Education 2.0 In Indonesia: Inspiring Bamboo Innovators (Jakarta Post)

Dear Friends and All,

“What use is an esoteric academic theory like Einstein’s theory of relativity?” Answering this question with the Bamboo Innovator framework can surprisingly lead to the uncovering of resilient compounders: the Indonesian-listed bread company Indosari, the largest mass-market producer of bread in Indonesia under the “Sari Roti” brand, and Mexican-listed Grupo Bimbo, the largest bread manufacturer in the world. Interestingly, Indosari’s market value of US$750 million (now over US$900 million) is almost 20-times smaller as compared to Mexico’s Grupo Bimbo’s US$15 billion, even though both Indonesia and Mexico have gross domestic product (GDP) of US$1 trillion. What is so unique about the business models at Indosari and Grupo Bimbo? Why are they Bamboo Innovators? I like to share the article that was published in Jakarta Post, the oldest and largest-circulated English newspaper (one of the few dailies who survived the 1997/98 Asian Financial Crisis): “Education 2.0 in Indonesia: Inspiring Bamboo Innovators”.

Education 2.0 In Indonesia: Inspiring Bamboo Innovators, May 11, 2013 (Weblink: Jakarta Post)

Jakarta Post_Bamboo Innovators

Below is the unedited version:

Education 2.0 in Indonesia: Inspiring Bamboo Innovators

April 2013

“What use is an esoteric academic theory like Einstein’s Theory of Relativity?” scoffed the “street-smart” students and “practical” businesspeople. Answering this question using the Bamboo Innovator framework can help foster resilient value creators in varied disciplines and remake Education 2.0 in Indonesia as we walk through the seemingly unrelated stories below and be amazed by how the dots connect towards the end.

Without Einstein’s modern physics theory, it would be impossible to use your iPhone to find your location on a map. The transistors in the phone rely on effects predicted accurately to several decimal places by quantum mechanics. The Global Positioning Satellites (GPS) that the phone uses to locate us incorporate in their software the deformation of space-time predicted by relativity theory to achieve navigation accuracy within about 15 meters of our actual position. Without the proper application of relativity, GPS would fail in its navigational functions within about 2 minutes. Thus, this theory plays a critical role in the multi-billion growth industry centered around the GPS.

GPS, in turn, has enabled the development of the GIS (Geographic Information System) to revolutionize the way we capture and analyze all types of geographical data for multiple applications from urban planning, disaster response, epidemic planning, mining and oil exploration to location-based services. ESRI is the GIS software pioneer, founded by Jack Dangermond in 1969. ESRI has an installed base of more than one million users in more than 350,000 organizations with over a billion in annual revenue achieved by 3,000 employees. ESRI grew by focusing on its users and employees, eschewing incentives such as sales commissions. “People want to do the right thing; they want to be purposeful in their life,” Jack said. “Throwing financial thresholds and goals — my experience in running at least my kind of organization is that it robs people of the culture of doing great things.”

ESRI, in turn, is linked to Singapore entrepreneur Wong Fong Fui who runs the conglomerate Boustead, which has exclusive country license to ESRI GIS software in South East Asia and Australia. Mr Wong is known as a turnaround specialist, having helped the loss-making unfocused QAF with a market cap of $15 million then in 1988 to build the Gardenia bakery brand in Singapore into a $500 million food business when it was sold, and now Boustead, which he bought for $14 million in 1996 and has a current market value of $580 million.

Interestingly, this $500 million market value has been exceeded by Wendy Yap who helped focus her family business Nippon Indosari to become a Gardenia 2.0 and the largest mass-market producer of bread in Indonesia under the “Sari Roti” brand with a market value of $750 million. Around the same time FF Wong got into Boustead, Wendy started Indosari in 1995 with her father Piet Yap, one of the Salim Group executive who co-founded Bogasari Flour Mills. The typical businessman might shrug and point out that for Indosari to be bigger than Gardenia is an obvious observation, since Indonesia is a far larger market than Singapore. However, many companies and MNC giants such as SaraLee had tried to expand in Indonesia earlier but all retreated with heavy losses. So why was Wendy Yap able to scale up while others with abundant tangible resources failed?

Indosari has adopted an open innovation business model in collaborating with Japan’s Shikishima Baking who helped Indosari in its technological processes in introducing Japanese-style soft breads that won over the Indonesian palate. Importantly, Indosari has built trust with retailers and customers to overcome the logistics nightmare that doomed its better-capitalized rivals through its strong distribution network for its highly-perishable products of more than 2 million pieces of bread daily, resulting in a dominant 90% market share. It sells its products through modern distribution channels and an innovative system of around 3,000 mobile tricycle carts to penetrate over 17,000 small traditional shops in the rural parts of Indonesia.

Yet, Indosari’s market value at $750 million pales in comparison to Mexico’s Grupo Bimbo’s $15 billion even though both Indonesia and Mexico have a GDP of $1 trillion. Bimbo is also the world’s largest bread manufacturing with over $13 billion in sales. So why is this “small white teddy bear”, Bimbo’s corporate image, which “began with great limitations” in 1945 from Mexico, a country where half the population lived below the poverty line, able to become the largest in the world and compound 24-fold in market value since 1994?

Given that over 80% of bread is sold in mom-and-pop stores in Mexico scattered miles from one another over poor roads, cultivating trust and support amongst its community of customers, suppliers and employees is critical to overcome the geographical limitations in scaling up. Small store owners tend to ask for credit which was provided informally by Bimbo. Its partnership with community bank FinComún leveraged upon the bank’s pioneering expertise in providing micro-loans to extend credit yet reduce bad debt and improve working capital position to free up more cash to carry out expansion. In a country known for the exploitation of workers, Bimbo has built an unusually people-oriented culture with its well-known policy of avoiding layoffs even in times of crisis and sponsoring its employees’ education which helped foster loyalty and committment. As a result, Bimbo was able to resist the 1991 threat from the arrival on the Mexican market of giant PepsiCo. While Bimbo innovated in integrating production-delivery-finance, none of it would amount to much if Bimbo had not offered the country affordable, edible aspiration, spreading this dream to nearly every remote corner of Mexico.

There is a common thread running through these stories: the resilient Bamboo Innovator. The vitality of the bamboo revolves around its empty hollow center in the same way as the “emptiness” of the Bamboo Innovator with its “indestructible intangibles” that derive its strength from “know-how” and “trust and support in the community”. The “emptiness” is why bamboo bend but not break in the wildest storms that snapped the mighty resisting oak tree. The intangible know-how in relativity theory has led to the multi-billion GPS industry which enabled the development of the GIS pioneered by Jack Dangermond’s ESRI whose leadership nurtured a culture of empowerment and innovations. FF Wong is attracted by this intangible know-how of ESRI, having built the “intangible” Gardenia brand. At the same time when FF Wong is building Boustead, Wendy Yap has scaled up a bigger, more focused Gardenia 2.0 at Indosari by cultivating trust and support in the company’s community of customers, suppliers, partners and employees, in the same way this “emptiness” worked wonders at Grupo Bimbo.

In the landscape of Education 2.0 in Indonesia, students can search for facts on Google, but Google and Facebook cannot tell them how to connect the dots in alignment with their talent and personality to pursue what they can excel in. With the Bamboo Innovator in their hearts, they will experience the uncanny: the raw sensual data reaching their eyes before and after are the same, but with this pertinent framework of meaning, the chaotic features and anomalies in the marketplace are visible. Instead of producing “grades”, “checklist-based holistic CV” and “high graduation salary”, the education system inspires students to be the Jack Dangermond inventor, the FF Wong and Wendy Yap entrepreneur, the quantum mechanics engineer and physics expert, the geography-based business and trade specialist, the teacher and the value investor, and so on. Their fate all intertwined as Bamboo Innovators to forge their own larger-than-self path to create value for Indonesia and the world.

2,557th birthday of Buddha celebrated in S. Korea

2,557th birthday of Buddha celebrated in S. Korea

Xinhua)  15:15, May 17, 2013


Ben Franklin’s Face-Lift: The New $100 Bill

Ben Franklin’s Face-Lift: The New $100 Bill

By Keenan Mayo on May 16, 2013

After a three-year delay, the new high-tech $100 bill enters circulation this fall. Here’s how it’s designed to beat the counterfeiters.


Education strategy and the philosophy of bicycle riding

Education strategy and the philosophy of bicycle riding

Budiono Kusumohamidjojo, Jakarta | Opinion | Tue, May 14 2013, 11:04 AM

Paper Edition | Page: 7

Indonesia is a vast country that should not tolerate dilettantish national policy formulations, let alone in the field of education, which should always be perceived as the most important undertaking of human investment.
With its population of 240 million people and abundant natural resources, it is a land that is badly in need of a state of the art education strategy.
Indonesia’s education strategy should be capable to withstand geopolitical shifts, yet, flexible enough for policy adjustments that may be called for by changes in the course of national development.  Read more of this post

Hedge Funder’s Advice On How To Go Through A Company’s Annual Report

Hedge Funder’s Advice On How To Go Through A Company’s Annual Report

BlackHatWall Street Oasis | May 16, 2013, 1:15 PM | 9,420 | 5

Still jet-lagged by 8 hours from a day and a half in London, I haven’t slept for a good 48 hours and remembered I owe WSO my process for dissecting a 10-k in the usual form. Before I get right into it, keep in mind every business is different and that will dictate the way you should read their specific annual report. What might be important to look at for an oil & gas company might be completely ignored for a hardline retail company, so don’t take this as gospel when your PM tells you to get up to speed on a company and you remember the stupid shit old BlackHat told you was right and you end up missing something crucial to making an investment decision. So with that, here is a full breakdown of how I like to look through a 10-K for the first time, what’s important to focus on, and what can be glazed over (if anything) to save time and/or not confuse yourself. As always, I’ll field questions afterwards if and when I feel like it to clear anything up. Read more of this post

16 Wildly Successful People Who Majored In English: Steven Spielberg, Hank Paulson, Mitt Romney, Michael Eisner

16 Wildly Successful People Who Majored In English

Vivian GiangLynne Guey and Max Nisen | May 16, 2013, 5:13 PM | 57,027 | 9

Guess what, contrary to popular belief, you’re not entirely screwed out of having a successful career if you get an English degree.  English majors get a bad rap in today’s college debate, and it seems they always have.  It’s argued that their education doesn’t provide the necessary skills required in today’s economy. However, there are always exceptions to the rule, and many English majors go on to become highly successful people in business, government and technology. We’ve included 17 people who prove that success is determined by your drive, not background.

Singer Sting was an English major at Northern Counties College of Education.

He might be known for his musical career, but at one time, Sting was a school teacher until he decided to pursue his musical passions full-time. He has since received additional honorary music degrees from Northumbria University and Berklee College of Music.

Mitt Romney, CEO of Bain Capital, was an English major at Brigham Young University.

Mitt Romney acquired a multimillion-dollar fortune running private equity firm Bain Capital. His success in business was a popular selling point during his 2012 presidential campaign. But he didn’t get that background from an undergraduate degree. He actually graduated from Brigham Young University with a B.A. in English before going on to Harvard to get his MBA and J.D. Read more of this post

The Greatest Blunders Of Genius Scientists

The Greatest Blunders Of Genius Scientists

Clara MoskowitzLiveScience | May 16, 2013, 2:47 PM | 3,699 | 8

Even geniuses make mistakes, and sometimes those mistakes turn out to be genius in their own right, helping to illuminate some underlying mystery or impacting the way an entire field thinks. In celebration of happy accidents and enlightening errors, astrophysicist Mario Livio of the Space Telescope Science Institute in Baltimore, Md., tells the stories of five great scientific mistakes in his new book “Brilliant Blunders” (Simon & Schuster, May 14, 2013). These stories serve to show how even the smartest among us can err, and that in fact to achieve a big breakthrough, big risks are necessary, which sometimes also involve big failures. Below are Livio’s choices for the most brilliant scientific blunders. [Oops! 5 Retracted Science Studies]

Darwin’s notion of heredity

Charles Darwin achieved an amazing feat when he came up with his theory of natural selection in 1859. “Darwin was an incredible genius,” Livio told LiveScience. “His idea of evolution by natural selection is just mind-boggling — how he came up with something so all-encompassing as that. Plus Darwin really didn’t know any mathematics so his theory is entirely non mathematical.” This feat is even more incredible given the notion of heredity how traits are passed from parents to offspring) that Darwin and scientists of the time subscribed to would have made natural selection impossible. At the time, people thought the characteristics of the mother and the father simply get blended in the offspring just as a can of black paint and a can of white paint blend to create gray when combined. Darwin’s error was in not recognizing the conflict between this idea and his new theory. “If you introduce one black cat into a million white cats, the theory of blending heredity would just dilute the black color away completely. There’s no way you would ever end up with black cats,” Livio said. “Darwin didn’t understand this, he really didn’t catch this point.” It wasn’t until the concept of Mendelian inheritance was widely accepted and understood in the early 1900s that the puzzle pieces of natural selection fell into place. Gregor Mendel proposed correctly that when traits from two parents come together, rather than blending, one or the other is expressed. “As it turned out, Mendelian genetics worked precisely to solve this problem. In Mendelian genetics you mix more like you’re mixing two decks of cards, where each card retains its identity — not like paint,” Livio said. Read more of this post

Bill Gates Retakes World’s Richest Title From Carlos Slim

Bill Gates Retakes World’s Richest Title From Carlos Slim

Bill Gates is once again the world’s richest person.

The 57-year-old co-founder of Redmond, Washington-based Microsoft Corp. (MSFT) recaptured the title from Mexican investor Carlos Slim yesterday, according to the Bloomberg Billionaires Index, as the software maker hit a five-year high. It is the first time Gates has held the mantle since 2007. His fortune is valued at $72.7 billion, up 16 percent year-to-date.

Slim’s America Movil (AMXL) SAB, the largest mobile-phone operator in the Americas, has dropped 14 percent this year after Mexico’s Congress passed a bill that could quash the billionaire’s market dominance. That’s helped erase more than $3 billion from the 73-year-old tycoon’s net worth.

“When they’re talking about reform in a country that’s generally poor, and the guy shows up No. 1 on the list — not a good thing,” said Greg Lesko, managing director at New York-based Deltec Asset Management LLC, which oversees $750 million and has an “underweight” position in Slim’s flagship company. “He’s had a pretty good monopoly situation in Mexico, and the Mexican cellphone user has been paying more than he should. We applaud it for the country.” Read more of this post

Dan Brown’s Secret to Keeping Secrets; The best-selling author visits locations he never plans to write about, just to keep fans and readers guessing

May 16, 2013, 6:17 p.m. ET

Dan Brown’s Secret to Keeping Secrets

The best-selling author visits locations he never plans to write about, just to keep fans and readers guessing


When Dan Brown was researching his new novel, “Inferno,” a Dante-themed thriller set in Florence, he visited Michelangelo’s statue of David multiple times, and spent hours studying floor plans of Florence’s Uffizi Gallery, home to masterpieces by Leonardo da Vinci, Raphael and Botticelli. But the Uffizi and the David are mentioned only in passing in “Inferno,” and Mr. Brown never intended to use them to much effect. He visited the sites as a sort of cover, to throw people off and prevent plot points from leaking out. For Mr. Brown, who has made a name for himself writing novels about explosive revelations and codes, secrecy is paramount. So he uses a technique that he has mastered as a thriller writer: misdirection. “If I’m trying to keep things secret, it’s impossible to talk to these specialists without them saying, ‘Oh, my God, you wouldn’t believe who was here today and what he was asking,’ ” Mr. Brown says. “These trips usually take longer than they should, because out of 10 things I see, five of them have nothing to do with the book. I’m constantly trying to keep people guessing as to what I’m doing.” Read more of this post

Out of sync with the world: Depressed people suffer with ‘broken body clocks’

Out of sync with the world: Depressed people suffer with ‘broken body clocks’

  • There is a link between depression and changes in the body’s circadian rhythm, or body clock
  • There is a daily rhythm to the activity of many genes across many different areas of the brain
  • The pattern of gene activity is so distinctive that it can be used to estimate the hour of someone’s death
  • In people with depression clock is so disrupted that day pattern of gene activity can look like night pattern


PUBLISHED: 11:39 GMT, 14 May 2013 | UPDATED: 11:48 GMT, 14 May 2013

Depressed people are out of sync with the rest of the world because their body clocks are broken, according to a new study.

The discovery of disrupted body clocks in the brains of people with depression is the first link to be found between the condition and changes in the circadian rhythm.

It is hoped that the finding will allow for the development of better treatments. Read more of this post

Richemont Chairman Rupert to Take Sabbatical After 25 Years; “I just want to be the master of my own time for a while,” he said, adding he will return. “It’s ironic that someone in the watch business isn’t in control of his time.”

Richemont Chairman Rupert to Take Sabbatical After 25 Years

Cie. Financiere Richemont SA (CFR) Chairman and controlling shareholder Johann Rupert will take a year off, leaving management of the world’s second-biggest luxury-goods company to a team of executives including Cartier’s former CEO. The stock rose as much as 7.6 percent to a record after the Geneva-based maker of Montblanc pens and Chloe fashion said it’s increasing its dividend 82 percent to 1 Swiss franc a share to mark its 25th anniversary. Rupert’s leave will put the company in the hands of Co-Chief Executive Officers Richard Lepeu and Bernard Fornas, who previously ran Cartier. The 62-year-old South African billionaire ended his third stint as CEO in March after having taken on the job in 2010 to replace his predecessor who resigned for health reasons. His sabbatical will start after the annual shareholders meeting in September.

“There are things I want to see and want to do,” Rupert said in a call with reporters, adding he may go to Antarctica and has 50 books he’d like to read. “I have the right to take a break after 25 years.” Read more of this post

Secret Rocks: The $10 billion jewels industry is shrouded in beauty—and mystery. Is change about to come?

Updated May 17, 2013, 12:47 a.m. ET

Secret Rocks

The $10 billion jewels industry is shrouded in beauty—and mystery. Is change about to come?



TO HEAR RICHARD HUGHES tell it, the journey was like something straight out of “Indiana Jones and the Temple of Doom.” One of the world’s leading modern-day gem hunters, he was hell-bent on reaching the fabled jade mines of upper Myanmar—a jungle redoubt so remote and closely guarded that few living Westerners have ever laid eyes on it. Before he could get close, he had to spend months ahead of his trip convincing Myanmar’s secretive military, which controlled access to the country’s mines, to let him in. Then he had to navigate some of the most punishing, malaria-ridden terrain east of the Congo, capped by a grueling climb along a dirt road his handlers said would only take seven hours to ascend. The trail quickly turned into a river of sludge under Myanmar’s brutal monsoons, trapping vehicles in mud to their doors until teams of elephants showed up to haul them out. Days passed by as Hughes and his companions fought their way through the muck. In ramshackle villages along the way, residents smoked opium and told wild tales of the mining world beyond the ridges above. Read more of this post

China’s Next Crisis Lurks in Shadow Banking; “The longer the government takes to address this, the bigger the problem becomes.”

China’s Next Crisis Lurks in Shadow Banking

By Dexter Roberts on May 16, 2013

China’s growing reliance on shadow banking is contributing to its debt problem. Since 2010 the value of the unregulated loans, investments, and other financial products of this sector has almost doubled, to as much as 36 trillion yuan ($5.86 trillion). That’s equal to 69 percent of gross domestic product, says Haibin Zhu, chief China economist at JPMorgan Chase (JPM) in Hong Kong. “Shadow banking poses systemic risks,” warned Moody’s (MCO) in a May 13 report.

The question is how much of this capital carries an implicit guarantee that the national government must cover. “It is our belief that at some point the central government will have to take responsibility for local debt,” says Derek Ovington, head of regional banks in Asia at CLSA Asia-Pacific Markets. The official debt burden of central and local government, which does not take the localities’ shadow banking activities into account, is just below 30 percent of GDP, Moody’s says. In contrast, Ovington estimates that shadow banking liabilities and consumer, corporate, and government debt are now more than 200 percent of GDP. “The longer the government takes to address this, the bigger the problem becomes.” Read more of this post

Phoney QE peace masks rising risk of instability

May 16, 2013 3:48 pm

Markets Insight: Phoney QE peace masks rising risk of instability

By Gillian Tett

Profound tensions lurk beneath surface calm

Are the markets going mad? That is a question many investors might have asked in recent weeks, as stocks in the UK, eurozone and US have soared – even as bond spreads decline.

But, if you want another sign of how peculiar market patterns now seem, take a look at a report recently compiled by Matt King, an analyst at Citigroup. For what is most striking about the current market trends, Mr King argues, is not simply those dazzling equity and bond prices; instead the really notable issue is how many long-standing data patterns have broken down*.

Take a look at the link between unemployment and equity markets. Between 1997 and 2011 the level of unemployment in the eurozone was always inversely correlated to the Stoxx index. However, since 2011 the eurozone jobless rate has jumped from 10 to 12 per cent – even as the Stoxx has risen 10 per cent. Read more of this post

Companies might be forced to boost the amount of debt they report on their balance sheets by hundreds of billions of dollars under a proposal announced to overhaul the accounting for leases

May 16, 2013, 1:05 p.m. ET

Accounting Change Could Boost Companies’ Debt

Proposed Rule Would Require Most Leases to be Treated on the Books as Debt


Companies might be forced to boost the amount of debt they report on their balance sheets by hundreds of billions of dollars under a proposal announced Thursday to overhaul the accounting for leases.

If adopted, the changes could affect retailers and restaurant chains, which lease real estate at hundreds or thousands of locations. Other companies that may feel the impact are airlines and package-delivery companies, which finance aircraft through leases, and companies that lease printers, copiers and other office equipment.

The new proposal from the Financial Accounting Standards Board and International Accounting Standards Board, which set accounting rules for the U.S. and most of the rest of the world, respectively, would require companies to add all but the shortest leases to their balance sheets as obligations akin to debt. That could have a major impact, experts said, given the estimated $800 billion in new lease contracts world-wide every year. Read more of this post

The Risky Business of Investing

The Risky Business of Investing

14 MAY 2013 – ASHBY MONK

Note to readers: institutional investors are not in the business of making investments or managing investment returns. I know I’ve said this before, but that’s really not what pension funds, sovereign funds, endowments or foundations ultimately do. Investors are, at their core, risk takers. They assess, mitigate, manage, bear and trade risks. If they perform these tasks well, they make money in the process. Risk, then, isn’t just something to mitigate; it’s something to be actively sought out. Risk is the oxygen that gives life to financial markets; it’s the currency upon which all assets are traded. You get the picture.

Given the enormous importance of risk in the investment business, you’d think that risk management would be fully integrated into everything these investors do. But… you’d be wrong. As it turns out, over the past few decades, many institutional investors have moved away from a ‘risk based’ approach to investing and have preferred to think about investing in terms of products and expected returns. This was deemed to be a useful abstraction that rendered modern finance consumable by the masses. However, this wound up be being somewhat problematic, as focusing on returns to the exclusion of risk resulted in some unhealthy distortions in the way we think about investments. Read more of this post

STX Group Chairman Kang Duck-soo is under mounting pressure to pay some of the debts held by the struggling units of the country’s 19th largest conglomerate using his own assets


STX boss pressured to give up private assets

By Na Jeong-ju

STX Group Chairman Kang Duck-soo is under mounting pressure to pay some of the debts held by the struggling units of the country’s 19th largest conglomerate using his own assets. Government officials and creditor banks say the 63-year-old executive should give up a considerable part of his fortune to take responsibility for the ongoing liquidity crisis in STX. “That’s a pre-condition for a financial lifeline. All creditor banks and the government want him to join their rescue efforts,” said an official from the Financial Supervisory Service (FSS). “They will take extreme measures, including requesting the court to seize his property, if needed.” Kang recently handed over his controlling stake in STX Offshore & Shipbuilding, which generates more than 50 percent of the group’s total revenue, to creditors. He is also considering selling the group’s overseas assets to secure cash. However, creditor banks claim that’s far from being enough to get STX out of its financial hole. Some bank officials told media Kang should pay the price for mismanaging the firm. They alleged that some of Kang’s relatives are working in key positions at STX affiliates, indicating he abused his status and power to give them jobs.  Read more of this post

Jakarta Governor Joko Widodo, an untested outsider to Indonesian politics, has attracted an unexpected national following in this fledgling democracy amid a void of young leaders

May 16, 2013, 1:32 p.m. ET

With Little to Show, Jakarta Governor Attracts Following


JAKARTA, Indonesia—An untested outsider to Indonesian politics has attracted an unexpected national following in this fledgling democracy amid a void of young leaders.

Joko Widodo, the 51-year-old governor of Jakarta, is taking on the major challenges of the capital—flooding, poverty and traffic—and though evidence is scant so far that he can fix the problems, he has attracted intensive media coverage and is even mentioned as a strong presidential contender in 2014, when President Susilo Bambang Yudhoyono is due to step down after a decade in power. Read more of this post

Former Malaysian Prime Minister Mahathir’s influence in new Cabinet ‘likely to hamper reform’

Mahathir’s influence in new Cabinet ‘likely to hamper reform’

KUALA LUMPUR — The new Malaysian Cabinet, which is filled with established leaders of United Malays National Organisation (UMNO), shows the influence of former Prime Minister Mahathir Mohamad, opposition Pakatan Rakyat (PR) leaders said yesterday.


KUALA LUMPUR — The new Malaysian Cabinet, which is filled with established leaders of United Malays National Organisation (UMNO), shows the influence of former Prime Minister Mahathir Mohamad, opposition Pakatan Rakyat (PR) leaders said yesterday.

“You don’t see any intention of breaking away from the past,” Democratic Action Party (DAP) strategist Liew Chin Tong told The Malaysian Insider. “The appointment of Shahidan furthers the UMNO agenda … there is no intention to reform,” he added, referring to former Perlis Mentri Besar Shahidan Kassim’s appointment as a minister in the Prime Minister’s Department. Read more of this post

Unhappy Malaysians can leave country: Home Minister Zahid

Unhappy Malaysians can leave country: Zahid

PETALING JAYA — Malaysia’s new Home Minister Ahmad Zahid Hamidi (picture) has told Malaysians who are dissatisfied with its political system after the general election — which handed victory to the long-ruling Barisan Nasional (BN) coalition — to migrate to other countries, as those who are loyal would accept the rule of law.


PETALING JAYA — Malaysia’s new Home Minister Ahmad Zahid Hamidi (picture) has told Malaysians who are dissatisfied with its political system after the general election — which handed victory to the long-ruling Barisan Nasional (BN) coalition — to migrate to other countries, as those who are loyal would accept the rule of law.

Mr Zahid made the comments in an editorial for Utusan Malaysia, a newspaper controlled by the BN’s dominant party, United Malays National Organisation, a day after he was appointed Home Minister by Prime Minister Najib Razak, news website Malaysiakini reported yesterday. Read more of this post

Vietnam to Force Bank Bad-Debt Sales to State Asset Company

Vietnam to Force Bank Bad-Debt Sales to State Asset Company

Vietnam will force banks to sell bad debt to a soon-to-be established asset management company, according to State Bank of Vietnam Chief Inspector Nguyen Huu Nghia, as the government steps up efforts to revive the economy.

Lenders assessed by the central bank to have bad-debt ratios of 3 percent and above will be required to comply, Nghia said today, citing a final proposal that is awaiting the prime minister’s review and approval. The government plans to set up the company this month, according to Cao Sy Kiem, member of the National Financial and Monetary Policy Advisory Council. Read more of this post

Chinese graduates face toughest job market ever

Chinese graduates face toughest job market ever

May 16, 2013 11:18am by Julie Zhu

While many Chinese of a certain age are reliving their college days through the movie “So Young”, the country’s students of today are facing the fiercest ever competition for jobs, with a record high number of nearly 7m graduates this year.

“So Young” – a nostalgic look at student lives and loves of the 1990s from actress-turned-director Zhao Wei – has successfully captured the collective memories of those who left campus all those years ago. But when they look at the pressures facing today’s graduates, they may be glad their own student days are in the distant past.

According to the ministry of education, 6.99m students will graduate from university this summer, 190,000 more than last year and the most since records began in 1949.

Tough competition and slackness in China’s economy have made 2013 what many in the media have described as the “hardest” yet for graduates looking for jobs. According to Shanghai Evening Post, the situation is even more severe than it was in late 2008, when the global financial crisis was at its height. Read more of this post

As Jade Becomes Rarer, a Thirst for More

May 15, 2013

As Jade Becomes Rarer, a Thirst for More


To judge by auction prices, the appetite of collectors for top quality jade jewelry remains unsated, despite recent talk of slowing demand for luxury goods in China, where jade has traditionally been held in near-mystical reverence.

At Christie’s London last month, a simple necklace featuring two rows of graduated jadeite beads with an Art Deco diamond clasp realized £49,875, or $77,625, far exceeding its pre-sale estimate of £5,000 to £6,000. At Sotheby’s New York, also last month, a suite of gold, jade and diamonds, comprising a necklace, brooch, ear clips and ring, estimated at $30,000 to $50,000, sold for $149,000.

At Sotheby’s Hong Kong, a jadeite bangle estimated at 200,000 to 250,000 Hong Kong dollars, or $26,000 to $32,000, sold for 1.12 million, and a jadeite and diamond ring estimated at 350,000 to 500,000 dollars sold for 1 million.

Yet, not all the jade on offer at recent sales has fared so well. Some lots have barely made their estimates, and others have remained unsold. Read more of this post

China Encourages Foreign Auto Investment in Policy Reversal

China Encourages Foreign Auto Investment in Policy Reversal

China said it will encourage foreign investment in vehicle manufacturing in its western region, reversing a policy to remove automaking from a list of industries qualifying for government incentives.

Starting June 10, foreign auto investment will be given preferential treatment, the National Development and Reform Commission and Ministry of Commerce said in a joint statement today, without giving more details. The policy was among measures taken to encourage labor-intensive projects in the central and western regions, which attracted $19.2 billion in overseas investment last year, according to the statement.

The announcement follows official figures this week that showed foreign direct investment growth slowed in April, highlighting concern at the outlook for the world’s second-biggest economy. Giving foreign automakers preferential treatment in building plants may allow companies like Volkswagen AG (VOW) and General Motors Co. (GM) to accelerate expansion in China, increasing competition for local companies. Read more of this post

McDonald’s Seen Overhauling U.S. Menu From 145 Choices; “They can’t make the food fast enough”; “Part of the reason why Chipotle works so well is that it’s simple”

McDonald’s Seen Overhauling U.S. Menu From 145 Choices

The Angus burger is going away, and it may not be the only McDonald’s dish on the chopping block.

The world’s largest restaurant chain has also considered axing Caesar salads, the McSkillet Burrito, the Southern Style Biscuit and steak bagels, according to a franchisee e-mail obtained by Bloomberg News. While the Angus burger contains as many as 820 calories and costs $4, the culling isn’t simply about offering healthier fare and cheaper items. It’s an effort by McDonald’s Corp. (MCD) to streamline a menu that has expanded by 70 percent to about 145 items since 2007 — straining kitchen staff, gumming up service and spoiling customers for choice.

“It’s gotten to the point where the operation has kind of broken down and that’s all a symptom of the complication of the menu,” said Richard Adams, a San Diego-based restaurant franchisee consultant and former McDonald’s store owner. “They can’t make the food fast enough.” Read more of this post

Three Asian Democracies, One Lame-Duck Problem

Three Asian Democracies, One Lame-Duck Problem

Voters in the Philippines appear to have delivered a resounding victory to President Benigno Aquino in midterm elections. The son of former President Corazon Aquino looks set to control both houses of Congress, giving him a mandate to continue his reform policies. His biggest worry now is making them stick.

In the first half of his six-year term, Aquino arrested his predecessor on corruption charges, faced down the business lobby to pass revenue-raising taxes on cigarettes and liquor, and challenged the powerful Catholic Church by providing free contraceptives to slow population growth. His payoff: investment-grade credit scores for the first time, the support of almost three-quarters of the electorate and even a place on Time magazine’s list of 100 most influential people.

It may seem odd, then, that with three years left in his term, some pundits are already calling Aquino a lame duck. Rivals know the president can’t run again; all that Aquino has accomplished could easily be undone by a successor more interested in self-enrichment than good governance. He not only needs to push forward with his reforms now, while he has a popular tailwind, but also must make sure that his foes can’t easily roll them back once he’s gone. Read more of this post

Singh’s Growth Push Imperiled as Graft Scandals Rattle: Economy

Singh’s Growth Push Imperiled as Graft Scandals Rattle: Economy

Indian Prime Minister Manmohan Singh’s latest skirmish with corruption risks setting back efforts to spur growth, worsening a legislative logjam under a government set to pass the fewest bills ever in a full term.

Singh, 80, is grappling with renewed allegations that he has allowed corruption to fester after separate graft probes led to the May 10 dismissal of the law and railways ministers. Parliament ended two days early last week as opposition parties demanding the men’s resignation blocked proceedings, with proposals to open up the country’s pension and insurance industries to overseas investment still stalled.

At stake is Singh’s ability to extend an eight-month push to revive Asia’s No. 3 economy that included allowing more foreign investment in aviation and retail, measures for which parliamentary approval weren’t required. With just the monsoon and winter sessions left this year before a general election in 2014 and India’s expansion at a decade low, the government is running out of time to complete its legislative agenda. Read more of this post

Thailand’s asset management industry is voted the third best in the world, according to a global investor survey, behind US and South Korea

Thai fund industry ranked 3rd in the world

The Nation May 17, 2013 2:05 pm

Thailand’s asset management industry is voted the third best in the world, according to a global investor survey announced today by the Securities and Exchange Commission. Thailand follows the US and South Korea. It scores well in terms on regulatory framework and tax structure and improvement in selling activities and intermediary role. Yet, Thailand still has to improve some areas, particularly the information disclosure. Morningstar’s survey covers investors in 24 countries, ranked Thailand at the “B” level, putting it on par with the Netherlands, Singapore and Taiwan. This is chiefly thanks to tax incentives like capital gain tax waiver and tax deduction on investment in long-term mutual funds.This raised the scores in the regulatory and tax category above the average level. However, some limitations need to be addressed, like the ones on local funds’ overseas investment and the direct offering of overseas funds to Thai investors. In the fee and expense category, the scores are higher than the average., as most funds do not levy fees on unit trust transactions. In the disclosure category, Thailand wins a moderate score. Absent from Thai funds’ prospectus are trading cost, the names of fund managers and their experiences as well as investment data of the funds under the managers’ control. Thailand scores the lowest points in the selling and intermediary category, though the 2013 result is better than the previous year. Most funds are now sold via bank branches, limiting access for some investors. Less than 20 per cent of mutual funds is sold through non-bank channels.  “The research reflects the continued development in the Thai asset management industry. There is still much to be done, though,” said SEC Secretary-General Vorapol Socatiyanurak.

S&P: Asia’s Unfinished Homework: Rebalancing Growth To Make It Sustainable

Asia has unfinished homework: S&P

The Nation May 17, 2013 1:00 am

Although Asia’s trade and current account surpluses have declined recently, the evidence is mixed on whether the indicators have improved for the right reason, according to Standard & Poor’s Ratings Services. In its report on “Asia’s Unfinished Homework: Rebalancing Growth To Make It Sustainable,” S&P said the region has been accused of having “mercantilist tendencies” for its role in the unhealthy global imbalances. Paul Gruenwald, chief economist for Asia-Pacific, said China often gets the lion’s share of the blame for Asia’s surpluses. “When the indicators in Asia are scaled by GDP, we see that size matters,” he said. “It’s easier for a small economy to run a large surplus or deficit, and the ‘big guys’ don’t look so dominant when we scale the data. “If we scale China’s current account and foreign currency reserves by GDP, the country doesn’t appear so uniquely guilty of generating the types of macroeconomic outcomes typically associated with the conventional wisdom about Asia’s contribution to global imbalances,” he said. Asia’s unfinished homework is to rebalance to a more consumption-driven economic model. “Note that it isn’t about simply consuming more. Consumption has been trending higher in all the economies in our sample. The key is for private consumption to grow faster than GDP. Only then will the consumption-to-GDP ratio rise,” he said.

Aussie Dollar dives like a ‘falling knife’

Dollar dives like a ‘falling knife’

May 17, 2013 – 3:39PM

Glenda Kwek


On the way down … the Australian dollar over the past 10 trading sessions. In just 10 days, the Australian dollar has fallen from US103¢ to US97.4¢. The sudden fall has been so sharp one currency strategist described it as a ”falling knife”. The dollar has now fallen for five weeks in a row, and is on track for its worst weekly fall this week since November 2011. So what’s been driving the recent drop, and should we expect a rebound any time soon, if at all? Australian dollar … commodity price trends suggest that the currency should be trading closer to 80 US cents than parity, Goldman Sachs analysts say. In short, the first trigger was the sudden rallying of the US dollar against the yen and other currencies last Thursday night in New York. The US dollar broke through the significant psychological barrier of 100 yen and sent its Australian counterpart into free fall. That pushed the dollar past its own psychological barrier of US101.50¢ and it didn’t take long for the currency to drop through parity on Friday night. The Australian currency continued to fall over the past week, while the greenback has kept strengthening. This is not the first time the Australian dollar has broken out of the 102 to 106 US cents range it has been mostly trading in over the past two years. In September 2011 and May 2012, the currency fell below parity with the US dollar but lifted again shortly after.

Turning point

But currency strategists said the Australian dollar appeared to have reached a turning point, and talk of it bouncing back to above-parity levels was looking less likely.

”The big difference between this fall and the falls in the last couple of years is that they were driven by risk aversion, big falls in asset prices and global growth confidence associated with the European currency crisis,” RBS currency strategist Greg Gibbs said.

”This time, the Australian dollar has fallen in a risk-positive environment, and in some ways, it makes it feel more permanent.”

As optimism grows about the US economy amid growing expectations the US Federal Reserve could wind back its ”quantitative easing” money-printing strategy by the end of this year, investors were once again turning to other fundamentals that drive the Australian dollar, such as the Chinese economy, commodity prices, and the mining investment outlook, Mr Gibbs said.

And all of these indicators have been weak of late.

Stars align for drop

”Iron ore since the peak in February of this year … has lost a fifth of its value. Importantly, coking coal prices have weakened fairly significant too. The spot price of coking coal from the highs in February has dropped by 18 per cent,” Westpac chief currency strategist Robert Rennie said.

”When two or our key export commodities – coking coal and iron ore – lose a fifth of their value, that obviously implies that we should see some weakness in the currency.”

Mr Gibbs said investors now viewed the Australian dollar as reconnecting with commodity price movements.

The Japanese selling of the Australian dollar has also been weighing it down. Japanese investors were net sellers of Australian bonds last year – the first time since 2005 – while becoming record buyers of European bonds.

Given Japan’s influence in the debt market – where it contributes about 10 per cent of all portfolio investment in debt securities, the sell-off could also lower the dollar, HSBC analysts said.

Also fuelling the recent lows are the federal government’s announcement of budget deficits in the next few years, soft domestic economic indicators and the imminent peak of the mining investment boom, Goldman Sachs analysts said in a research note, adding they had reduced their 12-month Australian dollar forecast to 90 US cents.

No longer a safe haven?

At the same time, another change is occurring.

The Australian dollar, along with commodities such as gold, has functioned as a safe haven amid the global economic turmoil over the past few years. They have provided an avenue for higher yield as compared to other investment assets.

But as the recent plunge in gold prices showed, optimism about the US economy and its outlook was driving investment away from safe havens like the Australian currency and gold, and back into other investment vehicles such as the US equities market and greenback.

Already, the lack of increased inflation as economies printed more of their currency over the past few years meant investors felt they no longer needed to pile into the Australian dollar and use it as a hedge, like gold, against global inflation, ANZ currency strategist Andrew Salter said.

”Despite the truly considerable increase in global money supplies the world over, central banks have been largely successful in keeping inflation near target and consumer and business expectations in check,” Mr Salter said.

Whats next?

All eyes will be on Federal Reserve chairman Ben Bernanke as he speaks on Saturday in the US at a graduation ceremony, and testifies to Congress’ joint economic committee on the US economic outlook on Wednesday.

Any indication that suggests the Federal Reserve is open to winding back its bond-buying program – part of how it has been pumping money into the economy – could push the US dollar higher, and its flipside, the Australian dollar, down.

The falling Australian dollar could pare back expectations of a Reserve Bank rate cut in June.

Financial markets were pricing in a 19 per cent chance of a cut next month, and  the chance of at least one more cut by the end of this year.

Meanwhile, a 6 per cent decline in the exchange rate (the past 10 days has seen it decline by 5.6 per cent) could have the same impact as a 100 basis points interest rate cut, boosting economic growth by about 100 basis points over a couple of years, Barclays chief economist Kieran Davies said in a research note today.

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