AMPANG: Those who have yet to apply for a Public Service Department scholarship despite scoring 9A+ or more in their SPM examination will not be left out, said Tan Sri Muhyiddin Yassin.
The Deputy Prime Minister said these students could still apply for it, in view of Prime Minister Datuk Seri Najib Tun Razak’s assurance that all students who scored 9A+ or better would be granted PSD scholarships for local or overseas studies irrespective of race.
“They can come forward and we will take them into account,” he told reporters yesterday after opening the Ampang Umno division meeting here.
Najib, who made the announcement on Saturday, had described the move as “historical”.
Muhyiddin, who is also Education Minister, said it showed that the Government had no qualms rewarding students based on meritocracy, adding that it would not be a problem to source for the additional funding.
“The Prime Minister’s statement is a happy one for all sides,” he said, adding that a big portion of those in the list announced by the PSD had already received their scholarship.
The Government had previously said that it might withdraw PSD scholarships for overseas studies gradually. That plan drew criticism from certain quarters.
All top scorers to get PSD grants
KUALA LUMPUR: All students who score 9A+ or more will now receive Public Service Department scholarship regardless of their race, said Prime Minister Datuk Seri Najib Tun Razak.
“We have achieved one thing that we have never done in history. Every student who scores 9A+, irrespective of his or her ethnic background, will get a scholarship from the department.
“It doesn’t matter if they are Malay, Chinese, Indian, Kadazan, Iban or others. If they score 9A+, they will get the scholarship whether for local or overseas studies.
“This is to show that 1Malaysia is not just a slogan,” he said when opening the MIC annual general assembly at Putra World Trade Centre here yesterday.
His announcement received thunderous applause and a standing ovation from the hundreds of MIC delegates attending the assembly.
Others present included MCA president Datuk Seri Dr Chua Soi Lek and Gerakan president Tan Sri Dr Koh Tsu Koon
Najib also said 2,304 of 2,499 Indian students who qualified for entry into public universities were given places. A total of 4,541 Indian students applied to enter public universities this year.
“This is a clear manifestation of the Government’s effort to help the Indian community,” he said.
Students are now graded according to A+, A, A-, B+, B, C+, C, D, E and G. Previously, the grades were from 1A to 9G.
In March, Education director-general Tan Sri Alimuddin Mohd Dom explained that the highest possible grade under this system was an A+ which indicates a score of more than 90% in a subject.
A total of 214 students from government schools and another 41 students, who were either from private schools or private candidates, obtained A+ in all subjects taken.
A total of 1,500 scholarships have been awarded to top SPM scorers under the PSD’s Overseas Degree Programme to pursue their studies at universities abroad this year.
MCA vice-president: 9A+ grants in line with 1Malaysia
Tue, Jul 13, 2010
The Star/Asia News Network
KUALA LUMPUR: The announcement that Public Service Department scholarships will be awarded to all students who score 9A+ or higher regardless of their race is in line with the 1Malaysia concept, said MCA vice-president Datuk Seri Dr Ng Yen Yen.
She said such a move was unprecedented in the country?s history and a positive move forward for all Malaysians.
This decision means that those who qualify will enjoy the scholarships. This is something that has never been done before in our history. ?It shows that the 1Malaysia concept advocated by the Prime Minister is not just a slogan, she said here yesterday.
Prime Minister Datuk Seri Najib Tun Razak had announced, during the MIC general assembly on Saturday that these succesful students would receive PSD scholarships to pursue their studies locally or overseas, regardless of their race.
A rafting trip to the Grand Canyon is what Atul Bhargava hopes to do when he turns 50. One has happened (he turned 50 recently) but the other, not quite – yet.
But that’s really by choice. Atul is not ready to visit the Grand Canyon yet but hopes to do it next year with his family.
This year there are too many things happening – his daughter has exams and soon after will head to the Oregon Health and Science University in the United States for an internship. As such, Atul would rather wait another year to accomplish his grand trip.
Even so, turning 50 was no less auspicious. His sister, niece and her husband arrived from India to celebrate the day with him. “To me, family comes first,” says the managing director of Intel Malaysia, who has been in the country for some eight years.
A typical Sunday in the life of Atul involves playing tennis with his two daughters and looking forward to dinner – his wife’s cooking.
Family man
He is clearly a family man. “My youngest daughter recently went for a trip to Sabah and I was the only male parent who signed up to go with her. It was a parent/child programme. In fact I missed an important business meeting in Costa Rica to be with her.
“My daughter spoke to my boss and asked if I could go to Sabah with the children and people asked me if it was the right decision. On hindsight, a lot of people would not remember if I was present at the meeting but my daughter will remember that I was with her in Sabah. That’s the difference the trip made to her,” he says.
Atul hails from Benares in India. It is a holy city and famous for saris. But he did not stay long enough to enjoy the colours of Benares.
He studied in Dehli and later moved to Kanpur to study engineering. As soon as he finished, Atul, like many other young aspiring boys from India, applied to go to the United States.
He got it and the next thing he knew he arrived in the land of milk and honey, with only US$1,000 and two luggage bags.
He enrolled into Clemson University for a Masters programme. To support himself, he worked part time, correcting exam papers and doing research.
Being used to the Indian style of marking papers, he had to loosen up his marking style.
In the US, the approach to creativity and innovation and the process taught him to look at “multiple view points” and how to apply and learn instead of purely learning.
He got paid US$600 a month, which though a meagre amount, kept him going till he finished his Masters. “You just learn to budget and prioritise,” he says.
After finishing his Masters, he stayed back in the US and joined Intel. But after a while, he yearned to return to his homeland.
He joined a small semiconductor company in India with the intent of learning more about the business.
Sometime around this point, at the age of 27, he got married to an electrical engineering graduate.
“It was an arranged marriage but in the US, I said it was a blind date as people there were surprised to hear about arranged marriages,” he says. Soon after he called his ex-boss at Intel to inquire if he could rejoin the company. Knowing his expertise, he was hired via the phone. He landed back in the US but this time not alone – he was accompanied by his wife.
She was employed by Intel as well but in a different department. “The good thing is that when we moved, Intel made sure that both spouses move together and that makes it easy for us. They are supportive and it is a great place to work,” he says.
But Atul had bigger dreams and ambitions and wanted to lead and not be led. He told his boss that he wanted to go back to school to continue his studies. Again, it helped as Intel believes in nurturing talent. So lucky for him, he got paid while studying.
That lifted him professionally and job offers came his way but he would not move as the “kind of freedom and privileges” he got at Intel kept him with the giant chip maker.
Turning point
At 37, it marked the turning point of his career. At Intel there is a mentor system where people can call upon their mentors to discuss their career path. “It is good to have a few mentors,” he says.
His mentor advised him that if he were to “go for his next dream he needed to improve in certain areas” and that gave him an idea of the direction he needed take.
“I believe you have to have passion in your work. That’s important. Love your work and you can achieve a lot in your life,” says Atul.
That’s what he tries to inculcate in his eldest daughter, who is deciding whether to study medicine or something else.
This happens to be Atul’s second posting to Malaysia. His first was in 1989. “At some point in our lives we will go back to the US but this (Malaysia) country has a mix of east and west, the food is great, the environment is great, working conditions are good and my children also like it here,” he says.
His work style is to allow everyone to be creative and be leaders at what they do. Intel has various programmes where it works with schools by introducing technology and provides research grants.
To have a knowledge- and innovative-based society, Atul believes that involvement has to begin from the early years and that is why Intel is providing computer schemes to some schools.
Atul has travelled extensively and has been to 35 countries. Apart from the Grand Canyon, the other things on his to-do-list include an African safari in Tanzania because of its unmatched wildlife.
WHEN it comes to purchasing a car, one is often confronted with one main decision – whether to buy a brand new or second-hand car.
Each one has its own pull-and-push factors but ultimately, the potential buyer needs to decide what best suits his needs. How much is the potential buyer willing to spend? Is the buyer facing budget constraints? Is the buyer stretching the finances all for the sake of a brand new wheel?
Clearly, if you’ve got a limited or tight budget, then purchasing a used vehicle would be a preferred option. However, even if it cuts your cost by half compared to buying a new car, used vehicles are not risk-free.
Driving a new car gives you more peace of mind.
First, you won’t really know the extent of the car’s wear and tear. The appearance of the car is rarely a good gauge, as a neat-looking, 10-year-old jalopy could just be firing on one-and-a half cylinders, be up for a transmission overhaul and be a ticking time bomb on wheels.
As such, a used vehicle may require higher maintenance and expensive repairs compared with a new one. What’s more, such repairs won’t be covered by warranty.
Apart from being costlier than its old-aged counter part, owners of new cars can relish in the fact that their vehicles are unlikely to unexpectedly break down in the middle of nowhere for no apparent reason, says Kay Vee Auto car salesman Johnson Low of Petaling Jaya.
“A new car is covered by warranty, so even if you have problems within the (warranty) period, it can be fixed without any additional costs because its their (manufacturers/distributors) responsibility.”
Low noted that many luxury cars especially, offered vehicles with warranties that extended to as long as five years.
“Also, new cars won’t need new parts for a long time. A used car on the other hand may need a lot of things that need changing.”
Low also pointed out that in the case of a break down for new vehicles, many car manufacturers offered towing assistance.
“Basically, driving a new car gives you more peace of mind compared with a used one. Furthermore, one also tends to look good driving a brand new vehicle that just hit the market rather than one that’s been defunct for years,” he says.
Another advantage of a newer car is that it would command a slightly better resale value versus an older model,” Low adds.
Buying a used car
The immediate benefit of buying a used car is that it’s cheaper than a brand new one. Furthermore, a used car also depreciates a lot lesser than a new one.
“New cars lose about 30% to 50% of their value within the first three to four years, at which point the depreciation starts to slow down,” says Used Autos Sdn Bhd owner Peter Wong, a Segamat-based used car dealer.
“In the case of used cars, the previous owner would have absorbed the largest portion of the depreciation cycle. By the time you purchase a used car, nearly all of the costs of owning and operating the car would have been reduced,” he adds.
Jeremy Yeoh, a Kuala Lumpur-based used car dealer says that owning a used car also means lower financing costs, reduced registration and license fees as well as insurance premiums.
According to him, cheaper, fuel efficient cars tend to have better resale value, such as Perodua Kelisa, Kancil and Toyota Vios models.
“Each year, there are new drivers coming onto our roads, and these are mostly students who are often incomeless; it’s their parents who buy them their first cars, mostly used cars that aren’t too expensive.”
Yeoh adds that many people with multiple cars tend to go for used models as an alternate or second household vehicle.
PERSONALLY speaking, I have been faced with this question – to buy or rent a house – many times in my life. While I haven’t quite found a clear answer to that, I have decided to go with both. I have bought a house (or rather acquired one through financing) but am renting it out while I live in a rented premise with my family.
It is a known fact (if not compounded by our parents, and uncles and aunties) that one should, if they can, own a house. Generally speaking, renting somehow has some negative connotations. Ideally, we should buy a property early in our lives to take advantage of the longer loan financing period and if we can, try to settle the financing early.
While there may be no straight forward answer here, there are several pertinent questions we need to ask ourselves. Where do we see ourselves, five, 10, or 30 years down the road?
First, let us exclude investors from our category as they would naturally fall under the ‘buy’ status, and let us delve into the lives of the average man-on-the-street manifested in these four individuals – Robroy, Rizal, Rowena and Rossindra, who face a similar dilemma.
Robroy is 35 years old, married with two children, and works as an senior accountant. He works for a multinational company and therefore is required to travel, and at times is posted overseas for a few years. He also has chalked up some credit card debts from all the travelling, and have been delinquent in payments during his absence in Malaysia. Most recently, he was posted to New Zealand and is now considering migration.
Rizal is 30 years old, married with two wives and six children and is a businessman who owns several restaurants. His income is good, but it fluctuates, and he currently has some savings which he plans to invest. His big family helps him runs the business.
Rowena, is a 28 year old care-free person, whom after graduation could not hold a steady job, but is very happy with part-time jobs that give her the freedom to travel as she loves travelling. She has a boyfriend and plans to get married in a year or two.
Rossindra is 25 years old; she is a social science university graduate who has decided to dedicate her life helping the needy and healing the world. She is currently working under one of the Unesco projects in Myanmar. She gets paid pretty well, and with food and lodging fully provided at her workplace in Myammar, she saves almost all her salary. She recently took over the rental tenancy of her parents who live in a rented house, and is considering alternative options.
Of these four individuals, who do you think should buy a house or rent? The following represents my take, which of course, is open for discussion.
Robroy should rent, mainly because of his work commitment. His work requires overseas posting, which includes his family, especially since he is considering migrating to New Zealand. Furthermore, he has been delinquent in his credit card payments, and this may not go well for his loan financing if he wants to buy.
Rizal should buy, mainly because the nature of his income is uncertain and he has amassed some savings, which should aid in his down payment for a house. He had originally wanted to buy a house in cash but given the size of his family, he decided to buy a bungalow for which he has settled 50% of the payment while the remainder is financed through a loan. As he rents his restaurant outlets and the returns from his business is used to settle the rent, he is confident that buying a house is a much better option for him.
On the other hand, Rowena, quite clearly falls under the rent category. First, she does not have the financial ability and second, she has not quite decided what she wants to do in life. Furthermore, her part-time jobs may not provide her with a good credit standing with the banks. Her boyfriend whom she intends to marry happens to be rich.
So, naturally, if things go as planned, she may be able to solve, to some extent, her financial issues.
Rossindra, on the other hand is in a real predicament. While her position and work do not necessitate her to rent or buy a house, she is undertaking the obligation to pay rent for the house her parents stay in. She is considering the option of buying a small house and naturally, her parents are overjoyed to finally live in their own house.
Buying a house is usually, for many, a once-in-a-lifetime decision. So don’t rush into it. Take your time evaluating the possible scenarios and outcomes and of course, make sure you choose a suitable property. Whatever it is, you must try to avoid putting significant pressure on your financial status.
COMMENT By RAYMOND ROY TIRUCHELVAM
● The writer, a business planner with SABIC Group of Companies says: I would rather my parents choose my house than choose my wife.
KUALA LUMPUR: The hike in interest rates, which the market now expects to be the last for the year, drove the ringgit up and saw a rise in yields of short-term government bonds.
The ringgit appreciated against the dollar yesterday following the 25-basis-point rise in Bank Negara’s overnight policy rate (OPR) to 2.75%, with traders now expecting the local currency to continue to strengthen in the short term.
CIMB Investment Bank regional rates and foreign exchange strategist Suresh Kumar Ramanathan said the ringgit, which rose to 3.19 against the dollar yesterday, was pointing towards further strengthening.
He said the hike in interest rates made the ringgit an interesting carry-trade proposition for traders.
“Interest rates are pretty high to attract more capital flows into the market,’’ he said.
The monetary policy statement on Thursday was dissected by the market and the general consensus is that Bank Negara would most likely stand still now after raising domestic interest rates by 75 basis points this year.
Analysts said the previous statement, which alluded to further normalisation of interest rates, was omitted this time around.
They said this was replaced by a fresh stance whereby the Monetary Policy Committee (MPC) now considered the new level of the OPR to be appropriate and consistent with the current assessment of growth and inflation prospects.
“Taken together, these signals suggest that rate hikes are unlikely to come through in the future,’’ said Barclays Capital in a note yesterday.
“It appears that Bank Negara has created enough monetary policy buffer to respond to any downside risks.”
While the MPC’s assessment is for the global recovery to continue, it noted that there was increased risk that the global growth momentum could moderate.
But it pointed out that for the domestic economy, recent trends in key economic indicators such as industrial production, financing activity, labour market and external trade showed that economic activity had remained robust in the second quarter.
“While external developments may result in some moderation in the pace of growth, the domestic economy is expected to remain strong with continued improvement in private consumption and investment, and augmented by public investment spending,’’ MPC said.
Barclays Capital said the statement noted that recent economic indicators and trends would remain strong despite the recent gains in the ringgit. “This suggests that they are comfortable with the recent normalisation in the currency and would not stand in the way of further appreciation, provided this is fundamentally dictated,’’ it said.
RAM Holdings Bhd chief economist Dr Yeah Kim Leng believes the strong domestic economic indicators might have pipped Bank Negara’s decision to let interest rates go up for the third time.
The market was divided over the prospects for such a hike, given the economic situation globally.
“The central bank is confident that domestic growth momentum can be sustained despite the slowdown in the second half-year in the European Union economies,” Yeah said.
Although the current level was still below the historical average, Yeah called it the “new normal” considering the benign inflationary concerns and the weak economic condition globally.
He felt that the hike was important to nip asset price inflation, especially in the property sector which was driven by super-low interest rates, before it got out of hand.
“The double-digit increase in some property segments is of some concern,’’ he said.
While households have seen a debt build-up in recent years to levels considered high for Malaysia, Yeah said the current level of interest rates was seen as a balance between what households could shoulder and what the business sector found it could live with.
“It’s a fine line. We believe this level will stay for the rest of the year,” he said.
Should interest rates plateau at this level, Maybank Investment Bank head of debt capital markets Michael Oh-Lau said the rally in the bond market, which had seen yields dropping as a result of foreign buying of Malaysian Government Securities, should continue.
The impact on the bond market is expected to be positive but Oh-Lau said one risk that could emerge from interest rates remaining stagnant was a rotation of money out of the Malaysian capital markets to other countries that had not raised their rates. “There might be some risk of the exit of foreign investors if this is the last hike,’’ he said.
With interest rates now projected to remain firm for the rest of the year, analysts said all eyes would now be on the yuan and its movement against major currencies.
“The ringgit is seen as a close proxy to the yuan and further strengthening of the ringgit will come from the pace of strengthening of the yuan,” said Yeah. “This will fit in nicely for Malaysia getting a slower pace of strengthening.’’
If Malaysia has more of the strengths of Japan and less of the weaknesses of Greece, we will have fewer worries
IN a recent speech, Datuk Seri Idris Jala warned that Malaysia could in 2019 end up bankrupt like Greece if the RM74bil annual subsidies are not slashed. That speech attracted a lot of flak, and has been dismissed as more of a “scare tactic” to jolt “us to not live beyond our means”. More of that later.
What are the causes of national bankruptcy? A country can go bankrupt if, as a result of war or blatant mismanagement, it has gambled away all trust, can no longer service its debt or convince anyone to lend it any money, no matter how high an interest rate it promises to pay.
Greece has been in the spotlight with its debt problems. Though it didn’t actually default on its public debt, it is as good as bankrupt, as far as a lot of people are concerned. The European Union and the IMF kept the embattled Greek economy afloat by agreeing to a US$1 trillion loan package.
The crisis began when investors started getting nervous about Greece’s ability to refinance almost 17 billion euro of bonds (about US$23bil) maturing in April and May this year.
Greece certainly did not endear itself to investors when it was revealed in early 2010 that since 2001, it had help from Wall Street firms to quietly borrow so that it could continue to spend beyond its means while meeting the euro-zone’s deficit rules.
The Greek government hasn’t balanced a budget in nearly 40 years. Its profligate and irresponsible spending had resulted in its public debt ballooning to a forecast 125% of GDP in 2010. Measures to tackle its public finances problems are expected to cut its 2010 deficit to 9.3% of GDP, an improvement from 2009’s 12.7%.
Years of socialism have also resulted in an oversized government that has systematically crowded out the private sector and driven them underground. In fact, one third of Greeks work for the government where their jobs are guaranteed for life.
But the key cause of Greece’s debt crisis is corruption and impunity, which the Greek Prime Minister himself readily admits. Tax evasion, a way of life in Greece, could be costing the Greek government as much as US$30bil a year. According to Transparency International’s (TI) Corruption Perceptions Index 2009, which measures the perceived levels of public sector corruption in 180 countries and territories, Greece scored 3.8 points out of a possible 10 (with 10 being perceived as having low levels of corruption) and was ranked number 71.
While Japan hasn’t yet run into the kind of solvency problems faced by Greece, some commentators have already started predicting that it could end up being the world’s largest national bankruptcy. That’s because Japan’s public debt mountain is bigger than that of any other industrialised nation.
Japan’s public debt is a legacy of massive half-baked economic stimulus packages during the “lost decade” of the 1990s, as well as during the recession that began in 2008. It is expected to hit 200% of GDP within 2010 as the government tries to spend its way out of the economic doldrums against a backdrop of plummeting tax revenues and soaring welfare costs.
The Japanese government expects its fiscal deficit in 2010 to hit 9.3% of GDP, and public debt to rise to 17 times its annual tax revenues by the end of the year. Japan’s public debt situation seems irrecoverable, and its newly installed prime minister has warned that Japan could face a financial crisis of Greek proportions if it does not tackle its colossal debt.
Prospects of a downgrade
Despite all that, Japan isn’t in the kind of pickle Greece is in right now. In fact, credit rating agency Standard & Poor’s rating on Japan’s sovereign debt remains at AA, one step below its best possible rating, though it did in January raise the prospect of a downgrade on concerns about large fiscal deficits and a sluggish growth outlook.
Why isn’t Japan in the same kind of mess as Greece? And why hasn’t its sovereign credit rating been downgraded to junk status, like that of Greece’s?
It is possible that Japan is perceived as being too big to fail. Japan is the world’s second largest economy after the United States, and even though it may have lost some of its shine, it remains a technological powerhouse with a diligent and highly trained workforce. Its default risk is low, as it has a huge current account surplus as well as the backing of massive domestic private sector savings to continue investing in government bonds.
And unlike Greece, Japan’s credibility remains good, there being no fiddling with statistics to make Japan’s public finances look good. Its institutions are strong, and there is no crowding out of the private sector by the public sector. And corruption is hardly an issue in Japan; according to TI’s Corruption Perceptions Index 2009, Japan scored 7.7 points and was ranked number 17.
Malaysia’s public finances are clearly better off than either Japan’s or Greece’s, and its current debt-to-GDP ratio is nowhere near that of either’s. The CIA’s list (The World Factbook) ranking countries based on public debt as a percentage of GDP (2009 estimates) puts Malaysia at number 50 (at 47.8%); that’s far behind Japan at number 2 (192.1%), Singapore at number 6 (117.6%), and Greece at number 8 (113.4%).
However, according to Datuk Seri Idris Jala, Malaysia could in 2019 end up bankrupt like Greece if it does not cut its subsidies because its debt-to-GDP ratio would by then soar to 100% from the current 54%. Could Malaysia actually end up bankrupt like Greece?
As can be seen from the Greek and Japanese examples, the million-dollar question is actually not whether Malaysia could in 2019 end up bankrupt if its debt-to-GDP ratio soars to 100% but whether investors still find Malaysian government bonds attractive.
But this is an impossible question to answer because besides debt-to-GDP ratio, many other factors like economic strategies and policies, transparency and quality of governance, government efficiency, strength of institutions, etc also figure significantly in investing decisions.
According to the National Economic Advisory Council’s New Economic Model (Part 1) report, aggregate investment levels (in products and services) as a percentage of GDP have been declining ever since the Asian Financial Crisis of 1997-1998. The same report also mentioned that the contraction was driven mostly by a decline in private investment.
Is this an indication that investor interest in Malaysian government bonds could likely go the same way south as investor interest in the real sector in Malaysia?
Suffice to say that if Malaysia has more of the strengths of Japan and less of the weaknesses of Greece, we’ll have fewer worries.
COMMENT
By QUAH BOON HUAT
● The author is a research fellow at the Malaysian Institute of Economic Research (Mier). The views expressed in this article are the author’s and do not represent those of Mier.
Arizona may be ground zero for the conflict over U.S. immigration policy, but it takes only a few minutes of watching cable television news and scanning local op-ed pages to see how raw and divisive the matter has become in the nation's political sphere.
Yet with all the heated rhetoric about illegals, border security, amnesty, racial profiling, and other incendiary topics, one aspect of immigration isn't emphasized enough: the job-creating potential of immigrant entrepreneurs. They're the vanguard in America's global competition for entrepreneurial talent and innovative ideas. The nation needs to encourage more entrepreneurs from other nations to call America home. Their energy is the elixir of future economic growth.
Take a recent study by the McKinsey Global Institute on U.S. multinational corporations. In Growth and competitiveness in the United States: The role of its multinational companies, the consulting firm notes that big business comprises less than 1 percent all U.S. companies, yet the 2,270 multinational corporations in its database accounted for 31 percent of the growth in inflation-adjusted gross domestic product from 1990 to 2007. Even more important, U.S. multinational corporations have contributed 41 percent of gains in labor productivity since 1990—and 53 percent of the productivity increases during expansions.
The consultants highlight the role immigrants play in bolstering the competitiveness of American multinationals, especially helping the U.S. "lead the world in the number of engineers, scientists, and business professionals who are ready to work in a multinational company."
High-Tech Startups
Specifically, some of the world's brightest brains and cutting-edge innovators come to learn and create in the U.S.—and they stay. In 2007, for instance, 62 percent of foreign-born nationals who received a science or engineering doctorate remained in the U.S. for at least five years following graduation. That figure is up from 41 percent in 1992. More than 80 percent of graduates of Indian origin and 90 percent of Chinese graduates still lived in America five years after graduation, according to McKinsey. (The McKinsey study on multinationals makes for good companion reading to Intel founder Andy Grove's cover story in the July 5-11 issue of Bloomberg BusinessWeek. The Silicon Valley legend is himself an immigrant from Hungary.)
It's well-known that America's high-tech economy has prospered thanks largely to highly educated foreigners. But the degree that the nation's cutting-edge industries, from semiconductors to biotechnology, depend on immigrant scientists, engineers, and entrepreneurs to remain competitive is stunning. For example, a quarter of the engineering and technology companies started in the U.S. from 1995 to 2005 had at least one founder who was foreign-born, according to research by scholars Vivek Wadhwa, Annalee Saxenian, Ben Rissing, and Gary Gereffi. In Silicon Valley, America's epicenter of technological innovation, the percentage of immigrant-founded startups reached 52 percent of total new companies over the same period.
The scholars also calculate that foreign nationals living in the U.S. were named as inventors or co-inventors in 24 percent of all international patent applications filed in the U.S. in 2006. That's up from 7 percent in 1998. The influx of highly-skilled workers from India, Asia, Latin America, and other corners of the world is also a boon to U.S. exports.
Lake Street Revival
It isn't just highly educated foreigners who are entrepreneurs, either. Immigrants have created businesses, from the corner grocery to the local builder, that create jobs and revitalize neighborhoods throughout the country. Take Lake Street in Minneapolis. A good portion of the major urban artery had become was one of the city's most poverty-stricken, crime-ridden neighborhoods by the late 1980s and early 1990s
Storefronts were boarded up, while drug dealing, prostitution, and other crimes were all too common.
The area started to attract Latino immigrants, legal and illegal. The first Latino-owned business opened on Lake Street in 1994. Cheap rents and a growing market attracted many more Hispanic entrepreneurs. "We saw the need and the opportunity," says Ramon Leon, founder and chief executive of the Latino Economic Development Center on Lake Street. "Everybody wanted to open a business on Lake Street."
Business is doing well on Lake Street today, despite the economic downturn. The street is lined with restaurants, small grocery stores, and other classic neighborhood shops. East African entrepreneurs from Somalia and Eritrea have also opened businesses. Little wonder that cities with lots of immigrants have seen their per capita tax base go up, according to David Card, economist at the University of California, Berkeley. The competition on Lake Street is fierce enough that immigrant entrepreneurs are increasingly aware they need to expand their market beyond their ethnic communities. "If you want to be successful you need to sell stuff to others," says Ramon.
Put Out the Welcome Mat
The Obama Administration wants to start a national debate on comprehensive immigration reform. It's a sensible but daunting, politically perilous undertaking. The Bush Administration took a similar tack, and it ended badly. All the political signs point toward legislative intransigence rather than compromise. The danger is that during a period of anger and vilification of immigrants, fortified by post-9/11 fears of immigrants,
America will lose out in the global war for innovative brain power and entrepreneurial hustle. It's all too easy for overseas innovators and entrepreneurs to stay home and pursue their dream there, particularly in fast-growing emerging markets with modern universities and high-tech clusters.
Yet America's historic record, blue-chip economic research, and well-established business experience all suggest the payoff from making it vastly easier for immigrants—especially educated immigrants—to stay permanently in the U.S. will be enormous. Tear down the walls that place obstacles to immigrants attending American universities and set up procedures for rapidly granting educated workers permanent resident visas.
Create a mechanism for a permanent "entrepreneurial" visa for those immigrants with a hunger to create a business and a plan for a job-generating startup. Instead of piling on more obstacles to prevent abuses of the current temporary H-1B visa system, why not streamline the whole process and eliminate many of the restrictions that make it difficult for workers to travel, change jobs, or earn a promotion?
Let's turn down the rhetoric and put out the welcome mat again.
Farrell is contributing economics editor for Bloomberg Businessweek. You can also hear him on American Public Media's nationally syndicated finance program, Marketplace Money, as well as on public radio's business program Marketplace. His Sound Money column appears on Businessweek.com.
The largest Russia-US spy swap since the Cold War appears to be in motion. A Russian convicted of spying for the US has been reportedly plucked from a Moscow prison and flown to Vienna.
Igor Sutyagin, a Russian arms control analyst serving a 14-year sentence for spying for the US, told relatives he was going to be on the swap list.
Russian and US officials refused to comment on a possible swap.
A swap would have significant consequences for efforts between Washington and Moscow to repair ties chilled by a deepening atmosphere of suspicion.
A political analyst believes a swap is likely.
Ninolai Petrov, Political Analyst at carnegie Endowment, said, "I am afraid that we will never learn totally about how exactly it happens, and I am afraid it can be a mixture of both secret services from both sides, to be interested somehow in doing something which is not necessarily in favour of their political leadership. The fact that a solution to the case was found in such a fast way means that there is a political desire to fix the problem and not to develop the scandal, so there is understandable political will from both sides."
In New York, the ten suspects recently accused of being undercover Russian spies pleaded guilty. The ten and an 11th person, who was released on bail by a court in Cyprus and is now a fugitive, were formally charged in a federal indictment.
The defendants are accused of living seemingly ordinary lives in America while acting as unregistered agents for the Russian government, sending secret messages and carrying out orders they received from their Russian contacts.
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