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Saturday, 21 July 2012

No one can stop China in South China Sea but China - Former Philippines National Security Adviser

No one can stop China from claiming “indisputable sovereignty” over the West Philippine Sea (South China Sea)—except China itself or the authoritative power of world opinion.

Short of war, a war nobody wants or would wish, even the United States can only delay or impede the fulfillment of China’s inordinate ambition to gain sovereign control of 3 million square kilometers of this great inland sea that is also Southeast Asia’s maritime heartland.

This is the strategic context of China’s assertive ambiguity in the West Philippine Sea (South China Sea).

Just now, Beijing can only bluster and intimidate, as it probes for weaknesses in its rival claimants.

But once China can translate its economic power into military capability credible enough to challenge that of the United States—when the “time is right” in China’s terms—then the geopolitical configuration in the Asia-Pacific region will change radically.

And time and circumstances favor China. Analysts say China is likely to become the world’s largest economy in a decade or so.

If they are right, the Philippines has only 10 short years to prepare for what is likely to become an interesting Asia-Pacific future.

Long-term security

Given the constraints under which it’s working, the administration of President Benigno Aquino has so far done all that could possibly be done, in the short term, to defend our nation’s interests in the West Philippine Sea.

But in this case it’s not enough to deal with the immediate problem. Our nation’s long-term security hangs in the balance.

And to ensure our safety, we must look at the root of our nation’s security, which lies in our people—in everyone of us and nobody else.

If our country is to prevail in any challenge, if the Philippines is to become worthy of respect as a sovereign nation, we must first of all enable our people to become effective wealth creators.

We must make our country rich enough to enable us to acquire the means to defend our nation’s interests, to protect our people’s dignity and honor.

Nationhood infrastructure

To carry out the government’s strategies, policies, plans and programs to grow and develop the nation, we must strive urgently to create the four conditions necessary for growth and development.

Let us make no mistake, without these, the nation can hardly enforce its Constitution and its laws, and no development plan can succeed:

1. We must come to terms with ourselves. We must build among us the infrastructure of nationhood. We must be able to answer the basic question of who we are.

We must live the core values our forebears fought and died for: Dignity, honor, freedom, justice, self-determination, hard work, discipline, tolerance, mutual caring and compassion.

We must become a people at peace with themselves and with the world.

There is nothing our people cannot accomplish, if our identity and the goals we seek are articulated in terms of the core values taught us by our heroes and martyrs.

These core values define what is right or wrong for our people. They guide us, like our heroes and martyrs, to live only when it is right to live, and to die only when it is right to die.

2. No matter what it takes, we must end our internal wars. Our radical insurgency is kept alive by our grievous inequality and the elemental injustice of mass poverty. And both are caused by corruption and misgovernment.

The same is true of our separatist conflict in Mindanao. There popular frustrations are worsened by rivalries over land and livelihood, and the situation is complicated by ethnic and religious enmities.

3. We must complete all the land and nonland reforms we still need to do. Not only will their completion make rebellion, separatism and mutiny irrelevant but will also accelerate our nation’s growth. And, finally, it will unite our people.

4. We must transfer the power of the few over the state to the people as citizens. In the World Bank’s view, we are a country where state policies and their implementation serve not the common good but those of special interests.

The capture of the state and its regulatory agencies by vested interest groups has made our economy the least competitive among comparable economies in East Asia.

In sum, we must put our house in order. We must level our popular playing field to grow and develop the nation—and so enable our people to surmount any challenge.

No luxury of time

As we create the four conditions necessary for growth and development, we must also carry out our development plans. Given the uncertainties building up in East Asia, we do not have the luxury of time.

It is the Chinese people’s historic sense that is driving their country’s rise. They count their recovery from generations of humiliation at the hands of the great powers as lasting 150 years starting from the initial European effort to open up China around 1800.

In 1949, Mao Zedong proclaimed China had stood up. But China began to recover economically only after Deng Xiaoping’s reforms (1978). In three and a half decades, China has become the world’s second largest economy.

We, too, must tap into our people’s sense of nationality—and do no less. By creating the four conditions necessary for growth and development that I cited above, and by simultaneously carrying out the government’s development plans, we can change our country—we can modernize it without leaving anyone behind—during the next 10 years.

By that time, we will also have nurtured the inclusive institutions that will sustain our people’s capacities for wealth creation.

No primrose paths

Let us not delude ourselves. There are no short cuts—no primrose paths—to growth and development. We must never give up even if our country’s rise takes 150 years or more.

We have no choice. The alternative is too dire to contemplate.

We must work together to prevent the situation developing that reduces our country into a tributary, a vassal, a province of a great power.

Those who sacrificed and died for us and for generations yet to come will never forgive us if we fail to summon the courage and the will to take the radical steps toward the Filipino future: To deliberately put in place the four conditions necessary for growth and development without delay.

By:

China launches Sansha City Maritime management in South China Sea

Sansha City to administer South China Sea

HAIKOU: Maritime management has begun in the newly established city of Sansha in the South China Sea, as local Chinese authorities hope to enhance maritime safety there and protect the environment.




 The building on Yongping Island will be home to the Sansha city government. [File photo]

The State Council, or China's cabinet, approved the establishment of Sansha, a prefectural-level city in south China's Hainan province, to administer the Xisha (Paracels) , Zhongsha (Middles Sands) and Nansha (Spratlys) islands and their surrounding waters in the South China Sea on June 21.



"We began maritime management there soon after the State Council's decision was made," a spokesman with the Hainan Maritime Safety Administration said Thursday.

Maritime personnel are working to build infrastructure, buoy tenders, supply bases, light stations and radio stations in order to enhance maritime supervision and rescue capabilities, the spokesman said.

Maritime authorities are also studying sea travel routes in the area and considering introducing new laws to regulate traffic, as Sansha will develop its own tourism industry in the future and receive more ships, he said.

In addition, the Hainan Maritime Safety Administration is now researching the disposal of waste and pollutants and the supervision of yachts in an effort to keep a clean marine environment, the spokesman added.

"We are also planning to cruise regularly in the area in the future and set up a daily cruise mechanism when conditions are ripe," he said.

China on Tuesday set up an organizing committee for the legislative body of Sansha, officially beginning the formation of the government of the newly established city.

The government seat of Sansha will be stationed on Yongxing Island, part of the Xisha Islands.

Sansha administers over 200 islets, sandbanks and reefs in the Xisha, Zhongsha and Nansha islands.

China said it first discovered and named the reefs, islets and surrounding waters of Xisha, Zhongsha and Nansha islands. In 1959, it became the first country to set up an administrative office to exercise sovereignty over the area.

By Lu Hui. Xinhua

Mayor elected in China's newly established Sansha city

  
Representatives pose for group pictures after the first session of the first Sansha Municipal People's Congress held on Yongxing Island, the government seat of Sansha City, in south China's Hainan province, July 23, 2012. Forty-five deputies to the municipal people's congress attended the first session of the first Sansha Municipal People's Congress and cast their votes. Xiao Jie was elected the first mayor of the newly established Sansha city Monday afternoon. (Xinhua/Hou Jiansen)
 
YONGXING ISLAND, Hainan, July 23 (Xinhua) -- The newly established city of Sansha in the South China Sea elected its first mayor Monday afternoon.

Xiao Jie, 51, head of the Hainan Provincial Agriculture Department, was elected mayor in the first session of the first Sansha Municipal People's Congress held on Yongxing Island, the government seat of the city.

Xiao was also appointed secretary of the Sansha Municipal Committee of the Communist Party of China (CPC).

Fu Zhuang, 56, deputy director of Hainan Provincial Civil Air Defence Office, was elected director of the standing committee of Sansha Municipal People's Congress, the city's legislative body.

The legislative conference also elected three deputy mayors, head of the city's intermediate people's court and procuratorate. It also elected another five members of the standing committee of the Sansha Municipal People's Congress.

"It's a great honor to be the first mayor of Sansha, and it's also a brand new mission, challenge and test for me," said Xiao.

The first Sansha municipal government will be devoted to administrative management, economic development, people's livelihoods and environment protection in the coming five years, Xiao said.
The deputies and members of the standing committee of the municipal People's Congress should make positive contributions to the management, development and protection of the islands as well as the sea waters surrounding Xisha, Zhongsha and Nansha, said Fu.

Forty-five deputies to the municipal people's congress attended the first session of the first Sansha Municipal People's Congress and cast their votes.

The deputies, divided into groups from the Xisha, Nansha and Zhongsha islands, were elected Saturday by 1,100 residents from the islands.

The State Council, or China's cabinet, in June approved the establishment of Sansha, a prefectural-level city in south China's Hainan province to administer the Xisha, Zhongsha and Nansha islands and the surrounding waters in the South China Sea.

China's central military authority has approved the formation and deployment of a military garrison in Sansha.

Sources with the People's Liberation Army Guangzhou Military Command said Friday that the Central Military Commission had authorized it to form a garrison command in the city.

Yongxing Island is part of the Xisha Islands.

Anarchy in the financial markets!

 If regulators don't fix the lawlessness in international financial markets, future losses might us all in

THE lawlessness that pervades the international banking industry and especially the large Western banks must raise serious questions as to what perpetuates such barbarous behaviour among the custodians of people's money.

A big part of it is that the banking industry operates on greed rewarding its key employees via commissions for businesses brought in, deals made, and products sold even if they were dubious in the first place.

This encourages among the industry a bunch of highly dishonest salesman who shield themselves behind a veil of professionalism to dupe and seduce customers into believing their products are good and their processes are strong, secure and fair.

And they are aided by ineffectual regulators who parrot the trite phrase that free markets should not be overly regulated but turn a blind eye when the biggest financial institutions amass massive positions to fix markets and deceive customers, making a mockery of market freedom.

The Angel of Independence monument stands in front of HSBC’s headquarters in Mexico City. Europe’s biggest bank has been found laundering billion of dollars for drug cartels, terrorists and socalled pariah states, in a scandal which almost overshadows the Barclays’ one. — Reuters

The integrity of free markets was compromised because big players could affect the direction of markets, making the markets way less than perfect. Free markets basically became unfettered freedom to make money even at the expense of the market and the potential collapse of the world's financial system.

They did it yet again or to be more accurate they did it earlier but their misdeeds surfaced once more recently. UK's Barclay's bank made a US$453mil settlement with regulatory authorities in the United Kingdom and the United States for fixing the London interbank offered rate (Libor).

Now, it turns out that Barclay's may not be the only one. According to a Reuter's report, other major banks are likely to be involved and may try and go for a group settlement with regulators, the US' Commodities Futures Trading Commission and the UK's Financial Services Authority.

The banks being investigated include top names such as Citigroup, HSBC, Deutsche Bank and JPMorgan Chase. They all declined to comment to Reuters.

And one of these banks, Europe's biggest HSBC, has been found laundering billion of dollars for drug cartels, terrorists and so-called pariah states, in a scandal which almost overshadows the Barclays' one. That leads to the question of whether other banks were involved as well.

If they jointly fixed the Libor, the world's most used reference rate for borrowings and derivatives with an estimated US$550 trillion, yes trillion, of assets and derivatives tied to the rate, it will be a scandal of epic proportions and may result in settlements of an estimated US$20bil-US$40bil.

That settlement will only scratch the surface. Just 0.1% of US$550 trillion is US$550bil. That implies that if banks had been able to fraudulently fix Libor so that it was just 0.1 percentage points higher, customers throughout the world would have had to pay US$550bil more in interest charges in a year.

In March this year, five US banks, including Bank of America, Citigroup and JP Morgan Chase, made a landmark US$25bil settlement with the US government for foreclosure abuses.

Even so, only a small fraction of affected house buyers are expected to benefit from this. Many other banks, however, are relatively unaffected and have not been fully called to account for their role in the US subprime crisis, which could have caused a collapse of the world's financial system.

Banks which bundled together risky housing loans into credit derivative products and passed them off as those with higher credit rating than their individual ratings, aided by ratings agencies, got off scot free. No one was called to account.

That the financial system is still vulnerable and that all gaps have still not been closed is JP Morgan's recent loss of up to US$4bil from rogue trading by a London trader going by the name of The Whale.

There needs to be a new set of rules, regulations and behaviour one based on ethics, honesty, competency and checks and balances. Custodians of public money should be required to be above all else honest first and foremost.

They should be consummate professionals whose first duty should be to protect the deposits of customers and the bank's capital. They should not do anything which puts the bank at undue risk.

The insidious habit of rewarding those who bring in revenue with hefty commissions have to be stopped so that bankers do not take risks which put their banks at undue risk which will eventually require trillion of dollars in rescue from governments.

Regulators should again make clear demarcations between those financial institutions who are custodians of public money and those who are not and hold the former to much higher standards of accountability and integrity.

Shareholders of financial institutions who are custodians of public money should be led to expect a lower rate of return on their investments but they should also be led to expect a lower corresponding rate of risk befitting that of major institutions which are so vital for the proper functioning of the economy.

Enforcers should focus on bringing individuals responsible for these losses to book and throwing criminal charges at them which will put them behind bars for long periods of time, befitting their severity. Society at large tends to treat white-collar criminals with kid gloves.

When derivatives trading and deception brought major Wall Street firms such as Enron and WorldCom to their knees and eventual collapse in the early 2000s, enforcers brought to book key executives who are spending time behind bars.

But despite the near collapse of the world's financial system, despite fraudulent behaviour, despite misrepresentation and deception, despite selling structured products of dubious value and then promptly taking positions against them, despite fixing of reference interest rates, despite money laundering and despite many other crimes still to be unearthed, no one has been brought to account.

Fining institutions leaves those individuals responsible free. In fact, settlements made come with the agreement that there will be no prosecution of individual bank staff and gives major incentive for others to do the same.

They are safe in the belief that the institution will pay the price and they will go free in the event things turn wrong. Otherwise, they will end up millionaires and even billionaires. How convenient an arrangement!

There is anarchy in the financial markets and a state of lawlessness which encourages heists of unimaginable proportions without risk of punishment. If we don't watch it, the losses will do the world economy, and all of us, in.

A Question of Business
By P. GUNASEGARAM

> Independent consultant and writer P. Gunasegaram (t.p.guna@gmail.com) is amazed that people can get away with so much by just repeating two words: free markets.

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Friday, 20 July 2012

Malaysia's Days in the Sun - WSJ

New York, Hong Kong, London...Kuala Lumpur? Malaysia is going gangbusters. Now, it must sustain the momentum.



The Southeast Asian nation is home to the world's second and third largest initial public offerings this year—the $3.3 billion listing of Felda Global Ventures 5222.KU 0.00% and IHH Healthcare's $2 billion IPO. Meanwhile, the benchmark KLCI hit a record Wednesday after rising almost 7% this year.

State backing for Malaysian equities is a factor. Felda's IPO was largely bought by government-backed investors such as individual Malaysian states. Mandatory retirement savings boosts domestic pension funds that typically invest a lot in the local market too.

The economy is also performing well. Unemployment is low. Inflation is benign at about 2%. Gross domestic product growth is around 5%. That is important because the Malaysian stock market is mainly comprised of domestically focused companies.

Diverse exports are also relatively robust. Commodities like palm oil, petroleum and gas make up about a quarter of exports, while electronics and manufactured goods make up the rest. HSBC notes that Malaysia's exports are down just 2% since last August, compared to a 13% aggregate decline for shipments from Singapore, Thailand, Indonesia and the Philippines.

The country's banks look healthy too. Asset quality is strong and deleveraging by European banks isn't a big threat, says Moody's. "Their claims on the Malaysian economy amount to a mere 5% of GDP," notes the rating company.

Still, there are risks that warrant caution. A prolonged slump in global trade would hurt. Net exports are equal to about 16% of GDP—much higher than the ratio for neighbors such as Indonesia and the Philippines.

Politics is a wildcard too. Prime Minister Najib Razak wants to improve infrastructure and boost investment in sectors including oil and gas and tourism. Investors must hope that agenda stays on track regardless of the outcome of an election expected by early 2013.

Much of the good news may be priced in. Malaysia's benchmark stock index trades at about 15 times current earnings. Some analysts say that is rich. Malaysia has momentum. But much now depends on domestic politics and the depth of the weakness in global trade.

Write to Cynthia Koons at cynthia.koons@wsj.com

Thursday, 19 July 2012

Penang top politician's life tough?

Life’s tough at the top

Instead of ruling with skill and deftness, what comes out of Penang Chief Minister Lim Guan Eng's office is a steady rush of statements blaming the previous government or baiting its arch foes, MCA or Gerakan.

MANAGING success has been a difficult learning curve for DAP, once the country's premier Opposition party but now a ruling party in Penang and significant partner of a Pakatan Rakyat-ruling coalition in Selangor.

The Opposition party, founded in 1965, was swept into power on the back of the 2008 tsunami to lead Penang.

It came to the job with an image as a party preaching transparency and accountability but now after four plus rough years in power, DAP seems to be struggling to cope with its initial success, at least that's the perception.

Governing can be tough and DAP has been the first to admit that the honeymoon is long over. Party secretary-general and Penang Chief Minister Lim Guan Eng admitted in his first 100 days in power that it is a tough act to balance the different racial and socio-economic forces in the state. He had confessed that ruling was indeed tough and he had a steep learning curve.

Today, his administration, which was brimming with euphoria in 2008, is stuck on its own rails, unable to break free to energise the people of Penang a victim of its own success.

Instead of ruling with skill and deftness, what comes out of the 28th floor of Komtar, where Lim sits, is a steady rush of statements blaming the previous government or baiting its arch foes, MCA or Gerakan.

While the rank-and-file party members throughout the country will be pleased with the constant baiting game, some of his own party members in Penang, who are either born in Penang or have put deep roots in the state, are not amused.

A Universiti Kebangsaan Malaysia political analyst said: “I think the Chief Minister is in the process of transformation. He needs to act and talk more like a CM because right now he can't shed his combative, street fighter behaviour.”

Middle-class Penangites, whose living environment and homes are being threatened by hillside development, are not pleased. They want the state government to come to grips with this emotive issue.

It does not matter which government gave the approvals, what is more important is what is being done to put matters right.

The Chief Minister is caught in his own blame game, unable to get out of it to address the concerns of the people while some of his colleagues try their best to address the issues.

They hold dialogues, express concern and vow to do something about hillside development. But the statements coming out of the 28th floor just get more combative and provoking.

While the party's rank-and-file is happy, the statements infuriate the house-owning voters of Penang.

A Penang Chinese newspaper editor said: “Lim Guan Eng is so sure of the support he is getting from the Penang Chinese, who forms the majority, I do not think he really bothers what the press thinks of him. That's the reality.”

A large section of Malays, however, is alienated with the constant blame game in which they are not interested and want to see support for Islam, leadership of mosques and low-cost house ownership.

The escalating prices of houses and condominiums in the state are beyond the reach of most Malays as well as many Indians and some Chinese. The housing situation is no longer sustainable and potentially explosive.

As land is a state matter, they all look to the state government to make houses affordable but prices just keep escalating.

Furthermore, for the Malays, the abrupt resignation of DAP vice-chairman Tunku Abdul Aziz Tunku Ibrahim in May citing “irreconcilable differences” has cast doubts on the party's multi-racial image.

DAP's plan to woo Malays in large numbers is effectively derailed.

“One or two Malay leaders in DAP does not make it multi-racial or reflective of Malay support. The likelihood is that the Chinese on the island will back DAP but on the Malay-majority mainland, the votes will go to Barisan Nasional or Umno to be more precise.”

The loss of Tunku Aziz, a former vice-chairman of Transparency International, who joined DAP in 2008, was incalculable.

For the Indians, who can make or break the winner or loser in four parliamentary and eight state seats, the on-going feud between DAP chairman Karpal Singh and Penang Deputy Chief Minister Dr P. Ramasamy is an eye-opener. It shows that DAP is also rife with battles of ego and personality.

Lim himself is caught in a controversy of his own but has denied having an affair with a former staff member who was later transferred out of his office.

Initially, he threatened to sue anybody who even asked him about Ng Phaik Kheng, also known as Rainbow, but later, he and his wife Betty Chew, a Malacca state assemblyman, came out to strongly deny it.

For weeks, blogs and Facebook users had a field day speculating on the matter and Ng's “no comment” answer only fuelled more speculation.

However, another political analyst said the controversy had no political impact and only made good gossip, adding that he was against the use of personal issues in any campaign. But perception is everything in politics and politicians more than anybody else know this intrinsically.

The DAP image, which was seen as squeaky clean when it came to power in 2008, has been dented in the four years that it has been in power.

Most political parties, after working hard for years to win power, however, fail to manage the success properly, losing at the more imaginative work of balancing different forces.

It is even more difficult to retain power because of shifting public perception, which is what Lim has to contend with in the next general election. Lim looks set to retain his Penang power base but the test will be whether his PKR and PAS allies can hold on to their seats to give him support in the state.

COMMENT By BARADAN KUPPUSAMY
baradan@pc.jaring.my


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Huduh is good for Malaysia?

Enough with hudud

The growing number of politicians in this country who think that hudud is a good idea for Malaysia should see the video that is circulating online of the execution of an Afghan woman by her husband for alleged adultery.

HERE is a video circulating online which everyone in this country should watch:



It depicts the execution of an Afghan woman for alleged adultery. Her husband shoots her many times in the head while being cheered on by a crowd of men.

If anyone thinks this happened many years ago during the Taliban–era, they are sadly mistaken.
This gruesome event happened recently, in present-day non-Taliban-ruled Afghanistan.

The authorities are now looking for the executioner who has predictably disappeared. But really they should arrest the entire crowd that watched it, as accessories to murder.

I think this video should be shown to the growing number of politicians in this country who think hudud is a good idea for Malaysia. In particular, it should be shown to those who have just called for the same.

If they can watch the video without at least blanching and truly think that’s what they want, then I hope they will be held accountable for not only the exodus of Malaysians from this country but also for the drastic reduction in foreign investments coming in.

If they want to blow us back to the Stone Age, then they should at least be made to answer for it.

What is it with some of our politicians who seem to have taken leave of their senses?

Is the loathing for reading and knowledge so widespread that they have to show it off with such ill-informed statements?

In a world where problems are increasingly sophisticated and complicated, is hudud the only response these people can come up with?

Maybe they should get out a bit more.

They might like to travel to places like Pakistan where the literacy rate is all of 55% and where, in some areas, only 22% of women can read.

Or, go to Iran where a full 40% of the population lives below the poverty line. They might also like to notice the vast numbers of children forced to do backbreaking work in the Middle East.

Or they can stay home and instead of reading the tabloids and beefing up their knowledge on which actress is about to marry which rich man, they might like to read up on our very own Federal Constitution which basically says that not only can’t you have hudud laws, you also can’t impose it on anyone who isn’t Muslim.

Unless they have some subconscious need to lose the elections for their beloved party, then they might pause and see where this is going.

But introspection is not a Malaysian strong point.

Somebody floats an “idea” that they think will attract some press attention and next thing you know, everyone else is jumping on the bandwagon.

Never mind that none of the so-called hudud punishments can be found in the Quran.

For years, our Government has steadily pooh-poohed the idea of having hudud in this country because that was what the Opposition (or at least some of them) wanted. For years those of us who knew that hudud did not belong in the 21st century have held on to that as our bulwark against theocratic rule in this country.

Now, however, the government supporters have changed their tune and are echoing the Opposition’s line all those years ago. They seriously think this is the way to win an election?

If hudud is to be implemented, then I hope someone realises that it has to be implemented fairly.

Therefore not only will petty thieves get their hands cut off but major-league million-ringgit bribe-takers too. And no doubt we will have morality police patrolling the streets and checking that everyone is being good.

MUSINGS
By MARINA MAHATHIR 


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Wednesday, 18 July 2012

What’s minimum wage in Malaysia?

I REFER to the Minimum Wages Order which the Human Resources Minister made by notification in the Gazette on July 16.

Although the said Order comes into operation on Jan 1, it is frustrating and appalling that it does not define what components can constitute “wages” to make up the minimum wage of RM900 for Peninsula Malaysia and RM800 for Sabah, Sarawak and the Federal Territory of Labuan.

Throughout the Order, the term “wages” is used repeatedly without denoting clearly and explicitly whether the term refers to merely basic pay and/or includes fixed and regular allowances paid to employees e.g. shift allowances, attendance allowances, meal allowances, overtime meal allowances, laundry allowances, competency allowances, etc.

To add to the ambiguity, the illustration in Section 4 of the Order, introduces yet another undefined term “current basic wage”.

Is this meant to suggest that only basic wage can be part of the minimum wage?
While I understand that it is only an illustration, this does not help for purposes of clarity.
The National Wages Consultative Council Act 2011, under which the said Order was made, defines wages as having the same meaning assigned to it in section 2 of the Employment Act 1955.

The definition of wages under the Employment Act 1955 is “wages refer to basic wages and all other payments in cash payable to an employee for work done in respect of his contract of service.”

It excludes five types of payments which are mostly clearly defined. The definition of wages in the Employment Act 1955 is by no means a clear science.

Debate rages in the Labour Court even now, some 50 plus years after the Act was made law, as to what amounts to wages or not.

If one refers to paragraph three of the First Schedule of the Employment Act 1955, it states: “For the purposes of this Schedule wages means wages as defined in section 2 but shall not include any payment by way of commission, subsistence allowance and overtime payment”.

This means that under section 2 of the Employment Act 1955, commissions are part of wages. And since “wages” in the said Order refers to the definition of wages in section 2 of the Employment Act 1955, it follows that commissions are part of wages to make up the minimum wage.

Say if I hire a salesman and pay him a basic of RM500. In some months, when sales are good, he earns commissions in excess of RM400, and therefore his wages are more than RM900.

In other months, when sales are bad, his commissions are below RM400 and thus his wages are below RM900. It follows then that for the months where sales are good, I as an employer have not flouted the said Order whereas in the other months, I am in breach of the said Order.

Am I as an employer expected to watch the commission trend of each of my salesmen?

Imagine a car dealer who has 50 dealerships each hiring 20 salesmen. How am I to track this?

I do not underestimate the complexity of the issue of what components should or should not be part of wages.

I will be the first to agree that it is not an easy subject. However, if we are inclined to come up with a minimum wage with such uncertainty revolving around the word “wages”, surely the fixing of a minimum wage is to put the proverbial cart before the horse.

Let me remind the learned folks at the Human Resources Ministry and the Attorney-General’s Chambers that all these ambiguities are not doing any good to the employers or the employees; neither is it going to assist in its smooth implementation.

Unless a holistic and precise approach is made to the question of what constitutes “wages”, this very attempt to introduce a new regulation on minimum wages appears to be hurried through for political expediency and far removed from the concept of a high income society.\

FRUSTRATED HR PRACTITIONER
Kuala Lumpur

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