RENESIAL Leong’s success in property investment was not something she expected or sought. She went into it because of a need – she was tired of being poor.
“My father was a dedicated teacher and extremely passionate about his career. But we were poor and I was tired of always being in need.
“I went into property investment not with the goal to become rich but to meet a need for myself and my family.”
Leong says she had several options to choose from. “You have to invest to grow your capital. You either go into business, buy stocks and hope for capital gains, or invest in properties.” She took the last route because it was the most stable and tangible.
Leong’s perseverance to delay self-gratification has also helped her succeed in her field of work.
“You have to invest to grow your capital. You either go into business, buy stocks and hope for capital gains, or invest in properties.” —Renesial Leong
“I disciplined myself. While my friends were going to the movies or shopping, I was looking at properties. My mother also gave me a lot of strength to weather that period in my life. I wanted to make life better for her and that also motivated me tremendously.”
Leong has been in property investment for about 20 years now. In her early days, she would buy a property, sell it and reinvest the proceeds in two or three properties. Today, 70% of her property assets are commercial while the rest are landed and high-rise condominiums.
“In some ways, commercial properties are easier to manage. Because the tenant has a business to run, the onus is on him to upkeep and manage the place well. A business will be there for quite some time. It is different for residential properties. The tenant may stay for a year or so,” she says.
Leong’s achievements have enabled her to divide her time evenly between work (six months) and personal development (six months). Her experience in property investments have helped her to think long term and she uses this principle when planning for her personal development.
“Like my father, I put a premium on education. I really enjoy short courses, not just to learn, but also to experience the culture and life in another country,” she says, adding that she intends to keep on learning regardless of age.
Leong has been setting aside several months in a year for this purpose. She will be going to Britain to do a four-month course on psychology and marketing soon. She plans to go to Oxford next year and subsequetly Harvard.
Leong recently released her fourth book titled The Magic of Property Investment. She is currently working on her fifth book with feng shui master Joey Yap.
She says her fifth book will incorporate elements of feng shui as she believes property owners should know more about it.
“Whether one believes in it or not is irrelevant. There may come a time when you want to sell or rent out a place. The buyer or tenant may (subscribe to feng shui) and there goes your customer.”
For example, according to feng shui it is not ideal to have a house located at a T-junction because on-coming cars will shine their headlights into the house. Home owners also have to contend with dust due to passing traffic and lack of privacy.
Leong says it is important that people know when to take a break from work. She says people often go on working without knowing when to slow down.
But while her work life is on a different pace, it is by no means a slow one. She continues to give talks around the world.
Be it European or Asian countries, the principles of property investment remains the same and she wants others to benefit from it.
“I’m glad I spent time with my father and though I am sad that he is no longer with me, I made time for him. And I thank my mother for standing by me when I started on this investment journey when I was in my 20s,” she says.
Note: Property investment consultant Y.M. Leow, who is trained by Renesial Leong, will give a talk on The Ultimate Property Mastery today (2.30pm-4.30pm) and April 28 (2.30pm-4.30pm and 8pm-10pm) at Level 1, Menara PJ, Amcorp Mall, Petaling Jaya. Tel: Liew 9059-5785/017-720-6030
By THEAN LEE CHENG, leecheng@thestar.com.my
Related story:
Book review: The Magic of Property Investment
Sunday, 11 April 2010
Saturday, 10 April 2010
Realities about China’s BoP surpluses
We need to go back to fundamentals to get a better perspectives
RECENTLY, I was in Shanghai to attend a research symposium led by Harvard president Drew Faust. Participants included the university’s best and brightest China-hands as well as luminaries from among China’s elite academia.
Deliberations took on “The Chinese Century?”, “China: Dynamic, Important and Different”, “The Moral Limits of Markets”, “Managing Crises in China” and many more. I came away wiser. Indeed, there is so much happening in China to experience, understand and learn.
Visiting Shanghai and Beijing, you cannot but feel China is under siege for running external payments surpluses. A consequence – argued by politicians and others in the United States and Europe, of China’s rigid exchange rate regime.
The debate is as fierce as it is emotional. Of late, China is strongly criticised for artificially depressing (even manipulating) the value of its currency, renminbi or yuan, to the detriment of its trading partners. Indeed, Nobel Laureate Paul Krugman even contended that China had since taken millions of jobs globally, especially from the United States.
To really understand this it requires going back to fundamentals. What caused China’s recent balance of payments (BoP) surpluses?
Causes of imbalance
For China, BoP surpluses are a relatively recent phenomenon. It used to have persistent deficits in the second half of the 80s. Surpluses only came in the early 90s and rose sharply since 2004 (3.5% of GDP or gross domestic product) to reach a high in 2007 (10.8%). The surplus has now moderated but only modestly.
Whereas, serious US current account deficits started years earlier. The literature on China’s surpluses is long. I came across a perceptive study by two young Beita economists at its China Centre for Economic Research, Huang Yiping and Tao Kunyu, who attributed the main cause to asymmetric market liberalisation.
Over the past 30 years, reform was much too focused on product markets (today, 95% of products are determined by free markets). But markets in factors of production – labour, capital, land, energy and the environment – remain highly distorted, driven by the government’s growth-centered policy strategy to push exports.
These cost distortions are equivalent to production and investment subsidies. Both Chinese and foreigners invest massively because of China’s cheap labour, cheap capital, cheap land and cheap energy:
● Labour: China’s abundant and cheap labour is key to its continuing success in manufacturing exports. But labour costs are distorted because (i) the separation of rural and urban labour leads to labour immobility and low pay for rural migrants; and (ii) an out-of-date social welfare system (including health and pensions) means payrolls should be 35%–40% more.
● Capital: The financial system remains repressed, with regulated interest rates and state control of credit allocation; external capital controls are restrictive on outflows. Moreover, the currency is kept undervalued.
● Land: The state owns land in cities and collectives, outside. No market mechanism exists to price land for industrial use; often prices are set low to promote investment and growth.
● Energy: Key energy prices are state-determined and usually subsidised; and
● Environment: Enforcement is random since growth is a given priority. The cost of pollution is not priced in.
All these mean lower production costs and producer subsidies. They artificially inflate profits, raise investment returns and improve competiveness. Economists Huang and Tao estimated these subsidies to be worth a hefty 7% of GDP.
Capital market distortions are the most troublesome, contributing 40% of total; with labour subsidies, 25%. The upshort: These are structural imbalances. Factor distortions are deep. Any credible policy at re-balancing must tackle the root cause, i.e. distorted incentives for investors, producers and exporters. The undervalued yuan is but one element in the entire jigsaw.
The savings-investment gap is by definition the flip-side of BoP surpluses. Attempts to explain the imbalance in terms of savings and investment behaviour will not be useful. Suffice to recognise the common belief that Chinese households save too much is incorrect.
For 15 years, the household savings rate has been stable at about 30%; nothing unusual in Asia. Its stability suggests that household savings are probably not a key cause of the growing BoP surpluses in recent years. Because corporate savings are rising, households’ income share is on the decline.
The exchange rate option
Exchange rate reform in China is sensitive. For the United States and Europe, the yuan scapegoat is political football, with attendant risks of a trade war. Among economists, there are vast differences about what needs to be done. The common prescription is to let the yuan rise by a certain margin (enough to eliminate the undervaluation), but no one knows precisely what this is. Views vary widely.
In April, Goldman Sachs pointed out that “at the moment, rather oddly, our model suggests that the RMB (yuan) is very close to the price that it should be. This has not always been the case. The model used to suggest the currency was undervalued by about 20% but it has moved by that degree over the past five years.”
However, a 2009 research of Goldstein and Lardy at the US Peterson Institute pointed to a 12%–16% undervaluation. Even if such an adjustment were taken, the West would still prefer it to be larger. Nor will the Chinese do so in one go, given the likely sharp negative impact on China’s desire for exchange stability.
But the weight of recent history looms large. Between the mid-2005 and end-2008, the yuan exchange rate appreciated by 19%, after strengthening by 30% over 10½ years since January 1994. Yet China’s BoP surplus surged during these periods. Despite the revaluation, US-China imports rose 39% during 2005–2008.
Japanese economic stagnation following the US pressure in 1985 didn’t boost confidence – US$1 fell from 240 yen to 160 yen over two years; and then to 80 yen by 1995.
Consequently, growth slowed abruptly forcing more government spending and low interest rates. The real-estate bubble and a year-long slump followed. The 1990s became a decade of lost growth. To this day, the intended aim to fix Japan’s BoP surplus remains just that – an empty aim!
Two lessons have emerged for China: large foreign exchange adjustments cause long-term damage to the economy, and it won’t necessarily help eliminate BoP surpluses.
An often suggested alternative is for China to adopt greater exchange rate flexibility. This looks reasonable enough, but will it resolve China’s BoP imbalances? Empirical studies have shown there is no systematic or reliable relationship between its BoP position and exchange rate flexibility.
Consider this also. Even if a significant yuan revaluation could wipe off China’s BoP surpluses, it still won’t reduce the United States’ BoP deficits. After all, yuan features at only 15% of the US Federal Reserve’s exchange rate basket for the greenback. This simply means a 20% yuan appreciation only translates to a 3% appreciation against the dollar.
Furthermore, the market vacuum left by China would most likely be filled by exports from other low-income countries like India, South Africa, Indonesia and Vietnam, or by even high-tech competitive South Korea and Taiwan. So be careful about what you ask for.
And then, there is the crawling peg or gradual appreciation option. But this creates expectations that can lead to speculation and hot-money inflows. China should have learnt from yuan’s rise in 2007 and 2008. A way out of this dilemma should be familiar: Opt for the compromise it took in July 2005 when China moved off the peg to the US dollar with a material revaluation, which eventually turned out to have little impact on its BoP surplus.
Unlike the United States and Europe, ASEAN plus 4 (India, Japan, South Korea and Taiwan) have remained “cool” on this issue because: (i) China’s continuing growth provides a robust source of demand for the region; (ii) most neighbours have different export profiles from China; indeed, most of their trade complements rather well; (iii) Japan, South Korea and Taiwan have built large manufacturing capacities in China, thus sharing in China’s dynamic exports; and (iv) Asia likes ready access to cheaper manufacturing equipment it badly need, which in turn keeps China’s export machine running.
In the final analysis, many in Asia are likely to mirror any revaluation of the yuan. This is already happening to the stronger Asian currencies as the US dollar weakens.
US unlikely to benefit
Students of economics know better. In the past two years, the United States had trade deficits with over 90 countries. Yet, the United States is pushing for a bilateral solution (“forcing” China to revalue or tax Chinese exports) to essentially a multilateral problem. Both China and the United States have large imbalances with rest of the world. Any credible solution must lie in a multilateral approach. After all, China-US trade accounted for only 12% of the total Chinese trade.
Nevertheless, empirical evidence suggests that a more expensive yuan is unlikely to reduce the US bilateral deficit. A sharp appreciation of the yuan between June 2005 and June 2008 in fact widened the US deficit. Contrary to textbook economics, US imports from China rose by 39%, offsetting increases in China’s US-imports which (even without revaluation) had been increasing since 2002.
Moreover, higher import prices would mean a fall in the purchasing power of US income. But a stronger yuan raises the purchasing power of China’s producers who rely on imported raw materials. Because imports are now cheaper, Chinese exporters can reduce export prices to maintain market share.
Realistically, it is not surprising that the relationship between the exchange rate and BoP balance is at best weak. Weaker still is the relationship between the BoP deficit and US job loss.
Here again, empirical evidence is telling. An old friend, Prof Lawrence Lau of Stanford, pointed out in his 2006 research (and corroborated by others in 2008) that Chinese value-added accounted for only 1/3 to ½ of US imports from China. This reflects the importance of efforts by workers and capital from other countries, including the United States.
It is reported the iPod costs US$150 to produce, of which only US$4 is Chinese value added. Most of the components are made in the United States and other countries. It is put together in China and exported to the United States for the full US$150 as imports from China, adding to the US deficit and exaggerating the US job loss!
In reality, imported iPods support a myriad of US jobs up the value chain. Surely, prohibitive tariffs on iPod imports can’t really hurt China. Why cut your nose to spite your face?
China needs a package deal
It does appear slamming China as a “currency manipulator” does not help the United States’ cause. It will probably backfire. Even assuming the yuan is undervalued, exclusive focus on China’s exchange rate policy is, I think, counter-productive. It will unlikely resolve the United States’ persistent external imbalance.
However, as I see it, there is growing awareness in Beijing that greater exchange rate flexibility and a gradual yuan appreciation has to be an element of any credible package of policy measures for China to seriously liberalise factor markets and remove cost distortions. This could well transit over time to a full-market economy. Any exchange rate adjustment has to be viewed in this context.
Nevertheless, these are necessary but not sufficient. China has to embark also on other reforms, including re-designing macro-economic policies that don’t over-emphasise growth, privatising state-owned enterprises and liberalising financial development, striking a better balance in income distribution from corporate to households, and aggressively promoting the services sector development, especially small and medium-scale enterprises. Such a comprehensive rebalancing exercise can be made to work, but will necessarily take time. It’s steady as she goes.
What Are We To Do by TAN SRI LIN SEE YAN
● Former banker, Dr Lin is a Harvard educated economist and a British Chartered Scientist who now spends time teaching and promoting the public interest. Feedback is most welcome; email:
starbizweek@thestar.com.my.
Deliberations took on “The Chinese Century?”, “China: Dynamic, Important and Different”, “The Moral Limits of Markets”, “Managing Crises in China” and many more. I came away wiser. Indeed, there is so much happening in China to experience, understand and learn.
Visiting Shanghai and Beijing, you cannot but feel China is under siege for running external payments surpluses. A consequence – argued by politicians and others in the United States and Europe, of China’s rigid exchange rate regime.
The debate is as fierce as it is emotional. Of late, China is strongly criticised for artificially depressing (even manipulating) the value of its currency, renminbi or yuan, to the detriment of its trading partners. Indeed, Nobel Laureate Paul Krugman even contended that China had since taken millions of jobs globally, especially from the United States.
To really understand this it requires going back to fundamentals. What caused China’s recent balance of payments (BoP) surpluses?
Causes of imbalance
For China, BoP surpluses are a relatively recent phenomenon. It used to have persistent deficits in the second half of the 80s. Surpluses only came in the early 90s and rose sharply since 2004 (3.5% of GDP or gross domestic product) to reach a high in 2007 (10.8%). The surplus has now moderated but only modestly.
Whereas, serious US current account deficits started years earlier. The literature on China’s surpluses is long. I came across a perceptive study by two young Beita economists at its China Centre for Economic Research, Huang Yiping and Tao Kunyu, who attributed the main cause to asymmetric market liberalisation.
Over the past 30 years, reform was much too focused on product markets (today, 95% of products are determined by free markets). But markets in factors of production – labour, capital, land, energy and the environment – remain highly distorted, driven by the government’s growth-centered policy strategy to push exports.
These cost distortions are equivalent to production and investment subsidies. Both Chinese and foreigners invest massively because of China’s cheap labour, cheap capital, cheap land and cheap energy:
● Labour: China’s abundant and cheap labour is key to its continuing success in manufacturing exports. But labour costs are distorted because (i) the separation of rural and urban labour leads to labour immobility and low pay for rural migrants; and (ii) an out-of-date social welfare system (including health and pensions) means payrolls should be 35%–40% more.
● Capital: The financial system remains repressed, with regulated interest rates and state control of credit allocation; external capital controls are restrictive on outflows. Moreover, the currency is kept undervalued.
● Land: The state owns land in cities and collectives, outside. No market mechanism exists to price land for industrial use; often prices are set low to promote investment and growth.
● Energy: Key energy prices are state-determined and usually subsidised; and
● Environment: Enforcement is random since growth is a given priority. The cost of pollution is not priced in.
All these mean lower production costs and producer subsidies. They artificially inflate profits, raise investment returns and improve competiveness. Economists Huang and Tao estimated these subsidies to be worth a hefty 7% of GDP.
Capital market distortions are the most troublesome, contributing 40% of total; with labour subsidies, 25%. The upshort: These are structural imbalances. Factor distortions are deep. Any credible policy at re-balancing must tackle the root cause, i.e. distorted incentives for investors, producers and exporters. The undervalued yuan is but one element in the entire jigsaw.
The savings-investment gap is by definition the flip-side of BoP surpluses. Attempts to explain the imbalance in terms of savings and investment behaviour will not be useful. Suffice to recognise the common belief that Chinese households save too much is incorrect.
For 15 years, the household savings rate has been stable at about 30%; nothing unusual in Asia. Its stability suggests that household savings are probably not a key cause of the growing BoP surpluses in recent years. Because corporate savings are rising, households’ income share is on the decline.
The exchange rate option
Exchange rate reform in China is sensitive. For the United States and Europe, the yuan scapegoat is political football, with attendant risks of a trade war. Among economists, there are vast differences about what needs to be done. The common prescription is to let the yuan rise by a certain margin (enough to eliminate the undervaluation), but no one knows precisely what this is. Views vary widely.
In April, Goldman Sachs pointed out that “at the moment, rather oddly, our model suggests that the RMB (yuan) is very close to the price that it should be. This has not always been the case. The model used to suggest the currency was undervalued by about 20% but it has moved by that degree over the past five years.”
However, a 2009 research of Goldstein and Lardy at the US Peterson Institute pointed to a 12%–16% undervaluation. Even if such an adjustment were taken, the West would still prefer it to be larger. Nor will the Chinese do so in one go, given the likely sharp negative impact on China’s desire for exchange stability.
But the weight of recent history looms large. Between the mid-2005 and end-2008, the yuan exchange rate appreciated by 19%, after strengthening by 30% over 10½ years since January 1994. Yet China’s BoP surplus surged during these periods. Despite the revaluation, US-China imports rose 39% during 2005–2008.
Japanese economic stagnation following the US pressure in 1985 didn’t boost confidence – US$1 fell from 240 yen to 160 yen over two years; and then to 80 yen by 1995.
Consequently, growth slowed abruptly forcing more government spending and low interest rates. The real-estate bubble and a year-long slump followed. The 1990s became a decade of lost growth. To this day, the intended aim to fix Japan’s BoP surplus remains just that – an empty aim!
Two lessons have emerged for China: large foreign exchange adjustments cause long-term damage to the economy, and it won’t necessarily help eliminate BoP surpluses.
An often suggested alternative is for China to adopt greater exchange rate flexibility. This looks reasonable enough, but will it resolve China’s BoP imbalances? Empirical studies have shown there is no systematic or reliable relationship between its BoP position and exchange rate flexibility.
Consider this also. Even if a significant yuan revaluation could wipe off China’s BoP surpluses, it still won’t reduce the United States’ BoP deficits. After all, yuan features at only 15% of the US Federal Reserve’s exchange rate basket for the greenback. This simply means a 20% yuan appreciation only translates to a 3% appreciation against the dollar.
Furthermore, the market vacuum left by China would most likely be filled by exports from other low-income countries like India, South Africa, Indonesia and Vietnam, or by even high-tech competitive South Korea and Taiwan. So be careful about what you ask for.
And then, there is the crawling peg or gradual appreciation option. But this creates expectations that can lead to speculation and hot-money inflows. China should have learnt from yuan’s rise in 2007 and 2008. A way out of this dilemma should be familiar: Opt for the compromise it took in July 2005 when China moved off the peg to the US dollar with a material revaluation, which eventually turned out to have little impact on its BoP surplus.
Unlike the United States and Europe, ASEAN plus 4 (India, Japan, South Korea and Taiwan) have remained “cool” on this issue because: (i) China’s continuing growth provides a robust source of demand for the region; (ii) most neighbours have different export profiles from China; indeed, most of their trade complements rather well; (iii) Japan, South Korea and Taiwan have built large manufacturing capacities in China, thus sharing in China’s dynamic exports; and (iv) Asia likes ready access to cheaper manufacturing equipment it badly need, which in turn keeps China’s export machine running.
In the final analysis, many in Asia are likely to mirror any revaluation of the yuan. This is already happening to the stronger Asian currencies as the US dollar weakens.
US unlikely to benefit
Students of economics know better. In the past two years, the United States had trade deficits with over 90 countries. Yet, the United States is pushing for a bilateral solution (“forcing” China to revalue or tax Chinese exports) to essentially a multilateral problem. Both China and the United States have large imbalances with rest of the world. Any credible solution must lie in a multilateral approach. After all, China-US trade accounted for only 12% of the total Chinese trade.
Nevertheless, empirical evidence suggests that a more expensive yuan is unlikely to reduce the US bilateral deficit. A sharp appreciation of the yuan between June 2005 and June 2008 in fact widened the US deficit. Contrary to textbook economics, US imports from China rose by 39%, offsetting increases in China’s US-imports which (even without revaluation) had been increasing since 2002.
Moreover, higher import prices would mean a fall in the purchasing power of US income. But a stronger yuan raises the purchasing power of China’s producers who rely on imported raw materials. Because imports are now cheaper, Chinese exporters can reduce export prices to maintain market share.
Realistically, it is not surprising that the relationship between the exchange rate and BoP balance is at best weak. Weaker still is the relationship between the BoP deficit and US job loss.
Here again, empirical evidence is telling. An old friend, Prof Lawrence Lau of Stanford, pointed out in his 2006 research (and corroborated by others in 2008) that Chinese value-added accounted for only 1/3 to ½ of US imports from China. This reflects the importance of efforts by workers and capital from other countries, including the United States.
It is reported the iPod costs US$150 to produce, of which only US$4 is Chinese value added. Most of the components are made in the United States and other countries. It is put together in China and exported to the United States for the full US$150 as imports from China, adding to the US deficit and exaggerating the US job loss!
In reality, imported iPods support a myriad of US jobs up the value chain. Surely, prohibitive tariffs on iPod imports can’t really hurt China. Why cut your nose to spite your face?
China needs a package deal
It does appear slamming China as a “currency manipulator” does not help the United States’ cause. It will probably backfire. Even assuming the yuan is undervalued, exclusive focus on China’s exchange rate policy is, I think, counter-productive. It will unlikely resolve the United States’ persistent external imbalance.
However, as I see it, there is growing awareness in Beijing that greater exchange rate flexibility and a gradual yuan appreciation has to be an element of any credible package of policy measures for China to seriously liberalise factor markets and remove cost distortions. This could well transit over time to a full-market economy. Any exchange rate adjustment has to be viewed in this context.
Nevertheless, these are necessary but not sufficient. China has to embark also on other reforms, including re-designing macro-economic policies that don’t over-emphasise growth, privatising state-owned enterprises and liberalising financial development, striking a better balance in income distribution from corporate to households, and aggressively promoting the services sector development, especially small and medium-scale enterprises. Such a comprehensive rebalancing exercise can be made to work, but will necessarily take time. It’s steady as she goes.
What Are We To Do by TAN SRI LIN SEE YAN
● Former banker, Dr Lin is a Harvard educated economist and a British Chartered Scientist who now spends time teaching and promoting the public interest. Feedback is most welcome; email:
starbizweek@thestar.com.my.
Microfinance IPO sparks debate
Profiting from poverty?
(Reuters) - An initial public offer by India's SKS Microfinance is likely to set the stage for more such offers in the world's largest microlending market, but it has also sparked a debate on the ethics of profiting from the poor.The IPO, a first in India and one of only a handful by microfinance institutions (MFIs) around the world, is expected to raise about $250-$350 million for SKS and its private equity investors.
It has drawn keen interest from countries with major microfinance industries such as Bangladesh, Mexico and South America, as well as the private equity firms who have recently piled into the sector.
But it has also drawn sharp criticism from some MFIs and non-government organizations who do not favor going to capital markets or the strong flows of private equity that have pushed up valuations.
"The job of microfinance is to alleviate poverty, so the question to ask is: who's going to benefit from the IPO?" said Olivia Donnelly, executive director of UK-based Shivia Microfinance, a non-profit firm that focuses on India and Nepal.
"It's OK to do an IPO because you need to scale up, or upgrade your IT systems, but is it correct to make millionaires out of shareholders when your borrowers are so poor?"
Microfinance has been around since the 1970s, but jumped into the spotlight in 2006 when the Nobel Peace Prize went to Bangladesh's Muhammad Yunus and his Grameen Bank, which pioneered giving tiny unsecured loans to the poor to buy cows or sewing machines.
Some Indian MFIs including SKS have switched to a for-profit model and registered as non-banking financial corporations.
MFIs' expanding client base and near-zero defaults have drawn investors ranging from Singapore's Temasek, CLSA Capital and International Financial Corp to private equity firms Sandstone Capital, Unitus and Matrix, which have put money in SKS, Share Microfin, Spandana, Ujjivan and other MFIs.
HIGH VALUATIONS
Advocates say rapid growth and the drying up of traditional sources of capital have driven MFIs to consider other options.
"When we are growing 75 percent year-on-year, the sort of equity we need to maintain 15 percent capital adequacy ratio cannot come from old-fashioned sources such as philanthropists or banks," said Vijay Mahajan, president of lobby group MFI Network.
"So we've had to move to new sources like PE, the capital market and debt instruments. This is something to be celebrated."
Sumir Chadha, managing director of private equity firm Sequoia Capital India, which holds more than a fifth of SKS, said the IPO would improve the reputation of microfinance lenders.
"MFIs tend to be regarded badly. It is very frustrating. This IPO will dramatically increase visibility and bring in greater trust for the entire MFI eco-system," Chadha said.
Earlier this year, India's finance minister said non-banking financial corporations (NBFCs), including some like SKS, can be granted banking licenses, signaling a greater role for MFIs.
But India's central bank has pulled up MFIs for their high interest rates -- about 25-27 percent. That is about double the rate at which they borrow from banks, but still lower than moneylenders.
There is also criticism of high valuations, which private equity has helped push to about 5.9 times book value, or nearly three times the global average, JPMorgan and the World Bank's Consultative Group to Assist the Poor (CGAP) said in a report.
Listed MFIs, including Mexico's Compartamos, have outperformed mainstream banks, but valuations of Indian MFIs are "unsustainably high" and not justified by their recent growth or current and future earnings expectations, it said.
Delinquency levels, kept low because borrowers must repay funds before getting access to more funds, may not be sustainable. Overheating was already evident in some southern Indian states, the report said, and profitability will also decline as operating costs rise as MFIs expand outside the southern states.
Private equity's role in MFIs has also been criticized.
"PEs can bring greater efficiency, development plans and good management, but they can also create tension because investors tend to want to exit in three to five years," Xavier Reille, a co-author of the report, told Reuters from Washington.
"There may be potential rifts because with such high valuations, you obviously want to sell even higher. And the high multiples may discourage fresh capital from coming in," he said.
SOCIAL MISSION
SKS has drawn investors including Sequoia, Kismet Capital, Unitus, venture capitalist Vinod Khosla and Infosys Technologies founder N.R. Narayana Murthy.
Vikram Akula, a former McKinsey consultant, has been named one of the most influential people by Time magazine, and SKS, which he first founded in 1997 as a non-profit, is today India's largest MFI with about 5.5 million clients.
But activists and NGOs see no reason for cheer.
"MFIs are ignoring their social mission. They have a duty to educate their clients and not lend money for buying a TV or pay dowry just to add to their loan books," said Shivia's Donnelly.
"It's the wrong path to take. It's sub-prime all over again."
There are few regulations and no accountability, they say.
"MFIs talk about their valuations, but no one talks about social performance: are we really lifting people out of poverty?" said Royston Braganza, chief executive of Grameen Capital India.
With about half a dozen big Indian MFIs contemplating IPOs, SKS' offering will be a milestone, the JPMorgan/CGAP report said, and could help advance a stalled microfinance bill in India.
"Depending on the outcome, it is quite probable that the spotlight on Indian microcredit will intensify, while triggering renewed discussion around MFIs' profitability and social impact."
(Editing by Ranjit Gangadharan and Lincoln Feast)
Online – speed rules
CONSUMERS demand Internet services but generally they do not care how it is delivered.
The technology can be GSM, WiMax, CDMA, WCDMA or HSDPA, but what they want is a steady and reliant broadband connection without any interruption, while at the same time, one that comes with some speed for downloads. Most Internet users would be content with that.
While none of those around me uses dial-up or narrowband anymore, just flashback to the old school connection, 56kbps dial-up which is noisy during dialling. It can be a very frustrating experience as one might need to make several attempts to get connected.
Broadband, however, is generally all about the synergy displayed by a modem and a high speed copper or cable line to realise faster Internet access speeds.
An industry player says another advantage of the advanced broadband service over the older dial-up service is its splitting of the voice and data (phone and Internet) services using a splitter to enable the consumer to use both the services at the same time.
“Above all, broadband Internet connections give faster delivery starting from 256kbps, which is ideal for downloading heavy files such as music and video and online games. On the other hand, dial-up connections are sufficient for just surfing the Internet or checking emails,” he says.
Using the highway as an analogy, he says, narrowband is like a one-lane highway whereby only one car can travel at a time. However, with broadband, it is like having a highway with four or six lanes, allowing more traffic to pass concurrently.
Today, we have far more newer technology that equips us with faster and better Internet access than a decade ago. Consumers have even greater choices to access the Internet that prompted service providers to compete against each other to capture more market share. All local service providers are having one promotion after another, to attract users.
There are a few types of broadband connections available, some are faster than others, and some are more expensive.
There are various technologies behind broadband access. Asymmetric Digital Subscriber Line (ADSL), Symmetric Digital Subscriber Line (SDSL), cable and wireless are some of the of broadband connection types available in the country. Other new technologies such as Telekom Malaysia Bhd’s (TM) UniFi fibre-optic broadband and Time dotCom’s Time Fibre Broadband, are now adding to consumer’s choice for higher-speed Internet connections.
TM group CEO Datuk Zamzamzairani Mohd Isa says technology will keep advancing and the latest technology is fibre-optics. He adds that copper cable will still be used in other places.
“Basically, it provides us with better Internet connection especially with the high speed broadband as well as better user experience,” an industry player says when asked what all these technologies meant to us.
“They (consumers) don’t care if it’s Maxis Bhd’s wireless broadband, Celcom Axiata Bhd’s broadband, DiGi.Com Bhd’s broadband, PI Wimax or TM’s UniFi, only that it is available and affordable,” he adds.
He says the average Internet users do not care whether it is only 1Mbps, and not 20Mbps, or that the latency is 250 milliseconds instead of 60, unless they do a lot of heavy downloads.
The current fastest available broadband speed for the general public offered by TM is 4Mbps.
“The 4Mbps is still high speed Internet in my book, and most Internet users would be content with that. However, consumers may take a look at the latest 5Mbps basic package for UniFi. The whole package does look very attractive to a lot of users who have been subscribing to the 4Mbps or 2Mbps packages,” the analyst says.
Currently, all 3G players like Maxis, Celcom, DiGi and U Mobile Sdn Bhd offer affordable broadband services starting from RM38 a month. The rate can be as low as RM6 on a daily basis.
An industry player says wireless broadband coverage varies by region. “Just like phone coverage, it will be weaker or even unavailable if you’re accessing Internet in rural areas and in underground locations.”
Another industry player says even if you have the most advanced modem or if you are living in an area where broadband coverage is at its peak, it is unlikely that you will receive the maximum speed advertised by your provider.
“The distance from your house to the mobile pole, trees, buildings and other structures between your location and the pole, as well as the number of 3G network users within your neighbourhood will affect the speed of your connection,’ he explains.
Apart from the mobile players, WiMax providers like Packet One Networks (M) Sdn Bhd (P1), REDtone International Bhdand Asiaspace Sdn Bhd offer wireless broadband services.
Currently, P1 has the widest WiMax rollout nationwide, while REDtone has services in parts of Kota Kinabalu and Kuching. Asiaspace has coverage of 70 to 80 locations in the Klang Valley.
YTL Communications Bhd is planning for a commercial nationwide rollout of a 4G WiMax wireless service in July.
Analysts says the more popular option among the youth are wireless broadband as they could move about and yet stay connected.
An analyst says the true battle isn’t between the competing existing connection type, but between wireless and wired broadband. He wonders if TM will provide free dial-up service to the nation given that the telco is now moving to a higher speed.
“The performance and capabilities of new technology will only get better over time, and will represent a direct competitive threat to the existing broadband services.
“People will make a choice, just like today when people are disconnecting their wired lines for voice opting for mobile phone,” he says, adding that all service providers need to beef up their services and coverage given the extensive choice consumers have now.
Zamzamzairani believes that it is vital to educate the general public of the benefits of the Internet.
“Internet is a window to make the world smaller,” he says.
With today’s modern world where businesses rely on the Internet for everyday communications and worldwide access, broadband and other high-speed technologies present consumers and businesses an expedient way to hook up to the Internet.
By LEONG HUNG YEE
The technology can be GSM, WiMax, CDMA, WCDMA or HSDPA, but what they want is a steady and reliant broadband connection without any interruption, while at the same time, one that comes with some speed for downloads. Most Internet users would be content with that.
While none of those around me uses dial-up or narrowband anymore, just flashback to the old school connection, 56kbps dial-up which is noisy during dialling. It can be a very frustrating experience as one might need to make several attempts to get connected.
Broadband, however, is generally all about the synergy displayed by a modem and a high speed copper or cable line to realise faster Internet access speeds.
An industry player says another advantage of the advanced broadband service over the older dial-up service is its splitting of the voice and data (phone and Internet) services using a splitter to enable the consumer to use both the services at the same time.
“Above all, broadband Internet connections give faster delivery starting from 256kbps, which is ideal for downloading heavy files such as music and video and online games. On the other hand, dial-up connections are sufficient for just surfing the Internet or checking emails,” he says.
Using the highway as an analogy, he says, narrowband is like a one-lane highway whereby only one car can travel at a time. However, with broadband, it is like having a highway with four or six lanes, allowing more traffic to pass concurrently.
Today, we have far more newer technology that equips us with faster and better Internet access than a decade ago. Consumers have even greater choices to access the Internet that prompted service providers to compete against each other to capture more market share. All local service providers are having one promotion after another, to attract users.
There are a few types of broadband connections available, some are faster than others, and some are more expensive.
There are various technologies behind broadband access. Asymmetric Digital Subscriber Line (ADSL), Symmetric Digital Subscriber Line (SDSL), cable and wireless are some of the of broadband connection types available in the country. Other new technologies such as Telekom Malaysia Bhd’s (TM) UniFi fibre-optic broadband and Time dotCom’s Time Fibre Broadband, are now adding to consumer’s choice for higher-speed Internet connections.
TM group CEO Datuk Zamzamzairani Mohd Isa says technology will keep advancing and the latest technology is fibre-optics. He adds that copper cable will still be used in other places.
“Basically, it provides us with better Internet connection especially with the high speed broadband as well as better user experience,” an industry player says when asked what all these technologies meant to us.
“They (consumers) don’t care if it’s Maxis Bhd’s wireless broadband, Celcom Axiata Bhd’s broadband, DiGi.Com Bhd’s broadband, PI Wimax or TM’s UniFi, only that it is available and affordable,” he adds.
He says the average Internet users do not care whether it is only 1Mbps, and not 20Mbps, or that the latency is 250 milliseconds instead of 60, unless they do a lot of heavy downloads.
The current fastest available broadband speed for the general public offered by TM is 4Mbps.
“The 4Mbps is still high speed Internet in my book, and most Internet users would be content with that. However, consumers may take a look at the latest 5Mbps basic package for UniFi. The whole package does look very attractive to a lot of users who have been subscribing to the 4Mbps or 2Mbps packages,” the analyst says.
Currently, all 3G players like Maxis, Celcom, DiGi and U Mobile Sdn Bhd offer affordable broadband services starting from RM38 a month. The rate can be as low as RM6 on a daily basis.
An industry player says wireless broadband coverage varies by region. “Just like phone coverage, it will be weaker or even unavailable if you’re accessing Internet in rural areas and in underground locations.”
Another industry player says even if you have the most advanced modem or if you are living in an area where broadband coverage is at its peak, it is unlikely that you will receive the maximum speed advertised by your provider.
“The distance from your house to the mobile pole, trees, buildings and other structures between your location and the pole, as well as the number of 3G network users within your neighbourhood will affect the speed of your connection,’ he explains.
Apart from the mobile players, WiMax providers like Packet One Networks (M) Sdn Bhd (P1), REDtone International Bhdand Asiaspace Sdn Bhd offer wireless broadband services.
Currently, P1 has the widest WiMax rollout nationwide, while REDtone has services in parts of Kota Kinabalu and Kuching. Asiaspace has coverage of 70 to 80 locations in the Klang Valley.
YTL Communications Bhd is planning for a commercial nationwide rollout of a 4G WiMax wireless service in July.
Analysts says the more popular option among the youth are wireless broadband as they could move about and yet stay connected.
An analyst says the true battle isn’t between the competing existing connection type, but between wireless and wired broadband. He wonders if TM will provide free dial-up service to the nation given that the telco is now moving to a higher speed.
“The performance and capabilities of new technology will only get better over time, and will represent a direct competitive threat to the existing broadband services.
“People will make a choice, just like today when people are disconnecting their wired lines for voice opting for mobile phone,” he says, adding that all service providers need to beef up their services and coverage given the extensive choice consumers have now.
Zamzamzairani believes that it is vital to educate the general public of the benefits of the Internet.
“Internet is a window to make the world smaller,” he says.
With today’s modern world where businesses rely on the Internet for everyday communications and worldwide access, broadband and other high-speed technologies present consumers and businesses an expedient way to hook up to the Internet.
By LEONG HUNG YEE
Triple play on a single ticket
Voice, video and data convergence has finally arrived in Malaysia
FINALLY, all that convergence is here. There will be more as technology moves along. Malaysia has finally caught on the global trend and joined a handful of countries on a platform that has been much hyped and talked about, where voice, video and data converge.Last month, Telekom Malaysia Bhd (TM) made its foray into the triple play scene with its offering known as UniFi. This makes it the first “official” triple-play player in the country.
A triple-play network is one in which voice, video and data are all provided in a single access subscription, where the house telephone provides the voice, and when connected to the computer, serves as a TV and at the same time, provides the data. In short, a three-in-one.
Globally, telecommunication companies have been moving into triple play typically to mitigate the flat revenues from fixed-line networks and to retain customers as competition heats up.
In 2003, the Hong Kong Broadband Network, the broadband subsidiary of Hong Kong telecoms upstart City Telecom launched its pay-TV service marking the completion of its planned triple-play strategy of offering voice, video and broadband Internet access services.
In Singapore, Singapore Telecommunications Ltd (Singtel) opted for triple play in January 2007.
TM recently signed agreements with 20 content providers to offer content for its soon-to-be launched IPTV or Internet protocol TV, which is basically TV on the Internet.
IPTV’s strength is its ability to offer services with high availability, quality and interactivity, says TM group CEO Datuk Zamzamzairani Mohd Isa in a recent interview with StarBizWeek.
A quick recap. UniFi’s recently unveiled packages are priced at RM149, RM199 and RM249 per month and come with high-speed broadband, IPTV, free voice calls and some other offerings.
But because the packages cannot come “unbundled”, meaning consumers have to take what is offered without an a la carte option, some analysts have said that they are expecting limited take-up.
But that remains to be seen.
Meanwhile, while TM is the official incumbent, some of the other celcos are also well positioned to offer triple play services.
For example, Maxis Communications Bhd, the country’s largest celco by subscriber base, currently offers Maxis TV via its tie- up with Astro TV. It has the makings of a triple play service provider.
At Celcom Axiata Bhd, the potential to offer triple play is there by virtue of its link to sister company TM.
Axiata president and CEO Datuk Seri Jamaludin Ibrahim, commenting on triple play, says: “The jury’s still out on its potential.
Currently, the potential is still much focused on mobile broadband. TV is not critical, but TV content via mobile 3G is,” he says.
Newest 3G kid on the block, U Mobile Sdn Bhd which is controlled by tycoon Tan Sri Vincent Tan, is another potential triple play candidate, given that Tan had once owned a TV station via his U Mobile (formerly MiTV Corp Sdn Bhd),
YTL Corp Bhd managing director Tan Sri Francis Yeoh says its subsidiary YTL Communications is on track for the rollout of its 4G services, by year-end.
“We are beta-testing it now,” Yeoh tells StarBizWeek.
Packet One Networks (Malaysia) Sdn Bhd recently said it would use its newly-obtained RM50mil loan to further roll out its 4G network infrastructure nationwide
The 4G network is broadband connection with speed of up to one gigabyte per second and will enable speedier access for downloads and so on.
Such networks will enhance the advent of triple play services.
TM’s Zamzamzairani says he believes “a lot more companies” can be its competitor due to the rapid changes in the broadband ecosystem and technology sphere.
“I think a lot of people can be our competitor now ... because of the convergence; the entire industry is an ecosystem,” he says.
Analysts, meanwhile, are all-out for encouraging triple play in Malaysia.
“The future is in triple play, the prospects of pure play providers appear limited as customers become more sophisticated and price-discerning, ” says one senior telco analyst.
In a September 2009 industry report released by India’s Aarkstore Enterprises, a global market research provider, it is forecast that there would be 64 million IPTV subscribers by the end of 2012, an almost six-fold increase over 2007 levels, a reflection of the growing sophisticated trend globally. Zamzamzairani says the level of content in Malaysia is evolving.
“There won’t be an end game. We’ll be bringing in more interactive content. So long as Hollywood and Bollywood still spin, we’ll add more content.
“One of the main challenges is to make sure consumers get what we promised. Customer expectations are changing fast and they are becoming very sophisticated,” adds Zamzamzairani.
For now, consumers should sit back, relax and wait for the competition to create a lot more offerings.
A triple-play network is one in which voice, video and data are all provided in a single access subscription, where the house telephone provides the voice, and when connected to the computer, serves as a TV and at the same time, provides the data. In short, a three-in-one.
Globally, telecommunication companies have been moving into triple play typically to mitigate the flat revenues from fixed-line networks and to retain customers as competition heats up.
In 2003, the Hong Kong Broadband Network, the broadband subsidiary of Hong Kong telecoms upstart City Telecom launched its pay-TV service marking the completion of its planned triple-play strategy of offering voice, video and broadband Internet access services.
In Singapore, Singapore Telecommunications Ltd (Singtel) opted for triple play in January 2007.
TM recently signed agreements with 20 content providers to offer content for its soon-to-be launched IPTV or Internet protocol TV, which is basically TV on the Internet.
IPTV’s strength is its ability to offer services with high availability, quality and interactivity, says TM group CEO Datuk Zamzamzairani Mohd Isa in a recent interview with StarBizWeek.
A quick recap. UniFi’s recently unveiled packages are priced at RM149, RM199 and RM249 per month and come with high-speed broadband, IPTV, free voice calls and some other offerings.
But because the packages cannot come “unbundled”, meaning consumers have to take what is offered without an a la carte option, some analysts have said that they are expecting limited take-up.
But that remains to be seen.
Meanwhile, while TM is the official incumbent, some of the other celcos are also well positioned to offer triple play services.
For example, Maxis Communications Bhd, the country’s largest celco by subscriber base, currently offers Maxis TV via its tie- up with Astro TV. It has the makings of a triple play service provider.
At Celcom Axiata Bhd, the potential to offer triple play is there by virtue of its link to sister company TM.
Axiata president and CEO Datuk Seri Jamaludin Ibrahim, commenting on triple play, says: “The jury’s still out on its potential.
Currently, the potential is still much focused on mobile broadband. TV is not critical, but TV content via mobile 3G is,” he says.
Newest 3G kid on the block, U Mobile Sdn Bhd which is controlled by tycoon Tan Sri Vincent Tan, is another potential triple play candidate, given that Tan had once owned a TV station via his U Mobile (formerly MiTV Corp Sdn Bhd),
YTL Corp Bhd managing director Tan Sri Francis Yeoh says its subsidiary YTL Communications is on track for the rollout of its 4G services, by year-end.
“We are beta-testing it now,” Yeoh tells StarBizWeek.
Packet One Networks (Malaysia) Sdn Bhd recently said it would use its newly-obtained RM50mil loan to further roll out its 4G network infrastructure nationwide
The 4G network is broadband connection with speed of up to one gigabyte per second and will enable speedier access for downloads and so on.
Such networks will enhance the advent of triple play services.
TM’s Zamzamzairani says he believes “a lot more companies” can be its competitor due to the rapid changes in the broadband ecosystem and technology sphere.
“I think a lot of people can be our competitor now ... because of the convergence; the entire industry is an ecosystem,” he says.
Analysts, meanwhile, are all-out for encouraging triple play in Malaysia.
“The future is in triple play, the prospects of pure play providers appear limited as customers become more sophisticated and price-discerning, ” says one senior telco analyst.
In a September 2009 industry report released by India’s Aarkstore Enterprises, a global market research provider, it is forecast that there would be 64 million IPTV subscribers by the end of 2012, an almost six-fold increase over 2007 levels, a reflection of the growing sophisticated trend globally. Zamzamzairani says the level of content in Malaysia is evolving.
“There won’t be an end game. We’ll be bringing in more interactive content. So long as Hollywood and Bollywood still spin, we’ll add more content.
“One of the main challenges is to make sure consumers get what we promised. Customer expectations are changing fast and they are becoming very sophisticated,” adds Zamzamzairani.
For now, consumers should sit back, relax and wait for the competition to create a lot more offerings.
By YVONNE TAN
Connectivity to speed up national growth
IS your broadband service really as fast as advertised? In the United States, the Federal Communications Commission (FCC), equivalent to our industry regulator the Malaysian Communications and Multimedia Commission (MCMC), has a new tool that allows users to test the download and upload speeds of their broadband connections, which is then reported back to the FCC.
This is for both landline-based broadband connections and those with smartphones, theiPhone and Androids. A week after FCC announced the new gadget, about 150,000 people in the United States had stories to tell how their connections were doing. The purpose of the tool and the project to consolidate the information was to educate consumers about whether they are getting the service they are paying for, and hopefully to highlight areas where advertised speeds may fall short, the FCC said.
This is a process of transparency and a move to eliminate confusion, and since it is real time information, it is a channel for the regulator to track the services across the country.
Broadband speed tests have been around for a long time. Back here in Malaysia, Internet speeds may not be as promised.
And so let’s be honest. Speed, pricing and quality are the three big issues affecting our broadband industry.
Nonethessless, we have recently moved up a few notches with the entry of high speed broadband (HSBB) services. Should we then take it that the era of short-changing users, choked networks and users suffering downtime is a thing of the past?
Enter fast speed broadband
A dream pipe that can carry more data, voice and images that was conceptualised a few years ago is now firmly planted in the ground. Unfortunately only a small pocket of users can access it for now. This new pipe or fibre-to-the-home (FTTH) connection, which carries HSBB services, is able to deliver fast down- and uplink connectivity with data speeds from 1Megabits per second (Mbps) to 50 Mbps. In a blink of an eye you can download heavy files and even a movie!
The landmark launch of UniFi was on March 24.
»This is the first time we can have triple play in this country. The transformation process for TM has begun «TM’S DATUK ZAMZAMZAIRANI MOHD ISA The connectivity is via fibre-optics and that marks the beginning of the end of the copper era. The pipe opens new opportunities for new and old players, and expands revenue streams for existing players. The once-flat revenue of fixed line voice business is expected to change with fast speed broadband.
With Malaysia trying to turn into a k-economy, the pipe is vital. The business sector gets a lift with faster connectivity and that makes Malaysia more competitive.
In essence, this dream pipe heralds a new era of fast connectivity and a change in the broadband landscape. With that, comes a host of challenges and opportunities, which excite Telekom Malaysia Bhd group CEO Datuk Zamzamzairani Mohd Isa. For one, he can expect fixed line broadband revenues to rise and TM gets entry into new areas of business which it could have only dreamed about a decade ago.
“This is the first time we can have triple play in this country,’’ he says. Triple play is essentially a single access subscription that provides video, voice and data.
For him the “transformation process for TM’’ has begun. But it is not just TM. The transformation gives the country the needed push in speeds from 1-50Mbps.
When UniFi roll-out is complete, Zamzamzairani says TM will have a single IP (Internet protocol) platform that is more efficient, capable for delivery of a variety of new services and fast speeds. UniFi is TM’s branding for its HSBB.
Even the Government wanted a share of the pie and committed the RM2.4bil investment in UniFi. Thus far, it has put in RM990mil into the project and TM RM1.9bil.
TM’s portion of the UniFi is RM8.9bil, bringing the total cost to RM11.3bil, where 1.3 million premises passed gets the fast access over three years ending 2011. TM says it already has 900 customers on its UniFi network.
But let’s not forget that TM’s rival, Time dotCom Bhd (TDC) was the first to roll out FTTH in Mont Kiara weeks before UniFi was launched. It is only one area but TM’s UniFi is available in four areas – Bangsar, Taman Tun Dr Ismail, Subang Jaya and Shah Alam – in the Klang Valley.
TM and TDC are not the only two players in the game. Over on the east coast, Kuantan seems to be a favourite spot for Jalur Lebar Nasional Sdn Bhd (Jalenas), which is rolling FTTH too. Jalenas claims to be the first to offer an open-access FTTH HSBB project in Putra Square. The truth is, they should not stay in Kuantan forever. They should move to the Klang Valley and other areas so that there is big time competition in the fast speed broadband sector and to give consumers a choice.
Co-existence of fixed and wireless
Competition exists but there is room for both mobile and fixed broadband players as the market is big enough for both even though TDC CEO Afzal Abdul Rahim is of the view that novelty of mobility is gone and essentially margins for mobile will start to come down while that of fixed broadband will rise.
“There is clear division of what fixed and wireless can do and as fixed become more ubiquitous, wireless will become less prevalent. There will be clear distinguishing factors between the two,’’ Afzal says.
»For Celcom, the game is about strategising its product offering, pricing, coverage and distribution« AXIATA GROUP’S DATUK SERI JAMALUDIN IBRAHIM However, DiGi.Com Bhd outgoing CEO Johan Dennelind believes that mass migration to the Internet will begin with the smartphones, that’s the first stop before people buy computers and get into the fixed business, so there is a big enough market for wireless connectivity for now. As people get used to speed, the migration to fast speed will escalate.
“Mobile and fixed broadband should co-exist since consumers have different user behaviour,’’ Dennelind says.
The truth is that fast speed broadband is still in its early stages in the country and only a small percentage of the population has been able to taste fast speed so smartphones are seen to be the first tool for many to the World Wide Web.
Dennelind believes his company has got the right approach to broadband and theiPhone that it just began selling is going to increase revenue the next three years.
Maxis Communications Bhd is also into the fixed line and wireless broadband game. Its ambition is to dislodge Celcom Axiata Bhd from the top spot in wireless broadband in a few years.
“We are clear that we want to be the number one in broadband.’’ Maxis CEO Sandip Das said recently. The company is investing RM700mil to expand its nation-wide broadband coverage to hit nearly 80%.
But Axiata is not going to give up without a fight.
Axiata Group Bhd president & group CEO Datuk Seri Jamaludin Ibrahim said “for Celcom, the game is about strategising its product offering, pricing, coverage and distribution. We will continue to improve on the quality and coverage of our services, and ensure consistency. We are also working with some parties on bundling our products.’’
The only other cellular player with a 3G spectum that can offer broadband, U Mobile Sdn Bhd, is still trying to get its direction right.
But the game does not stop at 3G. There are four WiMAX players also offering broadband connectivity. Packet One Networks (M) Sdn Bhd has the widest coverage of the three for now. The other three are RedTone International Bhd, Asiaspace Sdn Bhd and YTL Communications Bhd. YTL aims to take the market by storm when it makes its debut with WiMAX 4G in July, but let’s wait for the time.
To wire up Malaysia
Going forward in the wireless and fixed broadband war, Maxis chief operating officer Jean-Pascal Van Overbeke says pricing in the short term will remain aggressive as multiple players try to gain a foothold.
“Maxis is focused on balancing price and investment considerations in its broadband pricing strategy so that ultimately consumers enjoy high quality experiences,’’ he said. He adds that investing in network infrastructure is key and those companies with stamina and commitment to continuously invest will succeed in the medium to long term.
There were a total of 30.3 million mobile subscribers in the country as at the end of 2009.
Malaysia has fast speed broadband and FTTH in some areas but what is the gameplan for the rest of the nation? Surely, people in the rural areas must have the same services as those in the urban centres. This is where the National Broadband Initiative (NBI) come in and it was launched the same day when UniFi came online. The NBI plan is to use up the RM4.6bil of the universal service provision (USP) fund which has been sitting in MCMC’s coffers for a long time to wire up parts of the country.
The NBI is in two parts – the first is HSBB, which raises speed to 10Mbps and beyond and covers high growth areas. Next is the broadband for the general population (BBGP), with speeds of less than 10Mbps.
To implement NBI, the areas are zoned into three, depending on population densities, economic activities and existing telecoms infrastructure. Zone 1 is HSBB. Zone 2 covers urban and semi-urban areas. Zone 3 is meant for rural areas and this is where the RM4.6bil will go into, according to Information, Communications and Culture Minister Datuk Seri Utama Dr Rais Yatim.
The MCMC has identified 462 under-served areas in the country for the roll out of telephony, broadband and cellular access. The funds have to be managed properly to avoid possible pilferage and leakages. The MCMC claims it has been transparent in its management of the USP fund.
Rais says there is a new approach to the USP to include services provided for the disabled, women under rehabilitation and low cost residential areas and underpriviledged children.
“It is our social responsibility to ensure that everyone, be they rich or poor, young or old, is empowered with basic telephony and Internet services in any part of the country,’’ Rais says.
The target is to reach 50% broadband penetration by year-end; the country achieved 33.2% or 2.07 million homes by the end of last year.
Rais says “we are on track.’’
By B.K. SIDHU bksidhu@thestar.com.my
Related Stories:
The broadband catalyst
Voice, video and data convergence has finally arrived in Malaysia
Broadband – new way to communicate
Online – speed rules
TM has 900 UniFi customers
This is for both landline-based broadband connections and those with smartphones, the
This is a process of transparency and a move to eliminate confusion, and since it is real time information, it is a channel for the regulator to track the services across the country.
Broadband speed tests have been around for a long time. Back here in Malaysia, Internet speeds may not be as promised.
And so let’s be honest. Speed, pricing and quality are the three big issues affecting our broadband industry.
Nonethessless, we have recently moved up a few notches with the entry of high speed broadband (HSBB) services. Should we then take it that the era of short-changing users, choked networks and users suffering downtime is a thing of the past?
Enter fast speed broadband
A dream pipe that can carry more data, voice and images that was conceptualised a few years ago is now firmly planted in the ground. Unfortunately only a small pocket of users can access it for now. This new pipe or fibre-to-the-home (FTTH) connection, which carries HSBB services, is able to deliver fast down- and uplink connectivity with data speeds from 1Megabits per second (Mbps) to 50 Mbps. In a blink of an eye you can download heavy files and even a movie!
The landmark launch of UniFi was on March 24.
»This is the first time we can have triple play in this country. The transformation process for TM has begun «TM’S DATUK ZAMZAMZAIRANI MOHD ISAWith Malaysia trying to turn into a k-economy, the pipe is vital. The business sector gets a lift with faster connectivity and that makes Malaysia more competitive.
In essence, this dream pipe heralds a new era of fast connectivity and a change in the broadband landscape. With that, comes a host of challenges and opportunities, which excite Telekom Malaysia Bhd group CEO Datuk Zamzamzairani Mohd Isa. For one, he can expect fixed line broadband revenues to rise and TM gets entry into new areas of business which it could have only dreamed about a decade ago.
“This is the first time we can have triple play in this country,’’ he says. Triple play is essentially a single access subscription that provides video, voice and data.
For him the “transformation process for TM’’ has begun. But it is not just TM. The transformation gives the country the needed push in speeds from 1-50Mbps.
When UniFi roll-out is complete, Zamzamzairani says TM will have a single IP (Internet protocol) platform that is more efficient, capable for delivery of a variety of new services and fast speeds. UniFi is TM’s branding for its HSBB.
Even the Government wanted a share of the pie and committed the RM2.4bil investment in UniFi. Thus far, it has put in RM990mil into the project and TM RM1.9bil.
TM’s portion of the UniFi is RM8.9bil, bringing the total cost to RM11.3bil, where 1.3 million premises passed gets the fast access over three years ending 2011. TM says it already has 900 customers on its UniFi network.
But let’s not forget that TM’s rival, Time dotCom Bhd (TDC) was the first to roll out FTTH in Mont Kiara weeks before UniFi was launched. It is only one area but TM’s UniFi is available in four areas – Bangsar, Taman Tun Dr Ismail, Subang Jaya and Shah Alam – in the Klang Valley.
TM and TDC are not the only two players in the game. Over on the east coast, Kuantan seems to be a favourite spot for Jalur Lebar Nasional Sdn Bhd (Jalenas), which is rolling FTTH too. Jalenas claims to be the first to offer an open-access FTTH HSBB project in Putra Square. The truth is, they should not stay in Kuantan forever. They should move to the Klang Valley and other areas so that there is big time competition in the fast speed broadband sector and to give consumers a choice.
Co-existence of fixed and wireless
Competition exists but there is room for both mobile and fixed broadband players as the market is big enough for both even though TDC CEO Afzal Abdul Rahim is of the view that novelty of mobility is gone and essentially margins for mobile will start to come down while that of fixed broadband will rise.
“There is clear division of what fixed and wireless can do and as fixed become more ubiquitous, wireless will become less prevalent. There will be clear distinguishing factors between the two,’’ Afzal says.
»For Celcom, the game is about strategising its product offering, pricing, coverage and distribution« AXIATA GROUP’S DATUK SERI JAMALUDIN IBRAHIM“Mobile and fixed broadband should co-exist since consumers have different user behaviour,’’ Dennelind says.
The truth is that fast speed broadband is still in its early stages in the country and only a small percentage of the population has been able to taste fast speed so smartphones are seen to be the first tool for many to the World Wide Web.
Dennelind believes his company has got the right approach to broadband and the
Maxis Communications Bhd is also into the fixed line and wireless broadband game. Its ambition is to dislodge Celcom Axiata Bhd from the top spot in wireless broadband in a few years.
“We are clear that we want to be the number one in broadband.’’ Maxis CEO Sandip Das said recently. The company is investing RM700mil to expand its nation-wide broadband coverage to hit nearly 80%.
But Axiata is not going to give up without a fight.
Axiata Group Bhd president & group CEO Datuk Seri Jamaludin Ibrahim said “for Celcom, the game is about strategising its product offering, pricing, coverage and distribution. We will continue to improve on the quality and coverage of our services, and ensure consistency. We are also working with some parties on bundling our products.’’
The only other cellular player with a 3G spectum that can offer broadband, U Mobile Sdn Bhd, is still trying to get its direction right.
But the game does not stop at 3G. There are four WiMAX players also offering broadband connectivity. Packet One Networks (M) Sdn Bhd has the widest coverage of the three for now. The other three are RedTone International Bhd, Asiaspace Sdn Bhd and YTL Communications Bhd. YTL aims to take the market by storm when it makes its debut with WiMAX 4G in July, but let’s wait for the time.
To wire up Malaysia
Going forward in the wireless and fixed broadband war, Maxis chief operating officer Jean-Pascal Van Overbeke says pricing in the short term will remain aggressive as multiple players try to gain a foothold.
“Maxis is focused on balancing price and investment considerations in its broadband pricing strategy so that ultimately consumers enjoy high quality experiences,’’ he said. He adds that investing in network infrastructure is key and those companies with stamina and commitment to continuously invest will succeed in the medium to long term.
There were a total of 30.3 million mobile subscribers in the country as at the end of 2009.
Malaysia has fast speed broadband and FTTH in some areas but what is the gameplan for the rest of the nation? Surely, people in the rural areas must have the same services as those in the urban centres. This is where the National Broadband Initiative (NBI) come in and it was launched the same day when UniFi came online. The NBI plan is to use up the RM4.6bil of the universal service provision (USP) fund which has been sitting in MCMC’s coffers for a long time to wire up parts of the country.
The NBI is in two parts – the first is HSBB, which raises speed to 10Mbps and beyond and covers high growth areas. Next is the broadband for the general population (BBGP), with speeds of less than 10Mbps.
To implement NBI, the areas are zoned into three, depending on population densities, economic activities and existing telecoms infrastructure. Zone 1 is HSBB. Zone 2 covers urban and semi-urban areas. Zone 3 is meant for rural areas and this is where the RM4.6bil will go into, according to Information, Communications and Culture Minister Datuk Seri Utama Dr Rais Yatim.
The MCMC has identified 462 under-served areas in the country for the roll out of telephony, broadband and cellular access. The funds have to be managed properly to avoid possible pilferage and leakages. The MCMC claims it has been transparent in its management of the USP fund.
Rais says there is a new approach to the USP to include services provided for the disabled, women under rehabilitation and low cost residential areas and underpriviledged children.
“It is our social responsibility to ensure that everyone, be they rich or poor, young or old, is empowered with basic telephony and Internet services in any part of the country,’’ Rais says.
The target is to reach 50% broadband penetration by year-end; the country achieved 33.2% or 2.07 million homes by the end of last year.
Rais says “we are on track.’’
By B.K. SIDHU bksidhu@thestar.com.my
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US and Russian nuclear arsenals
US President Barack Obama and his Russian counterpart, Dmitry Medvedev, signed a landmark nuclear arms treaty in the Czech capital, Prague on Thursday.
The treaty commits the former Cold War enemies to each reduce the number of deployed strategic warheads to 1,550 - 30% lower than the previous ceiling. Here is a breakdown of their respective arsenals.
The treaty commits the former Cold War enemies to each reduce the number of deployed strategic warheads to 1,550 - 30% lower than the previous ceiling. Here is a breakdown of their respective arsenals.
Note: Names in brackets are those used by Nato. Those names with an "*" next to them are pictured. The data for the US relates to 2009. That for Russia, 2010. Photo Credits: Getty, AFP, Airteamimages.com , GlobalSecurity.Org Source: http://newscri.be/link/1066800 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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