FireEye threats of cyber espionage loom with the coming 26th Asean Summit in Malaysia


Photo by hfuchs/Relaxnews.

PETALING JAYA: Regional government and military officials, businessmen and journalists involved with the coming 26th Asean Summit in Kuala Lumpur could be among the targets of a recently discovered cyber espionage group, claims an Internet security firm.

FireEye, which exposed the presence of the APT30 group of hackers snooping on governments and businesses, including those in South-East Asia, said some of its previous attacks had been launched before key Asean meetings.

“Based on previous experience, I believe that this group and possibly others will try to use that meeting (26th Asean Summit) as part of their ruse to potentially target businesses and governments in the region,” said Bryce Boland, FireEye’s chief technology officer for Asia Pacific in a telephone interview here yesterday.

In its report, FireEye, which is based in the United States, said APT30 had a distinct interest in organisations and governments associated with Asean.

The group had released a malware in the run-up to the 18th Asean Summit in Jakarta in 2011 and the Asean-India commemorative Summit in 2012.

One of the domain names it used to command its malware was aseanm.com

AFP had reported that the APT30 group was “most likely sponsored by China” and that there was no immediate reaction from the Chinese government, which had always denied allegations of cyber espionage.

The two-day Asean Summit from April 26 is expected to discuss various issues, including maritime disputes between China and Brunei, Malaysia, Vietnam and the Philippines in the South China Sea, and the formation of a single market and production base in the region.

“The hackers are after intelligence and information, primarily about political changes, political positions, especially over disputed territories, border disputes and trade negotiations,” said Boland.

“We have also seen that when they target journalists, they are specifically looking for information in relation to understanding concerns about the legitimacy of the PRC (People’s Republic of China),” he said.

The group has also attacked businesses to steal information on deals, manufacturing plans and intellectual property such as schematic diagrams.

According to the FireEye report, Malaysia is one of seven countries with targets hit by the group, which has operated largely undetected for the past 10 years.

Others are Thailand, Vietnam, South Korea, Saudi Arabia, India and the United States.

Boland said the group mostly attacked their targets via spear phishing emails with attachments that appeared to be from a known contact but were in reality sent by the hackers.

The attachment, which can be in the form of a document with an Asean-related title, will contain a customised malware that is activated the moment that it is opened.

It allows the attacker to gain control of the victim’s computer and retrieve information from it.

Boland advised computer users not to open suspicious e-mails.

“Businesses and governments should ensure that their IT infrastructure not only protects them from attacks but can detect the extent of damage done in the event of a successful hack.”

By Razak Ahmad The Star/Asia News Network

Related:

 FireEye: Cyber Security & Malware Protection

Regional issues today developed from the past to predict the future, the winds of change in Asia


To appreciate how issues today had developed from the past is also to understand how they are likely to develop in the future.

  “Since Sultan Mahmud Shah of 15th-century Malacca at least, Malay rulers have had no problems with a powerful China“.

MANY people can be so absorbed by specific issues as to neglect the larger picture that created them. Thus much misunderstanding persists of the issues themselves.

This failure to see the wood for the trees also affects many professional analysts or “country watchers”.

Putting issues in the news in their proper context is crucial.

In the late 1980s, economic growth in East Asia had become both contagious and self-evident. Talk of the coming 21st century as “the Century of Asia and the Pacific” had been gathering momentum.

After Japan’s stellar economic performance from the 1970s, rapid growth would visit the East Asian “tigers” – Hong Kong, Singapore, South Korea and Taiwan – then the other countries of South-East Asia and then China.

Few countries at the time could see that never before in history had both Japan and China, old rivals with their historical baggage still in hand, achieve economic ascendancy at the same time like now – but Malaysia was one of them.

Since economic strength meant diplomatic and political clout, tensions between Tokyo and Beijing could grow to unmanageable proportions with potentially devastating effects throughout the region.

Something had to be done to anticipate and contain any such fallout.

In December 1990, on the occasion of the visit to Malaysia by Chinese Premier Li Peng, Prime Minister Datuk Seri Dr Mahathir Mohamad proposed the formation of the East Asia Economic Grouping (EAEG).

This would comprise all the countries of South-East Asia and China, Japan and South Korea working together towards a more integrated regional economy.

Since economics was less controversial than politics, the EAEG would skirt political sensitivities while a culture of working together as a region could in time overcome them.

Such regional cooperation that acknowledges and encourages regional integration could also pre-empt and minimise any economic crisis.

But that was not to be. Australia and the US had not been included and opposed the EAEG, the latter also pressuring Japan to reject it.

Within Asean, Indonesia’s Suharto rebuffed it because as senior regional leader he had not been consulted, while a West-leaning Singapore still preferred Occidental leadership to anything so distinctly Asian.

Singapore then proposed a watered-down East Asia Economic Caucus (EAEC), this compromise being a subset of the larger Asia-Pacific Economic Cooperation (Apec) grouping largely to assuage US insecurities. After the EAEG died, the EAEC withered away.

By 1997 a financial and economic crisis struck East Asia, devastating the economies of Indonesia, Thailand and South Korea in particular.

There was no regional grouping or bank to help deflect, absorb or otherwise mitigate it.

South Korea then stepped up the drive to form an Asean Plus Three (APT) grouping, with the EAEG’s same 13 countries. The crisis also gave China an opportunity to demonstrate regional leadership: it suspended its planned currency revaluation, thereby helping to cushion the shock of the crisis.

Throughout the whole long-drawn saga, the unspoken issue for some countries was the impending economic dominance of China that they could not accept.

Thus they opposed the EAEG, as if China’s economic dominance could be restrained in the absence of a regional grouping. The reality would have been quite the reverse: with South Korea and Japan balancing China, and Asean countries at the fulcrum.

Meanwhile an underlying Western presumption shared by West-leaning Asians is that once China achieves economic ascendancy, it would mimic the West in acquiring overseas colonies and generally throwing its weight around.

That remains a heavily constructed hypothesis at odds with the history of China and the region.

China had been a great maritime power before, but had never embarked on naval conquest in a region where naval power trumps all other strategic options.

And through the years of talk on the EAEG, EAEC and APT, China’s economy kept on growing.

Then came China’s massive projects resulting from, and further empowering, that growth: the New Silk Road Economic Belt (“One Belt, One Road”) linking Asia and Europe overland, the Maritime Silk Road at sea, and the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank to fund them.

In contrast only Indonesia’s still formative and insular “maritime highways” idea, just a tiny fraction of China’s proposals in scale albeit grandly positioning Indonesia as a Global Maritime Fulcrum, appears to be the only response from the region.

Why has the rest of South-East Asia, or East Asia in general, become mere passive spectators to China’s bold plans? Why have other countries not offered their own thought contributions in response to China’s proposals?

Indonesia has, through different presidential administrations, clung to its informal position as first among equals in Asean. It has foraged for opportunities lending it such a profile, though not always elegantly or consistently.

On President Joko Widodo’s first visit to Beijing for an Apec summit last November, one month after he became president, he asked that the AIIB be moved from Beijing to Jakarta. That was a non-starter.

He recovered some equilibrium last month on state visits to Japan and China. On the day of his arrival in Tokyo, an interview was published in Japan in which he said China had no legal basis to its South China Sea claims.

That was three days before his arrival in Beijing, where the news had preceded him. One day after his arrival there, a bilateral agreement had been fleshed out for full-scale economic cooperation.

Now that much of the dust has settled on which countries would, or would not, be founding members of the AIIB, the challenge of projecting possible futures begins.

The positives include there being more international support for the multilateral lending institution than expected, a good mix of countries in Asia and Europe, and that the bank will proceed unimpeded.

However, the negatives include the voluntary absences of the US and Japan, two major economies that would have made the bank more multilateral, better resourced and further enriched with the collective experience of multilateral lending.

Playing somewhere in the background is the Western-oriented anxiety that a militarily powerful China may one day edge the US out of the region.

That prospect goes against the grain of China’s deep policy pragmatism and interests.

US military dominance in East Asia is often credited for keeping the peace in the region.

That peace has meant unfettered transportation and travel that has benefited the region, most of all China, in its imports of fuel and raw materials and its exports of manufactured goods.

China has had ample opportunity to learn from the tragic errors of not just the Soviet Union but also neighbouring North Korea, where overspending on military assets only wrecks the economy. The same applies to the US itself in profligate spending on questionable foreign wars.

China’s focus on infrastructure for facilitating trade is clear, its economic priorities echoing those it has had for centuries. Since Sultan Mahmud Shah of 15th-century Malacca at least, Malay rulers have had no problems with a powerful China.

Such a China had prioritised economic growth and cooperation without meddling in local affairs except to provide protection against hostile outside powers.

There are still no indications that modern China would deviate significantly from such a position, other than perhaps “protection” today including cushioning the shocks of economic crises.


Behind the Headlines by Bunn Nagara

Bunn Nagara is a Senior Fellow at the Institute of Strategic and International Studies (ISIS) Malaysia. The views expressed are entirely the writer’s own.

Winds of Change in Asia

The birth of new development banks led by developing countries and the United States’ failure to block them are signs of rebalancing of economic power, especially in Asia.

The world must adjust to the rise of new powers. It will not stop just because the United States can no longer engage. If the results are not to the United States’ liking, it only has itself to blame! – Martin Wolf

 

China’s Asian Infrastructure Investment Bank (AIIB): U.S. Asian, European “Allies” Pivot away from Washington

IN the last month, the international media has been carrying articles on the fight between the United States and China over the formation of the Asian Infrastructure Investment Bank (AIIB).

Influential Western economic commentators have supported China in its move to establish the new bank and judged that President Barack Obama made a big mistake in pressurising US allies to shun the bank.

The United States is seen to be scoring an “own goal” since its close allies the United Kingdom, Australia and South Korea decided to be founding members, as well as other European countries, including Germany and France, and most of Asia.

The United States also rebuked the United Kingdom for policies “appeasing China”, but the latter did not budge.

The United States did not give any credible reason why countries should not join the AIIB.

Treasury Secretary Jack Lew said the new bank would not live up to the “highest global standards” for governance or lending.

But that sounded like the pot calling the kettle black, since it is the lack of fair governance in the International Monetary Fund (IMF) and World Bank that prompted China to initiate the formation of the AIIB, and the BRICS countries (Brazil, Russia, India, China and South Africa) to similarly establish the New Development Bank.

For decades, the developing countries have complained that the developed countries have kept their grip on voting power in the Breton Woods institutions by clinging to the quotas agreed upon 70 years ago.

These do not reflect the vastly increased shares of the world economy that the emerging economies now have.

Even the mild reform agreed upon by all – that the quotas would be altered slightly in favour of some developing countries – cannot be implemented because of US Congress opposition.

The big developing countries have been frustrated. They had agreed to provide new resources (many billions of dollars each) to the IMF during the financial crisis, but were rewarded with no reforms in voting rights.

In addition, the unjustifiable “understanding” that the heads of the World Bank and IMF would be an American and a European respectively remains in place despite promises of change.

So much for legitimacy of lectures about good governance, merit-based leadership and democratic practice, which are preached by the Western countries and by the IMF and World Bank themselves.

The BRICS countries then set up the New Development Bank, which will supplement or compete with the World Bank, while China created the AIIB to supplement the Asian Development Bank (ADB), which also has a lopsided governance system.

The new banks will focus on financing infrastructure projects, since developing countries have ambitious infrastructure programmes and there is gross under-funding.

Critics anticipate that the new banks will finance projects that the World Bank or ADB would reject for not meeting their environmental and social standards.

But that is attacking something that hasn’t yet happened. True, it would be really bad if the new banks build a portfolio of “bad projects” that would devastate the environment or displace millions of people without recognising their rights.

It is thus imperative that the new banks take on board high social, environmental and fiduciary standards, besides having good internal governance and being financially viable.

The new institutions should be as good as or better than the existing ones, which have been criticised for their governance, performance and effects.

It is a high challenge and one that is worthy of taking on. There is no certainty that the new banks will succeed. But they should be given every chance to do so.

The AIIB, in particular, is being seen as part of the jostling between the United States and China for influence in the Asian region.

A few years ago, the United States announced a “pivot” or rebalancing to Asia. This included enhanced military presence and new trade agreements, especially the Trans-Pacific Partnership Agreement (TPPA).

It seemed suspiciously like a policy of containment or partial containment of China. The United States combines cooperation with competition and containment in its China policy, and it retains the flexibility of bringing into play any or all of these components.

China last year announced its own two initiatives, a Silk Road Economic Belt (from Western China through Central Asia to Europe) and a 21st century Maritime Silk Road (mainly in South-East Asia).

The first initiative will involve infrastructure projects, trade and public-private partnerships, while details of the second initiative are being worked out.

The AIIB can be seen as a financial arm (though not the only one) of these initiatives.

China is also part of negotiations of the RCEP (Regional Comprehensive Economic Partnership) that does not include the United States.

Last year, it also initiated a study to set up a Free Trade Area of the Asia-Pacific, which will include the United States.

These two intended pacts are an answer to the US-led TPPA. It is still uncertain whether the TPPA will conclude, due both to domestic US politics and to an inability to reach a consensus yet among the 12 countries on many contentious issues.

Meanwhile, prominent Western opinion makers are urging the United States to change its policy and to accommodate China and other developing countries.

Former US Treasury Secretary Larry Summers said this past month will be remembered as the moment the United States lost its role as the underwriter of the global economic system.

Summers cited the combination of China’s effort to establish a major new institution and the failure of the United States to persuade dozens of its traditional allies to stay out of it.

He also called for a comprehensive review of the US approach to global economics, and to allow for substantial adjustment to the global economic architecture.

Martin Wolf of the UK-based Financial Times said that a rebuff by the United States of China’s AIIB is folly. This is because Asian countries are in desperate need of infrastructure financing, and the United States should join the bank rather than pressuring others not to.

The real US concern is that China might establish institutions that weaken its influence on the global economy, said Wolf.

He added that this is wrong since reforms on influence in global financial institutions are needed and the world economy would benefit from more long-term financing to developing countries. China’s money could push the world in the right direction.

In a devastating conclusion, Wolf said the world needs new institutions.

“It must adjust to the rise of new powers. It will not stop just because the United States can no longer engage. If the results are not to the United States’ liking, it has only itself to blame.”

The winds of change are blowing in the global economy, and many in the West recognise and even support this.

Global Trends by Martin Khor

> Martin Khor is executive director of the South Centre, a research centre of 51 developing countries, based in Geneva. You can e-mail him at director@southcentre.org. The views expressed here are entirely his own.

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The global centre of gravity shifting to Asia


Asia_danny-quah-east-shift1“Danny Quah of the London School of Economics has calculated the world’s economic centre of gravity and reckons that, thanks to Asia’s rise, over the 70 years from 1980 to 2050 it will move eastwards from the mid-Atlantic all the way to somewhere between India and China. By 2015, the halfway point on this great journey, it will have reached the city of Bandar-e Mahshahr, in Iran, on the north-eastern tip of the Persian Gulf .”

 Danny Quah’s calculation of the world’s economic centre of gravity has been included in The Economist’s eye-catching statistical landmarks of 2015

Many see the rush to join the Asian Infrastructure Investment Bank as the beginning of a new international financial order and the decline of US dollar hegemony.

BRITAIN’S recent decision to join the Asian Infrastructure Investment Bank (AIIB) as a founder member has led to a kind of stampede by other allies of the United States in Europe such as Germany, France and Italy to follow suit.

So did two other important Asia-Pacific allies, Australia and South Korea. The only other major US ally in Asia which did not was Japan.

What is striking is that these allies went against the express wishes of the US which apparently saw the AIIB as a potential challenge to the domination of the international financial architecture by the US-controlled World Bank and the International Monetary Fund.

Particularly stunning is the British decision. According to senior fellow at the Department of Politics and International Studies at Britain’s Cambridge University Martin Jacques, in this year’s Boao Forum, this is the first time since Breton Woods in the 1940s, except for one occasion when Britain refused a US request to send troops to Vietnam, that Britain had ever said no to the US so publicly!

Jacques exaggerates somewhat as he should have begun with 1956 as the year when Britain abandoned an independent foreign policy, as a result of its misbegotten adventure in Suez, and became a faithful junior partner to the US.

Still, it is no less remarkable, even beginning with 1956, for it took about six decades before a clear British nay to the US came about.

Many saw the rush to join the AIIB as signifying the beginning of a new international financial order and the decline of US dollar hegemony, with China deemed to be the new or most influential nation.

Some, however, saw Chinese weakness rather than strength in this spectacle.

London’s Financial Times argued that resorting to a multi-lateral institution to exercise influence suggests weakness as China will be less able to get its own way, not to mention possible badgering from non-governmental organisations in future deliberations of the AIIB, than if it could do so by bilateral means.

It remains to be seen if a new financial order will eventuate. I will however make a few points about this development.

One is that it has shown in a dramatic way the global reach of Chinese economic strength, especially in the financial arena.

While it is true that China is already an economic force in other parts of the globe such as in the continents of Africa and South America, not to mention Asia and Australia, this is probably the first time that a major European nation has made an economic decision with obvious political implications favourable to the Chinese.

Someone defined a superpower as a nation or state that can project dominating power and influence in the globe, sometimes in one region or more, and that has the potential to attain global hegemony.

In this respect we can consider China an economic superpower.

Of relevance to our understanding of Chinese strength is the reason behind the British decision.

Britain in the past year or two has evinced a more positive attitude towards China.

According to an analysis in the Internet magazine, Counterpunch, the recent British economic recovery has been mainly based on financial flows to property and infrastructural projects in London and the south of England, and the prosperity of the City of London.

And the city of London is what keeps Britain from becoming a third-tier economy.

This is so important that David Cameron and the Conservatives could conceive of Britain leaving the European Union if the EU were to mess with the running of the City by imposing regulations.

A lot of the money recently has come from China and Britain is very keen to be involved in the offshore trading of the Chinese renminbi. Thus, there is every prospect of Britain getting more action from a China, with foreign reserves of around US$4tril (RM14.68tril), looking for more ways to use the renminbi.

Joining the AIIB in such a fashion, not only brings with it the prospect of possibly getting a leg up in future AIIB projects, but also gains Chinese goodwill. But it is important not to exaggerate Chinese strength. It is a superpower only in the economic arena, and not in other spheres such as the military and political.

Militarily, the US far exceeds China in the amount of money spent and in technological sophistication. Politically, what China can at present offer cannot match the global impact of values associated with the US such as democracy and human rights.

Even in the economic sphere, the Chinese Gross Domestic Product is only equal in size to the US in purchasing power terms, and not in dollar terms where the US GDP is more than one and the half times that of China.

In per capita terms, US GDP is at least four times more. And the US is still far more advanced in the sophistication of its financial market and industrial structures.

The significance of this AIIB development is not a demonstration of raw Chinese economic power.

It is unlikely to do away with the WB or the IMF.

It is really another symptom, this time in Europe and in the financial arena, of the global centre of gravity shifting to Asia.

By Dr. Lee Poh Ping
> Dr Lee Poh Ping is a Senior Research Fellow at the Institute of China Studies in the University of Malaya. The views expressed here are entirely the writer’s own.

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Lee Kuan Yew’s meritocracy: a key reason for S’pore’s separation from Ma’sia, his quotable quotes..


Lee Kuan Yew_Strong

No one could accuse LKY of being weak

When he suddenly fathered a reluctant new nation, the iron was forged in him.

LEE Kuan Yew, former prime minister of Singapore, has died at the age of 91.

He was born Harry Lee Kuan Yew on Sept 16, 1923 in Singapore. When he left England after graduating with a law degree from Cambridge University, he also left his English name behind.

In 1954, Lee formed the People’s Action Party (PAP). In 1959, at the age of 35, he won the national elections of Singapore, then still part of the British Empire, and became Prime Minister for the first time. After a brief merger with Malaysia, in 1965 the Republic of Singapore was born. Lee was PM until 1990 when he voluntarily stepped down, at age 67, to make way for a younger man.

It is a cliché, but it has to be said: the passing of Lee Kuan Yew is the passing of an era for Singapore and Singaporeans. A Singapore without LKY will take some adjusting to.

Older citizens will probably remember him with more affection and gratitude. Younger Singaporeans may attend the academic institutions and win scholarships that bear his name, but they will likely feel no particular affection or disdain, but rather, a vague admiration for the legendary leader whom they have been told was the architect of modern Singapore.

“I have been accused of many things in my life, but not even my worst enemy has ever accused me of being afraid to speak my mind,” he once said. Perhaps he will be best remembered through his own words.

In 1980, he said, “Whoever governs Singapore must have that iron in him.” For him, it was in August 1965, when he suddenly fathered a reluctant new nation, that the iron was forged – from the fire in his belly to make Singapore succeed.

From that “moment of anguish”, he would “spend the rest of my life getting Singapore not just to work but to prosper and flourish.” Over the years, he would use that same steel to fight all forms of obstacles and undesirable dogma, prejudices and even personal habits.

He would go on to confront and battle challenges that included corruption, unemployment, poverty, communism, political opposition, smoking and at the end, his own deteriorating health.

His self-belief and devotion to the Singapore cause was intense and absolute: “This is your life and mine. I’ve spent a whole lifetime building this (country) and as long as I’m in charge, nobody is going to knock it down.”

He will be remembered for his ferocious fight against corruption. He believed vehemently, “The moment key leaders are less than incorruptible, less than stern in demanding high standards, from that moment, the structure of administrative integrity will weaken, and eventually crumble. Singapore can survive only if ministers and senior officers are incorruptible and efficient.”

He will be remembered for standing up for meritocracy. A key reason for Singapore’s separation in 1965 was Lee’s belief in multiracial meritocracy. He was utterly convinced that, “If you want Singapore to succeed…you must have a system that enables the best man and the most suitable to go into the job that needs them…”

Every time a Singaporean takes a ride in a bus along a tree-lined avenue, plays with her children in a park near their flat, or enjoys a picnic in Botanic Gardens, she might just think of Lee. He launched Tree Planting Day and “set out to transform Singapore into a tropical garden city.” He was completely certain that, “Greening raised the morale of people and gave them pride in their surroundings.”

Lee’s beliefs and ideas went on to mould not just the development of a small new country with no natural resources to speak of, but also, some would argue, the personal lives of its citizens. Under his leadership, his government implemented policies and ran campaigns to compel and urge Singaporeans to save water, to keep Singapore clean, to have two children, and later, to have three if they could afford it, and to speak Mandarin, among many other exhortations.

In response to critics who accused his government of interfering in the private lives and personal behaviours of the city-state’s inhabitants, he had this to say, “It has made Singapore a more pleasant place to live in. If this is a ‘nanny state’, I am proud to have fostered one.”

He will be remembered for the power of his convictions. “I have never been over concerned or obsessed with opinion polls or popularity polls. I think a leader who is, is a weak leader.” No-one could accuse Lee Kuan Yew of being a weak leader.

Of his own accord, he relinquished the position of Prime Minister in 1990, but stayed on in government as Senior Minister and then Minister Mentor in the governments of both his successors, Goh Chok Tong and his own son, Lee Hsien Loong, the current Prime Minister. He retired from Cabinet in 2011 but remained a Member of Parliament.

For those who remember Lee Kuan Yew in his prime, no matter to which side of the political divide they belong, they will recall a perspicacious politician whose intellect found admirers far beyond the little red dot, a powerful orator whose words conquered crowds and carried generations of Singaporeans with him, and perhaps, most of all, a pragmatic visionary who, against all odds, made the improbable nation a reality.

Lee was known for his admiration, gratitude and devotion to his wife, the late Kwa Geok Choo. He is survived by his two sons, one daughter and seven grandchildren.

By Peggy Kek

Singaporean analyst Peggy Kek is a former director with the Lee Kuan Yew School of Public Policy at the National University of Singapore. The views expressed here are entirely the writer’s own.

Quotable quotes from Lee Kuan Yew

Lee Kuan Yew commenting on death: ‘There is an end to everything and I want mine to come as quickly and painlessly as possible, not with me incapacitated, half in coma in bed and with a tube going into my nostrils and down to my stomach.’ – AFP pic, March 23, 2015

Here are some notable quotes from Singapore’s founding prime minister Lee Kuan Yew, who died Monday at the age of 91.

On Japan defeating Britain to occupy Singapore in 1942:

“The dark ages had descended on us. It was brutal, cruel.

“Looking back, it was the biggest single political education of my life because, for three and a half years, I saw the meaning of power and how power and politics and government went together, and I also understood how people trapped in a power situation responded because they had to live.

“One day the British were there, immovable, complete masters; next day, the Japanese, whom we derided, mocked as short, stunted people with short-sighted squint eyes.”

After World War II when the British were trying to reestablish control:

“… the old mechanisms had gone and the old habits of obedience and respect (for the British) had also gone because people had seen them run away (from the Japanese) … they packed up. We were supposed, the local population was supposed to panic when the bombs fell, but we found they panicked more than we did. So it was no longer the old relationship.”

As a law student in Britain:

“Here in Singapore, you didn’t come across the white man so much. He was in a superior position.

“But there you are (in Britain) in a superior position meeting white men and white women in an inferior position, socially, I mean. They have to serve you and so on in the shops. I saw no reason why they should be governing me; they’re not superior. I decided when I got back, I was going to put an end to this.”

On opinion polls:

“I have never been overconcerned or obsessed with opinion polls or popularity polls. A leader who is, is a weak leader. If you are concerned with whether your rating will go up or down, then you are not a leader. You are just catching the wind … you will go where the wind is blowing. That’s not what I am in this for.”

On his iron-fisted governing style:

“Anybody who decides to take me on needs to put on knuckle-dusters. If you think you can hurt me more than I can hurt you, try.”

On his political opponents:

“If you are a troublemaker… it’s our job to politically destroy you… Everybody knows that in my bag I have a hatchet, and a very sharp one. You take me on, I take my hatchet, we meet in the cul-de-sac.”

On democracy:

“You take a poll of any people. What is it they want? The right to write an editorial as you like? They want homes, medicine, jobs, schools.”

On justice:

“We have to lock up people, without trial, whether they are communists, whether they are language chauvinists, whether they are religious extremists. If you don’t do that, the country would be in ruins.”

On his policy of matching male and female university graduates to produce smart babies:

“If you don’t include your women graduates in your breeding pool and leave them on the shelf, you would end up a more stupid society… So what happens? There will be less bright people to support dumb people in the next generation. That’s a problem.”

On criticism over the high pay of cabinet ministers and senior civil servants:

“The cure for all this talk is a good dose of incompetent government. You get that alternative and you’ll never put Singapore together again: Humpty Dumpty cannot be put together again… and your asset values will be in peril, your security will be at risk and our women will become maids in other people’s countries, foreign workers.”

On religion:

“I wouldn’t call myself an atheist. I neither deny nor accept that there is a God. So I do not laugh at people who believe in God. But I do not necessarily believe in God – nor deny that there could be one.”

On his wife of 63 years, Kwa Geok Choo, who died in October 2010:

“Without her, I would be a different man, with a different life… I should find solace in her 89 years of a life well-lived. But at this moment of the final parting, my heart is heavy with sorrow and grief.”

On death:

“There is an end to everything and I want mine to come as quickly and painlessly as possible, not with me incapacitated, half in coma in bed and with a tube going into my nostrils and down to my stomach.”

On rising up from his grave if something goes wrong in Singapore:

“Even from my sickbed, even if you are going to lower me to the grave and I feel that something is going wrong, I will get up.”

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Review of Malaysia’s external debt; SE Asia draws more FDI investments


Malaysia-external-debt-forecast

Malaysia External Debt Forecasts are projected using an autoregressive integrated moving average (ARIMA) model calibrated using our analysts expectations. We model the past behaviour of Malaysia External Debt using vast amounts of historical data and we adjust the coefficients of the econometric model by taking into account our analysts assessments and future expectations. The forecast for – Malaysia External Debt – was last predicted on Tuesday, March 17, 2015.

Putting the finger on external debt

As the country’s situation has become a topic of debate and confusion, it is useful to review and clear the air on the matter.

LAST week there was some confusion over the state of the country’s external debt, but it was to some extent cleared up after an explanation by the Finance Ministry.

It is thus useful to clarify what external debt is, and have an informed discussion on how dependent or vulnerable the country is to external funds and changing conditions.

On March 11 the media reported that the Finance Minister, in a written reply to a Parliamentarian’s question, said Malaysia’s external debt had risen from RM196bil in the final quarter of 2013 to RM740.7bil in the third quarter of 2014.

The reply did say that the sharp increase was due to a new definition in debt reporting which now includes ringgit-denominated debt securities held by foreigners.

However, this nuance was lost amidst the headlines that the country’s external debt had tripled to RM740bil, causing surprise and perhaps a tinge of alarm.

A day later the Finance Ministry issued a statement clarifying the new external debt fi­gures were in line with debt reporting requirements of the IMF, and under the new definition, the external debt now includes holdings of debt securities, deposits and trade credits denominated in ringgit by non-residents, as well as the offshore borrowings by the Government, public enterprises and the private sector.

The high level of non-residents’ holdings of ringgit-denominated debt securities and deposits comprise over 40% of Malaysia’s external debt, and “this is due to the wider depth, openness and attractiveness of the Malaysian financial market”, added the statement.

This should give relief, that the external debt hasn’t jumped three times after all. It was really, mainly, a redefinition issue.

While the jump isn’t so high, this explanation does reveal that the country’s external debt is really much higher than originally thought.

Under the old definition, Malaysia’s external debt was RM328bil in end-March 2014 or 30.5% of Gross Domestic Product.

Using the broader new definition, the debt level had become higher at RM700bil or 65.2% of GDP at the same date, according to Bank Negara’s explanation of the redefinition of external debt, in its Quarterly Bulletin of First Quarter 2014.

The ratio of short-term external debt to exports also jumped from 15% to 39% using the redefined figures.

These figures show that the country is more vulnerable than previously thought, in terms of the share of foreigners in domestic loans and the exposure or risks to changes in conditions that affect foreigners’ perceptions on whether to maintain the holdings of their credit to the country.

The newly defined external debt has increased further to RM744.7bil, or 69.6% of GDP, as at end-December 2014, according to Bank Negara data.

The redefinition exercise is a positive one. It puts the country’s debt reporting in line with international standards, meeting the International Monetary Fund’s requirements.

It also provides a more realistic and accurate view of the true state of the country’s external debt.

Previously, only the loans taken by the Government and private companies from abroad and denominated in US dollars and other foreign currencies were considered to be external debt.

Meanwhile, foreigners have been taking up billions of ringgit worth of Government and corporate bonds issued in Malaysia and denominated in ringgit. These had previously not been considered external debt.

By the end of 2014, non-residents’ holdings of domestic debt securities were RM223bil, and non-residents’ deposits were RM88bil, thus totalling RM311bil of the total RM745bil external debt. The remainder were offshore borrowings (RM367bil) and trade credits and other items (RM67bil).

On one hand, ringgit-denominated borrowings by Malaysia do not carry the same risks of exchange rate volatility that dollar-deno­minated loans have.

Thank goodness for that, because the recent depreciation of the ringgit means that more ringgit would have to be forked out to service and repay those external loans that Malaysia has taken in US dollars and other foreign currencies.

On the other hand, the increase in foreigners’ holdings of Malaysian Government securities and corporate bonds, although denominated in ringgit, also increases the country’s exposure in terms of having to service the loans (including paying interest to foreigners, thus causing an outflow on the current account of the balance of payments) and of outflows of funds if and when the foreigners decide to withdraw the credit they provided.

Much of the public securities or private bonds that the foreigners took up can be sold back in the market and taken out of the country, and it is not unusual that buyers do not hold the financial asset until the maturity date.

If there is a change in market sentiment, prompted by either international or domestic conditions, then there can be a net outflow of foreign funds held in debt securities.

It is true that the build up of foreign holdings of Malaysian securities and bonds is made possible by the increased openness and attractiveness of the Malaysian financial market, as explained by the Finance Ministry.

On top of the exposure to foreign ownership of loans, there is also significant foreign ownership of equity in the Stock Exchange (which is not counted in the figures on external debt).

The same openness that brought the capital inflows could also lead to capital outflows when conditions change.

The easy-money policies of the United States, that included near zero interest and quantitative easing that pumped over a trillion dollars into the banking system, contributed to huge funds seeking higher yield in developing countries like Malaysia.

Since the end of quantitative easing in the US and with the increasing prospect that interest rates will rise, the same funds have begun to return to the US.

Malaysia is no exception to the countries facing a reversal of capital flow. It is not clear if this will be offset by the new quantitative easing exercise which just started in Europe.

For the whole of 2014, there was a net outflow of RM37.9bil of portfolio investment, and RM20bil of that in the fourth quarter, according to Bank Negara data.

This portfolio investment includes foreign holdings of debt and stock market equity.

The outflow of portfolio funds, together with outflows of direct and other investments, caused the financial account of the balance of payments to have a deficit of RM76.5bil in 2014, thus contributing to the decline in the overall balance of payments by RM36bil, according to Bank Negara data in its Quarterly Bulletin Fourth Quarter 2014.

The international reserves correspondingly declined from RM441.9bil in end-December 2013 to RM405.5bil in end-December 2014 (according to Bank Negara Quarterly Bulletin) and to RM386bil on Feb 27, 2015 (Bank Negara media statement March 6).

The declines are significant but the current situation is manageable as high reserves were built up through the years, so that the country will not be caught again by the crisis conditions of 1997-99.

The redefinition of debt figures and the recent data on movements in portfolio investment and reserves show that a comprehensive overview of the debt situation enables a better picture of the country’s exposure to different types of debt-rela­ted and portfolio investment flows.

Another conclusion is that borrowing through ringgit-denomina­ted debt removes the risks associa­ted with foreign-exchange changes.

But it still results in dependence on the foreign appetite or prefe­rences in investment venue and consequently to exposure to significant outflows when these preferences alter.

As global conditions, especially in the US and Europe change, it will be a challenge to manage the country’s finances.

– Global Trends by Martin Khor

> Martin Khor is executive director of the South Centre, a research centre of 51 developing countries, based in Geneva. You can e-mail him at director@southcentre.org. The views expressed here are entirely his own.

SE Asia draws more FDI investments

Asean FTZ

Region draws more investments than China for 2nd year running.

JAKARTA: South-East Asia’s major economies drew more foreign direct investment combined than China for the second straight year in 2014, as growth in their giant neighbour cooled. But by country, inflows into the region were uneven, swayed by political change and the varying costs of doing business.

Overall FDI into Singapore, Indonesia, Malaysia, the Philippines, Thailand and Vietnam rose to a record US$128bil in 2014, estimates compiled by Thomson Reuters show.

That surpassed the US$119.56bil that flowed into China.

FDI into the Philippines grew the fastest, at 66%, while in Thailand, where the military seized power last year, inflows fell. FDI into Indonesia, the region’s biggest economy, rose around 10% even though it was an election year.

As China’s troubled manufacturing sector loses momentum, Chinese businesses will be venturing abroad to cut operating costs and to search for new markets, economists say.

Manufacturing powerhouses in South-East Asia should pay heed.

“Rising wages in China are leading low-end manufacturers to look for other low-cost locations for their factories, with countries like Vietnam and the Philippines looking like attractive alternatives,” said Dan Martin, Asia economist at Capital Economics.

“Asean is also a large market in its own right, and one with good long-term growth prospects. Given the general slowdown in other emerging market regions in recent years, it is starting to stand out.”

The Philippines, the second-fastest growing major economy in Asia, attracts investors with its strong economic fundamentals.

But one concern is the continuity of economic policies following the 2016 general elections.

That means some investment decisions might be postponed. Slumping commodity prices could pinch on FDI inflows into resource-rich Indonesia and, to a lesser extent, Malaysia.

Indonesian President Joko Widodo, who took office in October, is seeking more foreign investment in manufacturing to counter the volatile resources sector. But Indonesia has many improvements to make, particularly in its business infrastructure, to successfully challenge the region’s manufacturing leader.

— Reuters

German Chancellor: Japan needs honesty to improve relations with victims of World War II


Angela Merkel: I think history and experience tell us also that peaceful means of reconciliation have to be found

TOKYO: German Chancellor Angela Merkel waded into the fraught area of wartime forgiveness during a visit to Japan, saying that “facing history squarely” and “generous gestures” are necessary to mend ties.

Merkel was speaking in Tokyo on March 9 2015 ahead of the 70th anniversary of Japan’s defeat in World War II, in which Prime Minister Shinzo Abe’s conservative views on Tokyo’s war crimes are under scrutiny, and as China and South Korea continue to call for more contrition.

“Germany was lucky to be accepted into the community of nations after the horrible experience the world had to meet with Germany during the period of National Socialism (Nazism) and the Holocaust,” she said.

“This was possible first because Germany did face its past squarely, but also because the Allied Powers who controlled Germany after WWII would attach great importance to Germany coming to grips with its past.

“One of the great achievements of the time certainly was reconciliation between Germany and France … the French have given just as valuable a contribution as the Germans have.”

Relations between Japan and its wartime victims China and South Korea are at a low point, with Beijing and Seoul both calling for Tokyo to do more to atone for its past.

Nationalists in Japan say Tokyo has apologised enough and that the constant references to WWII are covering flak for governments in China and South Korea seeking to direct popular anger elsewhere.

There were “great minds and great personalities who said we ought to adopt a policy of rapprochement … and without these generous gestures by our neighbours this would not have been possible,” Merkel told her audience.

The public lecture came on the first day of a two-day trip to Tokyo, her first in seven years.

Abe visited Germany last year.

China’s foreign minister Wang Yi on Sunday said Abe would be welcome at Beijing’s commemorations of the end of WWII if he was “sincere” about history.

Beijing has not given a specific date for the parade but it regards Sept 3, the day after Japan signed its formal surrender to Allied forces on board the USS Missouri in Tokyo Bay, as victory day.

“It’s difficult for me as the German chancellor to give you advice on how to deal with part of your neighbourhood. But I think history and experience tell us also that peaceful means of reconciliation have to be found,” Merkel said in response to questions.

Merkel’s visit to Japan is part of her swing through G7 member nations before Germany hosts the group’s next summit in June. She has already visited the other five nations.

The visit, her third to Japan in almost 10 years in office, is seen as a balancing act between Germany’s ties with Beijing and Tokyo. She has been to China seven times during the same period.

Thanking Japan for joining Western powers in imposing sanctions on Russia over its annexation of Ukraine, Merkel said: “Japan and Germany share common interests whenever the strengthening of the international rule of law is to be brought about.” — AFP

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You are ‘Stupid’ is not defamatory


Jeff Ooi

PUTRAJAYA: Calling a person “stupid and recalcitrant” does not amount to defamation, the Court of Appeal has ruled.

Court of Appeal judge Justice Mohd Hishamudin Mohd Yunus, who chaired a three-man panel, held this in a civil appeal brought forward by Jelutong MP Jeff Ooi (pic) against a politician over the dismissal of Ooi’s defamation suit.

Justice Mohd Hishamudin ruled Thursday that “although it was not nice to use the words”, it did not amount to defamation.

On April 22 last year, Ooi’s defamation suit against Gerakan deputy secretary-general Dr Thor Teong Gee for calling the former “stupid and recalcitrant” at a press conference was dismissed by the Penang High Court.

Justice Mohd Hishamudin, who upheld the High Court’s ruling in an unanimous decision, also ordered Ooi to pay RM10,000 to the defendant in costs.

In the coram were Court of Appeal judges Justice David Wong Dak Wah and Justice Vernon Ong Lam Kiat.

At the outset of court proceedings when queried by Justice Mohd Hishamudin, Ooi’s lawyer R. Ramesh Sivakumar argued that those words were defamatory because they were a personal attack on the credibility of his client.

Ramesh Sivakumar argued that Dr Thor had acted mala fide by using those words.

“He could have used better words. By calling him stupid, he was portrayed as not fit to be an MP,” he added.

However, Dr Thor’s counsel Baljit Singh and V. Amareson were not required to submit in the appeal.

In an immediate response, Dr Thor said he was very grateful for the appellate court’s decision as he had never made a personal attack against Ooi.

“An NGO invited me to give a professional views on medical issues on radiation,” said Dr Thor, who is a Penang-based medical doctor, when contacted.

In her ruling earlier, High Court Judicial Commissioner Nurmala Salim said Ooi had failed to state the alleged defamatory words in the original language, which was in Mandarin, in his statement of claim.

She also held that the words used by the defendant Dr Thor in the press conference were in reference to a radiation issue, and not a personal attack against Ooi.

“I am inclined to concur with the defendant’s (Dr Thor) counsel that the words uttered are commonly used by Malaysians of all races during an argument or when one is angry,” she said in her decision.

She also said the court did not see how the words had sullied Ooi’s reputation and office, as he had earned a bigger majority of votes in the 2013 general election compared with the general election in 2008.

“The plaintiff (Ooi) himself had refused to state how the words had tarnished his office and reputation,” she said, before dismissing the suit and ordering Ooi to pay RM20,000 in costs to Dr Thor.

Ooi sued Dr Thor for defamation for allegedly uttering the words “stupid and recalcitrant” against him in a press conference on May 21, 2010.

He sought aggravated and exemplary damages, a retraction and an apology by Dr Thor, as well as costs and other relief deemed fit by the court.

By M. Mageswari The Star/Asia News Network


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