reuters.

The RBI is keeping tabs on every aspect of companies’ exposure to currency risks.

After working hard to build up its defences on the rupee, the RBI would not want some other segment of the capital market to fail to keep pace.

The bosses at Royal Bank of Scotland (RBS), which is still under government ownership, were dealt an embarassing blow when their proposal to pay high bonuses was shot down.

The Treasury stopped RBS from paying some staff bonuses worth twice their salaries, said Reuters, quoting James Leigh-Pemberton, chairman of UK Financial Investments (UKFI) which controls the taxpayer-owned 79% of RBS.

UKFI had recommended that RBS be allowed to pay that level of bonus to retain staff and attract talent, said Reuters.

Retention of staff is a dicey issue when it involves banks that are still in the throes of reform.

It is a Catch 22 situation where these banks are still experiencing falling revenues and low share prices.

The situation will probably improve when these banks can reap the fruits of their revamp and get off the hook with government owning the stake.


By YAP LENG KUEN... PLAIN SPEAKING  The Star/Asia News Network
Columnist Yap Leng Kuen looks forward to a more balanced infrastructure development in Asia.

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Hong Kong students at risk of anti-China scheming by outsiders; Chinese abroad blast protests

 HK leader: 'External forces' involved in protests

The Occupy Central movement in Hong Kong has lasted more than three weeks. The Hong Kong Special Administrative Region government on Tuesday held talks with the Hong Kong Federation of Students. But given a lack of positivity on the part of the latter during the talks, it remains unknown when the Occupy movement will end.

The external political situation concerning Occupy Central is increasingly clear-cut. Western public opinion has given it full support. Besides, a mix of traditional forces that are confronting the current Chinese regime, including Tibetan, Xinjiang and Taiwan separatists, Falun Gong devotees, and pro-democracy activists, have beaten the drums for the Hong Kong protests like cheerleaders.

The Occupy Central activists and their adherents must wake up. They shouldn't act as a puppet of those hostile external forces.

With the Hong Kong radical forces becoming a new member, the anti-China camp seems to be expanding. If this is the case, it will yield terrible results.

Hong Kong, the Asian financial hub and a role model for the rule of law, will be held hostage by those hostile external forces, transforming into a battlefield between them and the rising China.

We suggest the Occupy Central activists not take on such a perilous role. Being already embroiled in the political competition in the Asia-Pacific region, they may have been pushed further than they originally intended.

The young Hong Kong students who have participated in Occupy Central should know that China, which is developing rapidly, is their home country and Hong Kong is a part of China's rise. They therefore enjoy more opportunities than their counterparts from a smaller country. Meanwhile, they have to accordingly take responsibility to safeguard China's security as it rises.

If the Occupy Central forces keep advancing, this will attract more international anti-China forces. The longer the protests last, the harder it will be for the Occupy Central forces to back down.

Incredible role reversals have often occurred throughout history. A marginal part or even central part of a camp could be converted into the enemies of that camp. We strongly hope the Occupy Central activities won't do so.

The West-supported external forces will continue cheering for Occupy Central. Exiles will take the Occupy movement as their chance.

Their aim is to strike a heavy blow against China and take it down, but is this the goal of the young student participants of Occupy Central? If not, they should withdraw from the protests as soon as possible.

And for a small number of hostile elements to China, the country knows how to deal with them.

- Global Times

Chinese community leaders in London blast HK protests

Leaders of the Chinese community in Britain on Monday called on protesters in Hong Kong to stop the Occupy Central movement and let things return to normal.

According to a statement issued by the London Chinatown Chinese Association, the Occupy Central movement has disrupted Hong Kong long enough and needs to be wrapped up soon.

The statement called for stability through the "one country, two systems" policy and continued successful economic development for the international financial capital.

Under Hong Kong's basic law and its top legislature's decisions, more than 5 million Hong Kong voters have a say in who will become the chief executive in 2017 through the "one man, one vote" electoral system, said Chu Ting Tang, chairman of the London Chinatown Chinese Association, at a forum on the Hong Kong situation in London's Chinatown.

Residents of Hong Kong, under the "one country, two systems" rule, enjoy freedom of speech, religion, education and employment, Tang said, adding that "residents can demonstrate in the streets, criticize the government, media and members of the legislative body and monitor the government without restriction".

Tang believes that Hong Kong residents have been enjoying prosperity from a thriving economy and that their standard of living has been improving year by year.

"Since rejoining the Chinese mainland in 1997, Hong Kong's status as an international center for commerce and trade has been strengthened. The employment rate has also reached an all-time high," Tang said.

Shan Sheng, president of the UK Chinese Association for the Promotion of National Reunification, noted that the Occupy Central movement has had a serious impact on the residents of Hong Kong by obstructing administrative operations. The students among the protesters are young, some even not yet in their 20s, Shan said. Their understanding of politics is rather shallow.

Since being implemented in 1997, the policy of "one country, two systems" has been progressing smoothly in Hong Kong, Shan said, adding that real estate and the economy of Hong Kong have thrived.

The current protest movement is negatively influencing that development and the everyday livelihood of Hong Kong residents, Shan added.

Thousands of Hong Kong protesters, most of them students, joined the Occupy Central movement to express their discontent over the process set by the top legislature for electing the region's next leader through universal suffrage.

China's Hong Kong government on Tuesday held its first formal talks with students who have been participating in the Occupy Central movement since Sept 28.

- China Daily/Asia News Network

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GST will push up home prices by 2.6%, said Real Estate and Housing Developers Association Malaysia

But it says still too early to determine exact increase

PETALING JAYA: Home prices will rise by about 2.6% once the goods and services tax (GST) comes into play, said the Real Estate and Housing Developers’ Association Malaysia (Rehda).

The chairman of the association’s task force on accounting and taxation, Datuk Ng Seing Liong, said that the calculation was based on its consultations with industry experts and member developers.

Real Estate and Housing Developers' Association of Malaysia (Rehda) says the GST is likely to raise property prices.

Rehda’s 2.6% estimate differs from that of the Customs Department, which expects the GST to have an impact of between 0.5% and 2% on house prices, assuming there’s no change in supply and demand conditions.

Ng said the association was in full support of the GST and concurred with Customs GST director Datuk Subromaniam Tholasy, who had said that land did not incur the 6% GST rate.

However, he said land was by no means the largest cost component in property development.

“As our calculation clearly spells out, the construction cost, which constitutes 46% of the total development, is not only the largest component but also the component which will attract the GST of 6%,” he said in a letter to StarBiz.

He said the GST on this component would inevitably lead to an increase in house prices.

Appending calculations for a housing unit originally priced at RM400,000, Ng said the price post-GST would be around RM410,560.

Under the 46% construction component, costs were broken down into non-service taxable and service taxable segments, representing 44%, or RM176,000, and 2%, or RM8,000, respectively.

Under the non-service taxable segment comes items such as cement/concrete, steel, bricks and sand, while the service taxable segment includes tiles and fittings/sanitary. Under the existing sales and service tax, no tax is imposed on the non-service taxable category, while the service taxable category has a tax of up to 10% imposed on it.

Post-GST, Rehda’s calculations showed that the non-service taxable cost had gone up to RM186,560, while the service taxable cost remained at RM8,000.

It maintained the same cost estimates for other items, including land (15% or RM60,000), infrastructure and pre-development works (10% or RM40,000), professional fees and marketing costs (6% or RM24,000), finance costs (6% or RM24,000) and profit (17% or RM68,000).

Ng said Rehda also disagreed with Subromaniam, who had said that developers could easily absorb cost increases as their margins were around 30%.

He said it was currently impossible for developers to earn up to a 30% profit, as most development costs were on the rise, along with various capital contributions and charges imposed on developers.

“On average, as tabulated in the calculation, developers, most of which are public-listed companies, are only making around 17% at best,” he said.

However, Ng said it was still too early to determine the actual house price increases post-GST, as Rehda was still in discussions with the Government and there appeared to be many more issues to be ironed out.

By Isabelle Lai The Star/Asia News Network


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More Malaysians are being declared bankrupt!

JOHOR BARU: Young Malaysians are being declared bankrupt because they spend more than they earn, says Minister in the Prime Minister’s Department Nancy Shukri (pic).

This trend was worrying because most of them had just started working but already had debt problems, she added.

“This younger generation are supposed to be the next leaders. Instead, we have those who are already facing financial difficulties at a very young age,’’ she told a press conference after opening an information programme for young people at the Home Ministry complex at Setia Tropika here yesterday.

Quoting figures from the Insolvency Department, she said there was an increase in the number of young Malaysians being declared bankrupts in the past five years.

She said there were nearly 22,000 cases last year, an increase from about 13,200 in 2007.

Within the first six months of this year, more than 12,300 young Malaysians had been declared bankrupt. They include 3,680 women.

“On the average, 70.22% of the cases are men,” said Nancy, adding that most of them have outstanding debts of RM30,000 or more and could not afford to settle their dues.

She said the high bankruptcy rate among Malaysians at a young age mainly resulted from defaulting on instalment payments on car, housing and personal loans.

Nancy said there had been celebrities who were also declared bankrupt but most of them declined to seek assistance from the Insolvency Department.

She added that aside from the department, those who have problems managing their finances could seek advice from the Credit Counselling and Debt Management Agency.

The Star/Asia News Network

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Money, money, money ... Love of money is the root of all evil !

Lets not use Money as an all-powerful weapon to buy people

ONE can safely assume that the subject of money would be of interest to almost all and sundry. ABBA, the Swedish group, sang about it. Hong Kong’s canto pop king, Samuel Hui made a killing singing about it. Donna Summers, Pink Floyd, Dire Straits, Rick James and quite a few more, all did their versions of it.

Is money all that matters? The ‘be all and end all’ of life?

This will certainly be a fiercely-debated subject by people from both sides of the divide; the haves and have nots. Just last week, my 12-year-old asked if the proverb Money is the root of all evil is true. Naturally, like most kids of his generation, he would not have a clue as to how difficult it is for money to come about. Or why, when it does come about, it has the power to make and break a person. To a Gen-Z kid, the concept of having to ‘earn’ money is somewhat alien. Simply because everything he ever needs and beyond is ‘magically’ provided for.

Forget about teaching this generation to earn their keeps, just expecting them to pick up after themselves is a herculean ask. But we are not here to talk about that, instead, is money really the root of all evil? Perhaps, the proper answer would be ‘the love of money is’.

Let’s see what sort of evil comes with this love of money. Top of mind would be corruption, covetousness, cheating, even murder, just to name a few. These, of course, are of the extreme.

What about at the workplace? How does the love of money or rather the lure of money affect the employment market? Let me take on a profession closer to my heart, the advertising industry. Annually, our varsities and colleges churn out thousands of mass communication and advertising grads. Of these, only a handful would venture into the industry. Where have all the others gone?

A quick check with fellow agency heads reveals that many have opted to go into the financial sectors as the starting packages are somehow always miraculously higher than those offered by advertising agencies. A classic case of money at work. For those who have actually joined the ad industry, some get pinched after a while because of a better offer of ... money, and more. (As if this is not bad enough, the “pinchers” are often not only from within the industry but are clients!)

The fact is there is absolutely nothing wrong in working towards being the top of one’s profession and getting appropriately remunerated for it. The problem starts when money is used as the all-powerful weapon to ‘buy’ people. Premium ringgit is often paid to acquire many of these hires, some of whom, unfortunately, are still a little wet behind the ears. Paying big bucks for talent is all right, as long as the money commensurate with the ability and experience of the person.

Case in point is if an individual is qualified only as a junior executive with his current employer, should he then be offered the job as a manager and paid twice the last drawn salary? All because some of us are just so short on resources.

Now, hypothetically, if this person was offered the managerial post anyway, would he be able to manage the portfolio and deliver what is expected of him? Would he, for instance, ask what he needs to bring to the table? After all, he has suddenly become the client service director and draws a salary of RM20k a month. Does he actually need to bring more new businesses, or what? We can call ourselves all sorts of fancy titles but the point is we have got to earn it. As they say, the proof of the pudding is in the eating.

Having served on the advertising association council for the past nine years and presiding over it the last two, it concerns me greatly to see the how money is affecting and somewhat thinning the line of qualified successors to the present heads.

The lack of new talents coming into the ad business is increasingly worrisome. Though it may look a seemingly distant issue to most clients, they must now take heed. The agencies are business partners and if there is going to be a dearth of talents it will surely affect the clients’ business in the near future. So rather than pinching the rare good ones from the agencies, would it then not be in the clients’ best interest to instead remunerate the agencies so to secure better and higher standards of expertise? Food for thought, eh?

Pardon me for being old school. I am a firm advocate of the saying that one should not chase money. First learn to be at the top of your trade and money will chase you. Then again, we are now dealing with and learning how to manage the present generation. A generation of young, smart, fearless, and somewhat impatient lot who may not be as loyal as their predecessors. A generation that loves life and crave excitement. Adventure is in their blood and ‘conforming’ is a bad word. And money, lots of it, makes the world go faster for them.

As elders, we need to look hard and deep into how to inculcate the right value of money in this new generation. These are our children. They are the future. If we make no attempt to set this right and instead keep on condoning the practice of over-remunerating them, we will be in trouble. The fact that Malaysia will soon have to compete in the free-trade region further allows money to flex its muscles more. I shudder to think what would happen to our young ones if we keep on mollycoddling them with the wrong idea that they ought to be highly paid just for breathing.

Folks, my sincere apologies if I have inadvertently touched some tender nerves but a wake-up call this has to be. For our dear clients, think about the proposition to review your agency’s remunerations – upwards I mean. This, over taking people from the industry, will save you more in the long run.

For those of us in the agencies, let us keep polishing up our skills and not let money be the sole motivator. If you are good, others will take notice. Work hard, the rewards will come. Just exercise some patience.

I leave you with a saying that one Mr Jaspal Singh said to me when I was a rookie advertising sales rep with The Star eons ago: “Man make money, money does NOT make a man”. (Or woman, of course.)

Till the next time, a very Happy Deepavali to all.

God bless!

 By Datuk Johnny Mun, who has been an advertising practitioner for over 30 years, is president of the Association of Accredited Advertising Agents. He is also CEO of Krakatua ICOM, a local ad agency.