Declining performance of Malaysia's civil service, World Bank report

KUALA LUMPUR: The performance of Malaysia’s civil service has been declining since 2014, according to a World Bank report, which also expressed concerns about the sustainability of the country’s public sector wage bill.

The report, which came about following the visit of World Bank vice-president for East Asia and Pacific Victoria Kwakwa to Malaysia last December during which she met the Prime Minister, also ranked Malaysia lowly in its indicators for accountability, impartiality as well as the transparency and openness of its public service.

The report – which is included in the World Bank’s six-monthly economic monitor on Malaysia – will be formally launched today.

World Bank lead public sector specialist Rajni Bajpai said that while Malaysia was doing better than others in South-East Asia, there was a very “big gap” in the performance of its civil servants with Organisation for Economic Co-operation and Development (OECD) countries.

She said the report decided to compare Malaysia with the OECD countries as it was hoping to move from a middle-income status country to that of high-income.

“When you compare Malaysia with others in the region, Malaysia has been doing pretty well but we see that the performance has stagnated.

“If you look at the indicator for government effectiveness, Malaysia is still above in the region but in 2018, the performance is below that of between 1991 and 2014.

“If you take the average of that period between 1991 and 2014, it was higher than that in 2018, which means the performance is declining,” she said in an interview.

There were also some indicators in which Malaysia ranked even below the region, said Rajni, adding that this included accountability, impartiality and the openness of its public sector.

“There is a strong perception ... that recruitment of the civil service is not fair and neutral (with) Malaysia scoring very poorly on the indicators for impartiality in the government.

“It’s the lowest ranked, even below the region and way below the OECD,” she said, adding that the government in its election manifesto had suggested setting up an Equal Opportunities Commis­sion meant to tackle discriminatory practices in both the public and private sector.

“Malaysia also scores very poorly on the openness indicators. Malaysia is not a very open economy in the sense that data sharing is a very big problem.

“The government does not share of a lot of data, even within its own departments or with the citizens. “And citizens’ feedback and voices are not factored by the government into the design of programmes,” she said, adding that the report would suggest the setting up of an institutional and legal framework for open data sharing.

Another indicator that Malaysia performed “not very well”, according to Rajni, was in digitisation and technological advances, which the government had not been able to integrate into its system to provide services.

The report, said Rajni, also focused on another critical element in Malaysia’s civil service, in that the recruitment, which was carried out by the Public Services Department, was overcentralised.

Describing Malaysia as one of the “most overcentralised”, she pointed out that in many countries, this function had been devolved to other departments and even state governments.

“Overcentralisation does not allow for the people who actually need the public servants to do certain jobs ... because they don’t have the right people or the recruitment takes a very long time,” she said.

OECD countries, said Rajni, had been using a competency framework for the recruitment of their civil service, which defined the kind of roles and skills needed in the public sector, rather than taking in people generally for everything.

Among the indicators that Malaysia performed very well were for the ease of doing business – for which Malaysia is ranked 15th – and the inclusion of women in its civil service.

“Women occupied almost 50% of the civil service although there are some issues with women in higher management,” said Rajni.

Other indicators that were highlighted in the report included political stability, regulatory quality, rule of law and control of corruption.

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New bank underscores BRICS unity

The BRICS New Development Bank was established Tuesday with an initial capital of $50 billion shared equally by the five BRICS countries. The Contingent Reserve Arrangement was also launched with an initial fund of $100 billion. The development bank's headquarters will be in Shanghai. Its first president will be from India, the first chair of the board of directors from Brazil and the first chair of the board of governors from Russia. The bank will have an African regional branch in South Africa.

The idea of a BRICS bank was first mooted by India. The five countries reached a consensus at last year's BRICS summit and the bank has been launched this year. The fast pace and its implications have created waves in the West. This landmark event shows that BRICS countries have turned from a forum to an entity and may signal a new beginning for global strategic trends.

The five emerging powers from four continents have formed a financial group. Prior to that, the world's financial power was held firmly by Americans and Europeans.

Without exception, Western opinions have all been centered on the deep-rooted discrepancies among the five BRICS nations. They didn't expect that the wishes and ability of the five countries to overcome these discrepancies were so strong.

Has the world's financial pattern changed? We cannot say this yet, but the old pattern in which the World Bank and the International Monetary Fund dominated the field will face competition from now on.

The BRICS bank not only forms a new financing channel, but also will display the democracy and equality that the old financial pattern lacks most.

Western opinions have tried to drive a wedge among BRICS countries and have speculated about China's hegemonic ambition to dominate the institution. The successful launch of the bank has dealt a heavy blow to them.

Western elites have expressed opinions on emerging countries with a biased mentality, which makes their views detached from reality.

That Shanghai is chosen to site the bank headquarters is good news. Shanghai is becoming a new geographic and financial center in the 21st century. It unites the development momentum of the whole of China and is a major international metropolis in the Western Pacific. It is bound to be an outstanding host city.

On the other hand, the opening of the BRICS bank will provide a new driving force for Shanghai.

China's reform and opening-up in the past 30 years have created huge potentials for this city, while the stage where it can display its strength is relatively small. The BRICS bank is a timely opportunity which will broaden the scope of Shanghai and boost its influence.

China is the most outstanding country among all the emerging powers. The launch of the BRICS bank with Shanghai as its headquarters is a testament to China's national strength, diplomatic capabilities and strategic position. The confidence of all the emerging countries will be boosted. The five nations used to be earthen BRICS, and with the development bank, they will truly become gold BRICS.

Source:Global Times Published: 2014-7-17

BRICS Agree on $50 Billion Bank With Something for Everyone;

Photographer: Nelson Almeida/AFP/Getty Images

Leaders of the five BRICS nations agreed on the structure of a $50 billion development bank by granting China its headquarters and India its first rotating presidency. Brazil, Russia and South Africa were also granted posts or units in the new bank.

The leaders also formalized the creation of a $100 billion currency exchange reserve, which member states can tap in case of balance of payment crises, according to a statement issued at a summit in Fortaleza, Brazil.

Both initiatives, which require legislative approval, are designed to provide an alternative to financing from the International Monetary Fund and the World Bank, where BRICS countries have been seeking more say. The measures coincide with a slowing of economic growth in the five countries to about 5.4 percent this year from 10.7 percent in 2007, according to economists surveyed by Bloomberg.

“The BRICS are gaining political weight and demonstrating their role in the international arena,” Brazilian President Dilma Rousseff said after a signing ceremony.

Until the eve of the summit, India and South Africa had vied with China to host the headquarters of the bank, dubbed the New Development Bank. The administration of Indian Prime Minister Narendra Modi gave in after it was reminded that his country’s previous administration had agreed to Shanghai as the bank’s headquarter, according to an Indian official, who requested not to be named because the talks were not public.

Shared Out

Russia’s Finance Minister Anton Siluanov told reporters that the BRICS decided in favor of Shanghai because the city offers better infrastructure, opportunities to capture private funding, and is home to more investors than the competitors.

Each member country got something out of the deal. The first chairperson of the Board of Governors will be from Russia, while the first chairperson of the Board of Directors will be Brazilian. South Africa will establish an African regional center for the bank, which may not get off the ground for another two years, according to Carlos Cozendey, secretary for international affairs at Brazil’s Finance Ministry.

Unlike the IMF and World Bank, which are managed by Europeans and Americans, the BRICS bank “is quite democratic,” Brazilian Finance Minister Guido Mantega told reporters. 

Each member country has the right to withdraw different amounts from the joint currency reserves, according to a statement from Brazil’s central bank. China can withdraw half the amount it earmarks or $20.5 billion. Brazil, Russia, and India may withdraw the same amount they commit or $18 billion, while South Africa can tap $10 billion, twice its contribution.

“It’s a type of insurance policy, speculators looking for weaker countries without backup, will run because those countries will have sufficient solidity to face a currency problem,” said Mantega.

Aiding Development

The BRICS have evolved from the original term coined in 2001 by then Goldman Sachs Group Inc. economist Jim O’Neill to describe the growing weight of the largest emerging markets in the global economy. In 2011, South Africa joined to give the BRICS a broader geographic representation.

Even with slowing economic growth in BRICS countries, there are still plenty of opportunities for business, and the newly-created development bank will help those opportunities become reality, said Jorge Gerdau Johannpeter, chairman of Brazilian steelmaker Gerdau SA.

“The bigger the financing possibilities, the bigger the chances of implementing projects,” Gerdau told reporters at the summit.

The biggest winner among the BRICS and its newly created bank may be South Africa, as it stands to gain financial expertise, investment and trade, said Colin Coleman, the Johannesburg-based head of Goldman Sachs Group Inc. in sub-Saharan Africa, who attended the BRICS Business Council meeting.

Greatest Benefit

“Arguably we have the greatest amount to benefit because we’re partnering diplomatically and otherwise with some of the world’s most important emerging-market economies,” Coleman said in a phone interview.

While BRICS trade ministers in a joint communique yesterday said that member countries stood by the World Trade Organization’s Bali agreement, Brazil’s Trade Minister Mauro Borges said he understood India had certain concerns about its implementation and that the BRICS countries didn’t intend to forge a common stance on the issue.

BRICS share of world exports rose to 16 percent in 2011, from 8 percent in 2001.

Russia also proposed at the summit in the northeastern coastal city of Fortaleza the creation of an Infrastructure Fund during the summit, Kirill Dmitriev, chief executive officer of the Russian Direct Investment Fund, told reporters today. The fund could start up as early as next year, he said

.- By Raymond Colitt, Unni Krishnan and Arnaldo Galvao Bloomberg


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China surpasses US as world's top corporate borrower; Will the IMF headquarters move to Beijing?

China surpasses US as world's top corporate borrower

Corporate debtChinese corporate borrowers owed $14.2 trillion at the end of 2013 versus $13.1 trillion owed by U.S. corporations with the switch in ranking

The Chinese mainland has surpassed the US as the world's top corporate borrower, and higher debt risk in the world's second-largest economy may mean greater risk for the world, a report said on Monday.

However, Chinese economists noted that the debt risk in China's corporate sector is still well under control.

Nonfinancial corporate debt in the Chinese market was estimated at around $14.2 trillion by the end of 2013, overtaking the $13.1 trillion debt owed by the US corporations, a progress happening sooner than expected, said a report from the Standard & Poor's Ratings Services on Monday.

The report expects that by the end of 2018 debt needs of mainland companies will reach $23.9 trillion - around one-third of the almost $60 trillion of global refinancing and new debt needs.

"It [the mainland surpassing the US as the largest corporate borrower] is not surprising at all, as the [size of] mainland non-service sector has already surpassed that of the US," Tian Yun, an economist with the China Society of Macroeconomics under the National Development and Reform Commission, told the Global Times on Monday.

Cash flow and leverage at mainland corporations has worsened after 2009, and debt risks in the property and steel sectors remain a particular concern, the report said.

Private companies are facing more challenging financing conditions - highlighted by China's first corporate bond default case of Shanghai Chaori Solar Energy Science and Technology Co in March and another case of default of leading private steel maker Shanxi Haixin Iron and Steel Group.

"The capital market has been sluggish during the past few years, leading to the fast growth in corporate debts," Xu Hongcai, director of the Department of Information under the China Center for International Economic Exchanges, told the Global Times Monday.

Experts noted that the rapid growth in debt reflected some problems of the  Chinese economy, but the size of the debt is still in a safe range and will not cause major risks as the economy remains stable.

"The problems of the Chinese economy are institutional and structural," Tian said, "By addressing these issues, debt risks can be managed."

Tian further noted that most corporate debts in China are internal debts, thus debt problems in the country will have limited impact on the rest of the world.

The report also said a possible contraction in "shadowing banking" will be detrimental to businesses as general.

But Xu noted that China's tighter supervision of the "shadow banking" sector will make it more transparent and better-regulated, which will reduce the potential risks in the sector.


Local governments face massive debt repayment pressure

China's local governments are facing huge debt repayment pressure this year with 2.4 trillion yuan ($390 billion) of debts due in 2014, China Business News reported Monday.

From 2009 to 2013, China issued 94 local government bonds raising 850 billion yuan, the report said.

With another 400 billion yuan worth of bonds to be issued this year, the total financing since 2009 will reach 1.25 trillion yuan, according to the report.

However, the total local government debt is much higher than the amount raised through the bonds, the report said, noting that major debt came from bank loans.

Although the central government has stated several times that the overall debt risk is under control, the statistics from China's National Audit Office show that some local governments have a debt-asset ratio of more that 100 percent and are facing huge repayment pressure, the report said.

Market analysts hold the view that local governments may borrow new debts to pay for the old ones.

The central government allowed local authorities to raise funds since 2009 in the wake of the global financial crisis, while the central government also issued bonds and repaid debts on behalf of the local governments, a practice criticized by some as not conforming to market economy principles.

As the bond issuing backed by the central government is limited and could not fully meet the local needs, the local governments also turned to opaque financing channels including shadow banking activities, the report said.

Despite the big debt pileup, no local government default has so far taken place.

- By Liang Fei Source:Global Times Published: 2014-6-16 23:43:09 

Will the IMF headquarters move to Beijing?

The International Monetary Fund's headquarters may one day move from Washington to Beijing, aligning with China's growing influence in the world economy, the fund's managing director Christine Lagarde said early this month.

Attaching importance to China

Christine Lagarde made the statement at the London School of Economics and Political Science (LSE), saying that the IMF rules require that the institution should be headquartered in the country that is the biggest shareholder. This has always been the U.S. since the fund was formed.

"But the way things are going, I wouldn't be surprised if one of these days, the IMF was headquartered in Beijing," she said.

Lagarde remarked that the IMF had a good relationship with China, the world's second largest economy, and she praised the Chinese government's commitment to fighting corruption.

Lagarde added that she did not think the IMF should be controlled by Europeans in its first place. Since its establishment in 1945, the IMF headquarters has been headed by Europeans and located in Washington, while the World Bank has been headed by the Americans.

Not satisfied with the U.S.

Lagarde also pointed out that the U.S. government is an "outlier" among the G20 in refusing to approve IMF reform, and the IMF was trying to give emerging economies like China and Brazil a bigger voice through reform.

According to Lagarde, on the part of countries like China, Brazil, and India, there is frustration with the lack of progress in reforming the IMF by refusing to adopt the quota reform that would give emerging economies a bigger voice, a bigger vote, and a bigger share in the institution. “I share that frustration immensely,” she said.

She also claimed that the credibility and the importance of the IMF are closely related to proper representation among the membership. "We cannot have proper representation of the membership if China has a tiny share of quota and the voice, when it has grown to where it has grown," she said.

The IMF agreed to reform its management structure in 2010 so that emerging economies could play a bigger role, and made China the third largest member. The U.S. is the only member with control weight in the voting; meaning that any major reform must be approved by the United States.

Hello headquarters

Lagarde has no specific schedule for the headquarters' shift. However, this once again reminds China that there are few international organizations headquartered in its country, which is disproportionate to China's status as the world's second largest economy.

This article is edited and translated from 《IMF总部要搬北京？》，source:Beijing Youth Daily, author: Bu Xiaoming. (People's Daily Online)

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Fearful of China's rise?

PETALING JAYA: China may overtake the United States as the biggest economic power in the next four to six years but this does not mean that it will instantly become the world's superpower, says a leading expert on China.

Dr Martin Jacques, 67, author of the global bestseller When China Rules the World: the End of the Western World and the Birth of a New Global Order, said it would take several decades, from between 2030 and 2040, before it could even achieve developed state status.

“It'd be a long way to go as a superpower,” he said at a talk on “China As Global Superpower: What It Means For Asia and The World”, hosted by the Asian Centre for Media Studies, based in Menara Star.

The second edition of his book was released recently and 40% of its content was new.

“This includes an extensive chapter analysing events after the 2008 financial crisis,” he said.

Expert on China: Dr Jacques presenting a talk hosted by the Asian Centre for Media Studies at Menara Star.

 

His first was shortlisted for two major literary awards.

Dr Jacques said Westerners were fearful of China's rise due to scant knowledge and understanding of China and that it was a communist country.

They fear the country might throw its weight and its military power around.

However, Dr Jacques pointed out that China had no major interest in developing military power after Deng Xiaoping took over the country from the late 1970s to 1990s.

On fears that a communist country was not democratic, he argued that being democratic had not stopped Europeans from conquering others.

“Although China has a lot of problems now, it doesn't mean that it can't be humane and more democratic,” said Dr Jacques.

“Maybe, it will develop universal suffrage without following the Western way.”

Dr Jacques pointed out that the China Development Bank and China Export-Import Bank gave loans of more than US$110bil (RM338.415bil) to other developing countries in 2009 and 2010 while the World Bank only made loan commitments of US$100.3bil (RM307.65bil).

Dr Jacques, a Senior Visiting Research Fellow at the London School of Economics (University of London), visiting professor at Tsinghua University, Beijing, and Fellow at the Transatlantic Academy, Washington DC, was the former editor of Marxism Today, deputy editor of The Independent and a co-founder of the think tank Demos.

Fresh insight on China

PETALING JAYA: China continues to grab world headlines and dominate international news for many reasons. The world's second largest economy is now expected to be the biggest in only a few years, with many far-reaching implications to follow.

World-renowned author and academic Dr Martin Jacques (pic) will be presenting a fresh look at the new China in a talk at Menara Star in Petaling Jaya at 2pm on Thursday.

His talk titled “China As Global Superpower: What It Means For Asia and The World” is hosted by the Asian Center for Media Studies, based at Star Publications (M) Bhd.

Dr Jacques is the author of the global bestseller When China Rules the World: The End of the Western World and the Birth of a New Global Order, which has been translated into 11 languages, shortlisted for two major literary awards and described as the best book on China in many years.

To keep track of the rapid changes in China, Dr Jacques has just released the second edition of his book, incorporating the latest data and an extended analysis which includes a new section.

The discussant for the talk will be Dr Lee Poh Ping, a Senior Research Fellow in the Institute of China Studies at Universiti Malaya.

Dr Lee has written and published extensively on East Asian affairs and presented university seminars on Dr Jacques' work.

The talk will be moderated by The Star's associate editor Bunn Nagara.

The event at the Cybertorium in Menara Star is open to the public free of charge, with no registration required

 The Star/Asia News Network

MIA, Malaysian Institute of Accountants needs to change

World Bank report says it should improve its governance structure

PETALING JAYA: After a recent assessment of the accounting and auditing environment in Malaysia, the World Bank has concluded that there ought to be changes in how the Malaysian Institute of Accountants (MIA) is governed.

The report on the observance of standards and codes, released in February, noted among other things, that the institute's governance structure and lack of resources were “posing some challenges”.

The report focused on accounting and auditing standards and practices in corporate Malaysia, as well as the institutional framework that underpins the corporate financial reporting system.

“An independent review of the governance structure of the MIA should be conducted to provide recommendations for improving its structure and operations,” said the World Bank.

“In particular, these actions should address the structure and membership of the MIA council, and the streamlining of the investigation and disciplinary process.

“These changes should also facilitate the process of approving any increases in membership fees, as it appears that a lack of resources is impacting the MIA's ability to discharge effectively all its obligations.”

The report noted that the institute's governing body, its council, had 30 members, 10 of whom are elected. The rest are appointed by the Government.

“All the members of the investigation, disciplinary, and disciplinary appeals committees are required to be members of the council, which limits the volume of cases these committees are able to process,” said the World Bank.

The institute has already taken steps to address this. In an interview with StarBiz earlier this month, MIA president Datuk Mohamed Nasir Ahmad said the institute had submitted to the Government a draft of proposed amendments to the Accountants Act 1967.

Among the changes sought was that the MIA be allowed to create multiple sub-committees to deal with investigations, with the subcommittee members possibly coming from outside the council.

However, the World Bank report did not mention any dissatisfaction over the council's composition, although this has been a longstanding complaint among some MIA members.

In a statement sent to StarBiz, the Malaysian Accounting Firms Association (previously known as the Association Of Small & Medium Accounting Firms of Kuala Lumpur and Selangor) pointed out that although the MIA was “wholly supported by members subscriptions”, 20 of the council members were appointed by the Finance Minister on the advice of the Accountant-General, as provided under the Accountants Act.

“The MIA is probably the only members-only professional body in Malaysia, and possibly in any country, with such a majority of unelected members in council,” said the association.

“If at all any amendment to the Act is to be proposed, it should start with reinstating the rights of the members to govern themselves as professionals should.”

The association issued the statement in response to the StarBiz article on April 16 on the proposed amendments to the Act.

Mohamed Nasir said the MIA was also proposing that its council be given the authority to make or amend certain rules, instead of having to wait for a general meeting to approve new rules.

The association frets that this may enable the MIA to unilaterally increase its membership subscription rates.

It said: “To put that in context, members have rejected subscription increases sought in the last two AGMs due to unhappiness with the institute.”

The World Bank report alluded to the institute's previous attempts to seek a subscription hike.

“The MIA derives almost twice as much income from its professional development programmes than it collects from annual membership fees. The annual membership fees stand at RM250, and two recent attempts to increase annual fees were voted down,” said the bank.

By ERROL OH
errol@thestar.com.my

UNCTAD conference starts amid Uncertainty

The 13th UNCTAD conference began last weekend with an impressive turnout of political leaders but there are tense undercurrents below the surface calm.

THE ministerial meeting of the UN Conference on Trade and Development (UNCTAD) kicked off to a good start last Saturday with an opening session marked by a modern play and dance depicting the inequalities of the modern world, and with speeches by an impressive group of political leaders, including the Emir of Qatar, the President of Tunisia who came to power in the wake of the Arab Spring, and the Prime Ministers of Turkey and Bangladesh.

Most of them stressed the need to rethink the model of economic growth that was driven by a financial system that is now seen as dysfunctional and by a pattern of development that may be economically and environmentally unsustainable.

This is echoed in the theme of the UNCTAD conference, known as UNCTAD XIII because it is the 13th in a series of high-level sessions, held once in four years, since the founding in 1964 of this most important of United Nations development organisation.

The UNCTAD XIII theme is “Development-led globalisation: Towards sustainable and inclusive development paths.”

The conference report of the UNCTAD secretary-general, Supachai Panitchpakdi, speaks of a “world turned upside down”.

Much of it criticised the way globalisation had been driven by speculative finance, which has destabilised the world economy but also damaged development in developing countries.

The report advocated the start of a new era, of a development-led globalisation in which the state has to resume its leading role in development, with a new North-South deal based on taming the financial sector, turning trade and investment towards development, managing new threats and there is more democratic governance of the world economy.

Many sessions have already been held, with ministers, business leaders and academics debating investment promotion and investment agreements, the global environment influencing development, trade and poverty.

On Sunday, the UN General Assembly President Nassir Abdulaziz Al-Nasser, opened the main plenary, re-affirming the leading role of UNCTAD on trade and development issues in the UN system.

However, below the surface calm, there is an undercurrent of a tense atmosphere because of the uncertainties surrounding the main outcome of UNCTAD XIII, a declaration of ministers that spells out the main issues of the present and the main functions of UNCTAD in future.

The latest draft of this declaration, dated April 21, shows how far the countries are from agreement on many issues, both in stating the problems the world faces and in the future role of UNCTAD on these issues.

It is evident from this draft that developed countries, especially the group known as JZ (that includes the US, Japan, Canada, Australia, New Zealand and Switzerland), are proposing to delete or severely dilute the text in many areas.

If their proposals are accepted, the future role of UNCTAD may be seriously curtailed.

This is being resisted by developing countries and their Group of 77 and China, which want to retain UNCTAD’s mandate to work on its present broad range of issues.

The most notable divisions, along North-South lines, are the following:

The G77 wants UNCTAD XIII to reaffirm the Accra Accord of 2008 adopted at the previous UNCTAD session, and to build on it. This will allow UNCTAD to continue work on all the issues it presently deals with.

However, the JZ group wants to delete “reaffirm” and keep “builds upon”, implying that there is no agreement to maintain the present mandate.

The text has only two simple paragraphs on the financial crisis, and the need to connect finance to the real economy, which JZ wants to delete. JZ and the European Union also want to delete another paragraph on the role of UNCTAD to contribute to the UN’s work in addressing the causes and effects of the economic crisis.

The paragraphs on the work of UNCTAD on debt, debt restructuring and responsible lending are also being diluted or deleted by developed countries.

The JZ group wants to delete UNCTAD’s work in servicing the GSTP, the South-South trade preference scheme of developing countries.

There is only one paragraph referring to UNCTAD’s work on intellectual property and development. The JZ and EU propose deletion of this.

Similarly JZ proposes deletion of the only reference to the important role of industrial policies.

There is also deletion or dilution of UNCTAD’s work on environment and sustainable development, such as climate change and the follow up to the Rio Plus 20 summit.

Other areas of dilution include food and agriculture, preferences to least developed countries, technology transfer, traditional knowledge and genetic resources.

At a meeting of Ministers of the G77 and China on April 20, it was agreed that the developing countries’ group will maintain its stand that the Accra Accord be reaffirmed and that there should be no dilution of the issues.

This is to be expected, because the G77 and China consider UNCTAD to be their organisation. Indeed, it was the formation of UNCTAD in 1964 that led to the birth of the G77 and China itself.

A puzzling question is why some of the developed countries are so adamant on eroding the mandate and work of UNCTAD.

It is well known that UNCTAD is not the developed countries’ favourite organisation, since its secretariat has continuously produced research that flies in the face of the orthodox policies of organisations they control, especially the World Bank and IMF.

But then the work of UNCTAD, which has often proved correct, is even more important today, when the old economic theories are crumbling and the traditional policies are being reviewed.

UNCTAD has proved it can contribute immensely to the new ideas so much needed.

What if there is no agreement on the draft Declaration?

That would be a setback not only to UNCTAD but the whole framework of international cooperation, which is also much needed in these turbulent times for the global economy.

Thus, it is hoped that all the countries at UNCTAD XIII will this week agree on a good declaration in Doha.

GLOBAL TRENDS BY MARTIN KHOR

Malaysians, work hard to succeed !

Hard work, long hours and a focused approach ensure the country and rakyat succeed

I AM an amateur musician and I play the guitar and I sing. I like all types of music but one that tugs at my heartstrings is the blues.

We all know what the blues are: simple, direct, strongly expressive music with a steady beat and rhythm, leaving plenty of space for singing and solo instruments. Letting it all hang loose, so to speak.

But to me singing the blues means eventually rising above the blues, even if you have to pour out all your problems and wail for a while. That's what this column is about.

I am fortunate to be involved in and driving one of the most exciting projects around. What can be more meaningful than raising incomes and the quality of life for all Malaysians, irrespective of race, creed or religion?

But as hopeful as I am that we can do this, I am not so naive that I do not know that there are many problems and obstacles to overcome before this dream becomes reality.

So I will sing the transformation blues here: I will air the problems, the big ones, which face us in our programme to transform us into a high-income nation. And then we will say what we are doing to overcome them.

Idris: ‘I like all types of music but one that tugs at my heartstrings is the blues.’ 
 

A big part of this is putting right misinformation. We will need your help as Malaysians to understand what we are trying to do and to tell us what it is that we are not doing right and what we should be doing instead. The e-mail contact is in the logo above.

We promise to read every response and if appropriate respond to some here. We ask only three things: that you are fair, reasonable and realistic.

Concept of income

The first thing I would like to explain is the concept of income, which is key to the entire concept of transforming into a high-income country. At what level of income do we become developed and achieve high income? How do we do it? How do we measure this? And can we achieve it?

A lot has been said about how we measure income and the level of income in 2020, and how we have not taken the right things into account. It's been said that we have used the wrong measures. We have not.

Intentionally, we have used globally accepted definitions and methodologies, i.e. the World Bank approach and benchmarks. Without getting too technical, we used the current definition for high-income countries in nominal terms and then using projected inflation rates, derived what it would be in US dollars in 2020.

Hence, the figure of around US$15,000 per person was arrived at RM48,000 based on a projected exchange rate of RM3.20 to the US dollar. The current rate is close to RM3 which means that if this rate prevails, the target will be lower at RM45,000. In 2009, our income, using prevailing exchange rates, was US$6,700 per capita. Yes, we have a long way to go but we are well on the way.

From here, we project the population at 2020 and multiply that by the income per capita to obtain the total income of the nation in 2020, in nominal terms.

Working backwards, we then estimate the growth rate needed to get there, again in nominal terms.

Then we take out the projected inflation rate from this figure to arrive at the real rate of income increase that we need for the nation as a whole to achieve high-income status which is on average around 6% annually, assuming all other factors hold equal.

“Real” here means the income is adjusted for inflation and reflects the actual rise in income even after taking into account price increases. The real gross national income or GNI is just the real gross domestic product plus net income from abroad.

Our methods are rigorous and our results were reviewed in January 2012 by an international accounting firm and a globally renowned panel of experts.

The latter also shared outside-in feedback and global best practices. We have no interest in deceiving anybody on how we are performing.

That is how we set the target.

Getting there

The next thing is getting there. Basically, we identify all the major projects on hand and estimate their contribution to economic and, ultimately, income growth. We don't pretend that these are accurate but they are the best estimates we can get. No country in the world can accurately measure and predict with precision its economic growth.

These estimates are also targets. If we can meet them year-to-year, we are on our way. If we run short we have to do more, and if we are doing very well we can lift up our hands to the heavens and give our thanks to God. It's a moving, dynamic target and it changes all the time.

Yes, there are risks to the achievements we have set out for ourselves. What worthwhile endeavour comes without risks? The world economic growth can remain low for longer than expected. We are not completely insulated from the world. The private sector may not invest as much as it should.

But what we are doing at the Performance Management and Delivery Unit is to get the Government to facilitate all efforts to increase incomes, no matter by whom. And we will monitor to see if we are on track and recommend the appropriate changes to put us back on track, as and when necessary.

According to Tan Sri Nor Mohamed Yakcop, Minister in the Prime Minister's Department: “At the end of last year, annual per capita income in Malaysia rose to more than RM29,000 (US$9,400).”

At current prices, this is 12% growth compared with RM26,174 (US$7,985) in 2010 and RM23,850 (US$6,677) in 2009. This is a big improvement compared with only RM1,070 (US$347) in 1970.

In April, the Government will release a full report on the performance of Economic Transformation Programme (ETP) in 2011.

Our income growth in the last two years shows that we can achieve the targets that we have set for Malaysia as a nation. If the projects under the ETP and others come through, we will do it.

We may also see others setting up their own projects to take advantage of opportunities, and that would definitely be a bonus.

This shows that we have made good progress as a country. Under the leadership of our Prime Minister, we are on our way to transforming Malaysia to become a high income economy. Hard work, long hours and a focused approach are being put into ensuring that Malaysia and Malaysians succeed locally and globally.
Any Malaysian can join us on this journey. Simply by working harder and smarter you can contribute to increasing your employer's revenues and growing yourself, hopefully.

That way, all of us Malaysians can move forward together to achieving our goal of becoming a higher income nation and creating a better life for all of us. That's what transformation is about.

Together, we can do it.

● Datuk Seri Idris Jala is Minister in the Prime Minister's Department and CEO of Pemandu. Feedback and comments are most welcome. 

Malaysia's nothing ventured, nothing gained

Nothing ventured, nothing gained

ON YOUR OWN By TAN THIAM HOCK

I had a weird start to 2012. For the first time, I joined the unemployment line. Voluntarily of course. I started working two weeks after my final examination in University Malaya back in Feb 1983 and I have never stopped working since.

Had a good month's break from writing this column and I have to admit that writing is much much more difficult than selling lipsticks! Mighty pleased that I am not making a living out of this writing profession ... or my family will be starving at this moment. No holidays. No iPhones and no I want this and I want that.

To some concerned readers, no, I was not banned from writing nor was I terminated by Star Publications (M) Bhd CEO. I did receive some formal complaints from some sensitive officials from government agencies and sovereign funds but no RM100mil defamation suits ... yet. As such, I do not have to apologise in public to anybody. So far, so good. No shame.

Writing this column forces me to recall snippets of historical events that had pass me by. Looking back, an event that happened 31 years ago could have changed Malaysian history. And your current cost of living.

In 1981, I was in AIESEC, University Malaya involved in organising the Heavy Industries seminar, at a time when our Dr M decided to launch the national car project. Our economics professor, Dr Chee Peng Lim was adamantly against the car project, arguing that Malaysia should concentrate her resources on modernising agriculture, invest in infrastructure and resource-based manufacturing.



He further argued that unlike Japan and South Korea, Malaysia has a small domestic market and we will not achieve the economy of scale that will help make us cost competitive for the export market. It would be an extremely inefficient allocation of economic resources if we were to proceed with the car project.

It was rumoured then that Dr Chee had to leave the country and he subsequently joined the World Bank. No opportunity to confirm this rumour but what a great story!

Commodity prices are at its highest in years. Felda pioneer settlers are all millionaires. Malaysian rubber gloves dominate the world market. And Proton is still in a poor state of affairs. Proton still needs the protection of the Government to compete in the local market. It has never been able to compete in the world market. With or without Lotus. It never will. Dr Chee was right.

To be fair, Proton did generate some economic benefits. It spawned many entrepreneurs with investments in car parts, logistics, etc and it created jobs. Billionaire entrepreneurs were also created ... from papers. That's right. From AP papers that costs a few cents to print. So, why bother to sell cars when it is more lucrative to sell a piece of paper? In the meantime, the poor rakyat has to pay some of the highest car prices in the world.

There is no better place in the world for entrepreneurship to flourish than Malaysia. The best projects are privatisation projects. Buy an airline from the Government with maximum loans from our GLC banks. If you manage it well, then you are a successful entrepreneur. If not, no worries. The Government will buy it back from you at the same price. So, you wasted your precious time but hey ... nothing ventured, nothing gained, right? You will never ever suffer personal losses. Only occasional lawsuits.

Back in the good old days before LRT, we had a haphazard public transport system of mini-buses and many bus companies. But it worked. In true entrepreneurship spirit, supply meets demand. And the mass could travel everywhere by bus. Many choices and on time arrivals.

Then the Government decided to upgrade the public transport system by centralising and privatising. All the old Omnibus companies folded. Tong Fong Omnibus, Klang Omnibus and Ah Hock Omnibus. Conservative entrepreneurs who toil over long hours and small margins. Good riddance though to those crazy and dangerous mini-bus drivers.

Brilliant entrepreneurs were roped in to invest in modern air-conditioned buses. Easy loans were arranged. Modern management techniques were employed. Monopolistic routes were divided and spread among these entrepreneurs. But still they lose money? Now they claim that they are providing a social service to the rakyat. “Compensate us for the losses or we will stop running the buses.” The rakyat was held to ransom.

With election looming, neither the opposition state government nor the federal government could afford the backlash from the rakyat. The rakyat's money was used again to pay inefficient and hopeless entrepreneurs. No shame. No shame.

Entrepreneurs invest in business knowing that the risk of failure is ever present. So you work hard and you work smart. You try your best. If it works, great. If you fail, just swallow your pride and walk away. Don't go begging for help especially if it is the rakyat's money. And don't you dare hold the rakyat to ransom again.

In the ETP seminar, Datuk Seri Idris Jala said inefficient entrepreneurs should be eliminated in a free enterprise economy. I agree. The politicians and the bureaucrats should manage the rakyat's money as if it's their own or the rakyat will hold them accountable in the polls.

Dr Chee, wherever you are, thank you for the invaluable lecture.

On Your Own The writer is an entrepreneur who hopes to shares his experience and insights with readers who want to take that giant leap into business but are not sure if they should. Email him at thtan@alliancecosmetics.com

Yuan or not to Yuan? Yuan way to new monetary order

  A 'grown-up' yuan means a more stable world economy

WHAT ARE WE TO DO By TAN SRI LIN SEE-YAN

CHINESE New Year has come and will soon go. The eurozone debt crisis is well past two years. Yet uncertainty persists. The World Bank's January 2012 Global Economic Prospects reports:
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“World economy has entered a very difficult phase characterised by significant downside risks and fragility and as a result, forecasts have been significantly downgraded. However, even achieving these much weaker outturns is very uncertain Overall, global economic conditions are fragile.”

This week's IMF World Economic Outlook says more of the same: “The global recovery is threatened by intensifying strains in the euro area and fragilities elsewhere.” China, India, South Africa and Brazil have entered a slowing phase.

No country and no region can escape the consequences of a serious downturn. Nevertheless, growth in the East Asia and Pacific region (excluding Japan) is expected to slowdown to about 7.8% in 2012 (8.4% in 2011) and stabilise in 2013.

This reflects continuing strong domestic demand (evident in third quarter or 3Q 2011 GDP) while exports will slow to about 2% due to Europe heading towards recession and sluggish rich “Organisation For Economic Coercion And Direction (OECD)” demand.

The middle-income nations are, I think, in a good position to weather the global slowdown, with significant space available for fiscal relaxation, adequate room for interest rate easing, ample high reserves and rather strong underpinning for domestic demand to rise.

I see the modest easing in China's growth being counterbalanced by a pick-up in GDP gains in 2013 over the rest of the region. Outside China, growth has slackened sharply to 4.8% in 2011 (6.9% in 2010), but is expected to strengthen in 2012, reaching 5.8% in 2013.

China

GDP growth in China, which accounts for 80% of the region, had eased to about 9.1% in 2011 (10.4% in 2010) and is expected to slacken further to a still robust 8.2%-8.4% in 2012.

The World Bank projections point to growth moderating at 8.3% in 2013, in line with its longer-term potential GDP. Expansion is expected to emanate from domestic demand, with private spending and fixed capital outlays contributing most of the growth in 2012.

For China, the health of the global economy and high-income Europe in particular, represents the key risk at this time. Domestic risks include property overheating, local government indebtedness, and bloating bank balance sheets.

The 4Q 2011 growth of 8.9% annoy investors who are looking for indications either weak enough to justify further policy easing or strong enough to allay fears of a hard landing. Bear in mind the forecast growth for 2012 will be the weakest in a decade, and may cool further as exports slump.

The Chinese economy is buffeted by two very different forces: (i) slow global growth will hurt Chinese exports (especially to its largest trading partner, European Union) which rose by 7% in December, and exporters foresee more trouble ahead; however, (ii) analysts point to strong retail sales (up 18% in December) reflecting rising wages and domestic spending which represented about 52% of GDP in the first quarter, higher than in 2009-11.

China is counting on its massive effort to build low-income “social housing” to provide enough demand to keep the real-estate market from collapsing.

It is unclear whether China can accelerate this program to build 36 million subsidised housing by 2015enough to house all of Germany's households. But financial markets are anticipating worse news ahead. After all, the Shanghai Composite Index fell 21% in 2011. As the adage goes, stock analysts did forecast 10 of the past 3 recessions!



The yuan

Appreciation of the yuan (renmimbiRMB) against the US dollar in 2012 is expected to slow to about 3%, from +4.7% in 2011. The yuan closed at 6.3190 at end 2011, up about 8% compared with June 10 (when China effectively ended its 2-year long peg to the US dollar and has gained 30% since mid-2005 when it was last revalued.

The slowdown reflects growing demand for the US dollar amid uncertainty, lower growth, diminishing trade surplus, and growing US military presence in Asia, according to China's Centre for Forecasting Science (of the Chinese Academy of Sciences) which reports directly to the State Council, China's Cabinet.

Much of it will be in the latter year as China is likely to keep the yuan relatively stable in the first half to allow time to assess the impact of goings-on in the euro-zone. Dollars are pumped in via state banks, providing markets with a clear signal it will not allow the yuan to depreciate, while not in a hurry to let it appreciate either. The yuan has since moved sideways.

Off-shore yuan

To make the yuan a true reserve currency, China begun to liberalise currency controls and encourage an offshore yuan market in Hong Kong, creating an outlet for moving the currency across borders. However, foreign investors in China have been slow in using the yuan.

In practice, it is still difficult to buy & sell yuan because of paperwork & bureaucracy. It is still easier to settle in US dollar as it is the universal practice. Its convenience outweighs the potential costs of any unfavourable move in the US dollar-yuan rate. Nonetheless, China is encouraging more businesses to use the yuan and more US banks to step-up their yuan-settlement business.

This market will grow as China diligently moves to internationalise its currency. Encouraged by the authorities, a vibrant offshore yuan market has blossomed in Hong Kong. Beijing still controls the currency and how the yuan bought in Hong Kong can be brought back to China.

Yuan deposits in Hong Kong rose more than 4 times to 622.2b yuan (nearly US$100bil) at end September 2011 from a year earlier according to the Hong Kong Monetary Authority, and now account for 10.4% of bank deposits.

Growth in offshore yuan stalled in late 2011 as China slowed its currency appreciation against the dollar. Given Beijing's gradualist approach to reform, the market will soon revive.

An audience poll at the recent 2012 Asian Financial Forum in London indicated 63% believes full yuan convertibility is more than 5-years away.

The very fact that London wants to be a yuan-trading centre now says a lot. Only 10% of China's international trade is settled in yuan, rising to 15% in 2012. It's still a small market in the global context.

The yuan is used for just 0.29% of all global payments in November 2011 according to financial messaging network Swift. By comparison, the euro's share is about 40%.

Dim-sum bonds

A booming business in dim-sum bonds (offshore yuan denominated bonds) followed, with companies including Caterpillar and McDonalds issuing such bonds. In September 2011, a spurt of capital flight towards “safe haven” assets in the US tied to the worsening debt crisis in Europe caused currencies of emerging nations to depreciate against the US dollar.

In East Asia, modest declines were recorded compared with South Africa (the rand fell 22%) and Brazil (the real dropped 18%). Only the Indonesia rupiah (down 5.8%) and the Malaysia ringgit (fell 5.4%) come under some pressure.

This event slowed the appreciation of the yuan and with it, trading in dim-sum bonds eased as investors were no longer in a hurry to invest. Over the medium-term, most analysts expect this yuan market to grow in the face of its massive US$3.18 trillion in reserves, as China moves to build its international status.

When dim-sum bonds started to hit the market in 2010, investors were enthusiastic, bidding up prices and driving down yields. But in the second half of 2011, the average price of investment grade dim-sum bonds fell 3.3%, amid a broad flight towards quality spooked by euro-zone turmoil and Chinese accounting scandals.

Bankers hope new entrants (private banks, commercial banks, mutual funds & life insurers) will give the market more stability this year. They would add depth & breath to the market, which tripled to 185b yuan (US$30bil) in dim-sum bonds issued in 2011. Expectations are for such bond issuance to reach 240 billion yuan this year, as new issuers (including more foreign companies) join early adopters such as government entities & state run banks.

This offshore bond market has developed well over the past year. Investor diversification in both types & geographics is still evolving, which is key to the healthy growth of the market. Equally important, investors look to the continuing appreciation of the yuan.

In addition, its average yield has risen to 3.8% (from 2.35% since mid 2011) and most now trade at higher yields than comparable US dollar bonds.

This rise in yields reflects expectation for (i) slower yuan appreciation; (ii) increase in supply; and (iii) investors desire for a higher liquidity premium during market downturns. Overall, the dim-sum market is turning into a buyer's market.

Bilateral arrangements

China is forging ahead in laying the groundwork to internationalise the yuan via bilateral arrangements with foreign companies, nations & financial centers, particularly Hong Kong (mainly because it can fully control the terms of the market). More mainland-based financial institutions will be able to issue yuan denominated bonds in Hong Kong.

This is part of a broader effort, first started in July 2009 when it encouraged enterprises in Shanghai & Guangzhou province to use the yuan when settling trade with Hong Kong, Macau and some foreign companies (see my column “China: RMB Flexibility Not Enough” of July 3, 2010).

The post-X'mas direct yuan-yen trade deal forms part of a wide-ranging currency arrangement between China & Japan to give the use of the yuan a big boost. After all, China is Japan's largest trading partner with 26.5 trillion yen in 2-way transactions last year. Encouraging direct settlement in bypassing the US dollar would reduce currency risks and trading costs. Also, Japan will buy up to US$10bil in yuan bonds for its reserves even though it represents no more than 1% of Japan's US$1.3 trillion reserves. And, it is now easier for companies to convert Chinese and Japanese funds directly into each other without an intermediate conversion to US dollar. About 60% of China-Japan trade is settled in US dollar, a well-established practice.

The package allows Japan backed institutions to sell yuan bonds in the mainland (instead of Hong Kong) helping to open China's capital market.

In recent weeks, China has taken new steps to promote the use of yuan overseas, including allowing foreign firms to invest yuan accumulated overseas in mainland China; widening the People's Bank of China (its central bank) network of currency swaps with other central banks to enable their banks to supply yuan to their customers, including with Thailand, South Korea and New Zealand totalling 1.2 trillion yuan.

It already has completed arrangements with the big Asean counterparts. Berry Eichengreen (University of California at Berkeley) observed: “Japan appears to be acknowledging implicitly that there will be a single dominant Asian currency in the future and it won't be the yen.”

But Harvard's Jeffrey Frankel is more down to earth: “This hastens a multicurrency world, but this is just one of 100 steps along the way.”

China still has a way to go in: (i) getting the yuan fully convertible (ii) reducing exchange rate interventions (iii) liberalising interest rates, and (iv) reforming the banking system. In all, so the yuan can really trade freely.

What to do?

The China-Japan deal points the way, nudging the yuan towards the inevitable becoming a reserve currency alongside now discredited US dollar and the euro. This is to be welcomed by all.

China must realise a fully internationalised yuan should be free to float (and to appreciate) part of its overall reform. Over the longer term, though, avoiding huge imbalances is good for everyone, not least China. While it is understandable for its Prime Minister to label China today as “unstable, unbalanced, uncoordinated and ultimately unsustainable,” opportunities to take advantage of new openings don't come often.

Alexander Gerschenkron, my professor at Harvard (in my view, the best economic historian of his time) points to economies like China as having “advantages in backwardness,” including China's ability to weather shocks: high reserves, robust fiscal situation and comfortable external position.

Shakespeare's Hamlet sums it up best: “If it be not now, yet it will come - the readiness is all.” A grown-up yuan is good for China's welfare.

It also means a more stable world economy which benefits the United States. For China, there will never be enough cushion. Politicians need to seize the moment and act boldly.

● Former banker, Dr Lin is a Harvard educated economist and a British Chartered Scientist who now spends time writing, teaching & promoting the public interest. Feedback is most welcome; email: starbizweek@thestar.com.my

To Yuan or not to Yuan, that is the question

The government of Zimbabwe is considering using China's Yuan as their national currency. China has reportedly been offered mining rights by Mugabe, despite protests [EPA] Bulawayo, Zimbabwe - From downtown shops that stock cheap clothing and shoes that fall apart after one wear, to mining concessions in platinum, gold and diamonds - the Chinese finger is now in virtually every Zimbabwean pie. From city sidewalks to low-income suburbs, the Chinese have become part of the local population, and if some senior government bureaucrats have their way, the country could soon find itself adopting the Chinese Yuan as its official currency. For some influential monetary policy czars, the massive assailing of the Zimbabwean economy by the Chinese now only requires the Yuan to strengthen these economic reconstruction efforts. Invited by President Robert Mugabe as part of his infamous 2004 "Look East" policy to help drive the economy and employment creation, after relations with former traditional investment partners the European Union and United States soured, China has been able to create its own little sphere of influence and establish an ubiquitous presence in Zimbabwe. Zimbabwe looks to China for economic revival This is despite being unpopular with Zimbabwe's industrial and commercial players - and general members of the public who accuse the Chinese of poor labour practices and shoddy goods and services. Late in 2011, Reserve Bank governor Gideon Gono, seen by many as a close ally of Mugabe, announced he was in favour of having the Chinese Yuan as the country's official currency. After the Zimbabwean dollar was suspended in 2008, the country has been using a multi-currency regime, which includes the use of the US dollar, the South African rand and the Botswana pula. According to Gono, the Chinese Yuan would be introduced alongside the Zimbabwean dollar. Mugabe's political supporters have been calling for currency reforms to bring back the Zimbabwean dollar. "With the continuous firming of the Chinese Yuan, the US dollar is fast ceasing to be the world's reserve currency and the eurozone debt crisis has made things even worse," Gono told state media in November. "As a country, we still have the opportunity to avoid being caught napping, by adopting the Chinese Yuan as part of consolidating the country's 'Look East' policy. "It's only recently when we had the startling revelations, with Angola offering to bail out her former colonial master Portugal from her debt crisis. This can also happen with Zimbabwe if we choose the right path," Gono added. He continued: "If we continue with our 'Look East' policy, it will not be long [until] we will also be volunteering to bail out Britain from her debt crisis, and I will not wait for my creator's day before this happens. There is no doubt that the Yuan, with its ascendancy, will be the 21st century's world reserve currency." 'Handing over' the country? Officials from Mugabe's Zimbabwe African National Union - Patriotic Front see huge potential in using the Yuan, citing the growth of the Chinese economy under BRICS, which brings together emerging global economic powerhouses Brazil, India, China and South Africa. But not everyone is as upbeat about such prospects. There are concerns that this could mean "handing over" the country to the Chinese, who already have been offered huge mining rights by Mugabe - despite protests from his coalition government partners. The country's finance minister, Tendai Biti, has said that Mugabe was forfeiting state resources to China, whom critics are calling "Africa's new coloniser". Economist Eric Bloch said "it is not practical" for Zimbabwe to adopt the Chinese Yuan. "Zimbabwe won't have any interaction with international markets, as the US dollar remains the standard currency in international trade," Bloch explained. With China increasingly being touted to overtake the US as the world's largest economy, the temptation to embrace all things Chinese has proven too much to resist for poor economies across the globe, contends Tafara Zivanayi, an economics lecturer at the University of Zimbabwe. "There has been false hope given to Chinese economic growth, with many African countries imagining they can transfer this growth to their own economies," Zivanayi said. "Such decisions (to adopt a foreign currency) as usually based on international trade indices and monetary policies of the country where the currency is domiciled. Even if there have been projections that the Chinese economy will surpass the US economy, this won't happen overnight," Zivanayi said. "There are still concerns about Chinese penetration of international, especially low income, markets and creating wealth for itself and not host countries," Zivanayi said. Even traders who have long ridiculed cheap Chinese products and have no grasp of international trade intricacies find themselves offering opinions about the prospects of adopting the Chinese Yuan. "As long as things have worked fine for us using the American dollar, why change that formula?" asked Thabani Moyo, a commuter omnibus driver. His colleagues, who are struggling to handle giving change in the basket of currencies they receive, nodded in agreement. Gono and other opponents of US currency cited this lack of change in coins as a reason why Zimbabwe needed to adopt a single currency or revert to its own, previously useless, dollar. However, during the presentation of the national budget for the 2012 fiscal year, Biti told parliament that Zimbabwe would continue using US currency until the economy stabilised. Not everyone supports the introduction of the Chinese Yuan. "We want real money, not zhing-zhong," taxi driver Jourbet Buthelezi said, referring to the pejorative term Zimbabweans use for sub-standard Chinese goods. A version of this article was first published on Inter Press Service. Source: IPS