New tax rate on property to keep away flippers

 

Profiteering nipped: Flip-happy property ‘investors’ – or rather, speculators – are not laughing now with the new stringent government measures to rein in excessive speculation.

Property prices have been spiralling and Budget 2014 introduced tough measures to cool prices down.

AHYAT Ishak was in the midst of selling off a property when Budget 2014 was tabled which saw hikes in the Real Property Gains Tax (RPGT).

It was higher and tighter than he expected. “Because of this announcement, I would have to make several different decisions. I bought that house less than three years ago.

“Previously, I would have been taxed 10% as RPGT, but with the recent announcement, I would need to fork out 30% of my profits for the RPGT.

“So right now, I am thinking that I should not sell it,” says the 30-something Ahyat, who has been investing in properties for the past 10 years and also runs workshops for wannabe property investors.

“If you have been strategic about investment, you would have known that the RPGT can go up anytime and you would have taken that into account in your investment plan. The worst strategy is when you have only one strategy,” he stresses.

Change of strategy: Property investor Ahyat is having second thoughts about selling a property he bought less than three years ago because of the higher RPGT. >

So he is not worried about hanging on a bit longer to the property that he had originally wanted to sell, because one of the rules he goes by is to make sure what he buys is an “investment-great asset”.

For him, this means two things – that the property is “tenant-able” and that it has good potential for capital appreciation.

As a player, he also makes sure he has the holding power to hang on to a property and service the loan.

“But it’s seen as uncool and yucky to talk to young investors about tenant-ability and capital appreciation. ‘Buying for rent’ is so old school to them. I’ve had people calling me a ‘sissy investor’ .

“Everyone was talking about ‘I buy, I get the keys, I flip’. How can that be sustainable?

“When I advocate responsible and sustainable investment, it is like a joke,” he says.

But those flip-happy property “investors” – or rather, speculators – are not laughing now with the new stringent government measures to rein in excessive speculation.

Other than the higher RPGT, the government is also prohibiting the developers interest-bearing scheme (DIBS), making developers spell out details of the house price and all the so-called “freebies” included, as well as making it a regulation that foreigners are only allowed to purchase properties that cost RM1mil and above.

Viewing the budget announcement as “very positive”, marketing and strategic consultant for developers Dr Daniele Gambero thinks this is what the market has been looking for.

“It is necessary to curb completely the investment of investors or speculators who are using property as if it is a forex or stock exchange market (where there is massive buying and selling in a short period).

“Property is not an asset for the short term. It is for the medium or long term, otherwise it becomes unhealthy and the market blows up,” he warns.

Gambero, who has been in the business for 15 years in Malaysia, says the kind of packaging housing developers have been offering over the past five years has been “ridiculous”.

“They are offering renovation packages, ‘free’ trips to, say, China and some even had a lucky draw for a Mercedez Benz.

“It’s ridiculous because these are actually not free. It is factored into the pricing and this is what has been pushing house prices up by a good 20%,” he says, stressing that developers are not angels and are merely responding to what the market is asking for.

He also takes to task the buyers for their “short-sightedness” in following their “emotions” instead of using practical and logical consideration when they buy property.

“If the value of the house is RM400,000 and these ‘free, free, not-so-free’ things bring the house price up to RM500,000, do they calculate how much this extra RM100,000 will cost them at the end of the loan tenure?

“At the end of the 35-year period, they might end up having paid RM180,000 extra in loan for these ‘free-free, not-so-free’ things the developer has thrown in to sweeten the deal. Don’t look at how much you are paying today but how much it will cost you in 20 to 30 years’ time,” he advises.

Besides, Gambero’s personal feeling is that most of the renovation offers built into the house price in fact ends up going down the drain, because about 40% to 50% of buyers end up having to renovate again because they want something that suits their personal taste.

One other thing that people should really sit up and take notice of is that with developers having to come clean with all the pricing, how will this impact on the amount of loan they can get to buy a property.

Both Ahyat and Gambero talk about the repercussions from banks.

“How is the banking industry going to react to this?

“When it is stripped bare and developers have to be transparent with details of the pricing, such as club membership, aircon, renovation and so on, the banks are going to be looking at that RM600,000 house and saying ‘Hey, this property’s value is actually RM500,000’ and that extra RM100,000 is just ‘fluff and whip cream’.

“Valuers from banks would give ‘zero’ value to those elaborate plaster ceilings, aircon and chandeliers. In the world of valuers, it is a big sin adding on all these add-ons.

“You can’t give loans on something that is inflated. You give loans based on the fundamental value,” says Ahyat, warning that the repercussions could be massive.

Concurring, Gambero says, the purchaser is at a “double losing end”.

“Say you bought the property for RM600,000 and a few years down the line you want to sell it for RM800,000, and find someone willing to pay that price.

“But when that person goes to the bank to ask for financing, the bank will look at the sales and purchase agreement and get their valuer to do a valuation and the valuer will give a value for the bricks but ‘not the plus, plus free-not-so-free’ package added in by the developer.

“And that real value of the house might only be RM700,000, so the bank will slash the margin of financing. So you might not be able to sell the house at RM800,000,” he says.

But will these new measures bring down the price of property?

Adrian Un, the founder and CEO of a property education arm, says the Budget announcement brought in the first wave and caught new young investors, aged 25 to 35, who came into the market with minimum downpayment, by shock.

The second wave, he believes, will come in when the details of the actual guidelines are spelt out.

“What has been announced is very general and the tip of the iceberg. Investors want to know in detail ‘if I do this or that, do I get a waiver’,” he says.

He thinks seasoned players will wait for a while and that after the Chinese New Year, when the news sinks in, they will continue to buy.

Un notes that developers with new launches planned will have to launch “no matter what” and they will now strategise on how to innovate and find new ways to entice people to buy.

“When they do away with the DIBS (a scheme where the developer bears the interest during the construction period and buyer pays nothing because that interest had already been factored into the price of the house), people might now be asking if it is worthwhile to buy the property.

“Developers might find a way to reimburse the buyer on the interest in a different way. For example, they may ask the customer to pay it first and then give a rebate or reimbursement every quarterly,” he says.

Un says it’s hard for house prices to come down.

“The cost of raw material has gone up, developers are going to have to pay GST from April 2015 (on supplies and material), the cost of labour has gone up, inflation is going to creep up with the introduction of GST and land cost is not getting any cheaper.”

Coming back to Ahyat, he says he doesn’t disagree that the property market is overvalued and that DIBS, among other things, had helped fuel speculation.

And he wonders too if other fiscal policies might be in the offing, like a hike in interest rates.

“We are in a low-interest environment right now and cheap credit fuels speculation.

“If there is a rise in interest rate, some say it would signal the bursting of the bubble because more people would die standing as their holding power would reduce significantly. And people can’t get loans or buy too if interest rates are too high.

“My question is, can Malaysia afford to let the development and construction industry contract and cool down? This is a very scary question to ask,” Ahyat notes.

Contributed by Shahanaaz Habib The Star

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Malaysia's Goods and Services Tax (GST) a boon to IT firms

Malaysia's new consumption tax is a boon to IT companies that stand to win infrastructure contracts and fees – provided they can convince people to switch to electronic payments in a country where 91% of transactions are in cash.

The 6% goods and services tax (GST) that Prime Minister Datuk Seri Najib Abdul Razak announced in his budget speech last Friday is aimed at narrowing a budget gap that is expected to hit 4% of gross domestic product this year.

Cash payments are harder for tax collectors to track, so the government is encouraging e-payments as a way to reduce costs and improve efficiency.

For companies such as Censof Holdings Bhd and GHL Systems Bhd that specialise in creating electronic payment and software systems, the initial benefit will likely come well before the tax is implemented in April 2015.

These companies, along with privately held Brilliance Information Sdn Bhd and Revenue Harvest Sdn Bhd, are seen as front-runners for government contracts to build the necessary infrastructure, because Malaysia has a procurement policy that favours local companies.

That potential has caught investors' attention. Censof's shares are up 64% in the year to date while GHL's have jumped more than 160%, both out stripping the broader market's 7.7% gain.

"To impose GST, you need to capture sales accurately and it needs to be done electronically. You need payment infrastructure in place," said Raj Lorenz, group CEO at GHL, Malaysia's largest e-payment firm by market share.

"The business is very bright but there are a lot of people using cash, so they (the government) have to make them all use e-payment. In the end, the only guys who can get away with it are those in the night markets," he said.

Censof executive director Ameer Shaik Mydin concurs, adding that all his company's systems are GST-ready and waiting to be implemented on clients' sites.

"We've done it in Singapore and Australia. It definitely has to be electronic. If not, I have to say it'll not work," he said.

Accounting for GST is especially tricky in a cash economy. Businesses might understate sales to lower the tax bill. But for cash-only companies, making the switch will be costly.

"Big boys can afford it but what about eateries and sundry shops? Do you expect them to pay for such machines and issue receipts (on GST)?" said Kuala Lumpur-based business consultant John Yong.

"If they don't buy and issue receipts, then the 6% GST is not going to be remitted to the government. Some industries are just not ready for GST," he added. – Reuters/theSun

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Malaysia Tax Budget 2014 Updates 

NSA secretly hacks, intercepts Google, Yahoo daily

The United States’ National Security Agency has secretly broken into the main communications links that connect Yahoo and Google data centers worldwide. That’s according to documents released by former NSA contractor, Edward Snowden, The Washington Post reports.

Video: NSA intercepts Google, Yahoo traffic overseas report | The Nationalhttp://www.thenational.ae/article/2013110
 http://shar.es/IxZIJ



According to the documents, the agency and its British counterpart GCHQ, through a project called MUSCULAR, collected data stored on Google and Yahoo servers. That allowed both governments access to hundreds of millions of user accounts from individuals worldwide.

“From undisclosed interception points, the NSA and GCHQ are copying entire data flows across fiber-optic cables that carry information between the data centers of the Silicon Valley giants,” RT cites the Post’s Barton Gellman and Ashkan Soltani.

A January 9th document says that in the preceding 30 days, collectors had processed over 181 million pieces of information, including both metadata and the actual contents of communications.

The government can already request information from phone or data through the FISA Amendments Act but this data collection would ostensibly take place without Google and Yahoo even being aware of it.

When you send email or store files with an internet company, that data is regularly shared among servers around the world, in order to ensure quick access to your information from wherever you happen to be. Google and Yahoo run customized private networks to shuttle that information around, passing between and within countries, as the Post indicates in a graphic. To move that information, the companies use fiber optic connections, light-speed networks running over thin glass cables. According to the Post, it’s those connections that the NSA is able to monitor. None of Yahoo’s inter-server traffic is encrypted. Not all of Google’s is either.

The MUSCULAR program, according to Wednesday’s leak, involves a process in which the NSA and GCHQ intercept communications overseas, where lax restrictions and oversight allow the agencies access to intelligence with ease.

“NSA documents about the effort refer directly to ‘full take,’ ‘bulk access’ and ‘high volume’ operations on Yahoo and Google networks,” the Post reported. “Such large-scale collection of Internet content would be illegal in the United States, but the operations take place overseas, where the NSA is allowed to presume that anyone using a foreign data link is a foreigner”.

The Post points out that company staffers were surprised and angry to hear that their their networks had been compromised. Google said that it was “troubled by allegations of the government intercepting traffic between our data centers”.

The report comes amid a storm of protest about NSA surveillance both at home and overseas of phone and Internet communications.

On Tuesday, US officials said reports that American spy agencies snooped on millions of Europeans were false.

Alexander told lawmakers that in many cases European spy agencies had turned over phone records and shared them with US intelligence.

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USA Spying, the Super-Snooper !

The United States is running clandestine communications intelligence facilities at its embassies in Kuala Lumpur, Jakarta, Bangkok, Phnom Penh and Yangon.

The country is doing so by tapping telephones and monitoring communications networks from electronic surveillance facilities in US embassies and consulates across east and south-east Asia, according to information disclosed by intelligence whistleblower Edward Snowden.A top secret map dated August 13, 2010 lists nearly a hundred surveillance facilities worldwide, the map however, shows no such facilities are located in Australia, New Zealand, Britain, Japan and Singapore – the US’s closest allies.

Snoopy the Snooper

According to the map published by Germany’s Der Spiegel magazine today, a joint Central Intelligence Agency (CIA) – National Security Agency (NSA) group known as ” Special Collection Service” conducts the sweeping surveillance operation, as well as clandestine operations against specific intelligence targets.The map, which was initially published in full on Der Spiegel‘s website but subsequently replaced with a censored version, lists Special Collection Service facilities at 90 locations worldwide, including 74 manned facilities, 14 remotely operated facilities and two technical support centres.

The map confirms the global reach of US signals intelligence operations with special collection facilities located in most major capitals on every continent.Read the full story here

http://en.harakahdaily.net/index.php/headline/8057-us-embassy-in-kl-and-elsewhere-conducting-clandestine-operations-.html

By Hanin Fadiyah@www.harakahdaily.com

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World Bank ranks Malaysia the world's 6th ease of doing business

KUALA LUMPUR: A World Bank report has ranked Malaysia as the sixth friendliest country in the world to do business, beating developed nations such as South Korea, the United Kingdom and Australia.

In a survey of 189 economies, the “Doing Business Report 2014” saw Malaysia jumping from 12th place last year, and up from 25th when it first joined the survey in 2007.

Countries with high rankings, according to the World Bank website, meant that their respective regulatory environments made it better for local firms to start up and operate.

Business-friendly reforms im­­proved a country’s standing, which Malaysia was noted for.

These included the reducing of company registration fees, which made starting businesses here less costly.

The report said Malaysia also made it easier for people to deal with construction permits by coming up with a one-stop shop. Even getting electricity was a factor.

“Malaysia made getting electricity easier by increasing the efficiency of internal processes at the utility and improving its communication and dialogue with contractors,” it said.

The report included Malaysia as a case study for electronic tax filing and payments.

Despite initial public reluctance, the report said, more people used the e-filing system over time, with businesses aided in the process.

“The time that businesses need to comply with Malaysia’s tax regulations fell from 190 hours in 2004 to 133 hours in 2012,” it said.

The report also found Malaysia ranking highly along specific rankings.

Ranking first in the world, Malaysia tied with Britain for “Getting Credit”, and earned fourth and fifth places for “Protecting Investors” and “Trading Across Borders” respectively.

The report’s findings were welcomed by International Trade and Industry Minister Datuk Seri Mustapha Mohamed, who said the country had aimed to be in the report’s top 10 list by 2015.

“Soon after Prime Minister Datuk Seri Najib Tun Razak assumed office, Malaysia was in 23rd place.

“The rise to sixth place is testament to his stewardship and a result of the economic and government transformation programmes,” Mustapa said in a statement.

He added that the ranking helped to reinforce Malaysia’s position as a preferred destination for trade and investments among local and foreign investors.

Singapore was ranked first in the World Bank’s list followed by Hong Kong, New Zealand, the United States and Denmark.

Contributed  by Patrick Lee The Star/Asia News Network

A Malaysian global ambition realised

PEMUDAH or The Special Task Force to Facilitate Business Malaysia’s ambition to be ranked among the top 10 in the world was realised when Malaysia was ranked 6th in the World Bank Ease of Doing Business Report 2014 (DB 2014), up from 12 in 2013 and 25 in 2007 when Pemudah was established.

Pemudah is a partnership between public and private sectors established in 2007 to improve the ease of doing business in Malaysia and to enhance the nation’s competitiveness.

This achievement is very significant as Malaysia competed with 189 economies to be counted among the best in a race where competition was intense and benchmarks were high.

I would like to share the 6-year journey from 25th to 6th rank in the DB rankings. Pemudah was set up by the then prime minister, Datuk Seri Abdullah Ahmad Badawi mainly to address weaknesses in public service delivery and continuous civil service “bashing” in the media.

He wanted to adopt a fresh approach and saw the value of a joint private-public sector committee in improving public service delivery.

A small group of 23 leaders from both the private and public sectors was appointed to the task force which was co-chaired by the then Chief Secretary to the Government, Tan Sri Mohd Sidek Hassan and me. The vision adopted at the first meeting was to have “a globally benchmarked, customer-centric, innovative and proactive service in support of a vibrant, resilient and competitive economy and society”.

This vision was underpinned by the following values: A sense of urgency, proactive public-private sector collaboration, facilitation, not hampering; no more regulation than necessary; zero tolerance for corruption. We announced our aim was to be among the top 10 most competitive economies globally.

How did Pemudah deliver on the promise? A shared vision, a common multi-agency platform, commitment and clear rules of engagement contributed to delivering the outcomes. Meetings were scheduled at the beginning of the year, fixed on the last Friday of each month, except when parliament was in session when meetings were convened on Tuesdays.

Setting meeting dates early ensured high attendance at meetings where no alternate members were permitted.

The commitment of members was not only confined to the monthly meetings of the task force as Pemudah worked through two main working groups (WG) and more than 10 focus groups (FG) which focused on specific areas.

Each group was chaired either by the public or private sector and reported progress on a monthly basis to the main task force. No allowances of any kind were paid and members contributed voluntarily for the common good.

The WG on Efficiency Issues focused on operational efficiency including licensing, e-payments and immigration-related matters. The WG on Policy Issues deliberated on national competitiveness issues like FIC, liberalisation, education, FTAs, etc.

The FGs covered specific issues like paying taxes, registering property, enforcing contracts, business processes, DBKL to name a few. While membership in Pemudah was confined to appointed members, membership in the WGs and FGs was wider.

To enhance awareness by the business community and citizens, the secretaries-general/heads of ministries/agencies wrote articles in the press and publicised their email addresses to enable direct communications to be direct and instantaneous and the media used to publicise improvements made.

Pemudah was supported by a strong secretariat in the Ministry of Trade and Industry (Miti) that issued minutes of meetings within 48 hours to facilitate quick follow-ups to decisions made.

The key improvements to public service delivery were varied with significant gains registered in many areas. A case in point is the issuance of construction permits, ranked 137th in 2007.

Datuk Arpah Abdul Razak, then director-general of Local Government Department and currently the secretary-general of the Housing and Local Government Ministry, set up one stop centres which allowed concurrent submission of all applications.

The centres then obtained approvals from all technical agencies within a stipulated time-frame. Kuala Lumpur mayor Datuk Seri Ahmad Phesal Talib further streamlined the procedures/timelines.

Timelines for approvals were reduced from 420 days to 100 days while procedures declined from 39 to 10. Malaysia’s rankings in construction permits leapfrogged to 43rd in DB 2014.

Another area of significant improvement registered was Trading Across Borders. Miti secretary-general Datuk Dr Rebecca Fatima Sta Maria chaired a multi-agency FG comprising Customs, Transport Ministry, Finance Ministry and permit issuing agencies to reduce time taken to import and export though pre-clearance of cargo and reducing documentation for such transactions.

The work of this FG improved Malaysia’s rankings from 46th to 5th in the six years.

In streamlining processes to start and close a business, credit is due to former Companies Commission of Malaysia (CCM) chief executive Datuk Abdul Karim Abdul Jalil and his team. Today, you can start a business in one hour compared to three days in 2007. In addition, the introduction of the Malaysian Corporate Identity by the Malaysian Administrative Modernisation and Management Unit has also contributed to Malaysia’s ranking improving from 71st to 16th in 2014.

The ranking will strengthen further with the impending introduction of a new Companies Act by CCM chief executive Mohd Naim Daruwish that will further reduce costs and improve efficiency.

Malaysia’s ranking in Paying Taxes was 49th in 2007, 15th last year and 36th in DB 2014. Several initiatives were implemented by former Inland Revenue Board (IRB) CEO Tan Sri Hasmah Abdullah and current CEO Datuk Dr Mohd Shukor Mahfar to facilitate electronic services, prompt refunds of overpaid taxes and enhance transparency of the tax process.

Hasmah reported that she received more than 500 messages on the day her email was made public and a special mechanism was set up to allow her to reply to each of them. Such was the commitment of this former civil servant.

Businesses used to complain about the backlog of court cases and often commercial contracts included provisions for determining courts to be in Singapore.

Former Chief Justice (CJ) Tun Zaki Tun Azmi and current CJ Tun Ariffin Zakaria were instrumental in motivating their team to clear the backlog. They also took up Pemudah’s proposal for new commercial courts to be established with a client charter of resolving all new commercial cases within a nine-month period – a timeline that is world class by any standards.

The transformation and improved rankings from 81st in 2007 to 30th in DB 2014 was the subject of a special report by the World Bank on Malaysia as a best practice. Rankings will improve further as the focus moves to the enforcement of judgements.

We have experienced the speed of issuance and renewal of passports, due largely to the work of past and present Immigration directors-general, including Tan Sri Mahmood Adam, who subsequently assumed the position of Home Affairs Ministry secretary-general. He also adopted and adapted Pemudah’s point system for evaluating eligibility for permanent residence and made it easier for foreign spouses and expatriates to work here.

When the proposal to disband the FIC was presented to Prime Minister Datuk Seri Najib Tun Razak, he was decisive. The decision has contributed significantly to improving the investment climate for Malaysia.

The 6-year journey of Pemudah is evidence that with the right focus and right commitment by the right parties, our rankings in world benchmarked public services can be even higher. It also indicates the power of public-private sector collaboration as a common and effective platform in moving the Malaysian development agenda forward.

I wish to congratulate all members of the civil service, past and present and to thank my private sector friends who have contributed to the incredible journey of Pemudah.

A special word of thanks to the former chair, Mohd Sidek, for his strong leadership and for throwing the challenge to be top 10 at us – we have done it in partnership with everyone.

I am confident that Chief Secretary to Government Tan Sri Dr Ali Hamsa and the new private sector co-chair, Datuk Saw Choo Boon will be successful in maintaining or improving Malaysia’s ranking with the continued support of the private and public sectors.

- Comment by Tan Sri Yong Poh Kon
Tan Sri Yong Poh Kon stepped down as co-chair of Pemudah in September 2013. He is the current president of the Federation of Malaysian Manufacturers and the managing director of Royal Selangor.

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China demystifying nuclear subs a welcome move

Wide coverage has been given to the Chinese nuclear submarine force in Chinese State media recently, considered to be a showcase of China's strategic master card. China's debut in this field is believed to have deep implication.  

Being confident is of prime importance to achieve military transparency. US submarines are open to visitors, so are parts of the Pentagon. Washington prefers to display power, which will convince the public of the national security while deterring opponents. It obviously believes that core military power being exposed to the public could generate more positive effects, distracting attention from worrying about the "leakage of secrets." 

Chinese understanding of "state secrets" is changing as its military power keeps increasing. On one hand, China is facing a heavier burden of keeping secrets due to soaring external interests on intelligence information about it. On the other hand, it has more room to win strategic gains through actively releasing some information. Is China safe? Are there any external forces daring to risk a strategic showdown with China or radically provoke China over its core interests? Such questions linger on in the minds of the public.

Besides being an economic giant, China is powerful in possessing a ­credible second-strike nuclear ­capability. However, some countries haven't taken this into serious consideration when constituting their China policy, leading to a frivolous attitude ­toward China in public opinion. 

Therefore, partly revealing the Chinese nuclear submarine force is in the interests of China. It could strengthen cohesion of Chinese society and enhance a comprehensive understanding of China. There is necessity that China should summarize its efforts in realizing military transparency and keep on moving forward.

For a modern power, there is rare opportunity to input core military power, which is mainly assuming a deterrent role, into practical war. To build the military we need to ensure its actual combat capacity, as well as convert it into strategic deterrence. Being in a sensitive position in the process of a peaceful rise, China will see a growing demand for strategic deterrence.

The current nuclear capability of China and the world's understanding of it cannot guarantee China's strategic deterrence not to be challenged. The limited number of its nuclear submarines is not enough to quell the idea of damaging China's interest in an extreme way. Jimmy Kimmel's shocking show demonstrates that many people in the West think they can choose to be friendly with China, but they don't have to be.

China needs to make it clear that the only choice is not to challenge China's core interest. To cultivate such thinking, there remains tedious work to do. Developing marine-based nuclear power is part of such work. Perhaps it will give excuse to "China Threat" speculation but the benefit will far eclipse the trouble created by external opinions.

Domestically it is of great significance to open some of the strategic military facilities where the public can have direct access to learn about China's aircraft carrier, missile base or witness a major military exercise. It is a way to help foster people's support for national defense, which is more and more important in modern society.

By Global Times

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China unveils nuke submarine, moving towards military transparency

China’s 1st fleet of nuclear submarine revealed for first time in 42 years CCTV News - CNTV English

http://player.cntv.cn/standard/cntvOutSidePlayer.swf?videoCenterId=8a29d075828644918bbd615daa014703&tai=outSide.english&videoId=20131028102971
http://english.cntv.cn/program/newshour/20131028/102971.shtml

The world has been given a rare glimpse into China's nuclear-powered submarine fleet, with State-owned media carrying extensive coverage of the previously mysterious strategic deterrence force.

The unprecedented revealing of the underwater fleet is a demonstration of China's confidence in its sea-based nuclear strike capability and serves as a deterrent to any attempted provocation amid the changing geopolitical situation, said military observers.

Starting on Sunday, China Central Television carried serial coverage two days in a row on the submarine force of the People's Liberation Army (PLA) Navy's Beihai fleet in its flagship news program Xinwen Lianbo.

The People's Daily, the PLA Daily and the China Youth Daily on Monday all carried front-page stories, features and commentaries on the submarine force, applauding its achievements since the launch of China's first nuclear-powered submarine in December 1970.

According to the reports, the idea of building a nuclear submarine was initiated by Chairman Mao Zedong in the late 1950s to break the global military powers' "nuclear blackmailing and monopoly."

In September 1988, China launched a carrier rocket from a nuclear submarine, becoming the fifth country in the world to have the capability of sea-based nuclear strike.

While striving to improve its strike capability, the submarine force has also maintained a good safety record, with no single nuclear accident reported during the past four decades, said the reports.

The People's Daily on Monday hailed the submarine force as "a shield preserving world peace and stability" and "a cornerstone to safeguard state sovereignty, security and development interests."

Du Wenlong, a military expert, told the Global Times on Monday that the latest publicity shows the maturity in the submarine force's sea-based nuclear strike capability, and implies progress in the development of China's new generation of submarines.

According to military observers, the submarines shown in the CCTV report and newspaper photos are the old models, which were put into service in the 1980s. It is reported that the navy is replacing them with Jin-class submarines, and a newer model, the Tang-class, is reportedly in development.

Du said in comparison to foreign submarines, China occupies a seat within the leading group but lags behind the US and Russia in terms of the submarine's noise output and the number of missiles it can carry.

Li Jie, another military expert, shared similar views, noting Chinese submarines still fall behind US and Russian ones, but have better prospects than French and British ones.

The growing capability of the Chinese submarine force is in line with the global emphasis on sea-based nuclear strike capability.

Sea-based nuclear deterrence is more covert, so it gives the countries the capability to launch a counterstrike after their main nuclear bases are destroyed, Li explained, noting its development requires strong comprehensive scientific and technological capabilities.

In addition to the demonstration of more transparency in the military, Li said the revealing of the force is also a deterrent to foreign provocation.

According to reports, during the submarine force's drills, it has repeatedly been tailed and interrupted by foreign ships and aircraft, including one time in international waters in the West Pacific.

"The changing international situation has caused containment to China's growth. The US-Japan alliance and US pivot to the Asia-Pacific both apparently target China. The publicity of the submarine force is a warning to any country that attempts to provoke China, telling them whoever makes the first strike should think about the consequences," Li said.

CCTV commentary said the submarine force has equipped China with a more covert and reliable nuclear counterstrike capability in addition to its intercontinental ballistic missile and strategic bomber, which would make China's rivals abandon their war attempts for fears of the unbearable price they might have to pay.

- Contributed By Yang Jingjie Global Times