China's warns US of Confrontation over South China Sea

Top military paper in China warns US of confrontation over South China Sea

BEIJING — China's top military newspaper warned the United States on Saturday that US-Philippine military exercises have fanned risks of armed confrontation over the disputed South China Sea.

The commentary in China's Liberation Army Daily falls short of a formal government statement, but marks the harshest high-level warning yet from Beijing about tensions with the Philippines over disputed seas where both countries have recently sent ships to assert their claims.

Dotted red line shows vast area claimed by China. The PHL, which is claiming some islands, has begun calling the region the West Philippine Sea. GMA News

This week American and Filipino troops launched a fortnight of annual naval drills amid the stand-off between Beijing and Manila, who have accused each other of encroaching on sovereign seas near Panatag Shoal (Scarborough Shoal), about 200 kilometers west of the former U.S. naval base at Subic Bay.

The joint exercises are held in different seas around the Philippines; the leg that takes place in the South China Sea area starts on Monday.

"Anyone with clear eyes saw long ago that behind these drills is reflected a mentality that will lead the South China Sea issue down a fork in the road towards military confrontation and resolution through armed force," said the commentary in the Chinese paper, which is the chief mouthpiece of the People's Liberation Army.

"Through this kind of meddling and intervention, the United States will only stir up the entire South China Sea situation towards increasing chaos, and this will inevitably have a massive impact on regional peace and stability."

Up to now, China has chided the Philippines over the dispute about the uninhabited shoal known in the Philippines as Panatag Shoal and which China calls Huangyan Island, about 124 nautical miles off the main Philippine island of Luzon.

 

 "The United States' intention of trying to draw more countries into stirring up the situation in the South China Sea is being brandished to the full," it said.

Regional tensions

Beijing has sought to resolve the disputes one-on-one but there is worry among its neighbors over what some see as growing Chinese assertiveness in staking claims over the seas and various islands, reefs and shoals.

In past patches of regional tension over disputed seas, hawkish Chinese military voices have also emerged, only to be later reined in by the government, and the same could be true this time.

Since late 2010, China has sought to cool tensions with the United States over regional disputes, trade and currency policies, human rights and other contentious issues. Especially with the ruling Chinese Party preoccupied with a leadership succession late in 2012, Beijing has stressed its hopes for steady relations throughout this year.

Nonetheless, experts have said that China remains wary of U.S. military intentions across the Asia-Pacific, especially in the wake of the Obama administration's vows to "pivot" to the region, reinvigorating diplomatic and security ties with allies.

The Liberation Army Daily commentary echoed that wariness.

"The U.S. strategy of returning to the Asia-Pacific carries the implication of a shift in military focus, and there is no better strategic opening than China's sovereignty disputes with the Philippines and other countries in the South China Sea," said the newspaper.



China has territorial disputes with the Philippines, Vietnam, Brunei, Malaysia and Taiwan in the South China Sea, which could be rich in oil and gas and is spanned by busy shipping lanes.

By CHRIS BUCKLEY, Reuters with GMA News/ HS

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French head to polls in presidential election

First round voting begins in overseas territories as incumbent Nicholas Sarkozy appears set to face a stern test.

More than 44 million French voters are to go to the polls for the first round of a presidential election that represents a serious threat to incumbent Nicholas Sarkozy's tenure in the post. While predictions of a high abstention rate and a strong protest vote have left the outcome uncertain, opinion polls point towards Francois Hollande, Sarkozy's main Socialist challenger, replacing his conservative rival. The two 57-year-old political leaders are on course to finish in the top two in Sunday's polling, thus setting them up to square off in a second round vote on May 6. The result of that vote will decide who is France's president for the next five years. Voting began on Saturday in France's overseas territories, which are mainly islands dotted around the Indian, Pacific and Atlantic oceans. On Sunday, voting will continue in 85,000 polling stations across the country's European mainland. Voting will begin at 8am local time (06:00 GMT) and continue until 8pm (18:00 GMT). Voting estimates will then be immediately published, giving what has been a traditionally accurate assessment of how the polls will stand once results are finalised. In all, 10 candidates are in the race, with Hollande and Sarkozy trailed by far-right leader Marine Le Pen, hard-left leader Jean-Luc Melenchon and veteran centrist Francois Bayrou. A handful of outsiders round out the field. Once the first round is over, the top two candidates will face each other in the final poll, with the run-up to that including a televised debate. Spotlight coverage of April 22 presidential election Hollande says that Sarkozy has trapped France in a spiral of austerity and job losses, and has called for the European response to the debt crisis to be more pro-growth. Sarkozy, meanwhile, says that his rival is weak-willed and would spark panic in financial markets by adopting an approach that involves increased government spending. Al Jazeera's Tim Friend, reporting from Paris, said that Sarkozy faces a stiff challenge due to his "extraordinary" unpopularity. "A lot of the people voting will be putting their ballot paper into the ballot box more against Sarkozy than perhaps for the candidate they eventually vote for," he said. Since Saturday, there has been no sign of any of the rhetoric that has characterised an increasingly heated contest, as French law prohibits campaigning and opinion polls on the eve of voting. Voters went about their business without being accosted by pamphleteers, the campaigns' websites, Facebook pages and Twitter feeds were left without updates and broadcasters had to find other subjects to interview. Source: Al Jazeera and agencies Newscribe : get free news in real time

Psychos in charge of World Politics

A fascinating peek into the heads of world leaders.

Psychopathology And World Politics Author: Ralph Pettman
Publisher: World Scientific
Publishing, 250 pages

THE list of apparently “unhinged” national leaders is distressingly lengthy. The 20th century gave us the maddest and baddest of all time, Adolf Hitler. But there were many others.

Among them, Jean Bedel Bokassa (or to give him his full title: “His Imperial Majesty Bokassa the First, Emperor of Central Africa by the will of the Central African people, united within the national political party, the Movement for the Social Evolution of Black Africa).” Myanmar’s crackpot dictator Ne Win, who changed the denominations of his country’s banknotes to his lucky numbers: 15, 35, 45, 75 and 90. Alleged cannibal Ida Amin of Uganda. And the absurdly vain, self-proclaimed “Genius of the Carpathians,” Nicolae Ceauescu of Romania, who died in a hail of bullets fired by his own soldiers, whose loyalty and patience he had finally exhausted by 1989.

Mental illness and abnormal or maladaptive behaviour has all too often shared and sharply affected the stage of global politics. Prof Ralph Pettman looks at why this is so. And what the consequences might be, or have been.

What happens when a leader’s mind ceases to function in what we might call a proper or normal manner? How does this impinge on world affairs? What is to be done, for example, when a statesman ceases to act in a seemingly sane fashion and yet still commands the loyalty of those who keep him or her in power? What to do when a leader’s advisers have a less than sufficient grasp of political realties themselves? Indeed, how can we react when a whole society goes insane, as happened in Pol Pot’s Cambodia in the late 1970s?

Prof Pettman is an informed voice on such matters, and well positioned to inspect the broader canvas on which these questions have been painted. He is a member of the editorial board of advisers of Global Change, Peace and Security, a member of the international advisory board of the European Journal Of International Relations, and a member of the advisory boards of International Politics and Religion. And he brings a wealth of insight to this multi-disciplinary topic.

Rather than provide a comprehensive account on this unwieldy realm of study, which would be beyond the scope of a single work, what this book does is first describe psychopathology in general terms and its relationship to world affairs in the first two chapters. Prof Pettman then deftly moves on to the four lynchpins of this penetrating work, chapters three to six, entitled: Denial, Truth, Delusion, and Reality, respectively.

The author cleverly cherry-picks case studies to illuminate his points, and through this methodology we learn just how fragile sanity in the halls of power can be. Hitler, the most disturbing figure in Prof Pettman’s rogues gallery, was beset by a range of psychopathological conditions, which his doctors treated with no less than 73 kinds of “medication” including sedatives, hypnotics, tonics, vitamins, hormones, cocaine and methamphetamine. Der Führer’s brain chemistry was also adversely affected by Parkinson’s disease.

Britain’s most illustrious-ever leader, Winston Churchill, was prone to bouts of bipolar depression, Prof Pettman notes. And he theories that US President Ronald Reagan was already suffering from the first symptoms of Alzheimer’s when he made the authorisations that resulted in the Iran-Contra scandal in the 1980s.

The life and times and mental ailments of the psychologically paranoid US President Richard Nixon get especially rigorous attention from Prof Puttman. While the Vietnam War was raging over 13,000km east of Washington DC, another war was taking place inside Nixon’s head. One between the man who regarded himself as a bold statesman and moral leader, battling the “insecure loner who always thought people were looking down on him or out to get him.”

We also get to read about the psychological frailties of Woodrow Wilson, the only world leader to have ever attracted the scholarly attention of Sigmund Freud (Freud, the “father of psychology”, crops up a lot in this book). Wilson’s passivity at the 1919 Paris Peace Conference was apparently due to feeling of inadequacy brought about by an over-dominating father.

This is all powerful heady stuff, and is pure gold for readers who have ever wondered how so many world leaders – past and present – tick with such a peculiar and menacing tok.

In general, Prof Pettman seems to concur with Lord Acton’s famous maxim: “Power corrupt, absolute power corrupts absolutely.” But he doesn’t seem to go as far as the stance held by the late Nobel Laureate Friedrich Hayek, who said: “In government, the scum rises to the top.” Nevertheless, the professor does skate close....

While not answering all the questions it presents – quite an impossible task – this book is a valuable contribution to the field of how international politics intertwines with modern psychology, and will also likely be instructive not only for better understanding of current world affairs, but also concerning the perennial issue of conflict resolution.

 Review by NICK WALKER

Kopitiam, truly Malaysia Boleh!

Ah, for that nice cuppa in the good old kopitiam

I GREW up drinking coffee like plain water. Kopi-O was served from morning till late at night in my home in Penang. And the best coffee was the one we bought from the nearby kopitiam.

An open-air kopitiam (coffee shop) in Bendemeer, Singapore.

It was common, in those days, for us to tar-pau coffee by the kettle. So when there were visitors, or when the men sat down to play mahjong, the young ones usually had to bring an empty kettle to the kopitiam for it to be filled to the brim, minus the sugar.

Where I grew up, there was even a small coffee mill nearby, and I enjoyed watching the men at work. Rumour has it that they added some special ingredients into the coffee to make the people addicted to their brand.

So where do you think are the 100 best kopitiams in Malaysia?

Tourism Minister Datuk Seri Dr Ng Yen Yen has challenged the Malaysia-Singapore Coffee Shop Proprietors General Association to compile such a list to showcase to the world.

And the minister is correct to say that our kopitiam is a unique heritage that can only be found in Malaysia and that it is time to promote the kopitiam globally.

The kiasu people across the Causeway might disagree but I believe we should quickly trademark this heritage by taking a leaf out of the “Malaysia, Truly Asia” tagline and declare this heritage, “Kopitiam, truly Malaysia”.

Some of us may think that the franchise upmarket coffee houses like Starbucks, Coffee Bean and San Francisco are on the top of every country’s list but if you do a search on the Internet, you will find lists for the best coffee shops in the UK, the US, Japan, Australia, etc. and these global brands will not be found there.

Seriously, I do wonder why people want to spend so much money for a cuppa when the real thing is actually found at our humble kopitiam.

I am glad that our own Malaysian versions of franchised coffee houses have sprouted up. Whether their roots are from Ipoh, Kuang, George­town or some other old town, they have cleverly linked their names to the ubiquitous kopitiam.

So when you enter these places, where I am told the wifi access is the fastest, you still get a tinge of nostalgia as the layout and ambience al­­ways pull you back into a different era.

I am indeed quite curious as to where the list of 100 top kopitiams will come from. Will they be the modern-day kopitiam or the real thing nestled in some small town throughout our country?

The minister has mentioned that tourists prefer to patronise the franchise outlets because of better hygienic conditions. So it is time for the association, set up in 1946, and with more than 20,000 members, to push their mem­bers to adhere to high standards.

And financial institutions should do their part to help them groom kopitiam operators and instil greater professionalism among them.

Instead of a crowded franchise at KLCC, I would rather be in a friendly small town set-up, like Sitiawan, sipping kopi-O while having my roti bakar with kaya and butter and two half-boiled eggs.

Except that I will also have my faithful iPad2 next to me connected to a highspeed wifi while I engage in conversation with the owner, in his white singlet.

I will be sharing YouTube videos with him while he tells me his grandfather stories. And as he browses through The Star, I will show him how the newspaper can talk to him because of iSnap. That, truly, must be a kopitiam that should be on the top of the 100 list.

SUNDAY STARTERS By SOO EWE JIN > Deputy executive editor Soo Ewe Jin wonders why he can no longer take coffee after lunch because it keeps him awake at night, unlike during his growing-up years when he had to take coffee as a nightcap.

Europe: 'Dark clouds on the horizon'

Michael Klein, is the William L. Clayton Professor of International Economic Affairs at the Fletcher School, Tufts University, and a nonresident Senior Fellow in Economic Studies at the Brookings Institution. 

This weekend's meetings of the International Monetary Fund and the World Bank are overshadowed by "dark clouds on the horizon" that threaten the "light recovery blowing in a spring wind," according to Christine Lagarde, the managing director of the IMF.

The main source of the dark clouds is Europe, where recovery remains weak.

More than three years into the crisis, policy options in Europe are limited; fiscal stimulus is out of reach for many countries, and recent efforts by the European Central Bank provided only a temporary respite. In this environment, strong and sustained recovery depends upon rebalancing within Europe, whereby countries' trade imbalances are reduced.

But rebalancing is a two-sided affair. We have all heard the ongoing calls for some European countries to rebalance deficits through painful austerity measures.

Investors to ECB: 1 tillion euros not enough

 

These calls need to be balanced with demands that countries with surpluses also move to rebalance.

In particular, Germany must take advantage of its scope for fiscal expansion to bolster European recovery and to forestall its own slippage towards an economic slowdown.

There are those who argue that the German surplus reflects its productivity growth and labor market reform. These people argue that Germany could only rebalance by stifling its own economic dynamism.
There are three responses to this argument:

Shared rewards: Reforms have made labor markets more flexible in Germany. Innovative policies, such as the Kurzbeit, the short-time working policy, limited the unemployment effects of the crisis.

German unemployment briefly peaked at 8% in July 2009 while the U.S. unempoloyment rate spiked to 10% in October of that year. Despite the soft landing, workers have not fully shared in the benefits of the recovery, and trade unions have been demanding higher wages.

Higher wages for workers would raise their demand for consumer goods, including the products from other euro-area nations.

Shared consequences: German exporters, and German producers of import-competing goods, have benefited from the weak euro.

Since 2008, the German real exchange rate has depreciated by almost 9%, even while its economy recovered relatively strongly from the crisis and its economy was strongly in surplus.

In contrast, over this same period the Swiss franc appreciated 16% -- estimates suggest that had the German real exchange rate tracked the Swiss real exchange rates, German export growth would have been cut in half.

Another major surplus country, China, saw an appreciation of its real exchange rate by more than 10% over this period.

If Germany had a free-floating currency of its own, rather than one whose value is determined by the fate of the full set of euro members, it would have seen an appreciation that would have brought down its current surplus.

Shared experiences: Another surplus country offers a striking recent example of rebalancing: China. In 2007, China's surplus exceeded 10% of its GDP.

The IMF projects that the debt to GDP ratio will fall to 2.3% in 2012, well below the 6.3% forecast published in its World Economic Outlook last year. In contrast, the most recent IMF forecast of the 2012 German debt to GDP ratio, of 5.2%, exceeds last year's forecast of 4.6%.

As a member of the euro area, Germany will not see the natural forces of a currency revaluation bring about a reduction in its current surplus.

But the government has the tools available to rebalance, and foster growth both domestically and more widely in Europe, through a stimulative fiscal expansion.

Investing in Europe? Look north

 

There are other tools available as well, such as policies to promote female labor force participation (which is low relative to other industrial countries) and liberalizing retailing (which could help promote domestic demand), to raise growth and to widen its benefits among its citizens.

Rebalancing needs to occur for both deficit and surplus countries to support and sustain growth during these challenging times.


By Michael W. Klein @CNNMoneyMarkets April 21, 2012: 10:50 AM ET

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How to get the best price of your property's resale value?

Nobody likes to buy a home with something that requires big money to modify or repair

While the adage “location, location, location” is still considered the ideal gauge for your property’s resale value, there are other factors that can still play a part in helping you get the best price when you part ways with your home.

One of the things to consider is the upgrades or renovations that you may have made to the property. While making improvements to a home can be a good thing, there are some additions that can make or break your property’s resale value.

The following are some home upgrades that will dampen your property’s resale value.

Poor renovation

It’s one thing to make renovations to your home – and another thing when those upgrades requires further improvements!

“Nobody likes to buy a home with something that requires big money to modify or repair,” says property investor Kamarul Ariff.

He gives an example of a property he had purchased that had a “badly-renovated roof.”

“The roof obviously had some bad leaks in the past but the renovations were very poorly done by the former owner. Unfortunately, when people go to inspect property, not many check to see if the roofing is in good condition. After all, most homebuyers or investors check out a property when the weather is clear anyway.”

Kamarul recalls that after buying the property, it rained heavily - indoors!

“There were leaks everywhere! When I finally got an expert to check the roof, I discovered that there were badly done patches made to some holes on the roof, which only worsen the leaks.

“In my opinion, it’s better to spend a bit more money and get a good job done than to stinge and get poor workmanship. In the long run, nobody benefits.

“It’ll affect your resale value and the buyer who’s looking for his dream home ends up buying into a financial nightmare.”

P. Lalitha, a home-buyer, shares a similar sentiment.

“The apartment I bought had poor floor renovations in the bathroom. Of course, it was my neighbour who lived below that alerted me of this.”

Upon inspection by an expert, she discovered that the cement used by a previous owner for the flooring was of poor quality.

“Renovations were not just done, they were badly done. So much so that it cost me a fortune to fix them. My advice for future home-buyers? Check every inch of your house. To home sellers, if you want to get the best resale value for your home, get your renovations done by an expert,” Lalitha says.

backyard swimming pool (Photo credit: Wikipedia)

Permanent upgrades

Some homeowners make upgrades to their property for personal gratification without taking into account the fact that they may need to sell it in the future. However, these renovations hardly do anything when it comes to resale value, nor do they make it easy to sell.

“Among them are fixtures such as swimming pools and wall modifications,” says KL Interior Design executive designer Robert Lee.

“Having a swimming pool can increase the price of a home, but it also comes with extra responsibilities that not everyone wants. If you’re a senior citizen and not the active sort, you’d probably need to hire someone to clean and maintain the pool you’d probably never use.”

He also points out that major works done to a property’s structure, such as to its walls, can be hard to undo.

“There was this large family living in two adjacent terrace houses and they made a huge arch in the wall between the two houses. When it came to selling, they had a huge problem!

“They also wanted to sell off the house as soon as possible and refused to patch-up the wall.”

Other structural changes, like turning a three-bedroom apartment or house into a two rooms can also put a damper on resale value, says Lee.

“If you’re selling a two-bedroom apartment and your neighbour is selling a three-bedded one at the same price, which property do you think a buyer will you go for?”

Home-Deco Art Sdn Bhd director Rachel Tam says having a distinct paint job won’t affect a home’s potential resale value.

“Some people paint their homes in all kinds of colours, like a kindergarten,” she chuckles.

“But it won’t affect a property’s resale value. It’s not permanent and can be easily replaced. Besides, the first thing most homebuyers do is give it a new coat of paint anyway.

Unexpected outcome

Some upgrades can be so extreme that they no longer look like what they were initially set out to be.

“We knew of someone who bought a single-storey house for RM250,000 and spent about RM200,000 to build a second level. When he sold it, he only got RM300,000,” says Lee.

“Some renovations that place a property beyond its original architecture will not increase its resale value,” he adds.

Tam notes that some people turn their homes into an office or place to conduct business, which may or may not affect the property’s resale value.

“It depends on how extensive the renovations are. If you’re just converting one room into an office, then it’s fine, as the future owner won’t need to do much or anything at all to convert it back into an ordinary room.

“However, if you’re going to start raring animals or live stock there, which may include additional structures to contain them, then this could be a put-off for potential homebuyers who are looking for a basic place to live.”

By EUGENE MAHALINGAM eugenicz@thestar.com.my

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Putting things into perspective - investment in Malaysian property

Is this anti-foreign investment sentiment justified? Currently, 98% of residential properties are owned by Malaysians while foreigners own only 2% in Malaysia. 

SHOULD Malaysia follow suit just because of Singapore's recent moves to stabilise its property market by increasing stamp duties and stopping rich foreigners from becoming permanent residents?

Singapore's situation is very different from Malaysia. Firstly, in terms of size Singapore is smaller than Perlis, Malaysia's smallest state but its population is 20 times bigger. This is in contrast to Malaysia which has a low population density but large land size.

Secondly, Singapore has been very successful in attracting talents and expatriates for the last 30 years, a route that Malaysia has only started to embark upon.

Foreign interest: The foreigners who are buying properties in Malaysia are no l onger the British but from countries in the region including Singapore, Indonesia, China and South Korea.

 

Between 1970 and 1980, the size of the non-resident population in Singapore doubled.

The trend has continued and non-residents constituted 26.8% and permanent residents 10.2% of the population in 2011, reflecting the highest proportion of foreign workers in Asia.

This small island has already increased its population from four million to 5.2 million in 2011 in just a decade. While there are plans to raise this to 6.5 million within the next 20 years, this may be stalled.

Singapore has managed to increase its share of knowledge workers from 51% in the 1960s to 59% in 1990s through liberal immigration policies, affordable yet comfortable accommodations and house ownership.

Anti-foreigner sentiment began to build up as one in every three persons living in Singapore is a foreigner.

The Government is now able to pull the brakes on foreign property buyers given their past successes. Prime Minister Lee Hsien Loong expected a slower 1% to 3% growth in the Singapore economy and said that “admitting fewer workers means forgoing business opportunities and slower growth.”

Malaysia, on the other hand, is a long way from achieving the 10 million population it plans to attract to Greater Kuala Lumpur from the present six million by 2020. The country has only started to embark on this high income path two years ago.

Lowest paid

According to the Economic Planning Unit (EPU) statistics, expatriates have been falling at a compound annual growth rate of -9% per annum from 2000 to 2008. Expatriates working in Malaysia are among the lowest paid compared with regional peers, according to a HSBC Bank survey.

Is this anti-foreign investment sentiment justified? Currently, 98% of residential properties are owned by Malaysians while foreigners own only 2% in Malaysia.

Statistics show that there is an overhang of property priced below RM150,000 for the past three years.

The foreigners who are buying properties in Malaysia are no longer the British but from countries in the region including Singapore, Indonesia, China and South Korea.

Similarly, Malaysians are snapping up properties, companies and banks in the region as well as in the United Kingdom.

Bank Negara statistics show that there is more money leaving the country than entering in 2011. Through fostering friendlier ties with Asean and Asean+3, Malaysia wants to enter foreign markets in Asean, China, South Korea and Japan.

Malaysian companies want to be regional players. If that is so, we also have to tread carefully on policies when others are entering Malaysian territory.

Who are the real culprits behind the rise in property prices?

If speculation among locals account for rising property prices, then Bank Negara's move to place restrictions on loans and net income instead of gross income would sufficiently contain the price increase.

Bank Negara has been very effective in curbing volatile rise in property prices as seen in the steady and gradual rise in prices of Malaysian versus Singapore house price index. (See chart)

Why are expatriates good for the country? Ultimately, every Malaysian wants to enjoy a higher income per capita.

High-income nation

As Malaysian wages are no longer competitive to China, India and emerging Asean member countries like Vietnam and Indonesia, the only route for the future of the country is to embark on a path towards a high-income nation.

In order to do this, Malaysia needs sizeable talent pool to attract multi-national companies to relocate their outsourcing industries here.

Malaysia needs to attract both returning diaspora and foreign talents because of our very small number of highly-skilled population in contrast to those available in China and India.

Expatriates can provide skills that our local population may not have. If we want our universities and research to be ranked anywhere within the top 50 globally, we need foreign talents. Foreign businessmen create jobs when they invest here.

The nation has made the right moves in reducing the cost of doing business, liberalising equity requirements for listed stocks as well as property. All these have gradually made an impact on foreign investors. Last year, Malaysia moved into the international investors' radar and the nation's foreign direct investment hit an all-time high of RM33bil.

To backtrack on its more liberal policies now would simply douse the renewed foreign interest in Malaysia.

Historically, every time Malaysia tightens its property policies, it triggers a downturn in property values. “When Malaysia removes restrictions, investments take a spike. When Malaysian reinstates restrictions on foreign investments, the market will over-correct,” said a Singapore analyst.

Look out for Malaysia Property Incorporated's (MPI) solutions to increasing residential property in the price range of RM500,000 to RM1mil in next week's column.

COMMENT By KUMAR THARMALINGAM - Kumar Tharmalingam is the CEO of MPI. MPI is a public-private initiative set up by the EPU to promote and facilitate foreign investment in Malaysian real estate. MPI's raises Malaysia's profile in the international investment radar through constantly updating foreign investors on Malaysia and real estate information.

Penang to raise price cap for foreigners

By HAN KAR KAY hankk@thestar.com.my

GEORGE TOWN: The Penang Government has proposed to raise the cap for foreign purchases on all properties in the state.

Chief Minister Lim Guan Eng said the current limit of RM500,000 would be raised to RM1mil, except for landed properties on the island that would be raised to RM2mil.

He added that the RM500,000 imposed on permanent residents would be retained.

Lim said this is to give locals priority to purchase cheaper properties, and to stop speculation.

“The state hopes to implement the new ruling by June or July. There will be exceptions and avenues for appeal which must be submitted to the state government on a case-by-case basis.

“We are willing to listen to the Federal Government’s objections, and at the same time, get feedback from and opinions from non-governmental organisations, property developers, foreigners and the public,” he told reporters yesterday.

Lim said the state was the first to come up with such a proposal.

Real Estate and Housing Developers’ Association (Penang) chairman Datuk Jerry Chan when contacted said the proposal was a drastic move but good as it would protect local interests.

On April 14, StarBiz reported that the Government was considering raising the minimum floor prices of houses foreigners are allowed to buy to RM1mil.

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Military superpowers show ?

IT might be big business in the developed and industrialised countries but the defence industry is flexing its muscle with greater intent when it comes to displaying, developing and selling their wares to countries in Asia.

That was aptly displayed at the recent Defence Services Asia (DSA) expo, where 850 companies from 45 countries participated in the four-day event, showing the variety of arsenal from handguns to jetfighters.

The reason for such a display boils down to what drives the industry spending. And it's no surprise much of that is taking place in Asia.

Abdul Harith: If we can champion the local industry, local original equipment manufacturers would benefit from the spillover effects.>>

A report by IHS Jane's, a defence industry publication, has forecast China's military spending will outstrip the combined total of Nato's top eight members Britain, France, Germany, Italy, Turkey, Canada, Spain and Poland excluding the United States by 2015.

Furthermore, growth in spending is taking off not just in China but also in South-East Asia, which has spurred its spending.

A report by the Stockholm International Peace Research Institute shows that the region increased its defence spending by 13.5% last year, to US$24.5bil. The figure is estimated to skyrocket to US$40bil by 2016, with the report noting that Malaysia's defence spending has also risen.

As observers have noted, Asia will outspend Europe this year. The London-based International Institute for Strategic Studies (IISS) says in the think tank's “The Military Balance 2012” annual report that China's spending has fuelled other growing Asian states into pouring more funds into their military and defence.

According to the IISS, Asia, excluding Australia and New Zealand, spent US$262bil on defence in 2011 with China alone accounting for US$89bil compared with Nato's European members, which spent about US$270bil.

Five contracts and 15 memorandums of understanding worth a total of more than RM4bil were signed between the Defence Ministry and several local and foreign companies in conjunction with the DSA.
Five contracts worth RM357.2mil were inked between the ministry with four local companies and a Russian firm.

With military superpowers like the United States and Russia flexing their military might, smaller Scandinavian countries were seen displaying their sophisticated equipment and gadgetry at Asia's largest arms exhibition.

Life-size replicas of an AugustaWestland helicopter and a Eurofighter Typhoon attracted crowds in droves, along with military equipment and weaponry that were available for tryouts (sans the artillery).

The new behemoth in the sky, the Airbus Military A400M tactical airlifter, also made a stop at the Royal Malaysian Air Force (RMAF) Subang airbase in conjunction with the exhibition.

The exhibition has also set the stage for Malaysian companies to showcase their growing expertise within the sphere of the defence industry.

A full-sized replica of the Eurofighter Typhoon parked on the PWTC parking lot is one of the main attractions of the DSA 2012.

 

At the DSA, visitors were treated to demonstrations by commandos and static displays occupying a floor space of 40,000sq m.

Tucked in a corner of the show, British-based defence, aerospace and security company BAE Systems is slowly but definitely shifting its focus to the Asean region and the wider Asia-Paficic.

Vice-president for Malaysia and Indonesia Mark Burgess tells StarBizWeek that the company had recently shifted its entire operations from Singapore to Malaysia in a bid to establish its regional hub in Kuala Lumpur.

“We see far greater opportunity in the Malaysian market both in terms of sales and partnerships. For the last 20 years, Malaysia has been a far more successful market than Singapore. Strategically, coupled with a number of reasons, it makes much more sense to move our office here,” he says.

For the record, BAE Systems is vying to supply its combat aircraft, Eurofighter Typhoon, to the Government, which is currently considering to retire the ageing fleet of Russian made MIG-29N under the Multi Role Combat Aircraft (MRCA) programme.

It is looking to supply a fleet of 18 to 36 of fully-equipped Typhoons to the RMAF, of which it had submitted a formal proposal that comprise a 100-page list of technologies that the company was willing to transfer as well as names of local and overseas companies that were willing to participate in the process.

With the re-establishment of Malaysia-Britain bilateral relations in almost 20 years following a visit by British Prime Minister David Cameron, the Typhoon deal is seemingly a catalyst to strengthen critical trade relationship between both countries.

“We are not new to this market, as BAE Systems had helped with the start up of SME Aerospace Sdn Bhd by contracting it to manufacture Hawk aircraft pylons with the technical assistance of BAE Systems back in 1992,” Burgess says.

He says BAE Systems is also central to the creation of Composites Technology Research Malaysia Sdn Bhd, which benefited from the transfer of technology from BAE and has since transformed itself to a full-fledged composite component manufacturer for the aviation industry.

“BAE System and its consortium of manufacturers had bought about £800mil worth of goods and services from Malaysia. Based on current plans, another £1.5bil of expenditure is expected to be channelled into Malaysia over the next five years,” he says.

Burgess says BAE Systems and part of its consortium are already a very important trade and investment partners with Malaysia, and the MRCA programme will build the relationship further via offset policies that are imposed by the Ministry of Defence.

Offset agreements are often an integral part of international defence contracts, where a supplier often agrees to buy products from a local country in order to win the country as a customer, while in return reinvest the money into the country via the purchase of components, services and technology transfer.

Another party benefiting from technology transfers and joint ventures (JV) is DRB-Hicom Defence Technology Sdn Bhd (Deftech). It has a successful JV with several big names including Turkish firm FNSS, which manufactures several types of armoured personnel carriers (APC).

FNSS is a JV established by Nurol Holding of Turkey and 49% owned by BAE Systems Land & Armaments LP.

When met on the sidelines of DSA 2012, DRB-HICOM head for automotive and defence Abdul Harith Abdullah says the conglomerate is looking for more industrial collaborations and this is just only the beginning of a bigger picture to drive the nation's defence industry.

“The 8x8 wheeled APC is the starting point for us to make our presence felt in the international arena. The defence budget for Malaysia is not extremely big in any way and to survive in the industry, we could not limit ourselves to just land-based businesses,” he points out.

With the collaboration with FNSS, doors are opened to Deftech to acquire valuable technological know-how and intellectual property to enable it to design and manufacture APVs on their own in the future.

Deftech is also keen to stretch its wings to go into the aviation and naval industries. Last year, Deftech was awarded a RM7.55bil contract from the Government to supply 257 units of APCs in 12 variants.

The Malaysian army might require as many as 500 such vehicles to replace the soon-to-be obsolete Condor and Sibmas-type APCs that were in use since the early 1980s.

In 2002, Deftech collaborated with FNSS to supply 211 of ACV300 to the country.

“Our aim is to be at the forefront of the national defence industry and not just rely on trade. If we can champion the local industry, local original equipment manufacturers would benefit from the spillover effects, and we are hoping for a really big success to expand internationally,” he says.

At the DSA 2012, DefTech signed a cooperation agreement with India's Tata Motors to develop and promote Tata's high-mobility vehicles.

Last year, DRB-Hicom signed an industrial cooperation teaming agreement with Sweden's SAAB AB as part of a collaboration to supply airborne early-warning and control system to the RMAF.

Meanwhile, Destini Bhd is also vying for a piece of the pie in the defence industry, with an ultimate aim to grow its business outside Malaysia.

Destini, a maintenance, repair and overhaul service provider for safety survival and rescue equipments, is also involved in the trading of military supplies. It was awarded a RM7.9mil contract to supply the army with anti-tank 40mm rocket-propelled grenades.

Destini group managing director Datuk Rozabil Abdul Rahman says the defence industry is not an easy business to venture into.

“The spending in the local defence industry is shrinking, and that is the reason why we desire to expand overseas. For the other second liners, you should think big and expand and not just rely on local contracts,” he says.

By CHOONG EN HAN han@thestar.com.my