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Sunday, 10 April 2016

Malaysia's pragmatic patriot: friends with benefits


The South China Sea dispute. The global terrorism threat. Malaysia’s foreign policy is back in the world’s spotlight and it is exciting times for ISIS Malaysia’s Foreign Policy and Security Studies chief.


IN an article titled “Think tanks aren’t going extinct. But they have to evolve”, American scholar James Jay Carafano wrote that the capacity to do rigorous, credible research is “no longer sufficient” for think tanks to manoeuvre their ideas prominently into the policy debate. Instead, think tanks must learn to communicate “in ways that will allow their ideas to break through to decision-makers who are bombarded with information from all sides”.

In that regard, Elina Noor has proven to be a real asset to Malaysia’s premier think tank, the Institute of Strategic and Interna­tional Studies, or ISIS Malaysia. Her ability to articulate on complex and dynamic global affairs – such as major power relations, cyber warfare, terrorism and conflicts – in succinct yet jargon-free language has also made her a highly sought-after interviewee by the international media.

As a child, Elina wanted to be “everything”, from prime minister to fashion designer. Her parents, who ran a management consultancy firm, however, might have subconsciously put her on her career path by leaving the world news on television all the time when she was growing up.

“My parents would engage in lively debates about international affairs between themselves. As I grew older, I wanted to do law with an eye towards international law, specifically how war and conflict affect people.”

After graduating from Oxford University in the United Kingdom, she specialised in public international law at the London School of Economics and Political Science. This was followed by an internship at the Centre for Non-proliferation Studies at the Monterey Institute of International Studies in Washington DC, specialising in issues of weapons of mass destruction terrorism.

Essentially, she helped compile a database of terrorist groups with chemical or bioweapons capabilities by combing through secondary sources and obtaining intelligence from experts who had gone into the field.

Her days in the United States were cut short, however, by visa limitations. So, after nine months, she returned to Malaysia in 2001.

Her appetite whetted by her Washington experience, Elina joined ISIS Malaysia as a researcher.

Though formally positioned as a research organisation for nation-building initiatives, ISIS Malaysia was set up by former prime minister Tun Dr Mahathir Mohamad in 1983 to serve as a crucial sounding board for the government on foreign policy and security issues.

In addition to research, ISIS Malaysia engages actively in non-governmental meetings between states, known as Track Two diplomacy, and fosters closer regional integration and international cooperation through forums such as the Asia-Pacific Roundtable.

Now, having risen through the ranks, Elina heads a team of eight in the Foreign Policy and Security Studies division.

As a claimant state in the ongoing South China Sea dispute, chair of the Association of South-East Asian Nations in 2015, and currently a non-permanent member of the United Nations Security Council, Malaysia’s foreign policy direction has drawn renewed interest at home and abroad.

Invariably, Elina is asked questions on Malaysia’s relations with China. Her answer is perhaps best laid out in an article she wrote, titled “Friends with Benefits: Why Malaysia can and will maintain good ties with both the United States and China.”

On the topic, Elina had explained: “Malaysia should or will be subservient to an awakening dragon, but the cost-benefit calculus militates against provoking it. Equally, Malaysia’s location and posture make it a strategic partner for China in South-East Asia.

“It is the mark of a mature and solid friendship when overall relations are not held hostage to single-issue disagreements.”

Elina had added that such overlapping claims in the South China Sea, “should not, if managed well, stultify cooperation between Malaysia and China in other areas of the relationship. For a developing country with high-income and knowledge-economy ambitions like Malaysia, the show must go on”.

Or to put it simply, Malaysia wants to be everybody’s friend. That’s always been the country’s foreign policy from the start, she points out.

On the other hand, this pragmatic approach has also enabled the country to punch above its weight in places where even superpowers fear to tread.

Elina’s other portfolio, cyber warfare and security, is expected to come further into the spotlight with recent headlines claiming that the so-called Islamic State extremist group in Iraq and Syria intended to abduct top Malaysian leaders, including the PM.

“Malaysia up to this point has handled terrorism very well,” Elina says.

Many attempts have been foiled in the past, she adds, and the police have kept it low-key.

“If you follow the issues closely, you’ll notice the police only started publicising their efforts in the run-up to Pota (The Prevention of Terrorism Act 2015), an anti-terrorism law passed by the Malaysian government on April 7, 2015 enabling the Malaysian authorities to detain terror suspects without trial for a period of two years.”

Part of this publicising had to do with the political selling of Pota, but there was a more legitimate, pressing reason: People were taking security for granted in Malaysia.

“Malaysians treat security like it’s not a problem. We often criticise the police but the military and Special Branch in charge of counterterrorism really know what they’re doing. The police have been very vigilant and I think they do good work but haven’t been given enough credit.”

After 14 years, she still enjoys her job because of the intellectual robustness but admits some world-weariness has set in.

Nevertheless, Elina remains motivated by the knowledge that a lot of good Malaysians on both sides of the political divide are doing good work for the country.

Pointing to a faded wristband she has been wearing for “donkey’s years”, the inscription reads: “Malaysia tanahairku (Malaysia, my homeland)”.

“Call me cheesy,” she says, “but I’ve never thought of removing it. Love for country might, but does not always, equate to love for government. I’m a sentimental patriot.”

By Alexandra Wong, China Daily/Asia News Network

Saturday, 9 April 2016

Lessons from Penang affordable housing



AS we all know, affordable housing is the saving grace for the middle to low income group in our common dream to pursue the “roof over our heads”.

Most often, aspiring homebuyers are sandwiched between increasing property price and developers’ tendency to build high-end apartments especially in greater KL for the last decade.

The introduction of PR1MA and other affordable housing agencies by the federal government is aimed at addressing this gap and to promote better home ownership as part of the prime minister’s national transformation programme. Nonetheless, not many realised that affordable housing is also a state initiative whereby state governments are free to introduce affordable housing schemes given that land and development are within the exclusive power of the state under the Federal Constitution. For instance, Penang is fully behind the notion of affordable housing by placing their top priority on increasing homeownership ratio within the state.

Checking online, there are currently 29 affordable housing projects in Penang with 12 being developed by the state government and the other 17 by the private sector. Penang is delivering a commendable amount of affordable housing by trading plot ratio of built-up area in exchange for more units to be built.

The state government is constantly reviewing and updating the criteria for the purchase of affordable housing in Penang. A person who already owns a property can still purchase affordable housing in Penang provided the person can satisfy the conditions imposed.

For example, the house to be purchased must be of higher value than the one already owned.

In addition, for those who are not born in Penang, under the talented and skilled category, they may also purchase affordable housing in Penang provided they undertake to reside there for a minimum of five years. In short, affordable has become a driver for talent retention. This ultimately helps to upgrade living standard in Penang.

On the flip side, Penang has uncovered a problem. Those who are entitled to affordable housing may not qualify for financing, especially those from the lower income group as they are considered as high risk by banks.

Job and income security at this level are extremely vulnerable given the high cost of living that in effect reduces disposal income. Bank and financial institution are after all profit-making entities. Loan disbursements below a certain threshold amount does not always generate their desire margin. Many expiring home owners are left helpless.

While nothing is perfect, one can only achieve success through lessons learned along the way and from history. The federal government is aware of the high loan rejection rate. It has, therefore, provided a 10% loan guarantee and First House Deposit Financing to help purchasers with their downpayments. The “Rent to Own” scheme was also introduced to circumvent the stricter loan financing situation.

Penang has introduced a similar Rent to Own scheme. Under this scheme, the state government provides 30% of the home price so that the house buyer can seek a 70% loan margin.

PR1MA, on the other hand, is facing difficulties finding suitable land as land is state matter. There is also a tendency for the state government to allocate land for this purpose in areas they want to urbanise, but which are often far from amenities and transportation links.

We all know that to develop affordable housing is not the best commercial decision to make because profit margins are definitely lower. As such, we cannot expect private sector developers to always bear the cost.

Penang, on the other hand, is able to overcome this problem by reducing the development charges via an increase in plot ratio. This then attracts private sector developers to come in.

A recent survey conducted by PR1MA shows that buyers prefer to purchase residential projects close to schools, clinics and shops. They also prefer access to transportation. Penang is closer to achieving its objective in the affordable housing arena because it “focuses on the homeowners”.

Under the recently announced Penang Transport Master Plan, the state government is mulling over RM8bil worth of projects that will enhance connectivity.

The development of an underground tunnel from Gurney Drive to Bagan Ajam, Gurney Drive to Jelutong Expressway and an alternative road connecting Gurney Drive right up to Batu Feringhi will really improve connectivity.

Penang is ambitious in executing its affordable housing plans. It is also spot-on when it comes to addressing the different issues connected with this subject.

The banking sector must buy into it. Banking and financial institutions are governed by the fiscal policy of the federal government. Maybe some mandatory quota or corporate social responsibility initiatives can be imposed on banks to provide loans to deserving house buyers. So it is timely that Bank Negara has called for a comprehensive and carefully designed National Planning Policy to support the Government’s aim in delivering more social housing in its recently released annual report.

By Chris Tan

Chris Tan is the founder and managing partner of Chur Associates.

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Friday, 8 April 2016

1MDB business model relied on debt to form capital is not sustainable


PETALING JAYA: 1MDB was unsustainable from the start, relying heavily on financial assistance to stay afloat.

The PAC observed that 1MDB’s capital financing structure and financial performance were both unsatisfactory.

“1MDB relied on debt (bank loans, bonds and sukuk) to form its capital, a chunk of which had been sanctioned or supported by the Government.

“Initially, the debt stood at RM5bil in 2009, and went up to RM42bil, compared to its assets of RM51bil in the financial year ending March 31, 2014, and it spent RM2.4bil to pay off interests.

“In January 2016, its debt was RM50bil, compared to its assets of RM53bil, where 1MDB spent RM3.3bil to pay off interests between April 1, 2013, and March 31, 2015,” said the report.

The PAC report also stated that 1MDB had paid RM3.3bil in interests on the loans it took from April 1, 2014, to March 31, 2015, which 1MDB said had yet to be audited.

“It is obvious that the debt amount and repayment of interest are too high compared to the company’s cash flow,” said the committee.

1MDB had also heavily relied on the refinancing exercise to settle matured debts and take new loans, which were used to settle interests on previous loans, among others.

The PAC report also found that 1MDB began facing an imbalance in cash flow in November 2014, five years after it started operations.

“The management and board of directors relied on the Initial Public Offerings (IPO) of Edra Energy Berhad to generate funds, but the IPO could not be carried out,” said PAC.

In the same month that year, 1MDB announced its first loss of RM665mil, resulting in its inability to pay off its almost matu­ring debts which stood at RM2bil, through its refinancing exercise.

“The company’s business model is overly dependent on loans and this caused a burden on the company as it did not have enough income to sustain operational costs and pay off its loans,” read the report.

The PAC also said that as a state investment arm, 1MDB should have focused on best practices, and raised examples of weaknesses in its administration.

“For instance, the board of directors was too dependent and often accepted explanations by the management without delving into the details.

“Indeed 1MDB’s experience is a lesson to all government-linked corporations on the importance of effective administration and integrity,” said the committee. - The Star/ANN

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Thursday, 7 April 2016

Lighthouse in South China Sea is operating now

The lighthouse on Zhubi Reef in the South China Sea is now in use. XING GUANGLI / XINHUA


China turns on lighthouse on man-made island

China's Ministry of Transport on Tuesday held a completion ceremony for the construction of a lighthouse on Zhubi Reef, marking the start of its operation.

Beijing rebuffed suspicion on Wednesday over the operation of a lighthouse on an island in the South China Sea, saying it is a public service that China is providing to the region.

"China has been committed to providing more public products and services to navigation in the South China Sea. It is beneficial to the trade of coastal countries in the region and even some countries outside the region," Foreign Ministry spokesman Lu Kang told a regular news briefing.

The Ministry of Transport held a completion ceremony on Tuesday for construction of the lighthouse on Zhubi Reef, marking the start of the lighthouse's operation.

Construction of the 55-meter-high lighthouse, which has a lantern of 4.5 meters in diameter on top and rotating lights inside, began in October. The lighthouse is monitored via a remote control terminal.

The lighthouse emits white light in the nighttime, with a range of 22 nautical miles and a glow cycle of five seconds.

Zheng Heping, deputy head of the Maritime Safety Administration, said the automatic identification system and other equipment inside the lighthouse can provide efficient navigation services to ships, such as positioning reference, route guidance and navigation safety information.

To improve maritime emergency responses in the area, the Ministry of Transport started construction of large, multifunctional lighthouses on Huayang Reef, Chigua Reef and Zhubi Reef last year. The two other lighthouses are already in use.

"The Zhubi lighthouse will further enhance the capability to ensure maritime security in the South China Sea," Zheng said.

"The lighthouse is a very advanced one with multiple functions," said Zhang Xuegang, an expert on Southeast Asian studies at the China Institutes of Contemporary International Relations.

He said the lighthouse will provide information about hydrology and weather, including typhoon warnings, to passing vessels.

"It can also provide waterway information, such as which channels are busy," he added.

He suggested having rescue personnel live on the island.

Li Jinming, a professor of maritime policy and law at Xiamen University, said the lighthouses that China has built in the South China Sea are a testimony to its efforts to safeguard navigation freedom and security.

"The US, Japan and the Philippines have challenged China on that. And the glowing lighthouse is a silent answer."

Lighthouses are part of China's efforts to perform its responsibilities in maritime search and rescue, response to natural disasters and marine environmental protection, the Transport Ministry has said.

By Li Xiaokun China Daily/Xinhua