Malaysia to relax strict security laws; a right move, a new dawn beckons; Thumbs up for ISA move!

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Malaysia to relax strict security laws

Eileen Ng AP

Malaysia plans to abolish two unpopular security laws allowing detention without trial and relax other measures curbing the media and the right to free assembly, Prime Minister Najib Razak says.

Video: http://bcove.me/pke9h9mj
PM announces repeal of ISA, three Emergency proclamations.

Prime Minister Datuk Seri Najib Tun Razak announced on Thursday that several draconian laws including the ISA and the three Emergency proclamations are to be repealed under major civil liberty reforms.

The policy changes are the boldest announced by Najib since he took the helm in April 2009 and are seen as a move to bolster support for his ruling coalition ahead of general elections, which are not due until 2013 but are widely expected next year.

Najib says heading toward a more open democracy is risky but crucial for his government's survival.



Malaysia plans to abolish two unpopular security laws allowing detention without trial and relax other measures curbing the media and the right to free assembly, Prime Minister Najib Razak says.

The policy changes are the boldest announced by Najib since he took the helm in April 2009 and are seen as a move to bolster support for his ruling coalition ahead of general elections, which are not due until 2013 but are widely expected next year.

Najib says heading toward a more open democracy is risky but crucial for his government's survival.

"There may be short-term pain for me politically, but in the long-term the changes I am announcing tonight will ensure a brighter, more prosperous future for all Malaysians," Najib said in a nationally televised speech on Thursday.

Critics who have long accused the government of using the security laws to stifle dissent cautiously welcomed the announcement but said they would have to wait to see what the measures are replaced with before assessing the reforms.

Lim Kit Siang, who heads the opposition Democratic Action Party, said he wondered if Najib's move was an election ploy.

"We see this as a victory of the people in demanding for greater democracy and respect of human rights, but the question is will he walk the talk?" Lim said.

Najib said the colonial-era Internal Security Act and the Emergency Ordinance, which allow indefinite detention without trial, would be abolished and replaced with new anti-terrorism laws that would ensure that fundamental rights of suspects are protected. He pledged that no individuals would be detained for their political ideologies.

Najib said police laws would also be amended to allow freedom of assembly according to international norms.

The government will also do away with the need for annual printing and publishing licenses, giving more freedom to media groups, he said.

"It is time for Malaysians to move forward with new hope," he said. "Let there be no doubt that the Malaysia we are creating is a Malaysia which has a functional and inclusive democracy."

The prime minister's speech was to mark Friday's anniversary of the 1963 union of peninsula Malaysia with Sabah and Sarawak states on Borneo, six years after the country's independence from British rule.

Najib's National Front has been working to regain public support after suffering its worst performance in 2008 polls, when opposition leader Anwar Ibrahim's alliance wrested more than one-third of Parliament's seats amid public allegations of government corruption and racial discrimination.

The National Front's popularity recently took a dip after authorities arrested more than 1600 demonstrators and used tear gas and water cannons against at least 20,000 people who marched for electoral reforms in Kuala Lumpur on July 9.

Syed Ibrahim Syed Noh, who heads the Abolish ISA Movement, asked if the two new laws to be introduced would also provide for detention without trial.

He estimated there are still some 30 people held under the ISA and another 6000 under the Emergency Ordinance, and called for their immediate release.

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Najib announces major changes in controversial laws as Malaysia Day gifts

KUALA LUMPUR: Malaysians received a significant Malaysia Day present in the form of greater civil liberties and democratic reforms under sweeping changes announced by Prime Minister Datuk Seri Najib Tun Razak.

Saying that the country is evolving and the people wanted more freedom, Najib outlined the historic announcement in his Malaysia Day eve address that was telecast live on TV.

The changes, he stressed, were to accommodate and realise a mature, modern and functioning democracy; to preserve public order, enhance civil liberty and maintain racial harmony.

All these changes will need to be tabled in Parliament.

Six of the best

>The Internal Security Act (ISA) 1960 will be repealed.

- In its place, two new laws will be enacted to safeguard peace and order the detention period will be reduced and can only be extended by the courts, except in cases involving terrorism.

>Three remaining emergency proclamations to be lifted are:
- Emergency 1969, Emergency 1966 (Sarawak) and Emergency 1977 (Kelantan).

>Banishment Act 1959 will also be repealed.

>The annual licence renewal requirement for newspapers and publications will be replaced with a one-off permit by reviewing the Printing Presses and Publications Act 1984.

>Reviewing the Restricted Residence Act 1933.

>Allowing greater freedom to assemble by reviewing Section 27 of the Police Act 1967 by taking into consideration Article 10 of the Federal Constitution which guarantees every citizen with the right to freedom of speech and assembly

A New Dawn beckons

REFLECTING ON THE LAW  By Shad Saleem Faruq iwww.thestar.com.my

The Prime Minister’s announcement on a number of changes to the country’s laws, including ending the Emergency, will have massive positive implications.

 

THE Prime Minister’s speech last night evoked the kind of hope and exhilaration I felt many decades ago on August 28, 1963, when I heard American civil rights leader Martin Luther King, Jr. deliver his “I have a dream” speech at the steps of Lincoln Memorial, Washington DC.

The Prime Minister pointed to a number of changes that he intends to bring to the country. Many of these proposals will have massive positive implications for the country’s legal system, its administration of justice and the sovereignty of law over personal discretion. He promised that:

•  The emergency proclamations that are in operation will be presented to Parliament for annulment;

•  The Internal Security Act will be repealed but replaced with two security laws framed under the Constitution’s anti-subversion provision of Article 149;

•  The Restricted Residence Act and the Banishment Act will be brought to an end; and

•  The much-criticised Printing Presses and Publications Act will be amended.

It will take some time and considerable research to fathom the full implications of the above pronouncements. Needless to say, the impact on the legal life of the community, the rights of the citizens, the powers of the Home Minister and the Police will be monumental.

The Rule of Law will be strengthened and the days of the omnipotence of the Government will come to an end. Looking at the implications of the lifting of the Emergency, the following salient features of emergency laws must be noted:

Ordinary legal system eclipsed: Under Article 150, once a proclamation of emergency by the Yang di-Pertuan Agong is gazetted, the floodgates are lifted and legislative powers of Parliament are greatly broadened. Parliament can make laws that violate, suspend or bypass any constitutional provision except six items in Article 150(6A).

All fundamental rights except freedom of religion can be violated. The federal-state division of powers can be disturbed and state powers usurped.

Emergency laws do not require a two-thirds majority. Neither do they require the consent of the Conference of Rulers or the Yang di-Pertua Negeri of Sabah and Sarawak.

Judicial review on constitutional grounds is ousted because of Article 150(6).An emergency law has no time limit and can continue as long as the emergency lasts.

Malaysia has been under such a state of emergency continuously since 1964. For all practical purposes, an emergency legal system eclipsed the ordinary legal system for the last 47 years.

The King’s power to make laws: As with the powers of Parliament, the powers of the federal executive are immensely enlarged during an emergency.

The Yang di-Pertuan Agong acquires plenary and parallel ordinance-making powers under Article 150(2B) as long as the two houses of Parliament are not sitting concurrently.

The executive’s power of ordinance-making is as large as Parliament’s power of legislation. The entire Constitution can be suspended except for six topics in Article 150(6A).

Since 1964, the Yang di-Pertuan Agong has promulgated nearly 92 emergency ordinances. Among these is the Emergency, Public Order and Prevention of Crime Ordinance, which is a favourite with the police and which results in more preventive detentions than even the Internal Security Act.

Executive power to give instructions: Under Article 150, the Federal Government acquires powers to give directions to the states in contradiction with the meticulous federal-state division of powers. If the emergency proclamations are repealed, what effect will that have on the legal system?

Restoration of normal laws: If the two proclamations of national emergency in 1964 and 1969 are repealed, the country will return to the normal operation of the constitutional system.

The five or so emergency laws made by Parliament under the authority of these proclamations will cease to operate. Any detention under these laws will have to be terminated.

Emergency ordinances will end: As with the emergency laws enacted by Parliament, the 90 or so emergency ordinances promulgated by the Yang di-Pertuan Agong (and the hundreds of subsidiary laws made thereunder) will also cease operation.

However, the cessation of emergency laws is not immediate. Under Article 150(7), there is a grace period of six months during which the emergency laws may still continue to operate. Once the six months expire, the expiry of the laws is automatic and no individual repeal is necessary. However, no action (e.g. for damages) can be taken for anything validly done under previous laws.

Some may wonder whether the Yang di-Pertuan Agong, in his discretion, may refuse the Prime Minister’s advice to restore the Rule of Law and to lift the proclamations of emergencies?In a long line of other cases, it has been held that emergency rule does not alter the position of the Yang di-Pertuan Agong as a constitutional monarch bound to act on advice.

The case of PP v Mohd Amin Mohd Razali (2000) altered the law slightly: it held that during the dissolution of Parliament, the Yang di-Pertuan Agong is not bound by the caretaker government’s advice on emergency matters.

Amin is, of course, not relevant to the Prime Minister’s speech last night because Parliament is not under dissolution and the Prime Minister’s advice is binding on the King.

Judicial review strengthened: The lifting of the Emergency will remove the eclipse of ordinary laws. The possibility of judicial review of executive and legislative measures will be enhanced. Many human rights will be restored.

The demise of hundreds of emergency laws, some conferring preventive detention powers and others excluding due process, will be a defining moment for Malaysian democracy.

However, the euphoria that is bound to be felt as a result of these wholesome developments must be tempered with caution.

New proclamations: The lifting of the 1964 and 1969 emergencies does not prevent the re-issuing of a new proclamation of emergency and the promulgation of new emergency Acts and ordinances, if circumstances so demand.

Subversion laws stay: Even if the Emergency is lifted, Parliament is still armed with anti-subversion powers under Article 149. New security laws under Article 149 have been suggested by the Prime Minister. Existing laws like the Dangerous Drugs Preventive Measures Act will not be affected by the lifting of the Emergency unless the Government sets about to apply the reformative paint brush to them as well.

Police Act remains: Controversial ordinary laws like the Police Act, the Official Secrets Act and the Universities & University Colleges Act will remain in the statute book though, of course, they will face pressure to accommodate the spirit of the times.

Some may, therefore, regard the lifting of the Emergency as merely a cosmetic measure because Articles 149 and 150 still arm the Government and Parliament with massive power to suspend constitutional guarantees.

Such a perspective is unduly cynical. It amounts to an all-or-nothing attitude. Whatever reforms are adopted and implemented must be welcomed. They may be harbingers of new things to come. They will certainly set a new mood and may be the catalyst and impetus for further improvements to the human rights scene.

A government receptive to the lifting of the Emergency cannot be indifferent to improving the situation of laws under Article 149.

All in all, one must applaud the Prime Minister’s courage, his willingness to listen to the voice of the people, his receptiveness to the felt necessities of the times, and his exhilarating agenda for reform.

The Attorney-General’s office also deserves congratulations for advising the Prime Minister on the incongruence between the rule of law and the state of emergency lasting 47 years.

So, let September 16, 2011 go down in our history as “a joyous daybreak” to end the long night of the Emergency.

Datuk  Prof.Shad Saleem Faruqi is Emeritus Professor of Law at UiTM and Visiting Professor at USM.

Thumbs up for ISA move

PETALING JAYA: The repeal of the Internal Security Act (ISA) is “a breath of fresh air,” said DAP national chairman Karpal Singh.

He also called for the abolishment of the Sedition Act.

“Why is the Sedition Act, enacted by the British in 1948, not one of the laws to be repealed?”

He said this Act was a draconian law which “did not enhance the democratic process”.

He was responding to the Malaysia Day announcement by Prime Minister Datuk Seri Najib Tun Razak regarding the repeal of the ISA.

In its place, Najib said two anti-terror laws would be drawn up to deal with terrorists, violent criminals and subversive elements.

DAP adviser Lim Kit Siang said the Najib administration should “really walk the talk” in providing greater civil liberties.

He said the promised reforms were “proposals” at the moment, adding that he “cautiously welcomed” the move to repeal the ISA.

He would observe the details of the alternative laws drawn up to replace it, he added.

PKR deputy president Azmin Ali suggested that a national consultative council be set up to deliberate on the two new anti-terror laws.

He also recommended that members of the council comprised representatives from the Government, Opposition and non-governmental organisations.

Azmin also urged the Government to release all ISA detainees or bring them to court.

Perkasa secretary-general Syed Hassan Syed Ali said its supreme council would meet tomorrow to discuss the changes.

“We will study why the Government decided to abolish these Acts and see whether it was made for political reasons or for the good of the citizens and country,” he said in a statement here yesterday.

Penang Chief Minister Lim Guan Eng said he was disappointed that the Printing Presses and Publications Act 1984 would not be abolished.

“The only part amended is the Section on publications that will no longer need to renew their printing licences annually.

“The other one for printing false news has been retained,” said the DAP secretary-general.

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Najib: Not too early or too late for initiatives to be introduced
The Laws in Question
Hisham: All about the right balance
Move to repeal laws welcomed
What they say
Lawyers, activists hope changes are made fast
Two new laws to replace Internal Security Act
Best piece of news for editors
No more annual licence renewal for newspapers
Newspapers form press council
A joyous daybreak beckons
Make no mistake, these transformations are real 

Malaysia's history, sovereignty violated, semantics need truly national!

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Of history and semantics

ALONG THE WATCHTOWER By M.VEERA PANDIYAN
veera@thestar.com.my

According to the country’s history buffs, we were not legally a colony of Britain, but only in effect.
Image via Wikipedia
IT was meant to be good break in Thailand, especially after weeks of scouring stories from dusty, bound copies of The Star for the paper’s 40th anniversary.

The mood in the kingdom, however, has been somewhat sombre, no thanks to the exceptionally bad weather this rainy season.

Floods and landslides have swept across 16 provinces in the country, killing more than 80 people and the death toll is set to rise further.

Even the resort town of Pattaya, which is usually spared from heavy torrents, was flooded over the weekend, along with Krabi, another tourist destination.

The rising waters have also set free potentially man-eating salt water crocodiles from a popular reptile farm, adding to the fears of locals and tourists.

So, there was little choice but to bum it out in Bangkok and keep abreast of the news, especially from back home.

And like always, the wonders never cease.

There was no escape from history and bizarre opinions from people who really should know better.

It was certainly news to read that Malaysia, or to be more precise, Malaya, was never a British colony but only a “protectorate”, as declared by Prof Dr Zainal Kling, a member of the 1,500-strong National Professors’ Council.



He argued that Britain held administrative powers, controlled the money and exploited the country’s natural resources but did not infringe Malay sovereignty in the states – except in the Straits Settlements of Malacca, Penang and Singapore.

Since then, there has been a deluge of comments against his views, along with the usual gnawing doubts about the state of our education system and more so the people who are supposed to be leading it.

But even the country’s most notable historian, Prof Emeritus Tan Sri Dr Khoo Kay Khim supported Dr Zainal, stressing that from a legal point of view, Malaya was never colonised.

The British, he said, took part in the administration of the Malay states as a result of treaties with the Rulers.
Dr Khoo said only those born in the Straits Settlements – yours truly from Malacca included – were considered British subjects, while those born in the Malay states were not. (Take note, Hindraf).

So, according to our presumably sage professors, it seems that in the legal sense we were not colonised but, sadly, in effect we were.

As former Prime Minister Tun Dr Mahathir Mohmad said sarcastically:
“The British did not advise, they gave orders.

“The English language is such that the advisers rule and rulers advise.”

Ahmad Fuad Rahmat, a research fellow at the Islamic Renaissance Front explained it vividly in his article in Harakah last week.

“Colonialism involves the exploitation of wealth of a nation – where one country becomes subjugated by the power and authority of another.

“If a country is browbeaten in such a manner, its sovereignty is already violated in effect, no matter what the legal documents say.

“So, Malay sovereignty was not protected under the Pangkor Treaty of 1874 because it gave the British a legal mandate to advise and interfere in local matters.”

As Ahmad Fuad rightly pointed out, sovereignty basically means power; and before independence, it was the British who held absolute power and control of the country.

The debate over the semantics of “colonisation” is of course, a spin-off from the controversy sparked by PAS deputy president Mohamad Sabu, better known as Mat Sabu.

The Pokok Sena MP was reported to have said during a ceramah in Penang recently that a group of guerillas led by Mat Indera, who killed 25 policemen and their families in the Bukit Kepong tragedy in 1950, were the real heroes because they were fighting against the British.

He was also alleged to have said that Umno founder Datuk Onn Jaafar and the country’s first Prime Minister Tunku Abdul Rahman do not deserve to be called independence leaders because they were British officers.
In Thailand, colonisation, or rather the absence of it, is indeed a big deal.

Among the things that the Thais are very proud of is that they have never been a colony of any Western power.

I suppose one should ignore the fact that Thailand did not exist until 1939. Before that it was Siam, which in its long history, was sacked by the Burmese and Khmers.

But as for recent times past, its kings are credited as being smart – by being neutral instead of taking sides with any European colonial power.

King Chulalongkorn, for example, offered the country as a geographical buffer for the competing colonial interests and, through this, effectively protected the kingdom from foreign meddling.

Earlier this year, the Thai government planned to make English the country’s second language.

But the plan was stymied midway by former education minister Chinnaworn Boonyakiat.

The committee reviewing the education system shot down the proposal for a peculiar reason: Making English a second official language might lead to misunderstanding that Thailand had been colonised in the past.

The minister justified his decision by saying that all countries in the region where English is the second language were viewed as former colonies.
While making comparisons between silly news makers in both countries, a Malaysian friend who is a long-time Bangkok resident summed it up with a common phrase:

“Same, same but different.”

Associate Editor M. Veera Pandiyan likes this Mark Twain quote: The very ink with which all history is written is merely fluid prejudice.

Sovereignty of Malay Rulers a legal fiction

IN the midst of the controversy over Mat Sabu and Bukit Kepong certain views have been expressed about British rule which may have the unintended effect of confusing rather than enlightening.

It is true that the Malay states – unlike Penang, Malacca and Singapore – were not British colonies in the formal sense. Nonetheless, they were under British rule. The sovereignty of the Malay Rulers was a legal fiction.

The Ruler was required in both the Federated and Unfederated Malay States to seek, and act upon, the advice of the British Resident or Adviser “on all questions other than those touching Malay Religion and Custom”.

In other words, decision-making powers were effectively in the hands of the British.

Apart from laws and treaties which established the actual locus of authority with the British, every important dimension of the economy was under their control. Issues pertaining to land, resources, labour, capital and market in the Malay states were all determined by British policy and British interests.

This made the situation in the Malay states no different from the three British colonies in their vicinity. Indeed, it was British control over both the internal and external economy of the Malay states that rendered them de facto colonies.

Economic control led to the exploitation of Chinese and Indian workers in the tin mining and plantation sectors and the marginalisation of the Malay masses in the peasant sector.

The creation of a dual economy with the commodity based, exported oriented sector directed towards the colonial metropolis was a common characteristic of most colonial economies. In reality, the Malay states bore all the iniquities and injustices associated with colonial rule.

It is mainly because there was de facto colonialism that Umno in the 50s and Parti Kebangsaan Melayu in the 40s championed the cause of merdeka (independence) from the British.

They were focussed upon the substance – rather than the form – of British rule.

DR CHANDRA MUZAFFAR,Kuala Lumpur.

We need a truly national history

the Sun Says

WHAT was Malaysia when imperial Britain was lording it over us, a colony or a protectorate? This seems to be the title of the public debate that is raging in the media and elsewhere ever since someone declared that the country was not a colony of Britain before 1957 and 1963.

It may perhaps help the debaters to be reminded that before the Japanese occupation Malaya was made up of a colony known as Straits Settlements of Penang, Malacca and Singapore, the Federated Malay States of Perak, Selangor, Pahang and Negri Sembilan and the Unfederated Malay States of Perlis, Kedah, Kelantan, Terengganu and Johor.

In 1946, Sabah (then British North Borneo) and Sarawak became colonies. Whatever their legal status – colony or protectorate, Britain was the de facto ruling power over them. In 1957, the states of Malaya became independent of that power, free finally to decide their own destiny. Sabah and Sarawak followed six years later.

Because it is not an academic debate some are clearly being emotional about it while others try, with whatever facts they have at their command, to claim that they are being objective. There is no doubt some valid points are being made but in the heat of the debate few seem to notice them.

It all arose as a result of a claim that someone is a hero because he was fighting his countrymen who were part of the colonial police force.

While it may not be easy to come out with a clear-cut answer and explanation acceptable to all as to whether the person is a hero or a terrorist, the debate has generated a lot of interest in the history of the country especially at a time when the contents of secondary school history textbooks are being scrutinised for errors and inaccuracies.

The special committee that is going through the history books and the complaints of one-sidedness regarding them is expected to come up with a report by the end of the year.

Local historians have been known to complain that the history books written by western writers or those influenced by them tended to play up the role of the British while ignoring or down playing the roles of local personalities.

To "correct" the situation local historians in their books tended to down play the roles of Britain and British officials in the history of the country. Some other local historians also tended to highlight the role of one community while down playing the roles and contributions of the other communities.

A common complaint of Sabahans and Sarawakians is that the history of the formation of Malaysia gives more prominence to the roles of West Malaysians in the effort while the natives seem to be mere passive assenters to the fait accompli.

Thus the report is eagerly awaited and if universally accepted it may be a guide or template for the writing of a history that is truly national.

Fallout from Sept 11 still being felt!

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MUSINGS By MARINA MAHATHIR

There are efforts by ordinary citizens all over the world to heal the wounds left by the Sept 11 tragedy. Many people have been reaching out to one another with respect, humility and trust.
Image by Getty Images via @daylife

UNLESS you’ve been on Mars this past week, you would have realised that it was the 10th anniversary of Sept 11 a few days ago. There had been so much news and stories about it everywhere.

Nobody doubts that the events of Sept 11 10 years ago were a horrific tragedy, and all sympathy should go to the families who lost loved ones that day. But it should also be remembered that the aftermath of Sept 11 has been equally tragic, and is still ongoing.

According to the costs-of-war project at Brown University, a “very conservative” estimate is that about 137,000 civilians have been killed in Afghanistan, Iraq and Pakistan and that the wars have created more than 7.8 million refugees in these countries.

The Brown project puts the wars’ ultimate cost, including interest payments and veterans’ care, to the United States at up to US$4tril – equivalent to the country’s cumulative budget deficits for the six years from 2005 to 2010. Think of how many people that money could feed and school.

What have all these gained? Even Americans have been affected by it. Today, they live in an environment so fearful of another attack that they have to suffer the indignity of all manner of surveillance and security inconveniences. One recent op-ed in the New York Times suggested that on balance the infringements on civil liberties that Americans have had to suffer are relatively minor.



It failed to mention that for its American Muslim citizens, these have been major. The blame, the humiliation and the abuses that they have had to endure are not yet over.

But despite all these, and its global impacts, there are efforts by ordinary citizens to heal these wounds. In the United States and several other Western countries, the issues that arose from Sept 11 were not glossed over but discussed and debated as a way to rebuild the broken bridges. Civil society, rather than governments or politicians, have been at the forefront of these.

I was just in Western Australia where I was asked to speak at a conference on Rebuilding Harmony in the post-Sept 11 world. It was heartening to see so many people interested in the subject, and so disappointed by the ongoing violence that has accompanied the event by all sides.

Many Australians had been opposed to the occupations of Iraq and Afghanistan, correctly seeing that this was no way to have peace.

They emphasised that people of different backgrounds, cultures and faiths need to know one another in order to avoid war, and that politicians should be held accountable for their part in the violence.

In the evening after the conference, we attended a special service at the main cathedral in Perth to commemorate the anniversary of Sept 11. It was attended by all the state dignitaries as well as people from all faiths. The entire service was beautiful and solemn as befitted the occasion.

But what moved me most was something I did not expect nor had ever experienced. An imam from a local mosque got up and recited the Al Fatihah and two other verses from the Quran dealing with compassion to humanity.

To hear the first surah of the Quran recited in Arabic in a cathedral while everyone listened so respectfully was a profoundly emotional experience for me. Never had its meaning been more beautiful.

It led me to think about how elsewhere in the world so many people have been reaching out to one another with respect, with humility and trust. When I heard the Al Fatihah in that church, it made me love my religion more.

The translation was in the programme, along with the words of all the other prayers and hymns that day, Christian and Jewish.

And what struck me most was how the sentiments expressed, while coming from different holy books, were in fact similar. My religion is as compassionate and generous as any other, not just to our own people but to all of humanity.

It made me wonder why this does not happen at home, why there is so much mistrust that nobody steps into a house of worship that is not their own.

Surely to be able to know one another is a good thing. After all, God says in surah Al-Hujarat, verse 13: O men! Behold, We have created you all out of a male and a female, and have made you into nations and tribes, so that you might come to know one another.

By constantly isolating ourselves from each other, are we not rejecting what our Creator intended?

As Malaysia Day approaches, perhaps we should think about how we can reconcile with one another. Or at the very least, refuse and reject the many deliberate attempts to divide us.

Selamat Hari Malaysia!

A new world order emerging

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CERITALAH By KARIM RASLAN newsdesk@thestar.com.my

Indonesia and Turkey – two great countries on the far reaches of the Islamic world – are benefiting from the freedom their people enjoy, boosting their international reputations.

WE HAVE seen how the Sept 11 attacks and Washing­ton’s subsequent missteps have led to a diminution of Ame­rican power and influence just as China was beginning its dramatic rise. Ten years on, the US is weighed down by debt and its failed dreams of global dominance.

Changes have also been taking place within the Muslim world. Indeed, in the aftermath of Sept 11, as well the more recent Arab Spring, the balance of power in and between these countries has shifted fundamentally.

In the past, Arab nations were considered pre-eminent. The revolutions in Algeria, Tunisia, Egypt, Bahrain and Libya have shattered the prestige of the Middle East’s autocratic rulers. The image of former Egyptian strongman Hosni Mubarak on trial has transfixed the world.

We now find ourselves asking the unimaginable – which Arab nation or kingdom will be next? Which redoubt of injustice, corruption and mismanagement will fall at the hands of its people?

As the Arab world – propelled by dramatic developments on the Internet, communications and social media – enters a period of turmoil and transition, other Muslim countries are emerging from the margins of history.

Most notable are Indonesia and Turkey, two great countries on the far reaches of the Islamic world. As fully-functioning democracies, neither need fear a repeat of the Arab Spring within their borders.

Indeed, their economies are benefiting from the freedom their people enjoy. This is boosting their international reputations while anti-reform Arab leaders appear morally bankrupt.



Indonesia has traditionally de­­ferred to Saudi Arabia, the birthplace of Islam, whose King is also the Custodian of the Two Holy Mosques. The relationship is also economic: some 1.5 million Indo­nesians work in Saudi Arabia as maids and construction workers. Indonesia is also a big importer of Saudi oil and gas.

Still, controversies over the ex­­ploitation and abuse of Indonesian migrant workers in the kingdom have soured their relationship.

The NGO Migrant Care reports that some 1,105 Indonesian workers died in Saudi Arabia from 2006 till last year. Under Saudi law, however, there’s little chance for aggrieved foreigners to seek redress.

Indonesian anger was further stoked by the execution of Ruyati Sapubi, a 54-year-old West Java­nese maid. She was convicted of murdering her Saudi employer, who she claimed was abusing her.

The mounting Indonesian anger culminated in protests in August by local activists and academics when the University of Indonesia conferred an honorary doctorate on Saudi Arabia’s King Abdullah.

The protesters complained that the award was inappropriate, given recent events and Saudi Arabia’s poor human rights record.

As Anis Hidayah, executive director of Migrant Care wrote in Kompas: “The conferral of an honorary doctorate on Abdullah is an insult to the nation, especially to the Indonesian migrant workers who have contributed to the country with their sweat and blood, often in the face of death.

“Indeed, they are more dignified and respectable than academics who have willingly sold out their integrity.”

Indonesia has thus suspended all migrant labour to Saudi Arabia until it signs an agreement on worker protection. The republic’s growing prosperity means that these shows of independence, and its determination to protect its citizens, will increase.

Meanwhile, on the far western flank of the Islamic world, Turkey is positioning itself as a regional power. Blocked in its attempts to join the European Union, Turkey has turned eastwards with great effect.

With its booming economy and dynamic society, Turkey is poised to seize a prominent role in Middle Eastern affairs – especially in the aftermath of the Arab Spring.

Ankara, for example, has demanded an apology and compensation from Israel for last year’s raid on the Gaza flotilla. With neither forthcoming, Turkey has frozen ties with the Israeli military and expelled Tel Aviv’s ambassador.

Turkish Prime Minister Recep Erdogan has also maintained an independent stance on both Libya and Syria. He insisted on joining Nato’s Libyan intervention but demanded special terms – principally that the enforcement of the no-fly zone be led by the alliance itself and not France.

The Turks are charting their own diplomatic course. They are no longer content to remain mere allies of the West, or a silent, acquiescent Middle Eastern neighbour.

Indeed, Indonesia and Turkey are bidding for leadership, not only of their respective regions but also of the Muslim world at large. As members of the G-20 Summit, they demonstrate how democratisation and liberalisation can strengthen nations.

Malaysia, for its part, is now at the crossroads. Can we embark on the more difficult, but ultimately far more rewarding, path of reform?

Whatever we choose, democracy – even in the Muslim world – is on the move everywhere. We must ask ourselves: are we to become the victims of history or its victors?

Who is America’s new enemy?

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America’s new enemy?

By ANDREW SIA star2@thestar.com.my

 It used to be the Nazis, the Soviet Union and then Osama and al-Qaeda. Now that he is dead, who will become the new enemy America focuses its energies on?

 SO what now? With Osama bin Laden dead, will his successor, Ayman al-Zawahiri, continue a new wave of terrorism against the West?

Yet a report in British newspaper The Guardian in late July indicates that most Syrian activists reject the new al-Qaeda leader. Mohammad Al-Abdallah, the spokesman of local coordination committees in Syria, said: “Zawahiri is trying to convince the world that he has supporters in Syria, which will provoke international public opinion against us and give the regime the right to commit crimes against our people.”



For Tom Engelhardt, academic, author and editor of Tomdispatch.com, al-Qaeda was a ragtag crew that engaged in some dramatic terror acts over the past 10 years but, in reality, it had limited operational capabilities, while the movements it spawned from Yemen to North Africa have proven “remarkably unimportant”. While Osama sat isolated in a Pakistan mansion, ironically, it was the Americans who did the work of creating war and chaos (and increasing people’s resentment of the United States) for Osama!

“Think of him as practising the Tao of Terrorism,” writes Engelhardt, comparing Osama to the way a tai chi master fights – not with his own minimal strength, but leveraging on his opponent’s strength, in this case, America’s massive fire power.

 

China rising: Will the United States next turn its attention to China?

And what can we hope for 10 years after 9/11?

Journalist Robert Fisk, writing in British newspaper The Independent, said, “Bin Laden told the world that he wanted to destroy the pro-Western regimes in the Arab world, the dictatorships of the Mubaraks and the Ben Alis. He wanted to create a new Islamic Caliphate. But these past few months, millions of Arab Muslims rose up and were prepared for their own martyrdom – not for Islam but for freedom and liberty and democracy. Bin Laden didn’t get rid of the tyrants. The people did. And they didn’t want a caliph.”

Jason Burke, author of The 9/11 Wars, notes that back in 2004, American intelligence agencies had foreseen “continued dominance” for many years to come. But in 2008, they judged that within a few decades the US would no longer be able to “call the shots”.

“If the years from 2004 to 2008 brought victory, then America and the West cannot afford many more victories like it,” he adds.

But in this second decade of the 21st century, will America learn the lessons of history?

Two years ago, when President Barack Obama intoned general platitudes about human rights for the Middle East in his landmark Cairo speech, his Secretary of State, Hillary Clinton, had this to say about the Egyptian dictator: “I consider President and Mrs Mubarak to be friends of my family.”

As the comedian and talk show host Jay Leno once joked, the invasion of Iraq was initially supposed to be called Operation Iraqi Liberation, until they realised that it spelt O.I.L. – and the name was then changed to Operation Iraqi Freedom.

Haroon Siddiqui, a columnist at the Toronto Star, believes that Obama has reverted to Washington’s old double standard of one law for allies, another for adversaries. And so dissidents in Iran and Syria will be cheered on and materially backed to overthrow their regimes but not the people rising up in Bahrain, Yemen, Algeria, Jordan, Oman, Morocco and Saudi Arabia.

Uri Avnery, a former Israeli Member of Parliament and author of several books about the Israeli-Palestinian conflict, reflects that the American empire always needs an antagonist, an “evil, worldwide enemy” to focus its energies on, be it the Nazis or the Soviet Union.

“The disappearance of the communist threat left a gaping void in the American psyche, which cried out to be filled. Osama bin Laden kindly offered his services as a new global enemy.

“Overnight, medieval anti-Islamic prejudices are dusted-off for display. Islam the murderous, the fanatical, the anti-freedom, anti-all-our-values. Suicide bombers, 72 virgins, jihad,” he writes in the online “political newsletter”, Counterpunch. Avnery adds that the present Islamophobia hysteria is similar to how Europeans used to demonise Jews in the past.

American civil rights lawyer, columnist and author Glenn Greenwald predicts in online news and culture website salon.com that even though US Secretary of Defence Leon Panetta has acknowledged that al-Qaeda has a grand total of “fewer than two dozen key operatives” on the entire planet, the War on Terror will be continued by trotting out more “fear-mongering propaganda” against a new alliance of villains from Somalia and Yemen – the “scariest since Marvel Comic’s Masters of Evil”.

As the future unfolds, will other villains be found to replace Osama? How about China?

John Feffer, the co-director of Foreign Policy in Focus (a project of the Washington DC-based Institute for Policy Studies), notes that perhaps the only country in the world that has benefited from the War on Terror is China.

“Beijing has watched the United States spend more than US$3tril (RM9tril) on the war on terrorism, devote its military resources to the Middle East, and neglect pretty much every other part of the globe. The United States is now mired in debt, stuck in a recession, and paralysed by partisan politics. Over that same period, meanwhile, China has quickly become the second largest economy in the world.”

What a difference a decade makes. When US President George W. Bush came into office over 10 years ago, he called Beijing a “strategic competitor” rather than a strategic partner. When a US spy plane flying off Hainan Island was involved in an accident with a Chinese plane, the Americans refused to apologise.

Ten years later, after US government debt was downgraded, we see China’s official Xinhua news agency lecturing the Americans – in English, mind you – that “the days when debt-ridden Uncle Sam could leisurely squander unlimited overseas borrowing appear to be numbered.”

In a Time magazine article in April, Admiral Mike Mullen, Chairman of the US Joint Chiefs of Staff, warned that “the single biggest threat to our national security is our debt”.

While America is still building aircraft carriers at US$15bil (RM45bil) a pop, China is developing missiles expressly designed to sink them – at a cost of US$10mil (RM30mil) each. Talk about being cost efficient. Economix, a unit of the New York Times, reveals that the US accounts for 43% of all the military spending on Earth – six times as much as China, which accounts for 7.3% of world military spending: “We’ve waged war nonstop for nearly a decade in Afghanistan against a foe with no army, no navy and no air force. We send US$1bil (RM3.02bil) destroyers to handle five Somali pirates in a fibreglass skiff.”

Yet the irony is: “(The US is) borrowing cash from China to pay for weapons that we would presumably use against it. If the Chinese want to slay us, they don’t need to attack us with their missiles. They just have to call in their loans.”

If Time’s scenario ever comes to pass, then the war on terror would be ended by Chinese financial tai chi.

Facing still more of the same - 10 years after 9/11

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Facing still more of the same

Behind The Headlines By Bunn Nagara

Ten years after 9/11, little has actually changed, least of all political attitudes.

UNTIL Sept 10, 2001, the world seemed a simpler place.
Image by Walt Jabsco via Flickr
Terrorism was a scourge that needed to be kept in check, if not eliminated while Afghanistan was a tribal wasteland in the boondocks and the legendary graveyard of foreign empires.

Iraq was an oil-rich autocracy and established US ally against Iran but with a tendency to slip into unilateral nationalist fervour, and the United States was a neo-conservative right-wing Republican bastion huffing and puffing for something to blow at.

The next day, two planes slammed into the two towers of New York’s World Trade Center. Neither bad coincidence nor pilot error was ever an issue.

Other aircraft had been hijacked the same day, but the twin crashes at the twin towers were more dramatic and dominated headlines, sound bites, political posturing and public imagination.

As the heart of lower Manhattan seemed to dissolve in a rising mound of smoke and dust, more than just debris was in the air. It was a time of change for the US and certain parts of the world.

Suddenly, the United States had the national tendency to slip into unilateralist fervour, Afghanistan and Iraq became targets that needed to be kept in check if not eliminated, and terrorism, oil-rich autocracies and Muslim states came to be profiled as one from many a Washington desk.

The neo-conservative right-wing bastion in the White House had found a couple of things to huff and puff at. Such was its enthusiasm that it forgot how Afghanistan remained very much a graveyard of foreign empires.

The result now, a full decade later, is described in Washington circles and elsewhere as the worst US policy overreaction of the century.



Within weeks, the George W. Bush administration blamed the attacks on Osama bin Laden and his followers, collectively called “al-Qaeda” as the Arabic translation of “the base,” the name the CIA originally gave Osama’s group and training camp. Nobody had claimed responsibility for the New York attacks, and al-Qaeda soon after denied any involvement.

The Taliban government in Afghanistan was then accused of sheltering al-Qaeda, so that made it fair game for elimination. In late 2001, Afghanistan’s Taliban leaders were ousted and replaced by the Pashtun activist and CIA point man Hamid Karzai.

The Zionist neo-cons in Washington were on a roll, “regime change” was the name of the game, and they were about to aim that exuberance and momentum at another target. But for the purpose to hit home, some points still needed to be made at home.

So Iraqi President Saddam Hussein was to be the new Hitler, he trashed his country’s wealth on costly palaces, he killed many people (decades ago), and he endangered the world or at least Israel with many nasty ABC (atomic, biological, chemical) weapons.

The problem was getting enough voters in the US and the general public in ally countries to go along with the idea. Bush and his British counterpart Tony Blair then decided the latter reason was the most persuasive: that Saddam had dangerous “weapons of mass destruction” (WMDs).

This was despite UN weapons inspectors having found no Iraqi WMDs, a recent major feature in Newsweek magazine coming round to the same conclusion, and the story about secret sourcing of radioactive material for a bomb discovered as fake. What mattered more instrumentally, however, was whether the UN Security Council could be massaged into endorsing a US invasion of Iraq.

It could, China’s abstention notwithstanding. As plans for an invasion of Iraq were being drafted, the US public also needed convincing.

So there was the ruse that Saddam was linked to al-Qaeda, and al-Qaeda was responsible for all the nasty things. Meanwhile Osama, having found that such issues could really rile the world’s sole superpower, “admitted” that he was responsible for the policy panic in Washington.

Thus Saddam was eliminated and replaced by a US ally, although the vast quantities of high-grade Iraqi oil seemed more elusive. But the violence and instability in Iraq also meant China could not access the oil either.

Still, the casualty rates in terms of human lives, economic cost and national destruction and degradation continue to mount. Ten years on and with the follies rather more exposed, senior US and British officials have queued to disown any responsibility for the continuing debacle.

Errors of judgment

Early this month, former head of British intelligence service MI5, Lady Eliza Manningham-Buller, gave a BBC lecture to enumerate the multiple errors of judgment across the Atlantic at the time. Critics replied that she should have said so then, since it is now too late.

Former British foreign minister Jack Straw pleaded innocence through ignorance, saying that the Blair government at the time had been misinformed by allies, including the US. As justice minister later, Straw refused to apologise personally to an Algerian pilot whose career was ruined after Straw wrongly accused him of training a Sept 11 hijacker.

Former US vice-president Dick Cheney also released a biography focusing on that period, typically accusing others who disagreed with him at the time. Former US secretary of state and chairman of the joint chiefs of staff, Gen Colin Powell swiftly blasted him for the effort.

Powell was followed by former US secretary of state and national security adviser Dr Condoleezza Rice, who also found Cheney small-minded and mistaken. Rice should be replying more fully in her own biography later this year, so her critics should in turn be prepared.

However, the whole point of being honest, truthful and accurate should be to acknowledge past mistakes and avoid new ones. With the military occupation of Afghanistan now set to extend beyond the promised deadline, and new occupations likely in Libya if not also Syria, avoiding mistakes is not going to be easy or even possible.

9/11 American Innocence: What Really Happened to Us?

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Frederick E. Allen, Forbes Staff

September 11 and American Innocence: What Really Happened to Us?

Evil expunged—but have we fully recovered? Image by swanksalot via Flickr

The other day at the Republican debate, Jon Huntsman said “I think we have had our innocence shattered” by what happened on September 11, 2001. On Morning Joe the journalist Tina Brown called the date “the last moment of American innocence,” and Mike Barnicle described it as “the end of our metaphorical summer as a country.”

Really? It seems as if every time disaster strikes our nation we hear that it’s the end of our innocence, but in truth there has never been an innocent time in the land of the Salem witch trials and the Boston Massacre and John Brown’s raid and our murderous Civil War and . . . well, the list goes on, right up through—not long before September 11—Monica Lewinsky and the impeachment of a president.

In fact, I’d say that if anything the opposite may be true, that a big price of September 11, beyond the lives lost, was that it may have given us a new birth of innocence, or perhaps of destructive pseudo-innocence.

17 images Gallery: 16 Ways 9/11 Changed The Way We Do Business 

Video: Forbes Staff: Working Through 9/11

Of course we were completely blameless in the hideous tragedy that befell us. We were entirely innocent in that sense of the word. When the planes struck that morning, the U.S. was, and knew it was, a beacon of freedom. We also were a prosperous land where unfettered innovativeness had by and large made every generation richer than the last. We had shown that we could achieve more than anyone else even while balancing our budgets and cutting our deficits. We felt freer, tougher, stronger, and more resilient than anybody. Then we were attacked by an enemy that was as purely evil as an enemy can be. We had done nothing to deserve the horror visited on us. We were plainly guiltless in an attack that was plainly evil. Only the most extreme, reflexive guilt-seekers could possibly find any American transgression that could begin to rationalize the attacks.



Knowing ourselves as a shining force for good and as blameless victims in what happened on September 11, maybe we let it all go to our heads a little bit. A kind of national naivete seems to have swept over us, an innocence about the consequences of our actions. President Bush told us that we were now at war, but also that we would have to make no personal sacrifices. He launched two foreign wars with no tax increases to pay for them. After the start of one of those wars went well, he appeared, in a burst of overconfidence, on an aircraft carrier under a giant banner reading MISSION ACCOMPLISHED to announce that “In the Battle of Iraq, the United States and our allies have prevailed.” Then as that battle continued, we even forgot that as a nation we had always held torture to be un-American and morally unjustifiable.

As our two new wars began to spin out of control we not only didn’t pay for them but also gave ourselves massive tax cuts and a big new unfunded Medicare entitlement at the same time. Too many of us kept buying bigger and bigger houses, and second homes, while borrowing all the money to do so, secure in our understanding that for Americans life keeps getting better and we all get richer. We cooked up reckless schemes to multiply the wealth from those homes. In other words, we appear to have forgotten, in the long shadow of September 11, that no big thing in life is easy or simple, and nothing comes without a price.

We finally began to see the price we were paying later in the decade, when the wars we had started refused to end, and the housing market crashed and bankrupted millions of Americans, and Wall Street imploded, and the economy went into its worst tailspin since the Great Depression. Finally our new age of innocence ended.

Or did it? In 2008 we rejected all our misdeeds of the previous years by voting for “hope” and “change” and giving ourselves a president who seemed to believe that any problem could be solved if everybody just agreed to be reasonable and get along. Then in 2010 we turned against that choice by electing a Congress dominated by people who seemed to believe that any problem could be solved by lowering taxes and shrinking government, period. If we had been naive through the decade of the 2000s, our naivete lived on, and it continued to get us into trouble.

If that all means that in some sense Osama Bin Laden provoked the U.S. into self-destructiveness, then in that sense he won the struggle he began on September 11. Yet the fact is that he has lost it. His poisonous cause has withered and died. The Arab world has turned definitively against him in the Arab Spring, as the rest of the world turned against him long before.

As for our own naivete, if that is what it was, maybe it is beginning to lift now, too. On September 8, 2011, that ineffectually conciliating president gave a speech presenting a raft of actions to address the ongoing jobs crisis—policies that had all won bipartisan support in the past—in which he repeatedly demanded that Congress “pass this jobs plan right away” and bluntly told the legislators to “stop the political circus.” And the leader of his opposition, the previously unyielding speaker of the House, actually said, “The proposals the president outlined tonight merit consideration.”

Might we finally be approaching the end of an age of innocence now?

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The BRICS are coming

Image via Wikipedia

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WHAT ARE WE TO DO By TAN SRI LIN SEE-YAN

THE term BRIC (Brazil, Russia, India, China) was first used in 2001 by economist Jim O'Neill (Goldman Sachs) to call attention to four rapidly rising large emerging economies considered able to play a significant role in global affairs, championing the interests of developing nations. Very much like what G-7 does for the developed world.

For years since, it was treated by investors and journalists as a shorthand for the big emerging markets. Adding South Africa to the group widens its focus to include more from outside fast-growing China and India.

The BRICs held its first summit in 2009 in Russia, discussing issues on international monetary reform, including the possibilities of a new dominant reserve regime to replace the US dollar-based system. This year, China played host and invited South Africa to join, formally naming the group BRICS. Together they exceeded three billion people, nearly 45% of the world, and about 25% of the world's 2011 gross domestic product (GDP) based on purchasing power parity.

China's total output is bigger than the other four put together. The economic clout of the BRICS is now growing as the developed world struggles to expand and pare debt. Indeed, they are starting to operate as a common bloc in the G-20, providing a counterpoint to the United States and Europe.

Building BRICS

But the group is vastly different. India, Brazil and South Africa are vibrant democracies in contrast to the more authoritarian Russia and China. They need to balance the interests of its members: three large commodity exporters and two huge commodity importers. For sure, they have to get used to obeying rules they played little part in shaping. China's economy, the world's second largest, is nearly three times the size of Brazil's, close on four times that of Russia and India, and 16 times that of South Africa.



They also differ on exchange rate policies. Brazil is vocal against China's tight management of the yuan's value, keeping its exports relatively cheap. China is becoming prominent in BRICS' trade already it is Brazil and South Africa's largest source of imports. Be that as it may, the group shares strong macroeconomic fundamentals going into 2012.

China and India will grow 8.5%-9% this year; Russia and Brazil, 4%-4.5%; and South Africa, 3.5%. Their structural budget deficits are well contained, with low debt/GDP ratios, highest being in India (68%) and South Africa (65%).

China continues to have a current balance of payments surplus (5.7% of GDP), while all the others' deficits are each less than 5%. But they share a common problem inflation: 6.5% in China, 9% in India, 9% in Russia, 7% in Brazil and 6% in South Africa. Containing inflation remains a top priority of public policy. Still, they continue to struggle to deal with this threat.

The 2nd BRICS Summit held in April 2011 reaffirmed the group's determination to transit from global pax americana to a new order in the “development of humanity.” The BRICS' emphasis on co-operation in their call for reform of the US-dollar dominated international monetary system and for tighter supervision of commodity derivatives and markets, and capital flows show the group is seeking to refrain from too much assertiveness. Still the desire to shake off the old hegemony is there; it calls for a larger role in international fora.

It condemns “the inadequacies and deficiencies” of global finance and the “excessive volatility in commodity prices.” The Sanya declaration underscored their concerns about underlying factors that fuel inflation and currency volatility in many emerging economies, as well as their strong desire to shift away from reliance on the US dollar.

“We call for more attention to the risks of massive cross-border capital flows now faced by the emerging economiesExcessive volatility in commodity prices, particularly for food and energy.”

The BRICS took a new step towards cementing their global influence by: (i) calling for a broad-based reserve currency system “providing stability and certainty”, one that is more reliable and stable; (ii) welcoming discussion about the global role of Special Drawing Rights (SDR), the International Monetary Fund (IMF)'s in-house accounting unit but a global reserve asset, and on the SDR's basket of currencies (now comprising the US dollar, the euro, yen and pound sterling); (iii) establishing mutual credit lines denominated in their home currencies among the state development banks of the group. To start the ball rolling, China Development Bank will issue loans worth 10 billion denominated in yuan this year to other BRICS nations, mostly to fund oil and gas projects; and (iv) forging a common emerging market negotiating stance on issues from climate change to world trade, and to act as a credible counterweight to the West in settings like the G-20.

BRICS & Asia

The Asian Development Bank (ADB) expects Asia to grow 7.5% this year (against 9.2% in 2010) and 7% in 2012. “If anything distinguished the region from the rest of the world, it is its strong macro fundamentals.”

However, a dark cloud in the horizon is the slowdown in exports to its traditional markets in the United States, Europe and Japan. Against this is the region's potential for rapid expansion in intra-regional trade, amid signs of rising domestic demand in Asia.

True, manufacturing and services-related activities stalled across much of the world in August, raising fears of another global downturn. True also, factory and services output throughout Asia, including China and India, slackened in August, pointing to growing evidence that weaker demand in the United States and Europe is weighing on Asia's export-driven economies.

Moreover, investor confidence dropped to the lowest in two years in September in the eurozone and the United States, and consumer confidence, already fragile, weakened further. Unfortunately, the United States' anaemic growth and Europe's worsening debt crisis have prompted governments to deepen budget cuts, undermining consumer demand and clouded growth prospects with uncertainty.

Barring a full-blown double-dip in the United States and Europe, Asia will still suffer significant bruising from deepened dashed expectations, with most of the pain centred on highly exposed nations Taiwan and South Korea. No doubt, the BRICS economies are bound to face clear challenges in responding to the angst over weakened global conditions.

Missing BRICS

O'Neill has since suggested his original four BRICs be expanded to include Turkey, Indonesia, Mexico and South Korea, to form the new “growth markets”. A fresh look is taken to measure exposure to equity markets beyond market capitalisation (GDP, corporate revenue growth and volatility of asset returns); any emerging market accounting for 1% or more of world GDP should be taken seriously. Mexico and South Korea each represented 1.6% of world GDP, Turkey, 1.2% and Indonesia, 1.1%.

Among them, I particularly favour Indonesia. Like Brazil, Indonesia's success is based on the commodities boom: gas and coal to China and India, and palm oil to the world. Investments are flowing in. With a population of 237 million (the world's largest Muslim nation), the country is in the midst of a consumer boom.

Indeed, it has the potential to become one of the world's biggest economies. But it has to get its act together. It will grow 6.2% this year (6.1% 2010) and hopefully 6.5% in 2012. South-East Asia's largest and fastest growing economy is firing on all cylinders. It is today rated a notch below investment grade and should be upgraded soon. It will become a credible 6th member of the BRICS.

What impresses is its growing middle class. World Bank puts private consumer spending at close to one-half of GDP. The middle class (disposable household income exceeding US$3,000 a year) numbered 1.6 million in 2004. Today, Japanese investment bank Nomura estimates it to be about 50 million, more than in India and larger than in any of its nine other Asean neighbours. By 2014-2015, Nomura thinks it could reach 150 million.

The country is growing so fast, especially in the urban areas, that inflation is a major political issue at 7.2% for 2011. But it's stable, bearing in mind the rupiah appreciated 5% this year. Affluent middle-class Indonesians are spending, mainly on motor cycles (eight million sold in 2010, dwarfing sales in the rest of South-East Asia), cars (750,000 in 2010) and smart phones.

Indonesia is reputed to be the world's No. 2 in Facebook members and world's No. 3 in Twitter users. But, Indonesia, to be frank, remains a difficult place to do business because of poor infrastructure (adding to production and distribution costs), and corruption (“non-transparent random regulations”). But there are signs things are changing for the better. It is still attractive to foreign investors: nowadays “if you are not here, you have to have a good reason.” Most new consumer desirables are still imported.

Wall of BRICS 

As a group, the BRICS are growing fast. China has surpassed Japan as the world's No. 2. India and Brazil are following fast behind. Catching-up is always much easier because the leader has already set the path and the pace. At some point, reliance on emerging nations as engines of growth begins to disappoint, as it becomes harder to sustain the pace. Growth will slow down (as did Europe, and Asian Tigers and Japan before them) or may even falter (as did Latin America in the 1990s).

There is a lesson from history. A recent study by three scholars Barry Eichengreen (University of California, Berkeley), Doughyun Park (ADB) and Kwanho Shin (Korea University) called the EPS study* attempted to draw potential warning signs by examining economies since 1957 whose GDP per capita (on a purchasing power parity or PPP basis) rose more than 3.5% a year for seven years, and then suffered a sharp slowdown when growth dipped precentage points or more.

The focus was on economies enjoying sustained catch-up growth. The common sense behind PPP is the same amount of money should purchase the same product in any two countries (hence, the term purchasing power parity). That is, the purchasing power of money, expressed in one currency, should change pari passu in different countries. If US$5 buys a cup of Starbucks coffee in New York and the actual cost of the same Starbucks coffee in KL is RM12, then the exchange rate should be US$1=RM2.40 according to PPP. But the actual exchange rate is close to RM3, or 20% cheaper. So, the use of PPP serves to neutralise any currency distortions.

What emerged was as follows: (i) growth slowdowns occurred when GDP per capita reached about US$16,740 per capita; and (ii) the average growth rate then falls from 5.6% per year to 2.3%. In the 1970s, growth rates in Western Europe and Japan cooled off at about the US$16,740 threshold, as did Singapore in early 1980s and South Korea and Taiwan in the late 1990s.

Thereafter, growth often continues and may even accelerate. Japan's boom lost momentum in early 1970s, then accelerated until it blew up in the 1990s. But, no one-size-fits-all depends on circumstances. When the United States passed its threshold, it kept on growing rapidly, consistent with its innovative prowess. Other risk factors matter, including openness to trade; lifting of consumption to beyond 60% of GDP; low and stable inflation; high ratio of workers to dependents. On the other hand, an under-valued exchange rate raises the risks of a slowdown.

* “When Fast Growing Economies Slow Down: International Evidence and Implications for China.” NBER, March 2011.

The EPS study does draw interesting parallels. China is destined to reach the US$16,740 GDP per capita threshold by 2015, well ahead of India and Brazil. Will it then slacken? The risk factors for China include: an ageing population, low consumption and an under-valued currency. On these alone, the study suggests high odds (over 70%) of a definite slowdown by then! But China is unique. These risks can be managed by shifting development inland, leaving the maturing urban centres room to innovate.

China is already reforming to become a more consumption-based economy, while its currency is being managed to reflect market considerations. Prompt structural reforms help cushion the effects of any slowdown. Even so, a percentage point drop in growth to 6%-7% does not sound so scary. For China, it should not really be such a big deal.

● Former banker, Dr Lin is a Harvard educated economist and a British Chartered Scientist who now spends time writing, teaching & promoting the public interest. Feedback is most welcome; email: starbizweek@thestar.com.my