Malaysia's Minimum wage’s benefits and effects

Minimum wage’s benefits are plenty

I HAVE been waiting for a reason to talk about a pizza delivery man I met in a lobby of an condominium while waiting for a lift to arrive. It was in the evening and he was delivering pizza to one of the residents. I struck a conversation about his job, his salary and his aspirations, and got enough from the chat to get his views that the decent salary he was making was insufficient.

The young man claimed he was making RM2,200 a month whizzing through traffic, despite the weather, to send piping-hot pizzas to customers from between 10am and midnight.

He said that after sending back money to his parents in Pahang and paying for his lodging and expenses to live in Kuala Lumpur, the salary was just not enough. Furthermore, the job was wearing him down and he wants to do something else, but is finding it hard to get a new skill with the demands of his current job and the obligations he has.

His story will resonate with many others who are struggling to make ends meet, and whatever little assistance they get will surely be welcome. That small bit of help though came for millions of Malaysians by way of a new minimum wage the Government announced on April 30.

Workers in Peninsular Malaysia were promised a floor wage of RM900 a month and those in Sabah, Sarawak and Labuan RM800 a month. The minimum wage will take effect six months from the time the law is gazetted to allow industries to make adjustments to comply with the new law. Non-professional services companies with fewer than five employees will be given a further six months to make their adjustments.

The higher minimum wage will benefit a reported over three million private-sector employees and the net effect economists have calculated is a negligible increase in unemployment and a small drop in investments.

Economic growth and the investments that will take place and the promise of new jobs will be more than enough to offset those small impediments.

One drawback many can expect is higher prices. You can bet employers will pass on the higher staff costs to customers, but the quantum should be kept in check given the competition that exists in business.

The benefits, though are plenty.

The higher wage that almost a third of the workforce will benefit from will be a boost to the economy, which in recent years has been driven by consumption.

The higher wages will also manifest in other benefits for workers. A higher base salary will mean higher contributions to the Employees Provident Fund (EPF) and the extra will go some way to shore up the retirement savings of many Malaysians.

Companies will see an increase in their payments to the EPF, but with productivity having risen 6.7% per year over the past 10 years and companies making a lot more money than before judging by profits announced by listed companies and tax collection by the Government, they can afford to pay a little more for their workers without diving into bankruptcy.

With a third of the workforce soon enjoying a higher base salary, the increased income will go some way to satisfy the requirement of banks under the new responsible lending guidelines.

Under the new loan criteria, banks will look at the basic salary and decide whether a person can afford a loan. With higher salaries, maybe that will be enough for low salaried people to qualify for a loan to get the small car or home they need.

The minimum wage will help those in need. It might help those like the pizza delivery man if the minimum salary together with allowances are fixed. It is a start that many Malaysians will be thankful.

● Deputy news editor Jagdev Singh Sidhu needs to get a lucky charm ahead of this weekend's FA Cup final.

Minimum wage effects manageable

Effects of the minimum wage policy are expected to be manageable and unlikely to have a significant impact on companies, with rubber glove manufacturers seen to be the hardest hit, analysts said.

UOB KayHian Research head Vincent Khoo said there will be no significant wage rise for most listed companies, especially given the flexibility for the floor wage to include allowances and benefits, hence no wage restructuring is required.

"However, small and medium enterprises in particular, may still be impacted by higher overtime and there may be an upward cascade effect for some listed companies."

In terms of sector, he said glove manufacturing remains the most impacted but the effect should be significantly softened with the incorporation of some allowances into wage calculations.

"Minimum wages would lower industry profits by as much as over 10% as a significant portion of the industry's staff force earn only RM600 to RM700 a month before allowances and benefits."

Consumer companies emerge as the winner as overall demand for fast-moving consumer goods should improve with higher disposable income among low-wage earners.

"We expect manufacturers to raise product prices during the implementation grace period to maintain profitability," Khoo said.

Affin Investment Bank economist Alan Tan said: "The direct effect of a minimum wage increase will result in increases in the relative prices of goods produced. However, even if minimum wages were to lift prices (especially in low-wage industries), we expect the inflationary impact to be manageable, as the minimum wage is set at a relatively low level, which will not raise production costs and overall price level significantly.

"Overall, we expect the broader economic effects of minimum wage in the country on company profits, prices, and inflation, to be manageable and unlikely to have a significant impact on the economy."

However, CIMB Research said higher wages will release pent-up consumption, albeit with some inflationary impact.

"Our view is that an appropriate minimum wage could over time achieve a big push, which is moving the low-wage, low-consumption and informal labour market to a high-wage, high-consumption and formal labour market."

For rubber glove makers, HwangDBS Vickers Research said staff costs would increase by 17-22% while earnings could fall by 5-19% .

"We expect the additional staff costs to be passed to customers over time, but in the immediate term, we expect earnings and margins to be dampened."

It said Hartalega Holdings Bhd is the least affected while Top Glove Corp Bhd would be most affected.

"Based on our estimates, Hartalega's salary costs could rise by RM10 million a year, an increase of 17% and this would lower the 2013 estimated net profit by 5%. For Top Glove, staff costs could rise as much as RM39 million (an increase of 22%), denting 2013 earnings by 19%. Meanwhile, we estimate Kossan Rubber Industries Bhd's annual salary costs to increase by RM18 million (a rise of 17%) and net profit to fall by 13%."

However, it said that if fixed allowances or cash payments are allowed in the calculation for minimum wages, the impact will be softened.

It maintained a hold on Top Glove at a target price of RM4.80 and Hartalega (RM7.70) and Kossan (RM3.30).

Affin Investment Bank said rubber glove makers have indicated that they will most likely reduce or re-categorise certain allowances to help offset the increase in their workers' basic salary.

Ee Ann Nee
sunbiz@thesundaily.com

Glove makers to gain from wage rule in long run

PETALING JAYA: While the new minimum wage will dent glove makers’ earnings in the near term, it is expected to be beneficial for the industry in the long run, CIMB Research said.

“It will encourage glove makers to reduce their use of low-skilled labour and improve their manufacturing processes by using more advanced technology and methods.

“Also, we believe that wage inflation will make the smaller glovemakers less competitive and catalyse consolidation in the sector. This will strengthen the positions of the large glove makers, favouring those with more efficient processes such as Hartalega (Holdings Bhd),” the brokerage said in a note to clients.

On Monday, Prime Minister Datuk Seri Najib Tun Razak announced the details of the country’s wage floor for the private sector, with the monthly benchmark set at RM900 for Peninsular Malaysia and RM800 for Sabah, Sarawak and Labuan.

This translates to an hourly rate of RM4.33 and RM3.85 respectively.

Some analysts say the new minimum wage rule may encourage glove makers to reduce their use of low-skilled labour and improve their manufacturing processes by using more advanced technology and methods.

The policy applies to all workers in the private sector, save for those in domestic services, but it will only take effect six months after the Minimum Wages Order is gazetted.

The law, which will be reviewed every two years, affords some flexibility to employers as they can absorb a certain amount of allowances and fixed cash payments in calculating the new wages.

According to CIMB Research’s forecasts, the minimum wage could shave some 1% to 7% off glove makers’ financial year 2013 core net profit, but the brokerage has kept its “neutral” rating for the sector and estimates for the companies under its coverage as they may yet find ways to mitigate the impact of higher staff costs.

Other research houses have also maintained their ratings pending further clarification from the companies and the actual gazetting of the law.

Among the glove makers, Hartalega is the least affected by the setting of a wage floor due to its highly automated production facilities and high margins relative to its peers.

“We believe Hartalega will emerge the strongest from the higher wages as its operations are already lean and management is working hard to further automate its manufacturing process.

“With the highest margins (lowest post-tax cost base), technologically advanced manufacturing process and an aggressive eight-year expansion plan, Hartalega has the most wiggle room in the sector to price gloves competitively and gain market share,” CIMB Research said.

Management was aggressively working on further automating the stripping and packaging portions of its manufacturing process to reduce the use of low-skilled labour and optimise operating expenditure, it added.

CIMB Research said Top Glove Corp Bhd would be the hardest hit as a result of low margins and an oversupply for its gloves that could take two to three years to work off.

“We believe it would be challenging for management to pass on the cost of the minimum wage to customers. This would put further pressure on margins and Top Glove’s high-volume low-price model.”

Top Glove shares have reflected this, with the counter losing 13 sen, or 2.72%, to RM4.65, making it one of the day’s top losers.

In contrast, Kossan Rubber Industries Bhd and Supermax Corp Bhd dipped one and two sen respectively to RM3.24 and RM1.87 yesterday, while Hartalega was unchanged at RM7.80.

For Supermax, CIMB Research said the manufacturer was ramping up nitrile production to 53% of capacity by financial year 2013. This could help curb rising staff costs, the brokerage added, as the cash cost of producing nitrile gloves was 20% lower than natural rubber.

Kossan, meanwhile, is poised to tap on the growth in China, where glove usage is a mere two gloves per person per annum versus 50 in Europe and 96 in the United States. Kossan entered the market in financial year 2012 via its 53%-owned Cleanera HK Ltd.

Moving forward, HwangDBS Vickers Research expects the additional staff costs to be passed on to customers over time.

Affin Investment Bank, in a report, also noted that Top Glove had previously said it would likely pass on 80% to 90% of the higher costs by increasing prices, which could prompt other glove makers to do the same. - The Star Business

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Eurozone unemployment hits record 10.9% as manufacturing slumps to recession!

Eurozone unemployment hit a record in March, with Spain's 24.1% rate setting the pace.

NEW YORK (CNNMoney) -- Unemployment in the eurozone rose to 10.9% in March, another sign of the broad economic weakness and possible recession across the continent.

The unemployment rate across the broader 27-nation European Union remained at 10.2% in March, according to a organization report Wednesday.

10 largest economies

But the 17-nation eurozone unemployment edged up from 10.8% in February. The EU and eurozone rates are the highest since the creation of the common euro currency in 1999.

There are now 13 nations in Europe struggling with double-digit percentage unemployment, led by a 24.1% rate in Spain, which was a record high, and 21.7% in Greece.

The rising jobless rates are primarily blamed on the ongoing European sovereign debt crisis, which has forced governments to take tough austerity measures to cut spending.

Europe's next recession risk: Germany

There are 12 countries in Europe that have had two or more consecutive quarters in which their gross domestic product has dropped -- a condition many economists say define a recession. Nine of the countries are in the eurozone, and three use their own currency.

The United Kingdom, which had an 8.2% unemployment rate in its most recent reading, is the largest economy now in recession.

The entire EU and and eurozone are widely believed to be in recession as well, a fact likely to be confirmed when their combined GDPs are reported on May 15.

Even some of the healthier countries in Europe are likely to meet that criteria, including Germany, the EU's largest economy and one in which unemployment is 5.6%, the fourth-lowest rate on the continent.

German GDP declined 0.2% in the fourth quarter and many economists are forecasting another drop in the first quarter, suggesting Germany could be in recession soon.



By contrast to Europe, the U.S. unemployment rate has been steadily falling, reaching 8.2% in March. The jobless rate here reached a 26-year high of 10.0% in October 2009, but it has declined in six of the last seven months, shaving almost a full percentage point off the 9.1% rate of last August.

Economists surveyed by CNNMoney forecast that the rate will stay unchanged in the April jobs report this Friday, while hiring is expected to pick up to a gain of 160,000 jobs

By Chris Isidore @CNNMoney, Newscribe : get free news in real time

Eurozone manufacturing heads towards recession

 

(BRUSSELS) - Gloom over eurozone manufacturing deepened in April, highlighting the impact of policies to control budgets and signalling recessionary pressures, a Markit survey showed on Wednesday.

A key index of activity based on a survey by Markit fell to almost the lowest level for three years.

Markit publishes closely watched leading indicators of economic activity and in its latest survey for its purchasing managers' index the firm said: "The eurozone manufacturing downturn took a further turn for the worse in April."

The adjusted manufacturing PMI figure, closely watched as an indicator of economic trends, fell to 45.9 from 47.7 in March.

A figure of below 50 points to contraction and Markit noted that "the headline PMI has signalled contraction in each of the past nine months."

The chief economist at Markit, Chris Williamson, said: "Manufacturing in the eurozone took a further lurch into a new recession in April, with the PMI suggesting that output fell at (a) worryingly steep quarterly rate of over 2.0 percent."

He said that "austerity in deficit-fighting countries is having an increasing impact on demand across the region" and that "even German manufacturing output showed a renewed decline."

Williamson commented that the latest forecast from the European Central Bank "of merely a slight contraction of GDP (gross domestic product) this year is therefore already looking optimistic."

He added: "However, with the survey also showing inflationary pressures to have waned, the door may be opening for further stimulus."

His remarks highlight controversy over policies in many countries to correct budget deficits and heavy debt to install confidence on debt markets where governments borrow.

There are increasing warnings that the eurozone must raise economic growth, but opinions differ on the best route, with some saying that budget austerity opens the way to structural reform and competitiveness and others saying that extra stimulus is essential.

Markit said that "the April PMIs also indicated that manufacturing weakness was no longer confined to the region's geographic periphery."

In Germany, which has the biggest economy in the eurozone and has shown broad resilience to downturn elsewhere, Markit also noted a setback.

"The German PMI fell to a 33-month low, conditions deteriorated sharply again in France and the Netherlands also contracted at a faster rate," it said.

Markit said: "There was no respite for the non-core nations either, with steep and accelerating downturns seen in Italy, Spain and Greece. Only the PMIs for Austria and Ireland held above the 50.0 no-change mark."

Markit said that manufacturers reported weak demand from clients inside and outside the zone and this had hit even German companies.

The worsening outlook for eurozone manufacturing was also affecting the job market, Markit said, just as eurozone data put the unemployment rate at a record high level.

In manufacturing "job losses were reported for the third straight month in April, with the rate of decline the sharpest in over two years," Markit said on the basis of its survey. - AFP.

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Malaysia's Education Setback

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

Hishammuddin Hussein, Malaysian Minister for Education.>

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

We must know our starting point.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Comment by P. GUNASEGARAM

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

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Dangers of U.S. Export Control Law & the Cybersecurity Market

Andrew Bigart

This article examines the export controls applicable to the field of cybersecurity, an increasingly global industry in which U.S. companies sell their products and services to multinational companies, U.S. agencies with overseas operations, and even foreign governments, when permitted. The cybersecurity market – both public and private – hit $60 billion in 2011 and is expected to increase steadily over the next several years. Indeed, cybersecurity is one of the few defense “growth” areas to buck recent U.S. budget cuts.

As U.S. companies continue to expand in the market, however, so too does the risk of non-compliance with the confusing web of U.S. laws and regulations that govern export-related activities. U.S. law places the burden of complying with export controls and economic sanctions squarely on U.S. companies and their officers and employees. The cybersecurity industry is no exception, and may be particularly vulnerable to government scrutiny given the strategic need to protect U.S. technological advantages, critical infrastructure, and access to confidential information. In this regard, violating U.S. export laws can result in criminal law enforcement actions, jail time, and significant fines and penalties, including debarment from federal contracting.

U.S. Export Controls

The U.S. government maintains a complex set of regulations that govern the export of goods – including technology, software, and technical data – to foreign countries and specified foreign entities and individuals.

The State Department’s Directorate of Defense Trade Controls (DDTC) regulates the export of defense articles, related technical data, and defense services listed on the United States Munitions List (USML) through the International Traffic in Arms Regulations (ITAR). All manufacturers, exporters, and brokers of defense articles, related technical data and defense services are required to register with DDTC. Registration with DDTC is a prerequisite to applying for export licenses.

The Department of Commerce’s Bureau of Industry and Security (BIS) regulates anything that is not listed on the USML, including the export of commercial and dual-use commodities, software, and technology through the Export Administration Regulations (EAR). Both DDTC and BIS regulate exports depending on an item’s technical characteristics, destination, end-user, and end-use. In this regard, cybersecurity products and services present a challenge because the exports may contain a mixture of different software, encryption functions, and controlled technical information.

Finally, although not the focus of this article, it’s import to note that the Department of Treasury’s Office of Foreign Assets Control (OFAC) enforces trade embargoes and economic sanctions against specific countries (Cuba, Iran, North Korea – you get the picture) and individuals and entities (terrorists, narcotics traffickers and other bad guys). OFAC publishes the names of these ne’er-do-wells in the “Specially Designated Nationals” or “SDN” list. (BIS also maintains several lists of prohibited persons). Together, the Commerce and State export controls and OFAC sanctions programs are designed to protect U.S. foreign policy interests and to prevent U.S. persons from doing business with the wrong types of customers.

Classifying Cybersecurity Products and Services for Export Purposes

Whether an export license or other authorization is required for the export of a cybersecurity product is a fact-specific determination that includes a review of the items or services being exported, the destination, end-user and end-use. Given the complexity in classifying cybersecurity-related items, many companies request commodity jurisdiction determinations from the export agencies for guidance on whether their products are properly classified under the DDTC or BIS frameworks. These determinations, which are published, in part, by DDTC and BIS, highlight the breadth of USML and EAR classifications that potentially cover cybersecurity products and software. For example, DDTC has advised that a company’s “Customizable USB thumb drive that conducts targeted searches of digital assets for critical files” is classified under the USML section XI, which covers military electronics, as are certain military-grade GPS and cryptography products.

On the other hand, data manipulation software that uses Security Socket Layer (SSL) encryption usually qualifies for BIS’s “Mass Market Encryption” exception for items classified under Export Control Classification Numbers 5A992 and 5D992. This exception allows certain “publicly available” software to be exported to most countries without a license if the exporter registers with BIS by obtaining an Encryption Registration Number.

Moreover, both DDTC and BIS regulations define an export as including the disclosure (orally or visually) of technical information or software to a foreign person. Thus, a “deemed export” takes place when technology or software is released to foreign a person or national for visual inspection (such as reading technical specifications, plans, blueprints, etc.); when technology is exchanged orally with a foreign person or national; or when technology is made available by practice or application to a foreign person or nationals under the guidance of persons with knowledge of the technology. Depending on the nature of the technology and the country to which the technology is disclosed, releasing technology to a foreign person or national may require an export license (or in the case of ITAR possibly a Technical Assistance Agreement, depending on the individual circumstances).

Why Should The Cybersecurity Industry Care?

As the importance of cybersecurity has grown from a national defense perspective, so too has the U.S. government’s focus on regulating the export of sensitive technology. A number of recent U.S. government enforcement actions involve U.S. persons selling software, encryption products, and other cybersecurity related information abroad:

• In 2010, a resident of China was sentenced by a federal court to serve 96 months in prison for his efforts to obtain sensitive encryption, communications, and global positioning system equipment without a DDTC license.
• In 2009, a U.S. national working for Technical Integration Group was sentenced to six years in prison and paid $1.1 million for exporting mobile telecommunications equipment containing encryption properties to Iraq, in violation of the then U.S. embargo on Iraq.
• In 2008, two companies paid administrative penalties to settle BIS allegations that the companies exported U.S.-origin engineering software to Iran and to companies on the BIS Entity List without the required licenses.
• In 2002, Neopoint Inc. paid a $95,000 civil penalty to settle charges that it unlawfully exported 128-bit encryption software to South Korea.

The consequences for non-compliance with U.S. laws overseas are severe and can include large monetary fines per violation for businesses, and similar monetary fines and imprisonment for individuals. On top of that, in cases of significant violations, the consequences can include a denial of future export privileges and federal contract debarment, which is particular onerous for cybersecurity companies dependent primarily on business from U.S. government contracts.

What Can My Company Do To Minimize Risk When Selling Abroad?

The first step in minimizing export-related risk is to understand the nature of your business and potential customers, including the who, what, and where of every export transaction. The U.S. government expects companies that export to inform themselves of the facts of any export transaction and exercise reasonable care in complying with applicable U.S. export requirements. This process requires companies to determine the appropriate export classifications for their products and services. If any of your products or services falls under the USML, then you must register with DDTC as a manufacturer, exporter, or brokerer.

The next step is to develop a compliance plan that is tailored to your company’s specific export needs. A compliance plan should address, at a minimum, the following:

• Overview of applicable laws;
• A list of prohibited activities and employee responsibilities;
• Regular compliance training for employees;
• Required checking of all business partners and customers against OFAC’s SDN list on a transactional basis;
• Rigorous internal financial and audit controls to monitor export and FCPA compliance; and
• Required due diligence on all agents or independent contractors and required written contracts with export, economic sanctions, and FCPA prohibitions and certifications.

Finally, under U.S. law, exporters that become aware of – or should be aware of – “red flags” are required to resolve them before proceeding with a transaction. Monitoring the activities of your business partners overseas is particularly important because the conscious avoidance of knowledge of wrong doing is not a defense. Typical red flags include:

• Transactions with incomplete information regarding end users, country of origin or destination;
• Exportation of products that do not not fit the buyer’s line of business;
• Unusual contract terms, payments in cash, or requests for high commissions;
• Direct or indirect payments to government officials or their families or payments to persons outside the normal scope of a transaction;
• Payment for travel, lodging, or business expenses or extravagant gifts or entertaining of government officials or their families; and
• Consultants who are connected with a foreign government or political party.

What if a Potential Violation Arises?

Unfortunately, for some companies the legal risks of doing business abroad are not apparent until something goes wrong. If you discover questionable business practices regarding your export-related activities, stop the conduct in question immediately and report the activities to your company’s compliance officer. If your company finds itself in such a position, consider the option of a voluntary disclosure. Each of the agencies discussed above – Commerce, State, and OFAC – maintain procedures that encourage companies to self-report violations under certain circumstances. Although these programs do not allow companies to evade liability completely, they do offer reduced penalties and other incentives.

Conclusion

There is no doubt that the export market for cybersecurity products and services remains an attractive and growing market for U.S. exporters. Before taking the leap overseas, however, take the time to review and understand your company’s responsibilities under U.S. export control and economic sanctions. An ounce of prevention in this regard goes a long way in keeping your business profitable and out of trouble.

Eric Savitz, Forbes Staff  -  Guest post written By Andrew Bigart
Andrew Bigart is an associate with Venable LLP, a Washington-based law firm.
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China successfully launches two more Beidou navigation satellites

China has moved a step closer to completing its own navigation and positioning satellite network with the launch of two more navigation satellites.

China plans to launch 35 navigation satellites

It brings the Beidou system, which became operational with coverage of China last December, to 13 satellites.

To have global coverage, the country eventually aims to have 35 satellites in orbit by 2020.

China hopes that Beidou will wean it off the US Global Positioning System.

Just like GPS, the Chinese system is designed to let users determine their positions to within a few meters.

Beidou, also known as Compass, has been developed for both military and civilian uses.

The two satellites went up on Monday morning from the Xichang Satellite Launch Centre in southwest Sichuan province.

They were carried on a Long March-3B rocket, according to the state-run Xinhua news agency.

"The two satellites will help improve the accuracy of the Beidou, or Compass system," Xichang Satellite Launch Centre said in a statement carried by the agency.

• Sat-nav systems determine a position by measuring the distances to a number of known locations - the spacecraft constellation in orbit
• In practice, a sat-nav receiver will capture atomic-clock time signals sent from the satellites and convert them into the respective distances
• A sat-nav device will use the data sent from at least four satellites to get the very best estimate of its position - whether on the ground or in the sky
• The whole system is monitored from the ground to ensure satellite clocks do not drift and give out timings that might mislead the user

Now partially operational, Beidou makes China only the third country in the world, after the US and Russia, to have its own navigation system.

Russia's Glonass satellite network has 31 satellites in orbit, but only 24 of them are operational. Four more are in reserve, one undergoing trials, and two under maintenance.

According to the Russian Space Agency, Roscosmos, Russia plans to spend $694m (£427m) on its Glonass system this year.

At a recent annual Satellite Navigation Forum in Moscow, Russia's deputy prime minister Vladislav Surkov said that more than 300 billion roubles (£6bn, $10.2bn) have been budgeted to further develop Glonass and bring 30 satellites into operation by 2020.

Europe has also been building a navigation system, called Galileo, which has two satellites in orbit, launched in October last year. The next two are scheduled to follow later this year.

The space project of the European Commission, the EU's executive arm, plans to have all 26 Galileo satellites in orbit by the end of 2015. - BBC Newscribe : get free news in real time

Play Video

China has successfully launched a pair of navigation satellites. The launch took place on Sunday Morning from Xichang Satellite Launch Center and marks the first time the Long March 3B launch vehicle has been used for this kind of mission.

The Compass Navigation Satellite System is China’s second-generation satellite navigation system, capable of providing continuous, real-time passive 3D geo-spatial positioning and speed measurement.

The Long March-3B rocket carrying two satellites blasts off from the launch pad at the Xichang Satellite Launch Center in Xichang,southwest China's Sichuan Province,on April 30,2012.China successfully launched two satellites into space Monday morning,the 12th and 13th of its indigenous global navigation and positioning network known as Beidou, or Compass system,the launch center said.(Xinhua/Tao Ming)

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Bersih 3.0: the good, bad and ugly Malaysians

When people who want change take to the streets, some stick to the perimeters of the law while others, with ulterior motives, break barriers and turn things unruly. 

BERSIH 3.0 co-chairman Datuk Ambiga Sreenevasan's call for people to show their displeasure and demand for electoral reforms on Saturday brought out thousands of Malaysians from all races and walks of life in a colourful expression of free will.

But Ambiga's calls also brought out the professionals the hardcore saboteurs who dreamt of regime change and the provocateurs who simply wanted chaos and trigger a mass protest that could eventually lead to the toppling of a democratically-elected government.

These people dream of sustained protests on the streets that eventually drive away tourists and worry investors.

Taking law into their own hands: Rioters using sticks and helmets to smash a car carrying the TV3 news crew as it was leaving Jalan Tun Perak, Kuala Lumpur, in 1999, soon after the verdict on Anwar was delivered.

 

Such sustained protests were last seen during the reformasi years in the 1990s with the arrest and jailing of the then Deputy Prime Minister Datuk Seri Anwar Ibrahim.

The same man was present on Saturday, after warning months earlier that Middle East-style protests could hit South-East Asian countries if the reforms were delayed.



If Ambiga thought she could keep everyone within limits, then she was sadly mistaken.

Different people read differently into a mass protest and the hardcore politicians in the crowd have other ideas too.

Reportedly, PKR deputy president Azmin Ali had egged on the crowd to break down the police barriers at Dataran Merdeka that were put up due to a court order declaring the place “out of bounds”.

Ambiga had given the order to disperse at about 3pm, but some marched forward and broke thorough the barriers.

They pelted a police car with bottles and stones, jumped on it and smashed the windscreen and later overturned it. They then attacked a police motorcycle and tried to grab a policeman's gun.

The attack on the police car was reminiscent of an incident in 1999 when a TV3 car was set upon during the reformasi protest.

At a press conference later, Ambiga expressed shock over the turn of events.

The initial carnival mood where people were giving flowers to FRU personnel, who reciprocated by wearing them, was hijacked by a section of the crowd.

Ambiga described the violence as “highly unusual” and suspected that it could have been instigated by agent provocateurs.

The problem is that while Ambiga heads a civil rights movement which is winning support by the day from young people, who incidentally make up the bulk of new voters, she has chosen to tie that movement with Opposition politics.

She has given Opposition leaders an opportunity to ride on the Bersih movement.

Ostensibly, independent non-politicians fill the Bersih steering committee but they are also enthusiastic Pakatan Rakyat supporters.

The Opposition leaders are hardened politicians who have served time in jail, have courted arrest many times and are willing to take greater risk to trigger mass action.

During the two previous Bersih rallies in November 2007 and July 9 last year, a similar scene took place; a section of the crowd taking over the protest and turning it violent.

The same police force, which was peaceful in the morning, was forced to fire tear gas and arrest protesters in the afternoon.

It brings to mind DAP vice-chairman Senator Tunku Abdul Aziz Tunku Ibrahim's warning that by not using the stadiums offered, Bersih 3.0 “encourages Malaysians to break the law”.

He had said he supported an individual's constitutional right to assembly but felt that it must be exercised within the provisions of the law. “As a lawmaker I am not willing to break the law.”

That same advice could also apply to Ambiga, a lawyer, but for politicians who desire regime change it is another matter.

The clock has been turned back on a burgeoning civil rights movement, and what could have been a shining example of peaceful protest, turned into a violent demonstration.

There were no warnings of reprisals in the days leading to Bersih 3.0, no roadblocks set around the city and no arrest of people streaming in for the protest.

But all that was blown away after some protesters breached the police barriers.

Many of the protesters who turned up on Saturday were those who genuinely wanted to bring about positive change. They had meant well and they represented middle Malaysia.

And, for the thousands of young Malaysians who braved Ambiga's call for a sit-in protest over the slow pace of electoral reforms, it was their first baptism of fire and one that they can wear as a badge of honour.

Comment by BARADAN KUPPUSAMY

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A father's lament: The real world is not a game!

Learning should be fun, but that doesn't mean we should be trying to hook kids into playing computer games that just happen to teach. 

There was something about the Mama Bear family tech conference a week ago that creeped me out. I am the father of a 5-year-old boy, and perhaps a third of the people at this conference were trying to build apps for him. All the apps were well-intentioned. All were, at some level, educational.

Still, all the apps felt wrong to me. I wanted my son to have nothing to do with any of them.

I've been trying to understand why these educational apps were getting under my skin to this extent. It's not like I'm anti-technology when it comes to my child. He plays Angry Birds. We watch TV (together). He's a child of technology; how could he live in my house and not be?

A psychiatrist friend, listening to me rant about how these apps are trying to wilt my son's brain, sympathized, but not completely. Yes, he said, computer games can be addictive. In fact, in his opinion, teaching kids to expect the world to work like a computer game deprives them of learning real-world life skills.

But, he said, a truly good educational app can be effective like a book, or a teacher. You can't stick everything that pops up on a kid's iPad into the "evil" category.

So where are the really good apps?

The Vinci Tab II is an Android tablet preloaded with educational software for kids up to 5 years old. 

(Credit: Rafe Needleman/CNET)

A few days ago, I handed my son a Vinci tablet to try out. This is another well-intentioned product for young children. It comes with pre-installed educational games carefully geared to kids up to about my son's age (actually he's a little old for it, but I occasionally make him earn his keep as a product reviewer).

I had the same feeling of foreboding about this product as I did about many children's apps I see. The Vinci reinforced this, unfortunately. While the game did in fact have educational payloads, the mechanics were, for the most part, dumb. How does pressing a button at exactly the right time to jump over a beach ball on-screen teach anything but how to operate a game, no matter what the game says it's supposed to be about?

The boy liked the tablet and its apps. But it's how he liked them that bothered me. The software sucked him in, and whatever lessons it tried to teach him were obstacles that seemed about as interesting as the flatly drawn beach balls. The real red flag came when I told my boy it was time to put the tablet down. He was so dialed in to the game mechanics that he panicked. He wasn't in learning mode, he was in addiction mode.

Did he retain the factoids and basic math and spelling skills he learned while playing? I think so. But I don't want him learning this way.

There is hope, though.

On the DIY app, kids snap pictures of their projects. On the Web site, shown, family and friends can award badges.

(Credit: Screenshot by Rafe Needleman/CNET)

 

Yesterday, I read about the launch of DIY, a site and app for kids that's supposed to be a social destination for them to share their creative projects. They upload photos of stuff they've designed, built, written, or drawn, and then their friends and family members can award them badges.

Something about this site appealed to me as a father. Why was it better than all the learning games, with their impressive educational pedigrees? I couldn't put my finger on it. So I called up DIY's CEO, Zach Klein (formerly of Vimeo). Klein isn't a father himself, but he understands the child's mind. In a few words he crystalized for me what I find distasteful about most kids' programming.

"They are gravity-fed," he says. "There's a path of least resistance to get to the next screen." The player's job is to find that path, he says. Games like this "infantilize children."

The real world doesn't work like this. There are no shortcuts in life. You don't get a big reward for each tiny action. Real rewards take real work.

DIY, he says, "gives children more responsibility than they are used to, not less." And the rewards aren't programmed. They come from peers and family. "We want kids to feel satisfaction, but we're suggesting it will take time and craft and love to earn it."

DIY is in a very early stage, and is too basic at the moment. In the interest of protecting kids, there's no personal information anywhere on the system; kids' identities are masked behind handles, and if a family member awards a kid a sticker, the kid can't see who it came from. But the thinking of DIY is right, at least to me: Encourage kids to engage with the real world. Use social-networking mechanics to reinforce it.

I loaded the DIY app on to my old iPhone 3G. I plan to let my boy use the app on this device without supervision. It's the first app I've seen that passes that test for me. I'm not sure he'll use it, but I bet he will. And I like it, because it's an accessory to his physical world, not a replacement for it.

Rafe Needleman

Rafe reviews mobile apps and products for fun, and picks startups apart when he gets bored. He has evaluated thousands of new companies, most of which have since gone out of business. Feeling lucky? Send pitches to rafe@cnet.com. And watch Rafe's tech issues podcast, Reporters' Roundtable.

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