China sets up air defence zone over East China Sea, a strategic move

http://english.cntv.cn/program/china24/20131123/104125.shtml

The Chinese government on Saturday issued a statement on establishing the East China Sea Air Defense Identification Zone.

The move, however, provoked anger in Japan, which accused China of "one-sidedly" setting up the zone that covers the disputed Diaoyu islands, and described the zone as "totally unacceptable."

Having no intention to generate tensions, China's move is to uphold its own legitimate rights and safeguard what has always been its own.

As pointed out by many military experts, the establishment of the air zone is a necessary, rightful and totally legitimate measure taken by China in protecting its sovereignty and providing air security.

Actually, the establishment of the air zone is not only perfectly legitimate, but also in line with current international practice.

An air defense identification zone is established by a maritime nation to guard against potential air threats. Since the 1950s, more than 20 countries, including the United States, Australia, Germany and Japan itself, have successively established such zones.

China's Defense Ministry spokesman Yang Yujun has stressed that the zone "has no particular target and will not affect the freedom of flight in relevant airspace."

Since the zone is both in line with the UN Charter and in respect of relevant international laws and customs, China has every right to decide on its own whether to set up such zones, without getting permission from any other countries.

And Japan should know better than to continue its overreaction and learn to accept the "unacceptable."

On Saturday, US Secretary of State John Kerry also voiced concerns over the zone, fearing it might "constitute an attempt to change the status quo in the East China Sea," and increase tensions and risks in the region.

But is it China to blame for upsetting the status quo over the islands?

The status quo of the Diaoyu islands, which had lasted for decades under the principle of shelving the dispute, has already been broken more than one year ago when the Japanese government launched a unilateral move to "purchase" and "nationalize" the islands.

The farce of "buying" the Chinese territories is a sign of Japan's expanding nationalism and growing belligerence, which should be identified as the real danger in the region.

Instead of "increasing tensions and creating risks," the setup of China's air zone could contribute much to regional peace and security by curbing the increasing rampancy of Japan's right-wing forces, as well as the continuous and dangerous provocations of Japanese politicians, which even Washington should be vigilant against.

The White House has repeatedly said that the United States does not take a position on territorial disputes between China and Japan, a neutral stance the Chinese government has appreciated.

But keeping a blind eye to the dangerous tendency in Japan could prove to be risky and might even jeopardize the US national interests.

Air defense identification zone a strategic decision: experts

The establishment of the East China Sea Air Defense Identification Zone is a strategic decision in accordance with China's current national security situation, experts said.

"Setting up the air defense identification zone can effectively safeguard national sovereignty and security," said Zhang Junshe, a military expert, adding that the move conforms to the fundamental spirit and principle of international law.

The Chinese government issued a statement on Saturday morning on establishing the East China Sea Air Defense Identification Zone. It also issued an announcement on the aircraft identification rules and a diagram for the zone.

According to the announcement, China will take timely measures to deal with air threats and unidentified flying objects from the sea, including identification, monitoring, control and disposition.

"The move also accords with common international practices as the United States and Canada took the lead around the world in setting up such zones starting in the 1950s," said Xing Hongbo, a military and legal expert, adding that more than 20 countries have set up air defense identification zones since then.

"Various aircraft with high altitude and high-speed flying capabilities have been broadly used around the world with the development of aviation technology, and it's hard for China to identify an unidentified flying object and adopt countermeasures immediately," said Meng Xiangqing, a military expert.

The establishment of the zone can help set aside early warning time to ascertain an aircraft's purpose and attributes and adopt measures to protect air defense security, Meng said. - Xinhua

Typhoon-hit Philippines: China Sends Hospital Ship, Others jostling for powers and dominance as Philippines welcomes former invaders

 

(Reuters) Following Typhoon Haiyan's devastating effect on the Philippines, the Chinese government is sending its hospital ship, the "Peace Ark," to aid displaced victims. 

 

Members of the medical crew stand at the inpatient room inside their Chinese Navy hospital ship Peace Ark before its departure from a navy base in Zhoushan, east of Shanghai, China, on a relief mission to the Philippines, on Thursday, Nov 21, 2013. Military flags fluttered in the wind aboard China's navy hospital ship Peace Ark as it began a goodwill mission to the Philippines on Thursday, nearly two weeks after the Southeast Asian country was struck by a devastating typhoon that killed more than 4,000 people. -- PHOTO: AP

In response to Typhoon Haiyan, which has claimed the lives of over 4,000 people, and has left millions homeless in the Philippines, China’s Ministry of Foreign Affairs announced that the country will be sending a hospital ship to aid victims who have lost homes and family members. The so-called “Peace Ark” is expected to set sail on Thursday, however, 16 members of the Red Cross Society of China were dispatched on Wednesday to areas with the largest devastation due to weather conditions.

“The 51-member emergency medical team sent by the Chinese government will set off within the next few days,” Foreign Ministry Representative Hong Lei said during a press conference on Wednesday. “The Red Cross Society of China will send an international rescue team to the disaster-hit areas in two groups. China will also dispatch the naval hospital ship, "Peace Ark," to join the relief effort in the disaster-hit areas.”

The Chinese government has been subject to heavy criticism for a lack luster effort to help typhoon victims in the aftermath of the Nov. 8 disaster. The relationship between China and the Philippines has been strained following territorial disputes over the South China Sea, The New York Times reported. China offered the services of its “state-of-the-art hospital ship” on Monday, which the Filipino Health Ministry graciously accepted.

With one of the largest economies in the world, second only to the United States, China announced that it would be donating $200,000 when the disaster initially occurred. The country recently changed its donation to $1.6 million, following an outcry from both international and domestic entities. Publications that usually support the communist state, such as the government owned People’s Daily, and its publishing asset the Global Times, have come out in protest against Beijing’s lethargic response.

“China has been following closely the typhoon disaster in the Philippines. It is reported that the disaster has injured about 20,000 people and left the disaster-hit areas lacking in doctors and medicine,” Lei added. “We have got the confirmation after coordinating with the Philippines and will send relief workers to the disaster-hit areas to provide humanitarian medical assistance in the spirit of healing the wounded and rescuing the dying. It reflects the Chinese people's goodwill toward the Philippine people.”

Contributed By Justin Caba

Philippine aid controversy shows powers jostling for regional dominance

Haiyan, the strongest typhoon to make landfall in recorded history, has killed over 3,976 people in the Philippines. But from the start, the size of the rescue package sent to Haiyan victims has been seen as a race.

Besides the initial emergency fund of $100,000 and the $100,000 in aid offered by the Red Cross Society of China, the Ministry of Foreign Affairs of China has pledged another 10 million yuan ($1.63 million) of rescue material to Manila on Thursday.

Washington is not shy to promote its rescue efforts to one of its important allies in Southeast Asia, with the aircraft carrier George Washington dispatched and $20 million offered, plus marines and sailors to distribute food and medicine. Japan also sent a high-profile rescue team including warships and 1,180 Self-Defense Forces members. Both countries have extensive experience in disaster relief work.

Rescue effort of Haiyan has particular political concern beside natural sympathy to the victims. Attention to the disaster relief to the typhoon stricken Philippines has reflected the rivalry among major powers for the regional dominant role.

Since Washington's pivot to the Asia-Pacific region in 2011, the South China Sea, among other areas, has witnessed escalating tension.

Alongside China's growing regional influence, Washington has to stress its ability to provide security to its allies to secure its influence in Southeast Asia. It becomes more urgent after President Barack Obama missed two important regional meetings in October and questions were raised about US commitment to its traditional allies.

Though on a humanitarian aid mission, the arrival of aircraft carrier George Washington has a strong symbolic meaning, as it signals US military presence and deployment ability in this strategically important region.

Japan, increasingly isolated in East Asia, is taking rescue efforts to strengthen its diplomacy in Southeast Asia, which Prime Minister Shinzo Abe has emphasized since the beginning of his current term. It is also a way for Japan to demonstrate its status as a regional power.

China's aid to the Philippines was criticized as "meager" and not matching its economic power. In the future, China will face increasing pressure to take more responsibilities in regional affairs.

For both the government and the public, there is a learning curve. Foreign ministry spokesperson Qin Gang remarked on Thursday that China's rescue aid to the Philippines is not a "one-time deal" and will correspond to the post-disaster situation.

Domestically, the Chinese public is tilting against sending rescue aid overseas. An online survey conducted by Sina News, following Chinese government's announcement of further aid, indicated that more than 65.3 percent of the people taking the poll believed the additional aid amount was more than enough, while 9.4 percent thought the figure was less than appropriate.

Some hold that sending aid to foreign countries is premature for a country still plagued by its own development problems. There are also voices opposing political factor affecting humanitarian support.

However, the case with Manila, a staunching ally of Washington's pivot policy, is more complicated not just because of the lasting row over the disputed Huangyan Island.

The Philippine government's incompetent performance in the hostage crisis in 2010 which killed eight Hong Kong tourists, the Aquino administration's stubborn refusal to apologize and failure to deliver proper compensation for that incident, and the Philippine Coast Guard shooting dead a Taiwanese fisherman this May all soured the Chinese public's perception toward their neighbor in the south.

Sending military force for overseas humanitarian aid is still a relatively new mission for China. The security dilemmas sparked by the expanding military footprint is a concern for Chinese authorities.

China's rise will be bound to be a bumpy process, and the controversy surrounding disaster aid to the Philippines attests to that.

Contributed By Guan Yan
The author is a commentator with the Global Times

Japanese troops welcomed back in typhoon-hit Philippines

 

Japanese troops welcomed back in typhoon-hit Philippines

Tacloban (Philippines) (AFP) - More than 1,000 Japanese troops were offered a warm welcome in the Philippines Friday as they prepared to launch relief operations across typhoon-devastated islands that were brutally occupied by Japan seven decades ago.

The troops were aboard three vessels that arrived at the central Philippine port of Cebu on Thursday night, an official at the Japanese embassy said, in what is the biggest overseas deployment of Japan's military since its defeat in World War II.

They will join a huge international relief effort to help survivors of Super Typhoon Haiyan, which flattened dozens of towns through the central Philippines on November 8, leaving at least 5,500 dead or missing.

"We have already delivered small amounts of aid but the main effort will begin after a meeting with Philippine forces today," Takashi Inoue, deputy director of public affairs with the Japanese embassy in Manila, told AFP.

Japan's contribution to the humanitarian effort comes as a newly-confident Tokyo looks to make its mark again on the world order, after decades in which the idea of its troops on foreign soil was complete anathema.

In many parts of Asia, memories linger of the brutality of invading Japanese soldiers prosecuting an expansionist romp through the region in the name of the emperor.

In a twist of historic irony, the Japanese troops are returning to areas of the Philippines that saw Japan lose one of history's biggest naval battles to the US-led Allies.

Eulalia Macaya, 74, who survived World War II and the typhoon, said she remembered being terrified by Japanese troops as a little girl.

"We were hiding in holes dug under the floor of our homes," she recalled. "The Japanese soldiers were patrolling but we couldn't see much of them. We could only see their boots. We were so afraid."

But Macaya, who was waiting for treatment at a temporary field clinic set up by the Japanese government in Tacloban, the typhoon-ruined capital of Leyte, said she was very pleased the former occupier was back.

"I don't hold any grudges anymore. There's no more bad blood between us," she said.

Tente Quintero, 72, a former vice mayor of Tacloban, said that at a time of dispute with an increasingly emboldened China over the ownership of South China Sea islands, Filipinos now saw the Japanese as friends and allies.

He declared himself "happy" there were Japanese boots back on Philippines soil.

"There's nothing like two allies living in harmony with each other," he said.

Beatrice Bisquera, 91, said the devastation and hardships Haiyan had brought were worse than anything Filipinos suffered under Japanese military rule.

"During the Japanese occupation we just hid in the mountains. Now, there's nowhere to hide," she told AFP.

General Roy Deveraturda, Commanding General of the Philippine armed forces Central Command, said the Philippines was thankful for the Japanese typhoon support, and past animosities were no longer a concern.
"This is a different world. We have seen the generosity of their donation," he told AFP.

"They have already showed remorse. Their help is most welcome."

For some Japanese relief workers already on the ground in Leyte, their country's participation in the international relief effort alongside the United States is an indication of Japan's very different relationship with the outside world.

"Nearly 70 years ago, we were enemies. Now we're friends," said Joji Tomioka, a doctor helping to coordinate a civilian medical team.

"We cannot forget the past, but we must learn from history so that we will not do the same thing again."

Old is Gold

Historical buildings offer unrealized value 

Refurbished heritage properties in Jalan Lau Ek Ching in Ipoh. One is for sale at RM2mil.  

What price is one willing to pay to own a piece of history?

According to valuation surveyor and property consultant Choo Ah Sit, sources have revealed that the former OCBC Bank building on Lorong Hang Jebat in Malacca has been attracting attention from foreign buyers. Some Singaporeans are said to have offered between RM22mil and RM25mil for the property.

However, since foreign buyers are required to obtain approval from the state’s Foreign Investment Committee, which can be a time-consuming process, the owners have offered the early mordernist style building to a local company for RM17.5mil.

The total land area for the five lots covers some 7,739 sq ft with a 3½-storey building with a total built-up area of about 23,500sq ft. Crunching the numbers, if the offer of RM17.5mil goes through, the price of the property works out to RM2,261 per sq ft.

“With that kind of money, you can construct a new 15-storey building, but not in the core zone of the Unesco heritage site, of course,” Choo said.

Property valuer Choo Ah Sit says the prices for heritage buildings have gone ‘crazy’ since Unesco recognised it in 2008.

Having observed the property market in Malacca for the last 33 years, Choo’s honest assessment of the market is, in his own words, “crazy”.

“The current trend now is, ‘You like, you pay. Don’t ask about the price’,” Choo declared.

From a map showing the Jalan Tun Tan Cheng Lock-Jalan Hang Jebat area (famously known as the Jonker Street area) and its immediate lanes, there are no less than 20 properties available for sale, but there are few signboards to indicate the owners’ intentions.

“In some cases, someone who has taken a fancy to a building will simply ask around for the owner’s contact. Surprisingly, word spreads fast. This is how some transactions are concluded,” revealed Choo.

The steep jump in prices, said Choo, came in tandem with the declaration of the area as a Unesco heritage site.

“From the 1970s to the 1990s, there was no interest in these buildings. One was because of the Rent Control Act that saw rental rates for buildings built before World War II being fixed at RM100 to RM200 per month. The returns were not enough to motivate owners to perform the necessary maintenance, resulting in some of these structures falling into a sorry state of disrepair. Only when the Act was abolished and the free market allowed to take over, did prices start to move upwards by anywhere between 30% and 50%,” Choo said.

For an idea of how much investors are expected to fork out at current market prices, Choo revealed that asking property prices in the heritage zone in Malacca can start from RM600psf to as high as RM1,600psf, depending on location factors such as accessibility and traffic flow.

Choo cites three interesting cases.

One property located along Jalan Tun Tan Cheng Lock made a record sale of RM1,221psf while prices for two single-storey shop houses in Jalan Hang Kasturi appreciated from RM980,000 to RM1.75mil in a short span of nine months.

Choo surmised this may be caused by the property changing hands over a short period of time. He also does not rule out factors such as speculation and the undervaluing of property.

.  
A pre-war shop with a restaurant for sale in Lorong Panglima, Ipoh, for RM1.5mil.

Another plum lot is a two-storey pre-war building occupying 1,717sq ft on Jalan Tun Tan Cheng Lock that is asking RM2.8mil or RM1,630psf.

“The high prices are mainly due to a fixed supply and it will keep rising because of this. Where foreign buyers are involved, it may have something to do with the prestige of owning a piece of property in a Unesco heritage site. The other thing is our favourable exchange rate,” said Choo of the dramatic prices.

Over in Penang’s Georgetown, which received the Unesco heritage designation at the same time as Malacca, Jennifer Yeoh, 47, a real estate agent for the past five years, said the appreciation for old buildings had been foreseen by some businessmen who transformed these premises into restaurants, hotels and retail outlets as early as a decade ago.

Case in point is Gurney Paragon on Gurney Drive. Standing together with the brand new mall is the 88-year-old St Joseph’s Novitiate.

In 2004, the 10-acre parcel of land was sold to Hunza Properties for RM97.86mil, or roughly RM250psf back then.

Today’s prices have, of course, risen significantly.

In Yeoh’s listings, for example, there is a row of seven units on Lebuh Clark each occupying 650sq ft going at RM1.2mil a unit or RM1,846psf. Over on Jalan Irving, a two-storey bungalow with a built-up area of 3,964sq ft is going for an asking price of RM4.5mil or RM1,135psf. On Beach Street (Lebuh Pantai), the owner of a two-storey shop house covering an area of 4,475sq ft has put the property up for sale at RM1,005psf.

“The trend is not to buy them singly but to purchase maybe a row of seven units at a time so that bigger commercial projects can take place,” says Yeoh.

She reckons buyers in this category are also antique appreciators in a way. In some of Yeoh’s listings, there is still old furniture from the post-World War II era inside.

Over in Ipoh, head of business development for Oriental Realty, Gladwin Agilan said the interest in pre-war and heritage buildings started in 2008 when a group of local businessmen began buying properties on Jalan Raja Ekram, Jalan Lau Ek Ching and Lorong Panglima and converting them into watering holes and eateries.

History, said Agilan, 37, was the main selling point. He cites Lorong Panglima as an example.

“In the past, this was known as Concubine Lane, formerly a red light area. Tin miners were said to keep their mistresses there, away from the public eye, in these very houses. Over time, international media and local historians played a part to stoke interest in the area.

With the influx of visitors who have found the architecture and nostalgia an ideal spot for wedding photography, local authorities were prompted to repair infrastructure like drainage and other utilities,” Agilan said.

Over 10 years, Agilan has seen property prices for pre-war buildings in Ipoh starting from as low as RM150,000 to RM180,000 and appreciating to a current price of RM550,000 to RM600,000.

“In our records, the last transaction for a pre-war building was at RM950,000. Today, offers have reached RM1.1mil,” he said.

In his current listings, a refurbished two-storey pre-war building measuring about 900sq ft on Panglima Lane is going for an asking price of RM800,000, which works out to an auspicious RM888psf.

The first floor is already tenanted, but the upper floor can be adapted into a homestay. Over in Jalan Lau Ek Ching, where the famed Bricks and Barrels watering hole is located, the current asking price for any one of the refurbished buildings covering 1,900sq ft on this row is RM2mil, about RM1,052psf.

Agilan explained the intention of most owners is not to restore but adaptive reuse. First on the agenda is the electrical rewiring, plumbing, roofing and flooring.

Walls are usually in the form of cement skreed and if the original floors are of timber, these will usually be replaced with double volume metal decks for safety and functionality. Renovation costs for such projects are usually in the range of RM100,000 to RM150,000.

According to Agilan, Ipoh is a veritable trove for heritage building hunters as there are no less than 2,000 units over 80 to 100 years old scattered in seven main areas.

The buildings can be found on Jalan Sultan Iskandar, Jalan Sultan Yusuf, Jalan Silang, Jalan Bandar Timah, Jalan Othman Talib, Jalan Bijih Timah and the two streets mentioned earlier.

However, Agilan reckons the chance to own a property in this market segment requires a lot of conviction.

“The owners really have a lot of holding power. There are cases where offers have had to wait between six months to a year before getting a reply. The oft-received response I always get from the owners is ‘Not now’ when it comes to the question of selling their property. Understandably so, as some of them are ancestral homes,” said Agilan.

But mindsets, observed Agilan, are slowly changing with the younger generation.

“In the 1980s, during the lull in tin prices, many moved to Kuala Lumpur. Back then, these properties had not reached their full worth yet as buyers did not know what to do with them.

“However, the economic revival in Ipoh has changed things and given people new ideas so this is a very good time to sell, and buy,” concluded Agilan.

- Contributed  by story and photos by Grace Chen The Star Metrobiz

The new Beijing beckons

 

Customers with bags containing first day purchases from a H&M fashion collection designed by French fashion designer Isabel Marant at a window display at a H&M store branch in Beijing, China. — EPA

Here, you are surrounded by optimistic and enthusiastic young people with the zeal to do well not only in China, but in the globalised world.

I JUST took a short trip to Beijing to attend a conference on women. It has been seven years since my last trip and 28 years since my first. In 1985, China was gingerly opening up to the world. People still wore blue Mao jackets and rode around mostly on bicycles. There were few hotels of the standard we were used to in Malaysia.

Today, so little of that Beijing remains. Tall glittery skyscrapers abound. Shopping malls carry every type of international luxury brand and people dressed as if they had just walked out of the pages of Vogue China that just celebrated its 100th edition by commissioning the photographer Mario Testino to shoot the entire issue.

Sitting at the French bakery chain Comptoirs du France, I saw a fashionable young couple walk by with their miniature dog. The dog wore a Chanel sweater....

When I arrived at the vast modern Beijing Capital airport, a young volunteer from the conference received me. She was a graduate student at Beijing University, spoke perfect English and was extremely efficient in getting me to my hotel and comfortably settled.

In fact, throughout the conference, a whole bevy of eager young volunteers shepherded us through the programme with remarkable efficiency, politeness and charm. Whenever a special request was made, they followed through until it was fulfilled.

I also met some impressive young female entrepreneurs and corporate leaders. There is now a generation of young Chinese who had been educated abroad and who are returning to start their own businesses or head companies.

The head of McKinsey in China is a Beijing-born woman as is the head of SK China, South Korea’s third largest company. Additionally, young women are using their cosmopolitan education to start businesses. The organiser of the conference was a 27-year-old former chess champion born in Chengdu.

Another 27-year-old has combined the experience of her education at both a Swiss finishing school and Harvard Business School to start a business giving etiquette lessons to Chinese wanting to venture out into the world beyond their own country. They have an acute sense that to succeed in this globalised world, they need to discard provincial habits and tastes.

The most impressive person I met, however, was Zhang, a taxi driver. I hopped into his taxi at my hotel and asked him to take me to Panjiayuan, the flea market. Taxis in Beijing are very clean and neat except that they tend to smell of cigarettes. But they are safe and as long as you get someone to explain to the taxi driver where you want to go in Mandarin, you will get there in one piece.

So I was not expecting Zhang to turn round and wish me a good afternoon. It turned out Zhang spoke pretty decent English. When I asked him why, he said he decided to learn it because he wanted to communicate with his international passengers and he loved to practise with them.

Indeed, Zhang proved to be a gem, not only did he take me to the flea market and wait until I was done but he also took me to find some other items I was looking for, drove me around Tiananmen Square so I could take photos and then took me back to my hotel, all the while chatting merrily in English.

(Some were however a bit cynical about Zhang, that he should by coincidence have picked me up that day. Apparently, there are no such coincidences in China.)

China does still have many problems, Beijing’s terrible pollution being just one. And no doubt there are huge gaps between the cities and the countryside. But there are enough eager young educated and entrepreneurial Chinese today ready to take the lead in almost everything, both domestically and perhaps even internationally. The socialist slogans are now found only on posters you can buy at the flea market.

For a few days, I had a break from home news because there is no Facebook or Twitter in China. It was nice to be with optimistic and enthusiastic young people wanting to do so much, instead of the angst-filled navel-gazing we indulge in back home and the thousands of ways we find to bring people down.

We seem to think that our country is special when we should be worrying about how this giant country only a few hours away is poised to leave us in the dust, despite our headstart.

I did meet one young Malaysian currently working in Shanghai who wants to come home to start a new IT enterprise. It was so refreshing to meet someone who is still eager to invest in his own country. I just hope that our daily nonsense does not crush his eagerness.

Contributed by Marina Mahathir

> The views expressed are entirely the writer’s own.

Bank Negara Malaysia new ruling to curb interest capitalisation and developer interest bearing housing loan schemes

Fee ling the heat: Although the guidelines on the prohibition of the DIBS is not surprising, the new rule on using the net selling price to determine the loan- to-value ratio is a negative surprise to some analysts.

PETALING JAYA: A new circular from the central bank that took effect last Friday will pile more pressure on an already hard-hit property sector, even if its merits are likely to be felt in the long-term, analysts and industry executives said.

In a bid to make the property market sustainable, the new rules have put the brakes on interest capitalisation schemes (ICS) and the developer interest-bearing scheme (DIBS).

It also calls for the use of the net selling price of a property as the benchmark for obtaining bank loans, which raises the amount to be paid upfront.

Alliance Research’s banking analyst Cheah King Yoong said the measures were “more onerous” than anticipated and posed downside risks to his 9% loan growth estimate for the banking sector next year.

“Although the guidelines on the prohibition of the DIBS was not a surprise, the new rule on using the net selling price to determine the loan-to-value (LTV) ratio is a negative surprise to us.

“While it is difficult to gauge the impact on banks, the fact that this new rule applies to all property financing, including first-time home buyers, means that property buyers’ affordability will be affected, and this will lead to lower property loan growth,” Cheah said in a report yesterday.

“We believe the latest policies illustrate the sheer determination of the authorities to contain the growth of household debt.

“These measures, together with potential rate hikes in 2014, fiscal tightening by the federal government and subsidy rationalisation next year, could further drag on loan growth in the retail segment, temporarily leading to a rise in credit costs, and dampen investor sentiment on the banking sector,” he added.

The circular prohibits financial institutions from granting end-financing facilities to individuals or non-individuals for the purchase of property offered under an ICS, including the DIBS.

Financial institutions are also barred from granting a bridging facility to finance a property development that offers ICS.

According to Alliance Research’s Cheah, this effectively removes any alternative incentives that developers might concoct to replace the DIBS.

“Nonetheless, our channel checks show that for the banking groups under our coverage, property loans with the DIBS only made up 1% to 3% of their outstanding mortgages,” he said.

Affin Bank is the exception, with some 7% of its mortgage loanbook comprising loans tied to the DIBS.

“Given that property loans with the DIBS are immaterial to overall outstanding mortgage loans as well as new mortgage loans approved, we do not expect the restrictions to have a significant impact on the banking sector,” Cheah said.

Public Bank has the highest exposure to housing loans at 56% of its gross loans, followed by Alliance Bank with 55% and Hong Leong Bank, 46%, company data showed.

Another key item on the circular requires banks to calculate the LTV ratio based on the net price of a property instead of its gross price.

To illustrate, a property with a list price of RM1mil, rebate of 5% and 90% financing would incur a down payment of RM50,000 after discount.

Under the new regime, the down payment increases to RM95,000 because the 90% loan will be computed using the discounted price tag of RM950,000.

While property executives expect a slowdown in sales, they believe that genuine buyers will remain undeterred.

Mah Sing Group Bhd group managing director and CEO Tan Sri Leong Hoy Kum told StarBiz via email that demand for properties would continue to be robust, especially among those buying to own or for long-term rental income.

“There is still a large supply-demand gap as supply growth for properties has been on a decreasing trend since 2003, with Malaysia’s supply growth in the second quarter of this year at only 0.8%.

“The fundamentals driving the property market’s growth in recent years have not changed, for example a younger population leading to new household formation, a rising middle-income group, the supply-demand gap and stable employment.

“Initiatives in Budget 2014 may remove the speculative element, but not the fundamentals,” he said.

Leong noted that the lending environment was still conducive, with low interest rates and banks offering BLR minus 2.4%, from BLR minus 2.1%-2.2% a year ago.

Mah Sing had stopped offering the DIBS for most of its launches since the start of the year. None of its projects in Iskandar Malaysia feature the DIBS.

-  Contributed by John Loh The Star./Asia News Network

Related posts:
1. Increase transparency in property prices
2. Property gain tax won't hurt genuine buyers
3. New tax rate on property to keep away flippers

Increase transparency in property prices

Companies factor in freebies into the cost of the property

 

The marketing tactic of offering lifestyle-oriented freebies is often quite effective when it comes to high-end premium homes

DEVELOPERS often offer sales gimmicks and marketing ploys like free legal fees, rebates, air-conditioners and furniture. Budget 2014, however, seems to make it a requirement that developers be transparent about their property prices.

The adage “There’s no such thing as a free lunch” rings true in this instance. While developers are quick to advertise various blandishments such as “free legal fees/stamp duty, etc”, such freebies are always factored into the property price. These freebies should be translated into cash incentives to be deducted from the purchase price of the property, as otherwise, it becomes meaningless to offer these gimmicks, which are usually recovered in the form of substandard materials. Here, we again thank our Prime Minister for announcing that developers, when offering their products, should disclose the value of the freebies to the buyers. Such transparency is a move in the right direction so that buyers would know what they are letting themselves in for. The enforcers of the law should be able to count on the Urban Wellbeing,

Housing and Local Government ministry to do its job to ensure that there is strict compliance and observance.

Whilst such a requirement will not deter speculation, it will hopefully educate house buyers on what makes up their final property price and not to be misled by developers advertising such freebies.

Additional measures

The National House Buyers Association (HBA) reiterates its call on the Government to take additional measures to stem the steep rise in property prices. There are basically two ways to reduce speculation: increasing the entry cost and increasing the exit cost.

Whilst Budget 2014 has increased the exit cost in the form of the higher real property gains tax or RPGT, more measures are needed to increase the entry cost to further reduce speculation.

The current stamp duty payable for the transfer of properties is based on the value of the property. This does not deter speculators, as the stamp duty payable is the same, regardless of the number of properties already held or bought.

The Government’s current low stamp duty regime has been misused by property speculators to accumulate multiple properties, driving up these prices by creating false demand and denying genuine buyers the opportunity to buy such properties.

It is every Malaysian’s wish to buy at least one property in their lifetime for their own dwelling, and perhaps an additional piece of property as a long-term investment or to fund their children’s education.

Hence,HBA has proposed that the current scale stamp duty remains the same for the first two properties bought, but is increased to a flat rate based on the property price for the third and subsequent properties to discourage speculative buying.

(See table for a comparison between the current stamp duty and the stamp duty proposed by HBA.)

With the same scaled stamp duty payable regardless of the previous number of properties held, speculators are not deterred from buying multiple properties.

Even for properties costing RM600,000, the stamp duty payable is only 2% of the value of the property.

The HBA-proposed stamp duty would not cause any disruption to genuine house buyers who can only afford two properties in their lifetime (one for their dwelling and one for long-term investment).

On the other hand, property speculators would be discouraged as the stamp duty greatly increases their entry cost.

RPGT will not lead to higher property prices 

Certain parties with vested interest are claiming that the revised RPGT rate would lead to higher property prices, as speculators would definitely factor in the RPGT into their property prices, only for the subsequent buyer to end up paying the RPGT indirectly.

Such statements only confirm that speculators are indeed responsible for driving up property prices.

If indeed the speculators factor in the additional 20% to 30% RPGT into their property prices, then it would make the property prices unattractive to the next buyer.

Financial Institutions may be unwilling to finance such exorbitantly overpriced properties, as such institutions have their own market intelligence to determine the fair value of such properties.

RPGT will lead to an orderly property sector
 
The aspiration of every rakyat is to own a roof over their heads and shelter their young rather than making money from properties. Hence, having the RPGT in place would deter speculators, and eventually lead to a more orderly property sector driven by market demand and not speculative forces.

Therefore, HBA supports the Government’s RPGT proposal and urges the public to support such a move to curb the current excessive speculation in the property sector.

HBA strongly believes that the cost of a roof over one’s head should not be left to market forces. The repercussions whereby a large section of society is deprived of affordable housing is serious and far-reaching. The present property price increase does not commensurate with the present rise in wages. The affordability of house ownership is becoming an elusive dream to the present generation. Controlling the upward spiral of property costs is not in the interest of housing developers. In fact, they certainly favour it. Therefore, it would be totally unrealistic to expect any developer to be interested in bringing down property prices.

Contributed by Buyers Beware Chang Kim Loong

CHANG KIM LOONG is the honorary secretary-general of the National House Buyers Association (www.hba.org.my), a non-profit, non-governmental organisation (NGO) manned by volunteers. He is also an NGO councillor at the Subang Jaya Municipal Council.

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Singapore wooing the best minds back to home

 

Singaporean at heart: Cardiologist Carolyn Lam returned from Mayo Clinic in the United States to practise and do research at the National University Hospital, where she focuses on women’s heart health. — The Straits Times / Asia News Network

Many top Singaporean researchers work abroad. What will bring them home — and at the same time help retain scientists who stayed on in the republic?

FOUR decades ago, armed with a newly minted doctorate from Cambridge University, a young Malaysian neuro-anatomy researcher arrived to work at the then University of Singapore.

Having come back to South-East Asia to be closer to his family, Prof Ling Eng Ang found a research landscape “like a Third World country”. Research funding was scarce; the lab had to buy and breed its own rats for studies, and there was no budget to publish papers in top journals that sought fees from researchers.

When the university began hiring scientists from the rich West who had lengthy publication records, “how could we compete?” he recalled.

Singaporean researchers left for countries with a more developed culture of science and richer funding. Later, others went and stayed, seeking to grow their careers.

Now, Singapore wants to woo this diaspora home, particularly those who have excelled in their fields.

Once they are headhunted by universities and research institutes in the island-state, scientists who are Singapore citizens will get up to five years of research funding.

This comes out of the S$16.5bil (RM41.2bil) pot earmarked for R&D between 2011 and 2015, while their salaries are paid by the institute that employs them.

“By doing so, we hope to anchor the research capabilities and grow the Singapore core,” Prime Minister Lee Hsien Loong said last month when he announced the scheme.

Lee explained it was “worthwhile to make an extra effort”.

“These are the people who might not be otherwise thinking of coming back,” he said.

“They have already set up their careers, settled in and have challenging and exciting jobs. wherever they are in the world. We say: come back, we would like to have this link with you, either come back to visit or come back to relocate.” This seems like a good idea in principle.

As the popular narrative goes, Singapore has very deliberately been bootstrapping itself up to the head of the class in engineering, physical and biomedical sciences over the past two decades, a process jump-started by importing big-name scientists from the West.

Now, it’s time to groom Singaporeans – who presumably will have a vision for science in the republic – to take up leadership positions. That is the core idea. But how effective will it be?


Singaporean stars

The National Research Foundation (NRF) does not keep tabs on how many Singapore scientists are abroad, but it said it was building a database of those overseas.

However, it is known that some are outstanding in their fields. For example, Prof Peh Li-Shiuan of the Massachusetts Institute of Technology’s electrical engineering and computer science department studies ways to boost the computing power of computer chips.

Assoc Prof Wong Chee Wei at Columbia University manipulates light to study tiny nanostructures. Last month, he was named a Fellow of the Optical Society of America.

Another Singaporean, Dr Desney Tan, is a principal researcher at Microsoft’s research division, where he studies human-computer interaction, mobile computing and healthcare applications.

Even if Singapore could track all its expatriate scientists down, drawing them back is a different matter. Choosing where to live and work are very personal decisions.

Singapore presents itself as a vibrant, well-funded destination for science research. If this is the case, why do Singaporean scientists need an extra carrot to come home?

In some fields, the opportunities elsewhere are richer.

Assoc Prof Leonard Lee of Columbia Business School, whose PhD in marketing was from MIT, said the opportunity to learn from his field’s best minds was “too great to miss”. But he keeps a foot in each country, giving seminars at the National University of Singapore (NUS) and other Singapore universities.

And Microsoft’s Dr Tan said the firm offered him support to build a “dream team”. He was also drawn by the chance to “conduct scientific research with the very best and then to translate that research into commercial products that get used by millions of people”.

Over time, many put down roots overseas. Some have married non-Singaporeans and live in their spouse’s home country. Some like the economies of scale in the research environment at, say, Harvard.

The truth is, people sometimes leave because they are simply dissatisfied with the level of bureaucracy or pressure for quick results. The latter has also been known to turn off some of the big names lured from overseas.

NRF might be more successful if it understood what draws Singaporeans home.

Family is a major reason: Nanyang Technological University (NTU) mathematician Chua Chek Beng gave up a tenure-track post at the University of Waterloo in Canada in 2006 because he and his wife wanted to be closer to their parents in Singapore.

It helped that he was offered the chance to work at NTU’s brand-new school of physical and mathematical sciences, too.

Assoc Prof Too Heng-Phon of NUS’ biochemistry department, who is Malaysian and a permanent resident here but whose wife and son are Singaporean, said he came back to the region to be closer to family as well.

Grants can help. When she received a Clinician Scientist Award grant from the National Medical Research Council, cardiologist Carolyn Lam returned from Mayo Clinic in the United States to practise and do research at the National University Hospital (NUH), where she focuses on women’s heart health.


Equal treatment

Great teachers are another draw. NUS’ Prof Ling said that while the conditions were spartan back in the 1970s, the late Prof Ragunathar Kanagasuntheram was a great mentor. He also stayed in Singapore out of a sense of duty. “We were almost like the ‘pioneers’ and we helped build up this place both in teaching and research. If we don’t, who else?”

As Singapore builds up its research ecosystem and draws other leading minds, those who come home may themselves become a draw for younger academics looking for mentors.

Prof Ling, for instance, has trained generations of medical students. And collaborations like the Singapore-MIT Alliance for Research and Technology allow those like Prof Peh to guide younger scientists in both Singapore and their home university.

While Singapore draws its own home and attracts foreign researchers, it also ought to recognise those who have long served here. It should treat equally those who have gone abroad and those who have stayed. Researchers like Prof Ling, Prof Lee and NTU dean of science Prof Ling San agreed on this point. The NRF carrot could help to retain outstanding Singaporean scientists, too.

At the same time, the move to woo back Singaporean scientists can also be seen as an exhortation to young scientists to go forth, grow their careers wherever they wish, then come home. They will not be considered quitters, but valuable returnees.

Dr Wilhelm Krull, secretary- general of Germany’s private Volkswagen Foundation and a member of Singapore’s high-level Research, Innovation and Enterprise Council, suggested it was “time to think more in terms of circulation rather than brain drain or brain gain”.

Dr Tan of Microsoft noted that the new scheme signalled a strong commitment to top local talent, a change from previous years.

When he completed his PhD in 2004, he felt Singapore favoured foreign hires with more attention and fat relocation packages. To draw him home, Singapore would have to replicate the “excitement, unfettered support and commitment” of his current conditions.

“There is no cookie cutter formula for this. What will work for one domain and individual, may not work for another ... But if done right, I believe top talent will choose to jump back in from their presumably fulfilling positions outside of Singapore and to embrace the challenge.

“In general, I think many Singaporeans would love to return home and serve the country, and I’m excited to see conditions swinging in favour of this,” he added.

Contributed by  Grace Chua The Straits Times/Asia News Network (ANN)

Malaysia GDP grew by 5% in Q3 2013, Economy and Growth Outlook projections

KUALA LUMPUR: Malaysia’s gross domestic product (GDP) grew by 5% in the third quarter, faster than the 4.7% expansion most economists had predicted, as the economy benefited from strong domestic demand and a rebound in exports.

Bank Negara yesterday also revised the country’s second-quarter growth to 4.4% from 4.3% previously. The central bank is maintaining its full-year growth forecast at 4.5% to 5%.

The GDP is one of the primary indicators used to gauge the health of a country’s economy. It represents the total dollar value of all goods and services produced over a specific timeframe.

“Domestic demand remained the key driver of growth, expanding by 8.3%, while exports turned around to grow by 1.7%,” Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said at a press conference.

She noted that emerging signs of a recovery in the major advanced economies are expected to support overall growth.

“For the Malaysian economy, the gradual recovery in the external sector would support growth. Domestic demand from the private sector would remain supportive of economic activity amid the continued consolidation of the public sector,” she said. “Going forward, economic growth is expected to be sustained although risks continue to remain.”

She said the global economic recovery was under way, but with downside risks from uncertainties over the fiscal and monetary adjustments in several of the major advanced economies.

“The other main contributor to GDP is investment, which is even more important as investment activity leads to capacity expansion, and allows our economy to experience future growth,” she said.

Malaysia’s current account surplus for the third quarter jumped to RM9.8bil, equivalent to 4.1% of the gross national income (GNI), from RM1.5bil in the second quarter.

This was mainly due to a higher surplus in the goods account. The GNI comprises the GDP together with income received from other countries less similar payments made to other countries.

She said net exports turned around and posted a positive growth of 1.6% after seven consecutive quarters of declines, driven by external demand, high commodity prices and strong investment activities.

The ringgit also experienced volatility in the third quarter, as expectations for a scale back in the US Federal Reserve’s asset purchase programme prompted a reversal of capital flows from most regional financial markets.

“The volatility was to a lesser extent than what we had seen previously at the height of the global financial crisis. The movement is similar to other currencies,” Zeti said.

She said the foreign exchange market was significantly larger and liberalised now and market players were, therefore, doing the intervention. However, she said Bank Negara would intervene if there were any severe volatility or market disorder.

“The region is in a better position to cope with more volatile conditions, as the financial markets are now larger, better developed and more mature.

“We believe there will not be an exodus out of this region, as our region remains an important growth centre in the global economy and, therefore, we will still be the destination for investment activities,” Zeti said.

The consumer price index was also higher at 2.2% due to higher inflation in the transport and food and non-alcoholic beverages categories.

Speaking on the subsidy rationalisation plans the Government has embarked on, she said the opportunity still existed for these price adjustments to be made gradually.

“We are on a steady growth path, and we have not experienced strong demand that would result in strong inflationary pressures. Therefore, it is a good time to make such adjustments,” Zeti said.

-Bernama/The Star/Asia News Network

Malaysia Economy Outlook 2013

KUALA LUMPUR (Nov 18, 2013): The Malaysian economy is expected to see between 4.6% and 4.7% growth in gross domestic product (GDP) for 2013, according to economists, in line with Bank Negara Malaysia's (BNM) projection of a 4.5% to 5% growth this year.

Alliance Research revised its full-year GDP forecast marginally upwards to 4.6% from 4.5% previously, after BNM released the third quarter (Q3) GDP data on friday which saw a stronger growth of 5% for the quarter on the back of a strong recovery in the external sector, as well as expansion in domestic demand. The research house anticipates a 4.8% growth in Q4.

"While growth may be affected by the recent announcements on the sequencing of certain Economic Transformation Projects and policy reforms such as the subsidy rationalisation programmes, we remain positive that the improving external environment would likely offset the weakness and support growth in the coming quarters," said Alliance Research economists Manokaran Mottain and Khairul Anwar Nor Md in a note.

For 2014, it expects growth to pick up to 5%, underpinned by robust domestic demand and improving external conditions.

RHB Research Institute estimated real GDP to grow at 4.7% in 2013, at a slower pace than the 5.6% growth recorded in 2012.

"Growth, however, will likely bounce back and register a faster pace of 5.4% in 2014, as domestic demand will remain a key driver of growth along side with a further improvement in exports," said its economist Peck Boon Soon.

The central bank said going forward, the gradual recovery in the external sector will support growth. Domestic demand from the private sector will remain supportive of economic activity amid the continued consolidation of the public sector. The economy is therefore expected to remain on its steady growth trajectory.

Meanwhile, BNM Governor Tan Sri Dr Zeti Akhtar Aziz stressed that the current volatility in the financial market is comparatively lesser than that experienced during the global financial crisis.

"We're in a position to cope. We've significant reserves of US$137 billion (RM446.2 billion) and we've many swap arrangements with other banks around the region. The region can come together to respond collectively if there's any crisis.

"Previously (under harsher conditions), we'll probably have a 1% to 2% growth. Now we've rebalanced our economy where domestic demand is an important driver, so it'll allow a 4% to 5% growth," said Zeti.

She said Malaysia's financial markets are larger, better developed and more mature now, adding that financial intermediaries are stronger and more importantly, there is greater diversification of portfolios.

"We believe there's not going to be an exodus out of our region (Asia) and it remains an important growth centre in the global economy. Therefore we'll still be a destination for investment activities," said Zeti.

On the ringgit, she said its volatility is similar to the movements of other currencies.

"We've liberalised the market to allow for unlimited hedging for an unlimited time period to hold a foreign currency account. Our corporate sector is in a better position to better manage their foreign exchange exposure, given that we've seen significant two-way flows. "In the event when the market has a risk of becoming disorderly, the central bank will step in to smooth out that volatility."

However, she said in the medium term, the ringgit should reflect the economy's underlying fundamentals.

"If all remains positive, (ringgit) should see an appreciating trend… but as fundamentals change drastically over a short period of time, then the appreciating should remain in a gradual trend."

Contributed by  Ee Ann Nee The Sundaily

Malaysia's 2013 forecast growth revised by IMF

THE International Monetary Fund (IMF) has revised its growth forecast for Malaysia to five per cent for 2013 from its previous projection of 4.7 per cent.

Growth will be underpinned by the domestic demand, with low unemployment and subdued inflation.

In its latest medium-term outlook, which was released following its Article IV Consultation recently, IMF projected growth until 2017 to be between 5.1 per cent and 5.2 per cent.

"Although the domestic demand growth pace is lower than that recorded in 2012, it is still sizeable at over six per cent from 11.6 per cent last year," IMF resident representative Dr Ravi Balakrishnan told the Business Times from Singapore yesterday.

Higher spending by households, firms and the government on consumer and capital goods has offset weak exports to Europe and the rest of the world.

Consumption has been supported by low interest rates, a strong labour market and fiscal transfers to households.

Balakrishnan said Malaysia has done remarkably well and displayed resilience like its neighbours in the face of the global crisis, chalking a 5.6 per cent growth for 2012.

The rebalancing of Malaysia's economy towards greater domestic demand - from its dependence on trade - has led to a significant deterioration in Malaysia's external current account balance, to a surplus of about six per cent of gross domestic product (GDP) last year, compared to 11 per cent in 2011.

The IMF released the details of its annual assessment last Friday together with its first financial sector assessment programme for Malaysia, which endorsed the resilience of the well-capitalised financial sector.

Malaysia's growth story was better than what the IMF expected.

"We are happy with the developments for the near term but there are challenges on the fiscal front for the economy to realise the growth level of 2020."

The government's revenue base needs to shift from the oil and gas receipts, which account for about a third of the total.

The planned goods and services tax would help broaden the revenue base, while the gradual rationalisation of the subsidies programme would help reduce spending pressures while staggering the impact on inflation and incomes.

In the case of investments, he said to sustain the current levels, there must be concerted efforts towards structural reforms, including education to help reduce its skills gap and increase the contribution of human capital.

The report said the Fund welcomed the introduction of a minimum wage this year, which should support the incomes of poorer workers, and recommends considering the introduction over time of unemployment insurance and reforms to the pension system to further strengthen social protection.

Government debt is expected to decline gradually relative to GDP over the next five years, reaching about 51 per cent of GDP by 2017.

The Fund has recommended that there be more "front-loaded" consolidation efforts to reduce the probability of breaching the debt ceiling and ensure the government's goal of reducing debt to 40 per cent of GDP by 2020.

Balakrishnan said while the target to reduce debt is lauded, it is also important that there be more transparency in the concrete measures that Malaysia plans to undertake.

Contributed by Rupa Damodaran Business Times

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