Category: Economics

Categories
Economics Environment

[711] Of Lim Keng Yaik says you must lower your fee or we’ll give you market power?

I might have heard the news wrongly and I’m neither a Malaysian telcos industry expert nor a not-so-casual observer. Nevertheless, while I was lying on my stomach and effortlessly switching channels, I came across a news report over TV3 about broadband infrastructures owners charging users exorbitant fee (access fee maybe?). These users, I presume, in context anyway, are broadband internet service providers,

The relevant minister, Lim Keng Yaik, through the clip, was almost angry and visibly frustrated at the owners. These owners, judging from excerpt of Keng Yaik’s speech, sound like monopolies. So, it’s safe to assume they act as monopolies too. Monopoly leads to inefficient pricing which in turn leads to inefficient outcome and, in this case, prevents greater broadband penetration in Malaysia. Current Malaysian broadband penetration rate is low and the government wants to change that. As Lim Keng Yaik’s ministry is responsible for telecommunication sectors in Malaysia, I understand his frustration.

I felt a sort of empathy for him until I heard – think I heard, rather – he said, if the owners refuse to cooperate with the government in lowering the fee, the government will stop issuing more broadband licenses. Now, I’m not sure what kind of license he was talking about. But it seems, through context again, he was referring to the permits for laying down broadband infrastuctures like fiber optics and stuff. If what I heard is true, then this is bad economics .

The problem is monopoly and a monopoly charges higher price for its good compared to a competitive firm. If the government stop issuing the licenses, wouldn’t that would actually reward the monopolies instead of punishing them?

I mean, halting the license issuance would effectively guarantee the existing infrastructures owners of market power.

If license doesn’t refer to the owners but instead refers to ISPs however, then maybe the punishing plan might work. Stoppage of the license issuance to ISPs would deprive owners of broadband infrastructure of revenue. But then, that wouldn’t help broadband penetration in Malaysia at all.

And if what he said actually meant stopping issuing licenses to existing owners, then that might make better sense. In fact, I think, this is the case.

Right now, I hope I heard it all wrong. I can’t find anything off the internet yet. So, I can’t confirm what Lim Keng Yaik said or meant but I’m sure a report will pop up somewhere within the next 24 hours. I’ll do a postscript entry here once the report is out. Stay tuned.

p/s – wow. 3,000 tonnes at all three sites. Sounds like Malaysia needs to bring down the cost of safely dumping waste legally fast.

Categories
ASEAN Economics Liberty

[706] Of Cambodian dictatorship and ASEAN

Malaysia and several other ASEAN members have been criticizing Myanmar for the latter’s lack of meaningful democratic progress. To the southeast beyond Thailand, lies Cambodia with a dictator is in the making. Despite Cambodia’s alarming progress towards dictatorship, ASEAN leaders are yet to say a word about it.

For the past few days, Cambodian government have been arresting Cambodians critical of the government on the ground of defamation. The arrest has sparked condemnation from several organization, including Amnesty International. AI in its press release accuses the Cambodian government of manipulating Cambodian courts. The New York Times in one of its articles says that this is not an isolated incident. Opposition leaders and others have been arrested by the government. This makes these arrests as a part of a larger erosion of freedom in Cambodia:

Cambodian Leader Cracks Down in Bid to Solidify Power
By SETH MYDANS
Published: January 9, 2006

PHNOM PENH, Cambodia, Jan. 8 – The harshest political crackdown in years is under way here in what some analysts are calling the final stage in Prime Minister Hun Sen’s drive to consolidate unchallenged power.

Over the past year, he has choked off the last effective political opposition while continuing to marginalize the monarchy, manipulate the courts and intimidate labor unions and other civic groups. In December, the leader of the only significant opposition party, Sam Rainsy, who had already fled the country, was sentenced in absentia to 18 months in prison for criminal defamation.

Now, with a series of arrests and lawsuits on defamation and related charges, Mr. Hun Sen is for the first time directly attacking the human rights groups that, by default, serve as a de facto democratic opposition…

ASEAN has a unique role to apply pressure against Cambodia. The 10-member confederation could admonish the Cambodian Prime Minister Hun Sen and perhaps, put a check on current Cambodian political atmosphere. But it is not doing so and I think I know why they are silent on the matter.

ASEAN takes pride of its non-interference policy but it makes an exception for Myanmar thanks to US and EU initiative. Unlike Myanmar, the European Union and United States are not pushing ASEAN to deal with Cambodia accordingly. With no outside push, ASEAN seems happy to stay away from making a comment on its members. Well, I think it’s just wrong and ASEAN needs to make a statement on Cambodia.

The reason for such need is simple – it’s the ASEAN Charter which guarantees human rights. Though the Charter has yet to be drafted, this is a chance for ASEAN to prove to the world and more importantly, to its own citizens that the charter will not be just another piece of paper. If ASEAN fails to speak up against Cambodia, it will be harder to deal with such case in the future even when the Charter is in place.

Then, of course, besides the lack of outside pressure, another reason why ASEAN is not doing anything about the issue is because its more prosperous members, particularly Malaysia, Singapore and Thailand, are not quite saints when it comes to human rights.

p/s – Volkswagen ends partnership with Proton. So, Proton is going to keep Lotus after all.

Categories
Economics Environment Politics & government Sports

[702] Of statism and Malaysia Airlines

Yesterday, Malaysia Airlines’ (MAS) new managing director, Idris Jala announced that MAS will move out of its headquarters in Kuala Lumpur in effort to cut cost. This might signal an eventual sale of the building. Today, Malaysian Deputy Prime Minister made known that the government won’t interfere with MAS operation. This is good news.

Several weeks ago, when Idris Jala brought up the possibility of selling MAS HQ building in Kuala Lumpur, politicians, some senators from the Dewan Negara and other old dogs were up in arms, harping at Idris Jala for even considering the matter. After all, MAS is Malaysia’s national air carrier, much like how Proton is Malaysian national car manufacturer. It’s national pride and the sale of MAS building could dent that pride. Hence, their reaction is comprehensible. Their opposition however is irrational.

Pride rarely has a place in business, especially when it gets tough. More often than not, a person, an entity or whatever has to swallow its pride and get on with it. What’s better or the best option won’t necessarily feed one’s ego. MAS is facing this dilemma and Idris Jala realizes this. He deserves respect for simply being able to perceive the scenario and look beyond pride. The politicians that disagree with Idris Jala deserve a kick for putting too much emphasize on pride.

The government should mostly do what it does best and that is governing. Government intervention on MAS is unneeded and unwanted. Malaysian government should learn something from Singapore Airlines – the firm, despite being linked to the government, must be free to work out its own strategy.

Pride won’t save MAS and neither will politicians that oppose the sale. These politicians are a bunch of statists. Do we really expect these statists to know more about MAS than the managing director himself?

No. Unless, if the politicians themselves have proper background in business. But that’s rarely the case, isn’t it?

p/s – the price of internalizing pollution – over USD 3 billion.

China will invest 26.6 billion yuan (US$3.28 billion; EUR2.69 billion) over the next five years to clean up the Songhua River, a key source of drinking water for tens of millions of people that was polluted in November by a toxic spill that reached into Russia, reports said Sunday.

That amount doesn’t even reflect full cost accounting. Imagine what the figure would look like with full cost accounting. Already, a third spill is in progress.

BEIJING (AFP) – A third major toxic spill in China in as many months has threatened water supplies to millions of residents of two central cities, officials and state media have said.

A clean-up accident allowed industrial chemical cadmium, which can cause neurological disorders and cancer, to flood out of a smelting works and into the Xiangjiang River in Hunan province on January 4, Xinhua news agency said Sunday.

If things go as they are going at the moment, the PRC might just overtake the US as an environmental devil.

pp/s – and Michigan goes unranked for the second time in six months. Bravo Carr!

Categories
Economics

[699] Of looming economic recession?

Yield curve is currently a hot topic in the United States. At least, in the economic circles . Why is it so hot?

Well, yield curve is a locus of points of interest rate for bonds of different maturities and right now, it’s inverted. Inverted yield curve means expected future short term interest rates are falling. At the same time, inverted yield curve usually precedes a recession.

Earlier in December 2005, the Federal Reserve raised the US interest rate. While at it, the all-powerful Alan Greenspan for the first time in many months, abandoned the word “accommodating” from his vocabulary. Many see that as a hint that the US market has reached its peak.

Greenspan however has dismissed the talk of upcoming recession. He and a few others don’t believe that an inverted yield curve is a signal of a downturn. I hope he’s right.

If he’s wrong, given that the US is Malaysia’s largest trading partner, Malaysian export might suffer quite a bit unless demands from elsewhere pick up. Malaysia certainly doesn’t need to catch an American flu.

How about that to start the new year? Pessimistic already?

Categories
Economics Environment

[698] Of top ten Malaysian environmental issues of 2005

With 2005 scurrying away fast, let’s see what I consider as top ten green issues in Malaysia for 2005.

Topping my list is definitely the haze that covered Malaysia, no thanks to weak Indonesian enforcement and possibly, irresponsible Malaysian firms. With Malaysians breathing smog, the term “fog you” started to gain currency. This was a signal of a growing discontent, directed towards Indonesian ineffectiveness in handling a grave major regional environmental emergency. There was even a small protest in front of the Indonesian embassy in Kuala Lumpur, and I was there. Though the problem is no more, despite a decade of this annual haze, I’ve yet to see any concrete action taken to completely solve the problem. So far, people in ASEAN have been treating the symptoms but not the cause. Hence, mark my word – the haze will return in 2006. So, stock up those masks now.

Second to the haze is the mis-development of Bukit Cahaya Seri Alam Agriculture Park in Selangor. The park is a nature reserve – what’s left of it anyway. Part of it was illegally developed by certain people and was approved by the local government in spite of the park’s status. And this happened under the nose of the state Chief Minister. Believe it or not, the Chief Minister’s office is not too far from the park. I’m very much dissatisfied with the outcome of the “investigation” since the people in the state government got away relatively unscathed. Those people should’ve been sacked and brought to justice – including the Chief Minister. But no. They even have the audacity to declare Selangor as a developed state…

Third is poarching and illegal trade of endangered wildlife. Remember the Malayan tiger that was butchered? How about the tiger cub that was saved from the soup bowl? That might be a tip of an iceberg but thanks to public exposure, awareness is starting to creep up. Slower than I would like but up nonetheless. Still, the government is not doing enough. Malaysia wildlife law needs serious upgrading. Or at least better enforcement.

Fourth is water shortage. It was rather surpising to see dams water level dangerously fell how it had fallen this year. The odd thing is, Malaysia is a tropical country and it suffers from water shortage. It’s like, going to the north pole and having a shortage of snow! Well, not really but, you know. Water rationing was imposed at several places. Thank goodness Kuala Lumpur was spared. One thing history tells us is that we never learn. This shortage is set to happen again next year and I’m convinced of that.

Fifth is still about water. This time, it’s about too much water. Northern Malaysian states suffered their worst flood in 30 years. The flood was partly due to above average torrential rain and inadequate drainage system. Crazy. Malaysians could have used that extra rain earlier but no, someone up there had a different idea. Meanwhile, Vietnam, mainland China and Japan suffered record breaking rain and snowfall. Possibility of a repeat? It depends on the climate.

Sixth, the Johor Department of the Environment fire. The fire did one thing – documents on a toxic waste case are in form of unreadable ashes now. The fire brings in suspicious circumstances given that the DOE was closing in on a toxic waste dumping case. Soon after, police comfirmed that it was an arsonist’s work. Later, a DOE officer was murdered. He was the one that reported the fire and a few other things to the police.

Seventh, mistreatment of pets. But thanks to wide coverage by Malaysian press and in part to SPCA’s efforts, Animal Ordinance 1953 is undergoing study and might have sharper teeth soon.

Number eight, bird flu. Malaysia wasn’t hit hard but culling of chickens did occur in Kelantan, near the Thai border. If Malaysia had been hit harder, eight would have been too low a rank.

Ninth. Tsunami. The 2004 tsunami convinced authorities in Malaysia and indeed all around the world of the importance of mangrove swamps. Efforts to conserve and rehabilitate mangrove swamps are receiving much needed attention due to how the swamps softened the destructive force of the tsunami.

Finally, protection of green lungs in and around Kuala Lumpur. These green areas faced possible extinction but protests from local residents prevented that. Better still, the opposition comprises of influential and filthy rich people. Thus, any effort to violate the green areas in the future will meet above average, fierce opposition.

With that, happy new year to you. I’m off to witness some fireworks.