Requiem for an Economist

I have pasted this lock ,stock and barrel from the online NST.

" DATUK Dr Zainal Aznam Mohd Yusof, a member of the National Economic Advisory Council, died on April 30 at the age of 66.

He contributed immensely to the nation as an ,playing a key role in the building of the economy and development policies.

Thus, it was fitting for him to be chosen as a member of the council, within which his untiring energy for narrowing economic inequality was reflected in the New Economic Model (NEM).

His forte was addressing disparities, poverty and income distribution.

He was concerned about the widening gap between the rich and the poor, and the plight of the bottom 40 per cent of households.

These efforts left a great impression on those who worked with him.

Zainal Aznam guided much of the work of the council in the two areas. He was critical of the problems associated with the implementation of certain policies but did not lose sight of the need to reduce inequality.

While recognising that there would be resistance from vested interests, he advocated a pro-poor, ethnically-blind affirmative action approach to helping the bottom 40 per cent of households, in line with the NEM goal of inclusiveness.

For him, it was imperative to address the inequality within and between ethnic groups, between regions, and between urban and rural areas.

But he also believed that for wealth to be fairly distributed, it must first be sustainably generated.

He was eager to see that his ideals were achieved, since he had been involved in the country's economy for 38 years.

He participated in the preparation of the first and subsequent industrial master plans. He also contributed to several Malaysia development plans.

He had long been involved in economic research and policy development departments and committees.

Thus, it was understandable that he wanted to see to it that his pursuit of addressing the widening gap between the rich and the poor would culminate in policy initiatives that could be carried out, like those he worked to include in the NEM.

His passion for statistical figures was a key element of the analytical tools he applied to diagnose the health of the economy. His obsession with improving the lot of the low-income group was amply documented with statistical and graphic representation, which brought to the fore the plethora of disparities that existed among the poor.

In his article Secret Lives of Statistics, he wrote: "Numbers count. Serious economists need statistics if they are to be counted and taken seriously. What have been the most seminal and outstanding statistics that have appeared so far for over the past 38 years, was the statistics on the incidence of absolute poverty, the inter-ethnic income disparity, overall income inequality and the ownership of share capital of Bumiputeras because of their wide repercussions and controversial, too."

He held a doctorate in Economics from the University of Oxford, besides having served in the government and private sectors.

He served on boards and teams at Harvard University, Keio University in Japan and at the Korea Institute for International Economic Policy.

He was a visiting scholar at the Harvard Institute for International Development, Harvard University and a consultant to the World Bank looking into the political economy of poverty, equity and growth.

He was a modest and humble person and we admired his dedication to an exercise regime as an athlete and fitness enthusiast, even as the demands of tough discussions in the council took a toll on his time.

He was a hardworking person and spared no efforts on thorough research while delving deeply into topics or issues prior to talking with conviction on the subjects.

He was concerned about maintaining impartiality and a non-partisan view, and it would be near impossible to get his vote or show of support if the issue did not meet his high standards.

In Zainal Aznam, the council had a colleague who was not afraid to speak his mind and yet allowed for disagreement and dissent.

When the council convened its inaugural meeting, he made it clear that the minutes should capture all viewpoints, however unpopular or controversial they might be.

Always looking debonair in his suit, he put forward his arguments eloquently and convincingly.

The council members will miss his wise counsel and contrarian views where they matter.

This tribute was written by the National Economic Advisory Council, Putrajaya."

So, we say sayonara to one contributing son of the nation.

May his soul rest in peace.

High House Property Prices-Locking out Young Housebuyers

An entire generation of young adults risk being locked out of the property market due to runaway house prices warns The National House Buyers Association (HBA)

HBA secretary general Chang Kim Loong said the rapid inflation of assets has put house ownership
beyond the reach of young adults.

“The prices are exorbitant and beyond the reach of young adults,” Chang told The Malaysian Insider. “The
price increases are not commensurate with salary increases. How are young adults going to catch up
(with house prices)?”

Property prices in urban areas such as Penang and Kuala Lumpur rose by up to 40 per cent last year
fuelled by low interest rates and a surge in speculative buying.

The average price of a KL residential property is now about RM485,000, or roughly nine times the average
urban household annual income of RM54,000.

The Demographia International Housing Affordability Survey rates markets, whose property prices are 5.1
times median income or more, as “severely unaffordable”.

The high prices of property in urban areas prompted the Najib administration to introduce a first-home
ownership scheme in March in addition to the loan-to-value ratio cap in a bid to stave off discontent.

However, lawyers and bankers say the first-home ownership scheme will not help those who take home
RM3,000 in total household income as the amount will not cover loan repayments due to rising prices for
food and other basic necessities and utilities.

The government’s My First Home Scheme launched in March will enable young adults aged up to 35 and
earning less than RM3,000 to get 100 per cent financing to buy houses worth between RM100,000 and
RM220,000 with a repayment period of up to 30 years. The measures also pale in comparison, however,
to efforts seen elsewhere in the region, such as China and Singapore.

The Chinese government last year introduced curbs on foreigners buying property and raised the
minimum downpayment for first-time buyers to 30 per cent from 20 per cent and banks were ordered to
suspend mortgages on third homes and above in some cases — in addition to hiking interest rates three
times since October.

Singapore, meanwhile, raised stamp duty on new properties to as much as 16 per cent of the sale price
to be paid by the seller if the house is offloaded within a year of purchase.

The amount that banks can lend for a second property has also been lowered to 60 per cent of the
home’s value.

So another problem looms on the horizon for eager beavers hoping to buy a house under the government's first home ownership scheme. It appears that they are just ripe for the burgeoning rental market, don't you agree?

CIMB-Another Booming Year for Property

Malaysia is likely to see another record year for property transactions says CIMB Investment Bank Bhd in a  report today (29 April 2011)adding that home price appreciation could accelerate,

The bank maintained its “overweight” rating on the industry and said Mah Sing Holdings Bhd was its top pick,

Meanwhile, CIMB Research is bullish on the performance of the properties sector for 2011 after hitting a record transaction of RM107.44 billion last year.

It said the potential re-rating catalysts for the sector are news-flow on land-banking, strong sales from most developers and accelerating earning growth.

"We remain bullish on the property sector, especially the residential properties, as house prices are likely to trend higher and volumes should scale new highs," it said in a research note today.

CIMB Research said the price direction was determined by major cycles and negative external events such as the Asian and global financial crisis.

It said the cycle was currently in the property sector's favour. - Bernama, Bloomberg

YTL Corp-Turning Point Friday?

Well, your sub-divided shares of 10 sen par are now officially in your CDS account. They were deposited yesterday night, so it seems.

Today is Friday and the Dow did not do well yesterday night.

In all likelihood, there may be market weakness all round and I think the new shares of YTL may again be easily available on a buyer bias.

My hunch is its collection time again for institutional shareholders.

Let us watch how the YTL Corp drama unfolds today.

When market ended,  the price slumped by 4 sen to RM1.66.

It was to be expected.

Social injustice main cause of Malaysia’s brain drain-World Bank

I am copying  Asrul Hadi Abdullah Sani's article in the Malaysian Insider verbatim here.

KUALA LUMPUR, April 28 — Social injustice is one of the top three reasons behind the country’s brain drain, the World Bank said today, adding that Malaysians are only willing to return if the government shifts from race-based to needs-based affirmative action policies.

The World Bank conducted an online survey in February of 200 Malaysians living abroad in conjunction with the Kennedy School of Government at Harvard University.

In its fourth issue of the Malaysia Economic Monitor, the report stated that 60 per cent of the respondents found that social injustice as their main concern to migrate or return-migrate, citing unequal access to scholarships and higher education especially among the younger generation within the non-Bumiputera community.

Of those surveyed, 66 per cent found that lack of career prospects was a major factor and 54 per cent agreed that unattractive salaries as underlying factors in the Malaysian diaspora.

The report also showed that a large number of the diaspora migrated to Singapore, resulting in Malaysian-born individuals contributing to a quarter of the island nation’s population in 2010.

According to a census conducted in Singapore last year, there are currently 385,979 Malaysians-born residents comprising 47 per cent of all skilled foreign labour in the country.

The number of ethnic Chinese among Malaysian migrants in Singapore has also jumped from 85 per cent in 2000 to 88 per cent in 2010.

The World Bank also said that a large number of Malaysians obtained their tertiary education overseas, pointing out that those emigrating are getting younger as more of those below 23 are leaving the country.

The report concluded that the “Malaysian diaspora is large and expanding, as well as geographically concentrated and ethnically skewed.”

In a Bloomberg news service report earlier today, World Bank senior economist Philip Schellekens was quoted as saying that foreign investment could be five times the current levels if the country had Singapore’s talent base.

“Migration is very much an ethnic phenomenon in Malaysia, mostly Chinese but also Indian,” Schellekens told Bloomberg in Kuala Lumpur on Tuesday ahead of the report’s release today.

Governance issues and lack of meritocracy are “fundamental constraints” to Malaysia’s expansion because “competition is what drives innovation,” he said.

Malaysia’s growth fell to an average 4.6 per cent a year in the past decade, from 7.2 per cent the previous period.

Singapore, which quit Malaysia in 1965, expanded 5.7 per cent in the past decade and has attracted more than half of its neighbour’s overseas citizens, according to the World Bank.

Malaysia has in recent years unveiled plans to improve skills and attract higher value-added industries.

Prime MinisterNajib Razak has pledged to roll back the country’s NEP-style policies but he also told the Umno assembly last year that the government’s social contract of providing benefits to Bumiputeras cannot be repealed.

According to the Bloomberg report, Najib has eased some rules to woo funds, including scrapping a requirement that foreign companies investing in Malaysia and locally-listed businesses set aside 30 per cent of their Malaysian equity for indigenous investors.

Last year, he unveiled an economic transformation programme under which the government identified US$444 billion (RM1.3 trillion) of projects from mass rail transit to nuclear power that it would promote in the current decade.

Malaysia’s Brain Drain getting worse, says World Bank

I have attached Lee Wei Lian' s report written in the Malaysian Insider in verbatim on this very serious problem.

KUALA LUMPUR, April 28 — World Bank senior economist Philip Schellekens painted a gloomy picture of the Malaysian brain drain situation today saying that it not only grew rapidly but is likely to intensify, further eroding the country’s already narrow skills base.

Schellekens said that the number of skilled Malaysians living abroad has tripled in the last two decades with two out of every 10 Malaysians with tertiary education opting to leave for either OECD (Organisation for Economic Cooperation and Development) countries or Singapore.

“Brain drain from Malaysia is likely to intensify in the absence of mitigating actions,” he said at the launch of the World Bank report titled “Malaysia Economic Monitor: Brain Drain”.

The report defined brain drain as the outflow of those with tertiary-level education.

The economist said Malaysian migration was increasingly becoming a skills migration with one-third of the one million-strong Malaysian diaspora now consisting of the tertiary educated.

“Expect the trend to continue,” he said.

He added that the outflow of talent was not being replaced with inflows, thus damaging the quality of Malaysia’s “narrow” skills base, noting that 60 per cent of immigration into Malaysia had only primary education or less, even as the number of skilled expatriates declined by 25 per cent since 2004.

The report also noted that there was a geographic and ethnic component to the brain drain, with about 88 per cent of the Malaysian diaspora in Singapore being of ethnic Chinese origin.

“The numbers for US and Australia are similar,” said Schellekens.

Report figures also show that 54 per cent of the Malaysian brain drain went to Singapore while 15 per cent went to Australia, 10 per cent to the US and 5 per cent to the UK.

The top three drivers for brain drain identified by the report were career prospects, compensation and social justice.

“(Lack of) Meritocracy and unequal access to scholarships are significant push factors and a deterrent to coming back,” said Schellekens. “Non-Bumiputeras are over-represented in the brain drain.”

He suggested that Malaysia implement important structural reforms in tandem with introducing targeted measures such as income tax incentives to reverse the brain drain.

“Once the highway is built, you must compete for traffic,” he said. “One suggestion is to hold a competition among members of the diaspora to get ideas on what can be done to attract them home.”

He added that while this report estimated the Malaysian diaspora at one million compared with about 1.4 million in a previous World Bank report, it was due to the lack of Singapore government information on the breakdown of its non-resident population.

“This is a conservative estimate and the diaspora could well be larger,” he said.

KFC-Another 25 New Outlets in the Offing

KFC's AGM yesterday saw the announcement of 25 new outlets-15 standard ones and the balance 10 drive-ins.

“Each standard outlet would cost RM1mil while the one with drive-through facility would be around RM3mil so it seems.

Currently, the company has a total of 515 outlets nationwide.

  

Internationally, another nine outlets will open in India by year-end from the existing eight outlets there.

Contribution from India is still be insignificant to the company's earnings this year as KFC have just started there about eight months ago.Currently positive contributions come from Singapore and Brunei.

KFC is currently not impacted by the rising poultry price as the group is involved in integrated poultry business where chickens were bought at a fixed margin.

KFCH is 50.6% owned by QSR which in turn is 57.5% controlled by plantation company, Kulim. Joho Corp holds 53% of Kulim.

JCorp is a public enterprise entity controlled by the Johor state with more than 280 companies under its stable and eight publicly-listed companies with businesses like oil palm plantation, healthcare, food and poultry in Malaysia and overseas.

JCorp, which was saddled with debts totalling more than RM6bil as at Dec 31, 2009, has been in the media limelight lately. Some RM3.6bil is due for repayment next year.JCorp had been reported as saying that it would not embark on any “fire-sale” involving the sale on any of its prize assets for its bond redemption.

It was said to be in the midst of evaluating ways to ensure the redemption of the bonds including the disposal of land it directly owned to settle the debts.

Do you think Johor Corp will dispose QSR and KFC and yet have indirect ownership?

That will be one finger-licking proposition,wouldn't it?