Euro debt crisis remains biggest threat to global economy, UN reports

UNITED NATIONS, June 7 -- The UN Department of Economic and Social Affairs (UNDESA) has released its mid-year World Economic Situation and Prospects (WEPS) report, in which it states that the continuous euro crisis remains a large threat to the world economy.

"The euro area debt crisis remains the biggest threat to the global economy," said the representative from the UN Department of Public Information, Newton Kanhema, to reporters during a press conference here on Thursday.

"An escalation of the crisis could result in severe turmoil in financial markets," he said.

The WEPS report reflects that, although some growth has been seen in developed countries, they continue to face significant challenges, particularly in Europe. The WEPS forecasts that the economic situation will "remain tepid" for 2012, with a slow- down in China's growth to an estimated 8.3 percent, while India is expected to grow between 6.7 to 7.2 percent during the 2012- 2013 term.

As a proposed solution to the dwindling global economy, assistant secretary-general for DESA, Jomo Kwame Sundaram, stressed the importance of cooperation between all countries.

"International cooperation is extremely important," said Sundaram. "International cooperation is important, because it will ensure, all countries, and all economies will benefit from [ it]."

As developed countries continue to struggle to bounce back, the report says they have to address four major issues: deleveraging banks, firms and households that continue to restrain normal credit flow; the continuous high rate of unemployment; the fiscal austerity responses to rising public debts; and the exposure of banks to sovereign debts, partnered with weakened economies that prolong the stagnation of the crisis.

The report also stresses that the "re-orientation of fiscal policies should be internationally, coordinated, and aligned with structural policies that support direct job creation, and green growth." -  Xinhua

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Malaysia's Education Setback

We need to know where we truly are and accept that before we can move the education system forward.

Hishammuddin Hussein, Malaysian Minister for Education.>

THE experts tell us one thing about any programme of self-improvement. That includes the whole gamut of losing weight, improving self-confidence, widening your knowledge base, playing a better game of tennis, speaking well, aiming to win a gold medal at the Olympics, climbing Mount Everest, and, yes, to drastically improving the education system.

We must know our starting point.

If you want to lose weight, you must accept that you are overweight and chart a programme to reduce your weight over time. It’s a good idea to lose it healthily. You don’t want to lose too much or you may put it back in half the time that it took you to lose it.

You want a permanent solution to the problem. You want to take the weight off and keep it off through a re-education of your eating and lifestyle programme so that the changes that you institute are for life.

But before you choose a programme you need to know if it’s good for you, if you can follow its regimen, if it makes sense and if it is in line with all known scientific principles.

You have to be sure that it has a good chance of working and it does not make you worse off than you started with.

Choose the wrong programme and you wreck your body and physique forever and make it nearly impossible to reprogramme your body so that its metabolic rate does not always stay on starvation alert caused by your ill-considered move to go on a severe diet.

Changing the education system is similar to weight reduction, only enormously more complicated.

But you first have to admit that your education system needs changing. If you hang on to that mistaken, myopic belief that your education is better than those of most developed countries, you are sunk.

If you are 200 pounds and five foot three, there is no way you are not overweight even if you have tonnes of muscle!

The authorities now quote a study by Introspek Asia that in a survey of 1,800 Malaysian adults, 55% believed our education system to be comparable to other countries, without saying which countries.

And 35% believed education standards to be higher than developed countries, again without stating which countries.

The short and long of this is without much more detail, this survey amounts for little if anything, and if its methodology is right and defensible, we may even have to come to the unpalatable conclusion that Malaysians are a rather misinformed lot.

Let me put down here 10 clear symptoms that our education system is sick and needs a major overhaul to move forward.

It’s my hope that those responsible for coming with up with yet another major blueprint will take heed for I am sure many fellow Malaysians share the same sentiments. Here goes:

> By the end of Standard Six we still have whole classes unable to write their names. If the authorities don’t believe this, let them make a survey of the schools through the administration of a simple test — and use independent auditors and make the results public.

> The quality of teachers and schools has fallen steadily. This is reflected in the poor quality of those who leave school, many of whom can’t read and write in Bahasa Malaysia, let alone English.

> The quality of English has plummeted. Employers in the private sector where English is commonly used as the de facto language of choice, lament the poor English skills of even graduates educated in universities where English is the medium of instruction. Government flip-flops over English has only exacerbated the problem.

> It has become much easier to score A’s. The seemingly easy manner in which thousands score straight A’s in end-of-school exams has raised serious doubts over the integrity of the education system and whether our standards are set too low.

> We don’t have a proper system of vocational and technical training. We have a system which is academic based and does not provide enough vocational and technical training for those who may want and need it.

> We have a racially polarised school system partly largely because of falling standards. There was a time when most students of all races went to national schools simply because they were considered the best.

But Chinese schools are now seen to be much better with most Chinese enrolling their children there.

We have at least four, perhaps five, educational systems — national, national type Chinese and Tamil and religious schools. The fifth are private schools, both with international and Malaysian curricula.

> We produce thousands of unemployable graduates, especially from public universities. We moved a long time ago to quantity instead of quality.

> Qualifications from public universities are not as well recognised as before. Most people opt for non-public universities if they can afford it, a sad change from before when getting a place in Universiti Malaya was considered prestigious.

> We don’t have a top 100 university, and university standards have declined. While most Malaysian university qualifications were recognised worldwide at one time, that’s no longer the case.

> We continue to politicise education at the expense of students. Why do our politicians insist that our education is tops and then promptly send their children to private schools and overseas to educate them — in English?

For changes to take place, we must recognise where we are right now, we must get our bearings first.

Let’s open our eyes, absorb the unvarnished truth, seriously soul-search, and provide a real, deep, thinking education to young Malaysians without politics, propaganda and proselytising so that education is wholesome, complete and secular.

Comment by P. GUNASEGARAM

 > Independent consultant and writer P. Gunasegaram likes this quote from Horace Mann: A human being is not attaining his full heights until he is educated.

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Malaysisia changes over the last 42 years; quanity yes, quality?

The ascend to the throne of our new King, 42 years after he was last installed, is a time to reflect on our achievements.

I WAS at the installation of our new King the other day. Twice as King, he has seen Malaysia change from what it was then and now. He also mentioned in his speech that he witnessed the efforts of the Prime Minister at that time, Tun Abdul Razak, the father of our current Prime Minister.

I sat in the audience, reflecting on some of the positives that have taken place in our country and took some notes on my Blackberry.

The key thought that ran through my mind was how much things have changed over the last 42 years. Here’s how much:

·We moved from a low-income, high-poverty country to a high-middle-income economy. Our next transformation is to become a high-income, developed country with quality of life for everyone.

·Our infrastructure has increased by leaps and bounds. Roads and highways have been built and traverse all parts of the country. We are putting in a mass rapid transit system in Kuala Lumpur to take us to the next level.

·We have modern retail outlets – supermarkets, hypermarkets, shopping complexes, malls and entertainment outlets and we are helping mom-and-pop stores to modernise too.

·We are moving towards greater freedom in all spheres with the repeal of the Internal Security Act, establishing clear rights for peaceful assembly and affirming the rights of online expression and social media liberties, amongst others. The Government has also made amendments to Printing Presses and Publications Act, while the Prime Minister is also talking about changes to the Sedition Act.

·Religious freedom has actually taken strides forward. There is now explicit statement of freedom to import (instead of implicitly before) and publish the Alkitab (the Bible). Indeed, since the 10 points resolution, many Alkitab have been imported and printed locally, without any difficulties with the authorities.

·We have moved to an extensive “social welfare” system e.g free primary and secondary schools, virtually free public health system, and one of the lowest consumer prices for fuel, LPG cooking gas, sugar, electricity, flour, gas, and so on with high subsidies from the Government.

·We have moved to greater focus on rural poor. Under the transformation initiatives, for low-income groups, three million lives were positively impacted in 2010 and 2011.

·We have put up an explicit and substantive roadmap to transform Malaysia further. We will build upon the great achievements we have made between the times of the rules of our current King and work towards our vision 2020 - to make our country a developed one with its people earning high incomes.

Considerable achievement

Just to show the extent our achievements over the last 42 years, I have constructed a table of some key indicators. You can see for yourself how much things have changed, even if you accounted for the fact that a ringgit went a much longer way then.

Our income as a nation – gross national income at the prevailing prices then - increased 64 times over the last 42 years, which is fantastic considering that the population growth over the same period was just 1.6 times.

It’s not surprising therefore that per capita income went up 25 times over the period, a considerable achievement even after taking into account inflation and the drop in value of money.

‘We are putting in a mass rapid transit system in Kuala Lumpur to take us to the next level.’

 

One of the most telling effects of this is that the incidence of poverty has been brought down from nearly half of the population to less than four for every 100 people in the country. That’s tremendous.

The number of schools increased but the impact here would have been understated because while additional schools were built, existing schools would have increased their enrolment considerably.

There was a massive explosion in universities. In 1970, the universities were all public and there were only three. The latest figures indicate that private universities now outnumber government ones almost two to one with 20 public universities and 39 private ones.

A similar situation was seen for hospitals with private hospitals increasing from 46 to 239 while government hospitals rose more moderately from less than 80 to 137.

Average life expectancy, assuming equal numbers of males and female, increased by 17% to 74.1 years, reflecting vast improvement in health levels, which is reinforced by the sharp over 80% drop in the infant mortality rate to seven per 1,000 live births.

World confidence in the Malaysian economy too increased over the 42-year period and this is well-supported by foreign direct investment flows in 2011 of an excellent RM33bil which was 150 times more than that in 1970.

Who would have believed 42 years ago, that Malaysia would make such major achievements in an extremely challenging environment of uncertainty posed by the 1969 racial riots and the drastic and controversial steps that the Government took then to redress racial imbalances and eliminate poverty?

But despite the scepticism and the lack of confidence then, we succeeded and succeeded well. Yes, we could have done better, but then we can always do better and anyone could have done better. What counted was that we met our major targets.

We find similar scepticism now to our efforts to make yet another great transformation, a giant stride to become a developed nation with its citizens earning high incomes and enjoying a better quality of life than ever before.

Promising figures

We aim to do this in a bit more than eight years in a rather challenging and competitive environment. And I dare say we know how to do it. We have it pretty much mapped out in quite some detail.

The initial figures are promising, despite all the nay-saying which continues to give me the transformation blues. But yes, we will rise above the blues as we did before and make this a better nation for each and everyone of us.

The results for 2010 and 2011 are great with most of our targets not just met but exceeded, often by a lot. See the comprehensive annual report on economic and government transformation in the Performance Management and Delivery Unit (Pemandu) website for details.

Rome wasn’t built overnight, likewise Malaysia too. We are blessed as a country. Whilst we know there are shortcomings, we also need to count our blessings even as we overcome the shortcomings and other obstacles.

And we shall overcome – of that I am very sure.

Transformation Blues - By Idris Jala

Aspiring nations gain more from Internet

By JO TIMBUONG
bytz@thestar.com.my

 

Manuel: "Malaysia derives a lot of income from exporting equipment that 

allows people to connect to and use the Internet." 

 

KUALA LUMPUR: Aspiring countries like Malaysia are gaining more from the Internet than developed nations.

The Web helps these countries improve gross domestic product (GDP), better their small and medium enterprises, and boost the creation of new jobs.

Going online helped Malaysian industries contribute 4.1% of the country's gross domestic product (GDP) in 2010, making Malaysia one of the 30 fastest growing countries in the world.

Some of the other aspiring countries are Argentina, Hungary, Mexico, Morocco, Nigeria, Taiwan, Turkey and Vietnam.

They were part of an online study - titled Online and Upcoming: The Internet's Impact on Aspiring Countries - by researchers McKinsey & Co.

McKinsey defines aspiring countries as those that are developing but are at the cusp of becoming a developed nation.



The study found that the Internet contributed US$9.75bil (RM29.7bil) out of a total GDP of US$238bil (RM723bil) for the aspiring countries in 2010. This is far more than what was contributed in the United States and China.

Nimal Manuel, principal at McKinsey, said a big chunk of the GDP contribution in Malaysia came from the IT industry.

"Malaysia derives a lot of income from exporting equipment that allows people to connect to and use the Internet," he said.

"The country will also see significant growth in the value that domestic activity on the Internet delivers to the nation."

Manuel was giving a briefing on the economic impact of the Internet on Malaysia.

Booster

Besides contributing positively to the country's economy, the Internet also helped its small and medium enterprises (SMEs) to make gains.

Manuel said the SMEs in Malaysia and the other aspiring countries that took their businesses online gained over 6% more in revenue than those with only brick-and-mortar stores.

"Thanks to the Internet, these businesses were able to reach new customers in different geographic locations. They also enjoyed a 10% increase in productivity (after embracing technology)," he said.

According to him, this increase in productivity (due to better efficiencies) does not mean decreased job opportunities in the aspiring countries.

"Our study found that for every job lost, 3.2 new jobs were created because of the Internet. And in comparison, for every job lost in developed countries, only 1.6 new ones were created," he said.

These aspiring countries must not rest on their laurels; they should be making an effort to improve their Internet ecosystems.

Manuel said they need to ensure a high quality and secure infrastructure to better capture the value of the Internet.

The governments need secure servers, in addition to basic infrastructure, such as electricity supply, as well as quality fixed and mobile Internet services, he said.

In response to the recommendations, Datuk Mohamed Sharil Tarmizi, chairman of the Malaysian Communications and Multimedia Commission (MCMC), said the Government is championing the quality of Internet services in Malaysia.

"This is an entry-point project under the Economic Transformation Plan, and that shows how serious the Government is on broadband services and issues," he added.

MCMC is the communications and multimedia industry regulator.

US Treasuries not safe, said don

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Don: US Treasuries not safe, emerging economies should find other ways to buffer themselvesImage via Wikipedia

JACKSON HOLE, Wyoming: Emerging economies should find other ways to buffer themselves from global crises than stockpiling US government debt, a prominent economist argued.

US Treasuries and the debt of other advanced nations might be liquid, but it was far from safe, Cornell University professor Eswar Prasad said in a paper presented to a group of central bankers gathered here.

Emerging countries seeking protection from global shocks by individually stocking up on US debt would be better off banding together to create a pool of funds that could be drawn on in a crisis, he argued. Doing so would give them a backstop should they need it, without saddling their national investment portfolios with debt that could turn sour.



Sharply rising levels of public borrowing and weak growth prospects in the United States mean that over time the dollar will continue to decline against the currencies of faster-growing emerging markets, eroding the value of emerging nations' foreign investments, he said. And the risks are not only for the long-term. The United States' near brush with default earlier this month, as lawmakers refused to raise the country's borrowing ceiling until a deficit-cutting deal was reached, brought the potential pitfalls of holding US debt into sharp relief.

“As demonstrated by recent events in the eurozone, bond investors both domestic and foreign can quickly turn against a vulnerable country with high debt levels, leaving the country little breathing room on fiscal tightening and precipitating a crisis,” Prasad wrote. “The US is large, special and central to global finance, but the tolerance of bond investors may have its limits.”

The dollar has long been the world's main reserve currency, and since the financial crisis emerging economies have built their reserves by buying Treasuries and the debt of a few other advanced economies, according to Prasad.

Any change could hurt the ability of the United States to borrow at low rates despite soaring debt levels.
That would turn the tables in a world where traditionally it was developed nations that pressured developing ones to bring their finances under control, he said.

“It is high time for advanced economies to take the tonic of macroeconomic and structural reforms that they have for so long dispensed to the emerging markets,” he said. Reuters

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Malaysia still in pursuit of full independence

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Still in pursuit of full independence

Global Trends By MARTIN KHOR

Fifty-four years after Merdeka, Malaysia, like other developing countries, is still fighting for full independence in a globalised world which has grown more complex and crisis-laden.

THE Merdeka season is a good time to ponder over what independence means to Malaysia and the other developing countries that are still battling to overcome the disadvantages that the colonial era brought.
The problems of governance in a developing country, 54 years after independence, are still as complex or even more so when compared with the immediate post-colonial days.

In that first phase of independence, the developing countries were preoccupied with domestic battles – how to install domestic political processes and how to chart new economic strategies to get out of the shadow of colonial influence.

Most countries tried to shake loose from the control of foreign-owned mining and plantation companies, banks and retailers, by boosting their domestic public and private enterprises.

However, they were over-dependent on a few export commodities for a long time.

In the social sphere, there was the monumental battle to provide jobs, build up housing, schools and health systems, besides reducing poverty.

Today, many developing countries like Malaysia have succeeded, to a significant extent, to break the foreign-ownership grip on the economy and to diversify from commodities to resource-based processing, boosting manufacturing and property development.



While some countries remain poor and dependent on foreign aid, other middle-income countries have broken through into the development sphere.

Indeed, countries like Malaysia are now worried about being stuck in the “middle-income trap”.

They are no longer so competitive in the labour-intensive industries like textiles and electronics assembly because lower-wage countries have entered the scene, yet they find it difficult to break through into higher value-added sectors and activities, in order to upgrade their economic status.

While the colonial grip on their economies has loosened, the middle developing countries are now caught in the complex web of global inter-dependence, in which they have become significant players but are still not able to call the shots, nor equitably participate in decision-making.

The dependence of immediate post-colonialism is now replaced with the inter-dependence that comes with globalisation. In good times, the country soars with the world economy.

But in bad times, the domestic economy is at the mercy of rapidly falling exports and foreign-capital outflows, as the 1998-99 Asian crisis and the 2008-09 “global great recession” showed.

With the United States and Europe caught in a deflationary situation, the next few years will be another great challenge.

Will the middle developing countries sink with the major players, or break free to chart their own course?
The answer will probably be in between.

But “decoupling” from the crisis in the rich countries can properly be achieved only if there are vision and action plans, including national economic restructuring and greater regional collaboration.

Intense inter-dependence is also evident in the physical world, where the environment worldwide is collapsing because the pursuit for economic growth did not take into account resource depletion and pollution.

The science of climate change and the recent radiation from damaged nuclear plants both reveal that emissions in one part of the world affect health and life in other parts.

Global solutions are thus necessary, but negotiations to find them are bogged down by basic issues of North-South equity and the need for balance between the imperative for environmental protection and the immediate needs for development.

International negotiations are also stuck in the area of economics.

The World Trade Organisation’s Doha talks have stalled because of the unreasonable demands made by major developed countries on the big developing countries.

Despite the G20 Summits, the world is further away today from global solutions to the financial crisis than in 2008-09 when concerted actions were agreed upon to stimulate a recovery.

It appears that the US, Europe and Japan, all former colonial countries, are now afraid that their mastery over the global economy is being challenged by China, India and some other developing countries – Asean included.

The middle developing countries like Malaysia are no longer one-sidedly dependent on their former colonial masters.

But in the web of an inter-dependent and globalised world, they are still in the mode of responding to initiatives and policies of the major developed countries, or to the unfolding situation.

They do not yet have the power or confidence to initiate and coordinate their policies and take the initiative to put forward solutions to global problems.

But they now have the growing capacity to do

Fifty-four years after Merdeka, the world is still an imbalanced one, and our country is building more stepping stones towards full independence.

It must join other developing countries to get a full voice and a fair share in the benefits of the global economy.

In this complex globalised economy, the developing countries’ battle for independence continues.

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