A booming WhatsApp posts mixed message as strong rivals emerge in Asia; War of the Apps heats up in China

 
 What's inside WhatsApp? 

WhatsApp: A booming smartphone message service

SAN FRANCISCO - WhatsApp was launched five years ago as a shot at doing to text messaging what Skype did to telephone calls.

If Facebook's move to buy the startup in a cash-and-stock deal valued as high as US$19 billion (S$24 billion) is any indication, the California-based WhatsApp may have hit the mark.

The firm founded by former Yahoo employees Brian Acton and Jan Koum in 2009 took its name from a play on the phrase "What's Up," according to its website.

They also devoted themselves to a credo of "No Ads. No Games. No Gimmicks."

A note stating just that and signed by Acton remains taped to Koum's desk, according to venture capital firm Sequoia, which invested in the startup early and stands to cash in big time on the Facebook take-over.

The "contrarian approach" of gathering no information about users for targeting ads was shaped by Ukraine-born Koum's aversion to tactics of secret police in communist countries, Sequoia partner Jim Goetz said in an online note.

"Jan's childhood made him appreciate communication that was not bugged or taped," Goetz said.
"When he arrived in the US as a 16-year-old immigrant living on food stamps, he had the extra incentive of wanting to stay in touch with his family in Russia and the Ukraine."

Koum remained true to those ideas when, after working at Yahoo with his "mentor" Acton, he turned to building WhatsApp, according to Goetz.

The stated mission was to build a better alternative to traditional SMS messaging in a world where smartphones were clearly becoming ubiquitous.

The founders jokingly described themselves at the website as "two guys who spent combined 20 years doing geeky stuff at Yahoo! Inc."

WhatsApp is a platform for sending images, video, audio, or text messages for free over the Internet using data connections of smartphones.

The application is free, but after using it for a year, there is an annual subscription fee of 99 US cents.

"We feel that this model will allow us to become the communications service of the 21st century, and provide you the best way to stay in touch with your friends and family with no ads getting in the way," the startup said in a blog post discussing pricing.

WhatsApp is reported to have grown stunningly fast to more than 450 million users and said to handle 50 billion messages daily.

As of the start of this year, WhatsApp had 50 employees, more than 30 of them engineers. While the company has its headquarters in the California city of Mountain View, where Google has its main campus, most of the engineering work is reportedly done in Russia. - AFP

In Asia, WhatsApp posts mixed message for Facebook

Singapore: WhatsApp may be hugely popular but its forays into Asia, the world's biggest mobile market, have had mixed success, raising questions about whether it can sustain the explosive growth Facebook Inc cited to justify its $19 billion price tag.

Data from app metric company App Annie, for example, shows that WhatsApp ranks as the top communications app in only three of 13 Asian countries tracked - Hong Kong, India and Singapore.

"WhatsApp has been a strong player in Asia, but in the past year has faced strong competition from LINE and WeChat," said Neha Dharia, India-based analyst for Ovum, a technology consultancy. "WhatsApp has not been displaced by these players, but has seen stiff competition in growing its market share."

Facebook said on Wednesday it would buy WhatsApp for $19 billion in cash and stock, in a deal worth more than Facebook raised in its own IPO. [ID:nL3N0LO52J]

For sure, WhatsApp has been phenomenally successful. For many users it has replaced sending costly texts, or SMS messages. Since its launch in 2009 it has built an active monthly user base of 450 million users.

A survey by marketing and research company Jana found WhatsApp to be the most used messaging app in all the countries it surveyed - India, Kenya, Nigeria, South Africa, Brazil and Mexico - beating competitors by a huge margin. 

The reason: users most prize the basic functions it offers - ad-free chat and photo sharing.

WhatsApp subscribers sent 18 billion messages a day in January. The overall market is growing rapidly: According to Ovum, 27.4 trillion such messages were sent last year; this year that figure will be close to 69 trillion.

CHINA CALLING

By hooking up, Facebook and WhatsApp may be able to take on those markets that have been elusive to Facebook so far. With Facebook blocked in China, and lagging Twitter Inc and Naver Corp's LINE in Japan, WhatsApp "is a potential avenue for Facebook" into those markets, said Vincent Stevens, a senior manager for telecoms consultancy Delta Partners.

Forrester, a consultancy, forecasts that China will have more than 500 million smartphones this year.

And in the fast growing smartphone market of India, says Neil Shah, research director of devices and ecosystems at Counterpoint Research, local users now account for almost 9 percent of total active WhatsApp users around the world - some 40 million of them.

But Facebook and WhatsApp face formidable foes. Where once messaging apps were simply about messaging, now Tencent Holdings Ltd's WeChat, LINE and KakaoTalk offer a slew of additional services, from icons and games to buying goods and services.

"LINE and the others are very different to WhatsApp. They're much more innovative in the business models they engage in," says Michael Vakulenko of VisionMobile, a UK-based consultancy. "They are innovating much faster than WhatsApp and going in a different direction."

This could prove decisive in Asia - the biggest battleground for social messaging apps - where no single player dominates.

Data from market research company Nielsen, for example, showed BlackBerry Messenger as the most downloaded messaging app in Indonesia last October, the latest data available, while Viber, bought by Japanese online retailer Rakuten Inc for $900 million last week, was the most popular in the Philippines, and LINE in Thailand.

WhatsApp was third in Indonesia, second in Malaysia and not in the top-10 in the Philippines or Thailand. And while locals say WhatsApp remains the default messaging app in Indonesia, some notice a shift.

FICKLE FORTUNES

Jerry Justianto, who runs a radio station network in Jakarta, says he's noticing fewer of his friends using WhatsApp than before. "I think it's reached a plateau in Indonesia," he said. "I see a lot of WhatsApp accounts in my list are inactive."

A survey by market research firm On Device Research late last year found that while nearly two thirds of Indonesians surveyed had installed WhatsApp, less than half used it at least once a week, compared to three quarters of Brazilians who had installed it.

Part of the problem, Justianto says, is that WhatsApp's approach of linking accounts to a phone number doesn't suit Indonesians who change their SIM card frequently. "Some of my early adopter friends are moving to Telegram messenger, where you can activate multiple devices with one number."

Telegram, which offers much the same features as WhatsApp, is evidence of the fickleness of users. The app is free and heavily encrypted, and is popular in some countries. In Spain, for example, it has risen from its launch last year to be the No.1 communications app in Google's Play store, at the expense of WhatsApp, according to App Annie data.

This, said one executive at a handset company in Spain, was partly because of a viral campaign among users to switch, and partly because many users dumped WhatsApp before they were charged at the end of their first, free year.

GETTING USERS TO USE MORE

Across Asia, the fragmentation is evident to users such as Martin Tomlinson, Asia Pacific director for On Device Research, who says he has installed at least six messaging apps for work: "I need to have at least three of these on my phone because that's how my clients communicate."

LINE, for example, considers its top markets as not only Japan but also Taiwan, Thailand and Indonesia. Now, says Simeon Cho, general manager at LINE Plus, which handles LINE's ex-Japan business, the goal is less about winning new users than getting existing ones to use the app more frequently.

Kakao, which started the KakaoTalk messenger service in 2010 and has since grown rapidly to 130 million users, said it was also focusing heavily on Southeast Asia, where there is relatively low smartphone penetration and no dominant messenger service.

And for China's Tencent, KakaoTalk and LINE are more of a threat overseas than WhatsApp, as the company's WeChat expansion is focused on Southeast Asia.

WhatsApp would only pose a serious threat if the likes of Tencent were to expand farther west. "This means it's now going to be more difficult for LINE to win in North America and Europe," said Serkan Toto, a Tokyo-based technology consultant.

 - By Jeremy Wagstaff Reuters

Facebook deal sends message to WhatsApp's Asia rivals

HONG KONG - Facebook's stunning US$19 billion (S$24 billion) deal for messaging service WhatsApp places the social network in an arena where competition is fierce, particularly in Asia, where fast-growing chat rivals dominate their home markets.

The multi-billion dollar valuation of WhatsApp is based on expectations that its 450 million monthly users will eventually pass one billion, powering the social network's drive into the fast- growing mobile space - particularly in emerging markets, where the simplicity of the messaging app can thrive on less expensive phones.

But it is not the only service gaining traction around the world, particularly in parts of Asia, where players such as WeChat in China, Kakao Talk in South Korea and Line in Japan dominate - and, according to analysts, show greater potential for making money given their different products and strategies.

While WhatsApp, which is free to download but charges users US$1 per year, is popular in some Asian markets such as Hong Kong and Singapore, services such as Line, WeChat and Kakao have also expanded around the region and beyond.

"Mobile-messaging apps are growing fast in Asia," noted Elinor Leung and Seung-Joo Ro in a report for regional brokerage CLSA.

"While Facebook dominates the US, mobile-messaging apps such as WhatsApp, Line and WeChat have rapidly taken over Asian SNS (social networking service) markets, especially in the emerging markets."

WhatsApp currently has a larger base than each of the three Asian services but they are growing fast, particularly when it comes to emerging markets, where smartphones or less expensive "feature" phones are seeing explosive growth.

CLSA noted that "Asian mobile-messaging apps like Tencent's WeChat and Naver Corp.'s Line should be valued at a premium to WhatsApp with their wider service offerings and higher revenue potential from games to e-commerce and payment."

WeChat is currently valued by CLSA at US$35 billion and Line at US$14 billion.

Global social messaging volumes are expected to reach 69 trillion and subscribers to such services 1.8 billion by the end of 2014, according to data from market research firm Ovum.

"In SouthEast Asia there is a huge tussle for market share," Neha Dharia of Ovum told AFP.

"WhatsApp will be able to claim the Facebook share of those markets as well, making it hard for these other guys to grow."

WeChat

WeChat, or "Weixin" in Chinese, is a free instant messaging and social media mobile application developed by Chinese Internet giant Tencent and officially launched in January 2011.

It has not only become a popular mobile communications tool in China - where Facebook is mostly blocked and WhatsApp usage is comparatively low - but has also attracted tens of millions of users in overseas markets.

The Facebook deal values active WhatsApp users at US$42 a piece. According to analysts with Japan's Mizuho bank, WeChat is worth twice that amount "on the back of its gaming, [commerce] and mobile payment potential".

WeChat's number of monthly active users worldwide reached 272 million by the end of September last year, more than doubling from a year earlier amid a drive to attract more users in countries such as India, Spain and South Africa.

WeChat provides text, photo, video and voice messaging services on major mobile platforms. It also offers games, online payments and taxi booking.

Line

Launched in 2011 as an instant message and free voice call app, Line - whose parent company is South Korea's Naver Corp. - has grown to 350 million users worldwide and aims to hit 500 million this year.

Its user-friendly interface and voice communication capacity have helped it become one of most successful apps in Japan, while also seeing popularity in Thailand, Taiwan, Spain and Latin America.

The app is best known for "stickers" - cartoon-like images purchased by users, sales of which are core to Line's revenues.

Kakao Talk

Launched in 2010, Kakao Talk is used by 95 per cent of South Korea's smartphone users and boasts 130 million users worldwide. It is reported to be preparing for an initial public offering next year that could value it at US$2 billion.

The free app allows users to send messages, pictures, soundbites and video via the Internet, either on WiFi or through cellphone networks.

Gifts can be bought using Kakao's online shopping facilities, a feature that helped push revenue last year to 230 billion won (US$215 million) from 46 billion won a year ago.

It is eyeing Southeast Asian markets including Malaysia, the Philippines and Indonesia where it is fighting for market share against Line and WeChat.

Viber

Developed by Cyprus-based Viber Media, which was founded in 2010, the service boasts 280 million users and was recently purchased by Japanese IT firm Rakuten for US$900 million - or roughly US$3 per user. It allows free text messages and phone calls as well as video messaging. It recently launched a service allowing desktop users to call non-Viber users' mobile phones, in a challenge to Skype, owned by Microsoft.

Analysts have questioned whether it can make more money from customers in the same way that the likes of Line and WeChat have, leading to Rakuten's share price plunging as much as 13 per cent on the first trading day after it announced the deal.

- AFP

War of the apps heats up in China

In the Battle between the two Chinese Internet giants Alibaba and Tencent, the consumers are the real winners.

 

RAISING a hand to flag down a taxi by the streets could be passé in China, or at least in the eyes of the taxi booking app developers.

Two popular mobile apps, Kuaidi Dache and Didi Dache (“dache” means taking the taxi), make it possible for passengers to hail a cab without flailing an arm, but just tapping on their smart phones.

The war between the two apps, which are backed by Chinese Internet giants Alibaba Group and Tencent Holdings Ltd respectively, has gotten more intense this week.

On Monday, Didi Dache announced that it was going to revive its 10-yuan (RM5.42) rebate programme for users who book a cab and pay via Tencent’s instant messaging app Wechat.

Every passenger is entitled to receive a subsidy of 10 yuan each trip, for up to three trips a day.

For taxi drivers in Beijing, Shanghai, Shenzhen and Hangzhou, a reward of 10 yuan awaits for up to 10 bookings they successfully respond to through Didi Dache.

Cabbies in other cities will receive 5 yuan (RM2.71) for the first five trips and 10 yuan for the next five trips.

To prevent users from cheating, Didi Dache said it would block passengers and drivers who reach mutual agreements to use the app only after the passengers get into the cabs, with the motive of earning the rebates.

Didi Dache reportedly poured in 1bil yuan (RM542.18mil) for this round of subsidy.

Kuaidi Dache was quick to follow up with an “always-one-yuan-more” reward.

Users who hail a cab through its app and pay via Alibaba’s mobile payment service Alipay Wallet were promised that they would always enjoy one yuan more than users of its competitor.

It is not the first time these two apps are using these tactics to entice users.

In January, Didi Dache rolled out the 10-yuan rebate promotion, prompting Kuaidi Dache to offer the same rebate in response.

When Didi Dache reduced the 10-yuan incentive by half on Feb 10, Kuaidi Dache seized the chance to announce that it would retain the 10-yuan offer.

Now that Didi Dache has readjusted the rebate back to 10 yuan, Kuaidi Dache has decided to have the upper hand by pledging “always-one-yuan-more”.

However, just a day after these announcements were made, Didi Dache upped the rebate once again. Passengers would now receive between 12 yuan and 20 yuan (RM6.51 and RM10.84) per trip.

Kuaidi Dache followed suit to offer a subsidy of at least 13 yuan (RM7.05) per trip.

While Didi Dache offered 10,000 free trips a day to lucky passengers, Kuaidi Dache pledged 15,000 free trips a day.

It appeared that there was no end to this intense price war.

This “war” between the two apps is only one segment of the fierce rivalry between the two Internet companies, Tencent and Alibaba.

Tencent owns Wechat while Alibaba has developed a similar app known as “Laiwang”.

Alibaba bought 18% stake of the popular Twitter-like service Sina Weibo last year, which is the contender of Tencent’s Wechat.

Last week, Alibaba offered to purchase mobile mapping app AutoNavi. Tencent, meanwhile, already has a mapping service that boasts a similar function to Google’s Street View.

This latest contest in the taxi-booking app was seen as a tactic to encourage smart phone users to adopt the habit of using mobile payments.

During the just-concluded Chinese New Year holiday, Wechat users went gaga over the electronic angpao.

They had to first link their bank accounts to Wechat before they could give or receive money among their circle of friends.

According to Beijing Times, from the eve until the eighth day of Chinese New Year, more than 40 million angpao were handed out in the activity participated by more than eight million people.

Even Alibaba’s founder Jack Ma described the phenomenon as a “Pearl Harbour attack”.

In a poll on finance.ifeng.com, 70.42% of some 5,600 respondents felt that the war of taxi booking apps between Tencent and Alibaba was not a vicious competition.

Almost half of them believed that what mattered most at the end of the day was the product experience.

They were of the opinion that the company with the better service would prevail, in contrast to only 23.38% of the respondents who predicted that the one with bigger financial capability would eventually be declared the winner.

With the two giants locking horns and trying to outdo each other, many believed that the consumers are the biggest beneficiaries.

The rebates did not have a reported deadline. Until the cash rewards are withdrawn, users can continue to enjoy the subsidies to save some pennies.

Contributed  by Tho Xin Yi The Star/Asia News Network

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1. WhatsApp deal dwarfs other high-profile Tech acquisitions 
2. Tech players race to widen reach !

Tech players race to widen reach !

Facebook goes the distance to widen reach 

IN the age of connectivity, what sells a technology company is not its system nor its employees, but the reach it has throughout the world.

Making news over the past few days has been the Facebook-WhatsApp deal, sealed at a whopping offer of US$19bil.

It is the biggest deal year-to-date and has set yet another stratospheric benchmark in the arena of tech deals. The deal pushed 2014’s total tech deals to US$50bil, the highest since 2000.

Google, which contended for WhatsApp as well, lost the acquisition battle with an offer about half the amount Facebook was willing to fork out – US$10bil.

Facebook is hungry for reach, and it has proven in the tech arena that it is willing to go the distance to get it.

Facebook CEO Mark Zuckerberg was reported to have told a conference call that it was Facebook’s explicit strategy to focus on growing and connecting everyone in the world over the next several years.

“And then we believe that once we get to being a service that has one billion, two billion, maybe even three billion people one day, there are many clear ways that we can monetise.

“But the right strategy we believe, is to continue focusing on growth and the product and succeeding in building the best communication tools in the world.”

Yes, pay for your customers first, then ease them into paying you.

To depict how valuable a company’s reach or user base is, take a look at Viber’s valuations when it was sold to global Internet services company Rakuten just a week ago.

With 105 million monthly active users, the messaging app company got acquired at US$900mil or US$8.57 per user.

In comparison, WhatsApp was bought at the price of US$42 per user for its big pool of 450 million monthly active users. And this number is expected to grow over the next few years.

As tech website CNet puts it: Facebook (has) demonstrated (that) valuations can rise or fall dramatically based on how large a base of users you command.

In the meantime, game company King Digital Entertainment is also looking to list on the New York Stock Exchange.

The company behind addictive mobile game, Candy Crush, said on Tuesday it planned to raise US$500mil from an initial public offering. In the last quarter of 2013, the game had 12.2 million monthly unique players.

Going public is said to be gainful for the company’s founders, as they only raised US$9mil of funding since it was founded in 2002.

Some tech deals have been bungled too, such as in social game company Zynga’s case.

Zynga, which is also listed, rose with meteoric success in its first years of business buying as many as 11 companies when it turned a profit in 2010. However, its success fizzled out as it failed to move into the mobile gaming space, even with its acquisition of the once-popular Draw Something game app.

While Zynga focused on developing games for Facebook (names like Farmville and Mafia Wars come to mind) and the desktop, games like Angry Birds and Candy Crush outran them on mobile devices.

There are also older examples of missed and misused opportunities like Yahoo! overlooking the competition from Google or MySpace losing its appeal under the wings of NewsCorp.

An extensive reach or user base creates the pulse in the economy of the virtual world, and the pulse is sustained by being in touch with user experience and trends.

As the entrepreneur spirit demands a courage to take on risks, technoprenuers like Zuckerberg have to surely keep an eye out for competitors worth bagging to expand their social network empires.

The race for reach continues.

Contributed by Liz Lee The Star/Asia News Network

Related post:
WhatsApp deal dwarfs other high-profile Tech acquisitions

WhatsApp deal dwarfs other high-profile Tech acquisitions

WhatsApp with Facebook's $19B offer?

 http://money.cnn.com/video/technology/2014/02/19/t-facebook-whatsapp-19-billion.cnnmoney/

In a play to dominate messaging on phones and the Web, Facebook has acquired WhatsApp for $19 billion.

That's a stunning sum for the five-year old company. But WhatsApp has been able to hold its weight against messaging heavyweights like Twitter (TWTR), Google (GOOG, Fortune 500) and Microsoft's (MSFT, Fortune 500) Skype. WhatsApp has upwards of 450 million users, and it is adding an additional million users every day.

Referring to WhatsApp's soaring growth, Facebook CEO Mark Zuckerberg said on a conference call, "No one in the history of the world has done anything like that."

WhatsApp is the most popular messaging app for smartphones, according to OnDevice Research.

Buying WhatsApp will only bolster Facebook's already strong position in the crowded messaging world. Messenger, Facebook's a standalone messaging app for mobile devices, is second only to WhatsApp in its share of the smartphone market.

Related: 5 key moments that changed Facebook
 
Similar to traditional text messaging, WhatsApp allows people to connect via their cellphone numbers. But instead of racking up texting fees, WhatsApp sends the actual messages over mobile broadband. That makes WhatsApp particularly cost effective for communicating with people overseas.

That kind of mobile messaging services have become wildly popular, with twice as many messages sent over the mobile Internet than via traditional texts, according to Deloitte. But most of the messaging industry's revenue is still driven by text messaging.

On the conference call, Facebook said it is not looking to drive revenue from WhatsApp in the near term, instead focusing on growth. Zuckerberg said he doesn't anticipate trying to aggressively grow WhatsApp's revenue until the service reaches "billions" of users.

WhatsApp currently charges a dollar a year after giving customers their first year of use for free. WhatsApp CEO Jan Koum said on the conference call that WhatsApp's business model is already successful.

That indicates Facebook bought WhatsApp to add value to its existing messaging services, as well as for the long-term potential of the company.

Facebook bought Instagram for $1 billion in 2012 for similar reasons: As young social network users gravitated towards photo-sharing, Facebook wanted to scoop up what could have eventually become a big rival.

Like Instagram, WhatsApp will function as an autonomous unit within Facebook, with all the existing employees coming in as part of the deal.

Facebook (FB, Fortune 500) said it will pay WhatsApp $4 billion in cash and $12 billion in stock.

WhatsApp's founders and staff will be eligible for for another $3 billion in stock grants to be paid out if they remain employed by Facebook for four years. Koum will also join Facebook's board of directors.

-   By Adrian Covert  @CNNMoneyTech

Beware of Cheque scams, banks take responsibility

Senior citizens' cheques were intercepted and stampered with in separate incidents
 
PETALING JAYA: Two senior citizens nearly lost thousands of ringgit when their cheques were intercepted and tampered with in separate incidents.

In the first incident, a man who paid his utility bills through cheques sent via mail was shocked to find that the amount deducted from his account was 10 times what he had written on one of the cheques.

The foreign national, who only wanted to be known as Richard, owns a home in Malaysia.

He issued a cheque for RM200 to pay his electricity bill in November last year.

“When I received the bank statement, I was shocked to see that the amount deducted was more than RM2,000,” he said.

When the bank gave him a copy of the cheque that was deposited, he realised that the cheque had been replaced with a fake one.

“The cheque was a different one altogether and it was made to one Alan Lim @ Lim Sze Wei. Only the serial number was the same as the one I had issued and there was a forged version of my signature,” he said, adding that the design on the cheque was also different as he was still using an older version.

“I only issue cheques once or twice a month and have not changed the cheque book for years. The old version had the bank logo in the centre. The fake cheque had a completely different design without the logo in the centre,” said Richard, who is in his 80s. Richard then lodged a police report.

In the second case, an 87-year-old pensioner’s cheque was believed to be intercepted and the name of the payee and amount altered, said his daughter K.L. Wong.

She said her father routinely paid his insurance policy premiums by cheque sent via mail, which was what he did on Jan 31.

He wrote a cheque for RM169 payable to a bank’s card centre to pay for his policy and posted it the next day.

On Feb 13, Wong, who handles most her father’s accounts because he is wheelchair-bound, called the bank to check if the cheque had been cleared.

“I was told the card centre had not received it and there was no payment for the December and January premiums,” she said.

Upon checking the account balance, she discovered that RM4,600 had been deducted.

“At first, the bank thought the cheque might have been processed and paid to the wrong person.”

When she requested for a scanned image of the cheque from the bank, she discovered all the payment details had been altered.

“It was the same cheque but the original details were somehow ‘washed out’. Only my father’s signature remained. The cheque was altered to pay someone by the name of Lim Teng Yong,” she said, adding that the person was unknown to her father.

Wong said the bank admitted that it was not the first complaint it had received involving the same name being used to cash fraudulent cheques.

She added that the bank promised to investigate the matter and she lodged a police report the next day.

Richard and Wong’s father’s cheques were issued by the same bank. After internal investigations, the bank reimbursed both men.

“It was good the bank was willing to take responsibility but there is obviously a scam going on. The public should be aware of how cheques are being tampered with or forged,” said Wong.

The bank declined to comment.

- Contributed by Jastin Ahmad Tarmizi The Star/Asia News Network

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Do You need jabs, antibiotics?

OUR population is getting more and more educated and knowledgeable. With the convenience of internet and smart phone, information can be assessed anytime and anywhere.

Facebook and Google have become the source of reference for most people. Many can now be “experts” in many specialised fields, including engineering, law and even medicine.

Nowadays, the medical practitioners enounter some patients who are so-called internet savvy, and refuse antibiotics and vaccines.

This issue arose due to the spread of such information in the internet, claiming antibiotics could lead to “superbug” and are associated with many adverse effects, while vaccines could cause autism or death.
Well, the risks of administration of both drugs are certainly debatable.

What we know for a fact is that since Alexander Flemming discovered penicillin and the pox vaccine, many lives were saved.

Nevertheless, I am not in the position to comment on the good and bad of both antibiotics and vaccines. But, it is more important for the general public to understand more about the need for antibiotics and vaccines.

Antibiotics or more specifically antibacterial, is a medicine indicated to kill (bactericidal) or inhibit the growth (bacteriostatic) of the bacteria.

There are various types of antibiotics with different mode of actions and indications. Strictly speaking, the mechanism of action for antibiotics is rather complicated.

However, it works mainly to counter attack the rapid reproduction of bacterial colonies, so that our immune system has enough time to defeat the illness.

Thus, the usage of antibiotics is strictly limited to the bacterial infection. In common clinical conditions, like acute exudative tonsillitis, abscess formation and urinary tract infection, antibiotics are strongly prescribed.

It must be understood that antibiotics have no role in curing diseases caused by fungus, virus or other parasites.

Therefore, it should not be overprescribed in cases like common cough and cold, flu and fungal infection of skin.

As for vaccines, they are biological preparations that help to boost immunity. Its primary focus is on disease prevention. It is always better to prevent a disease than to treat it.

Vaccines work by introducing the weakened form of “disease germ” into the body. The body will respond by producing antibodies to fight these invaders. At this stage, technically, the immune system is being sensitised. If the actual disease germ attacks the body, more antibodies will be produced to destroy the real enemy.

Vaccines are responsible for the control of many infectious diseases that were once common in this country and around the world, including polio, measles, diphtheria, pertussis (whooping cough), rubella (German measles), mumps, tetanus, Hepatitis B and Haemophilus influenzae type b (Hib).

Many patients question the need for further vaccination as diseases such as diphtheria, pertussis are very rare these days.

Furthermore, there are people that do not get vaccination, yet able to live healthily until old age. This is the myth behind “herd immunity”.

Herd immunity serves as a preventive barrier as most of the population had been vaccinated, thus, the disease is contained from spreading. If herd immunity is compromised, the widespread of the disease may occur.

A piece of advice to all, a little knowledge is a dangerous thing. Before you start to tell doctors about the negative effects of antibiotics and vaccines, why not, give them a chance to explain to you before you make a decision.

Contributed by DR H.B. CHEE, Muar, Johor The Star/Asia News Network

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A Malaysian household needs monthly income of RM14,580 (US$4,486) to buy a home in Malaysia

Klang Valley still affordable 

KUALA LUMPUR: You must have an average household income of RM14,580 a month to afford a home in the Klang Valley, according to a recent study.

The study – spearheaded by Sime Darby Property Bhd in collaboration with the Faculty of Built Environment of Universiti Malaya – takes into account the current household spending trend, price of homes and mortgage rates.

It found that certain groups of buyers interested in strategic areas can have access to houses that are priced at 56 times their household income.

The study also found that this same group can afford to spend up to 26% of their monthly household income to service a mortgage.

It identified strategic areas in the Klang Valley that are considered not only accessible but have the potential to appreciate in value. They include Nilai, Denai Alam, Bukit Jelutong and Bukit Subang.

A report of the study said that houses in selected areas in the Klang Valley remain accessible to homeowners who may be looking to invest in a second home.

The Housing-Income Index which was launched here yesterday by Urban Wellbeing, Housing and Local Government Minister Datuk Abdul Rahman Dahlan, who said the survey results would be useful for potential house buyers.

“The Index and its key findings had been reviewed by the ministry, and we find that the information is valuable as it can help policy makers and developers work hand-in-hand to build more houses that are not only accessible. but which can appreciate in value,” he said.

Abdul Rahman hoped that other property developers and the academia can carry out similar surveys in the country.

Based on the findings, Sime Darby said that 68% ofplanned housing schemes in the Klang Valley were in the accessible range.

“We intend to utilise the results to develop innovative, high quality products that are accessible and meet market needs,” said Sime darby Property managing director Datuk Seri Abd Wahab Maskan.

The Housing-Income Index was developed to gain a better understanding of home-owner profiles, specifically household incomes and spending patterns in relation to owning a home.

The study covered 1,529 respondents, of whom 1,183 were home owners at 12 locations: Bukit Jelutong, Denai Alam, Bukit Subang, Bandar Bukit Raja, Subang Jaya, USJ, Putra Heights, Ara Damansara, Mont Kiara, Melawati, Kajang and Nilai.

Purchasers want affordable homes but in safe neighbourhoods - However, Cheaper areas but few buyers

PETALING JAYA: Affordable homes are still available in the Klang Valley but many areas with houses priced around RM400,000 and below are not preferable to buyers.

Real-estate agent Michael Edward said areas such as Taman Sentosa and Taman Seri Andalas in Klang are examples where the houses are affordable but there are few pickers because it lacked security facilities and gated community features.

“Buyers want affordable pricing, safety and location when they buy a house. But most affordable houses that are available are usually under the older projects and may have a high crime rate. This puts off potential buyers,” said the Klang-based agent with Rina Properties.

Responding to recently-released Sime Darby Housing-Income Index, which said that one must have an average income of RM14,580 a month to afford a home in the Klang Valley, Edward said the survey probably interviewed respondents who owned properties in Sime Darby’s housing projects where prices were much higher compared to other areas.

“If other housing projects besides Sime Darby’s are taken under the survey, the average household income should be lower,” he added.

Describing the survey as “putting the bar too high”, real estate agent Jeremy Jones said the average household income of RM14,580 per month in the Klang Valley could be applicable to properties valued at RM950,000 to RM1.3mil in strategic locations.

“This is probably to purchase a double-storey house in areas such as Ara Damansara, USJ Heights and Glenmarie, Shah Alam where Sime Darby has developed its housing projects,” said Jones, who is attached to Ramdar Properties.

On whether selected areas in the Klang Valley remain accessible to potential house buyers, Jones said although there was affordable housing in various pockets within the Klang Valley, new buyers tended to look for a new environment and preferred to have their home within a gated-community.

“Therefore, choices for such housing become available to affluent buyers only,” he said.

On Monday, Sime Darby Property Bhd in collaboration with the Faculty of Built Environment of Universiti Malaya released the finding of a study that indicated that house buyers must have an average household income of RM14,580 a month to afford a home in the Klang Valley.

The study was conducted on 1,529 respondents aged between 21 and 60. Ninety-four per cent of them were married and 59% of them worked in the private sector.

Contributed by  G. Surach The Star/Asian News Network

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Malaysia's healthcare system is one of the best in the world

 Country is third best and practioners 'equal to or better than most Western countries'

PETALING JAYA: The country’s achievement at being rated third best in the world for healthcare services is something to be proud of, said Health Minister Datuk Seri Dr S. Subramaniam.

He also gave credit to the boom in the country’s medical tourism sector through strategic investments on good medical facilities and competitive rates compared to other parts of the world.

“Medical tourism has benefited the Government in terms of foreign direct investments and also spin-off effects in the hotel and shopping sectors,” he said yesterday.

The Star Online reported yesterday that a study by the American publication International Living rated Malaysia’s healthcare system as the third best out of 24 countries in its 2014 Global Retirement Index, beating Spain, Italy, Ireland and New Zealand, among other countries.

The index, which was recently released by the Baltimore-based magazine, praised Malaysia’s healthcare, which scored 95 out of a possible 100 points, as the medical expertise of Malaysian healthcare practitioners is “equal to or better than what it is in most Western countries”, according to InternationalLiving.com’s Asia correspondent Keith Hockton.

The top two countries, France and Uruguay, scored 97 and 96 points, respectively.

On the methodology of the index’s ratings, the magazine said both the cost and quality of healthcare were evaluated.

Another report in International Medical Travel Journal News reported that medical tourism receipts in Malaysia from foreign patients totalled RM509.77mil in 2011 involving 578,403 patients.

Dr Subramaniam added that Malaysia remained competitive with players like Singapore and Thailand and the focus was to consolidate the country’s position.

He said the key towards improving the overall healthcare sector would be to focus on the preventive and primary healthcare divisions.

Malaysia Medical Association (MMA) president Datuk Dr N.K.S Tharmaseelan also acknowledged the findings, saying that the country has one of the best healthcare systems in the world.

“The Health Ministry has become a massive seamless service provider in healthcare that has produced magnificent results over the years. Our statistics prove it,” he said, adding that this was despite general practitioners being the lowest paid in the world with their fees being regulated.

He added that impressive figures such as life expectancy for women reaching 80 years and about 72 years for men were reflective of the excellent healthcare provided by the ministry and the private sector.

By G. Surach The Star/Asia News Network

Malaysian Central Bank raises defence; weak currency

 

Malaysia banks told to set minimum CA ratio at 1.2% of total loans

PETALING JAYA: Banks have been told to have a minimum collective assessment (CA) ratio of 1.2% by the end of next year, sending a strong signal to the industry to improve its standards of prudence.

According to a circular from Bank Negara to financial institutions early last week, all banks are required to set aside a minimum of 1.2% of total loans effective Dec 31, 2015.

The requirement, effectively, will put a stop to the present situation where banks are left to set aside their CA ratio based on their own risk assessment of their asset profile.

“Most banks have maintained a CA ratio of lower than 1.2% because there is no minimum set by Bank Negara. This circular effectively sets the standard for a minimum requirement,” said a banker.

The CA ratio was previously known as the general provisions that all banks were required to adopt. The general provisions requirement was a minimum of 1.5% of total loans, a ratio set by the central bank.

However, after the introduction of the new accounting standards three years ago, the general provisions requirement was replaced with a CA ratio, with banks free to set their own ratio.

The central bank no longer set the minimum requirement for banks to comply with in regards to the provisions.

According to a research report by CIMB, banks that had a CA ratio of less than 1.2% as of September last year were Malayan Banking Bhd, Public Bank Bhd, Affin Bank Bhd and Alliance Bank Malaysia Bhd.

Bankers, when contacted, were divided on the impact that the requirement would have on their bottom lines.

According to one banker, the move to comply with the ruling will not impact profitability because the additional amount required to be set aside can be transferred from retained earnings.

“Funds out of retained earnings will not impact the profit and loss (P&L) account of banks. It’s not a P&L item,” he said.

However, it would affect the dividend payout ability of banks, added the banker.

Another banker said the financial institution was seeking clarification from Bank Negara on whether to set aside the provisions from its profits.

“If that were the case, then it would impact profitability,” said the banker.

OCBC Bank (M) Bhd country chief risk officer Choo Yee Kwan said the background to the new requirement was that Bank Negara wanted to ensure that impairment provisions could keep pace with strong credit growth.

“In addition, the regulator would like to promote consistency in practices in ensuring adequate rigour and data quality in arriving at the appropriate level of collective impairment and the factors that are considered by banking institutions.

“Adequate impairment provisions serve as necessary buffers against potential credit losses; hence, they can reduce the likelihood of systemic risk for the banking sector,” he said in an e-mail response to StarBiz.

He said the sector might witness an increase in the overall level of impairment provisions at the industry level.

“Nevertheless, this should be seen positively, as the higher credit buffers would now render the sector stronger,” he noted.

CIMB Research in a report stated that the proposed new guideline could have a negative impact on banks based on its theoretical analysis.

It pointed out that several banks would have to increase their CA provisions under the new ruling and this would lead to a rise in the banks’ overall credit costs.

“Those which do not meet the requirements would have to increase their CA (and ultimately credit cost) in 2014-2015, even if their asset quality is improving. For banks with a CA ratio of above 1.2%, the new ruling would limit the room for them to further reduce their CA ratios,” CIMB Research explained.

According to CIMB Research’s estimates, banks’ net profits could be lowered by around 0.5% (for Hong Leong Bank Bhd) to 11% (for Public Bank) in 2014 to 2015 if a minimum requirement of 1.2% for the CA ratio were implemented.

Another analyst, however, is of the view that the new requirement from Bank Negara would have a negligible impact on the operations and earnings of banks.

“We think it is not a major concern for most banks because, firstly, the grace period for the implementation of the new guideline is long. Secondly, the minimum ratio of 1.2% will not comprise of only the CA component alone, but is also a combination of the CA and the statutory or regulatory reserve.

“In general, we see the new guideline as a measure to standardise the way banks gauged their capital buffers.
“The bottom line is, we think the new guideline will only serve to further strengthen banks’ capital buffers,” the analyst added.

By Cecilia Kok and Daljit Dhesi StarBiz, Asia News Network

Silver lining in weak currency

Weaker currencies are a boon for Malaysia and Indonesia, helping to tip the balance of trade back in their favour, as exporters benefit from rising demand for goods and commodities from advanced economies, coupled with steady growth in China.

The favourable trade surplus, economists said, would ease the pressure on these emerging countries’ deteriorating external accounts, which is a major sore point for foreign investors.

They added that rising exports would provide the much-needed tailwind for Asian economies to sustain growth even as domestic demand moderated.

Malaysia on Friday reported a 2.4% growth in exports in 2013, backed by a 14.4% jump in December that exceeded the market’s expectation by a wide margin.

“We still maintain our long-term view of impending growth momentum in the coming quarters,” Alliance Research economists Manokaran Mottain and Khairul Anwar Md Nor said in a report.

They predicted exports in 2014 to grow at a faster pace of 5%, backed by steady but improving export demand from advanced economies.

While imports grew at a faster pace than exports in 2013, Malaysia continued to enjoy a strong trade surplus.

The favourable trade surplus combined with an anticipated smaller services deficit and transfer outflows would translate into a larger current account surplus of RM16.7bil or 6.6% of gross domestic product (GDP) in the last quarter of 2013.

“The cumulative current account surplus is estimated to reach RM37.8bil or 3.9% of GDP in 2013, helping to assuage fears of a current account deficit,’’ CIMB Research economist Lee Heng Guie said.

This, he said, was positive for the ringgit and the capital market.

The ringgit, along with other emerging Asian currencies, have been under pressure since June last year after the US Federal Reserve began talking and later started to reduce its quantitative easing (QE).

The US Fed first pared its monthly bond purchases programme from the original US$85 billion a month to $75 billion in January. This was cut further by $10 billion starting from February.

“Capital outflows from emerging markets are likely to continue in the months ahead as the Federal Reserve winds down its QE3 programme,” said Macquarie Bank Ltd’s Singapore-based head of strategy for fixed income and currencies Nizam Idris.

Fears about the US Fed tapering down the supply of cheap money to the market first surfaced in May last year and it triggered a huge sell-off on emerging market assets.

Countries such as Indonesia and India had seen their currencies depreciate the most in 2013, Both economies had wide current account deficits.

Last year, the Indian rupee plummeted the most in two decades, while rupiah depreciated by about 20% against the US dollar over the past 12 months.

Not helping emerging market currencies is the recovery in advanced economies, such as a rebound in economic growth in the US which rose by 3.2% in the fourth quarter of last year.

But if economic recovery in the US and eurozone were to stay on course, so would demand for cheaper emerging market exports. This, in turn, would help shrink the huge current account deficits that had hobbled countries such as Indonesia, India and Turkey.

For many emerging economies, 2014 had gotten off to a grim start.

Concern over the Chinese economy’s marked slowdown and the Argentine peso’s steep slide in January has brought upon renewed pressure on the currency market.

But the current market volatility does not portend weaker growth.

CIMB Research in Indonesia observed that the strains in the financial markets did not translate into a significant slowdown in the economy as the country’s real GDP growth accelerated to 5.7% in the last quarter of 2013.

Its exports surged in December, while imports slowed on the weaker rupiah. This helped to widen its trade surplus to $1.52 billion, the largest since November 2011.

The favourable trade numbers narrowed its current account deficit of $4.06 billion.

CIMB Research expects growth in Indonesia “to trough” in the first half of 2014 as the lagged effect of the rupiah depreciation and Bank Indonesia’s aggressive policy-tightening cycle in June-November 2013 works through the economy.

“Pre-election bounce in consumption should offset the weakness, allowing Indonesia to post 5.6% GDP growth in 2014,’’ it said.

Malaysia, too, is on track for sustained growth. CIMB Research projected GDP growth in the third quarter would probably expand by 5.3%, taking the full year growth rate to 4.7% for 2013. - The Star/ANN

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Education woes in Malaysia, etc, act now to address the weaknesses!

Policies have been formulated to improve and facilitate teaching and learning at all levels, yet there are weaknesses in the system that need to be urgently addressed.

THE dismal performance of our students in the Programme for International Student Assessment (Pisa) in 2013, where 51.8 % of our 15-year old students failed to reach even the baseline level for Reading, Mathematics and Science, has rightly alarmed many concerned Malaysian parents and educationists.

It bears repeating that the quality of an education system simply cannot exceed the quality of its teachers, no matter how many billions of ringgit is used in educational development plans or blueprints to improve our school system.

Prominent lawyer, politician, columnist and author Datuk Zaid Ibrahim, could well be expressing the sentiments felt by many informed Malaysians when he wrote in his book I, Too, Am Malay, that many teachers, are “poor in quality” and the school curriculum is irrelevant while administrators are too political.

The fact that 70% of our English teachers failed to make the grade in the Cambridge Placement Test speaks volumes of why and how we continue to witness a decline in English proficiency in our schools and universities over the years.

If it is true that a large number of our teachers are incompetent, then policy-makers will have to get the views of all the major stakeholders, accept sound suggestions from various quarters, before they attempt to tinker with our school system.

M. Bakri Musa, columnist and author in his book An Education System Worthy of Malaysia, mentioned the greatest weakness of all our educational reforms is the government’s exclusive dependence on in-house or Education Ministry officers, who have somehow failed to improve the quality of our education system over the years, in spite of all their grand schemes.

Let’s review how effective, practical or meaningful the educational reforms have been at school level.

Motivating students

When the co-curricular points system was first implemented in our schools, it seemed like a good way to motivate our students to participate more actively in sports clubs and societies to make them well-rounded students.

In the first place, the system was never implemented in good faith.

Students sitting for the Sijil Tinggi Persekolahan Malaysia (STPM) exams face a serious handicap when it comes to applying for admission to local universities for some degree courses compared to Matriculation students, who study for a shorter period of time and sit for their relatively easy internally-marked exam papers.

And as if things are not bad enough for STPM students, it looks like the co-curricular points system was designed to make university admission even easier for Matriculation students. The system enables them to secure high marks for co-curricular activities which account for 10% of the entry-score requirement for public university admission.

In matriculation colleges, students who participate in co-curricular activities among hostel block members are awarded marks meant for district level events, while students who compete in activities in college are awarded marks that are equivalent to state level grades. When students compete in inter-college events, they are accorded marks equivalent to that of national level!

Any wonder why so many SPM students choose not to do their Form Six?

The system is biased as it favours Matricu-lation students over STPM students. Moreover the chances of STPM students who score 4As getting courses of their choice at varsity level is also uncertain.

Considering the circumstances, many bright students simply don’t want to continue with Form Six.
Why experience the mental agony of getting 4As in the STPM exams only to be denied places for courses like medicine and pharmacy?

Let me reiterate that the STPM is a tougher exam and the co-curricular point system for matriculation students gives the latter an unfair advantage.

Research suggests that superior learning takes place when classroom experiences are enjoyable and relevant to students’ lives, interest and experiences.

As such, it is rather unfortunate that at a time when our education system is already failing to provide students with appropriate problem solving, critical and analytical skills and knowledge content, especially in Science and Mathematics, our policy-makers see it fit to make all students take up History (now made a compulsory subject to pass in the SPM exam).

Instead of learning world history and exposing our students to lessons we can learn from major historical events, much of our Form Four History textbooks are devoted to specific topics all in the name of promoting patriotism and national unity.

And why bother to introduce the SPM open certification exam in the first place when we have no real intention to offer our students real flexibility in their choice of subjects and electives based on their interests, abilities and aptitudes?

In his best seller, The World is Flat, Thomas L Friedman, points out that in today’s world, how children are educated may prove to be more important than how much they have to learn in school.

If what he says is true, why should we stifle our students’ initiative, curiosity and creativity by burdening them with uninspiring and even unnecessary subjects that have made school life such a dreadful and boring affair.

And yet, despite repeated calls to scrap Moral Education, such pleas have fallen on deaf ears. It has been pointed out that Moral Education, instead of exploring how we can effectively teach and test moral reasoning, only serves to indoctrinate our students and subjects them to mindless memorisation of core values.

To make things worse, our policy-makers decided that learning Moral Education was not good enough; in order to make our students more civic-conscious and patriotic, they went on to introduce yet another subject called “Civics and Citizenship” for our secondary school students from Form One in 2005.

Holistic development

Our national education philosophy emphasises holistic development of our students. That being the case, won’t Physical Education (PE) play an important role in producing physically fit and well-rounded students?

And yet with our students experiencing so much stress in their school life, they have to make do with just two periods for PE!

If that is not bad enough, some schools even use PE periods to teach “more important subjects” like Health Education. And what about our school-based assessment?

Various quarters have already pointed out that simply scrapping the Ujian Pencapaian Sekolah Rendah (UPSR) and Penilaian Menengah Rendah (PMR) exams to introduce the current school-based system may not necessarily serve to enhance learning and make school life more enjoyable for students.

When the school-based assessment system was introduced to schools in 2011, it was assumed that teachers would be able to assess their students’ abilities and potential.

But with so many “poor quality” teachers it will not be fair to assume that they are sufficiently equipped to evaluate their students based on internally-prepared assessments, that they take pains to assess their students properly, and that they are unbiased towards their students.

Well, that’s really a tall order. Already, we have heard stories from schools of incompetent and indifferent teachers teaching weak classes and yet awarding their students Band Six, no less, in their respective subjects!

And as usual, many schools are already resorting to buying workbooks in the market instead of getting their teachers to come up with their own worksheets and materials to assess their students, making a mockery of introducing the school-based assessment in the first place.

But we can’t blame the teachers, not when they are burdened with so much paperwork and keying data online into the SPPBS (Sistem Pengurusan Pentaksiran Berasaskan Sekolah).

It is worth noting that our current school-based assessment at the end of the day, is not much different to the A-B-C-D-E grade system or even the Percentage Score system. So why should teachers need to waste time with the banding exercise when in their daily dealings they can easily discern the band(s) the students actually deserve for the topics taught?

Wouldn’t it be better to reflect on their teaching approaches and enhance their professional knowledge, rather than waste time with paperwork and keying data?

It is about time to address the problems facing our education system.

For a start, the government should really grant greater autonomy to good schools in both urban and rural areas to adopt a broad-based curriculum, save for a few core subjects under the supervision of the Education Ministry, to let students learn what they ought to learn in today’s challenging world.

Get dynamic school principals to manage such schools and empower them to make decisions on matters related to school operations with the participation of parents and the local school communities.

If the principals are allowed to hire competent teaching staff, and be accountable for their performance, then we stand a better chance to improve our education system at the school level, specially when we are in a position to compare the performance of such autonomous schools with our national schools.

And with so many parents paying for tuition lessons these days, they would gladly pay school fees to get their children to study in such autonomous schools.

When such schools, gain a good reputation, the tuition syndrome will slowly die and more parents would choose to place their children in such schools rather than vernacular or international schools, resulting in a win-win situation!

With the current rot in the school system, the authorities should no longer be so protective over their turf. They must have the courage to admit the serious shortcomings of their policies and display greater commitment to think out of the box. It is now in the hands of the ministry to make it all happen.


 Contributed by Henry Soon - The Star/Asia News Network

The writer, a retired teacher, is still passionate about education. He hopes the Education Ministry will be bold enough to bring about changes for the greater good of students, teachers and parents.

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Interesting times in East Asia

South-East Asia is in a strategically unenviable spot – too small to shape North-East Asia, and too near to it to avoid the havoc of conflict there.

Troubled waters: South Korea conducting a drill to guard a maritime science research station set up on the South Korea-controlled underwater reef of Ieodo. Conflicts can result from miscalculation, misperception or misinterpretation of an adversary’s actions or intentions. -EPA

IF outright aggression between nations often results in conflict, conflicts need not result directly from aggression alone.

Conflicts also arise from doubts, uncertainty and lingering suspicions. They can result from miscalculation, misperception or misinterpretation of an adversary’s actions or intentions.

Several of these “triggers” are on full display in North-East Asia today. Contributory factors include historical grievances between Japan and its immediate neighbours China and the Koreas, China’s growth and assertiveness, Japan’s brashness, Korea’s sensitivities and US ties to Japanese security interests.

That these countries are major players does not insure against open conflict between them. These major powers have the means to initiate and sustain full-scale war.

Nor is the location of potential conflict in North-East Asia a comfort to South-East Asia. Whether individually or together, Asean countries are not strong enough to deter or resolve such conflict, yet are not sufficiently far away to avoid its fallout.

Several of the disputes stem from Japan’s 2012 nationalisation of the Senkaku/Diaoyu/Diaoyutai islands also claimed by China and Taiwan in the East China Sea. As with other provocations, this occurred against the backdrop of Japanese atrocities against Chinese and Korean populations during the Second World War.

Then last November, China declared an Air Defence Identification Zone (ADIZ) over disputed islands and waters. After the United States declared the first ADIZ in 1950, Britain, Canada, India, Japan, Norway, Pakistan, South Korea and Taiwan followed. 

A country’s ADIZ requires foreign civilian vessels to identify themselves before entering. Essentially controversial and provocative, it is unilateral, unregulated and unauthorised multilaterally.

Beijing presumably thought that all countries had equal rights to declare such a zone. It may not have anticipated the protests it received, particularly from countries that had done the same thing before.

In December, Chinese and US warships narrowly avoided a collision. Despite both countries downplaying the incident subsequently, different versions of the event resulted.

Spats had erupted between China and Vietnam, and the Philippines, over the People’s Liberation Army (PLA) Navy’s presence in disputed territories in the South China Sea. Then in mid-2013, a China-Vietnam summit cooled tensions, leaving the Philippines somewhat in the cold.

But as if to sow doubts about Beijing’s own diplomatic competence, PLA(N) ships were reported in disputed waters off Sarawak late last year and early this year. This surprised Malaysian diplomatic and policy circles, since China had previously avoided upsetting Malaysia.

Countries in the region puzzle over why China is putting on such provocations, beyond testing the reactions of the other claimant countries. However, such tests can be made by other countries as well.

Late last month, Japan’s Asahi Shimbun newspaper reported that China was preparing to declare an ADIZ in the South China Sea. The area includes disputed islands and waters claimed by China, Taiwan, Malaysia, Brunei, the Philippines and Vietnam.

The report suggested the new ADIZ would initially cover the Paracel Islands and eventual­ly include virtually the whole sea. Beijing immediately retorted, warning Japan against spreading baseless rumours.

The Japanese report was either a truthful account or an attempt to test China’s response. That response has been clear enough.

The Japanese government, meanwhile, has been working hard producing its share of follies and fumbles.

In mid-December, Tokyo called a meeting with Asean countries to discuss defence concerns vis-à-vis China. That meeting flopped, as Asean leaders downplayed the defence aspect and preferred discussing economic relations with Japan.

Then after Prime Minister Shinzo Abe’s controversial visit to the Yasukuni Shrine in December, Tokyo announced plans to nationalise another 280 islands. It coincided with the National Security Council’s launch to streamline the operations of security agencies and military forces under the office of the nationalist Abe.

That month, Abe criticised China’s ADIZ, calling it an attempt to change the regional status quo “by force”. Observers in the region were baffled by Tokyo’s definition of “force”.

Then the Japanese government revised textbooks to instruct schoolchildren that the islands in dispute with other countries were “an inherent part” of Japan. That again brought Beijing and Seoul together to condemn Tokyo.

At the same time, Japan planned military exercises with US and Indian forces, incorporating a US$2bil (RM6.65bil) loan to India. Days later, Tokyo planned more military exercises with US and Australian forces.

Such military responses with major countries outside East Asia do nothing to improve fraying relations within the region. But that disconnect apparently fails to concern policymakers in Tokyo.

Within Japan, Abe’s government is expanding its military forces over the Nansei Islands, covering Okinawa and the Senkakus. But reactionary nationalists had long seen the restrictions of Japan’s post-war “pacifist” Constitution as a hindrance.

Abe is now on a personal crusade to revise the Constitution to allow for a more assertive military. In his “historic mission”, Abe’s target is Article 9 which bans the use of military force to resolve disputes abroad.

The problem for Abe: a news survey last month showed 53.8% of the Japanese public opposing changes to the Constitution. How would a democratic Japan reject that majority view?

Abe seeks changes to permit Japanese force­s to make pre-emptive strikes, amounting to unilateral attacks on another country where self-defence may not be invoked.

After the US government advised US commercial airlines in November to abide by China’s ADIZ, Tokyo expressed bewilderment. Abe promptly concluded that the US had made no such decision.

Reports early this month said that Japan and the US had agreed to ignore China’s ADIZ in their military manoeuvres. But an ADIZ customarily applies to civilian, not military, vessels.

In other matters, however, there has been less agreement between Washington and Tokyo. A senior US military official warned against revising Japan’s Constitution. Since the overriding purpose was to build a trilateral alliance in North-East Asia comprising the US, Japan and South Korea to alienate China, a revised Japanese Constitution would instead alienate South Korea and disrupt the alliance.

In December, the US expressed “disappoint­ment” over Abe’s visit to the controversial Yasukuni war shrine. The following month, Ambassador Caroline Kennedy objected to the cruelty of Japan’s annual dolphin hunt, provoking protests.

Three US Congressmen have lobbied Secretary of State John Kerry to address the “comfort women” issue with Japan. It involved more than 200,000 Korean women and girls who had been sexually abused by Imperial Japanese forces.

When NHK broadcast chief Katsuto Momii trivialised the issue, suggesting Japan’s wartime actions were acceptable, he caused more controversy. Momii was Abe’s pick for the top media job.

Kerry is due in China and South Korea in a week to discuss North Korea. Japanese observers note that he will be bypassing Tokyo. However, Foreign Minister Fumio Kishida was in Washington on Friday to discuss with Kerry the Abe-Obama summit in Tokyo in April. Abe has found a compelling need to reaffirm bilateral ties with the US.

While the scheduled summit will bear on the “US pivot” to East Asia, other countries may also do a pivot or at least a pirouette. Russian Prime Minister Dmitry Medvedev has directed major state-owned companies to relocate their head offices to Russia’s far east to help develop the region.

Where political and economic concerns converge, strategic considerations are never far behind. Such concerns, never lacking in East Asia, are now set to multiply.

 Behind The Headlines by Bunn Nagara Asia News Network

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

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Rosy outlook for Penang 2014: Strong growth, rise in FDI seen

A roundtable organised by KPMG Penang this week at KPMG new office, the Hunza Tower in Kelawei Road, George Town concludes that Penang will continue to enjoy high economic growth in 2014 and attract foreign direct investors.

Its tourism and property sectors will stay buoyant this year and the recovery in its electrical and electronic sector will continue into 2014.

Penang’s GDP growth in 2013 is estimated to be slightly less than 5%, according to official data.

“Penang remains a highly attractive location for local and foreign investors alike. It is also noteworthy that Penang ranks as one of the top emerging business processing locations worldwide.

“We certainly see healthy prospects for Penang across several industries,” said Johan Idris, managing partner of KPMG in Malaysia.

Penang’s property sector was also expected to maintain its 2013 growth momentum through 2014, he added in a KPMG statement this week.

“The uptrend in businesses and Penang as a desirable location has led to the consistently high demand for both residential and commercial properties on the island.

KPMG Penang, which highlighted tourism as a key sector for the state, expected tourism to remain a mainstay for the state in terms of revenue.

“As a designated UNESCO World Heritage site since 2008, tourist arrivals have steadily increased 14% as at October 2013 recording 4.4 million tourists.

“Penang’s hospitality industry is expected to chalk good returns, particularly as occupancy rates are slated for an upswing. Tourist arrivals are not limited to the ASEAN region but also from across the globe.”

KPMG Penang’s partner, Ooi Kok Seng, said: “The electrical and engineering sector, specifically solar energy equipment manufacturers, has seen a renewed demand.

“We believe that the positive turnaround will continue into 2014 due to the government’s allocation of additional land bank in Batu Kawan. Slated for development, Batu Kawan is an extension of the Bayan Lepas Free Trade Zone which is currently facing limited land space due to rapid expansion.”

KPMG Penang also said foreign direct investments (FDIs) were expected to escalate in 2014 as a result of the completion of major restructuring projects in Penang.

It foresaw additional advisory work in relation to mergers and acquisitions (M&A), transaction and restructuring projects. –The Edge

Rosy outlook for Penang

PENANG can expect strong economic growth this year following the upgrade in ranking by Moody’s Investor Service outlook in November.

KPMG Penang Partner-in-Charge Ooi Kok Sheng said the rating upgrade was an encouraging sign for the country.

“With active steps taken by the Government to implement fiscal reforms, Malaysia remains resilient amidst global economic uncertainty,” said Ooi.

He was speaking during KPMG Penang’s inaugural Economic Outlook Roundtable session at their new office at the Hunza Tower in Kelawei Road, George Town.

“Penang remains a highly attractive location for local and foreign investors alike.

“It is also noteworthy that Penang ranks as one of the top emering business processing locations worldwide.”

He said KPMG Penang saw tourism as a key sector for the state and expected it to remain as the mainstay for the state government in terms of revenue.

“Penang’s hospitality industry is expected to chalk good returns, particularly as occupancy rates are slated for an upswing.

“Tourist arrivals are not limited to the Asean region. The state has many visitors from all over the globe.”

Ooi also anticipated a sustained demand for audit, tax and advisory work in 2014.

“With Penang as a manufacturing and export hub for the northern region and dubbed the semiconductor Silicon Valley of Malaysia, many public-listed companies have based their operations in the state,” he said.

Malaysian Association Hotels (Penang Chapter) chairman Mary Ann Harris said prospects for the state’s tourism sector looked good in Visit Malaysia Year 2014.

“However, we are not without our problems as we are in urgent need of a viable public transportation system,” said Harris.

Penang Rehda chairman Datuk Jerry Chan said the state should benchmark according to international standards, rather than local.

“We have been noted as one of the best food destinations in the world and one of the most liveable cities in the world,” he said.

“It is time for us to set a global benchmark in other sectors.”

- The Star/Asia News Network

'Penang set for healthy growth'

THE opening of the Second Penang Bridge, six new hotels and an influx of medical tourists into the state are expected to keep Penang's economy healthy this year, say captains of various industries.

Malaysian Association of Hotels (MAH) Penang chapter chairman Dr Mary Ann Harris said the soon-to-be opened longest bridge in Southeast Asia is expected to be a tourism draw.

"There is definitely going to be more tourists drawn to the new bridge and we expect many of them to participate in the Penang Bridge International Marathon 2014, which is expected to be held at the second bridge," she said.

The RM4.5 billion Second Penang Bridge, which connects Batu Maung on the island to Batu Kawan in the mainland, serves as a second land crossing after the first Penang Bridge was opened in 1985.

Harris was speaking after presenting Penang's economic outlook for 2014 at a roundtable session hosted by audit, tax and advisory firm KPMG Penang here yesterday.

The roundtable, which was opened by state executive councillor Datuk Abdul Malik Abdul Kassim; also saw presentations from the Real Estate and Housing Developers Association (Rehda), Penang branch chairman, Datuk Jerry Chan; the Free Industrial Zone, Penang, Companies' Association president Heng Huck Lee; investPenang general manager Loo Lee Lian; and Malaysian American Electronics Industry (MAEI) Association chairman Datuk Wong Siew Hai.

Also present were KPMG Malaysia managing partner Johan Idris and KPMG's northern region partner-in-charge Ooi Kok Seng.

Harris said the state's tourism sector is expected to see the entry of six new hotels of two- to five-star, and the availability of some 1,000 room keys.

MAH Penang's membership is made up of 50 hotels with a total of 10,000 room keys.

Among the new properties expected to open their doors include the Royale Bintang and Rice Miller Hotel, which are both located at Weld Quay.

Other projects are said to include a hotel in Seberang Jaya and serviced apartments in Teluk Kumbar on the island.

Meanwhile, Penang Health Association chairman Datuk Dr Chan Kok Ewe told the roundtable session that seven private hospitals in Penang (with a total of over 1,000 beds), which are members of the association, had recorded RM370 million in revenue from medical tourists last year.

"Prospects for this sector are encouraging. There have also been suggestions to make Yangon in Myanmar a sister city of George Town in Penang, due to the shared heritage of the two cities.

"There is also anticipated demand from medical tourists in China but whether our hospitals, which have been making significant investments with expansion programmes to cater to medical tourists, can cope with the capacity is the question," he added, saying that private hospitals in the state are also experiencing manpower shortage.

Meanwhile, Johan in his welcoming address, said KPMG Penang expects the state's property sector to maintain its momentum throughout this year.

"The industry has certainly fared positively with healthy uptake in retail, residential and industrial lots and is indeed diverse, given the many types of businesses operating in there."

- Business Times

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