Many teachers not fit to teach, Malaysia Education Blueprint 2013-2025?

SHAH ALAM: About a third of English Language teachers in the country have been classified as “incapable” or “unfit” to teach the subject in schools.

Education Minister II Datuk Seri Idris Jusoh said such teachers had been sent for courses to improve their proficiency in the language.

“The ministry will also consider sending them overseas for exchange programmes to take up TESL (Teaching of English as a Second Language) courses,” he said during a dialogue session on the National Education Blueprint 2013-2025 held at the Karangkraf headquarters here yesterday.

Idris, who did not state the number of such teachers, assured that a good portion of them had enrolled in English courses locally.

Recently, it was revealed that about 70% out of the 60,000 English Language teachers, who sat for the English Language Cambridge Placement Test, performed poorly.

On allegations that the Government was sidelining vernacular schools through the blueprint, Idris denied this, saying “all schools were treated equally”.

“We do not sideline any party. In fact, the ministry encourages everyone to learn more languages. Be it Chinese, Tamil, French or Spanish, the government will be proud if a Malaysian can master these languages,” he stressed.

The United Chinese School Committees’ Association of Malaysia (Dong Zong) protested against the blueprint, saying that increasing teaching time for Bahasa Malaysia from 270 minutes to 300 minutes for lower primary and 180 minutes to 270 minutes for upper primary pupils was a move by the Government to eradicate mother tongue education.

- The Star/Asia News Network

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Emerging economies in turmoil

The G20 Summit last week discussed a new phenomenon – economic turmoil beginning in some major developing countries – even as coordination to prevent future crises is still elusive.



WHAT a difference half a year makes. At the G20 Summit last week, attention turned to the weakening of the emerging economies.

This was a contrast to previous summits. Then, the major developing countries were seen as the drivers of global growth, as the developed countries’ economies were faltering.

For two years or so, the European crisis was the focus of anxiety. The American economy was also plagued with domestic problems. The economies of the developing world, including China, India, Brazil and Indonesia and other Asean countries, were the safety net keeping the global economy afloat.

But in its report for the G20 summit in St Petersburg, the IMF had to do an embarrassing about-turn. It reversed its previous theory that the emerging economies were on the fast-track and keeping the global growth going.

It now warned that the stagnation in these countries is now a drag on the global economy.

Developing countries’ leaders correctly point out that their economies have been victims to the developed countries’ monetary policies, especially the United States’ “quantitative easing” (QE), under which the Federal Reserve has been pumping US$85bil (RM283bil) a month into its banking system.

A lot of this ended up in developing countries’ equity and bond markets, as US investors searched for higher yields there, since the US interest rates have been kept near zero.

However, when the Fed chairman indicated the QE would be “tapering off” and long-term interest rates started rising in response, the capital invested in developing countries has been flowing back to the US.

Vulnerable emerging economies have been hard hit, and worse may yet come. Especially vulnerable are those which have a current account deficit, since they depend on capital inflows to fund these deficits.

The outflow of needed capital and the increased risk have caused their currencies and their stock markets to plunge. This in turn leads to more capital outflow, due to anticipation of further falls in equity prices and in the domestic currency itself. The currency depreciation also fuels inflation.

Thus, former stalwarts India, Indonesia, Brazil, South Africa, Turkey are now the victims of a vicious circle.

In Indonesia, the currency fell last week across the 11,000 rupiah to the dollar mark (it was 9,500 a year ago), as the July monthly trade deficit rose to US$2.3bil (RM7.6bil) and the annual inflation rate hit 8.8% in August.

In India, the currency fell to 68 rupee to the dollar (from 56 a year ago) before recovering to 65 rupee after a well-received inaugural media conference by the new Central Bank Governor last Thursday.

India’s current account balance is running at around US$90bil a year, making it very dependent on capital inflows.

In mid-August, the government introduced limited capital control measures including restricting citizens’ money outflows to US$75,000 a person (from US$200,000 previously) and restraining local companies’ investments abroad.

The current account deficits are also significant in South Africa (US$25 billion in latest 12 months), Brazil (US$78 billion) and Turkey (US$54 billion), making them vulnerable to the vagaries of capital flows.

The South African rand has fallen in value by 18%. President Jacob Zuma blamed the currency slide on the potential tapering of the US quantitative easing.

“Decisions taken countries based solely on their own national interest can have serious implications for other countries,” he justifiably complained.

Malaysia’s currency value has also dropped recently, but the country is not as vulnerable as it has been running a current account surplus (US$14.2bil in the 12 months to June). However, the trade surplus has not been as strong recently and there is always a danger of “contagion effect”, which we know is often not based on rationality.

Countries affected have a few policy tools to deal with the situation. One is to try to stabilise the currency through the Central Bank purchasing the local currency by selling the US dollar.

But this is expensive, and the country may draw down its reserves, especially if speculators keep betting that its currency will fall by more. This is the bitter lesson that Thailand and others learnt in the 1997 financial crisis.

Another policy measure is capital controls. Ideally this should be imposed to prevent inflows.

But most countries allow the inflows in the good times, and then when these suddenly turn into outflows, the boom-bust problem if laid bare.

Malaysia in 1998-99 imposed controls on outflows of both residents and foreigners, which was effective in stopping the crisis. It was heavily criticised at that time, but now even the International Monetary Fund is recommending capital controls if the situation is bad enough.

Ultimately there has to be international reforms to prevent excessive capital flows from the source countries, and developed countries have to be disciplined so that their economic policies do not have negative fallout effects on developing countries.

But we will have to wait for such useful international coordination on capital flows and economic policies to take place.

Contributed by Global Trends, Martin Khor

> The views expressed are entirely the writer’s own.

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Time for crucial fiscal reforms: Malaysia Budget 2014

Analysts expect Budget 2014 to address deficit concerns 

 Citi researchs ays there is a high probability that GST implementation will be announced in the budget.

THE long queues at petrol stations on Monday night was a precursor of things to come. Motorists waited patiently for their turn to fill their petrol tanks just before the price of RON 95 and diesel jumped 20 sen a litre at midnight.

It was a scene played out a number of times over the years when petrol prices at the pump were increased as energy subsidies were cut.

This time around, the decision to trim the fuel subsidy was just part of a greater scheme.

It was the first salvo in the Government’s effort to bring down the fiscal deficit and eyes are now squarely on just what more needs to be done to whittle the deficit to 3% by 2015 and a balanced budget by 2020.

On the cards is the continued rationalisation of subsidies and the sequencing of big ticket projects to lessen the import bill that has squeezed the current account surplus in the second quarter.

Moody’s Investors Service, in its assessment of the move to hike the price of fuel, says it represents a credit positive step in the Government’s larger fiscal consolidation plan but it is waiting for details of which are to be unveiled in the October budget speech.

The cut in petrol subsidies will result in savings of RM1.1bil and RM3.3bil for 2014. Analysts are divided whether that will be enough for the Government to meet its deficit target of 4% this year as there are still large expenditure transfers. “We currently forecast the deficit at more than 4% of gross domestic product (GDP) and the lack of additional reforms would place the Government’s fiscal targets increasingly out of reach,” says Moody’s.

The need to maintain such transfers such as the 1Malaysia People’s Aid is to ease the burden on the low-income and vulnerable groups as subsidies get rationalised. The continuation of such expenditures also allows for targeted subsidies to low-income households.

The Government is also looking at a comprehensive social safety net and further fiscal measures would also be introduced. It is expected that more fiscal tightening measures will be introduced during the budget.

There was, however, a knee-jerk reaction to the cut in fuel subsidies. The ringgit bounced back from its slide against the US dollar but analysts say any sustainable climb will depend on what the market sees from further fiscal reform measures.

More than reducing subsidies 

The timing of announcing the outline of its fiscal reform measures and the first cut in fuel subsidies was in response to worries by the rating agencies of the fiscal debt situation in Malaysia.

“Faced with the risk of a sovereign ratings downgrade and investors’ focus on the domestic and external sectors’ vulnerabilities at a time of a retrenchment of foreign capital, it is crucial that Malaysia fine tunes its macroeconomic policy mix for growth and financial stability over the medium term,” says CIMB Research chief economist Lee Heng Guie.

He feels that a fundamental review is also required to weed out the country’s non-developmental, low priority and unproductive expenditure, while focusing on growth-oriented spending.

“The problem of overlapping spending schemes has to be avoided. More cost-saving initiatives, including a critical review and reform of the procurement system to combat wastages and leakages must be implemented.

“A fiscal consolidation strategy should be accompanied by better fiscal and financial control over public-private partnerships and state-owned enterprises, aimed at putting the gross public debt-to-GDP ratio as well as contingent liabilities (loans guaranteed by the federal government) on a firm downward trajectory in the medium-term,” he says.

GST and RPGT

It is widely expected that a schedule for implementing a Goods and Services tax will be revealed when the budget is announced in October.

Citi research, in a note, thinks there is a high probability that GST implementation will be announced in the budget. “We doubt the Government will tempt the wrath of ratings agencies after raising hopes last week with such talk,” it said.

Reports have quoted Tan Sri Irwan Serigar Abdullah, the secretary general of the Finance Ministry, as saying that if the GST is announced during the upcoming budget for implementation in 2015, the rate will likely be between 4% and 4.5%.

For one, the GST itself will mean more taxes as the Government is expected to generate more revenue from its introduction. One economist also adds that a lot of businesses are also in favour of a GST because of the billions of ringgit it stands to gain from an imput tax rebate.

He says that analysis has shown expenditure will also rise because of GST and therefore, targeted social welfare programmes for the low-income earners will be needed once GST is implemented.

The other tax that will likely see a hike is the real property gains tax (RPGT). A higher RPGT, together with possibility higher stamp duty charges for higher priced properties, should increase government revenue. But one big motive behind hiking the RPGT, and possible raising the floor price on properties eligible for purchase by foreigners, is to cool down the property sector and stem the rapid rise in property prices.

Property prices are generally considered to be unaffordable for a growing segment of the population.

Impact on the economy

Fiscal reforms will mean cutting down expenditure and some economists are expecting economy to feel the impact from slower government expenses.

“We cut our 2013 GDP growth forecast to 4.4% from 5% earlier and 2014 estimate to 5% from 5.2% earlier – both of these numbers are now below the consensus expectations,” says Credit Suisse in a report.

“This downgrade reflects headwinds against private consumption from higher fuel prices and likely delays of some infrastructure projects hitting investment.” With the budget projected to be less expansionary, some are suggesting that the Government will look at ways to boost exports and drive investments as a means to compensate for slower spending.

“It is left to be seen if there will be a cut in corporate taxes and whether that will be enough to drive investments. As it stands, a lot of companies have a lot of cash in their balance sheet and it will have to be a big cut to get them to start putting that money to work,” says an economist.

“If that done, then there will be a big gap between corporate and personal income taxes.”

- Contributed by   By JAGDEV SINGH SIDHU  jagdev@thestar.com.my

China's moon landing mission to use "secret weapons"

Representational Picture

Multiple "secret weapons" will be used on China's Chang'e-3 lunar probe, scheduled to launch at the end of this year for a moon landing mission, a key scientist said.

The mission will see a Chinese orbiter soft-land on a celestial body for the first time.

In addition to several cameras, Chang'e-3 will carry a near-ultraviolet astronomical telescope to observe stars, the galaxy and the universe from the moon, said Ouyang Ziyuan, a senior advisor to China's lunar program.

The telescope will observe the universe "farther and clearer" and will possibly bring new discoveries since there will be no disturbance from the aerosphere, ionosphere and magnetosphere on the moon, offering views free from interference from human activity, pollution and the magnetic field, said Ouyang.

He said at the First Beijing International Forum on Lunar and Deep-space Exploration held on Sept. 3-6 that the lander also carries an extreme ultraviolet camera, which will be used on the moon for the first time to monitor the transformation of the earth's plasmasphere and the planet's environmental change.

The Chang'e-3 moon rover will roam the moon's surface to patrol and explore the satellite.

Radar will be attached to the bottom of the rover to explore 100 to 200 meters beneath the moon's surface, which is unprecedented, said Ouyang.

Chang'e-3 has officially entered its launch stage, following research and manufacturing periods. It will be launched from the Xichang Satellite Launch Center in southwest China.

"The Chang'e-3 mission makes use of a plethora of innovative technologies.

It is an extremely difficult mission that carries great risk," Ma Xingrui, head of China's space exploration body and chief commander of the lunar program, said last month.

The Chang'e-3 mission is the second phase of China's lunar program, which includes orbiting, landing and returning to Earth.

It follows the successes of the Chang'e-2 missions, which include plotting a high-resolution, full-coverage lunar map.

Chang'e-3's carrier rocket has successfully gone through its first test, while the launch pad, control and ground application systems are ready for the mission.

China's deep-space exploration should go beyond the moon, and the country's scientists are actively preparing to implement plans to explore Mars, Venus and asteroids, said Ye Peijian, chief scientist of the Chang'e-3 program.

"Scientists are always prepared to conduct deep-space exploration and will do it after conditions permit," said Ye.

Ouyang said the scientific goals of solar system exploration include searching for extraterrestrial life; deepening understanding of Earth by exploring Mars, Venus and Jupiter; investigating the impact on Earth caused by solar activity and asteroid strikes; searching for new energies and resources; and preparing for mankind's future development.

Contributed by Xinhua

EduCity project, Iskandar Malaysia

Muhyiddin looking at a model of the MDIS campus during the ceremony in Nusajaya. Looking on is MDIS secretarygeneral Dr R. Theyvendran (second from right) and other dignitaries. 

NUSAJAYA: The EduCity project in Iskandar Malaysia has attracted some RM700mil in investments with the setting up of several international universities, says Deputy Prime Minister Tan Sri Muhyiddin Yassin.

Muhyiddin who is also Education Minister, said that 70% of Educity has been developed with three university campuses and two shared facilities.

“Besides EduCity, the Government is also developing Pagoh into a multi-varsity education hub and Bandar Sri Alam in Pasir Gudang as a ‘City of Knowledge’,” he said at the ground-breaking ceremony of Management Development Institute of Singapore (MDIS) here yesterday.

MDIS, founded in 1956, is Singapore’s oldest non-profit professional institute for lifelong learning. It will invest RM300mil for its campus, which is expected to open in 2015.

Muhyididn said EduCity, which covers an area of 121ha, was now drawing the attention of many international investors.

He stressed that the cross-border investments between Malaysia and Singapore were complementing each country’s economy and it was not a rivalry.

“Singapore boasts some of the best tertiary learning institutions in the world. There is much we can gain by joining forces to woo the best brains to study within our shores instead of competing with each other,” he added.

Malaysia is currently ranked the 11th largest exporter of educational services, providing a place to study for more than 90,000 students from over 100 nations.

Muhyiddin said the country hoped to more than double the figure to 200,000 students by 2020.

The integrated MDIS green campus would have state-of-the-art facilities to accommodate 2,000 students and this will be MDIS’ third campus after its headquarters and main campus in Singapore and its sister campus in Tashkent, Uzbekistan.

Other campuses within the EduCity include Newcastle University, Malborough College Malaysia and University of Southampton, while the Netherlands Maritime Institute of Technology is expected to open next month.

Later during a meet-the-people session at Kampung Maju Jaya in Kempas, Muhyiddin said the move to increase the price of RON95 and diesel by 20 sen has been positively received by investors and economists.

“Although it was a painful decision it had to be made to ensure the country’s economy is stable,” he said.

He said that if the Government did not take the necessary steps to increase the price of fuel, it would be worse for the country’s economy.

- Contributed by The Star/Asia News Network.

Malaysia Aims To Attract 200,000 International Students By 2020


Tan Sri Muhyiddin Yassin looking at MDIS campus model after ground breaking ceremony of the campus at Educity Nusajaya Johor

NUSAJAYA, Sept 5 (Bernama) -- The government aims to attract at least 200,000 international students to Malaysia by 2020, further cementing the country's status as one of the world's largest exporters of educational services, Tan Sri Muhyiddin Yassin said Thursday.

The deputy prime minister and education minister said Malaysia had increased its attractiveness as a tertiary education provider in the global market place.

The country is currently the world's 11th largest exporter of educational services, providing a place to study for over 90,000 students from over 100 nations, he said.

Muhyiddin spoke at the ground-breaking of the Nusajaya campus of the Management Development Institute of Singapore (MDIS) at Educity, Nusajaya, here.

The RM300-million MDIS campus is the largest overseas investment for the Singapore-based educational institution.

Muhyiddin said the education services sector was one of the targeted nine economic pillars in the Comprehensive Development Plan of the Iskandar Malaysia development corridor, offering excellent investment opportunities for local and foreign investors.

The government, he said, had made a conscious decision to prioritise the private education sector.

"One of the Entry Point Projects identified under Malaysia's Economic Transformation Programme is to transform the economic growth corridor in Johor into Asia's choice destination for education by attracting renowned international universities and colleges," he said.

Educity in Nusajaya will make world-class education more accessible to Malaysians and other people in the region, he said, adding that the education enclave was expected to accommodate 16,000 students at full capacity.

The deputy prime minister said 214 acres (86.6 hectares) or 70 per cent of the total 300 acres (121.4 hectares) of Educity had been developed, with three campuses and two shared facilities currently in full operation.

These include the campuses of Newcastle University, Marlborough College Malaysia and University of Southampton, while the Netherlands Maritime Institute of Technology is scheduled to open its campus next month.

"We will see more institutions operating in Educity in the next three years," said Muhyiddin.

He said he was pleased that the tertiary education sector in Iskandar Malaysia was now drawing the attention of many international investors, including those from Singapore.

Besides MDIS, another Singapore group, Raffles Education Corp, is developing a RM200-million self-contained dedicated campus known as the Raffles University Iskandar, which is due to open in 2015.

Muhyiddin welcomed such cross-border investments from Singapore, saying the republic boasted some of the best tertiary institutions in the world and Educity in Nusajaya could complement the republic's attractiveness as an education hub.

"There is much we can gain by joining forces to woo the best brains to study within our shores, instead of competing against one another, which will only result in lost opportunities and failure to capitalise on our strategic strengths," he said. -- BERNAMA

MDIS makes S$116m footprint in Iskandar

JOHOR — Singapore has increased its presence in the Iskandar area across the border, with private education provider Management Development Institute of Singapore (MDIS) breaking ground on its RM300 million (S$116 million) Malaysia campus yesterday.

At almost five times the size of its Singapore campus, MDIS Iskandar is an example of the keen interest in Malaysia’s first economic growth corridor. Singapore firms — such as Temasek, Ascendas and CapitaLand — have invested about S$2.5 billion in Iskandar since it was set up in 2006, making the country the largest foreign investor, according to the Iskandar Regional Development Authority.

“We welcome such cross-border investments ... Students from various countries have long found it attractive and convenient to pursue their higher-education goals in Singapore. The demand for seats has risen in Singapore, herein lies the strategic advantage of Johor’s EduCity in terms of strategic location, land availability as well as excellent logistical network,” said Malaysian Deputy Prime Minister Muhyiddin bin Mohd Yassin, who was the guest of honour at the groundbreaking ceremony.

The 12ha freehold site in EduCity, Nusajaya, will be the second overseas MDIS campus and its largest to date. Its first campus abroad was set up in Tashkent, the capital of Uzbekistan, in 2008 for US$20 million (S$25.5 million).

“MDIS Malaysia represents another major step in the firm’s overall strategy to expand our global footprint,” said Dr R Theyvendran, Secretary-General of MDIS.

The Malaysia campus will offer nine diploma courses in business and accounting, information technology and mass communications.

The first phase of MDIS Malaysia is expected to be ready by 2015 to accommodate 2,000 students. Meanwhile, the first batch of about 100 Malaysian students will begin lessons in business management and mass communications at the end of this month at a temporary campus in Johor Bahru City Square, MDIS said. When fully completed in 2023, the campus will be able to enrol 10,000 students.

MDIS said initial enrolment will focus on Malaysian students, with admission of international students at a later phase. The institution is eyeing students from Africa and the Middle East for the Malaysia campus, said Dr Theyvendran.

Malaysia aims to have at least 200,000 international students pursuing higher education in the country by 2020, up from about 90,000 now.

“The education enclave in EduCity will make world-class education more accessible to Malaysians and other people in the region,” Mr Muhyiddin said. He added that EduCity will have institutions at pre-school, primary and secondary levels, making it an “integrated world-class academic hub”.

The 121ha EduCity@Iskandar is a major flagship development in Johor’s Iskandar area, and has attracted more than RM700 million in investments. At full capacity, EduCity is expected to admit 16,000 students.

Eleven educational institutions have committed to developing campuses there, according to EduCity’s website, while the University of Southampton, Newcastle University and Marlborough College Malaysia have already started full operations.

Singapore’s Raffles Education Corp is also developing an RM200 million campus at EduCity.

- Contributed by Lee Yen Nee  Today

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US-Syria drums of war — a familiar beat

The only solution for the Syrian issue is a political one and a peace conference of all actors may stop further bloodshed.

A HORRENDOUS attack with chemical weapons is alleged to have killed 1,429 people in a Damascus suburb on Aug 21.

Use of such chemical weapons is a flagrant violation of international law and the culprits must be hounded and herded to the International Criminal Court.

However, it is not clear who the real perpetrators are.

The Syrian government alleges that US-supported rebels carried out the attack to turn global sentiment against Syria. Obama pins the blame on Assad and is using this as a justification for a threatened war that circumvents the UN, like Bush before him.

The claims of both sides must be investigated impartially by the UN and there should be no resort to unilateral punishment before all facts are established. It is not in accordance with due process for the accusers to arrogate to themselves the role of adjudicators.

In the meantime, one must note that in March, an Independent Commission of Inquiry of the UN headed by Carla del Ponte had concluded that the nerve agent sarin was used by US-supported rebels and not the Syrian government.

It is also noteworthy that the weapons inspection team of the UN was in Syria at the invitation of Assad who is unlikely to have resorted to such an abomination with the UN watching over his shoulders.

The US and UK have a long, catalogued history of murderous lies to construct the pretext for war.

In August 1945, the US concealed the fact that Japan was actively negotiating surrender and went ahead to incinerate hundreds of thousands of civilians in Hiroshima and Nagasaki in a brutal atomic attack.

The US invasion of Vietnam in August 1964 was founded on the deceitful lie that Vietnamese torpedo boats had attacked US ships in the Gulf of Tonkin. The war took the lives of millions of innocent Asians and 50,000 American combatants.

In 2003, lies and skewed facts about Saddam’s alleged weapons of mass destruction led to the pulverisation and conquest of Iraq. 

Similar deceitful warmongering led to the attacks and subjugation of Afghanistan and Libya. The Third World is now quite mindful of Western spin masters and their weapons of mass deception. 

Assad is on a winning wicket and Western allies are understandably eager to find any pretext to kill him like the way they did Saddam of Iraq and Gaddafi of Libya.

The US, EU and Israel are fomenting civil war in Syria that has so far killed 100,000 for various geopolitical reasons: to weaken Iran and Hezbollah who are the only remaining regional rivals of Israel; to thwart the proposed Iran-Syria oil pipeline; and to kill the plan to sell Iranian oil in currencies other than the almighty US dollar. The Syrian conflict is a proxy war by the US against Iran.

There is also the desire to consolidate an uncompromising version of corporatism that seeks total economic hegemony over the region. Observers have noted that “defence manufacturer” Lockheed Martin’s stock prices rose sharply since news proliferated of the chemical weapons attack!

Any attack on Syria by a “coalition of the willing” on so-called humanitarian grounds will be a gross violation of the UN Charter.

Except for the narrow exception of unilateral self-defence under Article 51, the Security Council of the UN is the only authority empowered by chapter VII, Articles 39-42 to use force against a nation that is guilty of a threat to the peace, breach of the peace or act of aggression.

American-style unilateralism and exceptionalism pose significant potential for abuse. This is evidenced by Nato’s destruction of Gaddafi’s regime in 2011 under the guise of a limited humanitarian operation. One must also note that the terror of war necessarily results in thousands of civilian casualties.

Secretary of State John Kerry’s description of the Damascus chemical attack as a “moral obscenity” is very touching but reeks of hypocrisy. It is well known that the US used napalm and agent orange in Vietnam; depleted uranium in Iraq, Kuwait, Afghanistan and Bosnia; and white phosphorus bombs in Fallujah in 2004.

Saddam Hussein’s chemical attacks against Iran were with Washington’s full knowledge and support. In fact the chemical weapons, the feeder stock and equipment were supplied by the US, UK, Germany and Italy.

While the world has been focused on the horror in Damascus, US supported rebels have carried out a campaign of ethnic cleansing against 40,000 Syrian Kurds to force them to flee across the Tigris into Iraq.

There is not a word of Western condemnation of this atrocity.

The threatened missile attacks against Syria would cost thousands of innocent lives. In typical American style of justice, people will be butchered in order to save them from a dictator!

Weapon depots will explode, resulting in horrendous collateral damage. There is no certainty that Bashar Al-Assad will be toppled.

A broader conflict may result if Syria, Lebanon, Iraq and Iran react against Israel and America’s bases in the Middle East.

US military intervention in Syria’s civil war will, therefore, be an enormous mistake. It will not promote US interests. The use of missiles can change the military balance but it cannot resolve the underlying historic, ethnic, religious and tribal issues that are fuelling this conflict.

The only solution for the Syrian issue is a political one. A peace conference of all actors may stop further bloodshed.

President Obama must remember that you can start a war when you will; you can’t end it when you please!

Reflecting On The Law - contributed by Shad Saleem Faruqi
Shad Saleem Faruqi is Professor of Law at UiTM. The views expressed here are entirely his own.  

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Microsoft buys Nokia’s phone for $7.2 Billion

Ballmer: Nokia Deal Accelerates Share Position
http://www.bloomberg.com/news/2013-09-03/microsoft-to-buy-nokia-s-devices-business-for-5-44-billion-euros.html

Microsoft Corp. (MSFT) is spending 5.44 billion euros ($7.2 billion) to buy Nokia Oyj (NOK1V)’s handset unit so it can gain ground on Apple Inc. and Google (GOOG) Inc. in a smartphone market it let get away -- gaining a possible new chief executive officer in the process.

Nokia’s devices and services unit, which accounted for half of the company’s 2012 revenue, along with 32,000 employees, will transfer to Microsoft, the companies said. Nokia CEO Stephen Elop, 49, will return to Microsoft after a three-year stint running the Finnish manufacturer. The move stoked speculation he may be a successor to CEO Steve Ballmer, who said last month he’d retire within 12 months.

Microsoft is deepening a push into hardware as dwindling computer sales sap demand for the programs that made it the world’s largest software maker. Nokia shares jumped as much as 48 percent in Helsinki as the sale removes a money-losing handset business and lets it focus on higher-margin networking gear. Even combined, the companies have less than 4 percent of the smartphone market, leaving them far behind Apple and Google.

“The question is whether combining two weak companies will get you a strong new competitor -- it’s doubtful,” said Paul Budde, a telecommunications consultant in Sydney. “Both Nokia and Microsoft really missed the boat in terms of smartphones, and it is extremely difficult to claw your way back from that.”

Market-Share Decline

Nokia, based in Espoo, Finland, racked up losses of more than 5 billion euros over nine quarters as Elop’s comeback efforts failed to eat into the dominance of Apple (AAPL) and Google’s Android platform in the smartphone market. The stock has lost more than 80 percent in the five years through yesterday.

The shares rose 34 percent to 3.97 euros in Helsinki, valuing Nokia at 14.9 billion euros. The shares of Redmond, Washington-based Microsoft fell 4.6 percent to $31.88 at the close in New York, wiping out more than $12.6 billion in market value. The company’s market capitalization is now about $265.6 billion.

As part of the agreement, Microsoft will pay 3.79 billion euros for Nokia’s devices division and 1.65 billion euros for patents, according to a statement from the companies. The all-cash transaction, subject to Nokia investors’ approval, is expected to be completed in the first quarter of 2014. JPMorgan Chase & Co. advised Nokia on the transaction, while Goldman Sachs Group Inc. worked with Microsoft.

‘Big Transformation’

Nokia said it will book a gain of 3.2 billion euros, with the sale “significantly” accretive to earnings. It also said it aims to return its debt, which is ranked junk by all three major rating companies, to an investment grade. Chairman Risto Siilasmaa, who will become Nokia’s interim CEO, said the company may return excess capital to shareholders.

“It’s a big transformation, but that’s what you’ve got to do in the tech business to move forward,” Ballmer told Tom Keene on Bloomberg Television’s “The Pulse.”

Microsoft said it is confident of getting the deal approved by early next year. The transaction will shave 12 cents a share off earnings in the current fiscal year, or 8 cents excluding some items, the company said. In 2015, the cost will be 6 cents based on generally accepted accounting principles. Excluding some costs, the deal will add to profit that year.

Microsoft also expects to get more profit for every device sold -- more than $40 a unit for smartphones, compared with the less than $10 in gross profit it currently gets for Windows Phone sold by Nokia. That doesn’t include the costs of marketing and development, though.

Cost Savings

Based on generally accepted accounting principles, the transaction will add to earnings in fiscal 2016, Microsoft said. The company expects to have annual cost savings of $600 million 18 months after the deal closes.

The Microsoft purchase was the second major deal to be announced during the U.S. Labor Day holiday yesterday. Verizon Communications Inc. agreed to pay $130 billion for Vodafone Group Plc’s stake in their U.S. wireless venture in the biggest transaction in more than a decade.

The Microsoft-Nokia deal is the largest for a wireless device maker after Google’s purchase of Motorola’s handset unit in 2012, according to data compiled by Bloomberg. For Microsoft, the deal including the payment to license Nokia’s patents is its second-biggest behind the $8.5 billion purchase of Internet telephone company Skype in 2011.

Motorola Comparison

Microsoft agreed to pay about 0.35 times annual revenue, compared with the median of about 1.4 times for 60 wireless equipment-maker deals tracked by Bloomberg. That also compares with the 0.77 times revenue Google paid for Motorola Mobility, the data show.

Google paid about 1.3 times annual operating income for the handset maker, while Nokia’s device and services business reported an operating loss last year, according to the data.

With the latest sale, the original pioneers in the mobile-phone industry -- Motorola, Nokia and Ericsson AB -- have all ceased to be independent handset manufacturers or given up on the business. BlackBerry Ltd. said last month it’s considering putting itself up for sale. Its shares advanced less than 1 percent to $10.21 in today’s trading.

Microsoft, meanwhile, becomes the last major developer of smartphone operating systems to get into manufacturing. Apple makes its own handsets, which use its iOS operating system. Google’s acquisition of Motorola Mobility gave it its own lineup of phones.

Surface Tablet

Microsoft’s other recent significant move into hardware -- the Surface tablet -- has trailed expectations and the company wrote down inventory last quarter.

To break even on an operating basis, Microsoft will need Nokia to sell about 50 million smartphones a year, it said in a presentation. Nokia has a run-rate of about 30 million units. In the second quarter, Nokia sold 7.4 million smartphones under the Lumia line.

Microsoft acquired the Lumia brand to use with smartphones, while it will license the Nokia brand to use with low-end phones for 10 years, Elop said at a press briefing today. Microsoft will later decide what to call its future smartphones.

Microsoft will face a balancing act owning Nokia and keeping its other hardware partners, including HTC Corp. (2498) and Samsung Electronics Co., committed to its Windows Phone. Aiming to reassure other phone makers that Microsoft will still support them, Ballmer said that the company was “100 percent” committed to helping its manufacturing partners.

Ballmer declined to say whether Elop would become CEO, or had been a candidate to succeed him.

Microsoft Tie-Up

Ballmer called Nokia’s Siilasmaa shortly after the new year to initiate discussions on an acquisition and the two met in February at the Mobile World Congress in Barcelona, according to Microsoft. Talks heated up in recent months and a deal was lined up before Ballmer announced his retirement last month, the company said.

Microsoft and Nokia have had a close relationship through Elop, who had run Microsoft’s Office unit. He left the software maker in September 2010 to take the top job at Nokia.

At the time, Elop likened Nokia’s position to a man standing on a burning oil platform on the verge of being engulfed in flames, facing the option of staying aboard or jumping to the ocean to have a chance to survive.

In February 2011, Elop struck a deal with Ballmer to switch Nokia’s smartphones from its own Symbian operating system to Windows Phone. In exchange, Microsoft ponied up more than $1 billion to pay for Nokia marketing and developing products on Windows.

Losing Share

Nokia had the largest share of the mobile phone handset market until it was overtaken by Samsung (005930) in 2012, according to data compiled by Bloomberg.

Still, Nokia remains a top seller of traditional mobile phones -- models that are more popular in developing markets. In total shipments, the company ranks second to Samsung among device manufacturers. Samsung accounted for 26 percent of shipments last quarter, while Nokia had 14 percent. Apple came in third with 7.2 percent.

After the sale to Microsoft, Nokia’s biggest business will be network equipment, which it recently fully took over from Siemens AG (SIE) and renamed Nokia Solutions and Networks. The unit competes with Ericsson, Alcatel-Lucent as well as China’s Huawei Technologies Co. and ZTE Corp. (763)
 
Ericsson jumped 5 percent to 82.50 kronor in Stockholm. Alcatel-Lucent, which under new CEO Michel Combes is streamlining its business, added 9.2 percent to 2.20 euros in Paris trading.

Mapping Unit

Nokia said it will also keep its mapping and location services unit, called Here, and its technology development and licensing division.

“Nokia has a highly evolved device design and manufacturing process which will benefit Microsoft greatly,” said Al Hilwa, an analyst at research firm IDC. “This is simply the fastest path in front of Microsoft to achieve something like Apple’s vision on devices.”

Contributed by Bloomberg

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