Malaysian property market remains resilient: housing robust but commerical glutted

Developers optimistic of H2 but not sure about 2013

PETALING JAYA: The Real Estate and Housing Developers' Association Malaysia (Rehda) expects the housing and property market to plateau in the second half of 2012, but will remain resilient.

According to a survey Rehda conducted, property developers are optimistic of the second half and more respondents plan to launch projects.

The survey is based on a sample size of 180 companies, out of the 1,003 Rehda members.
Property developers are less optimistic of the first half of 2013 due to certain factors, including the outcomes of the 13th general elections and Budget 2013. The current global economic situation also contributes some uncertainty.

The results of the survey show that the property market in the first half of this year is still driven by the domestic market, despite beliefs that foreigners are buying more local properties. Last year, only 2% of total properties transacted were from foreigners.

Rehda president Datuk Seri Michael Yam said the Government should review building less low-cost homes. In 2011, 1.04 million units out if the total 4.51 million total residential stock were low-cost homes.

 

“As Malaysia moves towards striving to reach developed nation status by 2020, the Government should review if there is a need for so many low-cost homes,” Yam said.

Rehda national treasurer N.K. Tong said: “Perhaps the Government should consider implementing a limitation to low-cost homes like what Singapore has done with the HDB (Housing and Development Board) flats.”

HDB flat owners-to-be are not allowed to own any other properties in Singapore, or in any other part of the world. Tong said if such a plan was implemented in Malaysia, there would be less abuse of these properties, unfairness caused to developers and to a larger extent the people.

“I'm more concerned with the supply factor. It is moving downwards due to the shortage of prime land and rising building costs. Come 2015, if the Government is serious about implementing the build-and-sell plan, the supply (of houses) will reduce by about 80%,” Rehda past president Datuk Ng Seing Liong said.

His main concern if the plan was implemented was that property prices would continue to trend upwards due to the supply and demand equilibrium.

“In terms of the property sector, we must look at a long-term scenario,” he said in regards to future plan implementations.

Rehda public relations, communications and publication committee member Che King Tow said the Government usually owned the best-located properties.

He said it would benefit the public if the Government could consider releasing its land in high-density areas such as Jalan Duta and Selangor Golf Course in the upcoming budget.

“Those are suitable prime land for mass housing. They can cut down on ownership of cars, and use public transport instead,” he said.

Yam also urged the Government to establish an automatic-release mechanism to enable the release of unsold bumiputera units. Although Rehda has not complained about allocating a portion for bumiputera buyers, the unsold properties are affecting the developers.

“More projects are having unreleased unsold bumiputera lots which impact the developer's cash flow. An auto-release mechanism should be put in place to automatically release the unsold properties after a stipulated time to prevent this,” he said.

By WONG WEI-SHEN weishen.wong@thestar.com.my

Housing market robust but commercial property glutted

Malaysia's residential property sector will continue its upward momentum thanks to ample supply and demand as well as a change in the demographic structure, according to figures from the National Property Information Centre (Napic).

Last year, 269,789 residential deals valued at RM61.83 billion were recorded, the largest in the past five years.

Napic's statistics also showed that demand for units priced below RM150,000 was strong, accounting for 145,785 deals, or 54 percent of all the residential transactions for 2011. Moreover, this is an increase of 12.6 percent compared to the previous year's 129,441 transactions.

"On a similar upward trend, the demand for high-end units priced above RM500,000 increased gradually to 21,905 transactions from the 16,782 transactions recorded in 2010," said the Napic report, adding that the Malaysian All House Price Index soared to 154.6 points from 140.7 points in 2010.

"This was (also) attributed to the increase in affordability level and supported by the ease in borrowing and attractive loan packages offered by the financial institutions," commented Datuk Ng Seng Liong, Past President of Real Estate and Housing Developer's Association of Malaysia (REHDA).

However, there are concerns that Klang Valley's commercial property sector is facing a supply glut, said Dr Ernest Cheong, Principle of Ernest Cheong PTL Sdn Bhd. He believed that the problem can be solved by creating additional demand or stopping construction of commercial property.

La-Brooy, Chief Executive Officer at Axis REIT Managers Bhd, concurs. He explained that rental and occupancy rates will be pressured later this year because as much as five million sq ft of office space are scheduled for completion for the remainder of 2012.

For the latest property news, trends, resources and expert opinions, visit our Property News section. Home buyers, sellers or property renters looking for Malaysian Properties, may like to visit http://www.propertyguru.com.my today.

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China launches own mobile browser, Baidu Explorer, tosses currency into clouds

China’s biggest search engine launches its own mobile browser, Baidu Explorer 

China’s biggest search engine launches its own mobile browser, Baidu Explorer

Baidu Campus, Beijing, China. Image by hwanghsuhui, via Wikimedia Commons

Chinese-language search engine Baidu has decided to try and capture the massive mobile internet market in China by launching its own mobile browser, Baidu Explorer. 

Baidu is already the dominant search engine China, which has 538m online users, but with 388m of these users accessing the internet via mobile phones, the company needs to tap into this vast market.

Other mobile products from Baidu include a mobile operating system that appears on low-cost smartphones the company produces with its manufacturing partners. But, with Baidu Explorer, it hopes to reach other smartphone users. The target, according to Reuters, is to have Baidu Explorer downloaded by 80pc of Android users in China by the end of this year.

Though there is already strong competition in the mobile browser market, Baidu claims its browser is 20pc faster than its rivals based on internal tests. It also has strong HTML5 compatibility and users can run HD video through the browser without having to download additional apps or software.

Hopes for 80 per cent penetration by year-end

China’s search-and-plenty-more giant Baidu has flagged a $US1.6 billion cloud investment. The investment, announced with a minimum of detail by CFO Li Xinzhe, will go towards building data centres and hiring staff.

The Chinese search firm also announced the launch of the Baidu Mobile Browser, which it says is designed to compete with Chrome and Safari. It claims a 20 percent performance boost over its rivals based on internal testing.

Briefing Asian journalists last Friday (August 31), Baidu said its mobile browser can play high-definition video without plugins or extra supporting software, according to Reuters.

The company said it hopes that 80 percent of China’s handsets will run its browser by the end of the year. By some astonishing coincidence, 80 percent is also the search market share the company claims in the Middle Kingdom, in the absence of Google, which has clashed with Chinese authorities over search censorship.

During August, Google’s local partner Qihoo launched its own search service, relegating Google to an “alternative search option”.

The Wall Street Journal says Baidu’s cloud plans include remote online storage, as well as API access to its map service which last month overtook Google Maps in China. ®

By Richard Chirgwin • Get more from this author

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Upbeat views on Malaysian property

Tang: ‘Investors from China are big time property purchasers in Singapore.’

Substantial inflows and outflows of investments expected for this year

GEORGE TOWN: Despite the global economic crisis, property investments coming into the country and going to overseas this year are expected to increase substantially.

The recently introduced 10% stamp duty for foreigners buying properties in Singapore has increased the attraction of Malaysia as a property investment destination.

Property investments flowing to Melbourne, Australia, are expected to increase between 15% to 18% this year from RM125mil in 2011, thanks to new housing loans for the Australian market recently introduced by Malayan Banking Bhd (Maybank).

Property Talk International Sdn Bhd managing director Steven Cheah said that foreigners showing interest in Malaysian properties had increased significantly this year, compared with the last three years, due to the recent 10% stamp duty introduced in Singapore for foreigners buying homes.

“The other reason is that Kuala Lumpur still remain as one of the few South-East Asian cities with attractive property prices.

“Compared to Jakarta, the price for a prime residential in Kuala Lumpur is about 15% lower.

“The buyers are from Indonesia and China and they show preference for Iskandar, Johor Baru and Kuala Lumpur.

“Indonesians prefer Iskandar because it is close to Singapore,” he said.

The Indonesians and China buyers generally go for properties priced between RM600,000 to RM1.5mil in Iskandar and Kuala Lumpur, while in Penang they go for RM1mil above homes, according to Cheah.

The additional direct flights from Jakarta to Penang by Air Asia had also fueled the interest from Indonesia for Malaysian properties, Cheah added.

This year, Property Talk expects to sell about RM55mil worth of properties located in Johor, Kuala Lumpur, and Penang, compared with over RM20mil achieved for 2011.

“Over the past three months, we have sold over RM25mil worth of properties, comprising 35 residential homes located in Kuala Lumpur and Iskandar, Johor Baru.

“We expect to sell another RM30mil worth of properties, comprising 30 to 40 homes, from Iskandar, Kuala Lumpur, and Penang via three more property exhibitions in Jakarta jointly organised by Malaysia Property Inc and private developers before the year ends,” he said.

An aerial view of Melbourne. Property investments flowing to the Australia’s city are expected to increase between 15% to 18% this year.

 

On investments from Malaysia to Australia, Cheah said the loan interest from Maybank was between 4% to 5% per annum compared with 5.7% to 6% per annum by Australian banks.

“This is why we can expect more Malaysians to take up the loan to invest in Melbourne, Australia this year,” Cheah said, adding that the Maybank housing loan was for Melbourne only.

According to Cheah, Melbourne is the top investment destination for Malaysian property investment funds.

“This is because many Malaysians have relatives who have migrated to Melbourne, where you can find a variety of Malaysian food restaurants.

“According to the latest research from Australian Property Monitors (APM), over the last five years, Melbourne has been the standout performer among the major capital cities for house price growth, with prices increasing almost 30% in just 15 months,” he added.

Meanwhile, Henry Butcher Marketing Sdn Bhd chief operating officer Tang Chee Meng said Henry Butcher had recently set up a property show gallery in Beijing, following the imposition of the 10% stamp duty by the Singapore government for foreigners buying properties in Singapore.

“The gallery, set up two to three months ago, showcases residential properties from Klang Valley, Malacca, and Penang.

“Investors from China are big time property purchasers in Singapore.

“With the 10% stamp duty introduced, Malaysian developers are now trying to attract them over.

“We still need to do a lot of education work in China to promote Malaysia as a property destination, as the awareness is still lacking,” he said.

Tang added there were many enquiries from China investors to buy vacant land to develop residential projects in Malaysia.

“We hope they will undertake development in Malaysia and promote the properties in China.

“This will help to increase more awareness for Malaysian properties in China,” he said.

According to Tang, the global financial crisis which erupted in 2008 and 2009 saw foreign interest for local properties dropped significantly. ”In 2010, we see a return of foreign interest, but the volume and value of property transactions involving foreigners still have not not recovered to anywhere near its peak prior to 2008.

“We believe the pace of investment from overseas will remain flat against last year.

“Besides tapping into traditional sources like Singapore, Hong Kong and Indonesia, Malaysian developers are moving into markets such as South Korea and China.

“China is a vast market and if Malaysian developers are able to educate the investors on the attraction of Malaysian real estate, we may see a surge in foreign interest,” Tang added.

Henry Butcher Marketing director for international marketing Jazmine Goh meanwhile said the global economic crisis had created favourable conditions and opportunities for Malaysians to invest in overseas real estate.

“The economic slowdown in Britain has caused property prices to plunge and coupled with the drop in the value of the pound sterling against the ringgit, properties in the United Kingdom have become more affordable and within reach of middle income Malaysians.

“The mortgage defaults in the United States have also resulted in a lot of opportunities to pick up properties foreclosed by the banks at a fraction of the original price.

“Of course, the fear of the prolonged debt woes in Europe has at the same time resulted in a more cautious attitude being adopted by investors,” Goh said.

The popular investment destinations for Malaysians are Australia, mainly Melbourne and to a lesser extent, Sydney, Perth, Brisbane and Gold Coast as well as London, and Singapore, and more recently, the United States, according to Goh.

By DAVID TAN davidtan@thestar.com.my

Put an end to patent battle

An early settlement of the dispute between Samsung and Apple would benefit consumers and the global mobile device industry as a whole. 

An Apple Inc. iPad 2 and iPhone 4S smartphone, left, and a Samsung Electronics Co. Galaxy Tab 10.1 tablet computer and Galaxy S III smartphone are arranged for a photograph in Seoul, South Korea, On Tuesday. (Bloomberg)

SEOUL: Samsung Electronics has suffered a crushing defeat in a landmark patent battle against Apple Inc. A US jury last Friday found that the Korean smartphone maker infringed upon a number of patents held by Apple, while the American tech giant did not violate any of its Korean rival’s intellectual properties.

The jury’s judgement is widely criticised here as unfair. But it is highly likely to be upheld by the California court, dealing a serious blow to Samsung, the world’s largest mobile device producer. Samsung accounted for 32.6% of the global market in the second quarter against Apple’s 16.9%.

The nine-member jury ordered Samsung to pay US$1.05bil (RM3.28bil) in damages to Apple. The damages – much larger than expected – could be doubled or even tripled by the judge overseeing the trial, given the jury’s scathing verdict that Samsung “willfully” infringed on Apple’s coveted patents.

Samsung also faces a US sales ban on its mobile devices. Following the trial win, Apple presented to the judge a list of Samsung products it wants barred. Apple identified eight Samsung smartphone and tablet models but did not include Samsung’s new flagships, the Galaxy S3 and the Galaxy Note. Consequently, the sales ban, even if accepted by the court, is unlikely to have a serious impact on Samsung.

The US court’s ruling could also negatively affect patent battles between the two under way in nine countries over four continents. Unfavourable rulings in these countries would pour cold water on Samsung’s ambition to cement its global market leadership.

Furthermore, the jury seriously wounded Samsung’s pride by slamming it as a copycat. This is an insult hard to swallow, as Samsung has worked hard to secure leadership in mobile technology.

Given the high stakes involved, it is only natural that Samsung has decided to file post-verdict motions to overturn what it saw as the jury’s one-sided judgement. It plans to take the case to the court of appeals if its motions are rejected.

This suggests that the patent war will not end any time soon. Samsung is determined to continue the legal battle to make its case that Apple did encroach upon its hard-won patents for mobile technologies.

At the same time, Samsung is seeking to turn the tables in the next round of the battle by utilising its patents for fourth-generation technologies called “long-term evolution.”

Samsung is betting that it would be able to use some of its LTE patents as weapons against its rival because they have not been made open as industry standards. It is wondering how Apple can produce its next-generation model, the iPhone 5, without using its patented LTE technologies.

In light of Samsung’s technological prowess and deep pockets, the company will be able to overcome the grave challenge it is facing now.

For instance, it won’t have much difficulty paying the US$1.05bil (RM3.28bil) damages set by the jury, given that its net profit amounted to US$4.5bil (RM in April-June alone.

Yet Samsung should learn a lesson from the costly patent war. It is imperative for the company to transform itself from a fast follower to a first mover. It needs to go back to the drawing board to make its products truly innovative both in design and functions. It might want to risk a radical design that can differentiate its products from others.

Apple, emboldened by last Friday’s triumph, may be tempted to expand the patent war to collect royalties from other smartphone makers that rely on Google’s Android operating system. Yet it should realise that no company has ever succeeded in establishing market leadership through patent litigations. A company can only become a market leader through competition in the marketplace.

Apple also needs to know that any attempt to drive Android-based smartphone producers into a corner could backfire in the long term, as it will spur their efforts to become more innovative. With their survival at stake, they will be compelled to change the game as they cannot beat Apple at its own game.

In this regard, we urge Apple and Samsung to reach a deal that can benefit both. Apple could set royalties for Samsung at a level that would not undermine the Korean company’s earnings too much. An early settlement of the dispute would also benefit consumers and the global mobile device industry as a whole.

 
By EDITORIAL DESK

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'China-threat theory' dismissed

 PHOTO: REUTERS/FILE 

COLOMBO: Chinese Defence Minister Liang Guanglie says Beijing's increasingly close ties with South Asia are aimed at ensuring regional "security and stability" and are not intended to harm any "third party".

Liang, the first Chinese defence minister to visit Sri Lanka, did not name India -- where he heads to Sunday -- but officials in New Delhi have expressed concerns about Beijing's influence in Sri Lanka, Bangladesh, Maldives, Nepal and Pakistan.

India fears it might be part of a Chinese policy to throw a "string of pearls" -- a circle of influence -- around regional rival India.

But in a speech released by Sri Lanka's military on Saturday, Liang said that China had only peaceful intentions in South Asia, while stressing that the Indian Ocean was an important supply route for his fast-developing country.

Beijing is seeking "harmonious co-existence and mutually beneficial and win-win cooperation" with countries in the region, he told a Sri Lankan army staff college on Thursday, according to a copy of the speech.

In New Delhi, the minister will be a guest of the defence ministry, an Indian government spokesman said, without giving details of what will be discussed.

India is warily eyeing growing Chinese clout in what New Delhi regards as its traditional sphere of influence.

Liang dismissed the "China-threat theory".

"Some people in the international community suspect that China would take the road of expansion with force and have been actively spreading the 'China-threat theory'," he said.

"The People's Liberation Army (China's armed forces) efforts in conducting friendly exchanges and cooperation with its counterparts in South Asian are intended for maintaining regional security and stability and not targeted at any third party," he added.

Liang said his trip to Colombo was aimed at further strengthening close ties with Sri Lanka, including military cooperation.

China is a key supplier of weapons to the Sri Lankan military, which in 2009 crushed the Tamil Tiger rebels and declared an end to 37 years of ethnic conflict that claimed up to 100,000 lives on the island, according to UN estimates.   – AFP

Respond calmly to 'China threat theory'

China has won acclaims for its significant economic and social achievements since the reform and opening-up, but at the same time it has been seen as a threat by many countries.

Conflict of interest, an underlying cause of "China threat theory"

The "China threat theory" is caused by the country's rapid growth in economic and military strength, and is bound to accompany the country's rise as a great power.

In the eyes of certain Western powers, China's rise poses a challenge to the traditional Western-led international order and geopolitical landscape. According to the history of capitalism's rise, the rise of all great powers was accompanied by the use of force and wars. For example, the rise of the United Kingdom, the United States, Germany, and Japan all followed the same old path of wealth accumulation, military buildup, and military expansion. Western international relations theories formed on this basis, be it the Western power shift theory or hegemony transfer theory, believe that China's rise will cause a shift of power among countries and break the existing international order, which will cause global instability and even wars.

Therefore, the real reason for Western countries to propagate the "China threat theory" is that they are afraid that China will challenge the existing international status when it becomes strong. The western countries hope to restrict the rise of China by means of the "China threat theory."

"China threat theory" has dual effect of containment and stimulation

In order to curb and interfere with China's development, the Western countries hype the new round of "China threat theory." However, the result is counterproductive. The "China threat theory" exaggerated by the Western countries for decades produced a dual effect of containment and stimulation.

On one hand, the "China threat theory" damaged the image of China and deterred the development pace of China. It deteriorated the surrounding environment of China to some extent and made China must face a more complex international environment and withstand more external pressure.

On the other hand, as an imposed power, the "China threat theory" strengthened China's sense of crisis and stimulated the rise and development of China. According to the "challenge-response" theory of British historian Arnold J. Toynbee, the organism will instinctively produce a series of effective responses in the face of challenges and ultimately promote its development.

Take a calm and initiative attitude in response to "China threat theory"

The "China threat theory" has become a preferred tool in the domestic politics of some countries, and has become a power discourse in the international community. Whenever some countries suffer from relevant domestic political issues, they often take the "China threat theory" as shields. For example, in the currently heated U.S. presidential election, the "China threat theory" is the stock in trade of the Obama administration. Facing the "China threat theory," we have to be calm and initiative, but also take the following effective methods.

Firstly, have a calm state of mind compatible with other dominant countries. Secondly, continue to promote and intensify international cooperation. Thirdly, actively build a favorable national image. Fourthly, unswervingly follow the road of peaceful development.

Therefore, the fundamental way to offset the negative effects of "China threat theory" is to vigorously develop China's national strength. Besides, we should concentrate on our own business so as to ride out the current critical period of development. By then, the "China threat theory" as a special historical symbol in China's development process will naturally fade.

Read the Chinese version at http://zqb.cyol.com/html/2012-04/06/nw.D110000zgqnb_20120406_1-09.htm

By Shi Qingren (China Youth Daily)

Pitching for the Asean 10

Asean countries are still developing because there is still much to do, and much to learn about how to do it.

IF Asean is sometimes accused of being a talking shop, it also vividly demonstrates the value and virtues of some talking shops.

Officials’ meetings at various levels are legion, growing in number and scope over half a century until they average a few a day for every day of the year.

Between these are the summits, being more prominent in comprising heads of governments. Besides the content of the proceedings, the frequency of the summits themselves may indicate the state of the South-East Asian region.

When leaders from Indonesia, Malaysia, the Philippines, Singapore and Thailand met in Bangkok in 1967 to found Asean, that was somehow not considered a summit. So the “first” summit came only in 1976 in Bali, with the “Treaty of Amity and Cooperation in South-East Asia” and the “Declaration of Asean Concord.”

The second summit came the following year in Kuala Lumpur, coinciding with an Asean-Japan dialogue. Although this was only one year after the first, it was a whole decade after Asean’s founding and would be another full decade before the next.

The third summit (Manila, 1987) decided to hold summits every five years. By the seventh (Bandar Seri Begawan) it would be every year, then after skipping 2006 the Philippines hosted the 12th in Cebu amid local protests.

The 14th summit slated for 2008 in Thailand was postponed to early 2009 over domestic disturbances, then put off for another two months in the broken Pattaya gathering. From then on, summits would be biannual affairs.

Between and beyond the summits, whether or not local scandals and protests add to the news value of Asean gatherings, the original five member nations seem to attract more attention if not also more interest. This is anomalous since Asean membership confers equal status on all members regardless of size, age, clout or political system.

The newer members can actually be quite pivotal in their own way, as Vietnam and then Cambodia had been, and as Myanmar may be now. And several of the older members need not be particularly significant to the Asean 10 as a whole, much less beyond.

With such issues in mind, Malaysia’s Foreign Policy Studies Group last week held another roundtable conference in Kuala Lumpur on how relations between Malaysia and the CLM countries (Cambodia, Laos, Myanmar) can contribute to Asean consolidation.

An earlier roundtable comprised delegates from Indonesia, Thailand and Vietnam in assessing how their countries’ relations with Malaysia could progress in the same vein. Vietnam, as the largest and most developed of Asean’s newer CLMV members, had also introduced reforms earliest to qualify to join the earlier dialogue with some of the original members.

Other CLMV countries have progressed on other fronts on their own. It is now 20 years since Cambodia, for example, reached agreement with Malaysia on visa-free travel.

Laos is another country that Malaysia has assisted, with the establishment of bilateral relations (in 1966) even before Asean was founded. Since then, relations have flourished, particularly after Malaysia worked to welcome Vientiane into Asean.

Myanmar today is still undergoing a transition, and therefore also very much a focus of world media attention. Its people now have a greater sense of nationhood following a raft of reforms, mindful of the national interest from economic priorities to the prerogative of rejecting foreign military bases on its soil.

A Malaysian delegate said that the US, following news reports last Sunday, was now looking for a suitable site for a new “missile shield” system in the region. The US and China were the two proverbial “elephants in the room”, and the geopolitical rivalry between them very much an issue for all delegates.

No individual, organisation or country at the roundtable, whether officially or unofficially, was left undisturbed by major power rivalry contaminating the Asean region. This was the more so when preparations abroad tended to centre around a military build-up, with the US “pivot to Asia” involving stationing 60% of its military assets in the Asia-Pacific.

According to one recent analysis, at current and anticipated rates China’s economy could surpass the US’ as early as 2016, and US overall decline could become evident by 2020. Ironically, as with its former Soviet adversary before it, the decline would be underscored by excessive military expenditure and a warlike mindset.

Given these scenarios, it is important to be reminded of some pertinent underlying issues. These may be framed by some telling questions that must be asked, for which answers are vitally needed.

First, are the CLM countries necessarily more dependent on a regional superpower-as-benefactor like China economically, compared to Asean’s older and more developed members. Not so, especially when considering that the latter, with larger economies, have more at stake in dealing with a rising China.

Second, is China even likely to consider challenging US dominance in the region? Despite occasionally dire pronouncements by some there is no evidence of that, indeed quite the reverse: beyond assertions of its old maritime claims, Beijing’s relations with all countries in the region have been progressing and progressive.

US military dominance in the Asia-Pacific is often credited with keeping the regional peace, particularly in the high seas. Is this assumption merited if piracy and terrorism are not included in the calculus, since there may not be any other military force out to wreak havoc in the region post-1945?

Fourth, how much value is there still in the assumption that the US military posture is and will remain the status quo entity in the region? The status quo is helping China’s economy grow, with secure shipping and harmonious development, while the US economy is continually taxed by its large and growing military presence.

Fifth, and by extension, how much pulling power is there today in US efforts at soliciting allies? The problem with enlisting in an alliance for other countries is that to be identified as an ally of a major power is also to identify as an ally against another major power.

Dividing the region in Cold War fashion does not help anyone, and never did. To enlist with a (relatively) declining superpower creates further problems of its own for such allies.

Sixth, can China’s reported flexing of its muscles in the South China Sea and the East China Sea in any way be a show of strength? Since it only gives Beijing a negative image just as it needs to look good, without any gain in return, it is instead a point of weakness.

Seventh, can US efforts to contain China ever work? There is no shortage of instances that verify containment, a situation confirmed by official denials.

So, eighth, why try to contain China at all when in the process the US only loses goodwill before losing face? Perhaps old habits die hard, but more likely the military-industrial complex dies harder.

Smaller countries in Asean and elsewhere have much to learn from the major powers, notably the US and China. Sadly, the lessons are just as much what not to do as they are about what to do.

BEHIND THE HEADLINES By BUNN NAGARA sunday@thestar.com.my

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The rising K-economy in Asia

HOW big is the impact of the Internet potential on Asia, including the impact on development of the knowledge economy in Asia?

We all have a sense that the Information and Communications Technology (ICT) industry has transformed social media, education and the way business is done. But we are not sure what is the best way to use the Knowledge economy to propel our future growth.

In 1973, American sociologist Daniel Bell predicted the arrival of the Post-Industrial Society by 2000 with a world dominated by service industry, high value professional and technical employment and innovation driven by scientific research.

In 2000, the number of global Internet users was only 360 million, rising to 2.3 trillion with an annual growth rate of 528% between 2000-2011, of which 45% reside in Asia. The highest penetration of Internet is in North America (78.6%), whereas penetration in Asia is only 26.2%, pointing towards huge potential for Asian growth.

According to Internet World Statistics, the top Internet country in Asia is China, with 513 million users, followed by India (121 million), Japan (101 million) and Indonesia (55 million).

Within Asia, the highest penetration is South Korea (82.7%), Japan (80%), Singapore (77.2%), Taiwan (70%) and Hong Kong (68.7%). China has 38.4% Internet penetration.

However, the highest number of Facebook users in Asia is India (45 million), Indonesia (43 million) and the Philippines (27 million). Asia has 195 million Facebook users as at March 2012, or 23.3% of 835 million worldwide, compared to 44.8% penetration in Internet usage. The reason is of course Facebook is not used in China, but even then, there are 447,000 recorded users, less than the number in Cambodia (449,000).

Did you realise that 26.8% of Internet users are English-speaking (565 million), and 24.2% are Chinese speaking (510 million). The third most important language is Spanish (165 million). The Malay language, which is common to Indonesia and Malaysia, is not counted yet among the top 10 languages, mainly because the penetration of the Internet in Indonesia (245 million people) is only 22.4%.

Malaysia has a web usage rate of 61%, with over 17 million people online. The Post-Industrial Society has already arrived in the advanced countries, with the service sector accounting for 76.7% of US GDP, compared with only 1.2% for agriculture and 22.1% in industry. Employment in the service sector already accounted for 77% of total employment in the United States, with the increase in the service sector employment driving employment growth in the coming years.

Within the service sector, three sectors - education services, healthcare and professional and business services (all knowledge industries) are expected to grow at double the speed of employment of the US employment as a whole. In contrast, manufacturing employment is only 10% of total employment in the United States, compared with 28% employed in manufacturing in China. But the service sector in China accounts for only 43% of GDP, compared with 55.2% for India.

What is the relationship between information, knowledge and value creation?

In 1991, one of the pioneers on information theory, Robert Lucky, argued that the information value chain is a pyramid, with the bottom data having no value, classified data becoming valued information, with applied knowledge (technology) having more value, and wisdom, the highest value, being learnt, experienced and useful not only to understand but perhaps predict events.

What the Internet revolution has achieved is to distribute information and knowledge very quickly to the masses across the world. Indeed, the main benefit of the Internet is that it broke down “silos” of specialised information and data that could be shared and used by everyone with access to it.

Indeed, the Internet has enabled “Wiki-knowledge production”, which has produced a huge public good, available to all, with free input by thousands of anonymous volunteers. Public goods are no longer produced by governments, universities or firms, but by the collaboration of thousands of empowered individuals.

There is no doubt that as Asia ponders its own Post-Industrial Society, how it adapts to the new knowledge economy will make a difference between future success or failure.

Leading economies like Singapore and South Korea have devoted tremendous resources into education, research and development in key areas. South Korea even revived its Five-Year Plans to transform itself into a high growth, high knowledge green economy.

Both the Chinese and Indian 12th Five-Year Plans have ambitions to become creative and innovative economies.

In this regard, it is useful to compare and contrast the IBM way towards innovation and value creation versus the Indian approach. In the IBM book Making the World Better (2011), it uses a methodology insiders call SMUBA, an acronym for Seeing, Mapping, Understanding, Believing and Acting.

It is a process to master complex systems and to move from data, analytics and implementation.

Multinationals like IBM now realise that it is impossible to innovate alone by having centralised research laboraties the work is shared and done through key research labs spread throughout the world, through connecting research to product development, academic and government collaboration, internal collaboration across departments and labs, collaboration with clients, innovation by acquisition and open innovation.

In contrast, the Indian model of innovation and value creation is distinct in three ways producing frugal, affordable solutions for the masses without compromising quality, innovation in organisational and process models that improve quality and service delivery, and innovations in the process of innovation (frugal cost solutions through frugal cost of innovation).

The race is already on to produce Asian multinationals and create products to compete with Apple, Amazon, Google or Facebook.

The setback that Samsung faced recently will probably accelerate that process of innovation and competition across Asia.

THINK ASIAN By ANDREW SHENG

Tan Sri Andrew Sheng is president of Fung Global Institute.

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Apple patent claims stifling innovation; Japan court rules in favour of Samsung

Is Apple stifling innovation?

A US jury decision against Samsung and a Japanese court decision for the Korean conglomerate raise questions over the entire patent issue

WOULD anyone have expected the Apple-Samsung case to be decided in favour of Samsung by a US court in a jury verdict and against Apple, which is by now even more American than apple pie? I certainly didn’t.

But there is an appeal on the cards and it is still anyone’s guess if Apple will be allowed to claim such things as shape and “pinch to zoom out” as its right. But if it is, then that’s a big setback for other smartphones.

Samsung, however, scored a victory in a Tokyo court which ruled yesterday that the Korean electronics giant, and supplier to Apple, did not violate any patents. That victory will no doubt raise questions as to how fair the US jury was in making an award in favour of Apple, including US$1bil in damages.

The US decision means eventually consumers there may have to pay more for Apple’s iPhone, iPod and devices because others may not be able to emulate features that may have made their devices a success. That will have repercussions on prices elsewhere as well.

In the motor industry there have been many trends in shape over the years, moving from angular to rounded designs. If some car company had decided to sue every other car manufacturer for a similar look and feel and succeeded, car shapes may have had great difficulty evolving.

But the best manufacturers of cars did not. In fact some of them deliberately did not register safety patents just so that others could use the innovations to increase passenger safety.

If Samsung is said to have infringed on shape, then there are a number of other manufacturers who are in trouble too. Rectangular faces with rounded edges are a natural evolution in the mobile phone industry. Certainly, other manufacturers are going to hope there will be a reversal on appeal.

Apple did not invent the touch screen. Thus, it seems strange that it has a patent to “pinch to zoom” which is basically one way of many ways to use a screen. That’s like patenting a particular method of driving a car!

Apple has already followed up on its US victory, seeking an injunction to prevent Samsung from selling eight of its smartphones in the United States including some in the best-selling Galaxy range.

However, hearing of the injunction will only be in December and some of Samsung’s models may be phased out by then, which offers some consolation for Samsung.

Some US commentators view the case as a proxy war against another US company Google which makes the Android operating system used in Samsung, HTC and other smartphones.

An article in the San Francisco Chronicle says that the late Apple chief executive Steve Jobs was once a friend of Google’s co-founders but considered Google’s move into mobile a betrayal that demanded revenge.

“I’m going to destroy Android, because it’s a stolen product,” he told his biographer Walter Isaacson. “I’m willing to go thermonuclear war on this.”

But despite the nice rhetoric, revenge from the grave it is not. Apple’s strategy seems quite clear cut. Patent everything. Then tie up competitors in court if there is any semblance of product infringement and keep its competitive advantage intact as long as possible.

Reports put its profit margins on its iPhone at as high as 50%, a huge mark-up in a cutthroat market which it has been able to achieve by parlaying an excellent product with some very deft marketing and public relations.

That made it the biggest company in the world. Many would say that the product, however, is not necessarily the best anymore if ever it was, especially since competitors are fast catching up with their own nifty designs and features. And marketing and PR too – Galaxy is getting a name for itself and no doubt the cases around the world will help.

Thus it makes much economic sense for Apple to prolong this by any legal means it can for as long as possible. Does Apple care that it may be stifling innovation, raising costs and hurting consumers in the process?

Probably not. And why should it? It is a company based on the profit motive. But it needs to remember that all publicity is not good publicity and if it gets a reputation as a bully, its entire image and that of its products could change.

American companies can carry this patent thing too far and they have. Recall a few years ago when some of them tried to patent the production of pesticides from neem trees. For thousands of years, extracts from the leaves of the neem have been used for precisely that.

The American jury system cannot but be expected to favour a US icon such as Apple which is seen as brash, innovative and successful, the very image of the US itself. But that’s not going to be the case in the rest of the world. And even in the US, if learned judges make the decisions instead of a jury, the results may well be different.

Really, no one is going to benefit and there may well be detriment, if we allow patents to get the better of us and stifle innovation and hinder the development of new products and services at lower costs.
It would be a travesty of sorts and ironic indeed if Apple is now seen as a technology inhibitor instead. Beware!

A QUESTION OF BUSINESS By P. GUNASEGARAM starbiz@thestar.com.my

P Gunasegaram is an iPhone user but only because the service provider gave such a good deal.

 Japanese court rules for Samsung over Apple

In this Aug. 25, 2011 file photo a lawyer holds an Apple iPad and a Samsung Tablet-PC at a court in Duesseldorf, Germany. The Duesseldorf state court ruled Tuesday, Jan. 31, 2012, that neither the South Korean company‘s Galaxy Tab 10.1 nor the Galaxy Tab 8.9 could be sold in Germany because they were in violation of unfair competition laws. A German appeals court has upheld a decision prohibiting Samsung Electronics Co. from selling two of its tablet computers in Germany, agreeing with Apple Inc. that they too closely resemble the iPad2. (AP)

Samsung wins one battle in the multinational conflict over patent and innovation

By Jeong Nam-ku, Tokyo correspondent

A Japanese court has ruled in favor of Samsung over Apple in a patent lawsuit. In the August 31 verdict, Tamotsu Shoji, the Tokyo District judge, declined Apple’s claim that “8 models of Samsung Galaxy series infringed on Apple’s patents.”

Apple had sued Samsung for infringing on its synchronization of music and other data with remote servers. It asserted that “Samsung’s products use Apple’s technologies of synchronization, which constitutes patent infringement,” and demanded both compensation of 100 million Japanese Yen (around US$1.27 million) and a block on eight Samsung products.

According to Jiji Press, judge Tamotsu stated, “Samsung’s products are technologically distinct from Apple and can’t be considered infringements.”

As a first trial, this does not hold much importance beyond being an indication of what the final verdict might end up being. However, because the verdict ordered a ‘dismissal’ on Apple’s injunction, there is only a slight possibility for an overturn in the final verdict.

Apple has also sued Samsung for infringing on its ‘bounce back (technology that springs back when the document has reached the end)’ patent, a claim that is still ongoing.

This verdict is the first ruling out of the 9 lawsuits Apple and Samsung Electronics have against each other. Samsung also filed lawsuits against Apple in April and October of 2011, arguing that Apple also infringed on 6 of Samsung’s patents.

Samsung and Apple have ongoing lawsuits in different 10 countries. In the US, a judge ruled that Samsung had infringed Apple patents, ordering the Korean electronics giant to pay $1.05 billion in damages.  

Translated by Yoo Hey-rim, Hankyoreh English intern

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