Who will solve MAS’ operational problems?

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The deal with AirAsia reads like the rationalization of the airline industry but does little or nothing for Malaysia Airlines' operations

Image via WikipediaWhile MAS has award-winning products and services, a competitive cost base, and only slightly below average load factors, our yields are dramatically lower than our competitors. – Idris Jala then CEO of MAS in February 2006 before turning around the badly ailing airline within a year.

AT the end of the day, the alliance between Malaysia Airlines (MAS) and AirAsia achieved via share swaps between their major shareholders does nothing by itself to improve MAS’ operations (see our cover story this issue for full details).

In fact a misguided overemphasis on MAS focusing on being a premium full service carrier (FSC) can have dire consequences on its revenue and viability as we shall explain.

What is clear from the figures in the chart is that the national airline has a severe revenue management crisis, which it must solve or perish. The yields broadly track the airline’s operational profits.

The problem with the yield and hence revenue is not the product, for MAS is rated consistently among the top airlines in the world for service.

The problem is not capacity utilisation because seats are on average filled three quarters, despite increases in capacity.

The problem is pricing. Despite a good, and even excellent, product it is not able to price it properly and this is reflected in its yield, which is the revenue per revenue passenger km flown (sen per RPK – the average amount an airline gets for flying a paying or revenue passenger one km.). Hence there are no profits but losses now.



If we look at the RPK in the chart for the first quarter of this year, it is back to what it was in the first quarter of 2006 after Datuk Seri Idris Jala joined MAS in December 2005. Idris’ quote above in February 2006 shortly after he took over is exactly applicable to MAS today, over five years later!

An examination of the chart shows that since Idris came in to MAS in December 2005, MAS had experienced a relentless increase in both RPK as well as revenue per available seat km or RASK (available seat km is a measure of capacity obtained by multiplying seats available by the kms flown and totalling them) up to end-2008.

The increase in RASK at the same time indicates that the seat factor (how much seats are filled, obtained by dividing the RPK by the ASK) or capacity utilisation was maintained at healthy levels.

Maximising revenue is a function of trying to control three key variables – capacity, capacity utilisation and fares. When any one of these increases, revenue increases if the other two at least stay where they are. The ideal is when all three increase simultaneously.

The issue is complex to say the least and is at the heart of the profitability of any airline. Costs, in contrast, are much easier to control and quantify. But in revenue management you need to have a good feel for what price you can charge without affecting capacity utilisation.

For this you need very good people who can feed the right information to some of the most complicated and complex modelling systems in airline operations. And you need to be constantly refining this because the situation changes all the time and from day to day.

Most FSCs like MAS have a basic fare to fill most of their seats. But with an average seat factor of say 75%, one quarter of the seats are empty and wasted if they are not utilised. They target these seats to be sold too, often at lower prices, because they bring in revenue at the margin almost all of which goes straight to profit because it is incremental.

Now here’s the paradox: MAS, like any other FSC, must in areas where the load factor or capacity utilisation is low compete on the back-end or economy class with the low cost carriers (LCCs). Not to do so would make it severely uncompetitive as an airline.

If the flights are likely to be full, MAS should move to higher prices and if they are not, than the airline has to offer discounts – sometimes considerable discounts – to fill up the seats and improve capacity utilisation. The conditions for these seats are like for LCCs – inflexible schedules and early bookings but low price.

The trick is to do this without actually cannibalising your current base customers who are willing to pay a premium for flexibility and full service and to charge a rate the market can bear for the front end – business and first class where demand is not that price sensitive.

Now, lets look at the chart again. MAS’ yields increased steadily and peaked in the fourth quarter of 2008 for a gain of 60% in just three years and exceeding even that of Singapore Airlines, indicating excellent revenue management.

It took a massive dip in 2009 along with other airlines in the aftermath of the global financial crisis which started in the last quarter of 2008. Most airlines recovered after that but MAS did not. Idris left in the third quarter of 2009 to head the Performance Management and Delivery Unit and become a Cabinet minister.

Singapore Airline’s yield in 2009 fell to 25.7 sen per RPK from 31.3 sen per RPK (at current exchange rates), down 18% and MAS’ fell from 32.9 sen per RPK to 23.4 sen by the fourth quarter of 2009, down a massive 29%. But in the first quarter of this year, SIA’s was back up to 29.9 sen per RPK but MAS’ continued to languish at 22.7 sen, even lower than that at the height of the crisis!

The difference between SIA’s and MAS’ yield now is a massive 7.2 sen. MAS has estimated in the past that one sen in yield translates to about RM500mil in revenue a year. That means that if MAS can increase its yield to that of SIA’s – not impossible, it has done it before - that’s an extra RM3.6bil in revenue.

Since this is incremental, it means an operating profit of over RM3bil assuming MAS’ operating profit this year is likely to be less than RM600mil!

That is basically the problem at MAS – its yields have not recovered post the world financial crisis which affected airlines very badly in 2009. If MAS focuses on getting its yield back while keeping costs down, it’s back in business and in a great big way too.

MAS is an airline. The argument that ancillary services will make most of its money is false, although that income is useful. It can and must make money from the airline operations, although there will be cyclical downturns.

The guy (or gal) who will turn MAS around has to understand airline fundamentals and if he has no experience in how pricing affects revenue in the airline world, he must learn pretty fast. And he has to be pretty fixated on costs and have a good eye for market opportunities. Someone like Idris.

Back to the deal. It is good for AirAsia, some of it for good reasons and some for bad reasons. It is good because AirAsia can get routes and compete with MAS on the long, medium and short haul. But bad if the intention is to cut competition through uneconomic means.

MAS should be able and allowed to compete on economic terms with AirAsia in the same way that AirAsia can – the competition must cut both ways. That is the key to a more vibrant airline sector. If MAS can increase its revenue overall and make money by offering cheaper fares on some routes, they must be permitted – and indeed encouraged – to so.

By all means collaborate via common procurement, maintenance, training and the like to bring costs down but allow full economic competition on pricing. Don’t carve the market out rigidly but let the markets overlap on the fringes as they do in reality.

Let MAS be a full service carrier on all sectors but with the liberty to compete on pricing when the economics dictate it. Let AirAsia do its low-cost thing – which it has done so well and with so much benefit for travellers – wherever it wants to and give it access to any route it wants.

And let Firefly do what it will from Subang with no restriction, meaning it does not have to be an FSC.

Then we have the best of both worlds – the most collaboration to bring down costs with the most competition to keep efficiency up, deliver excellent service and low fares. Then we will truly recognise the three elements in this equation – the two airline groups and the customers without whom the first two don’t exist.

Managing editor P Gunasegaram would like to quote another turnaround man Lee Iacocca, the one who took Chrysler back to profits against all odds sometime back: “In the end, all business operations can be reduced to three words: people, product, and profits.”

US no longer ‘AAA’, Eurozone the next?

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US no longer ‘AAA’

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

STANDARD & Poor's (S&P's) had on Aug 5 cut the US long-term credit rating by a notch to AA-plus (from AAA). This unprecedented move reflected concerns about the US's budget deficits and rising debt burden. It called the outlook “negative,” indicating that another downgrade is possible in the next 12-18 months.

According to S&P's, the Aug 2 debt deal which cut spending by US$2.1 trillion, didn't go far enough: “It's going to take a deal about twice the size to stabilise the debt to GDP ratio.” It also stressed what it saw as the inability of the US political establishment to commit to an adequate and credible debt reduction plan: “The effectiveness, stability & predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges.” Moody's Investors Service and Fitch Ratings haven't followed S&P's move causing a split rating. They had earlier (on Aug 2) affirmed their AAA credit ratings for the US, while warning that downgrades were possible, grading the outlook as negative. At the same time, China's only rating agency (Dagong Global Credit Rating) downgraded the US from A-plus to A saying the deal won't solve underlying US debt problems.

US downgrade

What does a rating downgrade mean? For the US, it will affect its borrowing costs eventually and immediately, investor opinion of US assets. According to Sifma (a US securities industry trade group), the downgrade could add up to 0.7 of 1 percentage point to US Treasury yields, thereby increasing funding costs for US public debt by some US$100bil. But the US dollar has a special position as the numeraire of global transactions; it is also a reserve currency, and often regarded as a safe haven in times of uncertainty. Ironically, in the recent sell-off in equities world-wide following the S&P's downgrade, US government bonds was a big beneficiary. Its benchmark 10-year bond yields fell 21 basis points on Monday to 2.35%, the biggest one day drop since January 2009; by Wednesday, it was 2.14%, the lowest yield on record. Two year US Treasuries yield touched a record low of 0.23% and then, fell further to 0.184% on Wednesday. In the panic, Treasuries appear to be still the way to go.

With the downgrade, US no longer warrant the top-tier rating it enjoyed since 1941 (Moody has had a AAA on the US since 1917). At AA+, the US is still considered to have a “strong” ability to service its debt. Only Canada, Germany, France & UK still carry triple-A at S&P's. The downgrade didn't affect US short-term rating which remains at A-1+, the highest at S&P's. In a follow through, S&P's downgraded numerous government related enterprises (notably Fannie Mae and Freddie Mac which together hold more than one-half of US mortgages), 73 investment funds (fixed income funds, hedge funds, etc) and 10 insurance companies for their large holdings of Treasuries. But banks were spared on the implicit “too big to fail” policy of the government. Nevertheless, the US bond market retains widespread appeal. At more than US$35 trillion at end-March, this market is broad, liquid and deep. The Treasuries market alone has US$9.3 trillion debt outstanding. But in the end, the market decides. Consider Japan S&P's downgraded it in 2002. Today, Japan is still able to borrow freely & cheaply. As of Aug 9, interest rate on Japan's 10-year bonds stood at just 1.045% and 30-years, at below 2%. In practice, for the US, a double A-plus still works like a de facto triple-A.

Market rebound: Traders work on the floor of the New York Stock Exchange on Thursday — AP
 

Immediate global sell-off

When markets opened following the weekend downgrade, a global panic sell-off in equities took over.  There was a lot of fear and uncertainty in the markets, reflecting a confluence of three main factors:

● uncertainty about the US economy faltering, raising the risk of a double-dip recession;
● worries that the downgrade could further undermine US consumer confidence & business spending adding another layer of anxiety on the global economic outlook; and
● fear the euro-zone debt crisis will spin out of control, spooking investors.

All this took its toll. Stock markets plunged around the world with funds flowing into havens, such as gold (up 60% since 2010, surpassing US$1,800 a troy ounce), Swiss francs (up 24% against euro and 32% on US dollar over the past year) and ironically, US Treasuries. In Asia, markets closed at their lowest levels in about a year. Key benchmarks in Hong Kong, Seoul, Mumbai and Sydney skidded for the fifth consecutive day. Shares in China, Taiwan and South Korea plunged sharply before recovering some ground. All closed nearly 4% lower on Monday. In Hong Kong, the Hang Seng Index had its worst day since the 2008 financial crisis, falling another 5.6% on Tuesday; it had fallen by 16.7% in the past six sessions, or more than 20% from its recent peak. South Korea's Kospi was down 3.6% and Indonesia's main stock exchange fell 3%. At its close, the KL Bursa lost another 1.7% on Aug 9 (-1.8% on Aug 8). Japan's Nikkei fell 2.2% to its weakest level since the March earthquake. India's Bombay stock index declined 1.6%, its fifth drop in a row.

The Dow Jones Industrial Average (DJIA) recovered 1.5% on Tuesday after a record 635 point fall (-5.5%) in sell-offs on Monday. The German DAX closed further down 5% and the Paris CAC 4.7% lower while the FTSE 100 in London fell another 3.4%. The Stoxx Europe 600 index ended 1.4% higher following a 4.1% slide on Monday, although underlying sentiment remained extremely fragile. The VIX which tracks stock market volatility, reached its highest since the initial Greek debt crisis in May 2010. It rose 20% to 38.5 on Monday afternoon and then to 40.5 on Tuesday, reflecting extreme fear and emotional trading. It measures the price investors pay for protective options on the S&P's 500 index. After Monday's sharp share-price drop and the previous week's poor performance, China and Hong Kong aren't the only markets at or near bear territory. Stocks in Germany & France are now down more than 20% (definition of a bear market), from highs reached in the previous year. India's benchmark Bombay Sensex is down 20%, and Japan's Nikkei is off 16.5%.

A day after US stocks received a boost from the Fed to keep interest rates low until 2013, markets in the US and Europe resumed their plunge on Wednesday. The fear: politicians across the Atlantic won't be able to manage the significant headwinds buffeting the US & European economies. Woes were focused on France, where its bank stocks plunged amid worries it may lose its triple-A status. The Paris CAC-40 index fell 5.4%. In the US, the DJIA was down 4.62% (-520 points) wiping out Tuesday's surge. The Fed had run out of bullets. Asian stocks advanced Wednesday with sentiment helped by a strong Wall Street rebound. However, gains in most markets lacked the passion observed on the way down. Hong Kong was up 2.3%, South Korea, 0.3% and Taiwan, 3.3%. All three were still down more than 10% so far in August. Japan was up 1.1%, Australia, 2.6% and China, 0.9%. But Stoxx Europe 600 was down 3.7%. Expectations are for the markets to remain choppy. On Thursday, most Asian markets were back in negative territory. But Europe closed stronger (up about 3%) and the DJIA surged by 4% (+423 points).



European contagion 

Italy and Spain, the euro-zone's third and fourth largest economies, have a combined GDP of nearly 2.7 trillion euros, about 30% of the eurozone total. For nearly two years, the European Union (EU) has been trying to stem the unfolding debt crisis. The July 21 Greek bailout bought some time not much to ward off further contagion. The European Central Bank's (ECB) decision on Aug 7 to buy Italian and Spanish debt represents a watershed in EU's continuing battle against turning ECB into the lender of last resort. The ECB has insisted the main responsibility to act lies with national governments. Given worries of a new bout of contagion sweeping European and global markets, ECB defended the new intervention as restoring the “normal functioning of markets through a better transmission of monetary policy.” ECB's continued bond-buying brought benchmark Spanish borrowing costs for 10-year bonds down to 5.019% on Tuesday, close to their lows for the year. Italian 10-year bond yields also fell to a one month low of 5.143%. Both countries' yields had approached 6.5% last week a level that eventually escalated to push Greece, Ireland & Portugal into bail-outs. Analysts estimate ECB could have bought up to 10 billion euros, a small fraction relative to the size of Spain & Italy's debt markets. Italy's debt alone is 1.8 trillion euros.

Market sentiment aside, the purchases did little to change the fundamental backdrop in Europe where economic growth has slowed even in the “core” nations of Germany & France. Signs of stress remain despite the positive market reactions to ECB's decision. Deposits at ECB, for example, hit a 2011 high of 145 billion euros on Monday, reflecting banks' reluctance to lend inter-bank preferring the safety of ECB. There is a limit to how deeply ECB can be drawn into the fiscal misadventures of its members. Concerns are mounting on the French economy because of its high debt levels (85% of GDP, already above the US & rising) and weak growth prospects. Germany, in much better shape, isn't immune either. Already, the cost of insuring German bonds against default using credit-default swaps (CDSs) rose above 85 basis points, higher than insuring UK bonds for the first time on Tuesday, despite the London riots. There is growing concern the new austerity measures in Italy & Spain will slacken their struggling economies, plagued also by social unrest.

What's wrong with the US economy?

The recession ended two years ago. The stumbling recovery may turn out to be the worst ever. Most indicators are not reassuring unemployment at 9.1% is still too high and jobs creation too slow; GDP growth is faltering, income growth continues lagging behind; household wealth is falling; banks are not lending enough; and consumer expectations have not been positive. In the last eight recoveries, lost jobs were regained within two years of recession's end. This recovery is still seven million jobs below peak employment in 2008 and about two million fewer than if unemployment was held below 8%. The US economy will remain lacklustre for some years because of heavy household debt, a financial system deeply scared by mortgages, and a dysfunctional political establishment. Heavy household debt and a dismal job market have hurt consumers' confidence, further dampening their willingness to spend. The only bright spot is exports, reflecting the weak US dollar and still booming emerging economies. Unexpectedly, the pace of growth in US services fell in July to its lowest level since February 2010. Taken alongside disappointing manufacturing data, the services sector showed-up an economy with weak hopes of a rebound in the second half of this year, after an anaemic first half. According to Harvard's Martin Feldstein, “This economy is really balanced on the edge. There is now a 50% chance that we could slide into a new recession.” Even Prof Larry Summers now concedes: “The odds of the economy going back into recession are at least one in three.”

The US problem is more a job and growth deficit than an excessive budget deficit. The diagnosis of the run-up in debt out of control spending by the Federal government, is exaggerated. Indeed, the “cure” of severe spending cuts is likely to make recovery more difficult. The real problem lies in the fall-off in tax revenue. From 20% of GDP in 1998-2001, tax revenue has fallen steadily: averaging just 17% of GDP from 2002-08 and then, to below 15% in 2009-10. About 50% of the rise in deficit was due to the downturn because of “automatic stabilisers”, reflecting cyclical revenue falls and higher spending to assist the unemployed and other transfers to help the poor. They contribute to demand and assist to “stabilise” the economy.

The US rating downgrade is a warning bell. On present trend, its debt burden is unsustainable and the US political system seems unable to reverse it. To do so, it needs faster growth can't cut its way to growth. What's required is tax reform and a will to restore revenues back to the 20% of GDP trend; a prospect most Republicans have castigated. At issue is not the US government's capacity to service its debt, John Kay of the Financial Times pointed out. It is the “willingness of the government to repay.” If sovereign borrowers meet their obligations, it is only because “they want to.”

● 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.

Simple way to understand US Economic Situation

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Simple way to understand US Economic Situation:

Federal Budget 101 Letter - LA

How did the world get so fixated on GDP?

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GDP growth remains central to economic policy, yet life in flatlining Japan remains rather better than it does elsewhere

By James Meadway guardian.co.uk,

Mining on the Pacific island of Nauru shows how 'a few years of apparent prosperity can be bought at immense future cost'. Photograph: Torsten Blackwood/AFP/Getty Images

The economic news grows daily more grim. Across the developed world, once-optimistic forecasts for growth are being revised downwards. Financial markets, sensing trouble ahead, are in a tailspin. Debates over the future centre on a single metric – that of GDP.

Gross domestic product was not always with us. Created in the 1930s, and despite the warnings of its pioneer, it rapidly assumed centre stage in economic policymaking.

Growth could now be measured targeted through policy. For the right, it would be a simple gauge of national economic virility. For the left, it offered the more subtle appeal of an end to disputes over the distribution of wealth.

By focusing not on the size of the slices, but on the size of the pie, an interminable conflict between capital and labour could seemingly be resolved. The case was put most forcefully in the Labour politician Anthony Crosland's influential book The Future of Socialism. Growth would deliver the public goods – secure employment and a functioning welfare state.

That consensus has now held for 50 years or more. Yet mounting evidence suggests that GDP growth does not register many of the things people actually care about. It is a record of some aspects of economic life, but it fails to capture wider social needs and demands. Health, quality of life and inequality play no part in its measurement.



Rising, falling GDP

There is a growing consensus that rising GDP since the mid-1970s in the US and the UK has become disconnected from reported measures of wellbeing. We know that falling GDP produces misery, as unemployment rises and incomes collapse. But the reverse does not apply. Higher output does not necessarily mean happier people.

Even growth's blunt promise of material prosperity is failing. GDP in the UK increased by 11% from 2003 to 2008. Over the same period, median real incomes stagnated. The economy boomed, but few shared in its rewards. Living standards were maintained through unsustainable debt. As we crawl back into recession, the majority will find those rewards still harder to come by – even if a minority continue to grow fat.

And environmental damage has no impact on GDP's progress. A few years of apparent prosperity can be bought at immense future cost. The tiny Pacific island of Nauru once enjoyed the highest per capita living standards of anywhere in the world. Its plentiful supplies of phosphate rock, in demand for fertiliser, had been strip-mined since the 1900s. But as the phosphate dwindled, so did incomes. Nauru has been reduced to providing a detention centre in return for Australian aid money.

Environmental limits can and will bite. From declining fish stocks to the overwhelming threat of climate change, there are physical limits to our economic activities. GDP registers none of this.

 Lessons from Japan

We need to change how we think about the economy. Japan has now laboured through nearly two decades of flatlining GDP. A miracle of growth transformed it from defeated power in 1945 to the world's second-largest economy. Then, in the 1990s, the growth stopped, never to convincingly return. Yet living standards in Japan are among the highest in the world. Unemployment is half that of the US; life expectancy five years longer. Average real incomes are the same as Germany's, and inequality lower. Japan's environmental impact, particularly through the import of raw materials, remains high. But it is not simply the economic basket case it is often presented as.

The old consensus needs breaking. We need to fixate less on growth alone.

The government recognises this much, aiming to create a national measure of wellbeing. But this accounting exercise is completely disconnected from economic practice. The coalition has a near-mystical belief in the power of the free market to deliver growth. It believes the national debt should be run down, clearing the way for a return to prosperity as the economy "rebalances". Purposeful government intervention is not needed.

The coalition's lack of success is a tribute to its lack of strategy. Rebalancing the economy away from debt-fuelled consumption and bloated financial services is a fine aim. It needs policies to match. Austerity does not just blight individual lives – Ireland has shown how it cripples whole economies as demand drains out of the system. So public spending, the bedrock of an economy in recession, must be held steady.

A genuine rebalancing, however, cannot come from maintaining status quo. The thinktank New Economics Foundation has begun an ambitious modelling exercise that seeks to show how a low-carbon economy can also deliver social justice.

Action, though, is needed now. Economic policy must be broadened towards meaningful goals – creating secure, well-paid jobs; minimising environmental damage. Where private investment is failing, with business expenditure sliding again last quarter, government should be prepared to step in.

A new industrial strategy could match social objectives with credible interventions, supporting the industries of the future. Or we will be left to chase a statistical chimera.

Anarchy in UK - London Riots: Malaysian student mugged...

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Malaysian student mugged during riots to stay in UK

Ashraf Haziq, the Malaysian accountancy student who was filmed being mugged by rioters while sitting on the ground injured, says he wants to stay in the UK to finish his studies.

Haziq, 20, from Kuala Lumpur, said he felt sorry for his attackers. He was left with a broken jaw in a now notorious attack in Barking, east London on Monday - but said he still felt 'great' about Britain

Go to http://www.guardian.co.uk/uk/video/2011/aug/12/malaysian-student-mugged-riots-uk-video

British riots: Millions feel for Asyraf

By RAHIMY RAHIM rahimyr@thestar.com.my

PETALING JAYA: The scene of rioters in London assaulting and robbing Malaysian student Mohd Asyraf Haziq Rossli has touched the hearts of millions around the world after a video clip of it went viral on the Internet.

The clip has become an iconic symbol of the senseless violence in Britain, with even its Prime Minister David Cameron singling out the incident.

The video titled “London Riots-scum steal from injured boy” was ranked seventh most viewed video on YouTube this week with more than 2.9 million viewers worldwide.


Facebook fan pages were also created with “Support for student Mohd Asyraf Haziq, robbed while bleeding heavily,” given 249 likes while “Get Well Soon Asyraf Haziq,” got 990 likes until yesterday.

Mugged in London: Umno Information chief Datuk Ahmad Maslan pointing out the still images of Mohd Asyraf being robbed while the latter’s mother, father and younger brother look on yesterday. 

Jamie Cowen, a former worker of Britain-based Save the Children, has launched an Internet campaign to help Mohd Asyraf.

Based on Cowen's Twitter account, the campaign has so far raised some 4,000 (about RM19,350) with contributions still pouring in.

“Over 1,200 people have donated,” he said, adding that among the donors was a British bicycle firm pledging Mohd Asyraf a new one since his was stolen.

Among other donations were two first-class tickets by a British railway company for Mohd Asyraf to travel anywhere and free dental service from dentist Martin Nakisa in Britain.

The website “Let's Do Something Nice For Ashraf” (www.somethingniceforashraf.tumblr.com) also received thousands of supporters within hours of its launch on Wednesday.

In a video shot by his friend, Mohd Asyraf said from his bed in the Royal London Hospital that he was cycling with another student to visit a friend when a gang of about 20 headed towards him.

“I think some had knives. The youngest looked like he was of primary school age. They came in a group, they didn't attack at first. They wanted the bicycle.

“And then there was someone who put a hand in my pocket to take my phone. He pulled the bicycle and I don't know what happened. I fell and my mouth was bleeding. So, maybe I got hit,” Mohd Asyraf said in Malay.

“The people fled the scene. Others then approached me and said they wanted to help, but instead those behind me just took stuff from my backpack,” he added.

Asyraf’s parents leaving for England today

KUALA LUMPUR: The parents of the Malaysian student attacked and robbed by rioters in London will fly to England today.

Umno Information chief Datuk Ahmad Maslan said it would sponsor three flight tickets worth about RM20,000 for Mohd Asyraf Haziq Rossli’s parents and his younger brother.

“The London Umno Club will meet them at the airport and will arrange accommodation and food expenses during the stay,” he said after meeting the family at Putra World Trade Centre yesterday.

Mohd Asyraf’s mother Maznah Abu Mansoor, 47, said she was relieved that Umno had stepped forward to help.

“Before this, we were on our own, asking for help from friends and family,” said the teacher.

She added that Wisma Putra had contacted her at 5am yesterday to say that her son’s jaw corrective surgery had been successful and that he was doing well.

He left the hospital yesterday.

Maznah said she had also accepted Mohd Asyraf’s wish to continue studying there although she was shocked by the assault.

“We were stunned when we watched the YouTube video and saw him bleeding,” said Maznah, who will be in London with her husband, ex-army officer Rossli Harun, 49, and her youngest son Muhammad Fitri, eight, for at least a week.

In Kota Kinabalu, Foreign Minister Datuk Anifah Aman said Kaplan University, where Mohd Asyraf is studying, had also offered to fly his parents to London, adding that the offer was made when its officials met Malaysian officials on Wednesday.

In Kajang, Home Minister Datuk Seri Hishammuddin Hussein said there were lessons to be learnt from the riots, adding that Malaysians should be grateful.

He said it was important to ensure there were no such riots due to the country’s multi-racial and multi-religious society.

“It is an issue which we should not take lightly,” Hishammuddin said, adding that it was up to the public to decide if their perception of the police, who came under fire for Bersih 2.0, had changed due to events in Britain.

Related Stories:

Anarchy in the UK - London Riots Sparked by Police Beating, Poverty, Ethnic differences...

China Needs Urgent Review of U.S. Debt, Financial News Says

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By Bloomberg News (Updates with central bank governor’s comment in third paragraph.)

Aug. 11 (Bloomberg) -- China should urgently assess risks from being the main foreign investor in U.S. debt and diversify its foreign-currency reserves more quickly, the Financial News reported today, citing Xia Bin, a central bank adviser.                                      Image via Wikipedia

In the short term, China can adjust the structure of the reserves, the central bank publication cited Xia as saying. Longer-term, the key is to keep foreign-exchange holdings at a “reasonable” level, according to Xia, an academic member of the monetary policy committee of the People’s Bank of China.

Central bank Governor Zhou Xiaochuan pledged this month to “closely” monitor U.S. efforts to tackle its debt burden. The global stock market rout that saw Tokyo shares sliding this morning follows Standard & Poor’s downgrade of the U.S. debt rating from AAA and a widening of Europe’s sovereign-debt crisis.



China is the biggest foreign owner of U.S. Treasuries, with more than $1 trillion of the securities, and its foreign- exchange reserves are the world’s largest at more than $3 trillion.

The U.S. economy has entered a long cycle of economic weakening that will put pressure on China’s holdings of dollar assets, Xia wrote in a microblog on Aug. 6. He is the director of the Finance Research Institute at the Development Research Center of the State Council, China’s cabinet.

China should buy more non-financial assets with its reserves to diversify risks, Xia wrote, adding that the country should also pursue national strategic interests, and seek to globalize the yuan. He previously said that China should use its reserves to increase holdings of gold and some other precious metals.

To contact Bloomberg News staff for this story: Zheng Lifei in Beijing at +86-10-6649-7560 or lzheng32@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net --Zheng Lifei. Editors: Paul Panckhurst, Nerys Avery.

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Anarchy in the UK - London Riots Sparked by Police Beating, Poverty, Ethnic differences...

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British riots: Malaysian student injured in London

By RAHIMY RAHIM and QISHIN TARIQ newsdesk@thestar.com.my

PETALING JAYA: A 20-year-old Malaysian student who was on his way to buy food to break his fast was attacked by rioters in Barking East, London.

Wounded and bleeding on the street, he was later robbed by another gang.

The robbery on Mohd Asyraf Raziq Rosli which took place at 7pm London time (3am Malaysian time) yesterday was recorded by someone and later uploaded on YouTube.

Height of danger: A woman jumping from a burning building in Surrey Street in London in this image taken from Twitter. Riots spread to new areas of London in the city’s worst unrest in decades. — Reuters
 

Through the YouTube posting, the attack on Mohd Asyraf was highlighted in the BBC World News and newspapers like The Sun and The Telegraph.

The 75-second video showed the first-year Kaplan University student, who was bleeding in the mouth, being robbed by a group of men who had initially pretended to help him.

The Sun described the incident as “riot yob mug injured child” while Internet users have branded the group of men seen in the video as scums.

The Telegraph described the clip as being filmed from “somewhere above and looks down onto an unknown street apparently in London where gangs are roaming the streets”.

Mobbed and robbed: Video grab pictures showing an injured Mohd Asyraf (right) being robbed by a mob who had earlier pretended to help him. He is being treated at Royal London Hospital for a broken jaw.
 

London Umno Club president Dzuhair Hanafiah, who identified the victim, said Mohd Asyraf was walking with his friends to buy food when they were confronted by a group of gangsters.

“His friends managed to escape but he was attacked.

“He is now being treated at Royal London Hospital for a broken jaw and disjointed teeth,” he said when contacted yesterday.

The victim lost his mobile phone and wallet during the incident.

Dzuhair said efforts were being taken by the Malaysian Student Department and London Umno Club to evacuate students from the affected area.

Unfriendly message: A council worker removing a destroyed vehicle, spray painted with the words ‘Welcome to Hackney’ in Hackney, North London, yesterday. — Reuters
 

“It was a very dangerous area even before the rioting started,” he noted.

Mohd Asyraf's mother Maznah Abu Mansor, 47, said she was informed by Mara officers about her son's attack.

“I was initially very worried but I'm glad that he is all right. However, I am not able to talk to him because of his injuries,” she said.

She added that she would appeal to Mara for financial support to visit her son who is to be operated on today.

“I also hope Mara can bring home the remaining students,” said Maznah.

Malaysian High Commissioner to Britain Datuk Zakaria Sulong said an officer has been dispatched to help the victim.

“We will know what we can do to help the victim after meeting him,” he said.

Avoid hot spots in Britain, urges Anifah

KOTA KINABALU: Foreign Minister Datuk Seri Anifah Aman said his ministry is very concerned over the development in London as the rioting spreads to other parts of the city.

“We are worried as rioting has spread to places like Queensway and Oxford Street where there are a large number of Malaysians, including our High Commission staff,” he said.

He added that the riots were also spreading to places outside London like Bristol, Nottingham and Leeds.

“We have advised Malaysians, especially students to avoid areas where the riots are taking place,” he said last night.

Young thieves: Rioters looting a shop in Hackney, North London. — EPA

 

Anifah said the Malaysian High Commission was keeping in touch with the Malaysians in and around London.

“We are also trying to get in touch with any Malaysians who may have travelled to London.

“I hope they will be able to report their whereabouts to the Malaysian High Commission there,” he said.
He urged Malaysians to contact Wisma Putra or the Malaysian High Commission if they needed assistance or clarification.

The contact persons at Wisma Putra are Zul Kesli Abdullah at 03-8887 4353 or Faisal Abdul Hamid at 03-8887 4353, while the contact persons at the Malaysian High Commission are the deputy high commissioner Wan Zaidi Wan Abdullah at +44-020-79190242 or wzaidi@kln.gov.my.

Malaysian High Commissioner to Britain Datuk Zakaria Sulong said although it had not received any distress call from Malaysians, it had taken the move to advise citizens to look after their safety.

“The High Commission has also posted similar advice on our website,” he said.

Rural and Regional Development Minister Datuk Seri Mohd Shafie Apdal said Mara had taken precautionary measures to relocate its students from high-risk areas to Leices­ter Square to ensure their safety.

Violence causing jitters among Malaysians

PETALING JAYA: The violent unrest that spread to several parts of London and Britain is causing jitters among Malaysians.

Many Malaysian students were worried for their safety, particularly Muslims, who have to travel to London’s Malaysia Hall at Queensway to break fast and for terawih pra-yers.

Recalling Monday’s rioting, London Umno Club president Dzuhair Hanafiah, 30, said shops about 600m from Malaysia Hall were looted.

“We heard loud noises but police came moments later to take control of the situation, but it still created fear among the students,” he told The Star yesterday.

He said rioting had spread to other places including Birmingham, Bristol and Liverpool.

“Each area has different local issues like high unemployment rate, government policy issues and gangsterism,” he said.

He urged Malaysians who were injured to contact the club or the Malaysian Students Department (MSD) for help.

“We advise Malaysians to be careful and anyone affected by the riots must immediately contact the MSD or London Umno Club at info@umnolondon.com or call +44-743-564-4040,” he said.

Student, Basir Radzali, 21, said many Malaysian students chose to stay indoors as universities were on summer break.

“Many of us try to avoid going out since the riots started, especially to areas like Hackney, Croydon and Peckham,” he said.

He said the Malaysian High Commission had sent out SMSes to students to be vigilant.

Tan Chang Jin, 24, who lives in Tower Bridge, central London, said the riots had not yet reached his neighbourhood, although it was on high alert.

“Hopefully, the riots will not spread. For now I’m in close contact with my friends and family,” said Tan.

Owner of the Rasa Sayang restaurant chain Teddy Chen said the situation in central London was getting worse.

“It is waiting to explode. Some of them have bad intentions and will take any opportunity to riot,” he said.

Poverty, ethnic differences fuel chaos

By Zhang Haizhou (China Daily)

LONDON - As violence spread across the British capital in a second night of looting and chaos in the northern London suburb Tottenham, people began to ask why.

A list of causes, including high unemployment, spending cuts amid Britain's sluggish economic recovery, cultural or ethnical differences and a poor relationship between youth and police, have been picked up by local media and analysts.

Take Haringey, the borough in which Tottenham is situated. With a population of 225,500, it is listed as the fourth-most-deprived borough in London and the 13th-most in the country.

About 55 percent of Haringey residents are among some of the most economically deprived in Britain, according to the borough's official statistics.

Lambeth, home borough of Brixton, has a similar situation. The 2007 Indices of Multiple Deprivation places it as the fifth-most-deprived borough in London and 19th in England.

In Tottenham, the core of the borough of Haringey, more than 10,000 people claim Jobseeker's Allowance, an unemployment benefit. Recent government statistics show each registered job opening in Tottenham draws 54 applicants.

Despite a small decline in reported crime in the year to June 2011, compared with the previous 12 months, Haringey saw more burglaries and an alarming rise in robberies of individuals - an increase from 884 offenses to 1,204.

Eight of Haringey's 13 youth clubs were closed because of spending cuts, and reductions in community police officers are soon to come, the Guardian reported.

Edmonton, just across the borough border in Enfield, has become grimly associated with fatal stabbings of teenagers in recent years.

"There is every indication, as unemployment climbs and as cuts are made in youth clubs and other services, that the sense of alienation will burgeon. Crime figures have been climbing again," the Guardian said.

But economic conditions alone cannot explain what has been happening in London the past two nights.
"The Tottenham riot has rekindled memories of the wave of unrest which swept through Britain's cities in the 1980s," the Telegraph wrote.

In addition to a recession and spending cuts, the newspaper cited "poor relations between the black community and police" as part of the backdrop against which violence erupted in Bristol, Birmingham, Manchester, Liverpool as well as Brixton and Broadwater Farm in London in the 1980s.

Haringey and Lambeth are highly multicultural and multi-ethnical.

Roughly 48.7 percent of Haringey residents belong to non-white British ethnic groups, a higher percentage than in both London as a whole (40.2 percent) and England and Wales (13 percent), according to official statistics.

Thirty-eight percent of Lambeth's 272,000 residents have ethnic minority backgrounds, and 50 percent are white British. Over 130 languages are spoken in the borough.

The police were accused of "institutional racism" for their handling of the 1980s riots and calls were made for sweeping changes in how the police department was run, including a rapid increase in the number of black and Asian recruits.

In recent years, it has been assumed that "the mutual antipathy between police and the black community was a relic of the 1980s".

"Events in Tottenham may suggest that such optimism may yet prove to be premature," the Telegraph reported.

But residents say that the weekend's riots in Tottenham have little to do with cultural or ethnical anxieties.

"Race may have a little part to play, but there are other issues in there as well ... It's young people and the police, but not a black and white thing at all," Norma Jones, 48, who works in human resources in Tottenham, said on Sunday.

While the police have condemned the rioters, most of whom are young people, many residents blame the police for their mishandling of ties with youth in these areas.

"There are still areas in Britain where people or communities have a very difficult relationship with the police," said Max Wind-Cowie, head of the progressive conservatism project at London-based research institute Demos.

"There are a small number of people who want no constraints on their behavior, and this isn't about social or economic disempowerment. This is a section of the community that resents the police policing them," he said.

Riots spread from London to England's northern, midlands cities

(Xinhua)

Police officers ask questions near a burnt building in Croydon, south London, Britain, Aug. 9, 2011. British authorities have largely reinforced the police force on London streets following the riots happening three consecutive nights from Saturday. Some 16,000 police officers, five times the usual number, will be on duty on London streets for three days. (Xinhua/Zeng Yi)

LONDON, Aug. 9 (Xinhua) -- Riots again hit Britain on Tuesday evening for the fourth night in succession, with significant violence in the northern industrial city of Manchester as well as minor violence in London.

Police had posted 16,000 officers on the streets of London to prevent a repeat of Monday night's scene of arson, looting, muggings and assaults that took place as hundreds of rioters clashed with police in many parts of the city.

In Manchester city center police were engaged in running battles through the early and mid-evening with a crowd which eyewitnesses said was about 2,000 strong. Shop windows were smashed and a women's clothes shop was petrol-bombed, and several businesses -- including a jeweler's and clothes shops -- were looted.

Earlier police had clashed with a much smaller group of youths in the neighboring city of Salford, where a community building was set on fire and several businesses attacked.

Police in the West Midlands reported trouble in Birmingham city center, where there had been trouble on Monday night, and also in the town of West Bromwich and the nearby city of Wolverhampton, which had both been spared violence on earlier nights.

In Birmingham, a 200-strong gang of youths with sticks was confronted by riot police amid reports of attacks on shops and a car being set on fire.

Police in Wolverhampton had made 20 arrests by mid-evening. In West Bromwich hooded youths blocked a road and set fire to dustbins but later dispersed after burning two vehicles.

In the east London area of Canning Town, some youths were reported to have built barricades and stoned passing vehicles.

Also in London, theaters in riot-hit areas such as the Battersea Arts Center, the Dalston Arcola and the Greenwich Playhouse, cancelled their evening's performances, and shops in many parts of London closed earlier than usual. Many office workers left earlier to avoid being in the city if rioting began again.

Riot police seal off a street in Croydon, south London, Britain, Aug. 9, 2011. (Xinhua/Zeng Yi)

Police officers seal off a street in Croydon, south London, Britain, Aug. 9, 2011. (Xinhua/Zeng Yi)

 Police officers seal off a street in Croydon, south London, Britain, Aug. 9, 2011. (Xinhua/Zeng Yi)

 A police officer is seen near a burnt building in Croydon, south London, Britain, Aug. 9, 2011. (Xinhua/Zeng Yi)

Police officers are seen on a vandalized street in Croydon, south London, Britain, Aug. 9, 2011. (Xinhua/Zeng Yi)

Police officers are seen near a burnt car in Woolwich, southeast London, Britain, Aug. 9, 2011. (Xinhua/Bimal Gautam)

A police officer investigates on a street in Woolwich, southeast London, Britain, Aug. 9, 2011. (Xinhua/Bimal Gautam)

Police officers secure a burnt building in Woolwich, southeast London, Britain, Aug. 9, 2011. (Xinhua/Bimal Gautam)

Police officers secure a burnt building in Woolwich, southeast London, Britain, Aug. 9, 2011. (Xinhua/Bimal Gautam)

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