Archive for the ‘Asia’ Category

Weekend reading and viewing

July 13, 2013

1. First up, a farewell piece from Evan Osnos, China correspondent of the New Yorker. All about his poet bin-man friend.

A BILLION STORIES

POSTED BY EVAN OSNOS
Osnos-qi-290.jpg
In my neighborhood, near the Lama Temple, the men and women in fluorescent orange jumpsuits work for the district sanitation department. Many are migrant workers from the countryside; they sweep the alleys, clean the public restrooms, and collect the trash. Some wear straw farmers’ hats that cast a shadow across their faces, and, I admit, the matching uniforms make it difficult for me to keep them straight. I don’t know if there are three of them or thirty.
One afternoon not long ago, I was chatting with my next-door neighbor, a retiree named Huang Wenyi—a proud Beijinger, born and raised—when one of the sweepers in an orange jumpsuit wandered by. He had tousled hair, sun wrinkles around his eyes, and a smile of jumbled teeth. He approached and pointed to a gray flagstone at our feet. “Can you see the emperor on that rock?” the sweeper asked.
I thought I’d misheard. He said, “I can see an image of the emperor right there on that rock.”
Huang and I looked at the rock and back at the sweeper. Huang was not interested. “What are you bullshitting about?” he asked. “You have no idea what you’re talking about.”
The sweeper smiled and asked, “Are you saying you think I’m not a cultured man?”
“What I’m saying,” Huang said, “is that you’re not making sense.”
The sweeper gave him a look, and turned, instead, to face me. “I can look at anything, and pull the essence from it,” he said. “It doesn’t matter how ordinary something is; in my eyes, it becomes a treasure. Do you believe me?”
Huang was irritated: “Old man, I’m trying to have a chat with our foreign friend here. Can you not disturb us, and go back to your work?”
The sweeper kept talking—faster now, about ancient Chinese poetry, and the great modern writer Lu Xun—some of it too fast, and the references too obscure, for me to understand. He sounded somewhere between interesting and bonkers. Huang had had enough, and he poked fun at the man’s countryside accent. “Come back after you’ve learned to speak Beijing dialect,” he said.
Under his breath, the sweeper said, “As long as it’s a dialect of human beings, it’s legitimate.” But Huang didn’t hear him. He’d waved him away and wandered into his house.
I introduced myself. The sweeper’s name was Qi Xiangfu. He was from Jiangsu Province, and he said he had come to Beijing three months ago. Why did you come, I asked.
“To explore the realm of culture,” he said grandly.
“What kind of culture?”
“Poetry, mainly. Ancient Chinese poetry. During the Tang Dynasty, when poetry was the best, every poet wanted to come to Chang’an,” he said, invoking the name of the ancient capital, the predecessor to Beijing. “I wanted a bigger stage,” he said. “It doesn’t matter whether I succeed or fail. I’m here. That’s what matters.”
It was getting late; before I went inside, Qi said he had competed in poetry competitions. “I won the title of ‘Super King of Chinese Couplets.’?” In his spare time, he had taken to hosting an online forum about modern Chinese poetry. “You can go online and read about me,” he said.
That night, I typed his name into the Web, and there he was: Qi Xiangfu, the Super King of Chinese Couplets. In the photo, he was handsomely dressed in a bow tie and a jacket; he looked young and confident. Chinese poems are hard for me to understand, and many of his, especially, were impenetrably weird. But I appreciated some moments of grace: “Earth knows the lightness of our feet,” he wrote. “We meet each other there?/?Between heaven and earth.”
To my surprise, the more I searched about Qi Xiangfu, the more I found of a life lived partly online. He once wrote a short memoir, in which he described himself in the third person, with the formality usually reserved for China’s most famous writers. He wrote that his father died young, and Qi was raised by his uncle. He wrote, of himself, “The first time Qi read Mao’s poem ‘The Long March,’ he resolved that Mao would be the teacher to show him the way. Later, he studied the poetry of Li Bai, Du Fu, Su Dongpu, Lu You, and others, and he made a promise to himself: Become a master of literature.”
He described the first time he ever presented one of his poems to a large group—it was played on a speaker at a construction site—and he described a bus trip in which he met, as he put it, “a girl who sympathized.” They married and it “ended his life of vagrancy.” There were hints of trouble in his life—at one point, he wrote a plea for donations, saying, “Alas, Comrade Qi is having a difficult time”—but something in the spirit of his online persona captivated me.
So much of it was impossible just a few years ago: the journey to the city, the online identity, the interior life so at odds with the image he projected to the world. When I first studied in China, seventeen years ago, the Internet was only a distant rumor. It had reached China two years earlier, but hardly anyone had access. When I brought a modem from the U.S., and tried to plug it into my dorm-room wall in Beijing, the machine emitted a sickly popping sound and never stirred again.
When I moved to Beijing, in 2005, to write, I was accustomed to hearing the story of China’s transformation told in vast, sweeping strokes—involving one fifth of humanity, and great pivots of politics and economics. But, over the next eight years, some of the deepest changes in the lives around me have been intimate and perceptual, buried in daily rhythms that are easy to overlook. A generation ago, foreigners writing about China marvelled most at the sameness of it all. Chairman Mao was the “Emperor of the Blue Ants,” as a memorable book title had it. But in my years in China, I have been seized most of all by the sense that the national narrative, once an ensemble performance, is splintering into a billion stories.
Living in China at this moment, the stories bombard you with such fantastical vividness that you can’t help but write them down and hope to make sense of them later. Writing about China, in The New Yorker, for the past five years, I’ve tried to capture something of this age, to grab a few of these stories out of the air before they slip by. The complexities of individual lives blunt the impulse to impose a neat logic on them, and nobody who stays here for some time remains certain about too much for too long. To impose order on the changes, we seek refuge, of a kind, in statistics. In my years here, the number of airline passengers nationwide doubled; sales of personal computers and cell phones tripled. The length of the Beijing subway quadrupled. But the longer I stayed, the less those impressed me than the dramas that I could never quantify at all.
On Sunday, my wife, Sarabeth, and I are flying out. I’ll be on leave for the next couple of months, wrapping up a book about a few individuals I’ve come to know in China. It will be published next spring, and I’ll be saying more about that later. I’ll resume writing for the magazine this fall, based in Washington, D.C. China is not leaving my blood stream; I’ll be back to write pieces, and, in between, I’ll be writing at Daily Comment and elsewhere about how China looks from afar.
Since we launched this blog, in January of 2009, I’ve written about five hundred posts. This will be the last for a while, and I want to thank you for visiting over the years. There will be much more to come on China on this site, and in the magazine, so I won’t pretend to sum things up. For now, I’ll mention only the fact that returns to me more often, perhaps, than any other: never in modern history has China been more prosperous and functional and connected with the world—and yet, it is the only country in the world with a winner of the Nobel Peace Prize in prison. Contradictions like that have been the essence of this moment.
After I met the street sweeper Qi Xiangfu, I started bumping into him frequently. We swapped phone numbers, and he would send me a poem, now and then, by text message. He typed out the characters on his phone, with the help of a magnifying glass to aid his eyes. Many of his poems were heavy with Communist fervor; others were oracular and strange. But I sympathize with anyone trying to make sense of this place in writing, and I admired his persistence. “I’ve experienced every kind of coldness and indifference from people,” he told me once, “but I’ve also given myself knowledge, all the way up to the university level. I don’t have a diploma. People look down on me when they see me.”
A few weeks ago, Qi told me he had been reassigned to the sanitation department in another part of town; he said he would come back when he could. The last time I saw him, he wasn’t wearing his uniform; he was in street clothes—a crisp white shirt and a black jacket—on his way to see his daughter who worked at a restaurant nearby. He had a book under his arm: “Ten Contemporary Authors of Prose.” For the first time, I saw the two personae, online and real-world, in one. What inspires you, I once asked him.
“When I write,” he said, “anything becomes material. In life, I must be practical, but when I write, it is up to me.”
Photograph, of Evan Osnos and Qi Xiangfu, courtesy of Osnos.
2. Next, a bit of Australian fun. A Kath and Kim movie came out last year. It got terrible reviews, so don’t go see it. However this appearance on Sunrise is pretty funny. Seems like good background to the Ashes series. [youtube=http://www.youtube.com/watch?v=cH_DfTVN1Vo]
3. Next: Oh. Bama! Just to keep piling pressure on the liberal president, here is a Guardian piece about the sale of ambassadorial positions. Sort of Lloyd George goes to Washington. You might want to watch Lou Reed talking about Snowden and Obama again, (if only to watch the put-down of the obsequious female journalist at the end).
4. Now something serious. Christopher Wood, one of the best (perhaps the best) equity analyst in east Asia, doesn’t like his weekly missive reposted. So I am just going to quote a couple of bullets about the income distribution effects of the QE approach to stabilising the global financial crisis. I was banging on about the same thing soon after the crisis hit in 2010 and the QE started:
<The practical way unconventional monetary policies work is to lead to ever more extreme wealth distribution. Wealth distribution would have become much less extreme as a consequence of the 2008 crisis if losses had been imposed on creditors to bust financial institutions in line with capitalist principles, as opposed to the favoured ‘bailout’ approach pursued for the most part by Washington. The ‘great reckoning’ has been deferred to another day as the speculative classes have continued to game the system by resort to carry trades actively encouraged by the Fed and other central bankers. The leverage taken on in such trades is highly risky because of the underlying deflationary trend.>
5. More serious and interesting stuff is Philip Stephens in the FT (sub needed) parsing the Anglo Saxon-created disaster story that is the Middle East.
6. Looking at the Stephens’ canon, I see a piece from June (sub needed) making the case for shutting down the UK Treasury. It would save money and get rid of dangerous incompetents whose follies we, the taxpayers, must finance. I would just add that in shutting the Treasury to save money, government could also shut the Foreign Office, another black hole of self-regarding incompetence. George Osborne is right that we should not waste money. Mainly on people he went to school and university with.
7. Finally, this looks like something useful to do if any UK university students read this blog:
Hi there, My name’s Jonathan Goggs – I’m from an organisation called Team Up, who are establishing a student committee at Cambridge for 2013/14. I would very much appreciate it if you, or one of your colleagues, could circulate the following blurb into an email to all students in the business school, including the enclosed attachments as well. Do let me know if there are any questions from students by responding to this email, or copying me in. “Team Up is passionate about improving social mobility and transforming the prospects of bright young people and we are looking for outstanding university students from Cambridge to join one of our accredited leadership programmes next year. You will be trained in the highly sought-after professional skills to make a genuine difference and empower young people in your community to academic excellence. We believe in developing our university students to foster the skills they need to tackle the UK’s biggest social problem (social mobility) and secure exceptional careers. That’s why, once we’ve processed your application and conducted a short interview, we’ll be running master classes and networking opportunities, in partnership with leading businesses and charities, to give you the tools to lead, inspire and excel. The programme runs for 20 weeks, alongside your degree, and an overview of the year is attached, together with descriptions of the roles you can apply for. Last year our programme partners were Teach First and Bank of America Merrill Lynch and next year we will be partnering with even more organisations in management consultancy, education, social enterprise and finance. Places are competitive, so early applications are encouraged. Over the past two years we’ve received over 2,000 applications and some incredible student feedback – 9 out of 10 students said they enjoyed the programme. At Team Up, we think it’s a tragedy that so many young people are still disqualified from leading universities like Cambridge and fulfilling careers, because they come from low-income, socially disadvantaged backgrounds. If you think the way we do, we’d love to hear from you. To apply, click here.” Kind regards, — Jonathan Goggs Programme Officer | Team Up 18 Victoria Park Square, Bethnal Green, LONDON | E2 9PF E: [email protected] | W: www.teamup.org.uk

China comes to my home

July 9, 2013

We are having a Chinese primary school teacher to stay. She and a bunch of other Chinese teachers are supervising 40 Shanghainese kids on an English language immersion trip to Cambridge. Since our teacher (the senior one) doesn’t speak much English, I figured it would be good for our kids to have a week practising their Chinese.

It turns out that our kids also get a cultural lesson thrown in for free.

The Chinese teachers and schoolchildren have been billeted with Cambridge families around town. So far so good. But in order to consolidate them in the morning  so as to get everyone to school, they are not using one of the regular Cambridge taxi firms. Instead they are using a Chinese taxi firm I have never seen before. It’s a guanxi thing, you see.

Sure enough the driver gets to our house already half an hour late having gotten lost. Being Chinese, he doubtless also left half an hour spare in case of mistakes, so the group has likely already wasted an hour this morning going to wrong places. Plus, of course, the actual origin to destination driving time.

Finally the car pulls up outside our house and disgorges two panic-stricken occupants, both teachers. Spotting Senior Teacher Zhang, who is staying with us, they head for our front door. ‘We need the toilet!’ they exclaim, pushing into the house and straight past me in the corridor. ‘Hello!’ says one, as he locates the downstairs toilet under the stairs and heads in. A female teacher, beaten to the downstairs toilet, scoots straight off upstairs in search of another one, quickly locating it.

I wander into the street with my espresso to take in the scene.

After a couple of minutes the toilet-seeking teachers reappear becalmed and join Senior Teacher Zhang and the others in the taxi.

‘Sank you!’ says one.

And with that the people who are taking over the world are off.

Chinese structural adjustment (once more)

July 5, 2013

I am posting two articles from the China Economic Quarterly in 2001, by Tom Rawski and myself, that discussed China’s macro-economic performance during the last ‘structural adjustment’ period, when Zhu Rongji laid off 30 million+ state workers.

The point is that there is a big ‘hard landing’ debate going on just now, as we enter a new structural adjustment period. Rawski showed fairly convincingly in his article that in 98-99 real (as opposed to reported) GDP growth dipped as low as 2-3%. With the benefit of hindsight, this did not, however, lead to economic calamity. Indeed the low growth facilitated structural change as Beijing forced the provinces to adjust local economies to be less wasteful.

No two scenarios are ever the same. However, in discussing what is happening in China today, I think it is useful to look back on that late 90s period before the credit cycle that kicked off in 2002.

Let me know if this link does not work:

Rawski 1998-2000 China data issue

 

More:

FT (sub needed) today has a story on shipbuilder Rongsheng running out of cash. And how they are begging government for money. It reminds how credit starvation is the key weapon in the central government’s arsenal.

Singapore reaps what it sowed

June 22, 2013

Sing smog 1 Sing smog 2

 

 

Sing smog 3

 

See the 22 April AFP story below about the life-threatening smog enveloping Singapore. It comes (largely) from deliberately set fires on and around oil palm plantations in Sumatra, fires illegally set to facilitate land clearance.

You need additional information to read the story properly. Here it is. The story identifies two firms as largely responsible for the fires:

1. APP (Asia Pulp & Paper). The tale is too long to tell in detail here. Look it up in Asian Godfathers. Controlled by the Widjaya family, who defaulted on US$14 billion of debt (no, that is not a typing error) during the Asian crisis and then set out to buy the debt back at cents on the dollar. They did this by the most extraordinary acts of financial subterfuge, many of which were run through Singapore-based and Singapore-‘regulated’ institutions. A 2002 petition by creditors to the Singapore courts to have APP taken over and run by a local administrator was rejected. The Widjayas are serial law breakers. Where is their business run from? Singapore. Where did they hole up, and who protected them, after the Asian crisis? Singapore.

2. APRIL (Asia Pacific Resources International Holdings Ltd). Controlled by Sukanto Tanoto, who in the wake of the Asian crisis in 2006 was listed by Indonesian state bank Mandiri as one of its six biggest delinquent debtors. He owed Rupiah5.4 trillion. Tanoto was also under investigation for fraud at his own bank, Unibank, which after the Asian crisis was reported by regulators to have extended 51% of its loans to Tanoto firms; the maximum legal limit for loans to related parties was 20%. Tanoto is a serial law breaker. Where is his business run from? Singapore. Where did he hole up, and who protected him, after the Asian crisis? Singapore.

Finally, what is the east Asian market where it has been least possible to distribute Asian Godfathers since its publication in 2007 (way more difficult than in ‘authoritarian’ China). That’s right. Singapore!

Palm oil companies behind Singapore smog: Greenpeace

Fires on Indonesia’s Sumatra, which have cloaked Singapore in record-breaking smog, are raging on palm oil plantations owned by Indonesian, Malaysian and Singaporean companies, environmental activist group Greenpeace International said.

“NASA hotspot data in Sumatra over the past 10 days (11-21 June) has revealed hundreds of fire hotspots in palm oil concessions that are owned by Indonesian, Malaysian and Singaporean companies,” the group said in a statement received by AFP.

Singapore’s smog index hit the critical 400 level on Friday, making it potentially life-threatening to the ill and elderly, a government monitoring site said. On Saturday morning, the reading was at 323, still in the “hazardous” zone.

Parts of Malaysia close to Singapore have also been severely affected by the smog this week.

“Fires across Sumatra are wreaking havoc for millions of people in the region and destroying the climate. Palm oil producers must immediately deploy fire crews to extinguish these fires. But really cleaning up their act starts with adopting a zero deforestation policy,” said Bustar Maitar, head of Greenpeace Indonesia’s forest campaign.

The Indonesian environment minister Balthasar Kambuaya said Friday that a team has investigated eight companies suspected to be behind the fires and promised to reveal the companies’ names after the probe.

A senior presidential aide Kuntoro Mangkusubroto said Friday that the fires happened in concession areas belonging to Asia Pulp & Paper (APP) and Asia Pacific Resources International (APRIL).

“It is very clear that the fires are in APP concessions and APRIL. We need to settle this matter,” he told reporters while showing the distribution of fires from 1 to 18 June in concession areas in Riau.

APP, the world’s third-largest paper producer said in a statement late Friday that “ground verification” detected “only 7 points that are actually forest fire, affecting around 200 hectares of land”.

“They are under and being controlled by approximately a thousand fire fighting crews and their team. Our team’s preliminary investigation found that 5 of the fires were set by the community to clear land for crops and 2 cases are still under investigation”, APP added.

APRIL could not be reached for comment.

Indonesia stepped up its fire-fighting efforts Friday by deploying aircraft to artificially create rain and to water bomb the blaze.

The haze crisis has caused a dramatic escalation in tensions between tiny Singapore and its vast neighbour, with the city-state repeatedly demanding that Jakarta steps up its efforts to put out the fires.

 

More:

Sunny places for shady people.

On the road

June 17, 2013

The longest trip I ever made away from the family. Three-and-a-half weeks including Astana.

From there I arrived in Beijing. Domingo Cavallo sitting in the seat next door except I didn’t recognise him. We shared a cab into town and had a nice chat.

Various talks in Beijing, but also desperately trying not to stop to smell the rose(s) and get on with my research. The revelation of this trip was Line 6, newly opened, of the Beijing Underground. What a line. It connects, on a straight, east-west route, the greedy gweilos of Chaoyang district and the paranoid, pipe-hitting, nationalistic politicians and bureaucrats in the Beihai North and Chegongzhuang areas. Plus it ends up in IT-land Haidian. It’s the golden line of money and power, with the fastest trains to match. Well built.

Beijing subway

Tianjin was easy on the 300kmh train. Back in the day I was pulled over on the expressway doing 160kmh. You are the fastest today, said the policeman. ??, I replied. He popped the fine in a briefcase, heaving with cash. Still took 2 hours door to door. The train is 30 mins. Then an interesting factory manager. Minimum wage in Tianjin this year is Rmb1,800. Ouch.

Then 5 hours on the high-speed to Shanghai. I never liked the place, but this time, for the first time, they charmed me. The urban planning is just better than Beijing. The people are calmer, less bullshitty than they were. Beautiful dinner with friends. Small dogs. I am still obsessed with where all the dog shit goes. They say no owner cleans up after the pooches. It’s the waidi ren, the peasant slave labour, that just picks up the shit early in the morning while Shanghai is dozing.

No high-speed to Guangdong yet, so took the sleeper. Beers in the dining carriage with a businessman who told a story you just could not make up. It’s like they just want to write the next book for you, take the weight… We trade numbers. A Burmese-Chinese returnee who can’t speak Chinese and a Shanghainese too.

In Guangdong I have to go to Zhongshan, near Zhuhai, to see a rather smart company. Seems to me a lovely place, not visited in 15 years. Taxi driver says street crime is on the rise. But I think the people are great, open, smiling at the gweilo.

Then across the border for a weekend on Coloane, at Pousada de Coloane. Sunday lunch at Fernando’s, my favourite anywhere. You never could book. However they have introduced a piece of paper on which you write your name after 12.30, when restaurant already full, and they use this to determine who at the bar is next. Even Portugal is making progress. I lament the changed shape of the Vinho Verde bottle.

Hong Kong is a whirr of money pigs and talks. In the midst I am drinking ??in the FCC when a svelte young colonial strides in. It is Hemlock. I hardly know him. Convex chest, unhunched shoulders, a smile… He tells me, apologetically, that he has ‘a girlfriend, almost half my age…’ Wonders will never frickin’ cease. Of course he still shoves a plate of noodles in his face at 11am. But Thus Spake Zarathustra just came to a movie theatre near you.

All in all, a lovely trip. Problem is that in the whole month only Bowring tries to really nail me, with a question at the FCC. God bless. It is one of the points that Charlie Munger lists in his guide to gentle informational murder. They just don’t challenge you. And yet without the struggle, we cannot progress.

Finally, I get home. And the wife tells me to stop swearing so much. Gravity, at last.

 

Some media stuff:

Pilling on Indian IT after a chat

Marginal Revolution likes the book. And is probably right that neither beach reader nor academic reader will be happy.

Tom Holland on the book.

Jake Van der Kamp responds to Tom Holland in the SCMP, except without reading the book. This is staggeringly lazy. File under Howard Davies. And I have often quite liked Van der Kamp’s stuff. But this thin, indolent drivel is a pretty good guide to why so many millions remain poor. How can anyone serious pass judgement on something they have not read? It is a book about stages, that takes in your view, Mr Van der Kamp, and the other one. Separately, and somewhat pedantically, ‘fulsome’ does not mean ‘full of’. It means ‘insincere’.

And now Holland responds. His main point is valid. I said at the beginning (and end) of How Asia Works that this is a book about economic development. Real development is also about social and political development. But I was not willing or capable to try to put the other parts of the equation in the same book. It would be too complex. And people would not absorb the basic message about economics. The next book will deal with the institutional stuff.

RTHK on the book. I had to download a plug-in to run this, but assume the average reader is more tech savvy than I. Trick is to do all this and then hit the play button to start the show. But first go to ‘Select segr’ and choose the 11.05 slot. With Phil Whelan. That is where the interview is. Very clunky stuff. But listenable if you get there. ACTUALLY… just did this again a slightly different way. Went here. Then just scrolled down the page and hit the button next to ‘Joe Studwell — How Asia Works’. Took a couple of secs to load up, but then fine.

Podcast interview by the Economist Intelligence Unit in Hong Kong. It was the end of the day. I am more tired than at RTHK, but still a decent chat.

Amcham in Beijing. The podcast should be here.

More to come when I remember what it was.

Weekend reading

May 18, 2013

Just three items.

Elanah Uretsky has a very nice piece in The National Interest on yingchou (??), the merry-go-round of Chinese male bonding culture involving smoking, drinking and sex, and the health and family consequences.

Mohammed Hanif does a reasonable job of explaining the recent Pakistan election featuring Imran Khan (very rich) and Nawaz Sharif (much richer) contesting leadership of their very poor homeland.

And the FT has a nice graphic with click throughs showing the biggest real estate developments in central London.

 

 

Malaysian squib

May 6, 2013

Malaysian election 2013

Results are in and the opposition alliance won only 89 seats in Sunday’s election. The ruling UMNO alliance took 133 seats, down only 5 from the last election.

Still, there were some important shifts in voting patterns.

The main ethnic Chinese opposition group, the Democratic Action Party (DAP) did very well, a reward for years of political hard work and standing up to the bullying and intimidation of UMNO. UMNO’s in-house ethnic Chinese running dog party, the Malaysian Chinese Association (MCA), did very badly and looks like political toast. This is good news.

The opposition Pan-Malaysian Islamic Party (PAS), campaigning for the introduction of sharia, faired poorly. Anwar Ibrahim’s policy to bend with the wind and let PAS have whatever it wanted backfired.  This is also good news.

Malaysia can be added to the list of countries whose electors are now more grown-up than its politicians.

Still, going forward I would expect another period of misery as Najib fails to deliver any significant internal UMNO reform.

The pain will likely be leavened for the middle class by a stock-market bull run, for which all the pieces are now in place.

As the official ad campaign has it, Malaysia Truly (south-east) Asia.

 

Just in:

GaveKal, the firm that bought my interest in Dragonomics, reports that Sabah and Sarawak are 18% of the population but 36% of BN seats following the election (see Mr. Yap’s comment).

Household debt in Malaysia is now 80% of GDP, with the average family spending 44% of income to service debts. (It’s that old IMF trope — seen throughout south-east Asia — a first world financial structure with a third-world economy).

UMNO/BN got back in with lots of spending promises, but the fiscal deficit is already 5% of GDP.

 

What’s Good About Malaysia?

May 3, 2013

Mal Krishnan Mal KuokMal Hussain Mal Syed M Mal Anwar Mal Jomo Mal Mahathir

 

Among the major economies of east Asia, Malaysia — which will hold a national election on  Sunday — is the most racially mixed, a melting pot of people of Malay, Chinese, Indian and Sri Lankan ancestry.

All the racial ingredients are present to foment east Asia’s most dynamic and cosmopolitan society — a California, Holland or south-east England of today, or a Tang China or Arab ascendancy of a earlier epoch.

Unfortunately, the ingredients have long been just that — ingredients. In 1965, Malay fear of being outnumbered by ethnic Chinese (and the reverse) was the background to the break-up of a union with Singapore. More recently, the cosmopolitan dream has languished under the affirmative action policies of the ruling United Malays National Organisation (UMNO). Affirmative action has too often meant filling the boots of a small Malay elite, and assorted running dogs, rather than taking the country forward.

Today, many Malaysians of all races reckon themselves less integrated and less happy than ever. And yet despite this, the signs of cosmopolitan promise in this most beautiful and enchanting of Asian nations never disappear.

The richest man in Malaysia is a reclusive Tamil, Ananda Krishan, an extraordinary entrepreneur who has bent every political leader for two generations to his will. Even politicians who hate each other end up agreeing with Krishnan’s agenda, and admiring the Islamic-art inspired Twin Towers he built in Kuala Lumpur. If government had forced him to do something more useful than run monopoly concessions from tv to telephones, and fret about the layout of his luxury yacht, this son of Sri Lankan railway clerks would surely have built one of the greatest branded businesses in the region.

The richest Malaysian long since moved on from Malaysia, in part because of his frustration at the place’s limited ambitions. Robert Kuok, commodities kingpin and Shangri-la hotelier has, in his latter years, put on an ever more Chinese face, but his own family is a wondrous assortment of different races, from West Indian to Welsh and Arab to Malay. His first, late wife was half-British.

The biggest financial services conglomerate put together in Malaysia is the work of a Malay-Arab-Indian, Rashid Hussain, whose inititals gave rise to the ubiquitous RHB logo seen everywhere in the country. One of the fastest growing businesses of late belongs to a Pashtun-Malay entrepreneur, Syed Mokhtar Al-Bukhary, so sharp that a Chinese billionaire once told me he refused to eat chocolates sent to him by Syed Mokhtar until they had been tried on his family pet (the tycoon and the animal survived). The best known Malaysian brand these days is low-cost airline Air Asia, run by an ethnic Indian, Tony Fernandes.

Nor is this cosmopolitan smorgasboard of talent limited to the business sphere. In Jomo Kwame Sundaram (Indian Tamil-Indonesian-Teochew Chinese), currently serving as Assistant Director General of the United Nations’ Food and Agriculture Organisation (FAO), Malaysia produced south-east Asia’s most prolific and respected development economist.

In Mahathir Mohamad — one- or two-quarters Indian, two- or three-quarters Malay, though in power he declined to concede his mixed race ancestry for political reasons — Malaysia produced the south-east Asian politician who came closest to creating a viable industrialisation strategy, one that could have put his country on the track that Japan, South Korea, Taiwan and then China followed.

The mercurial Mahathir, however, studied but failed to digest the real lessons of north-east Asia. Agriculture was left stuck in the colonial mould, while industrial policy never harnessed competition to developmental ends in the manner of more successful east Asian states, as any businessman who works in both Malaysia and China will tell you.

Today, Malaysia’s businessmen goof around buying English soccer clubs (Queen’s Park Rangers, which came bottom of the Premiership this year, Cardiff which is joining it) when they could and should be driving their nation’s economic development.

UMNO’s defensive claim going into this Sunday’s election is that it is a tried and tested ‘product’. But given that Malaysia was much the most profitable British colony, and now has an even more formidable resource base after the discovery of vast natural gas resources, a modest GDP per capita lead over neighbouring Indonesia and Thailand is far from impressive. It is the US$15,000 GDP per capita lag on Taiwan and South Korea — much poorer states at the end of the Second World War — that tells.

Anwar Ibrahim (Malay-Indian), who leads the largest opposition party, Keadilan, has little to recommend him. A former Finance Minister, he has bent with the political winds for decades, only leaving UMNO after Mahathir turned on him. The leaders of allied opposition parties are untested in power beyond the local level — indeed sometimes at any level.

Yet Keadilan and its allies do offer Malaysia the chance of rule by a different party after 56 years of UMNO incumbency. It is a chance worth taking, even if — as appears to be happening to Japan’s LDP after defeat by its opposition — the main benefit would be to shake UMNO out of its corrupt and navel-gazing torpor.

Sunday is also a chance to change the nature of racial politics in Malaysia. Race has become an albatross around the country’s neck. It should be Malaysia’s greatest asset.

 

Tony down, Vince up

April 29, 2013

Cardiff promotion Tan and Chan Tien Ghee Fernandes QPR sad

The weekend’s English Premier League soccer results confirm that the team controlled by Malaysian billionaire Tony Fernandes will go down, while the team controlled by Malaysian billionaire Vincent Tan (currently in the league below) will go up.

What makes Third World billionaires waste their money on Premier League soccer clubs?

My working theory is that the habit reflects a desperation for recognition among people whose businesses will never buy them respect. (Actually, Tony Fernandes is a poor example because his Air Asia business is a relatively ‘normal’.)

The typical Third World billionaire who buys a Premier League club does not do something at the office that allows them to hold their heads high in the company of those they would like to be seen with. To wit:

‘So, how did you make your money?’

‘My dad fucked my mum.’

or

‘Well, I got my start robbing a train. Then a I cornered a bank. And now I’m in minerals. It’s important to have good bodyguards.’

or

‘In essence, I gave these guys who run my country a huge bung, and they gave me a licence to print money. So I did.’

So you buy a soccer club. Of course it is also useful to be in London on a regular basis to stash and invest some of your cash, while the UK’s tax laws have been redesigned around the needs of footloose billionaires.

But, in the end, no one will respect you even if, like Abramovich, you win the Champions League.

Methinks it a mug’s game.

 

Premiership clubs controlled by billy-willies:

Abramovich controls Chelsea and, according to Forbes, has spent US$3bn on the club. Meanwhile life expectancy for men in Russia is just 60 years.

Uzbek-Russian billionaire Alisher Usmanov and partner Farhad Moshiri control 30% of Arsenal. Usmanov has long indicated his willingness to increase his stake in Arsenal to full control but has yet to lay his hands on the shares.

Sheik  Mansour bin Zayed Al Nahyan owns  Manchester City.

Mohamed El-Fayed, erstwhile owner of Harrods, still owner of the Paris Ritz, controls Fulham.

Tony Fernandes and Lakshmi Mittal control Queens Park Rangers, who are already relegated. It looked like a good networking opportunity for Tony, founder of Malaysian Ryanair tribute company Air Asia, but will the two still be pals after losing tons of money while achieving nothing?

Vincent Tan, a master of the untendered Malaysian government monopoly concession, controls Cardiff, who are coming up from the division below to replace Tony’s QPR. Other Malaysian billionaires love to hate Vince, but the children of Cardiff momentarily love him. Note that Vince has also signed up to the Gates/Buffett GivingPledge, promising to give away at least half his loot ‘to help address society’s most pressing problems’; (here is his personal pledge). Now that Vince has got his team into the Premiership, he could choose to regard the losses required to stay there as fulfilment of his GivingPledge. What more pressing problem is there than Wales’s lack of a Premiership football team? If other premiership billionaires grasp the angle, Melinda Gates’s phone will be ringing off the hook. Soccer as philanthropy — allowing Third World tycoons to feel better about themselves while watching football. If any of them get the idea from this blog, I would like some tickets please.

There is a Wikipedia table of English football club owners here.

Thoughts beyond the premiership

European businesspeople who constructed more regular businesses invest in clubs some times, but seem to go for smaller clubs. Amancio Ortega, behind Spanish retailer Inditex, put money into Deportivo La Coruna. Francois Pinault, who controls the likes of Gucci and YSL, also controls the football team Rennes. Delia Smith, of English cookbook fame, has a major stake in Norwich. George Soros does have 10% of Manchester United, but that is a big club run for profit.

Weekend reading: Italy and Spain and more

April 28, 2013

Italy gets a government that surely cannot last, led by a ‘left-wing’ politician whose uncle is the chief of staff to Silvio Berlusconi. Front up  a younger guy and put more women in the cabinet so the Germans think we’ve grown up, seems to be the plan. FT (sub needed) has a sensible leader about how political reform may be the only way to unlock the door to economic reform.

Meanwhile, in The Guardian Simon Hattenstone writes about his long correspondence with Amanda Knox, who faces a retrial for failing to be guilty of murder when everybody in Perugia knows she’s a witch.

In Spain, Almodovar has a new movie out about his country’s economic crisis. It sounds dark, funny and uplifting — whereas Italy has become shallow, unfunny and boring.

I quite like Krugman’s habit of leavening his blog with some decent music. And he has this very funny take-down of the Reinhart-Rogoff controversy over the relationship between debt and GDP from Colbert (you may need a VPN set to the US to view this). The theme of picking your data points to fit the hypothesis you already decided on is entirely consistent with what How Asia Works describes happening in World Bank reports about east Asian development in the 80s and 90s. Harvard, eh? Martin Wolf (sub needed) has a nice reminder of British industrial revolution history when debt was twice GDP. The best thing in How Asia Works on the non-linear relationship between debt and GDP growth is the financial history of South Korea, set out in Part 3. South Korea was more indebted than any Latin American state in the 1970s and 1980s but, unlike them, didn’t go bust because of what the debt was spent on.

If you are in London, this is superb. And very much on the theme of development.

Need more mirth?

Have a look at the curious tale of the Management Today review of How Asia Works…