Financial Times hails Malaysia’s economic boom

KUALA LUMPUR: It is not always that emerging economies get favourable remarks from hard-boiled foreign media practitioners but Malaysia is getting more laudatory remarks from foreign journalists these days.

Take Jeremy Grant's article on Kuala Lumpur's soon-to-be-developed new financial centre, the Tun Razak Exchange, and the state of the Malaysian economy in the Financial Times Friday, for example.

He wrote: “With much of the world economy experiencing anaemic growth at best, it is hard to believe that any country would contemplate a project on this scale.

“Yet Malaysia's economy is enjoying a gravity-defying boom that is confounding sceptics. Second-quarter gross domestic product figures out this week showed the economy grew by 5.4%, way above consensus expectations of 4.6%, and the 4.9% recorded - after an upward revision - for the previous quarter.”

Grant attributed this development to big-ticket government spending, lending to business by well-capitalised banks, and robust consumer demand, fuelled by pay rises for civil servants and cash handouts that have even seen taxi drivers receive vouchers for free replacement tyres.

“Malaysia's stock market has been among the best performers in the world, buoyed by big flotations including Felda, a state-controlled palm oil producer, which was the second-largest initial public offering after Facebook when it raised over USD2bil last month. Bankers are cashing in with a parade of further IPOs expected within months,” he added.

“Much of the impetus behind the growth comes from the “economic transformation programme” initiated by Prime Minister Datuk Seri Najib Tun Razak when he came to power in 2009.

This involves dozens of government-backed projects designed to boost per capita income to USD15,500 by 2020, from USD9,600 last year and lift Malaysia out of its “middle-income trap”, Grant wrote.

Over spending: Analysts say one nagging concern for Malaysia is the rising household debt caused by the rapid growth in credit card usage.

The Financial Times also quoted Christian de Guzman, an analyst at Moody's, a rating agency, who admitted he was sceptical about the programme's ability to spur private sector development when it was launched. De Guzman is more convinced now, adding that “The proof of the pudding is in the eating but so far they are on track. In aggregate there are just so many things going on [in the economy].”

Grant wrote that “Not only has Malaysia experienced strong domestic demand offsetting its vulnerability to weakening demand for its exports - much of them electronics destined for Europe; it has also benefited from deeper ties with economies in Asia.

Moody's says that in 2006 the United States was Malaysia's largest trading partner, absorbing 18.8 per cent of its exports, while Asia Pacific accounted for 60 per cent. By last year the US share had dwindled to 8.3 per cent while Asia Pacific jumped to 69 per cent.

Malaysia's healthy economy - and the resulting “feel good” factor - stands in contrast to growing anxiety among Malaysia's neighbours in south-east Asia as the global downturn has tarnished their economies.

Analysts point out one nagging concern for Malaysia: rising household debt, caused by rapid growth in credit card usage.

As the transformation programme's projects take root, Grant wrote that Bank Negara Malaysia is forecasting full-year growth at the upper end of its 4-5 per cent.

Amidst this scenario, the Financial Times also quoted Rahul Bajoria, an anaylst at Barclays, as saying that: “We expect momentum to remain underpinned as the project-based nature of these investments means that it is unlikely to be halted abruptly.” - Bernama

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Malaysia's growth forecasts raised after the actual 5.4% in Q2, 2012

House price hike likely

Penang properties said to increase 5%-10% due to more costly cement

GEORGE TOWN: The selling price of properties in Penang will soon surge by 5%-10% following the recent move by Lafarge Malayan Cement to raise cement prices by about 6%, according to housing developers here.

Following Lafarge's announcement, a 50kg bag of cement is now priced at RM17.50, compared to RM16.50 before the hike.

Penang Master Builders & Building Materials Dealers Association president Lim Kai Seng said 60% to 80% of the materials used for a building comprised cement and cement-related materials.

“This is why an increase in cement price will have a significant impact on property prices.

Lim: ‘The price of sand is now RM40- RM43 per cu yard.’

“The other cement manufacturers in the country have sent signals that they will raise prices very soon,” Lim said.

There are six cement producers in Malaysia, namely YTL Cement Bhd, Tasek Corp Bhd, Cement Industries of Malaysia Bhd, Lafarge, CMS Cement Sdn Bhd, and Holcim (M) Sdn Bhd.

Only Sarawak-based CMS Cement has confirmed it would keep prices at the current level.

Lim said the price of other essential building materials such as sand and aggregate had also increased.

“The price of sand is now between RM40 and RM43 per cu yard, depending on the grade, compared to RM38-RM40 earlier this year.

“The price of aggregates is now at RM21 per tonne, compared to RM20 per tonne earlier this year,” he said.

House prices on the island are expected to rise by 10%, while in Seberang Prai, housing prices are expected rise by 5%, following the hike in cement price.

Kuala Lumpur-based developers such as Mah Sing Group Bhd and SP Setia Bhd with projects in Penang will continue to absorb the cost of the cement price increase.

Ideal Property Development Sdn Bhd managing director Datuk Alex Ooi said the company was now revising the selling prices of its new projects upwards, due to the hike in cement price.

Ooi: ‘There will be a 10% hike in the selling price of properties in Penang.’

“There will be at least a 10% hike in the selling price of properties on the island.

“A hike in cement price means the price of all cement-related products such as concrete and bricks will rise. Construction cost will go up by between 15% and 20%.

“We expect the rest of the cement manufacturers in the country to adjust the price of cement upwards in the next one to two months,” he said.

In addition to the rise in cement prices, the cost of labour and transportation charges have also increased this year.

Tambun Indah Land Bhd managing director K.S. Teh said the cost of labour had increased to RM45 per day this year, compared to RM35 a year ago.

Transportation charges for sand have increased to RM450 per truck load this year from RM400 a year ago.

“There is also a labour shortage, as many Indonesian workers have gone back to Indonesia, which is booming currently.

“The selling price of properties will be impacted by the hike in raw materials and labour costs.

“However, Tambun Indah will absorb the increase in the price of raw materials until year-end.

“We will revise our pricing next year,” he added.

Teh said the selling price of properties on the island would increase more because of the additional transportation charges to ferry the raw materials to the island.

“This is why the increase in property prices on the island will be around 10%, compared to about 5% in Seberang Prai,” he said.

Tambun Indah will be launching next month the Straits Garden@Jelutong on the island, the Pearl Residence@Pearl City and Pearl Indah@Pearl City projects in Simpang Ampat.

The Straits Garden is a high-rise project comprising 183 condominiums priced from RM688,000 onwards, while the Pearl Residence@Pearl City and Pearl Indah@Pearl City schemes comprise landed properties priced between RM353,000 and RM508,000.

Mah Sing managing director and chief executive Tan Sri Leong Hoy Kum said the cement price hike would have less than a 1% impact on construction cost.

“Most of our projects have been tendered out and the construction costs are already locked in,” he added.

SP Setia property (north) general manager Khoo Teck Chong said the group would absorb this impact for now to be competitive.

”If other raw material prices such as bricks, rebar and tiles were to increase drastically, we may then have to review and adjust our property selling price accordingly,” Khoo added.

Meanwhile, the Malaysian Competition Commission (MyCC) chief executive officer Shila Dorai Raj had said the price hike by cement manufacturers did not at this juncture warrant a formal investigation.

“Price increases are by themselves not anti-competitive in nature. However, if there is evidence of collusion among the competitors to increase prices, this would be of concern to MyCC and may merit an investigation,” she said.

By DAVID TAN davidtan@thestar.com.my

Malaysia's growth forecasts raised after the actual 5.4% in Q2, 2012

 Malaysia's economy up 5.4% in Q2, manufacturing, demand support growth 

KUALA LUMPUR: Malaysia's economic growth, as measured by gross domestic product (GDP), for the second quarter ended June 30 rose by an unexpected 5.4% year-on-year, underpinned by an expansion in manufacturing and robust domestic demand.

GDP growth for the first quarter was revised to 4.9% from 4.7%, while growth for the first half of the year stood at 5.1% compared with the same period a year ago. Compared with the first quarter, GDP expanded by 3%.

In the supply side of the economy, only the agricultural sector saw a contraction due to lower crude palm oil production. Manufacturing, services, construction and mining all posted growth. Domestic demand jumped 13.8% for the quarter and rose 11.8% for the first-half.

The country's second-quarter GDP numbers came as a surprise to many economists, whose median forecast was for a 4.6% expansion. Growth for the quarter even exceeded the most optimistic forecast of 5.2%.

Zeti (far right) attending the briefing. With her are other Bank Negara officials

Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said at a briefing following the release of the GDP data that the surge in private investment was the most encouraging aspect of the economy.

“Private investment has made a strong return because the investment climate has improved tremendously, with Malaysia moving up the rankings of various surveys in terms of competitiveness, costs and ease of doing business,” she said.

Zeti said the improvement was underscored by the higher implementation of investments by domestic and foreign investors. She added that civil engineering projects in the oil and gas, transport, utilities and services industries had helped spur growth in the construction sector.

By numbers, investments from the public and private sectors jumped 26.1% year-on-year for the quarter under review, with the first half rising 21.3%.


By sector, private investments rose 24.6% while public investments surged 28.9%. For the first half, private sector investments grew 22.4% while public sector investments expanded 19.5%.

Consumption rose 8.9% for the quarter and 11.8% in the first half. By sector, private consumption increased 8.8% for the quarter and 8.1% for the first half while public consumption expanded 9.4% for the quarter and 8.4% in the first half.

Zeti said monetary policy continued to be supportive of growth and that for the rest of the year, risks weighed on growth rather than on inflation with external headwinds still overshadowing the outlook.

She said it would take time for the global economy to recover and this would need action from various stakeholders.

“At this point, we're maintaining our forecast of 4% to 5% GDP growth for the year but this may change when the budget is announced (on Sept 28). This will come in at the upper range of the forecast if growth is robust,” Zeti added.

Alliance Investment Bank Bhd chief economist Manokaran Mottain has revised GDP growth for the year to 4.7% from 4.5% previously, with the second half to record growth of 4.5%.

He told StarBiz the third quarter would see expansion at its slowest.

Manokaran said despite the surprising growth figures, the global and domestic economy's outlook for the rest of the year would still be dampened by the eurozone debt crisis, slower expansion in China and tepid growth in the United States.

“We believe the eurozone crisis will continue to have an impact on trade and this will show itself in slower exports growth,” he said.

He added that with a drop in manufacturing activity, sentiments would be affected, leading to slower growth in the domestic-oriented services sector as consumption slowed.

Manokaran said Purchasing Managers Index (PMI) for July indicated that exports would slow as demand dropped in developed markets.

CIMB Investment Bank Bhd economic research head Lee Heng Guie said in a report that the leading index for June suggested that the economy could weaken in the second half.

“We caution that a sharply high base in the second half of last year poses a hurdle to year-on-year growth,” he said.

He pointed out that the global Organisation for Economic Co-operation and Development composite leading together with regional high-frequency indicators, including trade and PMI, were still under external pressures.

Meanwhile, the Statistics Department released data showing that July prices as measured by the Consumer Price Index gained 1.4% year-on-year to 104.8 and remained unchanged compared with the previous month.

By FINTAN NG fintan@thestar.com.my The Star/Asia News Network

Economists turn bullish following better-than-expected growth in Q2

 
PETALING JAYA: Several economists have raised their gross domestic product (GDP) forecasts for Malaysia following better-than-expected growth for the second quarter ended June 30.

Malaysia's economic growth for the second quarter rose by an unexpected 5.4% year-on-year underpinned by an expansion in manufacturing and robust domestic demand.

GDP growth for the first quarter was revised to 4.9% from 4.7%, while growth for the first half of the year stood at 5.1% compared with the same period a year ago.

Compared with the first quarter, GDP expanded by 3%.

Hong Leong Investment Bank's (HLIB) research unit said that following the strong-than-expected second quarter data, it had raised its full-year 2012 GDP forecast to 5% (previously: 4.5%).

For the second half of 2012, HLIB Research expected GDP growth to dip to 4.5% year-on-year in the third quarter (dragged by subdued trade and manufacturing and higher base in the third quarter of 2011) before improving to 5.1% year-on-year in the fourth quarter, yielding an average of 4.8% year-on-year (first half: 5.1% year-on-year).

“We are still positive that line-up of the Economic Transformation Programme projects for the second-half and 2013 could still provide a strong support to GDP growth despite external uncertainty,” said HLIB Research.

According to Bloomberg, Goldman Sachs also raised Malaysia's GDP growth predictions to 4.6% from 3.8% for 2012, and to 5.3% from 5.2% for 2013.

Meanwhile, CIMB Investment Bank Bhd economic research head Lee Heng Guie said given the steady performance in the first half, he had raised the 2012 growth estimate to 5%, from 3.8% previously.

“However, this still implies a slower growth of 4.5% to 5% in the second half versus 5.1% in the first half,” said Lee in a report.

Lee warned that external headwinds still warranted caution as they remained hurdles to Malaysia's export growth.

Meanwhile, Maybank Investment Bank (IB) Research said its 2012 and 2013 growth forecasts of 4.4% and 5.1% respectively were under review.

“Provisionally, we expect 2012 growth to be around 5%, which implies a slightly slower growth of 4.8% in the second half as the global purchasing managers index in July signals that the global economy hence external demand will remain soft in the third quarter.”

Maybank IB Research said domestic demand would continue to be well supported by initiatives to sustain consumer spending, policies and measures to spur investments, and the roll-out and progress of big ticket infrastructure projects and capital expenditures in industries like oil, gas and energy.

By THOMAS HUONG huong@thestar.com.my The Star/Asia News Network

Dangerous Older Drivers: A Car is a Lethal Weapon

“She only drives to the store”.

“He doesn’t drive at night, he just drives to the doctor and to church”.

Imagine the justifications people can invent to allow dangerous aging parents to stay behind the wheel. These are statements from family members whose elder is no longer safe to drive, but they’re still driving.  No one has the guts to ask Dad or Mom to stop.   Since most accidents happen within 3 miles of home, the “only to church” or “only to the store” is not safer than anywhere else.

The National Safety Council publishes a journal called Family Safety and Health, and in its Fall, 2012 issue, an article, “Time to Hand Over the Keys” appears.  I was interviewed for the article.  As a former personal injury lawyer, I represented hundreds of victims of car accidents, some caused by older drivers who never should have been on the road.  That dangerous driver could be your dad, your grandma or your aunt.  The next generation needs to see the problem and face the fear about confronting it.

Research indicates that most people, when approached respectfully, will voluntarily give up driving.  However, “ most people” does not include the very stubborn, those in denial, and those elders with the kind of cognitive impairment that prevents them from actually understanding how impaired they are.  With those folks, their families desperately need a strategy.

Here’s a sampling of parts from the strategy I advocate that you use.

First, recognize the problem.  A car is a lethal weapon whether your elder is driving it a block from home or across the city.  It is not a safer weapon because your elder is closer to home.  That’s a fanatasy. Give it up. I met an 84 year old who was behind the wheel when he accidentally hit and killed his best friend in the driveway of his own apartment building.

Next, be honest and respectful and talk to your aging loved one about his or her driving. If you’ve see grandma careen across the street cutting off other cars, unaware of their presence, it’s time to gently ask her to give up the keys.  Try a one-on -one conversation first.

Next, add allies to your approach if the one-on-one is not successful.  Bring in a trusted friend, other family, or anyone Dad likes best.  Bring up the subject kindly and with acknowledgement that giving up driving is huge and that it means losing independence.  Use an outside professional if this doesn’t work.

Make alternative transportation arrangements.  If your elder lives in an urban area, many resources may be available for elders, from community vans to carpools from senior centers.  Beware of putting cognitively impaired elders on buses. They may be confused and get lost.  Rural dwellers must usually rely on family and friends to transport them.  The burden on adult children may stop them from facing the issue of a parent’s dangerous driving.

If the elder is too dangerous to continue driving, get rid of the car if you can.  Sometimes a caregiver can do the driving and the aging person keeps the car. If there is no caregiver or someone else’s car is used to transport, the elder’s car is a sad reminder and a temptation you don’t want kept in the driveway.  It’s too easy for Dad to get a duplicate set of keys made.

Use the law as a last resort.  The primary care doctor may be of help if willing to report the danger or need for retesting to the department of motor vehicles.  Some states allow you to report a dangerous driver and ask for license retesting anonymously.  The courts can be used to protect elders who are a danger to themselves or others. Guardianship can be used in extreme cases to give family permission to take the car away.

Some older drivers are fine, like my mother in law, Alice, 90.  She limits her driving to daytime. She is still quite sharp, has a great memory and sense of direction and pays attention to what is on the road.  I wouldn’t classify her as dangerous, but she’s in the minority at her age.

Asking an aging loved one to give up driving takes courage. It can draw extreme resistance, anger and refusal.  Facing that possibility requires a plan and perhaps a family conference before approaching a particularly difficult elder.  I urge you to find your courage if your elder is scaring you when he or she gets behind the wheel.  Sometimes elders know it’s time and will give up driving willingly when asked.  You might be lucky.  In any event, it’s time to take your chances if this article reminds you of anyone close to you.


By Carolyn Rosenblatt, Forbes Contributor

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America’s deadly love affair with guns

BARELY a month after the deadly shooting in Colorado which killed 12 people, six more lives were lost to another maniac with a gun, this time at a Sikh temple in Wisconsin.

Yet, like the earlier shootings, the whole episode is destined to quickly recede into the background.

For all its greatness, America is a nation that is easily distracted by the trivial at the expense of the critical, a nation that can barely hold its collective attention much beyond the 30 second sound bytes of its newscasters.

It is one of the many paradoxes of America.

Consider, for example, that the death of 3,000 people on 9/11 became the jumping-off point for more than a decade of war that cost thousands of lives and billions of dollars, whereas the 140,000 or so lives lost to gun violence since then has elicited no corresponding outrage or demand for action.

I suppose it’s always much harder to confront the enemy within than the enemy without, easier to go after strange men in far away places than face an ugly truth closer to home.

Besides, the gun culture is so much a part of the American fabric that to confront it is to challenge the way America thinks about itself.

Almost all of America’s great heroes were gunslingers or men who cut their teeth in war.

Guns are so much a part of society that pastors preach about the right to bear arms while banks give them away to good customers.

Even the courts have let stand the so called “Stand Your Ground Law” which basically gives citizens the right to use deadly force when confronted by an assailant even when such force is unnecessary.

Talk about a licence to kill.

Perhaps, there is a certain fatalism as well; a resignation that such senseless killings are the necessary price Americans must pay for their cherished right to bear arms.

What is incomprehensible, though, is the frequently used argument that a well-armed population is the best protection against government encroachment of individual freedom. It might have been an appropriate response in the aftermath of their war of independence 236 years ago, but it makes no sense today.

The gun culture is largely sustained and promoted by the all powerful gun lobby and the arms manufacturers who fund them.

Guns are a US$31bil (RM96bil) industry that brooks no interference.

Their power to destroy anyone who challenges them is legendary. Even simple calls for more stringent background checks on prospective gun buyers are enough to send them on the offensive.

Unsurprisingly, most politicians go out of their way to avoid offending the gun lobby, especially in an election year.

President Obama, for example, has offered communities affected by recent gun violence the sympathy of his heart but not the power of his office.

Even his prospective Republican challenger, Mitt Romney, one of whose signature achievements as governor of Massachusetts was a ban on assault weapons, has been cowered into silence.

And so they talk endlessly about the need for better mental healthcare for troubled young men or promise to begin a “conversation” about guns in America instead of actually taking the bull by the horns.

It is escapism and denial on a staggering scale.

The gun lobby, meanwhile, continues to push the asinine argument that it is not guns but people who kill.

Society has long recognised that cars, for example, can kill and maim if not used properly and have come up with stringent regulations replete with a licencing system to control and regulate its use.

No such rules apply to guns which can be bought legally by just about anyone and carried just about anywhere. And not just handguns but assault rifles and other military-type weapons.

There’s also no limit to how much weaponry a citizen can amass.

It is estimated that there are more than 300 million privately owned guns in the US (population 314 million), making it the most heavily armed civilian population in the world. Most Americans, however, do not own guns; the numbers are skewered because most gun owners tend to stockpile them.

And perversely, every time there is another mass shooting, gun sales actually explode, as people rush out to buy yet more guns. Indeed, gun sales rose 40% in the aftermath of the recent Colorado shooting.

The other thing about such shootings is that it shines a spotlight on the deep alienation of a rootless and disconnected generation brought up on video games, movies and music that glorify gratuitous violence and anti-social behaviour. When unstable young men, to whom killing is probably just another video game, have unlimited access to the most lethal weapons, can there be any doubt that carnage is inevitable?

We shouldn’t be surprised, therefore, to see more and more heavily armed gunmen emerge from the shadows of their dark and dreary lives to carry out mass murder as the ultimate thrill, the final expression of their banal existence.

Until Americans are willing to confront the power of the gun lobby and demand that their leaders show some political courage on the issue, America will remain a killing field.

DIPLOMATICALLY SPEAKING 

By DENNIS IGNATIUS

China, S.Korea demand Japan own up to its wars criminal past

China and South Korea on Wednesday pressed Japan to face up to its wartime past, as festering territorial disputes flared and Asia marked the anniversary of Tokyo's World War II surrender.

Both countries demanded Japan do more to atone for the brutal expansionism of the 20th century, while in Tokyo cabinet ministers paid tribute to fallen Japanese, including top war criminals, at a controversial shrine.

Beijing said the key issue was "whether Japan can really look in the mirror of history, heeding its lessons, holding hands with Asian people to face the future".

"The power is in the hands of Japan itself," it added. "We hope Japan can keep its promise to deal with and reflect on its invasion history and take concrete measures to safeguard China-Japan relations."

In Seoul, President Lee Myung-Bak, whose visit to disputed islands last week sent relations with Tokyo into virtual freefall, said Japan had to make amends for the sexual slavery it forced on women in its former colony.

"It was a breach of women's rights committed during wartime as well as a violation of universal human rights and historic justice. We urge the Japanese government to take responsible measures in this regard", Lee said.

War veterans and others wearing uniforms of the Imperial Navy march at the Yasukuni shrine to honour the dead on the 67th anniversary of Japan's surrender from World War II in Tokyo. China and South Korea have pressed Japan to face up to its wartime past, as festering territorial disputes flared and Asia marked the anniversary of Tokyo's World War II surrender.

"Chain links tangled in the history of Korea-Japan relations are hampering the common march toward a better tomorrow in the Northeast Asian region, as well as bilateral ties", Lee said.

The demands came as Japanese police arrested five pro-China activists who had landed on an island claimed by both Beijing and Tokyo.

The five were part of a group of activists from Hong Kong and Macau who had sailed to the archipelago, known as Senkaku in Japan and Diaoyu in China, with the intention of planting a Chinese flag.

Japan summoned the Chinese ambassador in response.

Their action came just days after South Korea's Lee landed on another set of disputed islands, kicking back into life a long-slumbering row with Japan, which this week morphed into a warning that Japan's emperor must apologise if he ever wanted to visit.

Tokyo rounded on Lee, who had previously been viewed as a pragmatist with whom it could deal.

Foreign Minister Koichiro Gemba said his comments on the emperor -- a respected figurehead in Japan -- were "extremely regrettable" and "difficult to comprehend".

As Seoul celebrated Liberation Day, around 500 South Koreans, including two former comfort women, rallied outside the Japanese embassy in Seoul.

It was their 1,035th weekly protest over the issue, which Tokyo insists was settled in a 1965 accord normalising relations.

The demonstration was echoed in Taiwan, which Japan occupied from 1985 until the war's end, where about 200 Taiwanese chanted slogans and tore up Japanese military flags.

Japan marked the 67th anniversary of its surrender with an official ceremony in which Emperor Akihito and Prime Minister Yoshihiko Noda led 6,000 people in prayer.

Their speeches used tried and tested formulae for regret, but avoided an explicit apology.

Two Japanese cabinet ministers visit a war shrine on the anniversary of Tokyo's World War II surrender, a move sets to inflame regional tensions amid increasingly bitter territorial disputes. Duration: 01:02

"During the war, (Japan) inflicted significant damage and pain on many countries, especially on people in Asian countries," Noda told the annual ceremony. "We deeply regret that."

Akihito said: "Recalling history, I profoundly hope that the suffering of war will never be repeated. I sincerely express mourning for those who lost their lives on the battlefields, and wish world peace and our country's further development."

Less diplomatically palatable were the pilgrimages by two of Noda's cabinet to Yasukuni Shrine in central Tokyo, which honours 2.5 million war dead -- including 14 leading war criminals from World War II.

Those enshrined at Yasukuni include General Hideki Tojo, the Japanese prime minister who ordered the attack on Pearl Harbor and was convicted of war crimes and hanged by a US-led tribunal.

Jin Matsubara, one of the ministers, told reporters he was there "in a personal capacity" and had used his visit to "remember ancestors who established the foundations of the prosperity of present-day Japan".

Japanese Emperor Akihito and Empress Michiko offer a silent prayer during an annual memorial service to honour the dead on the 67th anniversary of Japan's surrender from World War II in Tokyo. China and South Korea have pressed Japan to face up to its wartime past, as festering territorial disputes flared and Asia marked the anniversary of Tokyo's World War II surrender.

The pilgrimages were the first on the sensitive anniversary by any government minister since the centre-left Democratic Party of Japan came to power in 2009.

All three prime ministers since then have asked their cabinets to stay away, but Noda's crumbling support seemingly left him without sufficient power to prevent the visits.

North Korean state media said the ministers' actions were an "intolerable insult and mockery of the Asian people who suffered a lot due to the atrocities of Japan".

TOKYO (AFP)

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China demands Japan release activists over Diaoyu Islands landing  

China demands Japan release Chinese activists landed on the Chinese-owned Diaoyu Islands

By James Pomfret and Linda Sieg
HONG KONG/TOKYO | Wed Aug 15, 2012 11:52am EDT

(Reuters) - China demanded Japan immediately and unconditionally free 14 Chinese activists held over a protest landing on disputed islands on Wednesday, as tensions between Tokyo and its neighbors flared on the anniversary of the end of World War Two.



 Video:Review: Diaoyu Islands dispute CCTV News - CNTV English
Video: Japan arrests 14 Chinese activists on Diaoyu Islands issue CCTV News - CNTV English

The landing by the activists on an island chain in the East China Sea and their detention by Japan's coastguard came on a day of regional diplomatic jousting, underscoring how history dogs Japan's ties with China and South Korea.

In a meeting with Japan's ambassador to Beijing and a phone call with a Japanese official, Chinese Vice Foreign Minister Fu Ying lodged "solemn representations" over the latest territorial quarrel between Asia's two biggest economies.

Fu "demanded that Japan ensure the safety of 14 Chinese nationals and immediately and unconditionally release them", the Chinese Foreign Ministry said on its website.

Japan arrested five members of a group of activists from China, Hong Kong and Macau who landed on the island, Japan's coastguard said. China's Xinhua news agency said Japan's coastguard later detained nine activists on their boat. Japanese media also said that in all, 14 activists had been detained.

Earlier, South Korea prompted an official protest from Japan after comments by South Korean President Lee Myung-bak which some saw as going too far by insulting Japanese Emperor Akihito.

And in a move likely to add to the anger of Japan's neighbors, two Japanese cabinet ministers paid homage at a controversial Tokyo shrine for the war dead.

Memories of Japan's wartime occupation of much of China and colonization of South Korea run deep despite close economic ties in one of the world's wealthiest regions.

Japan protested to China's ambassador over the landing and Prime Minister Yoshihiko Noda said Tokyo would deal with the matter strictly in accordance with the law.

Xinhua said Japan had pushed tension "to a new high".

"The tensions are fully due to irresponsible clamoring and attempts by some Japanese politicians and activists to claim the islands, which ... indisputably belong to China," it said.

Friction over the uninhabited isles, near potentially rich gas deposits, had been heating up already.

Several of the activists, who set out from Hong Kong, jumped into the sea, swam and waded ashore. The group said its boat had been rammed by the coastguard and hit with water cannon. A Japanese official denied that any serious damage had been done to the boat.

Media published photographs of the activists planting a Chinese flag on a rocky shore.

"We've waited 10 years for this... We finally managed to get ashore," the captain of the protest ship was quoted as saying on Hong Kong television.

A separate row over rival claims by South Korea and Japan to other islands has also intensified, signaling how the region has failed to resolve differences nearly seven decades after Japan's defeat at the end of World War Two.

WARTIME MEMORIES LINGER

The friction in part reflect skepticism over the sincerity of Japan's apologies for wartime and colonial excesses.

On Tuesday, South Korea's Lee told a group of teachers that Emperor Akihito should apologize sincerely if he wants to visit South Korea, saying a repeat of his 1990 expression of "deepest regrets" would not suffice.

Japan, noting that it had never broached the idea of a visit by the emperor to South Korea, lodged a protest with Seoul over the remarks. Akihito has spent much of the past two decades trying to heal the wounds of a war waged in his father's name.

Lee, whose Friday visit to the islands claimed by South Korea and Japan frayed ties between the two U.S. allies, called Japan an "important partner that we should work with to open the future".

But in remarks commemorating Korea's liberation from Japan's 1910-1945 rule, he also said the countries' tangled history was "hampering the common march toward a better tomorrow".

He urged Japan to do more to resolve a dispute over compensation for Korean women abducted to serve as sex slaves for wartime Japanese soldiers, known by the euphemism "comfort women" in Japan and long a source of friction.

"It was a breach of women's rights committed during wartime as well as a violation of universal human rights and historic justice. We urge the Japanese government to take responsible measures in this regard," Lee said.

Japan says the matter was closed under a 1965 treaty establishing diplomatic ties. In 1993, Tokyo issued a statement in the name of its then-chief cabinet secretary apologizing to the women and two years later set up a fund to make payments to the women. South Korea says those moves were not official and so not enough.

Speaking at a ceremony marking the war's end on Wednesday, Japanese Prime Minister Yoshihiko Noda acknowledged the "enormous damage and suffering" caused by Japan to other countries, especially in Asia.

"We deeply reflect upon (that) and express our deepest condolences to the victims and their families," he said, vowing that Japan would never go to war again.

Tapping into anti-Japanese sentiment remains a way to seek public support in South Korea and China, which face leadership changes in coming months. And some experts say a new strain of nationalism is surfacing in Japan amid gloom about the future.

In a sign of the domestic pressures in Japan, National Public Safety Commission Chairman Jin Matsubara and Transport Minister Yuichiro Hata visited the Yasukuni shrine for war dead, defying Noda's urgings to stay away.

Many see the shrine as a symbol of Japan's past militarism because 14 Japanese wartime leaders convicted as war criminals by an Allied tribunal are honored there with Japan's war dead.

(Additional reporting by Kaori Kaneko and Stanley White in Tokyo, and Ben Blanchard and Chris Buckley in Beijing; Editing by Louise Ireland and Robert Birsel)

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Backgrounder: History proves Diaoyu Islands are China's territory

Xinhua | 2012-8-17 19:02:23

The Japanese government on Friday decided to release the 14 Chinese illegally detained Wednesday by Japanese authorities at the Diaoyu Islands after the Chinese government repeatedly demanded their "immediate and unconditional" release.

The 14 Chinese, despite obstruction by Japan Coast Guard patrol ships, arrived at the Diaoyu Islands by a Hong Kong fishing vessel to assert China's territorial claim to the islands.

Japanese police arrested them on suspicion of "illegal entry."

After their detention, China's Vice Foreign Minister Fu Ying reiterated China's sovereignty over the Diaoyu Islands and the affiliated islets, and demanded that the Japanese guarantee the safety of the citizens and free them immediately and unconditionally. On Thursday, China once again urged Japan to "immediately and unconditionally" release its nationals.

Demonstrators across China staged protests Thursday demanding the release of the 14 Chinese nationals.

The Diaoyu islands, in the East China Sea between China and Japan, have belonged to China since ancient times.

The islands are 120 nautical miles northeast of China's Taiwan province, 200 nautical miles east of China's mainland and 200 nautical miles west to Japan's southernmost island Okinawa.

Geologically the islands are attached to Taiwan. The waters around the islands are 100 to 150 meters deep and there is a 2,000-meter-deep oceanic trench between the islands and Japan's Okinawa islands.

Fishermen from China's Taiwan and Fujian and other provinces conducted activities such as fishing and collecting herbs in this area since ancient times.

The islands appeared on China's map since the Ming Dynasty (1368-1644).

There are records about the islands in a book published during the rule of Yong Le (1403 to 1424) in the Ming Dynasty, more than 400 years before Japan claimed discovery of the Diaoyu islands in 1884.

After the Ming Dynasty, the islands were recorded in many historical documents.

On a map published by Japan between 1783 and 1785, marking the boundary of the Ryukyu Kingdom, the Diaoyu islands were shown as belonging to China.

Japan never questioned China's sovereignty over the islands before the Sino-Japanese war of 1894-1895.

In April 1895, the government of the Qing Dynasty was forced to sign the Treaty of Shimonoseki, under which China ceded the whole island of Taiwan and its surrounding islands including the Penghu Islands to Japan.

Only since then has Japan had its own name for the area where the Diaoyu islands are located. Before that, Japanese maps marked the islands by their Chinese names.

Japan was occupied by the United Sates after it was defeated in the Second World War.

In 1951, Japan and the United States illegally signed a treaty in San Francisco without the presence of China, which was one of the victor countries in the Second World War.

Although article two of the treaty said that Japan surrendered its claim over Taiwan and the Penghu islands, article three wrongly assigned the Diaoyu islands, which Japan had stolen from China, and other islands, to the Ryukyu zone which was under US control.

The then Chinese Premier Zhou Enlai lodged a strong protest and said the Chinese government would never recognize the San Francisco Treaty.

In a statement on territorial waters in 1958, the Chinese government said that Japan should return all the territory of the People's Republic of China including Taiwan and the islands around it to China.

Consequently, there is no room for argument that the Diaoyu islands have historically been a part of China's territory.

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