The overarching US strategy of exaggerating the issue of China’s overcapacity … is aimed at checking China’s industrial development by resorting to a beggar-thy-neighbour policy. — China Daily
RECENTLY, some US and EU officials have said China’s overcapacity distorts global pricing and production patterns. Concur-rently, the Joe Biden administration is considering imposing high tariffs on Chinese steel and aluminum, potentially opening a new front in the ongoing trade conflicts in order to contain Beijing’s “Made in China” drive.
Overcapacity is an economic term that signifies a situation in which there is too much production capacity relative to current demand levels, and hence it should not be overly “pan-securitised”.
Capacity utilisation rates are crucial indicators of whether capacity is adequately leveraged, with a very high rate generally indicating a shortage and a low rate suggesting excess capacity or an irrational capacity structure.
According to the latest data from Trading Economics, the United States has a capacity utilisation rate of 78.3% while China’s stands at 75.9%.
Developed countries including the United States and European nations consider any rate between 79% and 83% an indicator of supply and demand. China’s rate is not significantly lower than the healthy range.
Moreover, China has eliminated outdated steel production capacity to a large extent, having reduced about 300 million tonnes of steel and one billion tonnes of coal capacities, including entirely eliminating 140 million tonnes of substandard steel capacity, over the past decade.
Western pressure on China’s industries and trade has intensified in recent years, with many Western countries restricting the export of semiconductors to China and curbing the import of Chinese-made new energy vehicles, while taking “reshoring” or “near-shoring” measures, further exacerbating global overcapacity and straining the global economic governance system.
This is not the first time the West is using “overcapacity” as a pretext to suppress China’s manufacturing sector. In 2012, the European Commission initiated an anti-dumping investigation into Chinese photovoltaic products, initially planning to impose a 47.6% tariff on them. But in July 2013, China and the European Union “amicably” settled the photovoltaic trade dispute.
Unlike previous occasions, however, this round of scrutiny by the West is focused on China’s advanced manufacturing, particularly in clean energy sectors such as electric vehicles (EVs), photovoltaic panels and lithium batteries – areas in which there is intense Sino-US competition and China enjoys competitive advantages.
In recent years, spurred by the “New Washington Consensus”, the Joe Biden administration has increasingly used administrative and other non-market forces to ensure it has the upper hand in its competition with China in strategic future industries.
Government intervention
Also, the United States has been strengthening the industrial policy through government intervention, which, in essence, is strategic protectionism.
As many as 49 industries including automobile, aerospace, defence, electrical equipment, information and communications technology, and renewable energy in the United States get huge government subsidies.
Also, while strengthening itself, the United States has also increased efforts to weaken others. In recent years, under the guise of combating climate change and promoting low-carbon development, the United States has enacted the Inflation Reduction Act, which imposes discriminatory subsidy policies on products from World Trade Organisation (WTO) member states, specifically EVs from China.
These measures distort fair competition and will disrupt the global supply chains, as well as violate WTO rules of national treatment and most-favoured-nation status.
With the US presidential election still seven months away, the “overcapacity” issue is likely to be exploited by US politicians on the campaign trail, and the United States could intensify its rhetoric on China’s overcapacity, possibly imposing tariffs on Chinese exports including EVs, power batteries and photovoltaic panels.
It could also ramp up anti-subsidy and anti-dumping investigations, and impose green or labour standards barriers to limit Chinese exports. Alternatively, it may continue to forge alliances based on different issues to contain China.
The overarching US strategy of exaggerating the issue of China’s overcapacity is not aimed at striking a balance between global supply and demand; instead, it is aimed at checking China’s industrial development by resorting to a beggar-thy-neighbour policy.
The narrative of overcapacity is crafted by the United States to curb China’s industrial upgrading, safeguard certain Western countries’ vested interests in the global industry and supply chains, promote the reshoring of supply chains to the United States, bolster the US’ manufacturing competitiveness, contain China’s technological progress and prevent it from achieving breakthroughs in advanced manufacturing and strategic industries. — China Daily/ANN
Zhang Monan is deputy director of the Institute of American and European Studies at the China Centre for International Economic Exchanges. The views expressed are the writer’s own.
Faced with the common challenge of climate change, promoting energy transition should uphold an open and cooperative attitude, rather than getting bogged down in futile trade disputes and blame games, otherwise it will only hinder the pace of global energy transition.
PETALING JAYA: The four-year cyclic bitcoin halving event and fresh liquidity, especially institutional money, have driven the cryptocurrency market to fresh highs this year upon gaining more acceptance as an alternative asset class, albeit being a far more volatile one.
But as the drums of war got louder in the Middle East early Sunday, bitcoin was the first to reflect investor sentiment, falling some 9.9% or US$6,714 to a low of US$61,231 before fresh buying saw it trading at US$64,246 as at press time.
The fresh buying is a clear indicator that the crypto market is maturing, said Scarlett Chai, country manager of Luno Malaysia, as it now has made its way to institutional investors via centralised asset fund managers from being an asset class that was previously exclusive to the decentralised community.
The halving event, which is due to happen this week on April 19-20, could also provide price support. Historical data has shown that price corrections typically happen two years after every bitcoin halving, as this trend has been visible in the past three halvings.
However, this cycle looks very different to previous cycles with bitcoin reaching all-time highs near the halving for the first time in its history and with prospects of war as a headwind or even a tailwind.
“It is difficult to ascertain the scale of the upcoming halving’s impact on bitcoin prices. We need to understand that the crypto market, specifically bitcoin, is now different following the inflow of institutional investors. This new liquidity via exchange-traded funds (ETFs) might put the market on a new course,” Chai told StarBiz.
She added that with gold recently breaking its all-time high and should bitcoin be viewed as digital gold, they might share a similar momentum.
Scarlett Chai, Luno Malaysia Country Manager
For some the fresh liquidity, estimated at US$13.8bil year-to-date, and the halving event could be more oxygen to a bubble, which could all end badly with systemic implications to the global financial system.
“The anticipated halving and the increased cash inflow, particularly after the ETF, has driven up cryptocurrency prices. There is little doubt that there is a bubble as there is no intrinsic or underlying value.
“This may simply be a modern version of the Tulip mania,” warned Obiyathulla Ismath Bacha, professor of finance at the International Centre for Education in Islamic Finance.
Nevertheless, with cryptocurrency gaining traction in Malaysia, Luno has recently launched its staking option on its trading platform.
Chai said the latest feature on its mobile application platform called staking was something its Malaysian clients had been asking for.
“We are the first regulated exchange to bring staking here. We launched last year and it was a long-awaited feature for the local market. Staking using ethereum is now available and we know it is suitable for the current Malaysian market,” she says.
Chai explains staking is locking up a certain amount of cryptocurrency, in this case ethereum, on the platform while allowing it to participate in a blockchain network. This also means that one’s stake grows and rewards are compounded.
“It’s just like having an asset, you can either hold on to it or lock it up so it grows. Locking it up will help the digital system, which is a computer-based network, become more secure and functional,” she said.
While the coins are being staked, users cannot sell or remove their coins but Luno will allow them to “unstake” from their wallets.
Chai added it took some time for this feature to be approved by the regulatory boards and the group is looking at launching a second coin for this feature.
“We are on track for the launch of a second coin and we believe staking should be made available for more asset classes. With all our features, we aim to make it safe and simple to participate in the cryptocurrency industry,” she said.
Luno Malaysia currently offers an instant buy-and-sell option or an exchange programme, both with distinctive features to suit a user’s risk appetite for investment.
Chai said there are 11 digital assets that have been approved by regulators and using the platform has been made easier and more seamless.
“Users can now use Touch ‘n Go, bank transfers or even FPX to choose which coin they would like to transact from as low as RM1. Then we have the exchange, which is for more sophisticated users, those that know how to read charts to study pricing and are familiar with market trends,” she said.
Chai points out that despite initial concerns on data privacy and the volatility of the cryptocurrency world, the industry has been very popular in Malaysia.
“So far, we’ve got some 840,000 users on the platform. Luno has been around since 2015 but in 2019, we relaunched ourselves in the market under the purview of the Securities Commission’s (SC) guidelines,” she said.
This means there are hard guidelines on how the platform can operate and Luno is answerable to authorities should any concerns arise.
Chai stated last year was a strong learning curve for the group as it showed the crucial role it could play in allowing users to invest in digital assets.
“It became important for us to address and create awareness on scams or “too-good-to-be-true” offerings. And because of this financial literacy is really vital,” she said.
Luno Malaysia has participated in various community events like exhibitions and campaigns where the need to create a better understanding on digital wealth management comes up.
“We look forward to participating in more national scam campaigns with financial institutions and such for educational purposes. We have even been in universities to speak to students and how they can avoid scams,” Chai said.
The most active group on the platform are aged between 30 and 49, Chai notes, because they have higher disposable income, but Luno has seen an increase in downloads and participation by those in the 20 to 29-year age range.
“This is their domain, and Luno targets audiences that are interested in investment and are retail-focused. In the next couple of years, we hope to hit one million users on our platform,” she said.
Meanwhile, Chai noted digital wealth management is just another form of investing, same like bonds or stocks.
“We are moving into an era where there is a blend of traditional finance and digital assets, as more markets worldwide regulate crypto and are catering to people who want to diversify more,” she said.
One piece of advice Chai gives is always start small, make yourself aware of what’s out there and be ready to put in what you can afford to lose.
“With every form of investment, the risk of losing is there. People adjust their portfolios to meet their personal strategy. Never go into an investment without a strategy, because then, you’d be basing it on your emotions and that is not how it should be done,” she advised.
In 2024, Luno users can look forward to more coins being added on the platform, subject to regulatory approval of course.
“We added two coins last year and we are looking at adding another five. We work closely in collaboration with the SC and will continue on that journey with them as we bring more offerings to people in Malaysia,” Chai said.
On top of that, with the aim to maintain the highest levels of security, Luno has introduced monthly proof of reserves reports.
Through this process, the exchange ensures each customer’s assets are maintained on a one-to-one ratio on the platform, illustrating that customer-stored digital assets match with the balance in their Luno wallets.
Chai said as there was no regulatory obligation to publish proof of reserve reports, the group saw an important step to build trust in the crypto space.
“Luno’s 12 million global customers – with over 840,000 of those in Malaysia – can be rest assured that their wallets do contain the crypto stated.”
US should speak nicely when seeking help from China: Chinese experts
/
Photo:CGTN
US Secretary of the Treasury Janet Yellen, a US senior official who is believed to be pragmatic and less hawkish toward China than many of her peers, has arrived Guangzhou, capital of South China’s Guangdong Province, and kicked off her 6-day visit to China from Thursday to Tuesday (April 4-9), with Chinese experts saying on Friday that Yellen is trying to seek helps from China to solve US economic challenges, and they said US officials need to adjust its arrogant attitude and speak nicely when asking helps.
He Lifeng, a member of the Political Bureau of the Central Committee of the Communist Party of China and Vice Premier of the State Council, has met with US Treasury Secretary Janet Yellen in Guangzhou. The two sides discussed in-depth key issues related to the global, economic and financial fields of China and the US.
He said the main task for this meeting is to implement the important consensus reached by the two heads of state in their meetings and telephone dialogue, and seek to provide appropriate responses to key concerns in China-US economic relations, state broadcaster CCTV reported on Friday.
“I opened meetings with Vice Premier He Lifeng for frank and substantive conversations on our bilateral economic relationship. It is crucial that the two largest economies in the world seek progress on global challenges and closely communicate on areas of concern,” Yellen said in a post on social media platform X on Friday afternoon.
On Friday, Yellen also had round-table discussions with economic experts and business leaders from the US and some other countries from Europe and Japan to discuss the economic situation of Chinese market, as well as opportunities and challenges linked to the Chinese economy. Yellen also attended an event with leading representatives of the American business community in China, hosted by AmCham China, and delivered remarks on the bilateral economic relationship.
According to her released schedule in coming days, which expected to include meetings with Chinese Premier Li Qiang and senior Chinese officials who in charge different economic and financial sectors of China, analysts said Yellen’s trip eyes on further stabilizing the China-US relations as US President Joe Biden doesn’t want a fragile and uncertain bilateral ties with China, and Washington needs China’s cooperation to solve its headaches at home: a national debt problem and save US backward production capacity by adding pressure to China’s development in new energy technologies with the pretext of “overcapacity.”
Jin Canrong, the associate dean of the School of International Studies at the Renmin University of China, told the Global Times on Friday that “Yellen is an official who is different from the hawkish ones in Washington who actively push for confrontation with China, she is relatively pragmatic and moderate.”
In the phone call between the presidents of the two countries on Tuesday evening, Biden is probably asking for China to permit Yellen’s visit, as we can see Yellen kicks off her visit very soon after the phone call, which means that the US has prepared for the visit for a long time, and they are just waiting for China’s green light, Jin said.
“According to this, we can have a conclusion that the US is asking for something urgent. Washington’s national debt problem could be the top of the agenda. Yellen might ask help from China in the field of monetary policy,” Jin noted.
The Congressional Budget Office warned in its latest projections that US federal government debt is on a path from 97 percent of GDP last year to 116 percent by 2034, which is higher even than in World War II. The actual outlook is likely worse, Bloomberg reported on April 2.
The CNBC reported on March 1 that the debt load of the US is growing at a quicker clip in recent months, increasing about $1 trillion nearly every 100 days.
Li Yong, a senior research fellow at the China Association of International Trade, told the Global Times on Friday that in this visit, the Biden administration is seeking the further stabilization of China-US relations in the presidential election year. “The two sides are expected to discuss about coordination on macroeconomic policy and trade, and this is not only important to China and the US, but also significant to the world.”
But as a US official with pragmatic and relatively friendly image to China, Yellen this time presented her tough stance in some areas. According to the website of US Department of Treasury, “During her engagements in China, Secretary Yellen will advocate for American workers and businesses to ensure they are treated fairly, including by pressing Chinese counterparts on unfair trade practices and underscoring the global economic consequences of Chinese industrial overcapacity.”
Washington will not allow “a glut of Chinese production to wipe out American manufacturers of green technology,” Yellen has warned ahead of a trip to China, the Financial Times reported on Thursday.
Li said the US should take the issue about “overcapacity” more objectively, because China’s productive capacity is determined by the global demand and the efficiency and market size of China.
Lü Xiang, a research fellow on US studies at the Chinese Academy of Social Sciences, told the Global Times that Yellen’s expression is a bad signal for China-US trade ties, as this is implying that when the US development in areas like new energy and electric vehicle (EV) is facing backward or even failure, Washington is trying to contain China’s productive capacity to protect its backward capacity.
“This is very disappointing, as this is indecent for a US Secretary of Treasury to blame and contain China’s development in advanced areas to protect US’ backward productive capacity,” Lü noted.
At present, China’s EV export and photovoltaic industry have unshakable status in the world market, the US’ measure to contain China in these fields will receive no outcomes, Lü said. “Chinese economic and financial officials can give Yellen a good lecture about how to mobilize resources in the market and whole society to develop a new industry. The EV industry is an example of the success of China’s market economy.”
Chinese analysts said that Yellen and the Biden administration should understand that, if they are coming to China to ask for help and cooperation, they need to adjust their arrogant attitude and speak nicely, and don’t ask for unfair competition to confront and contain China, who will never submit to pressure based on hegemonic logic.
The world in 2024 is not peaceful. From great power competition to regional conflicts, to numerous global challenges, the global landscape seems to be changing every day. Will the confrontation between Russia and the West lead to a “Cold War …
Hopefully, more countries in the region will join the family of maintaining peace and stability and together promote greater achievements in China-ASEAN relations. We also sincerely look forward to continuing joining hands with ASEAN countries, taking the opportunity of the 70th anniversary of the Five Principles of Peaceful Coexistence this year to vigorously carry forward the Bandung Spirit that calls for solidarity, friendship and cooperation, to eliminate external interference, enhance solidarity and cooperation, safeguard peace and tranquility and provide more positive energy and stability to the region and the world.
Public university study shows majority prioritise buying cars, prefer to rent homes near workplace
FINANCIAL reasons continue to keep young Malaysians living in major cities from realising their dream of owning a home.
Among the younger generation, the major concern is high property prices that are many times more than their annual household income.
It is not easy for those with no fixed income or low salary to secure a housing loan.
While money issues are already weighing heavily on people’s minds, the younger generation’s inability to afford a home is exacerbated by the high cost of living.
Affordable housing is often beyond the reach of millennials in Kuala Lumpur, Selangor and Putrajaya.
The initiative aims to ensure housing affordability is handled in a holistic manner.
A study shows that those aged between 25 and 45 seem to be delaying the purchase of their first home.
Financial commitments
Universiti Putra Malaysia (UPM) Human Ecology Faculty lecturer Dr Mohammad Mujaheed Hassan said the study had shown that other factors also contributed to the issue.
“The Variations in Preferences of the Young Generation in Klang Valley Towards Housing Property Demand” study conducted by UPM in mid-2022 found that the younger generation had high financial commitments.
A total of 2,523 respondents aged 25 to 45 in Kuala Lumpur, Selangor and Putrajaya with individual monthly income of between RM4,360 and RM9,620 were interviewed.
The study aimed to identify this group’s financial level, in terms of their ability to save and invest as well as their financial liabilities.
Mohammad Mujaheed, who was involved in the research, said out of the total, 1,697 respondents or 67.3% were committed to monthly vehicle hire purchase instalments of between RM800 and RM1,200.
“For them, owning a car is a benchmark of their success in life,” he told Bernama.
Some millenials say it is cheaper to rent homes than buy. — Bernama
“Ironically, some of them take public transport to work and leave their cars at home.”
Mohammad Mujaheed, who is with the Social and Development Sciences Department, said the study also showed that 1,833 respondents or 72.7% had credit card commitments with at least two banks.
“To the younger generation, having a credit card is an alternative for them to have regular access to credit and as a cash advance.
“The study also reveals that 843 (33.4%) of respondents were renting a home for between RM500 and RM1,200 a month,” he said, adding that 73.9% of respondents had no disposable income for savings or investment.
POLL: Do you prioritise buying a car or owning a home?
Mohammad Mujaheed said based on the study, the younger generation preferred to rent due to several factors, although they could afford to buy their own home based on the monthly rental they had been paying for years.
“They argue that the location of the house that they can afford to pay for is far from their workplace.
“They have to factor in other payments linked to owning a property such as assessment tax and maintenance fees and higher fuel consumption that will further add to their financial burden.
Many people surveyed say affordable housing is too far from their workplaces.
“By renting, they only have to fork out for rent and utility bills.
“They say their rented houses are only for rest and sleep.
“Much of the time is spent outside their house and at work.”
At the same time, some millennials are tied to personal loans, among others to fund their wedding, while others are caught in the credit card debt trap.
This situation is not surprising as the Credit Counselling and Debt Management Agency (AKPK) had earlier highlighted that the majority cases of youths declared bankrupt in the country was due to credit card debt.
Worrying trend
Mohammad Mujaheed said the tendency for young adults to not prioritise home ownership had caused many to be saddled with longstanding debt, preventing them from buying a house despite getting older.
“The situation is rather serious and has contributed to many being blacklisted by financial agencies, living in debt, declared bankrupt and encountering problems such as stress and borrowing from illegal moneylenders or ‘ah long’,” he said.
He said while it was not wrong for the younger generation to own a vehicle or apply for personal loan, they should give priority to home ownership as it was an asset.
Vehicles, meanwhile, depreciate in value annually.
“The value of a house will appreciate every year.
Millennials may opt to purchase a car as a benchmark of their success.
“By paying monthly rental, it appears that we are ‘helping’ the owner to settle his housing loan repayment,” said Mohammad Mujaheed.
He said if the problem persisted, young adults would continue to delay purchase of their home to meet other needs.
It is feared that they will not be able to own their own house in future given the consistent upward trajectory in residential property prices.
“The younger generation should no longer adopt a wait-and-see attitude.
“The longer they wait, the higher the price, given that the growth of household income is not at par with the increase in house prices.
Youths who do not pay their credit card bills on time will find it tougher to get a housing loan.
What was worrying, he added, was this group ending up “homeless” when they reached their golden years.
On the possibility that this group would “share” a home with their parents or other family members, Mohammad Mujaheed said this could only be realised if their parents owned property.
“Otherwise, a family will be faced with the possibility of being homeless or continue to rent permanently (from one generation to the next) as they do not own any property.”
He said the younger generation should not use high property prices as an excuse for not buying a house as there were affordable home schemes offered by the federal and state government such as Rumah Selangorku, Federal Territory Affordable Housing Programme and Malaysia Civil Servants Housing Programme.
Affordability gap
Universiti Teknologi Mara (UiTM) Seri Iskandar senior lecturer Dr Azizul Azli said the huge gap between income levels and house prices had prevented the younger generation from owning a house.
“For example, average annual salary increments are about 2% while property values increase between 6% and 8% each year.
“Imagine, in only two years, property prices would have risen by 12% and salaries increased by 4%.
“Despite price fluctuations in the post-pandemic property market, prospective buyers are still not able to ‘catch up’ as their income is still at minimum level,” he said.
As an example, he said the average starting salary for fresh university graduates was around RM2,500 a month.
If they bought a house worth RM300,000, their monthly financial commitment would be about RM1,500, he said, adding that this was not viable with the escalating cost of living factored in.
An academic says double-storey houses are popular with developers as they take up less land.
Azizul, who is with UiTM’s Architecture, Planning and Survey Faculty, urged the government to play a more effective role in helping youths own their first home at a younger age.
Among others, incentives should be given to developers to build more landed property so that units can be sold at lower prices.
“We still have an abundance of land that developers can build on,” he said.
“However, they (developers) prefer double-storey houses as this involves smaller built-up areas.”
Azizul said Indonesia had undertaken measures to build affordable landed homes for the younger generation.
“Various house sizes at affordable prices are offered, and if converted to our currency, prices are below RM100,000.”
He said the current practice of allowing developers to provide basic amenities at housing areas had contributed to the hike in house prices.
To reduce costs, he said the government could take over construction of such facilities in addition to providing subsidies for building materials.
“At the same time, there is also a need to reduce red tape as this has also contributed to higher construction costs, causing developers to inflate their selling prices,” he added.
2023 will be remembered as a tipping point year when almost all mega-trends of finance, technology, trade, geopolitics, war and climate heating showed signs of acceleration in speed, scale and scope.
. 2023 will be remembered as a tipping point year when almost all mega-trends of finance, technology, trade, geopolitics, war and climate heating showed signs of acceleration in speed, scale and scope.
You can call this a state of permacrises, a series of cascading shocks that seem to be building up to a bigger shock sometime in the future.
In finance, the year began with the collapse of Silicon Valley Bank on 10 March 2023, followed by Signature Bank. The Fed and FDIC (Federal Deposit Insurance Corporation) acted fast to guarantee all deposits to stop what is now called “Twitter Deposit Runs” against banks. In Switzerland, Credit Suisse was taken over by UBS on 19 March, after the bank lost nearly US$ 75 billion worth of deposits in three months. Swiss financial credibility was hurt when Credit Suisse AT1 (Tier One bonds) bond-holders became outraged that they should suffer write-downs ahead of equity holders.
Although prompt action by the Fed and Suisse financial authorities averted global contagion and restored calm to financial markets, the Fed hiked interest rates four times in 2023 to 5.25-5.5% to tackle inflation. This month, gold prices touched a record high of US$2,100 per ounce, signalling anticipated inflation abatement, but escalated geopolitical tensions.
In technology, 2023 marked the seismic arrival of generative artificial intelligence (AI), through the public launch of ChatGPT in November 2022. Commercialized AI is considered the next big thing after the internet, sparking off a US tech stock rally, led by the Magnificent Seven companies in AI-related software and hardware. The rally averted a year of portfolio losses in financial markets hurt by interest rate hikes.
In trade, the latest UNCTAD Global Trade Update found that global trade will shrink by 5% to US$ 30.7 trillion in 2023, with trade in goods declining by nearly US$2 trillion, whereas trade in services would expand by US$500 billion. The outlook for 2024 is pessimistic because trade issues are now geopolitical, rather than purely market-driven. Global supply chains are either decoupling or de-risking to avoid possible sanctions which have been imposed for geopolitical reasons.
Geopolitics dominated headlines in 2023, as diplomacy played second fiddle to the militarization or weaponization of everything.
The biggest risk faced by businesses today is national security risk, in case companies or financial institutions are caught in geopolitical tit-for-tat arising from binary differences in values. Where national security is concerned, the business must bear all the costs of supply chain restructuring with no questions asked, or face possible existential shutdowns.
War broke out in Gaza/Israel In October with a scale of civilian slaughter more horrific and intense than the Ukraine war, which began in February 2022. The latest war count to June 2023 by The Armed Conflict Survey 2023 (1 May 2022–30 June 2023), showed global fatalities and events increasing horrendously by 14% and 28% respectively.
The authoritative Stockholm International Peace and Research Institute (SIPRI) reported that 56 countries were involved in armed conflict in 2022, 5 more than in 2021. Three (Ukraine, Myanmar and Nigeria) involved 10,000 or more estimated deaths, with 16 cases involving 1000–9999 deaths. Expect more conflicts when natural disasters hurt food, water and energy supplies.
As 100,000 or so delegates leave the United Arab Emirates at the end of the COP28 this month, the UN painted an upbeat tone that the Conference marked the “beginning of the end” of the fossil-fuel era. Scientists confirm that we have already passed the point of being able to limit carbon emissions for the average global temperature to remain below 1.5 degrees Celsius above pre-industrial levels. Most studies show that if most governments fail to meet their current commitments to NetZero, the planet will be struggling with temperatures above 2 degrees Celsius, meaning more natural disasters, rising seas and/or migration/conflicts. Every three weeks, the US has experienced at least one natural disaster costing more than $1 billion in damages.
As one cynic said, natural disasters are where the rich just pay in money, but the poor pay in their lives.
Putting all these mega-trend micro-disasters together suggests that a mega-system disaster may be on the cards. Historically, these seismic-scale disturbances are settled through a massive recession, like the 1930s Great Depression, or wars, which wipe out debt and make everyone poorer.
So far, the world has neglected to address these looming issues by either denying or postponement – printing more money and incurring more debt. Painkillers do not fix structural imbalances.
As my favourite poet TS Eliot said, the world ends not with a bang, but with a whimper. The world is in permacrises, with no one fully in charge. Democratic governance is in flux when no one can agree on the problems, let alone the solutions.
2024 will see some decisive but messy elections, especially in the US where both Presidential candidates may either be impeached or convicted by then. This cannot auger well for everyone, because 2023 marks the turning point when the US lost the respect of the Global South over its catastrophic handling of Ukraine and Gaza, both of which will be fought to the last Ukrainian or Palestinian. The morality of allowing other people to fight and die for one’s benefit shows not hypocrisy but hegemonic-scale cowardice.
The bottom line is that there is no shortage of technology or money to deal with the global existential threats of climate change and social imbalances. We cannot align policy intent (what politicians say they will do) with the reality that current policies are not delivering.
If man-made or natural calamities are looming, do we mitigate or adapt? On a single planet, we can run but not hide. So each of us must decide to do what we can, rather than relying on politicians to fix themselves, let alone our problems.
There is a wise saying about Christmas charity: give with warm hands. Do that now, or we will be giving with boiled hands or none at all.
The US Government is BROKE | The 2023 Debt Ceiling
Every few years, there is a bipartisan political farce over the debt ceiling negotiations in the US. It may look like a routine political drama, but quantitative change can lead to a qualitative difference, especially at a time when a global de-dollarization trend is gaining momentum, that is to say, the US trick of raising the debt limit to mitigate its default risk may now be very close to pushing the US treasuries to a dangerous tipping point.
The de-dollarization caused by the US debt crisis and the abuse of the dollar hegemony created unprecedented opportunities for the yuan internationalization, with more and more countries expressing willingness to settle trade in the yuan, but China must proceed with caution.
With the US on track to default without a debt ceiling increase, US President Joe Biden’s talks with House of Representatives Speaker Kevin McCarthy on Tuesday failed to make any meaningful progress, with political divides remaining between the two parties, Reuters reported. Biden even told the media that he has been looking at the 14th Amendment as a way to unilaterally work around the debt ceiling, though it will not be a viable short-term solution.
The political stalemate over raising the debt limit has already led to US Treasury Secretary Janet Yellen warning of an “economic catastrophe” if the US fails to meet all government payment obligations, which could happen “potentially as early as June 1.”
So far, most people still believe that the two parties will eventually reach a deal to avoid an ugly sovereign default before the deadline, just like what happened every time in the past debt ceiling struggles.
But unlike in the past, a new question has been raised in the market, that is, are the US treasuries still highly liquid? The US dollar’s credit is the cornerstone of US treasuries. Because the dollar is an international settlement currency and US treasuries have stable yields and are highly liquid, countries are willing to hold US debt, making the US the world’s largest debtor.
Yet, things may be different now with countries accelerating their de-dollarization efforts. The past year saw growing number of countries and regions such as India, Brazil, and the EU trying to establish new settlement systems for their trade.
Under the influence of the de-dollarization wave, some countries have reduced their holdings of US treasuries. Japan, the world’s largest holder of US debts, slashed its holdings by $224.5 billion and China by $173.2 billion in 2022.
Moreover, the US’ unlimited expansion of the size of its debt has also upset the market with the risks in the US treasuries. According to Yellen’s testimony in a congressional hearing in March, gross federal debt would swell to $51 trillion after a decade. The scale and speed of the debt expansion means the US is getting increasingly closer to a real explosion of a debt crisis.
Also, the root cause of the US banking crisis this year is the holding of a large number of US treasuries assets, which shrank significantly in value as interest rates continued to climb. That could be a warning to various governments and precipitated them to speed up the pace of de-dollarization. Since the collapse of the Silicon Valley Bank, international investors stepped up sell-off of treasuries, and prices of all kinds of safe-haven assets like gold have surged.
Of course, de-dollarization is likely to be a long-term process, but once it started, the US treasuries could lose its aura quickly, especially as the US government repeatedly raises debt ceiling or faces risk of default. In other words, as the world realizes that the US cannot and does not have the willingness to control or reduce the size of its debt, the credibility of the US debt as a safe-haven asset is collapsing rapidly.
It should be noted that amid the de-dollarization trend, the yuan internationalization has made a series of positive new developments and breakthroughs. The yuan’s international status as a trading currency has been significantly improved recently.
To ensure future development of the yuan internationalization, China needs to ensure liquidity and maintain exchange rate stability. Thus, China’s financial markets as well as the yuan’s onshore and offshore markets need more preparation to adapt to the new needs.
Dedollarise move: a file picture of us banknotes. Economists say there are incentives to move away from using the greenback as the primary currency for trade settlement and reserves. — afp
THE US-dollar dominance as the anchor of the international financial system is being challenged on several fronts simultaneously – and ever more intensely – in recent months.
From several countries opting to conduct trade in their local currencies, instead of using the US dollars to the BRICS nations of Brazil, Russia, India, China, South Africa seeking to develop a new common currency for the economic bloc, the risk of the mighty greenback being dethroned appears serious.
As some economists say, it is no longer a question of “if” the US dollar’s dominance will crack, but “when”. Is this a good thing for small and open economies like Malaysia?
According to economists, there are incentives to move away from using the US dollar as the primary currency for trade settlement and reserves.
Bank Muamalat Malaysia Bhd chief economist and social finance head Mohd Afzanizam Abdul Rashid points out that the high dependence on the US dollar will make the global economy highly susceptible to changes in the US monetary policy.
The move to dedollarise will not only reduce financial-market volatility caused by US monetary conditions, but it can also help reduce costs, he says.
Afzanizam explains: “Any change in the US monetary policy will affect the global financial market. This is a problem, as it can sometimes create excessive volatility in foreign-exchange markets.”
“Because of this, companies and investors have to hedge their exposure to mitigate currency risks. Hedging is cost to businesses and investors. Therefore, the incentives to do away with the US dollar is high,” he says.
Afzanizam tells Starbizweek if there were currencies that could provide better alternatives in terms of stability and predictability, dedollarisation would certainly gain further traction.
According to Sunway University economics professor Yeah Kim Leng, dedollarisation, that results in improved global economic and financial stability leading to increased trade and investment flows, will be beneficial to small and open economies like Malaysia.
“As a trading nation, pragmatic and nimble government and company-level policies and strategies are vital to cope with the potential fallouts and opportunities arising from dedollarisation that may or may not lead to a more stable and progressive global economic order,” he explains.
Cost and benefit
Malaysia is seen to be moving towards dedollarisation. Early this month, the country reached a deal with India, one of its major trading partners, to settle trade in Indian rupees instead of the US dollar.
In addition, Malaysia revived the idea of setting up an Asian Monetary Fund (AMF), proposing to initiate discussions on the matter with China, which is reportedly open to the idea.
These small steps are part of an ongoing global shift away from US dollar dependence.
Socio-economic Research Centre executive director Lee Heng Guie says there are potential costs and challenges during the transition process.
“Malaysia may face heightened exchange rate volatility if the dedollarisation is disorderly and abrupt, causing a plunge in the US dollar against major foreign currencies. The wide and deep US dollar fluctuations could impact trade, investment and capital flows,” the economist explains.
For example, a sharp appreciation of the ringgit against the US dollar could lower the cost of servicing Malaysia’s Us-dollardenominated debt, but it could dampen the country’s export competitiveness and lower exchange rate translation gains in domestic currency for the export-oriented industries such as palm oil, rubber products and crude petroleum.
“Portfolio investors may undertake portfolio adjustment in anticipation of the dedollarisation. This could induce assets price fluctuations in the debt and equities markets as investors stay on the sidelines, while assessing the potential risks and costs associated with a disorderly transition of the dedollarisation,” Lee says.
Lee: the wide and deep us dollar fluctuations could impact trade, investment and capital flows.
Regardless of the transition costs and risks, Malaysia has to continue strengthen its domestic financial markets, enhance policy credibility, and foster regional and multilateral cooperation in the provision of liquidity arrangement.
“The development of deep and liquid domestic financial markets is a prerequisite for buffering against the impact of dedollarisation,” he says.
Meanwhile, Malaysia University of Science and Technology economics professor Geoffrey Williams sees two basic scenarios pertaining to dedollarisation.
Williams: the use of the us dollar will slowly decrease.
“The first is that the use of the US dollar will slowly decrease, as more countries settle trade and investment in bilateral currencies. This will continue as BRICS and smaller countries get onboard.
“The second scenario is that there will be a tipping point where the US dollar will quickly lose reserve currency status as happened to pound sterling after World War II. There are many possible triggers of this, but they are very speculative and involve a major crisis,” he adds.
Williams says the United States will defend the dollar and so long as the dollar is used for oil, metals and commodity trades as well as intergovernmental settlement of debt, it will retain its role.
Gradual transition for stability
It is estimated that the US dollar accounts for 88% of global trades, based on Bureau for International Settlements’ triennial central bank survey 2022.
As it stands, central banks around the world still hold significant amounts of US dollars in their reserves. An estimate by the International Monetary Fund implied that the greenback accounted for about 60% of global foreign exchange reserves as at end2022.
Nevertheless, economists expect the numbers to be on a declining trend, as countries are diversifying away from the US dollar. The dedollarisation process, however, will likely be gradual to minimise disruption to global financial systems and markets.
As Afzanizam puts it, any abrupt transition to other currencies can create uneasiness and uncertainties among businesses and investors.
Therefore, allowing ample time would facilitate the changes and reduce the inevitable market volatility, he says.
The enormous and deep US debt markets have been touted as a major factor for the continuing dominance of the US dollar in global financial markets, according to Yeah.
Yeah: the yuan is expected to see a rising role as one of several alternatives.
Therefore, as countries diversify their reserve currencies and reduce dependence on the US dollar, one could expect global financial markets to face higher volatility and uncertainty, he says.
On Malaysia’s effort to wean off US dollar dependence, Yeah points out that it will be a gradual process.
“This will be in line with global shifts in international trade, capital flows and financial markets, whereby the process is driven by market forces and factors such as transaction costs, riskiness, accessibility and convenience,” he says.
As a start, Malaysia can consider trading its oil and other natural resources in local currencies with countries with which it has bilateral agreements, says HELP University economist Paolo Casadio.
Further, he notes, Malaysia can have a meaningful and impactful transition towards less reliance on US dollar by coordinating its effort with other economic blocs, such as BRICS, to set up a new system.
“There are long-term benefits for Malaysia as well as for all the other developing countries in eliminating the (US dollar) monopoly,” Casadio says, pointing to a more stable and equitable exchange rate as an example.
Asian fund proposal
On the setting up of the AMF, Williams says while it is a feasible strategy to reduce reliance on the US dollar, such a move will require “buy-in” across many countries in the region. In particular, pertinent issues such as who will to provide the finance, and securing consensus on the terms on which access to that finance is made available, have to be ironed out.
“It is not just a financial issue, but geopolitical too,” he stresses.
“The main issue is who will fund it, and what will be the contribution rates for each member. It is likely that most will come from China, unless Japan and South Korea join in. Otherwise, most Asian countries are too small to contribute much,” he adds.
Williams says new arrangements, such as the 12-member Comprehensive and Progressive Agreement for Trans-pacific Partnership, of which Malaysia is a part, are indications of ongoing shifts in global economic arrangements away from dominance of the United States and other developed economies such as the European Union (EU).
“Moving to bilateral currencies for trade and investment is feasible, but more at risk to exchange fluctuations and liquidity issues. So, it would be a move to multiple currency options, not just one,” he says.
He notes before US or Eu-based systems such as the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, could be replaced, there has to be a viable and reliable alternative for interbank transfers and e-payments.
“Although the systems are contestable and replaceable by new and local providers, the truth is that only stable, reliable and secure financial systems will survive. The US dollar still provides this,” Williams argues.
Importantly, for Malaysia as a small country, it should go with the flow and remain neutral in the shifting geopolitical dynamics, while trade and debt, in whatever currency is best, he says.
Potential alternatives
Amid the ongoing currency shift, China’s yuan, is increasingly seen a potential alternative to the US dollar. This is by virtue of China being the second-largest economy in the world after the United States. However, the country’s strict capital controls are a hindrance.
“As the world’s second-largest economy, China’s yuan is expected to see a rising role as one of several alternatives, including the euro, to the US dollar. Countries trading with China are already increasingly using yuan for payments and settlements,” Yeah says.
“Its internationalisation, however, is being constrained by strict capital controls and lack of liquidity for international transactions outside of China,” he adds.
Concurring with Yeah, Afzanizam says, for the yuan to play an even greater role as an alternative international currency, China’s capital account has to be more open, allowing free flow of funds to allow greater flexibility, especially in terms of the supply of yuan.
Casadio, on the other hand, argues there is no alternative to the US dollar in the prevailing system.
Rather, a “gold-backed system of currencies that constitutes an alternative” is a more viable option, this will provide an equitable system of exchange rates and a stable international financial system, he explains.
“There is a clear shift, at the international level, towards a system in which the dollar has no more monopolistic power as the international currency. The system that is going to emerge from this will limit monopolies and excess financing deficits, thanks to it being anchored to gold,” says Casadio.
Charles Schwab Corp says that there aren’t any viable reserve-currency alternatives to the US dollar.
“A reserve currency needs to be freely convertible and have deep and liquid bond markets to be considered safe for foreign central banks to hold. Central banks need to know that their money is easily and readily available when needed, particularly in times of stress.
“The United States, with a large, open, and liquid market for Treasury securities, fits that role,” the investment bank explains in its commentary.
“That’s why when the Covid crisis hit the global economy, the US Federal Reserve (Fed) expanded its swap lines with foreign central banks to enable access to dollars for countries that were struggling to access dollars for trade and debt payments. While other major countries’ markets have these qualities, the size and openness of the US market is difficult to match,” it adds.
Depreciating dollar
In the meantime, the US dollar is expected to weaken further against most currencies through the year on anticipation of slower interest rate hikes by the Fed.
The greenback has already been on a declining trend over the past few months. This is evidenced by the downtrend of the US dollar index – a gauge of its performance against a basket of major currencies – with the DXY falling to around 100 to 102 points from its multi-year high of 114 to 115 points in September 2022.
From the Malaysian perspective, the ringgit has been volatile against the greenback.
The local note is trading RM4.43 against the US dollar. This is an improvement from RM4.75 in early November last year, but a poorer position from RM4.24 at end-january this year.
With the expected weakening of the US dollar, the ringgit is forecast to strengthen to RM4.15-RM4.25 towards the second half of this year, says Dr Yeah.
“The US economy is anticipated to weaken significantly in the second half and that could warrant unwinding the high interest rates,” he explains.
Similarly bearish on the greenback, Afzanizam says he expects the ringgit to strengthen to RM4.20 against the US dollar by the end of 2023.
“The expectation of slower rate increase in the United States and the potential cut in the federal fund rate could lead to a weaker US dollar,” he explains.
Although on a decline, the US dollar’s dominance is expected to persist due to the absence of a viable alternative.
“The pace of its decline, however, could accelerate if US economic growth sputters, fiscal and debt woes mount and high inflation and interest rates destabilise its banking system.
“Continuing US economic instability coupled with the government’s penchant to apply sanctions for geopolitical reasons will also motivate the rest of the world to band together to find a viable alternative while reducing dependence on the dollar for trade, financing and foreign reserves,” he adds.
The United States’ way of weaponising the dollar to control global trade is losing ground and more and more countries are shying away from using the greenback. — Reuters
The US dollar system will be dominant for a while yet, but the more the dollar is weaponised in terms of sanctions, the more users will want to dedollarise. — Reuters
From left: Oppstar chief financial officer Chin Fung Wei, independent non-executive director Datuk Mohd Sofi Osman, independent non-executive chairman Datuk Siti Hamisah Tapsir, executive director and CEO Ng Meng Thai, executive director and chief technology officer Cheah Hun Wah, chief operating officer Tan Chun Chiat, independent non-executive director Datuk Margaret Yeo and independent non-executive director Foong Pak Chee
Oppstar soars 225% on ACE Market debut
KUALA LUMPUR: Oppstar Bhd made its debut on the ACE Market of Bursa Malaysia at RM2.05 a share, a 225.4% premium over the issue price of 63 sen a share.
The stock was the most actively traded with 19.26 million shares exchanging hands.
The integrated circuit design service provider successfully raised RM104.25mil from the initial public offering exercise via the issuance of 165.48 million new ordinary shares.
Oppstar will utilise RM50mil to expand its workforce and RM25.00mil for the establishment of new offices both locally and regionally.
Meanwhile, another RM12mil will go towards research and development expenditure along with RM12.65mil for working capital.
The remaining RM4.6mil will be allocated for its listing related expenses.
“Our vision for the company is simple and clear and it is to show the global players that Malaysia is not only known for its back-end semiconductor value chain, but also has the capability to go into front-end semiconductor IC design.
“I am proud to say that we now serve clients in countries such as China, Malaysia, Japan, Singapore, as well as the USA.
“As we gradually progress, we continually ask ourselves what we can do to expand our business and continue to build up Malaysia’s profile in the front-end semiconductor space. This was where the rationale to go for a listing came about leading up to this today,” said Oppstar executive director and CEO Ng Meng Thai said in a statement.
PETALING JAYA: Oppstar Bhd will focus on building its human resource capital post-listing, as the technology sector is set to grow from the opportunities presented by 5G, artificial intelligence and the Internet of Things.
The integrated circuit design service provider’s chief executive officer Ng Meng Thai said the bulk of the proceeds raised from Oppstar’s listing on the ACE Market of Bursa Malaysia yesterday would be used for the workforce expansion.
“At the moment we have 220 engineers and we have plans to increase that number to 500 in the next three years. With an enlarged workforce, we also hope to grow our revenue and profitability accordingly,” he said after the company’s listing yesterday.
The group is collaborating with various universities in the country to secure future design engineers.
“We started a programme in 2020 where we hire third-year university students for three months. They work part time for 20 hours a week and are paid RM1,500 a month. Upon graduating, they are required to work for us for a year. This is how we build our talent pool.
“When it comes to business, the multinational corporations (MNCs) are our customers. However these MNCs become our competitors when it comes to hiring. This is why other than fundraising, our objective in carrying out the listing exercise is also about hiring and retention,” said Ng.
Oppstar raised RM104.3mil from the public issue of 165.48 million new shares. The company made its debut in the market opening at RM2.05 per share, or a RM1.42 premium above the offer price of 63 sen per share.
The stock closed its maiden trading day up 285.7% or RM1.80 higher at RM2.43 a share. The share price hit a high of RM2.95 and a low of RM2 in intraday trade. Oppstar’s listing did not have an offer for sale of shares from its shareholders.
Oppstar chief financial officer Chin Fung Wei said the group intends to implement a long-term incentive plan of up to 15% of the total number of issued shares of the company for its employees.
“Prior to our initial public offering (IPO), we already had more than 20 shareholders. In fact, every one of our employees, except for those that came on board after the IPO’s closing date, is a shareholder of the company. This is one of our remuneration methods for our employees, apart from their monthly salary,” he said.
Ng added the group’s listing showed Malaysia was not only known for its back-end semiconductor value chain, but also had the capabilities to go into front-end semiconductor integrated circuit design.
“We serve clients in countries such as China, Malaysia, Japan, Singapore, as well as the US. Our expansion plans will enable us to groom future talent and grow our geographical presence which will progressively help strengthen Malaysia’s front-end semiconductor ecosystem in line with our vision,” he said.
The group plans to payout at least 25% of its annual earnings as dividends. AmInvestment Research said the US-China trade war bodes well for Oppstar because China is compelled to develop its own semiconductor capabilities.
7 Mar 2023 — PETALING JAYA: Oppstar Bhd, which is en route to a listing on Bursa Malaysia’s ACE Market on March 15, saw its initial public offering (IPO) …
Southeast Asia, like much of the rest of the world, is losing patience with King Dollar.
The westernization of the world’s reserve currency, as through sanctions on those deemed bad actors — such as Russia for its war in Ukraine — has pushed even the typically diplomatic Southeast Asians to warn the US of the consequences.
In a conference in Singapore on Tuesday (Jan 10), multiple former officials spoke about de-dollarisation efforts underway and what economies in the region should be doing to mitigate the risks of a still-strong dollar that’s weakened local currencies and become a tool of economic statecraft.
“The US dollar is a hex on all of us,” George Yeo, former foreign minister of Singapore, said at the conference hosted by the ISEAS-Yusof Ishak Institute. “If you weaponise the international financial system, alternatives will grow to replace it” and the US dollar will lose its advantage.
While few expect to see the end of King Dollar’s global sovereign status anytime soon, Yeo urged that the risk of it happening be taken more seriously.
“When this will happen, no one knows, but financial markets must watch it very closely,” said Yeo, who is a visiting scholar at the National University of Singapore’s Lee Kuan Yew School of Public Policy.
After gaining 6.2% in 2022, the US dollar is down 0.67% in the first several days of this year, through the end of Tuesday, according to the Bloomberg Dollar Spot Index.
Yeo noted that in times of crisis, the US dollar rises further — as with levies on Russia that have left Russian banks estranged from a network that facilitates tens of millions of transactions every day, forcing them to lean on their own, much smaller version instead. That’s put more pressure on third-party countries, too, which have to unduly rely on US dollar use.
Following on Yeo’s remarks later in the conference, former Indonesian trade minister Thomas Lembong applauded Southeast Asia’s central banks that already have developed direct digital payments systems with local currencies, and encouraged officials to find more ways to avoid leaning too hard on the greenback.
“I have believed for a very long time that reserve currency diversification is absolutely critical,” said Lembong, who’s also a co-founder and managing partner at Quvat Management Pte Ltd. Supplementing US dollar use in transactions with use of the euro, renminbi, and the yen, among others, would lead to more stable liquidity, and ultimately more stable economic growth, he said.
The 10 Asean countries are just too disparate to establish a common currency as with the euro bloc. But Lembong said he was “deeply passionate” on this subject of the US dollar as a global reserve currency.
The direct digital payments systems — which have boosted local currency settlement between Malaysia, Indonesia, Singapore and Thailand — are “another great outlet for our financial infrastructure”, he said.- Bloomberg
New Prime Minister Datuk Seri Anwar Ibrahim has been welcomed by many like a breath of fresh air. But can he cleanse the nation of the many ills it now suffers? It remains to be seen.
MY retired brother called from Penang the other day. He had yet to get his pension and needed some cash. Why? I asked. “Anwar has won and I want to celebrate with my friends,” he cheered. He is just one of many who are anamoured of our new Prime Minister.
There is also this man in Bukit Mertajam, Datuk Seri Anwar Ibrahim’s hometown, who is buying everyone meals at restaurants around town.
Elsewhere, a large non-Muslim crowd gathered outside a mosque as Anwar prayed inside. And they mobbed him when he came out. Everywhere he goes, the PM is being cheered.
He’s probably the most welcomed Malaysian chief executive in living memory. It’s all quite exciting, but I think the celebrations are also a bit premature.
Yes, it has been a long wait for him, his supporters and those who have been rooting for him all these years. He has been the underdog, facing failure after failure, falling every time he believed he had reached the pinnacle.
It’s the kind of story that would touch any heart.
But it’s only the beginning. Now is not the time to put him on a pedestal. He has much to prove, and he could fall off that high horse any time, just as the last three prime ministers did.
The plotting is going on. Those who do not like the idea of him being PM will do their best to bring about his downfall.
It happened before in 2020 with the Sheraton Move; and even days after Anwar’s appointment, there was talk of a Tropicana Move.
That has been denied, but his performance will be under intense scrutiny. There will be little room for relaxation.
His first task just got done. He has named his full Cabinet, obviously done with much juggling, putting together a unity government that will keep everyone happy and yet meet his promise of a small Cabinet.
If that was hard, the really herculean task awaits now.
There is so much wrong with our country now – an economy in the doldrums, a ringgit that’s floundering, an education system that’s well off the mark, and a population that’s deeply divided.
There’s so much to do – or undo.
I say undo because Anwar himself may be responsible for some of those maladies. He was once Education Minister – way back in 1986 – and started a revolution in the system.
He is the man credited with Islamisation of our schools, and the growth of religious schools, while working with then Prime Minister Tun Dr Mahathir Mohamad.
Those actions have come back to bite him, say analysts. Two weeks ago, his daughter lost the Permatang Pauh seat, held by members of his family since 1980, to a tahfiz teacher.
Anwar, and his Angkatan Belia Islam Malaysia (Abim), were the driving force behind such schools.
The children in many of these schools are being taught to only vote for a certain party, and with Undi18 now law, there was a flood of such voters, the analysts say.
With the mushrooming of religious schools, the days when children of all races laughed, played and mixed in schools seem to be long gone.
Now, schools are divisive. Even the syllabus has been questioned with Malays themselves asking why there are so many religious classes and too few teaching modern-day living skills like English, science and technology, computer know-how and things like that.
t;
The Chinese and Indians are flocking to vernacular schools, leaving the national school system largely to the majority Malays. So many Malays are also migrating to these vernacular schools.
Already, there is a call for one stream of education for all. I think it’s too early for that too. We first need to make the national school system the one of choice. For that, a good Education Minister is needed, as is a revamp of the school syllabus. Fadhlina Sidek and Datuk Seri Khaled Noordin have a lot to do.
We have heard the perennial complaints – discrimination in matriculation places, the closure of canteens during Ramadan, children forced to eat in the toilet and odd corners, non-Muslim children being left to their own devices during agama classes … the list is long.
Public universities too need to be places where a Malaysian identity can be forged, not where differences are reinforced.
A National Unity Minister who sincerely believes in his job could be a big help. Aaron Ago Dagang, a man from Sarawak, could be the right choice.
There is a lot we can learn from the Borneo states, which have retained much of the old-world charm that places like George Town, Klang, Johor and even Kuala Lumpur once had; the days when Chinese coffee shops housed nasi kandar stalls and people of all races sat together at the same table, eating and drinking together.
Even my mee jawa man had prawn and beef broth for his different clientele, each with a different wok.
Then there’s the minister for Religion. We have all heard about the one from Indonesia; his mantra is that he is a minister for all religions – Islam, Christianity, Hinduism or Buddhism.
It was not so the last time for the minister in Malaysia. He believed his job was only to cater to the religion of the federation.
What we need is a minister who looks at the similarities among religions, all of which preach peace and unity, not one who considers his religion superior and therefore untenable with the others.
The Rulers have got it right. They have called for an end to all extremism, religious or racist, and for unity to be the main consideration. It is important that the government works towards bringing the bitterness to an end.
“I hope there are no more leaders who will raise racial or religious issues to provoke the people,” said Negri Sembilan’s Tuanku Muhriz ibni Almarhum Tuanku Munawir.
They also want the Rukun Negara, whose first tenet is “Belief in God”. It does not say which religion. The supremacy of the Constitution and the rule of law are also important.
Now, it is up to the new PM. He has his job cut out for him. The honeymoon with the voters and adulation of the supporters will be over real soon.
The work – and it’s a lot of hard work – will have to begin. The pitfalls and booby traps are many. His supporters have faith that he will make it.
Five years from now – if Anwar succeeds as a unifying PM – we can celebrate as a nation. For now, though, I am holding that champagne, or non-alcoholic beer as the case may be.
Anwar says he took Finance Ministry to bring new policies
PUTRAJAYA: Prime Minister Datuk Seri Anwar Ibrahim, who appointed himself Finance Minister in his new Cabinet, is hoping to restore economic confidence through new policy approaches.
“I was not inclined (to take on the post), but I want to embark on new policy approaches and restore economic confidence among local traders as well as foreign investors.
“I will be assisted by a strong team that isn’t only civil servants, but also a group of advisers who will not burden the government’s coffers,” he said in announcing his Cabinet at Perdana Putra here yesterday.
In the follow-up press conference, Anwar said the Finance Ministry will be assisted by several advisers led by former PETRONAS president and chief executive officer Tan Sri Mohd Hassan Marican.
Meanwhile, Anwar said the new Cabinet members will be sworn in at 3pm today.
“I will have a special meeting with the ministers so I can convey several matters to them, such as new rules, direction, and new methods,” he said.
Anwar said ministers should begin their duties soon and he advised them to avoid wastage, bribes and power abuse.
“I have made it clear to the Cabinet that the unity government prioritises good governance and the need to reduce the people’s burden, as well as stimulating the economy,” he said.
The Prime Minister said his Cabinet, which comprises 28 ministers, is a clear signal to the people that the unity government, together with the civil service, will ensure its promises to the people are fulfilled.
The last prime minister who also served as a finance minister was Datuk Seri Najib Razak.
Anwar had served as finance minister and deputy prime minister to then premier Tun Dr Mahathir Mohamad before being sacked in 1998.
Rightways 
