“Equities on SALE!!!” – screamed most stock markets earlier this year. “Equities – Further Reduction!!!”, the announcements continued into mid and late 2008, yet, investors watched from the sidelines. In retrospect, waiting was wiser than jumping in. What about now? After all, many stock markets have already lost more than half their values!

You, the rational investor, are thinking it’s crazy to buy now when stock markets are in a pool of red.

Alternatively, you, the ultimate bargain hunter, are waiting for the sign that says, “Equity on Final Sales, last 3 days only!”

It is exactly what millions of other investors are thinking as well. So when is the best time to buy so that you are buying at the low?

But then, when can we expect equities to be at their cheapest?

They are cheapest when the market is at its “worst” or the outlook is at the “bleakest” – where it is impossible for things to get any worse.

Let’s cast our minds back and think of the world economy after the technology crash in 2000, Sept 11, 2001, Enron and Worldcom crisis in 2002 and the Asian SARS episode in 2003.

Each crisis seemed to signal the end of the world as we know it. This crisis is no different! SARS caused the Asian markets to plunge but shortly afterward, they shot pass their previous highs.

If you had waited because you thought that SARS would plague Asia for a long time, you would have missed out on some of the most spectacular growth. Does it mean one should just take an early plunge during a crisis?

Then looking back further at 2001 after the technology crash – one could have easily believed it was the “final sale” and entered the market then.

Unfortunately, the markets continued to be shocked by acts of terrorism (Sept 11) and then betrayed by corporate giants like Enron and Worldcom.

Even the most rational investor who bought at these perceived low points may call it quits.

When the situation could not get any worse, it just did! Does it mean one should just wait and see? After all, I did describe the current crisis as the “First world financial tsunami” – have the waves stopped or is it an interlude before the next big one?

The equity market is like a roller-coaster ride, as it plunges headlong into a great fall, investors will lament and throw their hands up in despair.

A friend of mine jokingly said that her long-term investments may now be so long term that they would only benefit her grandchildren.

Are you prepared to buy when the situation is bad, so bad that it cannot get worse? That, by definition, is to buy at a low and maybe even the absolute lowest point.

Unless you are still on the roller coaster, you will not be able to enjoy the upswing when it passes the bottom of the great fall. And if you choose not to be on the roller coaster, then don’t complain that you are always unable to buy at a low.

In fact, the stock markets have always recovered months before the real economies hit the bottom.

A sensible approach is needed, coupled with great mental and emotional strength to overcome the fear of loss in such instances.

While it is silly to buy simply because markets are falling, sticking to fundamentals does work. Buy in anticipation of future re-growth at reasonable prices and persevere through possible set-backs – this is likely to succeed over the longer term.

If you have what it takes, I would suggest a regular drip into the market.

For example, if you have RM100,000, divide it into 10 lots of RM10,000 and then invest each lot into the market monthly. As you ride the market down, you can be assured that you are buying cheaper.

Of course, the best outcome is that, in the course of such regular investing, you manage to “catch” the bottom.

As I always believe, if you get value for your money, then you don’t have to worry about whether it’s cheap or expensive.

Tay Han Chong is senior vice-president and senior head of division, Personal Financial Services Division, UOB

Datuk Seri Nazir Razak has become synonymous with the CIMB Group. His pedigree and achievements have made him a highly-regarded personality in corporate Malaysia. Readers get to find out a little more about this man from his answers to their questions

1. People say you grew up in a well-known and rich family and therefore, may not quite understand nor have experienced a fall or real challenges. Is that true?
KHLow

I value my family background not for material comforts but for the emotional security and set of personal code of ethics it has instilled in me. As for career challenges, I can assure you that life as a rookie at CIMB was no bed of roses. To be honest, I struggled and almost surrendered a few times.

By now though I believe that I have demonstrated the track record, character and ability to do the job entrusted to me.

2. Set of rules is normally redefined by the person(s) in-charge, be in the corporate world or family unit. Do you use the same principle at home as you do at work?
Zaharah Rashid, Subang Jaya

Although I try to assist, due to my work schedule I leave home matters largely to my wife.

3. We have heard so much about your life at work. Can you tell us more about your life outside the office?
See Gaik Eng, KL

Life outside work centres around my family. I have been married to Azlina since 1992 - we met while studying together at Bristol University. Her father is Tan Sri Aziz Taha, a former Governor of Bank Negara and we have 2 kids, Arman and Marissa. I try to spend as much time as possible with them. We are not good at glitzy social events and are actually very private, preferring time with our extended family and a small circle of close friends, many of whom date back to our youth.

It is important to have a good work/life balance and working long hours at the office also means working harder to obtain quality time with your family.

As for sports, I find squash the most efficient form of exercise and Chelsea the best football team in the world!

4. Family support is key in one’s success. How do you reconcile that with the huge benefits it may bring you as your brother will be Prime Minister of Malaysia not too long from now?
Yasir Tamizi

Indeed, the most important influence in my career has been my wife Azlina. She believed in me even before I had a job. She’s very smart but more importantly we both grew up in families which value integrity and a strong sense of duty. So she has been a great sounding board and conscience. As for my brothers, we are close but have each deliberately kept separate career paths. This won’t change even when Najib becomes Prime Minister.

As for CIMB, I am determined that my family relationships must not detract from the very real successes that CIMB staff have worked so hard and for so long to attain.

5. How do you distance yourself or CIMB Group from the perception of having strong political connections in securing high-profile business mandates? Are other investment banks really in the same playing field with CIMB, then?
Mustaqim Zain

CIMB was Malaysia’s leading investment bank before I became its CEO in 1999. Since then we have not only successfully defended that position in Malaysia but we have expanded to become number 1 in M&A advisory in Singapore and a leading investment bank in Indonesia. I do not have any relatives in government in other countries.

I do not deny that connections of whatever form helps open doors but it’s always what you do in the room that matters. If you look at the team we have at CIMB Investment Bank, you will see a set of bankers with a track record that can justify winning any mandate. CIMB has also been successful at consumer banking – surely that cannot be attributed to political connections.

6. You are one of the few who practises meritocracy in staff recruitment/promotion. Have you had problems implementing this policy? How can you persuade others to do the same to raise our competitive advantage?
S. Paul

CIMB has always strived to be meritocratic. A successful organisation is one that keeps its people motivated. We try our best to ensure that those who do well are rewarded financially and in career progression, irrespective of gender, race or age. Every employee must believe that it is worth working hard.

Implementing a merit-based organisation in Malaysia and our other banks in the region is not easy; it is human to be biased towards one’s race, gender or even friend.

So management has to continuously intervene to keep managers objective and fair. For instance, we question managers who can’t run multi-racial or multi-gender teams. We remind our people of the need to challenge what comes naturally to them as individuals.

So, my best advice to others - Admit this human failing and take steps to counter it because it will enhance your organisation’s performance.

7. You have been in the banking industry for almost 20 years and during that time you have been instrumental in propelling CIMB to great heights. What are your plans for the next 10 years? Do you see yourself as a regulator, for instance?
Ratha

Over the next 10 years, I see myself continuing to spearhead CIMB Group and in particular, its transformation into an ASEAN banking group and then hand-over to an able successor. I am very committed to the CIMB agenda that has consumed me since 1989 and do not see myself in any other full-time role after this.

8. Your late father is seen as a people’s leader and you are seen as the single force behind CIMB’s success locally and abroad. Like your father, how can that be meaningful to you when there are people out there in your own country who are trying to make ends meet?
Ahmad Safuan Mokhtar, Project Management Consultant

I am very proud of the role that CIMB Group plays. Banks are crucial to any economy, not least for channelling savings for investments that enable economic growth. And economic growth drives employment and wealth creation without which we can’t even begin to discuss distribution of wealth.

CIMB is a socially responsible organisation and strives to supplement the Government’s welfare efforts through our RM100 million charitable foundation. Our CSR programme is acknowledged as one of the best in the country. Our Community Link is currently running 198 projects throughout Malaysia such as helping single mothers in Pulau Tuba, sponsoring English lessons for underprivileged kids in Sentul and so on.

9. What measures would CIMB take to tackle the current global crisis to avoid it becoming a victim of the “falldown”?
By Katherine, Selangor

We have limited exposure to international assets and dependence on foreign financing. This ensured that we were not materially hurt from the crisis itself. But as the crisis will have a severe impact on the economy as a whole next year, we have to watch our loan books, be vigilant about all types of risks and contain our operating costs.

10. What is your view of the NEP? Should it be abolished?
Hussein Hamzah, Johor

The NEP was meant to be a 20 year exercise that, according to Tun Razak in 1971, is “… not aimed at promoting any sectional interest but is a blueprint for the progress and unity of our Nation”.

The NEP has had many successes against poverty and in uplifting the economic well-being of Malays but it has now gone on for 18 years longer than the founding fathers planned and is sadly seen by too many as a major cause of national disunity.

Furthermore, since the NEP was introduced, the competitive landscape of nations has changed dramatically, the complexion of our economy has transformed and Malaysians are quite different too.

I would suggest that we set-up a closed door forum of the best and brightest Malaysians to openly discuss the future of the NEP. At the very least we need to change some out-dated implementation policies. On a related note, I also feel disturbed that we can’t even seem to talk about vernacular schools. Again, why not set-up a parallel forum to openly discuss all aspects of the education system so that future generations have a real chance of realising Bangsa Malaysia?

Other countries will worry about solving their own problems first

THE world today is indeed a different place than say, a year, or even six months ago.

It was only recently that the National Bureau of Economic Research (NBER) declared that the US was in fact in recession since December 2007. But measured against the technical definition of a recession, i.e. two consecutive quarters of negative growth, the US is yet to be in recession.

However, with the market expecting fourth quarter growth in the US to be decisively negative, at as much as negative 6.5%, the US will be in technical recession once it releases its current quarter GDP data by the end of next month.

Recession or no recession, the US is in trouble, what with the massive global writedowns and credit losses todate amounting to a little over US$1 trillion, of which two-thirds originated from the US.

On top of the above losses, the US economy is in dire straits with rising unemployment, all-time low readings on the Consumer Confidence Index and ISM indices for both the manufacturing and services sector.

It is also facing a depressed retail sector and diminishing values for homes as well as the threat of deflation.

To address these challenges, the Fed has been aggressive in cutting interest rates with its latest move of lowering the target rate to between zero and 0.25%, the lowest ever on record.

At the rate the Fed is going, it has effectively used up all of its monetary tools to fire up the US economy.

The Fed has been busy in recent months, providing liquidity or buying up toxic assets to the extent that its own balance sheet has ballooned to more than US$2.2 trillion, almost triple compared to a year ago.

The Fed is effectively printing money but by doing so, the world too is drawn to the US problem as the rest of the world has been the biggest buyer of US Treasuries, despite the current extremely low interest rate environment.

Indeed, some nations have been cutting their exposure to the US economy and debt papers and rightly so.

With the current yield on US Treasuries at only 2.13% and 2.56% for the 10- and 30-year papers, does it make sense for the rest of world to continue to buy US debt papers?

More importantly, through the current low interest rate environment, the Fed is indeed getting cheap funding for its efforts to rescue the US economy but the end result may be even more damaging, especially in the supply of money, which at one point will turn inflationary.

US Treasuries have been among the best asset class performers in 2008, returning more than 15% this year.

With market expectations that the US economy will remain in the doldrums for at least another year, US Treasuries are set to return more than 10% if yields continue to dip due to their “safe haven” status and buying from the rest of the world.

Some may argue that the rest of the world cannot afford not to buy these debt papers now for fear that the US dollar itself may become a victim, resulting in nations recognising huge translation losses.

While this argument has a valid point, I must say that it too can be argued further.

For instance, if the rest of the world were to buy these papers now, would it be logical to think that the risk-reward ratio is indeed negative as chances of US interest rates climbing back up are definitely higher, maybe not in one or two years, but some time during the tenure of these long-dated papers.

Investing in government papers too can be risky in terms of mark-to-market losses, as when yields rise, prices fall.

Hence, even by buying these papers now and achieving short-term aims, i.e., supporting your own interest in US dollar assets, it too can backfire when things return to normal.

The other point of argument is that the rest of the world, including the European Union, Japan and China, is either experiencing its own respective problems at home and hence, I believe it is logical that they will take care of themselves first before acting on helping the US.

Uncle Sam can’t simply issue us “IOUs” and expect us to believe that it will not turn sour at some time in the future, either in forex losses or in the form of capital losses.

Pankaj Kumar is the chief investment officer at Kurnia Insurans Bhd.

LONDON: Oil prices fell below US$39 a barrel (US$1 = RM3.48) yesterday on a string of data confirming US economic downturn.

US crude for February delivery fell US$1.55, or about 3.7 per cent, to US$38.36 by 1628 GMT after falling 6 percent on Monday.

ICE Brent dropped by US$1.90 to US$39.55 a barrel.
The world’s top economy, the US, shrank an unrevised 0.5 per cent in the third quarter, official data showed. Consumer spending plunged 3.8 per cent, the biggest drop since 1980.

“The bears appear to be in control, aided by weak equity markets as the global economic slump offers a depressive ring to the festive period,” said Rob Laughlin, senior oil analyst at MF Global here.

“Crude oil markets were lower (on Tuesday) in generally thin conditions amid continuing news of lower global demand,” said analyst Nimit Khamar at the Sucden brokerage here.

“Given thin conditions and continuing concerns about the global economy, markets may drift lower until the end of this year but stay broadly within a range centred near US$40 a barrel.” — Agencies

Datuk Seri Effendi Norwawi (pic) delivered a speech in the Senate last week during the 2009 Budget debate. Below is an excerpt from the speech entitled The Impact of this Global Financial Crisis on the Long Term Economic Development in this Country

OUR target to become a developed nation by 2020 is again confronted by ‘macro’ challenges. Ten years after the 1997-98 Asian financial crisis, the global financial crisis will result in slower growth worldwide from 5% in 2007 to 3.7% (2008) and 2.2% in 2009 (source: IMF World Economic Outlook Update, Nov 2008).

Malaysia, as a small open economy that relies on global demand, will be affected.

More than half of Malaysia’s total production is aimed at the global market. Around 80% of our exports go to 10 countries, all of which are suffering economic slowdown.

The latest gross domestic product forecast of 3.5% for 2009 announced by the Deputy Prime Minister shows that we are indeed in a slowdown.

Bank Negara has said that the country’s financial system is not exposed to subprime crisis. The local banking system is strong, supported by risk weighted capital ratio of 13.2% and non-performing loan ratio of just 2.5%. We hope the local financial system would continue to remain strong and be able to support economic activities in the country.

The ongoing crisis is different compared with that of 1997-98. The turmoil in 1997-98 grew from the credit crunch that stunted growth in the real economy. Now, the country’s real economy is facing a crisis and we have to safeguard our financial system to avoid a potential dangerous reverse effect, where weakening cashflow and a business downturn would set off a credit crunch crisis.

This is the vicious cycle that would prolong the economic downturn.

Datuk Seri Effindi Norwawi

The impact of the economic crisis need to be studied in two perspectives: short term (growth) and long term (development).

The impact on economic growth in the near term, 2009-2010, has been widely discussed. I must stress the importance of understanding the impact on the long-term economic development of the country. How will it impact Vision 2020?

It’s true that we have survived 1997-98. During the 1998 economic crisis, the domestic economy contracted 7.4%. We then saw a V-shaped recovery the following year, with the economy posting a growth of 6.1% in 1999.

From a different perspective, however, the 1997-98 crisis had a negative impact on longer term growth. The average growth over the past 10 year prior to the crisis in 1997 was 9.1%, while the average growth rate between 1997 and 2007 was 5.6%.

It is clear that the 1997-98 crisis had affected the country’s longer term growth rate.

I want to suggest that the current economic crisis be reviewed in depth so we can take the appropriate measures to ensure our longer term plans are not compromised.

We are halfway towards the year 2020. The average real income per capita compared to advanced nations (Organisation of Economic Cooperation and Development), Malaysia’s real income per capita rose 1% from 14% to 15% between 1997 to 2007.

South Korea’s grew 10 percentage points from 44% to 54% over the same period.

In the early 70s, Malaysia could be considered at par with South Korea. Today, the gap has widened. We need to increase our efforts and focus on keeping pace with countries like South Korea. We only have 12 years before 2020.

I would like to suggest setting up a comprehensive national strategic plan and an institution with the mechanism to implement the national mission. This mission, which was first announced at the launch of the Ninth Malaysia Plan in March 2006, outlined the country’s core development plan for the next 15 years.

To achieve this, we need to have a strategic national mission masterplan with a clear target and implementation schedule that also includes definitions and detailed measurements for all core missions.

This plan need to be understand, agreed upon, and implemented by all parties involved in the public and private sectors and the general population. The roles of ministries and agencies towards achieving the national mission need to be spelled out clearly in a plan.

The accountability and the responsibility of overseeing the whole project/plan must be optimised to move in a single direction. Existing sectorial strategic plans such as the Third Industrial Masterplan (International Trade and Industry Ministry), Education Development Masterplan (Education Ministry), the National Science and Technology 2 Plan (Science, Technology and Innovation Ministry), National Strategic Higher Education Plan (Higher Education Ministry) and the Third National Agricultural Plan (Agriculture Ministry) need to be incorporated into this strategic plan.

Each plan need to realise the goals of the National Mission Masterplan.

A lon- term plan such as Vision 2020 needs high level of commitment to realise. I would like to suggest the setting up of a National Development Council (the Malay acronym is MPN) to be chaired be the Prime Minister, as the platform to oversee the implementation of the national mission. This is to ensure every resource be optimised and coordinated to the best level.

Under MPN, I would like to suggest the setting up of a full-time “task force” (Direktorat Pembangunan Negara or DPN) to be manned by experts and professionals that can be formally institutionalised.

The directorate can be set up almost immediately by putting under it an existing institution, Malaysia Development Institute (MDI). Currently MDI is being tasked to plan the country’s strategic macro direction and do research on the national mission.

With a clear mandate and transparent accountability, this task force is answerable to the Prime Minsiter and MPN to come out with a strategic plan, coordinating programmes, and its implementation and day-to-day running of all intiatives that is being planned. The task force is the strategic planner and execution coordinator that will work with all ministries and agencies involved throughout the whole project.

The importance of migrating towards k-economy and moving up the value chain have been repeated time and again.

But without a clear focus and coordination, we are still unable to show a result that we can be proud of. I believe with a MPN and DPN close monitoring, the focus and the execution that we wanted would be achievable.

For a bigger impact, the utilisation of resources need to be optimised. We again need to be focused and Malaysia must identify new growth areas to be prioritised.

The strength and resources capacity available must be maximised on a bigger scale. Malaysia needs to identify the industries with high potential for development as Malaysia’s niche to make Malaysia an international and dominant brand at the global level.

Spreading our resources to thin will be a waste. To move forward qucikly, we need to create our own Blue Ocean and to be above our competitors with specific and clear offers that can attract local and foreign investors.

History had shown us that global economic crisis has always been the spark for radical changes. Malaysia needs to realign its strategy to stimulate its economy and avoid being dragged into a slump in the near future. At the same time, we must turn this global crisis into the catalyst for Malaysia to implement strategic changes that will bring us closer to the objective, mission and dreams of becoming a developed nation.

The Star

CHICAGO: President-elect Barack Obama has signalled a major shift in US trade policy with a new emphasis on enforceable environmental and labour standards to prevent a "race to the bottom."

But while these progressive policies may satisfy some critics, they could further complicate stalled WTO negotiations and serve as an excuse for greater protectionism as the US slips deeper into its worst financial crisis since the Great Depression.

"The incoming president will face more political pressure for protectionism than any other US chief executive since 1930," said outgoing US Under Secretary of Commerce Christopher Padilla.

"How president-elect Obama responds to this pressure will define the course of the global economy - and America's economic identity - for a generation," he said.

Obama's free trade credentials remain questioned ahead of his White House entry on January 20 despite having tapped free trade advocates Bill Richardson for commerce secretary and Ron Kirk as US trade representative.

The Democrat is backed by trade unions and opposes free trade pacts with Colombia and South Korea that were signed under President George W. Bush's administration.

Together with another free trade deal signed with Panama, the pacts are gathering dust in Congress due to opposition from largely Democratic lawmakers.

In tapping Kirk, Obama said that while the success of American business depends on "strong, robust trade, and open doors for American products," any agreement he signs "must be written not just with the interest of big corporations in mind, but with the interests of our nation and our workers at heart."

That reciprocity will extend beyond just trade in goods, Obama said, but also means that "on both sides of the border, we end up having labour and environmental agreements that are enforceable so we don't have a race to the bottom, but instead the standards of living of all workers are raised."

Obama has also vowed to get tough on China's currency policy which US lawmakers charge is a key cause for the ballooning US trade deficit with the world's most populous nation.

Kirk may also have to tinker with the key North American Free Trade Agreement (Nafta), which Obama wants renegotiated in order to protect US jobs.

Obama also wants to rewrite the South Korean deal, the biggest to be forged since Nafta 15 years ago, to give US carmakers greater access to the Korean market. - AFP Business Times

STOCK market operator Bursa Malaysia Bhd is expected to launch the FTSE Bursa Malaysia Asian Palm Oil Plantation Index as early as first quarter next year.

The index, which is likely to be launched in the ETF, will comprise regional palm oil companies.

"The details haven't been finalised yet. But we are working together with FTSE to come up with that index, and probably the index will be launched in ETF," said chief executive officer Datuk Yusli Mohamed Yusoff in Putrajaya yesterday.

Besides launching the Asian palm oil index, the company is also planning to introduce the FTSE Bursa Malaysia Palm Oil Plantation Index - which solely tracks the performance of Malaysian-listed palm oil-related companies. The index will also be launched as early as first quarter next year.

Yusli also said the unified board and the "new" Mesdaq market will be launched sometime in the middle of next year.

"We expect an announcement early next year and we expect to have it in place by middle of next year," he said.

The industry was expecting the full details of the unified board, such as its listing requirements, to be announced by end of this year, as it was the timeline initially set by the authorities.

"There is still a lot of industry consultation going on. We want to get it right before we launch it," said Yusli.

With the unified board, Bursa Malaysia's main and second boards will be merged into one, while the new Mesdaq market will allow smaller companies access to the equity market at an earlier stage of their life cycle.

Business Times

Does Malaysia still want to lay claim to having first world infrastructure despite being stuck in third world mentality, particularly after the tragedy that struck Bukit Antarabangsa two Saturdays ago?

Or isn’t it about time that the country woke up to reality and constantly challenged and raised standards in all aspects — social, economic and political?

For that to happen, the country badly needs proper political leadership.

Recall when former Works Minister Datuk S Samy Vellu got an avalanche of brickbats after he proclaimed the landslide near Genting Highlands in 1995, which claimed 21 lives, to be “an act of God”.

The Almighty’s name has not been invoked in the aftermath of the latest disaster, but at least one politician — Housing and Local Government Minister Datuk Ong Ka Chuan — has proclaimed no early evidence of any human negligence.

Were adequate standards exacted out of developers as well as the local and central authorities to absolve humans of any blame?

If regulations are found wanting, standards should be made as tight as humanly possible to ensure that hillside development projects are safe, and in the event of breaches, the heftiest of penalties be imposed.

The authorities and engineers do not have to reinvent the wheel, but could learn from other jurisdictions that have proven to have successfully tackled hillside developments.

Safety must be guaranteed according to the strictest of standards at whatever cost, not only for those living on the hillslopes but also those at the foothill and surrounding areas.

There is no reason to deprive the well-to-do and not risk-averse the privilege of building their homes on hillslopes. Attacking the rich for their choices is uncouth. Making it as stringent and as costly as possible, more green lungs and catchment areas may even be saved from humanity’s destructive nature. The benefits of these will outweigh any opportunity cost.

Incidentally, the disaster claimed four fatalities comprising the country’s three major races, while a Sri Lankan maid is missing. That is no coincidence.

Politicians need to face up to the reality that the country is a multi-racial, multi-cultural and multi-religious society, where people share the same resources and the same plight.

The Gift Of Death (GOD) is colour and creed blind. Given the racial tension in recent times, the bar too needs to be raised in the country’s social agenda.

Political parties must make it the national agenda to purge racism and make anti-racism a conscious effort for everyone, as part of the protection of human rights.

How the economic agenda, specifically the National Development Policy that stipulates affirmative actions, even for well-to-do politicians, fit into this social agenda has to be meticulously worked out and proper standards applied.

Speaking of standards, most quarters have welcomed the tabling of the bills to form the Judicial Appointments Commission (JAC) and the Malaysian Anti-Corruption Commission (MACC).

Yet, lastly but the most important is the need to bring back the Rule of Law to the country’s political structure, particularly the restoration of the principle of separation of powers. Bar Council president Datuk Ambiga Sreenevasan has said it. Former UN special rapporteur on the independence of judges and lawyers Param Cumaraswamy has said it.

Regardless of whatever legislation, however welcome, no meaningful independence of the judiciary can be achieved unless the original Article 121 (1) of the Federal Constitution is restored.

As it is now, the judiciary is subservient to parliament and the executive branch.That forms the basis of many aspects of people’s lives.

Many positives can be had from exuding self-confidence and beating the chest, but when reality is not what it is made out to be, it is time for further self-examination.

Third world mentality will more often than not produce third world results. Will the country rise to the challenge in raising standards, or will our social structure and existing policies continue to be stumbling blocks?

The country badly needs political leadership that will do not only the right thing, but also think out of the box in doing so.

The Edge Daily

Connections and the ability to flip assets can get you going places

If you have ever wondered how to get rich in Malaysia – fabulously rich and very quickly at that – here’s a model that you might want to look at very closely. Not easy to do but if you do have a couple of projects in the bag, it will set you up for several lifetimes.

First you need connections – strong ones, the higher the better and if it goes right up to the top all the better. You need this because you need to convince the powers that be that your projects are good.

But you might ask if your projects are so good, why do you need connections? Why don’t you just go out and execute? Good questions, those. Here’s the answer - you need the state to give you something to do the deal that will help the nation.

Still can’t figure it out? See, it’s like this. You want to help the country, right? The country needs say a port. But you can’t build a port just like that. You need land to build a port. You tell the state or federal government you need land – cheap land, preferably free to build the port.

Or to take another example, you want to help the country by building a power plant. But look, you need land too and not only that you need the power to be sold. So you want an agreement – an iron-clad one to sell the power to Tenaga Nasional and to pass through all costs.

You see, that’s your reward as an entrepreneur – you get someone else to build the power plant, they guarantee the performance of the plant and someone else guarantees to buy your power and pay for all your costs. Nice deal? You bet. Billionaires have been made that way.

Or you may want to start an air hub. If you are persuasive enough, you can even convince the government to compulsorily acquire the land and sell it to you cheap. Once you have cheap land, lucrative contracts and concession agreements, the sky’s the limit.

Let’s take it a step further. If you want to realise the value of all of these things that you have and still keep control of them, it’s nice to have a listed company into which you can inject them. Inject one asset for shares and you gain control of the company.

And then inject others over the years for cash, taking the money out of the company. Who says you can’t have your cake and eat it too?

Do it right and get a flow of assets to inject in (you can do anything with discounted cash flow valuations – just change the discount rate, and presto, the value changes!), and you get a tidy flow of profits and cash into your personal accounts over the years. I mean a really tidy flow.

Just how much can you make this way, you ask? Why don’t you take a guess first? Did you say RM500mil? Guess again. RM1bil? How about five times that and you may be getting into the right order of magnitude.

One Tan Sri Syed Mokhtar Albukhary actually made some RM4.5bil that way - actually more because he still controls the listed company. (
MMC’s latest RM1.7bil deal irks investors7) We are not saying he is the only one, which makes your chances of joining the ranks better – if you are connected to high places that is.

But then again, if things change – and that’s still a big ‘if’ – you might not find it so easy anymore.

P. Gunasegaram is managing editor of The Star. He thinks it is high time we changed the way we did business

THERE was an air of confidence in Adam when he graduated from university with first class honours. He was now well prepared for the real world where he had to earn his own money.

Adam started his career in one of the big five accounting firms. He was paid a starting salary of RM2,500 per month and with overtime and other claims, he was able to earn an average of RM3,000.

This time, Adam had more disposable income in hand and decided to review his budget.

In Adam’s revised budget (see table), he put “savings ” as the first item under his “expenses” column. This is in line with the principle that we should always pay ourselves first.

Therefore, he continued with the unit trust investment but topped it up to 10 per cent of his salary.

In fact, some financial planners would recommend saving half the income. This is inclusive of the mandatory EPF contributions from both the employer and employee which amount to 23 per cent.

This means that you have to save another 27 per cent of your gross income to meet the 50 per cent target.

This may be tall order for most people, especially those with children, but this is the sacrifice we’d have to make for a comfortable retirement.

Second on Adam’s list was repayment of his PTPTN loan. As a responsible graduate, Adam started repaying RM150 each month as soon as he received his first pay cheque.

As Adam was staying with his parents, he was able to save quite a lot on rental.

So he decided to give his parents RM250 each for food and lodging.

Another RM500 was set aside for meals outside home, mainly for lunch and dinners when he has to work late. The estimate was RM20 per day for 25 working days.

Adam also set aside RM500 for clothing and entertainment as he would most likely go out with his colleagues, and a night out can easily cost RM100.

Adam would like his own wheels, decided to save up a little bit more in order to put down a larger down payment for his first car.

For now, he would rely on public transport.

He got himself an integrated travel pass for public buses and LRTs for RM135 per month. The transport allocation was increased to RM200 to cover taxi rides now and then.

Adam also set aside RM100 for his handphone bill.

After taking into consideration all his foreseeable expenditures, Adam found that he had RM300 per month to spare.

He decided on an insurance policy and the monthly payment came to 10 percent of his salary, a sum that was well within his budget.

When Adam was sent on an audit assignment, he met a familiar face that set his heart a flutter. It was Aida, a finance executive at the bank that Adam was auditing and she recognised Adam.

They were university mates and had not met or communicated since graduating from university.

Aida was a business graduate and they were staying in the same hostel.

At times, they would walk together with other friends to the faculty but never had they gone out alone together.

AKPK

DEWAN RAKYAT Dec 11, 2008:

The Malaysian education “systems” (note the enhanced plurality) are a primeval sub-division for contiguous political power play in that students are not allowed to join political parties but can be politically active and run for student office. As pawns and rat labs for socio-education engineering, they are perfect foil for politicians of all stripes bidding to push their parochial agendas.

The continuing battle to ensure dominance of languages to the grudgingly bitter acceptance of English as a crucial medium of instruction to the balkanisation of vernacular teaching guarantees that education, in whatever form necessary, is the hotbed of a nervous political war to shape the minds and mindsets of the young, in this case anyone generally below 23-years-old, the age where most students on a linear progression in life graduates from universities.

Nothing is taken for granted when it comes to our children’s education. While the focus is always on the sacrificially aggressive parents with no qualms of mortgaging their homes to pay for their child’s expensive education, very little attention is paid on their kids’ foetal political growth. The perception is that the Universities and University Colleges Act, 1971 had successfully blunted political growth while the child is still on a fixed studying programme.

Nevertheless, political activism in higher education is an exponential battlefield, the invasion coming from all sides of the well-intentioned to the eclectically-intent political parties to the body with the most extreme views. However you cut it, universities are a pervasive dreamscape of political manipulation and in the attitudes of politicians with the highly infectious doctrines, there is no better avenue than to influence and shape a youngster’s hungry curiosity for knowledge, expression and rebellion, as long as their learning curve is bent towards the politician’s ideology and demagoguery.

Kids from six years on to teenagers of pubescent innocence to those with the juvenile angst, and then to the seriousness of college humdrum and mind-boggling competition, are subtly exposed to the realpolitik of how they should be taught the basics of alphabets, maths, science and life in a multitude of languages and dispensatory control. Case in point is the Chinese educationists’ threat to hold street protests if the Government continues teaching Science and Maths in English and the Malay educationists who insist on teaching the two subjects again in Bahasa Melayu.
Officially, our students must be taught basic information from approved syllabuses but unofficially, the incessant drilling of political doctrines is widely intrusive. Some political parties have successfully drummed up abundant support among students as the cesspool for future support, votes and even candidacy.

It would be fair to assume that not every student is susceptible to this aspect of political inducement, just the ones with the hardiest rebellious streak while the rest are content with earning their degrees unobstructed, perhaps learn a trick or two in academic acumen and then proceed to join the distressing rat race amid the severe global economic doldrums.

This had been the mantra for students for all those 37 years since the UUCA was conceived, and it is also why the troublesome Datuk Tajuddin Rahman (BN-Pasir Salak) rose today in the House to label undergraduates as “intellectually weak”, not because of their busy politicking schedule, but because they are, not to put a fine point to it, “plain lazy”.

While debating the Universities and University Colleges (Amendment) Bill 2008, here was how he dazzlingly characterised the “intellectually weak”: "They don't go to the libraries and pursue additional knowledge to improve their minds. They are even lazy to read reference books as it is in English. They said it is difficult, gives them a headache. They only went for exams equipped with knowledge obtained from the lecture hall.”

And how did he arrive to this tenuous verdict? Tajuddin based his abrasive remarks on interviewing undergraduates for employment in his company. "Many had little general knowledge simply because they did not read enough," he lamented while somehow acknowledging that as political activists, our students need no prodding.

"I am not saying politics is not important. I am saying they should concentrate on improving their minds first. This country needs engineers, accountants, industrialists, entrepreneurs," he asseverated.

Does politics have a correlation between academic excellence and a dolt of a student who nevertheless has high political ambitions? The Oxfordian Khairy Jamaluddin (BN-Rembau) does did not think so, contending that there should not be double standards. He even espouses the ideal situation where the Government allows opposition parties to be active in local universities.

If this is the ideal that Khairy is advocating, then it may be academic: political parties have long penetrated universities to expand their doctrinal base. The students’ rebel rousing protests against exotic female singers performing in their campuses can be regarded as proof of these parties’ triumphant reach.

But Malaysian educators might consider Tajuddin’s brazen raking of our college boys and girls through the coals as obnoxious. Are they so I-Robot like that they are capable only of reading notes provided by lecturers or procured at tutorials as a means to progress?

However, truth be told, even if it is spewed by politicians of Tajuddin’s ilk who are in need of buckets of mouthwash in lieu of his earlier scatological escapades in the House, it is one of the more damning observations a politician can inject during an inflective moment when the whole Malaysian education system is in peril of gross mistreatment by political marauders, opportunists and instigators looking for the next populist issue.

But, ingratiating politicians aside, Tajuddin’s point should be contemplated as an indictment of the whole education system where rote learning, memorising and question spotting has bubbled into a vibrant industry where knowledge, understanding and enlightenment is as unthinkable as imploring our children to play professional sports.

Tajuddin’s allegory is actually unoriginal and unsurprising: children have over the years been reduced to simply attending school and universities to only pass examinations and earn degrees. That’s why books on literature and the great knowledge have become historical dustbins. And that is why workbooks to pass examinations flourish commercially, championed and pitched by principals and teachers with an eye on their next commission.

NST

UNIVERSITY students are intellectually weak because they are lazy and not because they are spending time in politics, a backbencher said yesterday.

Datuk Tajuddin Abdul Rahman (BN-Pasir Salak) said these undergraduates only read notes provided by lecturers or those obtained at tutorials.

"They don't go to the library and pursue additional knowledge to improve their minds.

"They don't read reference books as these are in English. They said it is difficult, gives them a headache. They go for examinations equipped only with the information obtained from the lecture hall," he said during the debate on the Universities and University Colleges (Amendment) Bill 2008.

The bill seeks to give more freedom to undergraduates in the country's 18 public universities to take part in campus activities.
It also aims to streamline the administration of universities and provide better welfare benefits to staff and the undergraduates.

Tajuddin said the undergraduates should be concentrating on improving themselves to face the rat race.

Responding to the widely-held perception that university students were not doing well in their studies because of involvement in politics, he said: "I am not saying politics is not important. I am saying they should concentrate on improving their minds first.

"This country needs engineers, accountants, industrialists, entrepreneurs."

He said the country needed to move forward by becoming producers rather than becoming consumers.

Tajuddin said his observations were based on his experience interviewing undergraduates for work in his company.

"I have interviewed many of them and although they were graduates, they had little general knowledge. What little general knowledge they had was poor because they did not read enough," he said.

Ahmad Maslan (BN-Pontian) said the changes in the Universities and University Colleges Act would improve the administration of universities.

He said the government should find ways to encourage idealism among university students.

"It has to be established if student activism had brought about poor performance among them," he said.

Khairy Jamaluddin (BN-Rembau) did not think there was a correlation between academic excellence and politicking.-


He felt there should not be double standards and the government should allow opposition parties to be active on campuses.

NST
By : V. Vasudevan, Eileen Ng, Irdiani Mohd Salleh and Seth Tun Ismail

Everything that is done must be of high quality

WHAT is the business of business?

The answer to this question may seem obvious. We are told it is to maximise shareholder value. But what exactly does this apparently simple statement mean? Are companies supposed to maximise shareholder value at the expense of customers, employees and the community?

Are we talking about the short term or the long term, and what exactly do we mean by short and long term? Is it okay for companies to break the law, pay fines and get away with doing this again and again as long as the fines they pay are less than the profits they make by breaking the law? Are we talking about maximising profits or some cash-based measure instead?

As directors and senior managers think through the implications of these questions, it is clear that maximising shareholder value is not as straightforward an objective as might have seemed at first sight.

The famous Johnson & Johnson Credo, written in 1935 by General Robert Wood Johnson, puts satisfying customers first, respecting employees second, being a good citizen third and giving the shareholders a fair return last:

“We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products and services. In meeting their needs, everything we do must be of high quality. We must constantly strive to reduce our costs in order to maintain reasonable prices. Customers’ orders must be serviced promptly and accurately. Our suppliers and distributors must have an opportunity to make a fair profit.

“We are responsible to our employees, the men and women who work with us throughout the world. Everyone must be considered as an individual. We must respect their dignity and recognise their merit. They must have a sense of security in their jobs. Compensation must be fair and adequate, and working conditions clean, orderly and safe. We must … help our employees fulfil their family responsibilities. Employees must feel free to make suggestions and complaints. There must be equal opportunity for employment, development and advancement for those qualified. We must provide competent management, and their actions must be just and ethical.

“We are responsible to the communities in which we live and work ... We must be good citizens – support good works and charities and bear our fair share of taxes. We must encourage civic improvements and better health and education. We must maintain in good order the property we are privileged to use, protecting the environment and natural resources.

“Our final responsibility is to our stockholders. Business must make a sound profit. We must experiment with new ideas. Research must be carried on, innovative programmes developed and mistakes paid for. New equipment must be purchased, new facilities provided and new products launched. Reserves must be created to provide for adverse times. When we operate according to these principles, the stockholders should realise a fair return.”

For a better answer to what is the business of business, look at why entrepreneurs start their companies. When asked, they do not talk about shareholders or maximising profits.

Instead they talk about the ideas they believe will change the world and how they want to make a difference.

Akio Morita, founder of Sony and father of the Walkman, wanted his engineers to make a product that would allow his daughter to listen to music as she walked to school. He wanted simply to make a difference to his daughter’s life.

Steve Jobs had a vision of a computer in every home when he and Steve Wosniak set up Apple.

Datuk Seri Tony Fernandes talked about the revolution in travel he wanted to bring to Malaysians who had never been in a plane when he founded AirAsia.

Henry Ford wrote this when he changed all of our lives by creating the mass produced motor car: “I will build a motor car for the great multitude … it will be so low in price that no man making a good salary will be unable to own one – and enjoy with his family the blessing of hours of pleasure in God’s great open spaces… and we will give a large number of men in employment at good wages.”

No mention of shareholders.

Peter Drucker makes the point even more clearly: “It is the customer who determines what a business is. For it is the customer, and he alone, who through being willing to pay for a good or a service, converts economic resources into wealth, things into goods…” (Drucker P, The Practice of Management, p35)

Yet we cannot say that all that matters is satisfying the customer. To do that would be at the expense of the other three key stakeholders: employees, community and shareholders. I will deal with them in turn in my next articles.

John Zinkin is CEO of Securities Industry Development Corp (SIDC). He believes that people should put the soul back into business.

PUTRAJAYA: Former prime minister Tun Dr Mahathir Mohamad and the 2003 Nobel Laureate in Economics, Professor Dr Robert F. Engle, have espoused different methods to solve the current global financial crisis.

Dr Mahathir said he was for a return to the gold standard to stabilise financial markets while Engle proposed a “counter cyclical regulatory system” at the Bridges – Dialogues Towards a Culture of Peace conference yesterday.

“In the past, the money we used was based on something that had value, now we are using pieces of paper where the value is dependent on what people say it is,” Dr Mahathir said, referring to the Bretton Woods system, set up in 1944, when fixed exchange rates were tied to gold reserves and the US dollar.

The Bretton Woods system broke down in the 1970s as industrialised countries moved to floating currencies and the influence of capital markets grew.

“Today, they say the ringgit is worth so much. Tomorrow they say it is lower some more,” Malaysia’s fourth prime minister said, referring to the 1997 Asian financial crisis.

Engle said the current crisis was not a result of foreign exchange volatility but due to the collapse of the US subprime mortgage market and the subsequent credit crunch that brought down US banking giants.

“I think we should look at a policy to tighten regulation when banks are doing well and to give more flexibility when the banking system is going through problems,” he said, referring to his “counter cyclical regulatory” approach.

In the run-up to the current crisis, Western banks had been given more flexibility during the boom period to create debt instruments as they saw fit, Engle noted.

Dr Mahathir agreed that governments needed to regulate the markets or businesses would “do whatever they think will bring them profit and not worry about the welfare of the people”.

“It is the government that has been entrusted by the people to look after their welfare, and not businesses,” he said, but acknowledged that “the government must be business friendly”.

He also said the possibility that Islamic banking could solve some of the problems of the current global crisis should not be dismissed.

The Star-Loong Tse Min

THE Malaysian government must study and understand the complexities of the current global financial crisis when drawing up a plan as it would otherwise only reflect "cosmetic changes", said former Prime Minister Tun Dr Mahathir Mohamad.

Injecting a few billion ringgit into the economy was not the answer to counter the current global financial crisis which is of a more enormous size compared to the previous ones, he said.

"It must be studied carefully. We must understand how this crisis came about. The government will find difficulty in facing the crisis and must be seen to be serious and this includes unpopular measures," he said, when he spoke about the future of Malaysia in light of global financial uncertainties in Putrajaya yesterday.

He was speaking at the "Bridges - Dialogues Towards a Culture of Peace" programme organised by Perdana Leadership Foundation.

"The government must play a bigger role but must be judicious. If its too tight, businesses can be strangled," he said.

Dr Mahathir was also sceptical of investments from the Middle East into the Iskandar Malaysia development corridor materialising.

"Worldwide, there has not been much foreign direct investments (FDIs) seen lately," he said.

The 2003 Nobel Laureate in economics Professor Dr Robert F.Engle who spoke on why financial market volatility is so high said volatility was now dramatically above levels since 1990.

"In the US, this is due to macroecononic uncertainty and credit processes associated with securitised debt," he said.

Volatility in the financial sector measures more than 120 per cent in the last few weeks.

Macroeconomic uncertainty can lead to high volatility which is also a natural response of any financial market to new information or news and in the case of asymmetric volatility, prices tend to go down and markets turn bearish, Engle added.

Engle also felt that fiscal policy would be needed to be in the forefront for authorities across the world to tackle the recession.

Business Times

WASHINGTON/CHICAGO: President-elect Barack Obama is focusing his economic recovery strategy on making the biggest investment in the nation’s infrastructure since President Dwight D Eisenhower created the interstate highway system a half-century ago.

Speaking Sunday at a Chicago news conference and on NBC’s “Meet the Press,” Obama said state governors have many such projects that are “shovel ready,” meaning they could be undertaken swiftly and have an immediate impact on jobs.

He declined to specify a price tag for the stimulus, saying his advisers are “busy working, crunching the numbers, looking at the macroeconomic data to make a determination as to what the size and the scope of the economic recovery plan needs to be. But it is going to be substantial.”

The remarks sparked a stock market rally, with oil and mining shares leading indexes higher in Europe and Asia. The MSCI World Index added 2.7% to 871.09 at 10.01am in London. Futures on the Standard & Poor’s 500 Index expiring in December surged 2.4% to 893.1.

Obama’s plans to invest in infrastructure led to gains in shares of construction and engineering companies that may benefit from the higher public spending and demand for products.

The Standard & Poor’s Construction and Farm Machinery Index rose 7% at 9.52am. Manitowoc Co Inc, was the largest gainer in the group with a 14% increase.

Caterpillar Inc, the world’s largest maker of construction equipment based in Peoria, Illinois, rose US$2.38 (RM8.64) or 6.2% to US$40.64 at 9.33am in New York Stock Exchange composite trading.

Jacobs Engineering Group Inc of Pasadena, California, rose US$3.84 or 9% to US$46.27 in New York. It is the second-largest publicly traded US engineering company. — Bloomberg

This column takes readers’ 10 questions to interesting people in the public eye. This week interviewee is Datuk Seri Tony Fernandes CEO, AirAsia Bhd.

As the founder of the budget airline and the man who has revolutionised the country’s airline sector, he is easily one of the most written about CEOs in the country. Interestingly enough, readers still have plenty to ask him. Fernandes takes time to answer some of them.

1 Who is behind your success and what is your philosophy in life? – Anne Athi, Penang

Datuk Seri Tony Fernandes

My father and mother. I believe in the unbelievable, dream the impossible and never take no for an answer.

2 You are such an inspiring and positive person. You are featured in nearly every magazine, but how come you don’t talk about your personal life? For instance, are you married with children? – Doris Ong, clinic nurse, Ipoh

It’s a rule I have with my family and I do not intend to change it. Business is business, personal life is separate.

3AirAsia is now one of the co-sponsors for F1 team AT&T Williams. As AirAsia is a budget carrier and is all about low frills and low cost, does it fit into AirAsia’s strategy to sponsor such a team? – Shane Lai, businessman, PJ

The purpose to sponsor fitted nicely with our strategy especially with AirAsia X’s route map. The F1 is held in some destinations that AirAsia X flies to or will be flying in the future. We would not have sold 25,000 tickets to London if not for the marketing and branding. I also motivate my staff to have high quality and efficiency like the F1 team.

4 How do you see 2009 affecting your business and what are your strategies to overcome this and the competition with Malaysia Airlines? – Lim Meng Siang, investment banker, KL

MAS is obsessed with what AirAsia is doing. They really should be focusing on their market and business, as lack of focus will cause them dearly in years to come. We have moved on. Our battle was about getting rights, we have got them. Our challenge is to continuously keep our fares low and cost down. We are also not looking over our shoulders and believe competition comes from within us.

5 How many flying hours do your pilots have on average and what is their average age? – M.K. Leong, lawyer

Our pilots fly 90 hours. I have to check their age as I do not carry that information in my wallet.

6 How do you intend to reward your shareholders when you keep buying new aircraft at a time when other airlines are scaling down? – Jenny Low, businesswoman

Airline business is not about quarterly profits, it is a cyclical business with ups and downs. AirAsia has a 10-year plan and we are half way through that plan. America’s Southwest Airlines recorded long-term growth and not quarterly profits and they have done very well. To us growth continuity is key in our business and so is growing market share. We have elevated ourselves and have the staying power. AirAsia is a long-term bet.

7 What are the criteria in picking your air stewardess? MAS air stewardess, while also pretty, look more “simple’’ whereas AirAsia stewardess have a more “dangerous’ look. Just curious – Marilyn Phoon, former SIA air stewardess, now E & E engineer

I suppose stewardess should not look the same and I cannot tell them how to look. I leave that to them but they have to be comfortable with their appearance to interact and exude a natural feeling. Crews are the stars of the show and individuality is all about being you, and that is all about creativity and innovation.

8 When flights are late and I try to call your customer service to check the flight status, nobody answers or I am put on hold for an unnecessary long period of time. Why is that so? – Rose Irene Mohammad Ali, chemical engineer, KL

Certainly our call centres have not kept up with the growth the airline has experienced and that explains the huge number of customer calls. We are urging customers to self-serve. We try to send SMS and keep updating customers. We are now outsourcing our call centre but at the same time we are conscious of our cost as higher cost will lead to higher fares.

9 Why do you not package Tune Hotel and AirAsia tickets together? – S.C. Leong, retired auditor

There are some packages but these are two separate companies, although they have common shareholders.

10 Why don’t you sell two-way tickets instead of quoting one-way tickets? – Grace Leong, teenager

One way tickets give greater flexibility and efficiency for people to change.

PETALING JAYA: Crude oil price dropped to a three-year low to under US$48 per barrel during Asian trading hours yesterday on fears worldwide demand for fuel will be crimped by worsening global economic outlook and falling equity prices.

At yesterday’s low, the New York light sweet crude benchmark was down by almost US$100 from its peak of US$147.27 hit on July 11. The sharp decline raised the prospect of further output cuts by the Organisation of Oil Producing Countries (OPEC) at its next meeting scheduled for Dec 17.

But while consumers welcomed the cheaper fuel prices - Malaysia yesterday cut domestic pump prices for the sixth time since June - the oil slump in the past months was a reflection how the the global economy had turned from bad to worse.

In the US, an influential private organisation of economists said on Monday that the world’s biggest economy had been in recession since December last year. The National Bureau of Economic Research (NBER) expects the downturn to last until the middle of next year.

The Dow Jones Industrial average plunged 7.7% on Monday to close at 8,149 points. The overnight drop prompted investors in Asia to to further reduce their equities holding yesterday.

The KL Composite Index fell to low of 838 points after the opening bell, but bargain hunters swooped in to alleviate the index’s early losses to just 2.68 points at the close of 845.75 points. Trading turnover on Bursa Malaysia moderated to RM595mil from RM740mil on Monday.

Other Asian markets were badly bruised.

In Japan, the Nikkei 225 index tumbled 6.4% to 7,863.69 as the rising yen reduced the appeal of Japanese exporters. In Hong Kong, the Hang Seng index fell 5%, pulled down by property stocks after the city’s biggest bank HSBC raised mortgage loan rates. All major Asian bourses were down yesterday, except for the stock market in Shenzhen, China.

Meanwhile, a number of brokerages yesterday issued their wrap-up reports on the recently concluded third-quarter earnings season.

“The poor corporate earnings reflect the slowing economy, which could get worse in the coming quarters,’’ RHB Research Institute said.

The sentiment was also echoed in Hwang-DBS Vickers’ assessment on local corporate results in the July to September period.

OSK Research, meanwhile, sees a possible “year-end window dressing activities” this month, as fund managers may try to prop up select counters before closing the book on what is shaping up to be a bad year for investors. It still recommended investors to take advantage from any potential rebound to sell their stock holdings.

The ringgit yesterday weakened to a new two-year low against the US dollar at 3.6385.

By Izwan Idris-The Star

Latest oil and other business news from the AP-Wire

THE impact of the global financial and economic crisis has reached our shores as the country encountered the slowest quarterly growth in three years for the three months ended September.

Bank Negara Malaysia last Friday announced that the country’s real gross domestic product (GDP) moderated further to 4.7% in the third quarter, from 6.7% and 7.1% in the second and first quarters, respectively — the lowest quarterly growth since the second quarter of 2005.

With the economic slowdown upon us, Malaysian businesses are bracing themselves for times of great uncertainties, particularly in 2009.

The Edge Financial Daily asked corporate captains for their views on what lies ahead, challenges specific to their industries, and the strategies they may employ to counter them.

The following, in a question-and- answer format, parlays their candid views.

CIMB
Datuk Seri Nazir Razak
Group chief executive
CIMB Group
subsidiary of Bumiputra-Commerce Holdings Bhd — RM5.95

Q: How long do you think the economic slowdown will last? When do you expect the worst to come? When do you expect to see recovery?
A: I think that the global economic slowdown will be severe next year as there is still some further credit provisioning and substantial de-leveraging by global banks to come. I doubt Malaysia will be able to achieve the current official forecast of GDP growth of 3.5% as the global outlook has worsened since the forecast was made.

But Malaysia is better insulated than most countries from the financial crisis and the government has the financial resources to mitigate some of the pain on the real economy from the slowdown in the external sector.

So, I do not forecast a recession for Malaysia in 2009. Beyond next year, the risk is of a prolonged recession in the West as then the government’s resources will be fully tested. But I am optimistic that the unprecedented scale and nature of government action in US and Europe will quicken the economic adjustments needed for recovery and that we will see an upturn in the later part of 2010.

Q: What’s your loans growth target for next year?
A: The situation is dynamic and I am reluctant to put a target on loan growth. Profitability always takes precedence. I am confident we will exceed our 12% loan growth target for 2008 and my sense today is that in 2009, loan growth will probably slow to about 8%-9%.

But if the bond markets don’t recover, it could remain double digit. The more important point is that we are looking to lend; lending is our core business, and we have ample capacity to grow our loan books. The challenge is to ensure that business and project proposals from potential borrowers have realistic forecasts of the operating environment.

Q: How do you expect your asset quality to be next year? Do you expect NPLs to rise?
A: It’s normal for NPLs to rise when economic growth slows, but I don’t expect them to rise to worrying levels. Banks in Malaysia have diversified their lending portfolios and Malaysian consumers and corporates are not highly leveraged.

As for us, we have gone through two years of transformation of our banking business at the core of which was rebalancing the profile of our loan assets and introducing stronger risk management oversight. In some segments we have even shrunk our portfolios while in preferred areas, we have grown strongly. We hope that due to these efforts, our loan book will perform relatively well despite the economic environment.

Q: What is your biggest challenge now: slowing demand, margin compression, etc?
A: The biggest challenge now is the amplification of the risk/reward equation across the board. Decisions in today’s environment tend to have much bigger consequences, whether positive or negative.

I recall that we made some very good strategic moves during the Asian financial crisis that propelled the company ahead of the competition in the aftermath of the crisis, for instance. Similarly, today we see opportunities with attractive returns but the potential downsides are bigger than we have seen for a long time.

Q: How are you faring relative to industry peers?
A: The Edge-sponsored brand survey last week says that our brand value increased by 83%! That suggests that we are making some major advances versus the competition. I am pleased with our improving market shares in preferred segments of consumer banking, conventional and Islamic, and that we are defending our lead in the capital markets even if the market has been pretty quiet.

Q: What are you doing to counteract the business slowdown? Which business segment will you pay particular attention to next year and why?
A: We are looking more carefully at our cost structures, keeping our people motivated despite slowing levels of activity and focusing on foundation building.

In some ways the spare capacity is good as we have a lot of integration work, having just expanded our businesses in Indonesia and Thailand. Our primary agenda for 2009 is, in fact, tying up our various businesses into a cohesive regional banking platform, which will pay dividends in the medium term.

Q: Do you foresee acquisition opportunities given depressed equity prices? Do you see any M&A activity in the local banking industry?
A: There will be opportunities given the environment but we are going to focus on putting together the pieces that we already have. For the rest of the industry, I am on record as being pro-further consolidation of domestic banks.

Q: Do you think your shares have been oversold?
A: Our foreign shareholding as at end-March 2007 was 50.06%; as at end-October 2008, it was 33.7%. Our current share price is at least partly a consequence of heavy foreign selling. As to whether it is oversold, I defer to the wisdom of markets. Our job is to improve long-term share price performance by delivering on business performance whereas investors will take into consideration relative values of stocks on Bursa and other markets too.

sources: The edge Daily

With a nuanced understanding of Asian cultures, he is a citizen of the world in a way that none of his predecessors could ever have been

By P.K. Basu

DESPITE the disaster of Iraq and the worst financial crisis in 75 years, the US remains by far the world’s predominant economic, financial and military power – buttressed by cultural “soft power” that no global rival comes close to matching.

Consequently, an American president’s actions have far wider global ramifications than those of any other individual. Yet the rest of the world has no say at all in choosing the individual whose actions over the next four years will have such a transformative impact on people across the globe.

Thus the world was entirely right to heave a collective sigh of relief (and whoop of unalloyed joy) upon the remarkable election of Barack Hussein Obama as the 44th President of the United States.

With a Kenyan father, a half-Indonesian sister with a Sanskrit name (Maya, meaning “illusion”), and a Canadian brother-in-law of Sabahan-Chinese ancestry, President-elect Obama is a citizen of the world in a way that none of his predecessors could ever have been, with a nuanced understanding of Asian cultures that is rare among the world’s leaders.

President-elect Obama demonstrated remarkable prescience on economics, foreign affairs and security issues throughout the campaign – and occasionally from even before starting his campaign. On each major issue, Obama’s visionary stance was initially received with skeptical criticism, eventually accepted as prescient, and then quietly adopted as the official policy.

Obama’s speeches and autobiography suggest he will be a radical centrist and a uniting figure — AFP

As a state (rather than national) Senator in 2002, Obama opposed George W. Bush’s decision to go to war in Iraq not just because the factual evidence of WMD (weapons of mass destruction) was too thin, but because Iraq’s three-way ethnic faultline would be impossible to heal, and would unnecessarily divert America’s military from its primary focus on those who had perpetrated the outrage of 9/11/01 (al-Qaeda, and their former Taliban protectors) in Afghanistan. This was an unpopular minority position in the US then; six years later, it is the accepted wisdom on the issue.

For two years – long before the US financial sector entered troubled waters 15 months ago – Obama hammered away on the need to roll back the tide of de-regulation that was exposing the financial system to excessive risks.

With greater clarity than any other candidate for president, Obama’s standard stump speech stressed that greater oversight over investment banks and leveraged institutions was essential to rein in the excesses that were undermining the foundations of capitalism.

This was initially greeted as an esoteric critique – but eventually even the leading cheerleader of de-regulation, former Fed chairman Alan Greenspan, has had to acknowledge the prescience of Obama’s stand.

Similarly, candidate Obama was roundly criticised as naive for advocating that the US should engage with Iran: as he put it, the only way to induce a “change in behaviour” is to engage in direct talks that can help determine whether there are any areas of possible agreement.

After the initial round of near-universal excoriation, it gradually began to be acknowledged that any solution to some of the intractable problems of west Asia (including Iraq itself, as well as Syria/Lebanon) required engaging Iran. And soon enough, a Bush administration representative was found attending confabulations with its Iranian counterparts.

Ultimately, however, his handling of the dire economy will define Obama’s presidency. With his party in control of both the House and Senate, he has an opportunity to take effective and decisive action to address the weaknesses in the financial system – beginning with a massive fiscal stimulus focused on investments in infrastructure, education and renewable energy (the priorities Obama himself emphasised during the campaign).

Aggressive monetary ease by the US Fed is having scant impact on the real economy, as the broken banking system is unable to act as a transmission mechanism for monetary expansion. In this classic “liquidity trap”, a large Keynesian fiscal stimulus is the only medicine that will work – giving Obama an opportunity to remake the economy in the image of Franklin Roosevelt, who ended the Great Depression of the 1930s.

Although his early actions will appear to place him firmly on the left of the ideological spectrum, those are simply pragmatic steps that are absolutely necessary in current circumstances.

Obama’s speeches and autobiography suggest he will be a radical centrist and a uniting figure – and his presidency will demonstrate anew the remarkable US capacity for periodic self-renewal. His experienced team headed by Geithner at Treasury, Summers at the White House National Economic Council, and Volcker and Goolsbee in a new “advisory board” will strive towards creating a more equitable regime of global oversight for financial markets (“Bretton Woods II”).

A more coherent US policy response to the US financial crisis, and greater international cooperation on finance, the environment and the anti-terrorist campaign will mark a refreshing change from the confrontationist rhetoric of the Bush years – allowing the US to return again to its leadership role in building a better world in the uplifting mould of Kennedy, Roosevelt and Lincoln.

The world could not have asked for a better antidote to the despondency of the Bush presidency – although its baleful legacy will still haunt the early months of the Obama presidency.

P.K. Basu is chief economist (Asia ex-Japan) of Daiwa Research Institute in Singapore. Prior to this, he was chief economist of Khazanah Nasional Bhd. His previous other positions include chief economist of Credit Suisse First Boston (South-East Asia and India) and UBS director of Asian macro-economics.