Asia 1997 vs. Asia 2013

August 22, 2013, 3:48 AM

Asia 1997 vs. Asia 2013

By Alex Frangos

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It seems all too familiar. Currencies are plunging. Current account deficits are widening. Central bankers are tripping over themselves to settle markets. So is this the 1997-98 Asian Financial Crisis redux? For one economist who lived through the crisis, history isn’t repeating itself just yet. “If the Asian financial crisis was a 10. I’d still be on a 3. My instinct is this is a short term portfolio adjustment that will pass,” says Stephen Schwartz, chief Asia economist for BBVA. He saw the Asian financial crisis up close as an International Monetary Fund staffer covering the region, and later lived in Indonesia working for the IMF as Asia licked its wounds during the 2000s.

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MIT’s Innovators List

August 22, 2013, 3:45 PM

MIT’s Innovators List

By WSJ Staff

The MIT Technology Review, a Massachusetts-based technology publication has come out with its annual list of 35 innovators aged under 35. This year it features two men of south Asian origin. Balaji Srinivasan and Vijay Balasubramaniyan, both 33, made it to the coveted list, which celebrates young entrepreneurs and inventors, who have done exceptional work in the field of technology globally. People of south Asian origin and Indian-Americans have regularly featured on  MIT’s innovators list. This year, however their number has gone down. In 2012, five innovators on the list were of south Asian origin. The winners are selected by a panel of judges evaluate the candidates based on current trends in technology and the diversity of innovation. The list is divided into five sections: inventors, entrepreneurs, visionaries, humanitarians and pioneers. MIT selected Mr. Srinivasan as one of the top entrepreneurs. He is the founder of Counsyl Inc., a Silicon Valley startup that conducts low-cost, genetic tests on prospective parents that can identify if they are carrying genes capable of causing hereditary diseases in their children. Counsyl also won bronze in the The Wall Street Journal’s Innovation Awards in 2010. Mr. Srinivasan founded Counsyl in 2007 with his brother Ramji Srinivasan. Before that, he taught data mining, statistics, and computational biology in the department of statistics at Stanford University in California. The Srinivasan brothers’ father, however, didn’t want them to get into medicine and was keen for them to study computer science instead, notes the MIT Technology review. A Stanford alum, Mr. Srinivasan holds graduate, post-graduate and doctoral degrees in electrical engineering. He also holds a Master’s degree in chemical engineering from Stanford. The other south Asian on the list, Vijay Balasubramaniyan is the co-founder of Pindrop Security. an Atlanta based company that tracks fraudulent phone calls. The list recognizes him as one of the top inventors. Mr. Balasubramaniyan completed his undergraduate studies in engineering from R. V. College of Engineering in the southern Indian city of Bangalore and doctoral studies from Georgia Institute of Technology in the U.S. Prior to Pindrop, he worked at some of the top technology firms such as Google Inc.GOOG +0.45%, Intel Corp. and IBM Research. He is also a regular speaker at technology conferences on the subject of phone fraud. In the past the MIT list has included Google founders Sergey Brin and Larry Page,Mark Zuckerberg of Facebook Inc.FB -0.23%, Spotify’s founder Daniel Ek and AppleIncAAPL +0.26%’s Jonathan Ive. Read more of this post

Sweden hits Wallenburg family’s buyout firm EQT and employees with $100 mln tax bill

Sweden hits buyout firm EQT and employees with $100 mln tax bill

Wed, Aug 21 2013

By Kylie MacLellan and Mia Shanley

LONDON/STOCKHOLM, Aug 21 (Reuters) – Sweden is demanding that private equity firm EQT Partners and some of its employees pay 647 million Swedish crowns ($100 million) in tax on past profits as it cracks down on buyout firms. Sweden has been trawling through tax returns and earnings declarations going back to 2005 of private equity firms that were paying tax at low rates or, in some cases, not at all. It wants to tax the majority of private equity carried interest, a share of profit on deals, at the highest income tax rate of 55 percent, not at the capital gains rate of up to 30 percent. The prominent and powerful Wallenberg family’s EQT, said the Swedish tax authorities would retroactively tax about 20 current and former employees of EQT as well as the company itself for income between 2007 and 2009. The tax authority said it had asked EQT to pay 334 million crowns and the employees 313 million for that period. It has already demanded 100 million crowns more for 2006. EQT said it would challenge the demand. “The parties concerned have followed all rules and regulations in Sweden, fully declared income and provided all relevant information to the tax authorities. Our view is that nothing new has been found in the investigations that warrant a retroactive change,” chief operating officer Johan Bygge said. EQT said income declarations from the individuals concerned had been approved by the tax authorities for the last 18 years. “The behaviour of the tax authorities creates a high level of uncertainty for EQT Partners AB and its employees,” the company said in a statement. Among other buyout firms facing retrospective tax charges, Nordic Capital was asked for $118 million and nearly $32 million of penalties in 2010. It is also contesting the tax demand and is yet to pay anything.

Tax attack

Leveraged buy-outs face legal scrutiny

Both cases relate to a tax loophole used by private-equity firms in America and much of Europe. Under “carried interest” rules, buy-out executives pay (relatively low) capital-gains taxes on profits made from buying and selling companies, in the same way investors or entrepreneurs do. This is odd, given that the money wagered on private-equity deals comes overwhelmingly from outside investors, not the executives themselves. It would make more sense for these profits to be taxed like salaries, or bankers’ bonuses, at the (higher) income-tax rate.

“I doubt any great entrepreneur in history got up in the morning and said I think I’ve got a good plan on how to make money. I think Wilbur and Orville [Wright] wanted to fly, I think [Thomas] Edison wanted to make light without candles.”

August 21, 2013, 7:50 p.m. ET

Inventing With an Eye on the Future

Even with an exceptional idea, budding entrepreneurs can struggle to move past the brainstorming stages. They face challenges in execution like building a cohesive team, coming up with a business plan and even understanding how to present their product or service. This week mentors on “WSJ Startup of the Year,” a documentary on wsj.com, offered some words of inspiration for all entrepreneurs. Here’s what some science and technology innovators had to say. Edited excerpts:

Ray Kurzweil, director of engineering at Google Inc. GOOG +0.45% : “Ninety-five percent of the innovators I meet would actually do exactly what they say if given the resources, but most of those projects would fail because the timing is wrong. A lot of business and technology plans assume the world three or four years from now will be kind of like it is today, and that’s not the world you need to aim at. That’s going to be a completely different world. The world is completely changed in just a few years time, and it will change at an even faster pace in the future. So a key harbinger of success is to actually understand this exponential pace of change and make your project relevant for the future world and meet the train when you get there.”

Peter Diamandis, chairman and founder of XPRIZE Foundation: “What I’m interested in seeing is someone who’s passionate about what they’re doing; that they love it; that they’re excited about it. Because a business plan isn’t worth much of anything. What really is worth something is a set of entrepreneurs whose mission this is to make happen beyond anything. That at 3 o’clock in the morning when they hit another brick wall, they’re going to wake up and take a different direction. Ultimately a business plan is going to be out-of-date as soon as you begin writing it. And it is really that internal dimension of passion, of commitment that will carry through all the hurdles along the way.”

Bob Hariri, founder and CEO of Celgene Cellular Therapeutics: “It’s the mission and the man. You establish a clear mission, what you want to do and then you go and find really great people. You have to have the kind of outgoing, engaging personalities that let [you] pull the best and the brightest. You’ve got to be evangelical about your mission. And then when you get them to sign on and you can inject some of that passion in them, then you can build a remarkably successful business.”

Dean Kamen, Segway inventor and health-care innovator: “If you believe that what drives a person to be an entrepreneur is money or not wanting to risk money, I’d say that’s an early sign that this is not an entrepreneur. Every entrepreneur I’ve ever seen is driven by the passion to do something, believing that if it’s as good as they think it is, of course somebody will make money. And probably if they stay with it, they’ll make some of it, maybe most of it or maybe all of it. But I doubt any great entrepreneur in history got up in the morning and said I think I’ve got a good plan on how to make money. I think Wilbur and Orville [Wright] wanted to fly, I think [Thomas] Edison wanted to make light without candles.”

Democracy by design: Seeley International’s secret is company-wide brainstorming

Matthew Smith Reporter

Democracy by design: Seeley International’s secret is company-wide brainstorming

Published 21 August 2013 21:23, Updated 22 August 2013 14:03

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From salesman to executive chairman: Frank Seeley fosters an inclusive culture where all staff can contribute to product design.

Mid-Market Awards 2013 | Environmental Innovation in the Mid-Market: Seeley International

It was at one of Seeley International’s regular company-wide innovation sessions that the idea for a new type of water management system was conceived. If it was solely left up to engineers, the system – modelled on an umbrella where water flows off a convex surface – might never have been developed, says the founder and executive chairman of Seeley International, Frank Seeley. The traditional water management system in air-conditioning units – essentially a pipe with holes – would eventually block up with salt, so Seeley took the design problem to the broader group, including sales, corporate development and administration staff. “I opened it up to the floor and someone said, ‘You need something so the water falls off like an umbrella’. And I said, you’re right!” he recalls. Read more of this post

Resilient and courageous: the stories behind the Australian BRW GE Capital Mid-Market Awards

James Thomson Editor

Resilient and courageous: the stories behind the BRW GE Capital Mid-Market Awards

Published 22 August 2013 09:01, Updated 22 August 2013 13:07

Adam Spencer, radio star and the MC of the inaugural BRW GE Capital Mid-Market Awards held in Sydney on Wednesday night, had done his homework. The small Victorian town of Longwarry, home to the winner of the Mid-Market Award for best regional business, could claim two great successes, Spencer told us. Not only was the town a Mid-Market award winner, but it was also home to Lenny Morel, who was named Australian Banjo Player of the Year for 2012. I’m not sure which award will be held up highest down in the main drag of Longwarry, but I do know this – it’s businesses like Longwarry Food Park that typify the spirit and resilience of the mid market. The business was born out of failure. Owner Rakesh Aggarwal, an engineer by trade, took the gamble of his life when he bought an abandoned milk powder plant in 2001, four years after it had been decommissioned. He redesigned the plant, restructured the business and set about creating a $75 million powerhouse, where exports account for 75 per cent of sales. Then, another disaster struck. In February 2012, fire shut the plant for seven weeks, leaving a damages bill of $5 million. But Longwarry Park wasn’t going to be stopped. It bought more milk than it needed from its suppliers, which it on-sold at a loss to competitors, and it arranged with its insurance company to allow employees to work on the clean-up so no jobs were lost. Read more of this post

Two Charts That Should Make You Concerned About Asian Debt

Two Charts That Should Make You Concerned About Asian Debt

JOE WEISENTHAL AUG. 21, 2013, 9:16 PM 1,113 3

From Morgan Stanley, here are two charts that should have you a bit concerned about corporate debt in Asia. First, Corporate Asia is the most leveraged in the world. And second, growth is slowing, while real interest rates (borrowing costs) are rising. So between massive leverage, slowing growth and rising rates… there are some reasons to be concerned.

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