Global economic order under threat

Need to ‘civilise’ capitalism

THE world economy is in a much worse-off shape than even many who know had expected, or what central bankers have come to understand.

Whatever growth there is remains paltry and uneven. Deflation was viewed as a strictly Japanese phenomenon. Now it’s a global threat, being revived and updated by Harvard’s Lawrence Summers as “secular stagnation.” The International Monetary Fund (IMF) says 2016 will be the fifth straight year of global growth below 3.7%, its average for nearly two decades before the recent great recession.

G-20 economies (representing 85% of the world economy, comprising most rich nations and major emerging economies) are expected to again downgrade their forecast to below 3% global expansion this year. They are likely to miss the target they had set for themselves in 2014 to lift their combined output by 2% over the IMF’s then forecast for 2018.

In early September, G-20 leaders met in Hangzhou, China, in the wake of Brexit and the rise of populist politics on both sides of the Atlantic with a strong sense of urgency to placate public discontent. Indeed, they have to “civilise’’ capitalism (Australian Prime Minister) as they seek to revive economic growth and address growing public scepticism about the benefits of free trade and growing backlash against globalisation. “Growth has been too low, for too long, for too few” (IMF chief Christine Lagarde).

Hangzhou consensus

This time G-20 leaders were on the defensive, amid a welter of familiar complaints back home on frustratingly slow growth, rising social inequalities and the surge of corporate tax avoidance. Looking back, the summer of 2016 is viewed not as a period of respite but as the moment it became clear that policy solutions from G-20, IMF and major central banks aren’t working well.

They have proved woefully inadequate. As a result, businesses are pessimistic about growth prospects, as reflected in low expectations for long-term interest rates. Yield on German 10-year notes is negative 0.116% p.a. What’s needed is a new approach. There has to be more growth and growth must be more inclusive.

At Hangzhou, the G-20 list of remedies rivals the world economy in its complexities, running beyond 7,000 words (excluding several lengthy appendices) addressing many issues, including immigration, terrorism, energy and Zika virus. Indeed, it risks looking “like an X’mas tree”. It was preceded by a surprising display of co-operation between China and US, who together ratified the Paris climate change agreement.

A long list of problems was on the table: including overstretched central banks, trade disputes, corporate tax avoidance, inequality and the populist backlash against globalisation and free trade. In the end, the Hangzhou consensus reflected an “innovative, invigorated, interconnected and inclusive” approach towards its main goals. It adopted a wide-ranging package of policies based on “Vision” (of innovative, new drivers of growth); “Integration” (forge synergy among fiscal, monetary and structural reform policies); “Openness” (build an open world economy, rejecting protectionism); and “Inclusiveness” (ensure growth promotes the role of women and youth, and generates quality jobs, addresses inequality and eradicates poverty).

All these won’t be enough to get us out of the rut. The real setback remains one of credibility. G-20’s sprawling agenda is filled with items that have little chance of success. Many stakeholders and opinion-makers are unlikely to take them really seriously. Experience shows that G-20 is better off when it focuses. Better stick with a limited agenda that has a high chance of achieving an outcome. Sometimes, more is done by doing less.

As host, China promoted innovation as the core of the G-20 agenda. This is sensible because: (i) the use of monetary and fiscal policies can only achieve so much. In the longer-run, real progress has to depend on improved productivity – getting more out of existing resources; and (ii) overcoming anxiety arising from the use of technologies and artificial intelligence that threaten jobs. Getting G-20 to think collectively about the downside of innovation and fintech can only help. There is then the endorsement of a set of non-binding principles designed to guide governments in devising cross-border investment policies in an effort to revive cross-border investment, which is sagging along with global growth and trade. The intention is good – there is a need to foster a more open, transparent global environment for investment, and ensure national and international rules remain clear, coherent and consistent. No investment, no trade, no growth.

Globalisation

The Organisation for Economic Co-operation and Development (OECD), i.e. the rich nations’ club, warned last week that growth in world trade is set to lag global growth in 2016, i.e. globalisation as measured by trade intensity has stalled. Other signs are just as worrisome: (i) ratio of world trade to output has been flat since 2008; (ii) volume of world trade stagnated between January 2015 and March 2016; (iii) stock of cross-border financial assets peaked at 57% global GDP in 2007, down by 36% over 2015; and (iv) inflows of foreign direct investment remained well below 3.3% of world GDP reached in 2007.

Indeed, the growing backlash against trade liberalisation as well as recessions in some big commodity producers are adding to the slackening of trade flows and is likely to erode already flagging productivity and ultimately global living standards. All this, at a time of poor economic performance in the rich nations, rising inequality and big shifts in the balance of global power.

So much so, failure to deal with the negative consequences of globalisation has surged into the political agenda of several large nations (including the US) facing forthcoming elections. Worse still, growth is too meagre to generate the jobs that youths expect and to fulfil pension promises for the elderly. Indeed, globalisation has stalled. Does it matter?

Yes it does. Recent history witnessed the first fall in global inequality of household incomes since the early 19th century. Average world real income rose by 120% between 1980 and 2015. The opportunities accorded by global integration should not be dismissed. No man is an island. Globalisation’s failure, however, lies in (a) not ensuring that its gains are not better shared, and (b) just as dismal is failure to assist those adversely affected. But, the net impact on jobs and wages from rising productivity and new technologies has far exceeded rising imports.

Globalisation shouldn’t be made the scapegoat. What’s really needed is better management. I recall Nobel laureate Joseph Stiglitz’s main message in his 2002 book Globalisation and its Discontents: the problem is not globalisation but how the process is being managed. The rules of the game has to include measures to “tame globalisation.” Unfortunately, global management didn’t change. Today, the new discontents are bringing home the same message – only more intensely.

Inequality

G-20 leaders in Hangzhou were preoccupied with the need to placate public discontent about the unequal distribution of the benefits of free trade and globalisation. Hence, a lot of talk about people. China’s President Xi Jinping set the tone: “Development is for the people. It should be pursued by the people and its outcome should be shared by the people. This is not just a moral responsibility. It also helps unleash immeasurable effective demand.”

In China, Xi said: “We will make the pie bigger and make sure people get a fairer share of it.” The global Gini coefficient – the economist’s measure of inequality, has raced passed (Xi’s) “alarm level of 0.6, and now stood at 0.7” (the closer it approaches 1, the greater the inequality in income distribution). “We need to build a more inclusive world economy.”

Unfortunately, globalisation is today seen naively as a zero-sum-game (I win, you lose), with a US presidential hopeful arguing that China’s rise has come at the expense of US manufacturing heartlands – reflecting a rising disenchantment with the global economic order. It’s spreading. Last week, France publicly called on Brussels to end trade deal talks between US and Europe, citing a globalisation “without rules, where social models are pit against each other and dragged downward, where inequalities grow.”

This “docile of discontent” is best illustrated by Branko Milanovic’s controversial “elephant chart,” which was created (from 196 household surveys worldwide) by ranking world population (from the poorest 10% to the richest 1%) showing growth in income between 1988 and 2008, i.e. from the fall of the Berlin Wall to the fall of Lehman Brothers.

His global chart traced the distribution of growth in real income as first sloping right up, then down sharply and up again steeply, like an elephant raising its trunk: it shows big income gains at the high middle and very top, with the era of globalisation offering very little or nothing for those in between (at the bottom and in the middle and working classes in the rich nations who are poorer than the top 15% but richer than everyone else; this group seemed scarcely better off in 2008 than they were 20 years before).

The stagnant fortunes of these Trumpian and Brexiteer discontents in advanced economies are squeezed between their own countries’ plutocrats and Asia’s rapidly rising middle-class. It is this dangerous sharp dip in the chart to near zero which reflects those who occupy this dangerous docile. Milanovic’s study showed that (a) Chinese middle-class and the world’s 1% rich have gained handsomely in the era of globalisation; (b) lower middle-class in rich countries have fared poorly; and (c) rising income inequality remains a serious problem.

What then, are we to do

Global growth are revised downwards yet again as its traditional engines of trade and investment sputter. OECD now estimates the world economy would muster growth of only 2.9% this year. I consider this to be optimistic. Worse, potential growth has fallen in both advanced and emerging economies. The rise in income and wealth inequalities exacerbates the glut in global savings (reflecting the global investment slump). This can only lead to lower trend growth. Economists call this “hysteresis”: long-term unemployment erodes workers’ skills and human capital; and because innovation is embedded in new capital goods, low investment leads to permanently lower productivity growth. That’s why structural and market reforms are vital to boost potential growth. This has become critical in Asean, especially Malaysia.

There are no politically easy solutions. I know fiscal policy (especially productive public investment that boosts both supply and demand) remains hostage of high debts and misguided austerity. For now, the world is likely to remain as IMF’s new mediocre, or in Summer’s secular stagnation, or China’s new normal.

Make no mistake. There is nothing healthy or normal about rising inequality in the face of continuing slow economic growth. Worse, it leads to rising populist backlash against trade, migration, globalisation, even technological innovation. Following the old road of relying purely on cheap and plentiful money leads to a dead end eventually.

Policymakers’ renewed focus on the need to make capitalism more inclusive is welcome. But rich nations need to ditch austerity in favour of purposeful fiscal support – emphasising structural supply side reforms. There is no other way to unleash effective demand. The tools are already available. Finally, of course, there is innovation.


By Lin See-Yan

Former banker, Harvard educated economist and British Chartered Scientist, Tan Sri Lin See-Yan is the author of “The Global Economy in Turbulent Times” (Wiley, 2015). Feedback is most welcome; email: starbiz@thestar.com.my.


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When will the property market pick up?

Affordable living: The history of Stuyvesant Town, Manhattan New York dates back to 1943. In October 2015, Blackstone Group LP led a deal to buy New York’s Stuyvesant Town-Peter Cooper Village, a transaction that would put Manhattan’s biggest apartment complex in the hands of the world’s largest private equity firm and maintain some affordable housing at the property.

Experts predict between 2018 and 2019

AT a recent property seminar organised by Asian Strategy & Leadership Institute, several developers and property consultants had a debate predicting when the property market will pick up.

Real Estate and Housing Developers’ Association Malaysia (Rehda) patron Datuk Jeffrey Ng Tiong Lip reckoned the residential sector should recover next year or in 2018.

Ng was the moderator for the session on The Future Outlook and Challenges of the Housing and Property Sector.

Property consultants Savills Malaysia managing director Allan Soo, who specialises in the retail malls, expects a 2019 recovery.

Office market specialist Jones Lang Wootton executive director Malathi Thevendre declined to make any predictions. “It all depends ...,” she says.

Ng says the current slow housing market is actually good over the long term, although it is painful in the short term. It all depends on how we manage “the noise”, he says.

There are lots of noises at present, both on the national and international level.

“If next year is election year, the recovery – if there is one – will be after that because between now and then, there are so many uncertainties.

“There is a lack of clarity at the moment,” says Ng.

His reading of the property crystal ball of a 2017/2018 turnaround is by far the most positive and contrasts with Kenanga Investment Bank Bhd equity research head Sarah Lim Fern Chieh.

Lim expects house prices to be flattish or slightly weak depending on locations “over the next four to five years, if there are no major policy changes”.

Her rationale for a longer down-cycle is simple. If your destination is Genting Highlands, but you are driving in the opposite direction, you will need a longer time to arrive there when you finally realise you are driving in the wrong direction.

Although it is widely accepted that the property cycle is between eight to 10 years, within this cycle are “mini two-year cycles. There were two-year up-cycle in 1999-2000 after the Asian Financial Crisis, and another in 2003-2004 and 2007/2007.

But after the 2008 Global Financial Crisis, Malaysia had an extended five-year up-cycle between 2010 and 2014 with prices peaking in 2013, and this was largely due to quantitative easing (QE).

She is, therefore, expecting a longer consolidation period of between four and five years, starting from 2015, before the next up-cycle, barring any policy changes and the global economic climate.

She is also expecting the property market to experience structural changes due to affordability and liquidity factors, among others.

More realistic pricing

Notwithstanding the fuzzy horizon, there are nevertheless a few certainties which may well put the sector on a better footing.

First, home ownership has become a national issue.

Second, the government, at both federal and state levels being landowners, are stepping up on affordable housing.

Third, prices are expected to be more realistic going forward.

Rehda president Datuk Seri FD Iskandar Mohamed Mansor is seeking government cooperation to reduce or waive development charges and other charges, collectively known as compliance costs, in order to bring down prices as this is “too challenging” for private developers to go it alone, considering today’s high land prices.

“If the Government wants developers to build more affordable housing, give us cheaper premiums or don’t charge at all.

“We will then see more stability in prices, or even a reduction, if development charges and all sorts of other charges imposed on developers come down,” said FD Iskandar at a Rehda first half-year review recently.

He says property development and land matters have been the biggest revenue earner for every state. Both federal and state governments own large tracts of land. Although FD Iskandar had made this call before, he was very passionate and firm this time around. Other developers, previously silent, are also quite vocal about the various land and development charges they have to fork out.

This is probably the first time developers are coming together to make a collective public call to seek a waiver or reduction of development and other aspects of compliance cost. The effectiveness of that call depends on the Government’s will to act.

While developers can clamour for such waivers, what is facing the market today is weak sales and this in turn is forcing developers to tweak pricing and strategy a bit, hence the drop in the number of launches as they try push unsold stock.

Andaman group managing director Datuk Seri Vincent Tiew says developers will be offering “more realistic pricing” from now onwards with location being a paramount factor.

There will be more affordable housing and this can be seen from the various affordable housing projects being planned by both the federal and state government although the end-products are slow in coming.

This, says Tiew, can be seen in the various agencies under the federal and state governments, among them being PR1MA Corp mandated to build 500,000 units of affordable housing units by 2018, as outlined in Budget 2013.

A total of 240,000 houses were due by end-2015, with an annual mandate for 80,000 between 2013 and 2015. The number of completed units was 883 at the end of 2015, says Tiew. By the end of this year, 10,000 units are scheduled to be completed. The number of units approved to date are 232,807 against 1.24 million PR1MA registrants as of February 2016. All eyes will be on the affordable segment in the coming Budget 2017.

Healthy demand

The demand for housing has always been there. The issue is affordability, says Kenanga’s Sarah Lim.

“Of late, developers are beginning to price units at RM500,000 and below,” she says.

The current change in direction is attributed to societal and government pressure. Unsold stock and government pressure forced developers to relook their pricing strategy.If developers keep building RM1mil homes, when the threshold is RM500,000 and less, they will be left holding unsold stock. In order to move stocks, creative marketing/financing strategies are employed to move these stocks.

Lim says if developers were unable to meet at least 40% of their sales target by mid-year, they would be unable to meet this year’s targets.

More than two-thirds missed their sales targets last year.

“Prior to this, what was booked was considered sold. Now, this is no longer true,” Lim says.

Lim says there are two issues here, the pressure on the sector as the rate of aborted sales crept up and the people’s demand for realistic prices.

“What we are seeing today is the government’s influence. It is actually steering the market in the right direction,” she says.

Renting the way forward

The other certainty is observed in the rental market, which is expected to continue to be soft next year.

There will be “low occupancy rate” for projects completed last year (2015) and this year, with rental yield at less than 3% a year, says Andaman group’s Tiew.

It is cheaper to rent than to buy. There is so much supply going around and the purchasing power of the ringgit is shrinking.

Selangor State Development Corp (PKNS) senior manager (corporate planning and transformation) Norita Mohd Sidek advocates renting.

She says if there is a 50% loan rejection rate for affordable housing, and considering the limited supply by private developers, renting may be the only option.

She suggests building affordable housing cities the likes of Stuyvesant Town’s Peter Copper Village, Manhattan New York and counters the argument that there is no money to be made from affordable housing.

In October 2015, Blackstone led a deal that put Manhattan’s biggest apartment complex in the hands of the world’s largest private equity firm and maintain some affordable housing at the property.

Blackstone and Canada’s real estate company Ivanhoe Cambridge Inc acquired the 80-acre enclave for about US$5.3bil. Rent is kept below market rates for some 5,000 units. Public transport and other amenities must be part of the development for it to succeed. “Government grants and resources are needed to identify the right location to built more council homes,” she says in her paper.

In today’s low yield environment, pension funds around the world are looking at other ways to generate dividends besides equities and fixed income securities. They are buying into infrastructures and large township developments where there are economies of scale for maintenance.

Malaysia’s national housing dilemma cannot be solved by profit-oriented private developers alone. The golden property years between 2010 and 2014 have been intoxicating, having resulted in expectations of 20% to 30% rise in sales year-on-year, like the manufacturing sector. But the property sector is quite unlike manufacturing. The reflection point was seen in 2014 after the government introduced certain cooling measures and anti-speculation sales gimmick.

Going forward, the emphasis on housing priced RM500,000 and below means developers have to sell more units to make the same sales value as previous years.

“They have to sacrifice some of their margins. Higher profit margins can be had from the mid- to high-end segments,” says Lim. They will have to work harder to help buyers secure loans.

This search for some form of cohesion in the national housing arena has taken a bit of time. Hopefully, the coming Budget 2017 will pave the way for more positive action.

By Thean Lee Cheng The Star/Asia News Network

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US presidential hopefuls show a country lacking in leadership, debate falls into trite format

Monday's first presidential debate between Democratic and Republican nominees Hillary Clinton and Donald Trump was the most-watched in the US since the 1980 match-up between Jimmy Carter and Ronald Reagan. It attracted some 84 million viewers on 13 television networks, not including online watchers, National Public Radio reported.

It is widely held that in the showdown, politician Clinton, who did her homework, crushed seemingly unprepared and ill-informed Trump who often ranted, though the polls afterward showed a different picture. The CNN/ORC poll immediately after the debate found 62 percent of respondents thought Clinton won the debate, while just 27 percent felt Trump triumphed. Yet online polls with wider coverage of respondents overwhelmingly showed Trump was the winner.

However, no matter who won, it won't make the debate as significant as it is supposed to be. The two debaters deviated from substantive statements on the real problems that matter to the country, becoming embroiled in personal attacks against the bad records of each other. They did not appear statesmanlike, but rather like TV stars competing to amuse the audience for approval. Neither seriously mapped out a trustworthy blueprint for the country. In this sense, whoever eventually wins won't quell the public doubts about their capacity to steer the US out of its plight of worsening domestic and external situations.

It is widely recognized that the US, baffled by the quagmire in the Middle East and rampant terrorism, has seen its leadership decline and is unable to lead the world to squarely face up to a slew of challenges. The latest debate gives ammunition to the judgment.

The US president is in many cases the best proof of US leadership. But neither of the candidates looks capable of helping the superpower regain its global leadership in a multipolar world. Clinton, a smart politician that looks so presidential in comparison with Trump, doesn't seem able to inject anything new to the US given her poor performance as secretary of state, let alone her credibility issues. Meanwhile, caustic Trump has risen by giving voice to the anger of conservative Americans, but that's all he can offer in front of the severe tests facing the country. His ridiculous policies that woo US voters will be disastrous for US clout and raise so many uncertainties about the direction of the US.

In the final analysis, the presidential election has become a game to choose who is the least unfit to rule the superpower. As the influence of its leadership slides, the world needs to be ready for it. - Global Times

Clinton-Trump debate falls into trite format

First round debate By Wang Xiaoying

The first US presidential debate between the Democratic and Republican candidates concluded Monday night, drawing unprecedented attention from around the world. No previous two contenders have displayed more differences in personality, vision and background than Hillary Clinton and Donald Trump, making this year's race to the White House all the more enthralling.

Many commentators thought Clinton's versed performance well-demonstrated her background as a veteran politician. Trump, a bit inexperienced, didn't display many faults and restrained his flamboyant style. In general, it was a trite debate.

As Clinton has been exposed to various scandals during the campaign, she tried to highlight her honesty and prudence. Many people have doubts about her integrity, however they are also accustomed to candidates' empty promises.

Trump wasn't faking. But the problem is that Trump does not make many Americans feel secure, and they worry he might be capricious if he is elected. This debate did not reassure people.

Clinton and Trump are perhaps the most controversial candidates in the history of US presidential elections. American society has different concerns about the two candidates, as neither is a role model for the country. With only less than two months before the election, voters have no better alternative than choosing the least worst candidate.

Be it in Europe or Asia, Western countries or emerging economies, few people look forward to the result of the US election or believe the leadership transition will promote global harmony. The two candidates are publicly making their calculations and revealing their selfishness to the world. For them, it seems the whole world owes the US.

Both candidates mentioned China several times in their first debate. Trump was particularly arrogant, and has spread the mentality that the US has suffered losses from its relations with China, and is also taken advantage of by its allies. This mentality, together with Washington's powerful strategic tools, poses potential threats to global stability.

The US will not stop pursuing its privilege as a superpower, and this will for sure challenge the status of China and Russia. While Clinton tends to make the current system more favorable to the US, Trump is more straightforward in maximizing benefits. The China-US relationship will witness more difficulties in the future. The US will also weigh benefits from its ties with China with those from a tougher China policy, and evaluate whether it could afford the price of jeopardizing its relationship with Beijing.

Chinese do not want to see China pressured by Clinton, and meanwhile are uncertain of Trump's presidency. Let Americans worry about who will end up in the White House. Chinese should be ready for the change in the US presidency. We have many tools to respond, enough for the future US president to feel the dread if it makes trouble with China. Such tools matter more than the goodwill of American presidents. - Global Times

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Getting back up after a fall

Don’t keep saying ‘no’ and ‘don’t’ to the kids because all it does is squelch their curiosity, determination and thirst for exploration. The truth is, even when you fall, you can learn from the experience. Growth happens when you step out of your comfort zone.

AS YOU likely would have heard by now, while training in the British Virgin Islands recently, I was bicycling down a hill, hit a bump in the road and was flung off my bike into the air. In the microseconds that I spent anticipating the feeling of concrete against my face, my life actually flashed before my eyes.

I genuinely thought: I’m going to die.

My bike disappeared off the cliff, and I landed hard. I was wearing a helmet, but I suffered a fractured cheek, torn ligaments and a few cuts and bruises.

While the timing couldn’t have been worse, my recovery is going well.

By the time you read this (injuries permitting), I will have been long into my journey on the Virgin Strive Challenge, the most physically demanding test I’ve ever tackled. I’m joining my children, Holly and Sam, and a group of inspiring people on this challenge.

We’re traveling entirely under our own power on a month-long trip through Italy, from the base of the Matterhorn in the Alps to the summit of Sicily’s Mount Etna.

We will be facing all sorts of physical obstacles along the way: a vast landscape across which we will hike and cycle, deep waters that we’ll have to swim across to reach Sicily, an active volcano we’ll run on. It will take great perseverance, solidarity and mental clarity to get through this adventure.

But it’s likely that the toughest obstacles will be those inside our own heads.

In business and in life, most people consider others to be their toughest opponents, whether it’s winning a tennis match or winning more market share. However, the real adversary is actually far closer to home. In my 66 years, I’ve learned that there is no tougher foe than yourself.

Think about it: As an entrepreneur, you’re the one who has to put in the hard yards.

You’re the one who has to deal with all those late nights and early mornings. You’re the one who has to figure out how to push past barriers you didn’t realise existed.

But if you’re determined enough and have the right mindset, you can reach heights you thought were impossible to reach.

That’s what the Virgin Strive Challenge is all about: pushing yourself to do something you didn’t think was possible, and in the process setting a great example for others, particularly young people.

Too often, children are told: “You can’t do this,” or “Don’t even try.” Adults say these things to keep their kids safe, to protect them from the pain of failure.

But in my opinion, this is a big mistake. The more children are told they can’t do something, the more they lose their curiosity, determination and thirst for exploration — qualities that are essential for entrepreneurs.

That’s why Virgin has partnered with Big Change this year, a youth charity in the UK that looks for different ways to encourage young people to thrive and develop a growth mindset.

It is all about believing that you can grow through both failure and success. When you fail, it’s tempting to slip into a negative mindset, to start thinking that you’re hopeless. But that just makes it easier to give up.

If you remain positive about your abilities, chalk up losses as valuable experiences and get back on your feet, it will be easier to forgive yourself and move on.

After all, while you may be your own toughest adversary, you can also be your biggest supporter. It’s important that we all know this, children in particular.

My wife, Joan, and I have always encouraged our children to chase their dreams, push themselves hard and live their lives without regret. I’m so proud of the adults they’ve become and the work they’re doing now through Big Change. It’s an incredible privilege for me to be able to join them in their latest undertaking.

I just hope my body holds up after the accident!Together, we’re going to have the adventure of our lives as we try and raise over £1.5mil to support positive change for young people. It doesn’t get much better than that!

And we hope to send a clear message: Growth happens when you step out of your comfort zone, and the truly extraordinary happens when you do it with the support of others.

Make sure you head over to the Virgin Strive Challenge website, strivechallenge.com, for more information, and check back for updates on our journey. — Distributed by The New York Times Syndicate

By Richard Branson

Questions from readers will be answered in future columns. Please send them to Richard.Branson@nytimes.com. Please include your name, country, email address and the name of the website or publication where you read the column.

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Malaysia's vernacular schools not the problem

Those who oppose vernacular schools ... are driven by their desire to produce a society moulded in a way that they desire. Please keep element of choice for both parents and students.

AMONG those opposing vernacular schools, you can detect one umbrella argument that is continuously used by many parties. They say that the existence of vernacular schools is a threat to national identity and a hindrance to unity. Their fear is that this student segregation will lead to a fracturing of our society.

I disagree with this view. I think they confuse the purpose of education and there is also a lot of hypo­crisy going on.

Let us firstly look at the concept of schooling. Historically, the entity known as a school has its origin in Prussia in the early 1800s.

At that time, Prussians were looking at methods to produce citizens who would loyally work and fight for causes determined by their rulers. So they devised a system where, from a very young age, their citizens were trained to live a regimented life.

It did not matter what your abilities and interests were. As long as you were of the same age, you would be grouped together and forced to learn subjects determined by the elites.

Like the military, there was heavy emphasis on leadership by head teachers and teachers, while students were mere recipients of what was taught to them. That regimentation remains as the nature of modern schools.

After two centuries of bureaucratic evolution, schools these days are not about providing holistic education to support the child’s individual growth anymore. Instead it is about producing cohorts of citizens who can be easily grouped and compartmentalised.

Every one of us who went through the modern school system has been compartmentalised into groups based on our exam results.

And that is also why it has become the norm for those in power to use the school as a tool for social engineering. From day one, since Prussian times, the purpose of a school has always been about social engineering. Yet the vast majority of people today confuse schools with education.

In reality, you can still get an education without going to what have become our traditional schools. Education can be obtained from home, or in informal groups that come together for what is today known as “home-schooling”.

More interestingly, there is also a global interest in concepts such as unschooling, Sudbury schools, and democratic schools.

Those who oppose vernacular schools usually do not argue about the quality of education received by the students. They are not driven by the desire to catalyse social mobility by ensuring everyone has access to quality education. But they are driven by their desire to produce a society moulded in a way that they approve of.

The elites have a concept of what they feel society should be like and they want to use the Prussian factory-like model of schools to produce underlings who behave according to their pre-determined mould. To legitimise their mould, they label it as unity.

Note that their desire for unity has nothing to do with education. Their focus is on schooling. And this is where the hypocrisy creeps in.

Many of the people who want to promote their mould of unity have never attended any of our government schools. They don’t even send their own kids to our schools.

They step into our schools perhaps for a few hours a year for hyped-up visits, yet they speak as if they really know. More amazingly, they speak as if they actually have faith in our school system when their actions show otherwise.

In reality, these elites campaign for something that will never affect them. When it comes to their own families, they send their children for a “better” education elsewhere.

They want to limit our choices on schools because they know that they can always pay their way out and send their own children to a school of their choice.

This is the tragedy of some of the privileged. Instead of looking for ways to make sure everyone can afford school choices like them, they want to kill choice for everyone who cannot afford to pay.

Let me pose a rhetorical question.

If unity can only be achieved by making students from different backgrounds come together in one school, then why do they just want to close vernacular schools?

To be specific, data shows that Chinese schools have higher ethnic diversity than other schools. I can think of many non-Chinese schools that are completely mono-ethnic. If we are objective, it is not the Chinese schools that need to be closed down.

This is why I say that there is a lot of hypocrisy in the debate. Worse, that hypocrisy is clouded by confusion about whether we want to educate or we just want to have factory-like schooling.

The vernacular school debate is a debate of the elite. For us common people, our sole desire is to be able to provide our kids with quality education.

It is possible to provide school choices for the commoners, such as by using school vouchers so that choice is provided but schools are still free for the students.

Of course, it will take time to move towards this choice-based system. Until we get there, I beg the elites to stop trying to kill what few choices remain for us poorer citizens of this country.

By Wan Saiful Wan Jan The Star

Thinking Liberally

Wan Saiful Wan Jan is chief executive of the Institute for Democracy and Economic Affairs (www.ideas.org.my). The views expressed here are entirely
the writer’s own.

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I often take a long pause when I am asked about what I do in Beijing, especially if the person is from Malaysia. For the last two decades, more than 90% of Chinese Malaysian families send their children to vernacular primary schools. Those who do not read and write some…

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High-rise living in below par, need professionalism in managing the property

Booming demand: With millions of stratified properties coming up, building management is becoming a very big industry. —Reuters

Star's Graphic: http://clips.thestar.com.my.s3.amazonaws.com/Interactive/highrise/highrise.mp4

Only 74 out of 7,325 high-rise residential properties in Peninsular Malaysia earned the top five-star ranking in an evaluation of their property management standards. And more than half are below par, earning only one and two stars.

IT is one thing to be a developed state by 2020. But it is another thing entirely to have a developed state of mind – and Malaysians have a long way to go to achieve that.

Take, for instance, condominium- and apartment-living.

Some of these properties may come with top notch facilities but when it comes to managing their upkeep, there is much to be desired.

Or so says the latest findings on the quality of managing stratified properties from a survey by the Urban Wellbeing, Housing and Local Government Ministry.

Every year, the ministry conducts its Strata Scheme Management Quality Evaluation, or “Star Rating”, which ranks the standards of joint management bodies (JMBs) or management corporations (MCs) of apartments and condominiums.

These bodies are ranked based on how they do in seven areas (see graphic below for details); five stars is the highest rank.

But, as it turns out, more than half – or 69% – of condominiums and apartments nationwide ranked “below par”, scoring only one and two stars in 2015. In 2014, a slightly smaller percentage, 65%, were ranked below par.

Only 1% – or 74 – out of 7,325 strata development schemes surveyed earned five stars in the 2015 ratings, made available to Sunday Star.

If such a trend continues, future residents will inherit poor standards of living amidst modern facilities.

Currently, almost six million Malaysians out of 20 million city folk are living in stratified buildings like apartments and condominiums.

“But this number is expected to rise in future as the country progresses and becomes more urbanised,” says Mohammad Ridzwan Abidin, Urban Wellbeing, Housing and Local Government Ministry urban service division under-secretary.

He says one of the major problems that condo dwellers continue to face is the refusal of other residents to pay maintenance fees. Other problems are building defects and matters involving enforcement.

“For now, about 70% of residents are at a level where they are merely aware of what needs to be done in managing their property. They are not yet at a level to appreciate the benefits of cooperating with each other and creating a better living culture,” he says.

Mohamad Ridzwan says there is a need to change the mindset of people to foster more civic-minded communities in high-rise buildings.

“Future generations will likely live in stratified buildings, so people should try to set a proper precedent for them,” he says.

He points out that there are also more people moving out of landed properties and into high-rise buildings.

“This group of people will have to learn to adapt to the culture of living in stratified buildings as it is different from living in houses.

“They will need to be more inclusive of and cooperative with their neighbours,” he says, adding that they would also have to learn to be more considerate when it comes to using shared facilities.

Stressing that it all boils down to the mindset of residents, Mohamad Ridzwan highlights the case of Rumah Pangsa Orkid, a low-cost flats property in Ulu Tiram, Johor, which made it into the Malaysia Book Of Records in 2014 for obtaining the ISO 9001:2008 standard for exemplary management.

“Until today, they remain the only low cost flat development to have achieved this,” he says, adding that there are yet to be any high-end condominiums accorded the same standard.

Mohamad Ridzwan says the ministry will continue to actively educate dwellers on proper management of their properties.

“We will embark on more education programmes to promote better practices through advertisements in the mass media,” he says.

On the Strata Management Tribunals to hear disputes, Mohamad Ridzwan says four such tribunals have been successfully set up to cover different zones in Peninsular Malaysia.

“Since their formation the tribunals have heard about 200 cases per month,” he says.

In March, Sunday Star reported that residents who do not pay maintenance fees and other charges were set to face the music, with the Government forming a team to strengthen the enforcement of the Strata Management Act.

The Act also enables residents to take their disputes to a Strata Management Tribunal to settle matters.

Building Managers Association of Malaysia committee member Richard Chan agrees that the “biggest and most critical” problem is the collection of fees, saying that it is rare that JMBs or MCs are able to collect payment from 80% of residents.

“It is more common for the collection rate to be at 40% or 50%,” he says.

Chan laments that petty excuses are often given by residents to defend their refusal to pay up.

“Some refuse because they don’t use the facilities.

“When people ask why they don’t want to pay, they simply say they don’t swim or play tennis,” he shares.

Chan adds that many unit owners live elsewhere or are based overseas and so are reluctant to pay.

“Some are not satisfied with services like garbage collection and defy orders to settle the fees,” he says.

He urges future condo owners to refrain from buying properties that come with all sorts of facilities if they are unwilling to pay up.

“Sometimes, it isn’t about whether they can afford the fees or service charges. It is about their attitude and mentality.

“Some don’t pay simply because their neighbours are not paying and are getting away with it,” Chan says, adding that such attitudes have resulted in some apartments owing up to RM200,000 in water and electricity bills.

The lack of money in the sinking fund also hinders JMBs and MCs from paying for major works like repairing lifts.

“It becomes a vicious cycle. Because people are not satisfied with the upkeep of the place, they do not pay the fees.

“But when they do not pay, there isn’t enough funds for upkeep,” he says.

Also, developers must do their part by informing all potential property buyers of the exact amount of all service charges, says Chan.

“Developers will try to promote their projects for more sales but they should also inform buyers of the fees they are expected to pay.

“Owners should also consider that, after a year, the fees may go up as warranty periods for equipment expire,” he says.

Federation of Malaysian Consumers Associations secretary-general Datuk Paul Selvaraj says many complaints against MCs have been made to the federation.

“High-end condominiums are generally better managed. We received a lot of complaints from people in medium cost apartments,” he says.

He says that consumers and the building management should both be more responsible.

“Consumers need to settle payments that they have agreed to. But they should also be receiving good service in return, like efficient rubbish collection,” he says.

Selvaraj highlights that the only way forward is for management bodies and residents to have a good working relationship.

“People should understand that managing their building is a collective responsibility.

“More dialogues should be held on how to improve the community to ensure good quality of life wherever we live,” he adds.

by Yuen Meikeng The Star/Asia News Network

More professionalism needed in managing high-rises

WITH more high-rises mushrooming, a Building Managers Board is urgently needed, according to Tan Sri Teo Chiang Kok, deputy president of the Building Managers Association of Malaysia (BMAM).

BMAM is an umbrella body comprising stakeholder organisations representing management corporations (MCs), joint management bodies (JMBs), chambers of commerce, developers, engineers, architects, shopping and high-rise complex managers, and managing agents.

Appealing to the Urban Wellbeing, Housing and Local Government Ministry to set up the board urgently, Teo says such a body is long overdue.

“Millions of stratified properties are coming up. Building management is becoming a very big industry. We have to start regulating. All building managers must be registered and regulated,” he says.

To date, some 600 building managers have voluntarily registered with the association, he shares, estimating that there are probably tens of thousands more.

Meanwhile, the BMAM is focused on educating its members and interested parties on good management via collaborations with institutions of higher learning.

Describing building management as a multitasking, multi­discipline function that attracts people from various backgrounds and with a variety of skills, Teo says that basic criteria for the role is needed. A Building Managers Board, once set up, will have guidelines and regulations to bring professionalism to the role.

Persons deregistered by the board cannot be hired as property managers, he suggests. This, he feels, will make hiring building managers cheaper while ensuring that they are monitored.

“So long as they fulfil the board’s requirements, anyone can be a building manager. The board will monitor and weed out the errant ones. JMBs and MCs can hire cheaper, smaller companies, even individuals, to manage their buildings if they don’t have the budget.”

Urban Wellbeing, Housing and Local Government Ministry urban service division undersecretary Mohammad Ridzwan Abidin acknowledges the proposal to set up a Building Managers Board.

“However, no decision can be made by the ministry yet as this matter is still being discussed,” he says.

He says the ministry issued a directive to Commissioners of Buildings nationwide last month to register all managing agents to protect residents from unscrupulous parties.

The BMAM would also like to see the country’s 150-plus Commissioners of Buildings (COB) given proper funding and staff. The role of the commissioner is mostly undertaken by local council heads or mayors, which isn’t right because they already have so much on their plate, he says.

The Commissioner of Buildings must be a dedicated, full-time position supported by an adequately funded department. Now, it’s mainly a one-man show, he observes.

“The Act is a good tool,” he says, referring to the Strata Management Act 2013, “But it’s for the COB to implement it efficiently. An effective COB can nip many things in the bud – the COB can call a unit owner, find out the grouses and give directives. If the COB can offer easy resolution, a lot of problems will be solved.”

Apart from supporting the position of COB, JMBs and MCs must familiarise themselves with the Strata Management Act, says Richard Chan, a committee member of the Building Managers Association of Malaysia and a past president of the Malaysian Association for Shopping and High-Rise Complex Management.

“For instance, many aren’t aware that money collected should go to JMBs and MCs – not the companies or individuals hired to manage the property. What if these companies don’t pay the service contractors?”

On Tuesday, a full-day strata management seminar will be held at Wisma Rehda in Petaling Jaya, Selangor, to explain the Act, he says, urging stakeholders to attend the event.

Teo feels that the Act is too harsh on JMB volunteers. Calling it a thankless job, he says it’s difficult getting residents to even attend AGMs, what more serve on the JMB.

“Despite not being paid, JMB members risk personal liability actions. It’s too onerous. It’s overkill because there are already laws like the Penal Code which imposes fines and jail terms.”

And he feels that the Act places too many obstacles in front of willing volunteers.

“The JMB chairman and members can only serve for two and three years respectively. Such restrictions will make things worse because as it is, no one wants the job. Our solution is to extend the chairman’s term to three years; but if at the AGM there’s no one else who wants the post, he or she should be allowed to stay on. And members should be permitted to stay on for as long as they want.” -  The Star

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