China making economic mark in Africa

The Chinese presence in Africa is quite extraordinary and the continent collectively is the third-largest recipient of Chinese outward foreign direct investment of nearly US$90bil.

AFRICA, with its one billion population and surging birth and economic growth rates, is and will be the next economic battlefield, a terrain that will be fought over by Chinese, Indian, American and European investors.

While Malaysia is a small fry among this company, we have a surprisingly high profile thanks to Tun Dr Mahathir Mohamad’s foresight and enthusiasm for the continent in the 80s and 90s. Dr Mahathir founded the Langkawi International Dialogues in 1995, which was and remains an important platform for Malaysia to engage with African nations.

We shouldn’t let these relationships lie forgotten. Instead, we need to build on this remarkable goodwill because it can provide real business opportunities for our country.

As the IMF had forecast in October 2012, Sub-Saharan Africa’s regional output is expected to expand by about 5.25% in 2012 and 2013.

The Financial Times on the other hand reported in November 2011 that the African Development Bank expected pan-African GDP in 2012 to be 5.5%.

True, poverty and political instability remain major issues but these are phenomenal rates compared to its former European colonial masters now.

Meanwhile, the Chinese presence is quite extraordinary, beginning from my fellow travellers on the late-night Kenya Airways Boeing 777 bound for Nairobi during my November trip there — many of whom were clearly from Guangzhou where the plane had originated. I still remember drifting off to sleep as announcements in Mandarin droned on in the background.

Upon arriving in Nairobi, I noticed to my surprise that most of my fellow Asian travellers had merely changed planes for other more exotic destinations – Juba, Lilongwe, Maputo, Addis Ababa, Kinshasa and Douala.

Nairobi, while strange and alien enough for me, was already old-hat for my Chinese compatriots.

Driving into town along the Mombasa Highway, I hit the morning rush-hour, enduring what can only be described of as a truly Asian traffic jam, replete with peddlers selling newspapers, magazines, household implements and toys.

We crawled along for mile after mile, negotiating the now inadequate roundabouts, overtaken in turn by the many people walking along the side of the busy thoroughfare.

After an hour or so, the city’s downtown with the distinctive cylindrical-shaped Kenyatta International Convention Centre – an icon in Nairobi where I was to stay – thankfully emerged into view.

Turning off the highway towards my hotel, I noticed a new intersection, replete with flyovers up ahead. Squinting, I could just about make out the banners announcing its upcoming launch.

Having been struck by the poor state of Nairobi’s infrastructure, I asked my driver about the new development and was told: “The Chinese built it sir. It’s the new Thika Expressway and the president will be opening it tomorrow.”

Chinese trade and investment in Africa has boomed. As Greg Levesque of the US-China Business Council wrote in the Business Insider on 27 June, the continent collectively is the third-largest recipient of Chinese outward foreign direct investment (OFDI) of nearly US$90bil (RM273bil).

Major destinations include South Africa, Angola, Nigeria and Algeria.

The key sector is of course energy, with Chinese state-owned firms like the China National Offshore Oil Company (CNOOC) hunting oil and gas blocks to meet the Asian giant’s energy hunger.

However, China is also moving into other sectors like infrastructure. The Thika Expressway for instance created 3,500 jobs for local Kenyans.

Also, in July, outgoing Chinese President Hu Jintao offered over US$20bil (RM60.8bil) in loans to African countries over the next three years.

But China’s push into Africa hasn’t come without criticism, and during the Mo Ibrahim Foundation dialogue that I attended in Dakar later on, a number of speakers touched on the imbalance in relations. Most felt uneasy about the way Africa’s natural resources were being exported to China, in return for which Africans were importing all manner of consumer goods.

As one speaker said, “The Chinese need to set up factories here in Africa to supply this market. In years to come, we will have the largest pool of young workers”.

The pan-African investment banker, Mamadou Toure felt that the continent is generally receptive. However he stresses: “China’s investments in Africa currently exceed the World Bank’s. We do need to diversify our partners.”

Indeed, there’s concern that China’s influence could alter the very social fabric of Africa. Afia Asantewaa Asare-Kyei, a Program Manager with George Soros’ Open Society Foundation in Senegal and a Ghanaian recalls a recent trip back home to her village in the Ashanti Region:

“I was surprised to see Chinese workers panning for gold alongside the locals.”

The Chinese presence is multi-faceted and deep. Indeed even in Dakar, at the newly built National Theatre (where the foundation’s dialogue took place), constructed with Chinese funding (they picked up around US$28mil (RM85mil) of the total US$32mil (RM97.3mil) cost) and know-how. Chinese workers – pleased with what they’d achieved, were very much in evidence.

The African decade is upon us. Are we in Malaysia ready to seize the opportunities that Dr Mahathir bequeathed us?

COMMENT 

By KARIM RASLAN

US building new spy wing to focus on Asia

AFP 12/2/2012

The Pentagon, in a major expansion of its intelligence gathering activities, plans to assemble an espionage network rivaling the Central Intelligence Agency in size, The Washington Post reported.

Citing unnamed US officials, the newspaper said that as part of the project, US military officials will send hundreds of additional spies overseas.

They also plan to overhaul the Defense Intelligence Agency (DIA) which has focused primarily during the past decade on activities related to the wars in Iraq and Afghanistan.

When the expansion is complete, the DIA is expected to have as many as 1,600 intelligence "collectors" around the world -- a major step-up for an agency whose presence abroad has not exceeded triple-digits in recent years, the paper said.

The total includes military attaches and others who will not work undercover, The Post wrote.

But US officials told the daily that the plan also includes deployment of a new generation of clandestine operatives to be trained by the CIA.

These new operatives are to work frequently with the US Joint Special Operations Command, but they will get their spying assignments from the Department of Defense, the paper said.

The Pentagon's top intelligence priorities are Islamist militant groups in Africa, weapons transfers by North Korea and Iran, and military modernization underway in China, the newspaper wrote.

A strategic game-changer, the Crude dynamics a new economic 'golden age' for USA likely?

A SEISMIC shift is under way in global affairs. At its most potent, this dynamic could conceivably upset the accepted wisdom of where the ‘centre of gravity’ of the world economy will lie two decades from now.

A recent report from the Paris-based International Energy Agency (IEA) predicts that by as early as 2020, the US could surpass Saudi Arabia as the world’s largest oil producer — and achieve complete energy independence by 2030.

The IEA forecasts that the US will increase its production to 23 million barrels a day (MMbd) in 10 years from total available supplies of around 10.3 MMbd currently. Oil and natural gas production in the US is increasing at its fastest pace in 50 years.

The IEA’s outlook on world energy has underscored what recent data have been pointing to: a perceptible decline in the dependence on energy imports for the US.

The US, currently the world’s largest oil consumer using 18.8 MMbd (roughly 22 per cent of global production), imported about 45 per cent of its petroleum (crude as well as products) in 2011. After peaking in 2005, the share of imports in US energy consumption has declined a full 10 percentage points (from over 55 to 45 per cent currently).

Contrary to popular perception, 52 per cent of these imports were sourced from the western hemisphere, with Canada, Venezuela and Mexico supplying 29 per cent, 11 per cent and eight per cent of the US petroleum needs.

Saudi Arabia, the second-largest supplier of oil to the US after Canada, accounted for 14 per cent of US petroleum imports in 2011. The wider Middle East/Persian Gulf accounted for 22 per cent of US petroleum imports in 2011, down by around 25 per cent since 2005.

The US has benefited from large domestic production gains, particularly in shale oil.

This has been made possible by technological innovation in oil drilling such as ‘hydraulic fracturing’ (or ‘fracking’) as well as the opening of hitherto off-limit geologically rich production areas such as Alaska and the Gulf of Mexico (drilling activity in the latter was temporarily halted by President Obama following the oil spill caused from BP’s rig).

What will this trend mean for the global economy? The virtual elimination of the US’s dependence on imported energy in the next one or two decades is being dubbed as a “strategic game-changer”. (The Wall Street Journal carried a piece with the headline ‘Saudi America’ in its Nov 12, 2012 Asian edition.)

According to influential commentators like Niall Ferguson, the celebrated financial historian and Harvard University professor, the abundant availability of indigenous energy could spark a new economic “golden age” for the US.

Uninterrupted supplies of relatively cheaper, and less price-volatile, fossil fuel could galvanise the US manufacturing sector into creating millions of new jobs.

With its productivity advantages, coupled with a gradual convergence of manufacturing wages between developed and fast-growing developing economies, the US could also start becoming attractive once again as a global manufacturing hub, according to Mr Ferguson.

Hence, rather than write off the US economy as a spent force, commentators such as Mr Ferguson believe quite the opposite: that the US will continue to economically rival, and possibly dominate, competitors such as China and India well into the supposedly ‘Asian’ century.

The replacement of imported fuel and the infusion of domestic energy in the US economy will have implications for the US dollar as well, according to this line of reasoning.

According to forecasts by Deutsche Bank, reduced energy dependence would cause the US current account deficit to fall 30 per cent by 2016.

By virtue of these developments, the value of the greenback will appreciate, which will provide an added impetus to declining world oil prices.

The possible reduction of geopolitical risk in global energy markets as a result of America’s energy ‘independence’ resulting in a weaning away from the volatile Middle East, could trigger a sharp reversal in the international oil price. (This scenario assumes, however, that Saudi oil production has not ‘peaked’ between now and then).

By some expert reckoning, the geopolitical risk in current oil prices ranges anywhere from $20 to $30 a barrel.

Such a large reduction in the oil price, should it occur, will exact a heavy toll on the budgets and economies of Middle Eastern oil producers.

Given their demographics, most of these countries will need to continue ‘pump-priming’ their economies for the next decade at least to create jobs and provide social safety nets.

The potential loss of oil income could be a devastating blow to their economies — and for millions of migrant workers who send billions of dollars in remittances to their respective countries.

The other major implication of these potential developments in global energy markets would be on food prices. If world oil prices do indeed trend down for the long run, it will remove the economic incentive for the push into bio-fuels.

This in turn will be welcome news for the world’s poor, as both the stopping of food diversion for bio-fuels combined with lower transport costs will make a significant dent in food prices.

However, if the US economy does not decline into irrelevance by 2030, and is in fact rejuvenated, the global competition for resources will be even more intense — pressuring not only the environment but also prices for non-oil, non-food commodities.

A fascinating global energy landscape is unfolding. Whatever final shape it takes, our continued dependence on energy from fossil fuels will ensure that oil will continue to play a major role in our lives for the foreseeable future.- Dawn/Asia News Network

 By Sakib Sherani
The writer is a former economic adviser to government, and currently heads a macroeconomic consultancy based in Islamabad.

Related posts:
U.S. to Overtake Saudi Arabia, Russia as World's Top Energy Producer.
South-East Asia in the frontline of US containing China rise?

How to reduce childcare costs?

 Tips to avoid falling into the parent trap of spending unnecessarily

THE patter of little feet around the house is always a joy but the addition of new family members into the household can be quite expensive and a financial strained if there is no planning.

Here's how to avoid falling into the parent trap of spending unnecessarily and reducing your childcare costs.

Sharing the load 

The financial load of taking care of a child can always be better managed if both parents are working.

“The first thing one should do is to sit down and decide how the finances should be evenly distributed,” says financial adviser Wilson Low.

“Of course, it would be better if everything is determined some time before the child is born, rather than after,” he adds.

It's not necessarily a bad thing, however, if only one of the two parents is working, says Low.

“If one parent is working, then the non-working one can stay at home and look after the children full-time. This can seriously help cut down on the cost of hiring a maid or babysitter.”

Buy what you only need

Adlina Hassan, a stay-at-home mother of three, says one should only focus on getting the bare essentials or “only what is necessary” when it comes to buying food or clothing for one's children.

“There are a lot of products out there and I always like to compare. Many parents often get what their friends or neighbours buy but that shouldn't always be the way. They could be better off than you and the items they buy may not be to your budget.

“Just get what is necessary and no need to keep up with the Joneses,” she says.

According to Melissa Ram, who is a proud new mother, buying in bulk can also be a cheaper option.

“Buying in bulk would be good when there are promotional items on offer. Buying goods online can also give you savings. I shop a lot online and compare pricing to get the best deal for what I want.”

However, when buying in bulk, one needs to ensure that the goods can be consumed in time.

“I would not buy food or milk in bulk as I'm very particular about the expiration dates and such. I once bought some cereal from a hypermarket and it was expired,” says Gowri Arumainathan, a mother of two.

Melissa also says she keeps a lookout for baby fairs where she believes one can get “really good deals.”

“Another option is to buy clothes in bigger sizes as children tend to grow very fast and outgrow their clothes in a short space of time.”

Gowri also says she prefers to purchase children's goods, especially dairy products, from local sundry shops and mini-markets.

“It's definitely cheaper, at least by a few ringgit, and I also notice that the stock moves fast. This way I know I'm getting new stock of milk or cereal that I need to buy. This even applies for diapers.

“When it comes to clothes, I tend to buy most of them from the open market. It's cheaper and you'd be surprised by the quality of clothes you can find.”

Cooking your own meals

If you have the time to do it, then home-cooked food is always a cheaper option.

“I tend to make my children's meals. It's cheaper, fresh and I'm able to provide more variety to their food intake,” says Gowri.

Melissa, meanwhile, says: “In respect of the food, breastfeeding will save you a lot in the cost of milk! I also believe mothers should try to cook their own food for their children rather than to buy baby food off the rack.”

Getting extra help 

A lot of times, one needs to get extra assistance to look after their children. This could be a willing and able family member, such as a parent, or getting hired help like a maid or babysitter.

“The cheapest is surely to get your parents to look after. In our case, we have a long list of “babysitters” on hand, ranging from our parents, sister to aunties and cousins,” enthuses Melissa.

Gowri also concurs that getting a parent to look after your children is a cheaper option.

“Of course, getting a parent to look after the child is the most cost-efficient way. Especially with reports of how children are not looked after well at nurseries and day-care prices these days are all going sky high,” she says.

“It's surely the cheapest option (being looked after by a parent) and you know your child's well being is close to heart. However, at times, grandparents are often too old or unwell to run around after small kids,” Gowri adds.

With that in mind, she believes getting a maid is a better option when the child is a little older.

“Getting a maid is only an option to me if my child is bigger and able to inform me about the maid. Otherwise, I will not be able to trust my younger children with them. With all the stories you hear of what they can put in your food and do to a child, it makes you shudder to think your child's health can be in harm's way.

“Babysitters would be my next option. As they don't take care of too many children at one time, you know you are getting a more personal touch. Day-cares are just too commercialised and can have too many children to look after. So the personalised care for your child is not there.”

Adlina believes getting students as babysitters is a cheaper option.

“Of course perhaps not as full-time babysitters but I always found that getting students to look after your children can be a cheaper option.

“Students are not so demanding. They're usually looking for easy pocket-money and they're usually quite happy with whatever you offer them, most of the time!”

By EUGENE MAHALINGAM eugenicz@thestar.com.my

Related post:

Childcare services: daycare and private nursery businesses

Building an innovative society

Bad intellectual property image clouds the country’s real progress in encouraging inventors and building an innovation-based society.

CHINA has been an easy prey worldwide as it is labelled as a country with one of the worst environments for intellectual property (IP) development.

But little has been known about the nation’s steady progress in raising a greater awareness of IP rights protection and significance to build a more innovation-based society.

Chinese State Intellectual Property Office commissioner Tian Lipu admitted that China is still full of pirated goods and copycats but he also pointed out that many more individuals and companies are turning innovators instead.

“I think the Western media has painted a wrong picture of China on its efforts to protect IP rights. China’s image has been quite bad in other countries,” he said in a recent interview in Beijing.

He acknowledged that one would be able to find pirated goods in places like Beijing’s Sanlitun and Luohu district in Shenzhen but many had overseen the fact that China had developed a comprehensive system and legal structure to protect local and foreign patents and trademarks.

“Last year, we received 526,000 applications for invention patents, accounting for 25% of the world’s total. About 110,000 local applicants were granted patents. While the number of applications reflects the level of awareness of IP protection among the public, the figures of patents granted indicate how good is the quality of the inventions.

“However, the intellectual property office is more concerned about the valid patents and to see whether these patented creations are well received by the market and how well the patent is maintained by its owner. To date, there are about 350,000 valid patents owned by locals,” he said.

In China, applicants can register patents for invention, patents for utility model and patents for design. The office processed 1.63 million applications for these three types of patents last year.

As for trademarks, China received a total of 9.71 million applications as of the end of last year, with 6.65 million of them successfully registered. Besides, some 110,000 software copyrights were registered last year.

“Not many people know that China is one the countries which pay the most royalties for patents, trademarks, copyrights and franchises and one of the world’s largest genuine software buyers.

“Government departments, banks, insurance firms and many companies are using original softwares. Many firms buy books, music, movies and TV shows through copyright trade,” Tian said.

He said foreign companies had gained huge profits in overseas markets after the production of their original equipment manufacturer (OEM) goods in China.

“I think because of the conducive environment for IP protection in China, foreign investors would have a peace of mind to entrust Chinese manufacturers to produce their OEM goods.”

Last week, the office’s patents administration department announ-ced that as of June, all the departments of the 31 provincial and municipal governments had installed genuine softwares.

By the end of next year, it said, all city and county-level governments would do the same. As of the end of October, all levels of government spent some 1.48 billion yuan (RM725mil) on 2.3 million licences for operating system, office and anti-virus softwares.

It is learnt that most of the state-owned enterprises have been equipped with proper softwares while 50% of smaller companies would be given until next year to follow suit.

Tian said China might not have a society priding itself on IP like in the United States but it would not take too long for the Chinese to catch up with the rest of the world.

“China used to be a country with the highest number of inventions during the Song dynasty – and 50% of the world’s total inventions came from China. China then laid dormant for centuries until we started educating our people on the value of IP 20 years ago. I think it may take one or two more generations for us to build a society that lives by the IP culture,” he said.

He revealed that his office, the Trademark Office under the State Administration of Industry and Commerce and the National Copy-right Administration were amending the Patent Law, Trademark Law and Copyright Law to give more tooth to enforcement and judiciary agencies to carry out their duty.

Under the amended patent law, damages will be calculated based on the illegal gains of the party which infringes the owner’s right rather than the owner’s actual loss. This is because the act of infringing one’s right is relatively easy compared to the act of protecting and maintaining it, he said.

He warned that as Chinese companies reinforce their IP development, they should be on guard to face the so-called “patent trolls” which tend to buy patents at low prices and go around taking action against those infringing their rights.

“These ‘patent trolls’ did not involve in any R&D and innovation. They are a byproduct of IP development sidetracking its real spirit.

“Piracy and IP infringement exist everywhere in the world and cannot be totally wiped out. But investors should be confident about doing business in China as its government is resolute in addressing the problem.”

MADE IN CHINA
By CHOW HOW BAN