St Jude Hi-tech medical boost for Penang

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Starks: The new facility uses environmentally beneficial technologies.  

By DAVID TAN davidtan@thestar.com.my

Hi-tech medical boost for Penang

 Simulation centre to train docs from Asia Pacific

PENANG will serve as a hub to train physicians from the Asia Pacific region on new medical technologies next year when the Advanced Technology Centre at St Jude Medical Inc facility in Bayan Lepas starts operations.

Chief Minister Lim Guan Eng said the centre would be equipped with a wet laboratory and state-of-the-art computers that could provide simulation of the human anatomy system to train the physicians.

He said the funding for the centre would come from the US$300mil planned by St Jude Medical for the 300,000sq ft facility in Penang.

According to a Global Business Intelligence research report, the global cardiovascular market was expected to hit US$415bil in 2016, driven by the increase of cardiovascular diseases, Lim added.

“Equipped with the CE Mark approval certification, St Jude Medical has started shipping out its pacemakers and other devices to the company’s distribution centre in Sweden,” he told a press conference after opening St Jude Medical’s new facility at the Bayan Lepas Free Industrial Zone yesterday.

Lim said the company planned to invest more than US$300mil into the Penang plant over the next five years to be used for infrastructure, wages, and capital.


He said the plant, which was now employing 150 workers, was expected to create about 2,000 jobs in the next five years.

St Jude Medical chairman Daniel Starks said the new facility incorporated environmentally beneficial technologies.

“One such environmentally friendly feature is a rain harvesting system which will use ‘grey water’ to water plants.

“This will save about 200,000 gallons of city water annually based on occupation of the building,” he added.

Headquartered in Minnesota, St Jude Medical develops medical technology and services that focus on putting more control into the hands of those who treat cardiac, neurological and chronic pain patients worldwide.

Its products include implantable cardioverter defibrillators (ICDs), cardiac resynchronisation therapy (CRT) devices, pace-makers, electrophysiology catheters, mapping and visualisation systems, vascular closure devices, heart valve replacement and repair products, spinal cord stimulation and deep brain stimulation devices.

 St Jude Medical to invest US$300mil in Penang facility

GEORGE TOWN: St Jude Medical Inc plans to spend US$300mil on its new manufacturing facility in Penang over the next five years.

St Jude Medical chairman and president Daniel Starks said the investment would be for infrastructure, capital and wages in Penang, which would create about 2,000 jobs.

He was speaking after the launching of the new plant in Bayan Lepas by Penang Chief Minister Lim Guan Eng,

Starks said the investment would include the funding for an advanced technology centre, which was expected to be operational next year.

The company had invested about US$67mil in the manufacturing facility.

“The centre will bring in physicians from Asia Pacific and train them on the latest development in medical technology from St Jude Medical.

“The centre would use virtual reality technology to train the physicians,” he said.

Starks added that the Penang manufacturing facility would initially produce products for the company's cardiac rhythm management division.



“The CE mark approval, the required endorsement for selling products in Europe, for the manufacture of pacemakers and leads, was awarded in January and the first Accent pacemakers made in Malaysia have already been provided to physicians.

“In addition to pacemakers and leads, St Jude Medical plans to expand production to include additional products such as implantable cardioverter defibrillators (ICDs) over the next several years,” he said.

Headquartered in Minnesota, St Jude Medical develops medical technology and services that focus on putting more control into the hands of those who treat cardiac, neurological and chronic pain patients worldwide.

Its products include ICDs, cardiac resynchronisation therapy devices, pacemakers, electrophysiology catheters, mapping and visualisation systems, etc.

The company reported net sales of US$1.3bil in the fourth quarter of 2010 ended Jan 1, 2011, an increase of 12% over the US$1.2bil in the fourth quarter of 2009. Net sales in 2010 were US$5.165bil compared with US$4.681bil in 2009, an increase of 10%.

Malaysia's household debt on the rise

By TEE LIN SAY linsay@thestar.com.my

But mortgage NPLs at an all-time low

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PETALING JAYA: Malaysia's household debt rose at a rapid rate of 11.1% per annum from 2004 to 2009, and from RM516.6bil at end-2009, it climbed by 8.4% to RM560.1bil as at end-August 2010, said CIMB Research.

The household debt to gross domestic product (GDP) ratio increased from 66.7% in 2004 to 76% in 2009 but is estimated to ease to 74.6% at end-2010.

The rapid growth of household borrowings is causing some worries that the excessive leveraging by households may make the economy and financial sector more vulnerable to instability and crisis.

HwangDBS Vickers banking analyst Lim Sue Lin said that the increase in household debt was also due to the cheap housing loans in the market over the last one to two years.

“What's heartening is that the balance sheets of our local banks are strong enough, and the default rates are low. In fact, mortgage non-performing loans (NPLs) are at an all-time low,” she said.

As at December 2010, mortgage NPLs stood at 3.3%. Its highest level was at 8.6% or about RM14bil in 2006. Since March 2007, this figure has been trending down.

Last year, in a bid to control appreciating property prices, the central bank increased the loan to value cap ratio to 70% for the third and subsequent mortgage loans. This move was applauded by economists and analysts as it was basically the central bank's way of curbing speculation.

“With banks requiring to set aside higher risk weights of 100% (from 75%) for mortgages with loan-to-value above 90%, this implies that banks would need to be more vigilant in utilising their capital. However, we think that if banks are still able to secure good quality mortgage loans with minimal credit cost issues, they may continue to give out mortgages at 90% loan to value,” added Lim.

Certainly, rising property prices have fanned an increase in borrowings. The share of household loans to total bank loans rose from 35.2% in 2000 to 55.5% as at end-August 2010. Mortgage debt accounts for 48.5% of total household loans currently.

Another banking analyst said that while the household debt level was high, Malaysians also had a very high savings rate, at about 35% of GDP.

“Bank Negara's control of the mortgage market is its way of controlling household debt. Thus, this should not dampen the sentiment of the market as the authorities are mindful and pre-emptive of this situation,” said this banking analyst.

CIMB head of economics Lee Heng Guie said the various financial indicators indicated that Malaysia's household balance sheet remained healthy with financial assets' coverage of total debt at 2.5 times, the liquid financial assets to debt ratio remained strong at 148.6%, and the non-performing loans ratio was low at 3.1% vs 8.5% in 2004.

“The strong balance sheet enabled the household sector to continue servicing its debt despite the rise of the debt service ratio to 49.2% in 2009 (38.4% in 2004),” said Lee.

As at end-August 2010, mortgage loans accounted for 48.5% of total household loans and 26.9% of total bank loans, followed by motor vehicle financing (25.9% of total household loans).

Credit card lending accelerated 16.4% per annum in 2000 to August 2010, pushing its share of total household loans from 5% in 2000 to 6.1% currently.

“Credit card lending now totals RM28.6bil or 3.4% of total bank loans. This means that higher interest rates would cause real hardship for those with large mortgages,” said Lee.

He added that on the demand side, the rapid build-up of household debt stemmed from changing demographics, strong economic growth, a steady rise in incomes and low interest rates.

On a cautionary note, Lee said that excessive household indebtedness not only raised concerns over its sustainability but also posed a risk to the financial system.

“High levels of household debt may also constrain the effectiveness of monetary policy as it heightens the sensitivity of households' behaviour to changes in interest rates,” he added.

China Adding to $1 Trillion of U.S. Debt Caps Rise in Rates

By Susanne Walker and Wes Goodman

International buyers hold 90% of US notes and bonds

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March 7 (Bloomberg) -- Investors outside the U.S. have boosted their holdings of longer-maturity Treasuries to the highest level since the credit markets froze in 2008, helping curb rising yields amid concern inflation is accelerating.

International buyers held 90 percent of their $4.44 trillion of U.S. government debt in notes and bonds as of December, the same as in September 2008 when Lehman Brothers Holdings Inc. collapsed, Treasury data released last week show. The ratio fell to 83 percent in October 2009 as investors sought the safety of Treasury bills with the U.S. economic recovery still in question.

The shift toward long-term debt shows bond buyers outside the U.S. agree with Federal Reserve Chairman Ben S. Bernanke’s assessment that inflation will be contained even as global food and energy prices soar. Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., warned last week that yields on Treasuries are too low with inflation accelerating and the central bank planning to complete $600 billion in asset purchases in June.

“Inflation in the U.S. isn’t a big problem,” said Zeal Yin, who buys Treasuries for Shin Kong Life Insurance Co. in Taipei, Taiwan’s second-largest life insurer with the equivalent of $50.6 billion in assets. Yin said he purchased U.S. government debt last week. “I’m bullish.”

Stocks Beat Bonds

The yield on the benchmark 3.625 percent note due February 2021 rose eight basis points, or 0.08 percentage point, to 3.49 percent last week, and climbed two basis points to 3.51 percent at 11 a.m. in New York, according to BGCantor Market Data.

Ten-year yields increased in each of the past six months, the longest stretch since the period ended June 2006, according to data compiled by Bloomberg. U.S. government securities have lost 0.4 percent this year, according to Bank of America Merrill Lynch’s U.S. Treasury Master index. The Standard & Poor’s 500 Index has climbed 5.1 percent during the same period as confidence in the economic recovery grows.

“We increased the portion of foreign-currency- denominated bonds, mainly Treasuries, because of the higher interest rates,” said Satoshi Okumoto, a general manager in Tokyo at Fukoku Mutual Life Insurance Co., which has the equivalent of $67.1 billion in assets. “When we need to increase our foreign-currency bonds significantly, the U.S. is the only place to put the money because of the liquidity.”

China’s Shift

The amount of marketable U.S. debt outstanding surpassed $9 trillion last month. Retaining demand from international buyers, who own half of the Treasury debt outstanding, is key to keeping borrowing costs from surging as the Obama administration seeks to finance cumulative budget deficits that the White House estimates will exceed $4 trillion through 2015.

Interest expense will rise to 3.1 percent of gross domestic product by 2016, from 1.3 percent in 2010, according to administration estimates. While yields on the benchmark 10-year note are up, they remain below the average of 4.13 percent over the past decade.

The Treasury will sell $66 billion of three-, 10- and 30-year securities over three days beginning tomorrow. Last month, indirect bidders, the class of buyers that includes foreign central banks, bought a record 71 percent, or $17 billion of the $24 billion in 10-year notes offered at the auction.

China, the largest investor in U.S. government debt after the Fed, increased longer-term notes and bonds by 39 percent to $1.145 trillion in December from a year earlier, while its stake in bills declined 78 percent to $15.4 billion, the most recent Treasury data show.

‘Extremely Supportive’

The nation bought more U.S. bonds even as its leaders criticized Bernanke’s plan for the Fed to buy $600 billion of Treasuries by June. Jesse Wang, executive vice president of China Investment Corp., the country’s $300 billion sovereign wealth fund, said Jan. 15 that devoting too much of its reserves to U.S. assets such as Treasuries was too risky.

“They remain extremely supportive for the Treasury market,” said Priya Misra, head of U.S. rates strategy at Bank of America Merrill Lynch in New York, one of the 20 primary dealers that trade with the Fed.

Japan, the second largest holder of Treasury debt, increased its investment to a revised $882.3 billion, the highest ever, from $765.7 billion a year earlier.

Longer-term U.S. bonds offer the highest yields relative to short-maturity debt of any Group of Seven nation, data compiled by Bloomberg show.

Yield Curve

The yield curve showing the difference between rates on two- and 10-year notes was 2.81 percentage points, after reaching a near record 2.93 percentage points at the start of February. The gap in Germany is 1.51 percentage points, 2.23 in the U.K. and 1.06 in Japan.

The curve will narrow to 2.63 percentage points by year-end and to 2.26 points by mid-2012, based on the median estimate of more than 40 economists and strategists surveyed by Bloomberg.

Strategists say the expectations show investors see little chance of inflation accelerating anytime soon. Returns on 30-year Treasuries, the most vulnerable to rising consumer prices because they have the longest maturity, gained last month for the first time since August, returning 1.51 percent, compared with an average loss of 0.09 percent for all Treasuries, Bank of America Merrill Lynch indexes show.

“The yield curve dynamics will change dramatically” in the U.S. as the gap narrows, John Richards, head of North American Strategy at RBS Securities Inc., said at a forum in Tokyo on March 3. “I call this the beginning of the great compression of short-term and long-term rates.”

Inflation Experience

Oil costing more than $100 a barrel and record high food prices probably won’t cause a permanent increase in inflation and borrowing costs are likely to stay low, Bernanke said March 1 in his semi-annual monetary policy testimony before Congress.

Experience with such price gains in recent decades, along with currently stable labor costs, suggest a “temporary and relatively modest increase in U.S. consumer price inflation,” Bernanke said in Washington.

While the consumer-price index jumped 0.4 percent in January, the core measure, which excludes food and energy, rose 0.2 percent in January, in line with the average monthly gain of 0.16 percent over the past 10 years, figures from the Labor Department showed Feb. 17.

“Bernanke tends to think this doesn’t matter -- at least in terms of headline versus the core -- we do,” Gross said in a March 4 interview on “Bloomberg Surveillance” with Tom Keene.

Cutting Treasuries

Gross cut holdings of U.S. government and related debt in Pimco’s $237 billion Total Return Fund to 12 percent in January, the least in two years. He recommends higher-returning assets such as emerging- market debt and corporate bonds.

The difference in yields between 10-year notes and Treasury Inflation Protected Securities, or TIPS, was 2.50 percentage points on March 4, the highest since July 2008. The spread, which reflects the outlook among traders for consumer prices over the life of the bonds, averaged 2.43 points in the five years before the credit crisis.

“We would not be a buyer of Treasuries at these levels,” said Andy Richman, who oversees $10 billion as a director of fixed-income at SunTrust Bank’s Wealth and Investment Management in Palm Beach, Florida. “Inflation is becoming more of a problem than it has been. The truck of inflation moving down the road is getting closer and closer.”

Treasury yields have also risen on confidence that President Barack Obama’s $858 billion tax compromise in December and the Fed’s monetary policies have put the economy on a more stable path to recovery.

Job Gains

The U.S. added 192,000 jobs in February, a report from the Labor Department showed March 4, up from a revised 63,000 in January. Economists in a Bloomberg News survey had forecast the economy would add 196,000 jobs. The unemployment rate dropped to 8.9 percent, the lowest level since April 2009.

While Bernanke said inflation remains subdued in the U.S., European Central Bank President Jean-Claude Trichet said March 3 the ECB may raise interest rates next month for the first time in almost three years to fight mounting inflation pressures.

The European Union’s central bank boosted its inflation and growth forecasts, saying consumer price gains will average 2.3 percent this year, up from a December forecast of 1.8 percent and exceeding the ECB’s 2 percent limit.

--With assistance from Daniel Kruger in New York, Ronnie Harui in Singapore and 野沢茂樹 and Yumi Ikeda in Tokyo. Editors: Dave Liedtka, Robert Burgess

Recognise talent and help others to soar

Monday Starters - By Soo Ewe Jin


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A FRIEND recently retired from an organisation which he has headed for the past 14 years. I remember those early days when he decided to leave the corporate world to venture into social work.

It was not easy fitting in initially, as he tried to bring in some semblance of order in an environment where the staff worked with passion despite the low salaries and still considered it a bonus to get a “nice warm feeling” at the end of the year.

One of his “achievements”, for want of better word, was the fact that he had 14 PAs working for him during his tenure.

So the immediate reaction must be, “what a horrible boss he must be to have so many changes of PAs.”

The fact of the matter is that all these PAs were groomed and then released to take on different positions within the organisation. He recognised talent and was not afraid to let them go.

Which was why they had plenty of good things to say about him at the farewell party.

As I reflect on this story, it dawns on me that there are many people in the working world who are often stuck in routine jobs who never seem to get a chance to break out and soar to greater heights.

Sometimes they may not have the confidence to tell their immediate superiors about their abilities. Sometimes it may be because their superiors simply will not let them go for fear that they may outshine them.



In the movie What Women Want (its Chinese remake recently released, starring Gong Li and Andy Lau) we have Erin the file girl played by Judy Greer who basically walks around carrying files from one person to another. Despite her talent, and her desire to apply for some internal positions that will make full use of her abilities, she is basically ignored.

Does this sound familiar?

I am sure you would also know of someone who feels unfulfilled in his job and has the potential to do so much if he was only given the chance. Do you just brush the request aside or are you prepared to listen to his dreams and help him along?

Another friend works in a company where anyone who is appointed to a senior position must have his designated successor within three months. It is a good way to force the person to quickly identify the talents under him and realise that in the real world, no one is really indispensible. I reckon a healthy dose of humility is good for the corporate soul.

In one of my earlier articles for this column I wrote about how in the various places I have worked, I have grown to appreciate the fact that the silent office clerk could well be a Lat in the making. Or that the person much maligned at the workplace would be so well loved as an angel by friends and neighbours.

I know of many workers who give of their time and their talent to worthy causes although this is often not reflected in their company records.

Any CEO should be proud of such staff, for they truly are the real ambassadors of the company.

Maybe it is good for those of us who have some form of managerial positions to look around and see if we can play a small part in making some people's dreams come true. For when they soar like eagles, we can truly be part of the ride.

Deputy executive editor Soo Ewe Jin would like to quote leadership guru Max De Pree who says, “We need to give each other the space to grow, to be ourselves, to exercise our diversity. We need to give each other space so that we may both give and receive such beautiful things as ideas, openness, dignity, joy, healing, and inclusion.”

Rewards of working hard

TEACHER TALK By NITHYA SIDHHU

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It is only through hard work that one is able to deal with challenges and attain success.

FROM the time I was a child, I’ve worked hard. My siblings and I were not the only ones required to study hard, but we had to complete all chores, big and small, by the end of each day.

This trait was so ingrained in me that even in university, friends were amazed at how I could go dating every night and yet do extremely well in all my exams!

My then boyfriend, who is now my husband, used to joke with girls who queried him, “If you want to know the secret of her success, date me.”

Working hard was second nature to me. In fact, on my first posting, I was made the school’s Science Panel head. And while I was still wet behind the ears, I was assigned Form Five examination classes to teach.

I remember that I did not baulk. Despite some internal trepidation, I just got cracking and soon mastered the art of juggling my heavy responsibilities at school with the demands of my young marriage.

Many of my colleagues in similar positions then worked as hard as I did. We shared stories of how we could go home from a hectic day at school to cook, clean and raise our children.

Hard work underlined my teaching life. Woon*, a teacher friend of mine told me of how it took her 26 long years of working in a primary school, obtaining her degree part-time, moving on to a secondary school, suffering at the hands of several unfair practices and bearing up with a myriad of responsibilities, before she was finally recognised as a Guru Cemerlang (excellent teacher) last year!

I take my hat off to teachers like her who were brought up, not only to work hard, but to continue doing so despite the adverse and challenging times.

Interestingly enough, Malcolm Gladwell’s book, Outliers – The Story of Success, agrees completely with what I’ve just said about the virtue of working hard.

Gladwell talks about the culture of hard work among Asians and ascribes this quality to the success enjoyed by many of them in America.

“In any Western College campus,” he writes, “Asian students have the reputation of being in the library long after everyone else has left”.

In the case of Chinese students, he traces this legacy to the peasant farmers in Southern China who didn’t sleep through the winter like their Western counterparts, but kept on working instead - repairing dikes, selling baskets, making tofu, doing many side tasks and then, when the winter was over – were “back in the fields at dawn!”

According to Gladwell, being willing to work hard on tasks that others would have long given up, is one of the traits of a successful person.

Thanks to Yale University Law Professor, Amy Chua’s book Battle Hymn of the Tiger Mother, “putting children through a gruelling schedule tailor-made for success” has now become a hot issue for worldwide debate.

Yet, how many of us teachers and parents can deny the fact that we ourselves often exhort our young to not only study hard, but study really hard?

The Asian perspective is clear - there is no short cut to success, only hard work.

I personally advocate balance. The work-reward cycle is what I believe in – and I tell my students so. I urge them to intersperse stints of hard work with doing activities they enjoy – like dancing, playing basketball or listening to music. But, I do motivate them to work hard.

I know that not all of them do so. Some just don’t or won’t put in the required work. I have accepted the fact that, after all has been said and done by a dedicated teacher, the choice a student makes ‘to be or not to be’ hardworking is sometimes out of the teacher’s hands.

To the administrative team in any school, it is more irksome to deal with teachers who don’t pull their weight. There is now an undeniable and growing divide between teachers who work hard as a matter of course (due to their cultural/familial upbringing, personal beliefs or attitude) and those who don’t.

Khatijah*, who has been an academic senior assistant for the past eight years laments the fact that when deadlines loom at school, it is the teachers who don’t meet targets and deadlines, that aggravate her the most.
To her and many in her position, this culture of desultory work and laziness among some teachers is what seriously affects the performance levels of the school.

She confides to me, “Some say it is the young teachers of today and their attitude towards work that are mostly to blame but seriously, I beg to differ. I’ve seen many a young teacher doing an admirable job while an older one remains tardy.”

Mohd Azmi*, who has been a school principal for 15 years, puts it very bluntly, “If we want to get school programmes up and running, let’s get some things straight. Work is work and it must be done. The sooner everyone understands this, the faster we achieve success.”

By the way, have you read about the dabbawalas of Mumbai – that fleet of mostly illiterate men donning white caps, who use bicycles and trains in the most efficient way possible to deliver hot lunches from homes to offices all over the Indian city?

Their work culture is so impressive that Harvard Business School has studied it as part of its MBA curriculum. The name of the case study? The Dabbawala System: On-Time Delivery, Every Time!
Gladwell says, “Working really hard is what successful people do.”

He’s right. The dabbawalas in Mumbai are successful because they work really hard. Not only that – they respect their work and are grateful for it; work is worship and a means to serve God, and finally, they work not because their boss is watching them do it, but because it is the right thing to do.

Listen. If you’re a laggard at work, pull up your socks my friend, pull them up!

*Names have been changed.