Malaysian education is too Western-centric, ignorance of Asian values, etc!

A Merdeka of the mind

Our education is too Western-centric, aping Western universities and showing ignorance of Asian and African contributions to knowledge.

AS we celebrate 55 years of political independence, we may note the blessings of peace and prosperity in our beloved land. But we also need to reflect on some unfulfilled dimensions of independence.

If independence is autonomy or freedom from the control of another nation, then we Malaysians are hardly free.

The basic assumptions of our political, economic and educational systems are dictated by Western, especially Anglo-American, hegemony. Politically we are free but enslavement of the mind has hardly ceased.

A slave mentality or Western/Euro-centrism need not be a conscious option. It is rooted in our psychology of dependence on, and blind reverence for, everything Western.

Syed Hussein Alatas calls it “the captive mind”. For Ward Churchill, modern intellectual discourse and higher education are “White Studies”.

Hundreds of years ago, the coloniser seized not only land but minds, monopolising information sources and undermining indigenous know­ledge.

For Frantz Fanon, the colonised was “elevated above his jungle status in proportion to his adoption of the mother country’s cultural standards”.

Ngugi wa Thiong says “it is the final triumph of a system of domination, when the dominated start singing its virtues”.

So 55 years after independence, our public figures are still enamoured with the colonial tune. Their intellectual discourses have three tendencies.

First, the Western worldview and its assumptions are blindly aped. Second, we are ignorant of Asian and African roots of knowledge and Eastern contributions to civilisation. Third, there is hardly any critique of Western theories in the light of our own realities.

Take Western-centrism in our educational institutions. Yusef Progler finds that in whatever field of study, a course in most Asian and African universities follows a similar path.

“It will first identify the great white European or American men of each discipline and then drill their theories and practices as if these were universal”, while ignoring knowledge from other civilisations.

Government recognition of foreign degrees is skewed in favour of Anglo-American awards. Eminent citadels of learning in Asia and Africa are largely ignored.

The favoured destination for JPA-sponsored postgraduate scholars is Europe or the United States. The external examiners and visiting professors are mostly from Britain, the US or Australia. Asian scholars are generally excluded from such honours or offered lesser terms.

Intellectual grovelling before Western experts remains as deeply ingrained as during the British Raj. A few years ago, Cherie Blair was invited to lead the arguments in a case before our courts even when scores of eminent local lawyers were available.

In any prestigious lecture series, the guest of honour is invariably a Westerner, sometimes of dubious credentials. For example, Tony Blair was invited by a local NGO to deliver a lecture.

But when Mugabe and Bashar were scheduled to come, concern was expressed, and rightly so. The crimes of Western leaders may be ignored, but we jump up to take a principled stand against Asian and African miscreants.

Our legal system remains British-oriented. In the English fashion of Austinian positivism, the concept of law is tied to the commands of the political sovereign even though most Asians and Africans regard religion and custom as part of the seamless web of the law.

The Civil Law Act continues its worship of outdated British precedents even though we have greater affinity with many other constitutional systems like India’s.

The Legal Profession Act continues to permit British graduates to be called to the Malaysian Bar without undergoing a bridging course. A key component of the course should be a study of the Malaysian Consti­tution.

In our law faculties, legal education is as much a colonial construct as during the Raj. The course structure and content, the book list and the icons are mostly Western.

A typical course on jurisprudence in Malaysia often begins with Plato, Aristotle, Locke, Bentham, Pound, Weber, Ehrlich, Durkheim, Marx, etc.

The Mahabharata, the Arthashastra, the Book of Mencius, the Analects of Confucius and the treatises of Ghazali, Ibn Rushd, Jose Rizal, Benoy Kumar Sarkar, Yanagita Kunio and Naquib al-Attas are not included.

Chinese, Indian and Persian universities predated European ones and provided paradigms for early Western education. Yet our universities ignore centuries of enlightenment in China, India, Japan, Persia and West Asia.

It is as if all things good and wholesome originated with Western civilisation and the East was, and is, an intellectual desert. The truth is other­wise.

In science, Galileo, Newton and Einstein illuminated the firmament but not much is known about Al-hazen and Nasir al-Din al-Tusi. Western chemistry was preceded by Eastern alchemy, algebra had African roots.

The philosophy of Plato, Aristotle, Kant, Sartre and Goethe can be matched by Ghazali, Ibn Rushd, Mulla Sadra, Shenhui, al-Mutanabbi and Kalidasa. Durkheim’s and Weber’s sociology must compete with Ibn Khaldun’s.

Freudian psychology had its corrective in Buddhist wisdom. The Cartesian medical model has its Eastern counterpart in ayurvedic, unani and herbal methods.

Very few know that Arab Muslims were central to the making of medieval Europe.

A slavish mimicking of Western norms of government, law and economics prevents us from tackling our own problems like poverty and unsustainable development.

Our attitude leaves us vulnerable to many predatory policies of Western-dominated institutions and processes. Transnational corporations dominate our economies.

Many Asian and African nations choke under the debt stranglehold. The West can bring down our economies with currency speculation, hedge funds, piracy of indigenous resources and trade boycotts as new forms of tyranny.

Yet we are too scared or ashamed to express our own views. Basing our life on other nations’ opinions is slavery.

As Aug 31 approaches, we must resolve to free our minds from Western intellectual hegemony. A Merdeka of the mind will put us on the path to that.

Comment
Prof Shad Saleem Faruqi
> The author wishes all readers Salam Lebaran and Salam Kemerdekaan.

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Riding the hi-tech waves

Penangite to return home soon as R&D director after 37 years abroad

GEORGE TOWN: A small electric fan and transistor radio were the only ‘luxury items’ his family possessed, but today, US-based Yong Kit Chin is a high-tech success story.

The 56-year-old National Instruments (NI) R&D director recalled that back then, his father owned a small shoe store in George Town.

The business was barely enough to feed the family and pay the workers’ wages.

“On occasions, when my father couldn’t sell a single pair of shoes and he had very little cash for groceries, we’d have only vegetarian meals,” he said.

Yong said the family didn’t own a car or a telephone and they had their first refrigerator and television set when he was 17.

“Hence, my siblings and I were brought up to be thrifty and we vowed to work hard to improve our lot.

“We couldn’t afford tuition classes, so we learned to be independent and to work harder than other kids,” he said.

When he was about 10, Yong became very interested in technology.

“Later, I became fascinated by electricity and would dismantle and re-assemble the rice cooker, electric iron and radio,” he said in an e-mail interview.

He remembered being “so thrilled” when his uncle gave him a RM5 reward for repairing a transistor radio’s corroded battery terminal.

The former Chung Ling High School boy did well in his school exams and was among the state’s top MCE achievers invited by then Chief Minister, Tun Dr Lim Chong Eu, to a tea reception at his official residence to celebrate the achievement.

He left the country in the mid-70s after securing a scholarship from Columbia University in New York and has been living overseas for 37 years.

“It was a totally new experience as I moved from the lovely and peaceful Penang island to the hustle and bustle of Manhattan,” he said.

Upon graduating with Master and Bachelor degrees in Electrical Engineering, he worked as a Hewlett-Packard production engineer in Singapore.

After over three decades of technical, business and managerial experience in the high-tech industries abroad, Yong is coming home.

He joined NI, a pioneer in modular and software-based instrumentation in Austin, last year.

Yong will return to his home state by the end of September as R&D director at NI’s facility here.

“I am very excited as I finally have the opportunity to work and live in Penang since I left for studies in the United States.

“I am willing to be a mentor to young engineers in Malaysia and share my experiences with them,” he added.

Yong said the thing he missed most about Malaysia was Penang’s delicious hawker food.

“The experience of savouring a plate of freshly prepared ‘char koay teow’ and sipping a cup of ‘teh tarik’ while chatting with friends is just priceless,” he added.

By CHRISTINA CHIN sgchris@thestar.com.my  

Related post:
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 Supporting Engineering and Science Education Worldwide

Buy Malaysian shares, sell Facebook stocks?

Malaysia ranked in top spot by Morgan Stanley analysts for third quarter investment

PETALING JAYA: The local bourse may see renewed interest among investors as robust domestic demand and government spending on infrastructure drive earnings among companies.

Morgan Stanley Research analysts said in a recent report that the country was ranked at the top spot for the third quarter based on valuation, profitability, earnings and performance.

“Malaysia's attractive ranking is driven by a combination of attractive dividend yields, under ownership levels, improvement profitability and relatively strong performance momentum,” they said.

They added that the country's current dividend yield of 3% was higher than its three-year average. They said that according to EPFR Global, a funds flow and asset allocation data provider, investors continue to position the Malaysian stock market 210 basis points underweight compared to the MSCI Asia ex-Japan benchmark.

They said profitability in terms of return-on-equity basis has improved to 12.7%, higher than the three-year average. “One quarter relative price performance for MSCI Malaysia has also been strong as it was the second best performing market in Asean,” they said.

While MSCI South-East Asia consensus earnings growth estimates had been revised down by 23 basis points last week, MSCI Malaysia earnings were revised up by 54 basis points.

“MSCI Thailand estimates was revised down the most, by 41 basis points, followed by MSCI Singapore 40 basis points, MSCI Indonesia 10 basis points and MSCI Philippines 4 basis points,” they said.

They said consensus growth estimates for 2012 were 14.4% for Malaysia, Indonesia (9.3%), Philippines (8%), Singapore (3.1%) and Thailand (14.2%).

On a year-to-date basis and relative to the performance of MSCI Asia ex-Japan, MSCI Malaysia declined 1.5%, MSCI Indonesia contracted 7.2%, MSCI Thailand gained 9.2%, MSCI Singapore rose 12.4% and MSCI Philippines jumped 14.7%.

On a sectoral basis, Malaysian utilities was revised up 94 basis points while industrials was revised down 35 basis points.

Meanwhile, The Institute of Chartered Accountants in England and Wales said in a report that although growth prospects for Asean had fallen substantially in line with the deteriorating conditions around the world, “Malaysia is still going fairly strong as domestic demand remains relatively buoyant.”

It said that like other countries such as Indonesia and the Philippines, the basic story of rising middle class incomes in Malaysia persisted despite diminished prospects for investments due to lower profits for exporters.

It forecasts growth to slow down to an annual average of 3.8% in the second half (after growing 5.1% in the first half) due to external headwinds.

“Elections this year or next year bear some political risk, but in the event of a peaceful outcome, growth should rise by 3.5% in 2013. A recovery of its trading partners should see the country's gross domestic product rise by 4% in 2014,” it added.

By FINTAN NG  fintan@thestar.com.my

Is Facebook director signalling to others to rush out of Facebook stocks?

19.16  -0.85 / -4.26%

SAN FRANCISCO: Peter Thiel was the first investor to take a gamble on Facebook Inc. Now some people are wondering whether, in selling most of his stake, the Facebook board member is signaling to others that it's time to rush for the exits.

Thiel, the co-founder of PayPal who invested in Facebook in 2004, sold roughly $400 million worth of Facebook shares last week as the first restrictions barring insider selling were lifted.

The sales, which were conducted as part of a stock sale plan that Thiel entered into in May, have dealt another blow to Facebook's reputation among some investors in the wake of a rocky debut that has wiped out roughly 50 percent of its market value. And it has raised questions about whether Thiel's move conflicts with his responsibilities as a Facebook director.

"It's a vote of no-confidence from a board member," said Max Wolff, an analyst at Greencrest Capital.

"If he wants to serve primarily as a self-interested investor, that's fine. But then you can't be the on the board. Boards of directors are not made up of people whose primary interests are in their checkbook," said Wolff, who said he believed Thiel should resign from the board.

A spokesman for Thiel declined to comment.

"From a shareholder standpoint, if a VC is going to be on the board you'd like to think that they still have a large position in the company and that they're interested in making it be more valuable," said Walter Price, a portfolio manager at RCM Capital Management which does not own Facebook shares. "It sends a mixed message when they sell most of their stock and they still stay on the board," he said.

The 44-year-old Thiel still owns roughly 5.6 million shares of Facebook, worth around $107 million at Tuesday's closing price of $19.14 per share.

That stake means he still has "skin in the game," said James Post, a professor of management at Boston University who specializes in corporate governance issues.

"The worst you can say is that it may reflect perhaps a questionable judgment about getting rid of all these shares at a time when such big questions are looming about Facebook's future," said Post. But he said he believed that Thiel's sales do not disqualify him from serving on the board.

The stock sales are the latest in a seemingly endless string of setbacks and controversies to plague Facebook since its highly anticipated IPO in May.

The world's No. 1 online social networking website, with roughly 955 million users, experienced brisk demand for its shares when it was a private company and became the only U.S. company to debut with a market value of more than $100 billion.

But technical glitches with the Nasdaq stock exchange marred the stock's first day of trading and concerns about the company's slowing revenue growth have pressured the company's shares since then.

Thiel, who has an undergraduate degree from Stanford University in philosophy and a law degree from Stanford Law School, was among Facebook's first believers.

He invested $500,000 in Facebook at a $5 million valuation in September 2004, seven months after the company was created by Mark Zuckerberg in a Harvard dorm room. In 2006, one of Thiel's investment firms, the Founders Fund, participated in a $27.5 million funding round along with Greylock Partners, Meritech Capital Partners and Accel Partners.

The Facebook investment is by far the most successful of Thiel's investments, which have also included stakes in LinkedIn Corp , Yelp Inc and SpaceX.

Thiel sold 16.8 million shares of Facebook at the IPO for $38 a share, for total proceeds of roughly $640 million. And he sold a significant number of shares through a private transaction in 2009.

Facebook, which declined to comment on Thiel's stock sales, said in its prospectus in May that the company believes Thiel should serve on the board because of his "extensive experience as an entrepreneur and venture capitalist, and as one of our early investors."

It's common for early investors, such as venture capitalists and angel investors, to have seats on the boards of companies they've backed. And venture firms typically distribute shares of the company to their limited partners following an IPO, so that the venture fund's investors can get a return on the investment.

But there are no "hard and fast rules" for when those investors should exit the board after a company's IPO, said Nick Sturiale, a partner at venture capital firm Jafco Ventures.

"It's usually a discussion between the CEO and the board member and the partnership whether they stay, and for how long," he said.

John Doerr, a partner at venture capital firm Kleiner Perkins Caufield & Byers, is on the board of Google Inc and was on the board of Amazon.com Inc until 2010 - both companies that Kleiner funded.

If the fund that a director represents sells its stake after the IPO, the director should also consider stepping down, said Charles Elson, a University of Delaware finance professor specializing in corporate governance.

The topic sparked a lively debate on Tuesday, as venture capitalists and technology company executives unleashed a rash of Twitter messages and blog posts to defend or criticize the insider sales.

Fred Wilson, a principal with Union Square Ventures, noted in a post on his personal blog that insider selling is to be expected following an IPO.

"Those who took the risk of losing all the capital they bet on 20 year old Mark Zuckerberg are entitled to their return," wrote Wilson.

Earlier report from print edition

WASHINGTON: If you bought Facebook shares in the May initial public offering (IPO) and held onto them, by Monday you would have lost more than half your investment and not see any encouraging signs of making your money back.

Three months after the largest tech share issue ever on US markets, Facebook fell to a new low below US$19 (RM60) a share, compared to the US$38 (RM120) underwriters charged for the 421 million shares they sold.

Although the stock bounced back to close at US$20.01, IPO investors were still holding huge losses with not much hope of a quick reversal, analysts said,.

Some key investors were still cashing out on Thursday and Friday, billionaire Peter Thiel, who invested in Facebook first in 2004, sold off nearly 80% of his huge holding, according to a filing with the Securities and Exchange Commission on Monday.

Thiel's average price for 20.6 million shares was US$19.73 still a handsome profit for such an early backer of the website, but not a demonstration of confidence in the company's potential to rebound.

Facebook raised US$16bil when it went public on May 18, giving it a nominal market value of a stunning US$104bil and raising hopes of a new dotcom boom on US markets.

The company's business promise was huge marketing access to the 900 million users of the world's leading social network and data about them that marketers prize.

But analysts said that the large number of shares sold, the high IPO price, and the overall skittishness of investors in a soft overall economy, had undermined market support for the company.

“They just put way too many stocks out at once... before the market was ready to absorb so many shares,” said Michael Pachter of Wedbush Securities.

The price struggled around the US$30 range in the weeks after the issue, with the underwriters undergoing a beating and lawsuits for allegedly having privately lowered their earnings forecasts for the company days before the IPO.

The shares then fell to the low-US$20s range at the end of July when Facebook issued an uninspiring quarterly earnings report.

And last Thursday the price plummeted when a ban on pre-IPO investors such as Thiel selling their shares was lifted many apparently sold.

That lockup applied only to 270 million shares. A further 1.2 billion shares, those controlled by Facebook employees, will be freed from lockup on Nov 14.

While undoubtedly Facebook founder Mark Zuckerberg and other top figures will hold on to most of their shares, anything added to market liquidity is, at this point, downward pressure on the price.

Analysts are debating whether the stock is now a bargain based on Facebook's earnings potential.

“Over the long term, the trade is about the fundamentals of the business, and the fundamentals remain very positive,” Pachter told AFP. He called the problem of a share oversupply “just noise”.

Social media expert Lou Kerner also downplayed the selling pressure.

“We remain very positive,” he said. “Facebook will figure how to monetise mobile, the dollars will find their way.”

New York University finance professsor Aswath Damodaran was more sceptical. After Facebook's quarterly earnings report, he cut his original US$27 a share “intrinsic value” estimate to below US$24.

“The earnings report was a disappointment to markets, revealing less revenue growth than anticipated and an operating loss.” But at US$19, he still is not sure of the investment's merit, given the potential overhang of sellers.

“Facebook remains a company with vast potential (their user base has not shrunk), no clear business plan (is it going to be advertising, product sales or something else) and poor corporate governance,” he wrote on his blog Musings on Markets.

“Eventually, the intrinsic' truths will emerge, but it may be a long time coming.”

Another longtime bear on the stock, Trip Chowdhry of Global Equities Research, retains deep doubts even at US$19 a share. “Facebook doesn't have the technology to monetise social actions,” he said. “With what we know right now, the price should be in the low teens.” - AFP

Citadel urges U.S. to okay Nasdaq's Facebook IPO payback plan

NEW YORK: Citadel LLC urged U.S. regulators to approve Nasdaq OMX Group's $62 million compensation plan for firms harmed by Facebook's May 18 glitch-ridden initial public offering.

Citadel's market making unit bought and sold over $3.8 billion worth of Facebook stock during the IPO and "incurred losses protecting retail investors from the problems caused by Nasdaq," the firm said in a letter on Tuesday to the Securities and Exchange Commission.

Nasdaq filed its all-cash plan with SEC in July.

Regulations cap the exchange's liability at $3 million a month for problems caused by technology issues, and the Facebook accommodation plan would temporarily raise that amount, though not to a level anywhere near the upward of $500 million lost by the major retail market makers in the IPO.

"While the extent of exchange immunity from liability for mishandling orders is an important and complex public policy issue, we submit that any commission consideration of this issue should be addressed at a later time," Citadel said.

Citadel lost around $30 million due to the IPO, a person familiar with the situation previously told Reuters.

Wednesday is the deadline for interested parties to submit comment letters to the SEC on Nasdaq's proposal.

The other top retail market makers involved in the IPO were Swiss bank UBS AG, Knight Capital Group, and Citigroup's Automated Trading Desk.

UBS said it lost more than $350 million when the lack of timely order confirmations by Nasdaq caused UBS's internal systems to re-enter orders multiple times.

A spokeswoman for UBS, which has said it may take legal actions against Nasdaq to recover the full extent of its losses, said the firm had no comment.

Knight said it lost $35.4 million due the IPO. A spokeswoman at Knight said it is still unclear as to whether the firm will formally comment on Nasdaq's reimbursement plan. A source familiar with the firm's plans told Reuters Knight is likely to accept Nasdaq's offer.

A spokesman for Citi, which sources have said lost around $30 million, could not confirm if the firm would submit a comment letter.

The all-cash $62 million reimbursement plan is $22 million larger than Nasdaq originally proposed. The prior proposal was made up mostly of trading rebates, which drew loud protests from other exchanges and market makers.

A Nasdaq spokesman could not immediately be reached for comment. Spokesmen for New York Stock Exchange operator, NYSE Euronext, and No. 3 U.S. equities exchange, BATS, said their companies did not plan to file comment letters with the SEC. A spokesman for No. 4 exchange, Direct Edge, was not immediately available for comment.

In a regulatory filing on August 3, Nasdaq said it is the subject an investigation by the SEC, as well as eight lawsuits by investors and one by trading firms, for its role in Facebook's problematic debut.

While Nasdaq said it believes the lawsuits are without merit, it said it expects "to incur significant additional expenses in defending the lawsuits, in connection with the SEC investigation and in implementing technical changes and remedial measures which may be necessary or advisable." - Reuters

Facebook at half-price: Which way now? 

WASHINGTON: If you bought Facebook shares in the May IPO and held onto them, by Monday morning you would have lost more than half your investment -- and not see any encouraging signs of making your money back. 

Three months after the largest tech share issue ever on US markets, Facebook fell to a new low below $19 a share, compared to the $38 underwriters charged for the 421 million shares they sold.

Although the stock bounced back to close at $20.01, IPO investors were still holding huge losses with, analysts said, not much hope of a quick reversal.

Some key investors were still cashing out -- on Thursday and Friday, billionaire Peter Thiel, who invested in Facebook first in 2004, sold off nearly 80 percent of his huge holding, according to a filing with the Securities and Exchange Commission Monday.

Thiel's average price for 20.6 million shares was $19.73 -- still a handsome profit for such an early backer of the website, but not a demonstration of confidence in the company's potential to rebound.

Facebook raised $16 billion when it went public on May 18, giving it a nominal market value of a stunning $104 billion and raising hopes of a new dotcom boom on US markets.

The company's business promise was huge: marketing access to the 900 million users of the world's leading social network and data about them that marketers prize.

But analysts said that the large number of shares sold, the high IPO price, and the overall skittishness of investors in a soft overall economy, have undermined market support for the company.

"They just put way too many stocks out at once... before the market was ready to absorb so many shares," said Michael Pachter of Wedbush Securities.

The price struggled around the $30 range in the weeks after the issue, with the underwriters undergoing a beating and lawsuits for allegedly having privately lowered their earnings forecasts for the company days before the IPO.

The shares then fell to the low-$20s range at the end of July when Facebook issued an uninspiring quarterly earnings report.

And last Thursday the price plummeted when a ban on pre-IPO investors such as Thiel selling their shares was lifted -- many apparently sold.

That lockup applied only to 270 million shares. Another 1.2 billion shares, those controlled by Facebook employees, will be freed from lockup on November 14.

While undoubtedly Facebook founder Mark Zuckerberg and other top figures will hold on to most of their shares, anything added to market liquidity is, at this point, downward pressure on the price.

Analysts are debating whether the stock is now a bargain based on Facebook's earnings potential.

"Over the long term, the trade is about the fundamentals of the business, and the fundamentals remain very positive," Pachter told AFP. He called the problem of a share oversupply "just noise".

Social media expert Lou Kerner also downplayed the selling pressure.

"We remain very positive," he said. "Facebook will figure how to monetize mobile, the dollars will find their way."

New York University finance professsor Aswath Damodaran was more skeptical. After Facebook's quarterly earnings report, he cut his original $27 a share "intrinsic value" estimate to below $24.

"The earnings report was a disappointment to markets, revealing less revenue growth than anticipated and an operating loss."

But at $19, he still is not sure of the investment's merit, given the potential overhang of sellers.

"Facebook remains a company with vast potential (their user base has not shrunk), no clear business plan (is it going to be advertising, product sales or something else) and poor corporate governance," he wrote on his blog Musings on Markets.

"Eventually, the 'intrinsic' truths will emerge, but it may be a long time coming."

Another longtime bear on the stock, Trip Chowdhry of Global Equities Research, retains deep doubts even at $19 a share.

"Facebook doesn't have the technology to monetize social actions," he said. "With what we know right now, the price should be in the low teens."

Malaysia energy efficient vehicle hub from China?

Three China-based firms to hold talks on making M'sia energy efficient vehicle hub

 In June, it was reported that Chery Malaysia, which is part of China’s Chery Automobile Co, would be setting up a plant in Malaysia.

PETALING JAYA: Three China-based automotive companies are close to making Malaysia their energy efficient vehicle (EEV) base of operations for the region, a source familiar with the matter said.

“Three potential Chinese automotive companies have been identified to manufacture right-hand-drive EEV vehicles for the region and representatives from the Government will be holding talks with them later this month,” he told StarBiz.

The source added that the meeting was necessary to “validate” the capabilities of the Chinese auto firms.
“We need to know if they are serious and have the capabilities of making Malaysia a hub for their EEV operations.”

According to reports, the Government, in line with intentions of liberalising the local automotive sector, is seriously looking to turn the country into an EEV hub for the region.

It has also been widely speculated that various incentives will be announced under the revised National Automotive Policy to attract foreign automotive companies with EEV capabilities.

EEVs are vehicles that meet a set of defined specification in terms of emission level and energy usage including fuel-efficient vehicles, hybrid, electric vehicles and alternatively fuelled vehicles such those using compressed natural gas, liquefied petroleum gas, biodiesel, ethanol, hydrogen and fuel cell.

In June, it was reported that Chery Malaysia, which is part of China's Chery Automobile Co, would be investing RM250mil in the country over the next five years, which would include the setting up of a production plant in Malaysia that would serve as a hub to make its right-hand-drive cars for the region.

The source added that many Chinese automotive companies had the know-how and expertise to develop hybrid vehicles.

“They are especially capable of manufacturing hybrid batteries at competitive prices. There is a good possibility that the Government may consider making the country into a hub for hybrid batteries.”

Apart from China-based companies, the source also said renowned automotive players from the United States, Japan and Europe had also expressed interests in making Malaysia their EEV hub.

He said the US-based company, which already had operations in Thailand, was looking to make Malaysia its hub for passenger EEVs.

“Thailand is more of a pick-up (truck) market but the growth potential for passenger cars is better in Malaysia.

“The American car company is looking to set up a hub here to help fast-track its global small car plans within Asean and beyond.”

By EUGENE MAHALINGAM eugenicz@thestar.com.my

Malaysian car prices to drop gradually?

Revised NAP likely to include policy to reduce car prices over next 3-4 years

PETALING JAYA: The revised National Automotive Policy (NAP) will include a policy that will address the gradual reduction of car prices in the country, said an industry source.

What happens to second-hand cars? Naza Group of Companies joint executive chairman SM Nasarudin SM Nasimuddin was quoted in a recent report as saying: if prices dropped, the resale value of a car would then plummet but the loan amount owed to banks (on cars already bought) would be unchanged.

“The Government, through the Malaysia Automotive Institute (MAI), had engaged us in the past few months to discuss on the matter,” he told StarBiz.

“There will be a policy that will tackle the gradual reduction of car prices in Malaysia. Details of this policy are expected to be made public in the near future,” he added.

The source said the policy would outline a structure to gradually reduce car prices over the next three to four years.

The Government has been considering it (the reduction of car prices) in the revised NAP and it was only a matter of time for this issue to be addressed,” said the industry source.

It is a known fact that the prices of cars are high in Malaysia compared with Thailand.

However, it has been argued that the cost of vehicle ownership in Malaysia is still among the most competitive in the Asean region, primarily due to the subsidised fuel prices, cheaper road tax and insurance premiums.

In a recent news report, MAI chief executive officer Madani Sahari was quoted as saying that Malaysia had the second lowest cost of vehicle ownership in the region after the Philippines.

According to him, the cost of vehicle ownership in Malaysia, compared to Thailand and Indonesia, was lower by 39% and 12% respectively.

In terms of petrol prices, Thailand was the highest, followed by Singapore, Indonesia, Vietnam and the Philippines, Madani said in the news report.

Meanwhile, on the point of car prices being slashed overnight via the reduction of vehicle excise duties, industry observers argue that the impact would be negative for existing buyers rather than first-time ones.

“If you're a first-time buyer, it would be like a dream come true as it means you can now afford to buy a car that was too expensive previously,” said one industry observer who requested anonymity.

“For the existing buyer, it would mean that the resale value of the car would have diminished overnight,” he added.

It is also argued that the sudden drop in vehicle prices would have a severe impact on second-hand car dealers.

Those servicing existing car loans will also be severely affected.

In a local news report recently, Naza Group of Companies joint executive chairman SM Nasarudin SM Nasimuddin was quoted as saying that if taxes were scrapped, consumers would have to overpay bank loans taken for their vehicles.

In the report, Nasarudin claimed that if prices dropped, the resale value of a car would then plummet but the loan amount owed to banks would be unchanged.

By EUGENE MAHALINGAM  eugenicz@thestar.com.my/Asia News Network 

Related post:
Malaysia energy efficient vehicle hub from China?

Asian banks review US ties

Cost will rise when tough new rules on derivatives come into force

SINGAPORE: Asian banks are reviewing relationships with their US counterparts to avoid being caught by tough new American rules on derivatives trading that are about to come into force.

From the start of next year, non-US banks that annually deal in at least US$8bil worth of products such as interest rate swaps with American counterparties are expected to be subject to new derivatives rules in the Dodd-Frank Act.

In practice that means they will need to register as swap dealers with US regulators and abide by their rules on capital requirements and risk management, all of which adds to costs.

“If I have the choice, I just don't want to deal with a US person',” said a treasury manager at a regional Asian bank.

“We're still looking at our compliance situation, but it may mean that in future I need to ask all my US counterparties if there's a way they can change where they book their trades with us.”

A “US person” as defined by the regulation is a relatively broad term, intended by regulators to apply to any person or entity that will have an effect on American commerce.

The Dodd-Frank Act was spurred by the 2008 financial crisis and aims to impose tighter supervision of cross-border derivatives trade following incidents such as the loss-making trades by the socalled “London Whale” at JPMorgan's UK office.

But some lawyers say even entities that deal in a relatively small amount of derivatives could be forced to execute trades on an electronic platform and put them through a central clearing house acceptable to American regulators.

That has prompted a knee-jerk reaction from some Asian institutions to consider cutting all their derivative trading relationships with US counterparties, anxious to avoid higher trading costs and the spotlight of American regulators.

In reality, few banks were likely in the long term to cut all trading with US banks given that they provided a lot of liquidity to the market, and it would be hard to remain active in the global markets without them, he added.

In Hong Kong, Singapore and Japan combined, around US$143.1bil of interest rate derivatives were traded every day in April 2010, according to the most recent figures from the Bank of International Settlements.

While still small compared with the US$1.2 trillion traded in the UK and the US$642bil in the United States, the turnover has almost tripled from the US$50.8bil recorded in 2004.

American banks are big players in global over-the-counter derivatives markets, with JPMorgan Chase & Co, Citigroup Inc, Goldman Sachs Group Inc, Morgan Stanley and Bank of America Corp accounting for about 37% of all outstanding contracts, according to the International Swaps and Derivatives Association.

Asian players have a smaller share, although Singapore banks DBS Group Holdings, Oversea-Chinese Banking Corp and United Overseas Bank Ltd account for a large part of the S$282bil of interest rate swaps cleared at the Singapore Exchange since it launched its clearing service in November 2010, analysts estimate.

Lawyers say US banks operating in Asia are now rethinking how they structure themselves and handle their trades.

“US groups that want to remain competitive in the non-US market will need to develop a structure that enables them to trade in a way that does not scare their counterparties away,” said Theodore Paradise, a partner at law firm Davis Polk & Wardwell in Tokyo. - Reuters

Eurozone woes tilt financial power in Asia’s favour

LONDON: As European banks retrench to recover from the global financial meltdown, they are finding ready buyers in Asia for everything from loans to entire insurance and broking operations.

There are other tell-tale signs of a shift in power: this year's two biggest initial public offerings after Facebook were launched not in the United States or Europe, but in Malaysia.

Yet perhaps what is more striking is that, with one or two exceptions, Asian financial firms are not doing more in Europe itself to capitalise on the eurozone's festering debt and banking crisis.

Take China. The economy has more than doubled in size in five years. It has some of the biggest banks in the world.

And its appetite for snapping up natural resources is undiminished: witness last month's US$15.1bil agreement by state oil company CNOOC Ltd to buy Canada's Nexen Inc, the biggest foreign acquisition to date by a Chinese company.

When it comes to the financial sector, however, the glass is half-empty, not half-full, said Andre Loesekrug-Pietri, chairman of A Capital, a China-Europe investment fund.

“There's a front-cover story every other month about China buying up the world, but China is still a very small player in international M&A,” he said.

David Marsh, co-founder of a forum in London that connects central banks and sovereign wealth funds with banks and asset managers, said the West no longer had a monopoly on innovation and dynamism in financial services.

But China was playing a long game, biding its time and waiting for bargains. With plenty of bankers and traders being made redundant, Chinese firms have the chance gradually to build up teams and expertise rather than making giant acquisitions.

“They'll be much more clever than simply buying moribund banks at high prices: they'll be buying people,” Marsh said.

“What we're seeing now is just the precursor of a much bigger shift that will take place over the next 10 years, but it won't happen in one fell swoop.”

China has not been completely asleep on the acquisitions front.

Two Chinese private equity funds are on the final shortlist of bidders for the asset management arm of Franco-Belgian financial group Dexia, a deal that could be worth 500 million euros or more.

And CITIC Securities has agreed to buy CLSA Asia-Pacific Markets, a highly regarded Hong Kong-based brokerage, from its French parent, Credit Agricole SA, in a two-stage transaction worth US$1.25bil.

The deal is symbolic. Whereas CITIC is China's biggest brokerage, Credit Agricole is battling mounting losses in Greece, the epicenter of the eurozone crisis, where it owns the country's sixth-largest bank, Emporiki.

“Distressed banks selling good assets always happens in a crisis like this. Banks which don't want to raise capital by issuing new equity end up selling their offshore assets, and typically they sell the crown jewels,” said Ken Courtis, founding partner of Themes Investment Management and a former vice-chairman of Goldman Sachs Asia.

A clutch of other European financial institutions is also beating the retreat in Asia.

Britain's Royal Bank of Scotland has offloaded some of its Asia-Pacific investment banking operations to Malaysia's CIMB Group Holdings Bhd, while ING is selling its US$7bil Asia insurance business. Both banks had to be bailed out by their governments during the crisis.

Integrating independent-minded CLSA would be one of the biggest challenges for CITIC, Courtis said. Chinese financial institutions in general have a narrow bench of executives with the right linguistic and overseas management expertise - one reason why they are initially beefing up their offshore presence in more-or-less familiar Hong Kong, he said. Reuters

Julian Assange condemns WikiLeaks witch-hunt

Assange calls for an end to the 'witch-hunt'

Julian Assange emerges from Ecuador's London embassy to call on the US to end its 'witch-hunt' against WikiLeaks.

WikiLeaks founder Julian Assange has appeared on the balcony of the Ecuadorean embassy to ask US President Barack Obama to make his country "do the right thing" and "renounce its witch-hunt against WikiLeaks".

"The United States must dissolve its FBI investigation," he said. "The United States must vow that it will not seek to prosecute … our staff or our supporters. The US must pledge before the world that it will not pursue journalists for shining a light on the secret crimes of the powerful.

To my family and to my children, who have been denied their father; forgive me. We will be reunited soon. 

"There must be no more foolish talk about prosecution of media organisations, be they WikiLeaks or The New York Times."

"End the witch-hunt" ... WikiLeaks founder Julian Assange makes a statement from the balcony of the Ecuador embassy in London. Photo: Reuters

This was the closest Mr Assange came to asking that the US promise not to seek his extradition should he go to Sweden to face questioning over claims of sexual misconduct. He has not been charged and denies the allegations.

Earlier, one of his spokesmen had said that Mr Assange would consider accepting extradition to Sweden if the US would publicly pledge not to seek his extradition.

Mr Assange and WikiLeaks outraged American authorities with the publication of thousands of confidential diplomatic cables.

WikiLeaks founder Julian Assange gestures after his statement to the media. Photo: AP

The WikiLeaks founder has been sheltering in the Ecuadorean embassy since June because he fears that if the UK sends him to Sweden, the Swedes might hand him over to America and he may face a potential death penalty related to espionage allegations.

Wearing a shirt and tie and sporting a new crew-cut, Mr Assange demanded that the US return to its "revolutionary values" before it lurched over a precipice into which it dragged "all of us": "A dangerous and oppressive world in which journalists fall silent under the threat of prosecution and citizens must whisper in the dark”.

The US “war on whistleblowers” must end, he said, making a forceful call for the release of Bradley Manning, an American soldier detained over espionage claims for allegedly leaking material to WikiLeaks.

To loud cheers from dozens of supporters - held back by more than 40 police - Mr Assange said the United Nations had found that Mr Manning had endured months of "torturous detention" at Quantico and was about to have his 815^th day in jail without trial.

“The regular maximum is 120 days,” Mr Assange said, calling Mr Manning "the world’s foremost political prisoner".

He issued a series of thank yous, including “to the people of the US, the UK, Sweden and Australia who have supported me even when their governments have not”.

He  thanked all the South American nations that have rallied behind Ecuador in outrage over a letter that has been seen as a threat by the British Foreign Office to use police to storm the Ecuadorean embassy to retrieve Assange: “Argentina, Bolivia, Brazil, Mexico, Nicaragua, Peru, Venezuela”.

Mr Assange also thanked supporters who had come out for a vigil in the dark last Wednesday night when police entered the building that houses the embassy.

"Inside this embassy after dark I could hear teams of police swarming up through the building through its internal fire escape". But he said he knew supporters were watching outside.

He finished with,  "To my family and to my children, who have been denied their father; forgive me. We will be reunited soon".

South American nations on Sunday backed Ecuador's decision to grant asylum to Mr Assange, urging dialogue to end the crisis pitting Quito against London.

Foreign ministers of the Union of South American Nations, meeting in Ecuador's biggest city Guayaquil, expressed "solidarity" with Quito and urged the parties "to pursue dialogue in search of a mutually acceptable solution," according to a joint statement.

Karen Kissane, London with AFP  Newscribe : get free news in real time

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