The center of world economic gravity moving east as AIIB shows


Chinese President Xi Jinping (C, front) poses for a group photo with the delegates attending the signing ceremony for the Articles of Agreement of the Asian Infrastructure Investment Bank (AIIB) at the Great Hall of the People in Beijing June 29, 2015. [Photo/Agencies]

http://player.cntv.cn/standard/cntvOutSidePlayer.swf

World Insight: http://english.cntv.cn/2015/06/30/VIDE1435616042104565.shtml

http://player.cntv.cn/standard/cntvOutSidePlayer.swf?videoCenterId=0ec45a9a1c7b41e389a04b5df8ac30bd&tai=outSide.english&videoId=435616042104565

Financial leaders of 57 states gathered in Beijing on June 29 to sign the agreement for establishing the Asian Infrastructure Investment Bank (AIIB), expected to become the region’s largest investment bank in the 21st century.

Seventy years ago, the World Bank was established, led by the US and its close western economic and political allies, as the first global financial institution. Along with the World Trade Organization and the International Monetary Fund, the western powers have commanded world financial and trade order for more than half a century. Even the Asian Development Bank (ADB), established 20 years later after the World Bank, has been largely controlled by Japan, backed by the US and other western economic powers.

China benefited from the global and regional development and financial institutions in the initial stage of economic reform and openness. As China expanded its economic strength it has aggressively contributed to financing them. However, despite its financial contribution to these institutions rising significantly China still has limited influence over management and operation.

China’s desire to influence world financial order and its inability to do so have been due to the governance structure of these institutions where China is not only a minority shareholder but its voting rights are marginalized.

Since the world financial crisis, triggered by the US subprime mortgage crisis and the EU’s debt problem, China’s relative importance in the world economy has risen rapidly. By 2010, it surpassed Japan to become the world’s second largest economy, and by 2012 it overtook the US to become the world largest trading nation as well as the largest producer and consumer of motor vehicles.

Apart from China’s second-to-none manufacturing capability, it holds the world’s largest foreign exchange reserves which have to be used effectively so they can generate a financial return and make appropriate contributions to infrastructural development in Asia, the largest and fastest growing region among all continents.

In addition, China, India, Russia and other initial AIIB member states have the financial strength and managerial confidence to create a new financial institution similar to the World Bank and ADB. For the initial $100 billion fund to be pledged, China has agreed to contribute 29.7 percent, India 8.3 percent, Russia 6.5 percent, Germany 4.4 percent and South Korea 3.75 percent. Other major contributors include the UK, Australia and Indonesia.

Both the US and Japan have not expressed their intention to join AIIB although many US political and economic allies have come to Beijing to sign the agreement, particularly the UK, Germany, France, Italy and Australia. The diversion of these countries’ attention away from the US to China and Asia not only reflects ever rising business opportunities in Asia, but also the relative decline of the US-led western influence on the global economy and financial order.

The apparent shift of economic gravity from the West to the East reminds me of my personal experience in the past. Thirty year ago, I was awarded a World Bank scholarship from a university in Hainan to study in the UK in 1985. At that time, the salary of a Chinese university lecturer was less than 1 percent of his UK counterpart. Today, all the top Chinese universities are able to pay significantly more than the equivalent UK or US salaries to attract overseas talents to work in China. In addition, numerous university teachers in China can easily apply for more research funding than their western counterparts.

Although China is still a developing economy by definition, it has exceeded many western powers in a number of areas such as equipment manufacturing, high-speed railways, nuclear power, construction, infrastructure engineering and space technology. In 2014, Chinese scientists produced the second largest number of high-impact academic journal papers in the world.

China started the first high speed railway 30 years later than Europe, but by 2014, has built 16,000 km of high-speed tracks, twice as long as the total length of all the EU countries put together. BYD, one of China’s private auto makers, has marched to California to build electric buses for the local market.

India is racing to follow in China’s footsteps. Its economy was growing as fast as China in 2014 and is set to overtake China’s growth in 2015. However, India’s transportation systems are so poor that they are evident constraints on the country’s development. It is expected that India will require $1 trillion to improve its transportation systems, and the establishment of AIIB will be helpful to its development needs. Other Asian countries face similar problems of investment for roads, railways, airports, seaports, telecommunications and internet.

AIIB will become a potent propeller to accelerate economic and social development in Asia. Along with the Silk Road Fund and the Brics Bank, China will use AIIB to implement its “one- belt and one-road” regional and global development strategies.

The Silk Road Economic Belt and the 21st Century Sea Silk Road will cover more than 60 countries surrounding China, and many will benefit from China’s outward-looking investment and development strategies. Under Xi Jinping’s leadership, China has gained increased support from neighbouring countries in Asia and many others in Latin America, Europe and Africa, thanks to its persistent foreign policy of peaceful cooperation, mutual benefit and common prosperity.

The future operation of the AIIB may face many challenges and uncertainty, but the AIIB has signified the rapid emergence of China, India and other developing and transitional economies. The determination and confidence for success through the AIIB and other newly created financial institutions suggest that the world financial and political order will be different from now, as the overwhelming dominance of the World Bank and ADB in Asia and the world financial systems will inevitably decline in the future.

By Shujie Yao (chinadaily

The author is a professor of economics, Chongqing University and the University of Nottingham.

Through AIIB, China can learn to lead

Representatives of 57 prospective founding members of the Asian Infrastructure Investment Bank (AIIB) gathered in Beijing on Monday for the signing ceremony, with 50 of them endorsing the AIIB agreement. As the largest shareholder, China takes a 30.34 percent stake and correspondingly has a voting share of 26.06 percent, which actually enables China to wield a veto on major issues, such as electing the bank’s president. This is a moment that our nation could never have imagined just 10 years ago.

The move forward in the AIIB, however, seemed to have no bearing on people’s feeble confidence in China’s stock market, as shares plunged amid a flurry of automatic sell orders on this remarkable day.

However, the country’s fundamental confidence has been elevated to a new stage. This is the first time ever that China is leading an international multilateral bank. Its influence is prominent and far-reaching, and it carries more profound significance than successfully hosting an Olympic Games.

It took China less than six months to complete the signing of the AIIB agreement and this efficiency shocked the world.

Although China barely has any experience in this regard, it is proof of its excellent capacity to learn and of its eager pursuit of fairness and equity. The first batch of 50 signatories is far more than the number of founding members of the Asian Development Bank (ADB).

China’s attempt to lead the international financial institution may have been forced by unfair treatment in other institutions or China may want to test experiences with the AIIB as we are still a developing country. But from now on, we must shoulder our responsibilities.

Of these responsibilities, the foremost is to bear criticism as numerous Western observers are waiting to find faults with and go bearish about China. But regardless of what they say, China must stick to its current trajectory.

In recent years there have been fewer protests by China, but frequent ones against Beijing overseas. China needs to stick to its major principles, but it does not need to be entangled in minor issues.

US allies that have joined the AIIB do not mean to flatter China, but they see the benefits will outweigh their relations with Washington. With GDP at the $10-trillion level, can China build more platforms of common interest and convince the outside world that working with China always means a win? This serves as the key to China’s further rise without encountering strong resistance from the outside.

Compared with the IMF, World Bank and the ADB, the AIIB indicates that the environment where China is rising may not be as terrible as we conceive. We must grasp the opportunities.

Source: Global Times Editorial



50 nations sign AIIB deals – China wields veto powers, enjoys 26% voting rights

China’s role as the largest shareholder with significant voting rights in the Asian Infrastructure Investment Bank (AIIB) will make the country shoulder more responsibility in turning the bank into a high-quality financial institution to complement existing multilateral development banks, experts said Monday.

A total of 50 prospective founding members of the AIIB on Monday signed the bank’s articles of agreement (AOA) in Beijing, which outlines the bank’s objectives, operating principles, governance structure and decision-making mechanisms.

Seven members, including Denmark, Thailand and the Philippines, failed to sign the AOA on Monday. China’s Ministry of Finance said they can sign the agreement anytime this year.

“The signing of the AOA is a milestone in the establishment of the bank,” Vice Minister of Finance Zhu Guangyao told the Global Times Monday on the sidelines of a forum in Beijing.

The bank was proposed by President Xi Jinping in 2013 during his visit to Indonesia.

Xi said on Monday that China’s development would not have been possible without Asia and the world.

“As China grows stronger, we are willing to make our due contribution to world development,” he said.

Zhu said the AIIB’s establishment process has outpaced other multilateral development banks, and its objectives have won support from members within and outside Asia.

“We hope AIIB members’ legislatures will approve their AOA membership as soon as possible and get the bank’s operations going by the end of the year,” he added.


Voting shares

The AIIB will have an authorized capital of $100 billion, and Asian members are required to contribute up to 75 percent of the total capital, leaving the rest to non-Asian members, according to the AOA.

China is the bank’s largest shareholder with a 30.34 percent stake. This gives China 26.06 percent of the voting shares, also the largest, within the multilateral financial institution.

“It is within expectations given China’s huge economy, and it also means China needs to shoulder more responsibility in building the AIIB into a high-quality bank,” Ruan Zongze, vice president of the China Institute of International Studies, told the Global Times Monday.

According to the AOA decision-making mechanism, China has effective veto powers over major decisions because it has voting shares of over 25 percent.

China does not seek veto powers in the AIIB, Vice Finance Minister Shi Yaobin told the Xinhua News Agency Monday. He said the country’s stake and voting shares in the initial stage are natural results of current rules, and may be diluted as more members join.

“Being a major Asian economy, Japan’s entry will dilute China’s stake and voting shares more than any other country, but so far we have not seen such a sign,” Ruan said.

He said he believes the AIIB is not likely to approve a large number of new members in its initial stage. Instead, it will focus on rolling out investment projects.

Owning veto powers does not mean that China will use these powers in AIIB’s future operation, Jia Qingguo, dean of the School of International Studies at Peking University, told the Global Times Monday.

Jia said China might use the powers only if the projects would seriously hurt China’s interests or are not in keeping with the bank’s objectives, adding that the possibility for such conditions is low.

After the signing of the AOA, the bank’s senior management will be appointed before it starts operations.

The bank’s headquarters will be located in Beijing, and its president will be selected through an open, transparent and merit-based process, according to the AOA.

The AIIB’s future investments will focus on Asian infrastructure projects in the energy, power, transport and agricultural sectors that also meet environmentally friendly and energy-saving standards, Jin Liqun, secretary-general of the AIIB’s interim multilateral secretariat, said at a forum held in Beijing over the weekend.

The Asian Development Bank said it believes Asia would need infrastructure investments worth over $8 trillion between 2010 and 2020.

“The AIIB will complement existing multilateral development banks to promote sustained and stable growth in Asia,” Zhu said.

World Bank President Jim Yong Kim welcomed the signing of the AOA.

“More funding for infrastructure will help the poor, and we are pleased to be working with China and others to help the AIIB hit the ground running,” he said in a statement on Monday.

– Song Shengxia contributed to this story

Related posts:

05 Apr 2015
Every single U.S. ally with the exception of Japan have all hopped on board the Asian Infrastructure Investment Bank, or AIIB. Italy and France were approved on Thursday to become founding members, bringing the total …
27 Oct 2014
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 …

Service first, don’t waste energy and resources in unproductive ways !


Service_dress codeA photo taken from Facebook showing what the woman wore when she was denied entry to the Balik Pulau court complex.

The mission: service first

Malaysian taxpayers should be treated as customers who deserve the best service. Government departments should aim to keep their standards high and not fuss over how their customers are dressed.

TEACHERS are supposed to teach. And when members of the public visit the hospital, the Road Transport Department, or any government facility for that matter, they are there for a service, and they expect to be given that.

After all, as has been said many times before, the public service exists because the taxpayers are the ones who pay the salaries of the civil servants.

But things do become complicated when some individuals get side-tracked from their job specifications, and start to bring politics and religion into play.

The problem with some Malaysians is that we are also not very good at exercising reasonable discretion. Maybe we fear those who hold higher positions and dare not question their authority, as it is not part of our culture, or simply because of fear of reprisals.

So, if you are a security guard, whether a member of the People’s Volunteer Corp (Rela) or someone from a security firm, you would be expected to just carry out the orders made by the boss, or maybe the smaller bosses, which in most cases, can be more difficult than the real top boss.

Malaysians would know by now, judging from incidents in the past weeks, that it’s always these little guys who get the blame.

If you are being asked to wear a sarong over your skirt which is deemed too short, you will look quite unnatural, and are bound to draw strange looks from others. Wouldn’t the front desk officer enquire from you, in a puzzled manner, why you are wearing a skirt with a sarong on?

But if the officers are indifferent to the ­situation and the head of the front desk does not even bat an eyelid, it is obvious that they are fully aware of what the security guard has ordered the member of the public to do.

Maybe this has been going on for a while, except that no one has complained, and a recording of the event had not gone viral.

Since incidents of such a “humiliating” exercise have been reported, many others, including a former colleague, have shared their experiences on social media.

My ex-colleague took her case all the way up to the JPJ chief, who apologised for the unfortunate incident. But in her case, she has access to the boss because of her job.

I have been following the exchange of opinions on social media and, by now, we are well aware that we are also not very good at articulating or advocating our case well. Many of these views seem racially and religiously prejudiced and, as a result, a sense of reasonableness is lost.

Dress codes are not something unusual. Even casinos, as some have pointed out, have strict dressing codes before anyone can enter. But the question here is how these rules are reasonably enforced in our government departments?

In all fairness, checks by our reporters have shown that most government departments are reasonable and seem to totally ignore even their own dress codes. Their priority is to provide service and the people are served even if the skirt’s hemline is above the knee or they are wearing slippers.

We actually have photographs of inadequate­ly dressed men, including one in a pair of shorts and singlet, rushing into a JPJ office and were properly served.

As with all debate, there are those who argue whether micro mini-skirts and bikinis would be tolerated, which I think is stretching the argument too far. Anyone who wants to dress that way in public, not just in a govern­ment facility, will most likely be hauled up.

No sane person would go to any office, private or public, in a bikini, so such arguments are flawed and unreasonable.

The recent cases whereby the women were asked to wear the sarongs are certainly not in this category. Anyone with a fair and objective mind would surely agree that all the ladies were properly and decently dressed.

Then, there have been a number of cases brought to light recently of teachers who want to play moral guardians in schools.

One incident was when a teacher reportedly confiscated the little crucifix that a student was wearing. A police report was subsequently lodged.

But according to the latest report, the cross has since been returned to the student and the father has accepted an apology from the school principal and also withdrawn the report.

It has also been reported that pressure was exerted on the headmaster and school management board of St Mary Labuk in Sandakan to remove the cross from the new school building. But Deputy Education Minister Datuk Mary Yap stepped in and guaranteed that the cross would remain, saying it had been clearly stated that mission schools are allowed to upkeep the ethos and characteristics of these schools.

It seems to be a phenomenon of the past decade. We all know the crucifix has long been removed from classrooms in mission schools, because of an order from the then minister who is now in the opposition.

About the same time, the symbol of the crucifix was also taken out of mission school badges. The Latin mottos fortunately have remained and presumably no one understands what they mean.

Well, Malaysia’s problem, or rather the Little Napoleons’ problem, is that we seem to channel our energy in a very unproductive way. There is a lot of fire-fighting because these people think they can get away with anything, and only when it becomes an issue do they step back.

Teachers should be striving to make our students top in Maths and Science and be competent in the English language. Instead, in these core areas of education, we have continued to deteriorate further.

Our students are no longer gaining entry into Ivy League schools such as Harvard as we used to. Schools used to be able to boast of these achievements but these days, many of them get into the news for all the wrong reasons.

Even if we seem to be generating many students with a string of As in the public examinations, these premier universities are not that easily impressed.

Meanwhile, no one will deny that our government-run hospitals are providing good service to the people. We must commend our doctors and nurses who toil daily for the public, at wages that are far less to what their counterparts in the private hospitals can command.

But the people who run these hospitals must also focus on keeping the standards high, and even raise the bench mark. The least of their concerns should be to worry about how visitors are dressed.

Just like at the JPJ, surely worrying about the dressing of the public is not part of the JPJ mission statement.

Malaysian taxpayers should be treated as customers who deserve the best service. They should not be sent home, denied entry or asked to wear a sarong, simply because someone takes offence to how they dress.

Moderates, stand up

Before and after: Photos posted on Tan’s Facebook page showing her original attire (left) and the sarong she was asked to wear at the JPJ office.

Before and after: Photos posted on Tan’s Facebook page showing her original attire (left) and the sarong she was asked to wear at the JPJ office.

IT is said that ignorance is bliss, but not necessarily so all the time. Most Malaysians must have been amused, rather than upset, over a recent Facebook posting that went viral and eventually caught the attention of a news portal.

It started with an angry customer, going by the name Mista Bob Faishah, posting on the Texas Chicken Malaysia Facebook page that the fast food chain obviously did not take into account religious sensitivities because the franchise’s brand dipping sauce is named “Church”.

“Dear TCM… Please do explain (yo)ur dipping sauce brand at Malaysia Franchises… Most of (yo)ur customers is a Muslim… AND Muslim didn’t not eat for food from ‘church’ brand,” he wrote. He also shared the image of said dipping sauce together with his post, the portal reported.

Soon, an equally outraged Facebook user, Halim Zainal, left a comment saying that Texas Chicken Malaysia should change the name on the packet as a sign of respect to its Muslim customers.

The angry person warned TCM that they would not be able to sustain their business if they were not sensitive to Muslims in the country.

The management of TCM had to patiently explain to the customer that the franchise’s “Church” brand dipping sauce was named after the founder and did not represent the Christian house of worship.

“Please be informed that the brand Texas Chicken was founded in San Antonio, Texas USA by our founder by the name of George W Church Sr — Church being his surname and the name of the brand Church’s Chicken.”

The Facebook post elaborated that the word “church” was not used in a religious context and that some of the dipping sauces were imported from the United States, where the food chain originates.

But it has ended well. The customer has now posted an apologetic comment: “Deepest from my heart that I want to ask apologized for my post (1 June). For that time I only want to inquiry regarding the brands of “church” brand. And after TCM do explain to my inquiry n I accepted that was the co brand from san Antonio, Texas.

“I hope with my apologized here can stop all the negtive things goes more bigger. That what can say I only just want to inquiry regarding that brands only..But for ur info, I stlll enjoy my meal with my favorite winglets from TCM!

“Once again..I’m apologized for my post before that I had removed because I don’t want that all people read n negtive thingking of my inquiries.”

Well, as we can see from the postings, the person’s command of the English language really leaves much to be desired.

That could have been one reason why he did not first check, via Google or other search engines, for information about this food chain and why its products are named as such.

Our English language proficiency, sad to say, has hit rock bottom and many of our Internet users are missing out a lot because they have such a poor command of the universal language.

He only associated the word “church” with religion, without being aware that it can also be the surname of many people. Christian Bale would be really worried if people stop going to watch his movies if such an association is made.

But let us keep this in perspective. We can all accept Mista Bob Faishah for sportingly admitting his mistake. We are sure he has no intention to create a controversy.

But another issue that we need to be concerned about, apart from poor English, is whether we are seeing a rise in religious conservatism where many modern-day practices that everyone in our plural society used to accept as a matter of course – from food to sports and entertainment – are being looked at from a different, and more radical, perspective.

Those who spew hate messages in the name of religion can always find a ready audience in those who are prepared to take what they say without question.

And this applies to all religions where such leaders thrive on those who are blissfully ignorant on the true nature of their faith.

Such an environment makes it easy for these people to create fears among the followers that they are constantly under threat. The bogeymen in flavour today include Christians, Jews, the LGBT community, liberal-minded people, etc.

Fortunately, we are still a country where people of different faiths can co-exist peacefully and in harmony with one another.

Faith is a matter of the heart and whatever the rabble-rousers may want to ferment, few will believe that just seeing the religious symbols of another faith will so easily shake their own beliefs.

Be that as it may, we need to also be on guard against the rise of extremism, especially when it comes quietly in every day situations.

The voices of moderation must be heard, and the silent majority cannot afford to be quiet if they value the kind of society we live in.

Why are so many Malaysians not surprised to read about the middle-aged “aunty” who was asked to wear a sarong before she could be served at a Road Transport Department office? The Rela guard felt her skirt, which was just above her knees, was too short and did not adhere to the dress code.

It may be a small matter to some, but it was good of Suzanna G L Tan to share her experience on Facebook by posting a photograph of herself outside the office, showing her attire for the public to judge.

“I had to go to JPJ personally to sign the transfer form for the car I sold. That in itself is already a pain,” Tan wrote.

“I go dressed like this. Indecent meh?” she asked in reference to her dressing in the photograph.

Tan said while she was at the counter to get a queue number, she was handed a sarong to wear “or they would not entertain me”.

The blame eventually fell on the Rela guard but none of the other officers at the JPJ office bothered to tell off the Rela guard for his over-reaction. They have kept silent over this demeaning exercise.

We used to be able to blame the little Napoleans for incidents like this but with the advent of social media, such actions can always be recorded for the public to judge.

And then we have our Malaysian gymnast Farah Ann Abdul Hadi, who has just won a gold medal at the Sea Games, being criticised for not covering up. But to be fair, there were many who came to defend her on Buletin TV3’s Facebook.

Instead of applauding her flawless performance, there seem to be those with perverted minds whose minds are focused elsewhere.

These people thrive on attention and their antics have a way of being magnified way beyond their actual influence.

But here’s the saddest part. Those who speak out for Farah Ann are the usual known personalities and non-governmental organisations while those we wish to hear from – including politicians from both sides of the divide who hold national level posts – are strangely quiet.

But we are glad that the Youth and Sports Minister Khairy Jamaluddin, who has to protect our athletes, spoke out.

“In gymnastics, Farah wowed the judges and brought home gold. In her deeds only the Almighty judges her. Not you. Leave our athletes alone,” wrote Khairy on his Twitter account.

By Wong Chun Wai on the beat

Wong Chun Wai began his career as a journalist in Penang, and has served The Star for over 27 years in various capacities and roles. He is now the group’s managing director/chief executive officer and formerly the group chief editor.

On The Beat made its debut on Feb 23 1997 and Chun Wai has penned the column weekly without a break, except for the occasional press holiday when the paper was not published. In May 2011, a compilation of selected articles of On The Beat was published as a book and launched in conjunction with his 50th birthday. Chun Wai also comments on current issues in The Star.

Related:

Short affair: What Ng wore when he was barred from entry at KLIA. Taken from …

Related posts:

We must separate the roles of the Attorney-General as legal advisor to the Government and Public Prosecutor who prosecutes cases in cour…

Building structural integrity & failure: problems, inspections, damages, defects, testing, 

Reponsible housing developers’ traits and qualiies expected

Who is responsible: developer, contractor, local council or house-owner for the damages? 
Who is responsible for slope management? Does the responsibility come with the property bought by the purchaser? THE collapse of a…

 
House buyers, learn your rights
House buyers, learn your rights. I RECENTLY moved into our new house in Sungai Ramal Dalam. I bought the property back in 2012 and we received t

We need local councillors who can do the job

I REFER to the article “Local govt polls may cause racial polarisation” ( Sunday Star, Jan 25) and would like to
share my views on matters. …

Fighting corruption must be serious !


We must separate the roles of the Attorney-General as legal advisor to the Government and Public Prosecutor who prosecutes cases in court.

IT has become fashionable for critics to express dissatisfaction every time the Auditor-General presents his report to Parliament. So when the second report this year was tabled on June 15, the reaction was generally expected.

But the reaction from Public Accounts Committee (PAC) Chairman Datuk Nur Jazlan Mohamed is particularly important. Nur Jazlan, who is also Ideas’ Council member this time, says that he is disappointed with the performance of many Government agencies because they have failed to improve.

He also said that not long ago he praised Government officials for showing improvements every time the Auditor-General’s report is published. But he felt compelled to retract that praise because this time it was particularly bad.

He went on to say that many of the problems originate from the attitude of civil servants. Apparently the quality of our civil servants has deteriorated, and they don’t even bother to read the rules.

When the PAC Chairman makes such a bold statement, you know that there is something really wrong in the way civil servants manage our money. It is ironic that the Prime Minister recently announced a bonus for our civil servants despite such abysmal indictment.

Under Nur Jazlan, the PAC has been doing a much better job in identifying weaknesses in Government machinery and in demanding accountability. In fact, thanks to the PAC, the public now knows about the risk posed by Pembinaan PFI Sdn Bhd, a Government-linked company that has one of the biggest liabilities among Malaysia’s GLCs. The company has been off the audit radar for almost 10 years, despite the large amount of debt that it has accumulated.

The work of bodies like the PAC is important in our push for better governance in the country. The issues the PAC looks into are not necessarily about corruption.

Their responsibility is wider, covering also problems such as leakages and failure to adhere to published policies and procedures.

Fighting corruption, on the other hand, is more commonly associated with the Malaysian Anti-Corruption Commission (MACC). I am still waiting to see if the MACC would act on a recent admission by Home Minister Datuk Seri Ahmad Zahid Hamidi that a Special Branch report found that around 80% of our border enforcement officers are involved in corruption.

Nevertheless, I am very aware that even if the MACC were to start an investigation, that is only half of the journey. The other half lies outside of the MACC’s jurisdiction, and that is the prosecution of corruption cases.

Our system is designed in such a way that the MACC, just like the police, can only investigate and not prosecute. Prosecution is the sole discretion of the Attorney-General, who doubles up as our Public Prosecutor.

I have no problem with the MACC not having the power to prosecute. In fact, I think it is right to keep prosecutorial powers away from the investigation agency. Back in 2012, we at Ideas looked into this issue and compared the experience of Indonesia and Hong Kong in fighting corruption.

We published the findings in July 2012 and concluded that it really does not matter whether or not the MACC has prosecution power. Instead, what is most important is the integrity of the judiciary and the Attorney-General’s office.

Any effort to improve the quality of MACC, therefore, will have to be accompanied by reform in both the judiciary and the Attorney-General’s Office. Focusing on the MACC alone is not sufficient.

If we want to see a more effective fight against corruption we must separate the roles of the Attorney-General as legal advisor to the Government and Public Prosecutor who prosecutes cases in court.

Let me justify that with a simple analogy using the case of the allegedly corrupt border enforcement officers.

Let’s say the MACC do investigate the allegation and find that the problem runs all the way up to Ministerial level.

The MACC then passes the files to the Attorney-General. How much confidence do we have that the Attorney-General will prosecute his friends in Cabinet?

It is obvious that as legal advisor to the Government, he is conflicted. How can he prosecute the very party he is supposed to advise?

There are actually many more proposals to improve the MACC that deserve public attention. If you are interested in this topic, I suggest you search for reports published by the Special Committee on Corruption now chaired by Tan Sri Abu Zahar Ujang. This bipartisan committee, whose membership consists of members of the Dewan Rakyat and Dewan Negara, regularly comes up with some very good ideas.

One of those ideas is for the MACC to be given independence in recruiting their own officers. This suggestion has been mooted since 2010 and it makes a lot of sense. To be truly independent, MACC cannot continue to be dependent on seconded staff from the Public Service Commission, because this creates a conflict of loyalty.

But unfortunately, this idea has not received the attention that it deserves from the Government. There are times when I ask myself if our Ministers are really serious in the fight against corruption. For if they are really serious, why are they ignoring sensible ideas coming from a committee whose membership is from among their own colleagues?

Don’t they realise that the longer they choose to do nothing, the more people will feel that they have things to hide?

By Wan Saiful Wan Jan, thinking liberally The Star

Wan Saiful Wan Jan is chief executive of the Institute for Democracy and Economic Affairs (www.ideas.org.my). The views expressed here are entirely the writer’s own.

Related posts:

Who is responsible: developer, contractor, local council or house-owners for the damages?Who is responsible for slope management? Does the responsibility come with the property bought by the purchaser?.
Structural integrity and failure is an aspect of engineering which deals with the ability of a structure to support a designed load (w…

Malaysia’s 1MDB’s questionable accounts


Summary raises  questions over spending. It shows where money went but fails to debunk critics.

In acquiring assets of RM13.7 bil, it incurred RM5.4 bil in cost of financing working capital and foreign exchange cost  between 2010 & 2014Accountant.

PETALING JAYA: Controversial 1Malaysia Development Bhd (1MDB) has given a brief summary of how it has incurred a RM41.8bil debt bill in a space of five years.

While the explanation showed where the money raised has gone to, it did not debunk criticism on why a sum of RM15.4bil raised locally and some of it guaranteed by the Government, are placed with funds outside the country for purposes of investments and as security deposit for loans.

It also reveals a staggering RM4.5bil that 1MDB has incurred in financing and capital cost and RM900mil in foreign exchange cost, which accountants describe as a sizeable amount that needs to be explained further.

1MDB president and group executive director Arul Kanda Kandasamy said the clarification on the use of its RM42bil debt was necessary to address allegations that RM27bil was “lost” or “missing”.

“In recent weeks, there has been much speculation about the use of RM42bil of debt raised by 1MDB, and more specifically that RM27bil of the debt proceeds are allegedly “lost” or “missing”.

“We provide a summary of what the RM42bil debt has been used for, information that is fully disclosed in 1MDB’s audited and publicly available accounts from March 31, 2010 to March 31, 2014.

“We trust this clarification will help to clear any confusion on this matter,” he said in a statement.

One of the strongest critics of 1MDB is former Prime Minister Tun Dr Mahathir Mohamad who has said that he could not account for some RM27bil of the RM42bil in debts carried by 1MDB.

In the summary, 1MDB for the first time revealed how much it has placed as investments with foreign funds and amounts deposited as security with Middle East funds for guarantees on loans.

The funds for investments are placed with Brazen Sky that has received RM6.1bil and GIL Funds that is holding RM5.1bil.

A sum of RM4.2bil has been placed with Aabar Investments Deposits as security for a US$3.5bil(RM12.9bil) bond issued by 1MDB in 2012. The bonds were issued when 1MDB acquired power plants from T. Ananda Krishnan’s Tanjong Group and the Genting Group in 2012.

The purchase of the power plants was the biggest item in 1MDB’s shopping list. However, the power plants came with a debt of RM6bil, which means 1MDB incurred a cash outlay of only RM12bil to buy the assets, although it lists RM18bil in its summary.

The next biggest item in the Finance Ministry-sponsored fund is a sum of RM1.7bil it paid to acquire three parcels of land – the Tun Razak Exchange and Bandar Malaysia in Kuala Lumpur and 234 acres (94.6ha) in Air Itam, Penang.

1MDB refuted allegations that the three parcels of land cost RM2.1bil, pointing out that the amount incurred was RM1.7bil.

The fund said it paid RM200mil for the TRX land and RM400mil for 495 acres (200ha) in Sungai Besi that is now known as Bandar Malaysia.

Both parcels of land are among the last pieces of large developments left in the city and had been the target of several prominent groups before it was given to 1MDB without any competitive tender.

Since 2011, 1MDB has re-valued the 72-acre (29ha) TRX development and the Bandar Malaysia parcel several times to reflect its soaring valuations.

The two developments now carry a combine value of RM4.3bil.

However, an accountant said the cost of financing and working capital incurred by 1MDB to acquire the assets and run its operations at RM4.5bil was on the high side.

“It raised debts to acquire power plants and three parcels of land. The other amounts raised were largely placed with fund managers as investments or as security deposits. Investments placed with fund managers should give returns and not incur financing cost.

“Similarly, the deposits should also give returns and not incur financing cost,” said the accountant.

The accountant pointed out that stripping out the investments placed with the funds outside Malaysia and the debt of RM6bil inherited when acquiring the power plants, the actual cash outlay 1MDB incurred in acquiring the power plants and three parcels of land was RM13.7bil.

“In acquiring assets of RM13.7bil, it incurred RM5.4bil in cost of financing, working capital and foreign exchange cost between 2010 and 2014.

“That needs further explanation. Without a breakdown in how much was the finance cost and working capital it is difficult to say whether the funds were well utilised,” said the accountant.

By M. Shanmugam The Star/Asia News Network

Related stories:

Husni: Written approval needed as PM represents Govt

Bank Negarabegins itsown probe

Rafizi pokes holes in fund’s debt summary

Stop spreading quit rumours, say ministers

Dr M: Ministers differ over 1MDB

Bank Negara probes 1MDB, no special exception for 1MDB

Related posts:

We have a due process to investigate any complaints made against any of our members,” MIA chief executive officer Ho Foong Moi (inset pic)…

Who is responsible: developer, contractor, local council or house-owner for the damages? 
Who is responsible for slope management? Does the responsibility come with the property bought by the purchaser? THE collapse of a…

Regulators act on complaints: MIA to name and shame errant professionals


We have a due process to investigate any complaints made against any of our members,” MIA chief executive officer Ho Foong Moi (inset pic) told StarBiz.

PETALING JAYA: The auditors who signed off on the controversial 1Malaysia Development Bhd (1MDB) accounts will be investigated by the Malaysian Institute of Accountants (MIA).

Confirming this to StarBiz, MIA chief executive officer Ho Foong Moi said this was following complaints made by an Opposition Member of Parliament (MP).

DAP’s Petaling Jaya Utara MP Tony Pua had made two complaints to MIA, one in March and another in May.

“We have a due process to investigate any complaints made against any of our members,” Ho said.

MIA would not say when it aimed to complete the investigation. Ho said the deadline would depend on many factors as the case was complex.

“It also depends on whether we can obtain the relevant documents as well as prompt responses from the relevant parties,” she said.

On how impartial the probe would be, given that several council members of the MIA also work for three firms or the Accountant General’s office – who are involved with 1MDB – Ho said that any conflicted party would not be involved in the MIA investigation.

Three of the Big Four accounting firms were at one time or another working for 1MDB. The three are Ernst & Young, KPMG and Deloitte. The Accountant General’s Department is an authority under the Finance Ministry and advises the minister on who to appoint to the MIA council. Nine out of the MIA’s 29 council members work for the three firms or the Accountant General’s office.

The RM42bil debt chalked up by 1MDB has been the interest of many, but this is the first time the MIA is stepping in.

There have been previous calls for it to check on the auditors. The chairman of the Public Accounts Committee, which is holding an inquest into 1MDB, said he had found some accounting issues.

Datuk Nur Jazlan Mohamed said a few major accounting principles seemed to have been stretched to achieve the unqualified opinion in 1MDB’s 2014 accounts.

He called for regulators like the MIA and the Audit Oversight Board to step up and enforce the law. But the board has made it clear that it has control only over auditors of public listed companies.

The MIA, on the other hand, is a regulator for the accountants in Malaysia. The body has the power to investigate and punish members. It can even bar members from practising. But Ho stressed that the body can investigate only individuals, and not firms.

When the misconduct is less serious, the MIA can reprimand or fine the member. The MIA can also suspend a member for up to three years.

Move to name and shame errant auditors

PETALING JAYA: The regulator of audit firms in Malaysia has raised the issue of firms not fixing problems it had raised during inspections.

To put pressure on such firms, the Audit Oversight Board (AOB) will to make its inspection report public.

“We are concerned that audit firms may have started to be complacent with the deficiencies and issues raised in our inspection reports and have not given the required attention to the effectiveness of their remediation plans as indicated earlier to the board,” said executive chairman Nik Mohd Hasyudeen Yusoff in the AOB annual report 2014.

He noted that while firms have been enhancing their quality control, the board had found little actual improvement.

Last year, the board set stricter conditions for registration. It refused an application for recognition by a foreign audit firm because that firm failed to meet the board’s standards.

Also, the board acted against another firm for failing to meet critical measures on independence.

The board said new and revised standards next year would be a possible game changer to raise the quality of auditing and financial reporting in the country.

It was referring to the rules from the International Auditing and Assurance Standards Board that take effect on Dec 15, 2016.

Nik said these new standards would require auditors to put in key audit matter disclosures in their reports.

This would make the reports tailored to the clients rather than the mostly standard terms and boilerplates.

The board expects this to give more insights “of the risks surrounding a particular reporting entity and some of this may have market impact”.

The annual report said there was no major change in the number of registered and recognised audit firms and individual auditors.

Six major audit firms and four others audited 957 public-interest entities (PIE), covering 98.6% of the market capitalisation of public listed companies in Malaysia in 2014.

Last year, the AOB acted against a firm and two individual auditors.

It was the first time it had barred a firm from accepting any PIE as a client for 12 months. The firm also had to pay a penalty of RM30,000. In the past, the penalties were limited to a reprimand and the highest fine was RM10,000.

Regulator AOB expects and has mechanism to ensure audit firms strictly adhere to the laws

PETALING JAYA: The Audit Oversight Board (AOB), which has taken enforcement actions against two individual auditors and an audit firm last year, expects audit firms to adhere strictly to the laws.

“AOB has in place a robust enforcement mechanism with sufficient safeguards to ensure that fairness and justice will prevail,” it said.

From April 2010 to December 2013, eight auditors were sanctioned for failure to comply with the recognised auditing standards in the performance of their audit of the financial statements of public-interest entities (PIE) and failure to comply with the ethical and professional standards of the Malaysian Institute of Accountants by-laws.

In 2014, action was taken against two auditors and one audit firm.

AOB has prohibited Wong Weng Foo & Co from accepting PIE clients for 12 months. The audit firm was also imposed a penalty of RM30,000.

The AOB has also rapped two registered auditors, Lim Kok Beng of Ong Boon Bah & Co and Chan Kee Hwa of Khoo Wong & Chan, for non-compliance.

They were reprimanded for not complying with the International Standards on Auditing while auditing the financial statements of public interest entities.

In addition to the reprimand, a penalty of RM10,000 was imposed on Lim

Salaries of audit firm employees higher than fees

PETALING JAYA: For the first time in two years, growth in employee costs has outstripped audit fees among Malaysian firms.

While the growth in audit fees has dipped by a quarter from 12% to 9% in the past year, the growth in staff cost has remained constant for the past two years.

There has been higher headcounts in the past year, which rose by 6.6%, according to the Securities Commission’s Audit Oversight Board’s (AOB) annual report 2014.

“Based on three years of analysis of the top 10 audit firms, salary costs continue to increase at a higher rate compared with the growth in the audit fees, which is a challenge for audit firms,” the board said.

Staff turnover was also another concern.

While the overall turnover has stabilised at about a quarter of the staff each year, the non-executives were leaving at a higher rate.

“This is a concern as turnover at this level may indicate the lack of attractiveness of audit as a career among younger accountants, which could be detrimental in the long term,” it said.

The report is compiled from 10 top audit firms, which collectively audited 957 public-interest entities (PIEs) covering 98.6% of the market capitalisation of public-listed companies in Malaysia.

The number of registered audit firms had decreased from 83 in 2010 to 52 last year.

The number of registered auditors has remained stable for the past five years. The number of registered auditors rose to 304 individuals in 2014 from 302 in 2013.

The annual report, AOB’s fifth, was released yesterday. AOB also questioned audit deficiencies for major firms.

AOB inspects accounting firms regularly to promote and develop an effective audit oversight framework and promote confidence in the quality and reliability of audited financial statements in Malaysia.

Sources: The Star/Asia News Network

Related:

 Board reminds audit firms of their duties

 Who can review the 1MDB audits?

Related posts:

Getting titles right in the engineering field in Malaysia

RECENTLY,
the Institution of Engineers Malaysia (IEM) received an enquiry on the
usage of the title “Engr.” for members of the institution.
http://www.myiem.org.my/default.aspx?redirect=oldsite. The title “Ir”
was first introduced …
18 Apr 2015
Lawyers who refused to return client RM4.9mil house sale struck off rolls. Singapore’s Supreme Court. Latest case is second instance of lawyers being disbarred in two weeks. SINGAPORE — Two senior lawyers were today …
Who is responsible: developer, contractor, local council or house-owner for the damages? 
Who is responsible for slope management? Does the responsibility come with the property bought by the purchaser?
THE collapse of a…

Reponsible housing developers’ traits and qualiies expected

    House buyers, learn your rights
House buyers, learn your rights. I RECENTLY moved into our new house in Sungai Ramal Dalam. I bought the property back in 2012 and we received t 

China committed to upholding peace, stability in S. China Sea island-building, rejects US criticism to isolate China in Asia


Admiral Sun Jianguo, deputy chief of staff of China’s People’s Liberation Army (PLA) addresses the fourth plenary session of the Shangri-La Dialogue in Singapore, May 31, 2015. Sun Jianguo elaborated on China’s foreign and defense policies. (Xinhua/Bao Xuelin)

http://player.cntv.cn/standard/cntvOutSidePlayer.swf

http://english.cntv.cn/2015/06/01/VIDE1433110801945569.shtml

China must insist on island-building

During the just-concluded Shangri-La Dialogue, military representatives from China and the US did not engage in the bitter brawling predicted by the media. Both sides have reaffirmed their own stance. US Defense Secretary Ashton Carter asked all claimants, especially China, to cease island-building in the South China Sea, and by cautiously skirting around the question of how the US will respond if China continues its construction activities, Carter didn’t issue further threats against China.

But the US is still able to launch more provocations in this region, perhaps by sending surveillance planes and warships to the periphery of 12 nautical miles from China-controlled islands.

No matter how disturbing the US can be, China must not stop its construction, which is in line with China’s sovereign integrity. If Beijing backs off due to Washington’s threats and some Western countries’ protests, this will create a horrific precedent, which will embolden US-led forces to set tougher positions against China. China should try its best to inject prosperity into the South China Sea, promoting regional economic development and enhancing its disaster resistance ability. Only in this way will the ongoing quarrels calm down.

If China can play its cards right, these expanded islands will not only prevent the South China Sea situation from becoming intensified, but initiate a new constructive thinking for regional development. China’s construction activities will offer an opportunity to break the vicious circle that has been haunting the South China Sea for decades.

These expanded islands will allow China to acquire more initiative to carry out its South China Sea policies. For now, it is China that values regional peace more than any other state, because the stability of the South China Sea is a prerequisite for China to make use of this important period of strategic opportunities.

As of now, military confrontation is still the last choice for all stakeholders in the South China Sea. However, different desires and expectations have caused the complexity in the South China Sea issues. When China can set a firm foothold in the area, it will bring along more elements that can drive peace and stability.

China needs to make broad plans including countermeasures against more US intrusions. Beijing should be fully prepared, both mentally and physically, for possible military conflicts with the US. China needs to clearly express its unwillingness as well as fearlessness to fight. The more prepared China can be, the lower the possibility of military conflict.

This round of contest in the South China Sea is more like a strategic dialogue, through which China and the US can come up with a set of models and principles under which they can show mutual respect around China’s offshore areas.

If China insists on its island construction, publicizes its peaceful purposes, and avoids making these expanded islands a focal point of Sino-US military competition, we believe it will be eventually accepted by the widest number of parties concerned. – Global Times

Related:

U.S. Seeks to Isolate China in Asia, But Not Too Much

 

Related Posts:  

South China Sea Dispute: Tension escalates between China and U.S US takes dangerous gamble in S.China Sea US Defense Secretary As…
Photo taken on Nov. 21, 2014 shows the scene of the plenary meeting of the 5th Xiangshan Forum in Beijing, capital of China. The two-day X…

China’s plan to lead the globe?


Globe As tensions in the South China Sea between the US and China continue to rise, the US Navy and Air Force are quietly gearing up to fight a war in the disputed region.

If necessary, that is. Both sides say they don’t want any military confrontation on China’s extensive coastal waters, but both are acting as if a military conflict is increasingly likely.

Optimists say that a peaceful resolution of China’s rise as a great power is achievable. The economies of the two powers are so enmeshed that a war sounds unthinkable.

Such is theChina_Prof Gen Liu Mingfu thesis of an important new book just out, “The China Dream,’ by Professor General Liu Mingfu (px), a leading Chinese military thinker and commentator who speaks with the voice of China’s military.

US-China trade accounted for $579 billion last year. Beijing holds $1.2 trillion of US Treasury securities, thus financing a big part of America’s massive trade deficit. China claims its low-cost exports to the US saved American consumers $600 billion in recent years.

China only wants its place in the sun, say its strategists, using the same words as German strategists did before World War I. It’s time for a multi-polar world. The age of American world empire is over, writes Liu Mingfu, words that will not endear him to Republican hawks and neoconservatives.China's Dream_Prof Jen Liu Mingfu

Pessimists retort that Britain and Germany fought two world wars even though they were major trading partners. History is replete with examples of rising powers eventually going to war with the status quo powers resisting their rival’s economic and military growth. The Franco-British-Russian alliance against Germany prior to World War I is a perfect example.

One need not be a swami to see that China’s surging power will soon clash with that of the American hegemon. The battle lines are already drawn: China’s aggressive claims to the South China Sea – viewed by the US Navy as an American lake. Taiwan. Tensions over Burma. Korea. China’s access to the open seas.

According to Prof. General Liu, the days of America’s world domination, or hegemony, as he terms it, are just about over. By 2030, China will be the world’s largest economy in absolute terms (today it rivals the US in purchasing power parity), regaining the geopolitical primacy it formerly enjoyed until the 1500’s when it was the world’s leading economic power.

The US must find a way to accommodate China’s growing power, a point also made for many years by this writer. A policy of containment is not likely to work unless India becomes a principal participant. My first book “War at the Top of the World” deals with the scenario of a future India-China war in the Himalayas, Karakoram and Burma. India has been very cautious in joining any American-sponsored alliance against China.

Liu writes that America must quietly cede some of its power to China in the same manner that the British Empire did to the United States after 1900. The United States and China must share power and jointly rule the world as benign hegemons.

He insists that China has no territorial ambitions and never will. “China suffered 470 foreign invasions within 65 years from 1840 to 1905,” asserts Liu, though incursions would be a more accurate term. During this period, China was raped and pillaged by the western colonial powers and Japan. Hatred of Japan seethes throughout Liu’s book, as it does among most Chinese.

One could argue that China’s annexation or ‘reunification’ of Tibet and Sinkiang were aggressions. China considers them part of historical China, along with truant province Taiwan.

Liu points out that China never invaded or seized its smaller neighbors Korea, Burma, Thailand, or Laos.

Instead, China’s emperors always preferred to dominate without aggression so that its smaller neighbors respected the will of China and acted respectfully – rather as the United States in the 20th century with Latin America. China, writes Liu, wants peace and prosperity in order to keep growing its economy. China remains an inward-looking colossus, content to be the Middle Kingdom.

America, according to the undiplomatic Liu, is a paranoid giant, afraid of the outside world and addicted to the need for enemies abroad. “Americans feel lost without any enemy.” Washington’s occupation and despoliation of so many countries, notably in the Muslim world, generates endless enemies and a war psychosis. America, he claims, is a half-democracy: democratic at home but promoting dictatorships abroad. He seems to believe that China is as democratic at home as the US – a claim that defies reality.

Liu asserts that China is devoted to peaceful relations, non-interference in other nations, and the desire to help build world prosperity, not just its own power or political system. What’s more, Liu modestly asserts, China should lead world development since Chinese are more intelligent and cultured than any other people and heirs to a 5,000-year history!

Interestingly, Liu depicts the 1950 Korean War as a major victory for China because it showed that an Asian nation could fight off the world’s greatest military power. He claims that the US did not invade North Vietnam out of fear of the Chinese People’s Liberation Army after its bloody experience in Korea.

Will Washington back off and allow China to be the master of Asia? It seems highly doubtful. But unless some kind of modus vivendi is found, a military confrontation is likely to follow, one that the US might very well loose. China would be fighting virtually at home or just off its coast. The US, by contrast, would fight thousands of miles across the Pacific from its distant bases. The US might even win, but China would undoubtedly come back for more.

The “China Dream” thesis has been actively taken up by China’s communist leadership. But two things might derail China’s rise to world domination. First, China’s history is replete with example of internal strife, civil wars, and regionalism. This “Chinese curse” could come back to haunt Beijing.

Second, as I read Liu’s panegyric to Chinese greatness and peaceful humanism, I kept recalling Lord Acton’s wise maxim about absolute power corrupting absolutely. It happened in Washington, and there’s no reason why it might not occur in Beijing.

By Eric S. Margolis who is an award-winning, internationally syndicated columnist. His articles have appeared in the New York Times, the International Herald Tribune the Los Angeles Times, Times of London, the Gulf Times, the Khaleej Times, Nation – Pakistan, Hurriyet, – Turkey, Sun Times Malaysia and other news sites in Asia. http://ericmargolis.com/

Related post:

South China Sea Dispute: Tension escalates between China and U.S US takes dangerous gamble in S.China Sea US Defense Secretary As…
Follow

Get every new post delivered to your Inbox.

Join 1,224 other followers

%d bloggers like this: