Being Human, Humane, Humaneness, Humankind-redspirit

Beyond the 'Dong Zong issue'

by Azly Rahman

in Malaysiakini

I read with interest about ongoing governmental discrimination against Chinese schools, as highlighted by Dong Zong.

Why are quality teachers and an abundance of resources still channeled only to Malay-dominated schools? Why are children in Chinese schools criminalised by the ‘sanction on teaching staff” which will ultimately deprive students of a good mother-tongue education?

What actually is our illness with regard to denial of the students’ right to their own language? Do policy makers actually understand the relationship between culture, cognition, consciousness and citizenship?

What does nationalism mean these days, and how do we understand it vis-a-viz use of language in schools? Whose brand of nationalism is being made dominant and what should an inclusive one look like?

What is the real issue behind the age-old request for the Chinese schools to have more teachers? How are the children criminalised by all this? Where is the peaceful path to this gentle profession called education?

When I think of education, I think of the children first and foremost. I think of each child as a gift brought into this world in all his/her cultural and cognitive complexities and of the pride of the family raising the child independent of what the ‘state’ wants the child to become.

Schooling is a process of mass babysitting in a capitalist state, such that the child will be provided a place for eight hours a days, seven days a week, to be taken care of, like in a kibbutz, while the parents go to work, selling their labour to the state.

The child is supposed to behave and learn new things while the parents are supposed to be obedient and, as good workers, bring profit to the state. The state, through its apparatuses, uses the profits and products of ‘alienated labour’ of  parents/workers and ‘develops’ the country according to what the political and economic elite imagines what ‘development’ means.

The child gets to be socialised to become citizens of the state. The mass baby-sitting agencies called public, private or parochial schools, tended by ‘managers of virtue’ called teachers - and wardens’ in boarding schools.

Their role is to ensure that the child learns to become nationalistic or even ‘patriotic’ in accordance to what this means vis-a-viz state ideology. In Malaysia, the current ideology is perhaps called ‘1Malaysia’.

Polarised education system

Are schools a happy place for the child? How shall the child be moulded? What language will he/she be proficient in? Whose culture will he/she inherit? In Malaysia, will it be the culture of the Malays? Or a hybrid of the Malay-Muslim culture? Who defines what will be it in the best interests of the child?

What actually is Malaysia's philosophy of education in this age and time of growing restlessness demanding for radical change, inclusiveness, linguistic diversity and competency, and the demands of a globalised world?

Why not let the child be schooled well first in his/her mother-tongue to develop cultural pride, and next let the medium of instruction at the secondary level be in English primarily?

Why not teach even the subject of Islamic Studies and Moral Education in English, and next prepare the child well for tertiary education that is predominantly English-speaking, with courses such as Philosophy, Ethics, and Cultural Studies as compulsory first-year subjects?

Malaysians: Let us not be dishonest, ignorant or hypocritical in the way we design the best cultural and cognitive environment for the child to grow up to become world-wise and productive citizens. As it is now, Malaysia's education system is polarising and inspired by the apartheid system.

The products of the Malaysian educational system have for several batches passed through the conveyor belt. The issue of race relations has become more and more exacerbated, partly as a consequence of the inability of the education policy makers to design peaceful educational settings and peaceable learning environments to allow respect and appreciation for each other’s culture to flourish.

Public discourse is becoming more plagued with calls by this or that racist-fascist groups in defence of the bankrupt and morally and nationally bankrupting ideology of Ketuanan Melayu or ‘pseudo-Malay idiotic pride’ as I would translate it.

Has there been any effort by the Education Ministry to design and implement a curriculum on multicultural education? Has there been an interest in it at all, given the nature of Malaysia’s communal politics that has evolved into the state of ethno-psychopathology bordering on irrationality, greed and massive corruption?

As an educator involved in the teaching of cultural perspectives, philosophy, and education, I’d like to see children in Malaysian schools bring their culture with pride into the classroom, to be shared with others in a deeply engaging creative learning context.

This is so that we bring in what the philosopher Charles Taylor would call the “ethics of authenticity” - of the ethical traditions of culture - into the learning process and not have these young curious cultural minds evolve into become ‘knockers or boosters’ of this or that brand of ultra-ethnocentrism.

Let us see how the Education Ministry will resolve this Dong Zong issue once and for all, before another regime takes this important  task more seriously.

---

DR AZLY RAHMAN, who was born in Singapore and grew up in Johor Baru, holds a Columbia University (New York) doctorate in International Education Development and Master’s degrees in the fields of Education, International Affairs, Peace Studies and Communication. He has taught more than 40 courses in six different departments and has written more than 300 analyses on Malaysia. His teaching experience spans Malaysia and the United States, over a wide range of subjects from elementary to graduate education. He currently resides in the United States.

Read More

What's Behind the 2012 Budget Announcements

There are a few key things that we can take away from the 2012 Budget announcements yesterday. Should the minority government survive a number of significant auto insurance initiatives will occur. Note that the Budget also addressed on a number of initiatives that have already occurred or are underway. It is not unusual to repeat previous announcement in particular where they have no monetary impact on the government.

1. Auto Insurance Anti-Fraud Task Force

The section of the Budget document has nothing really new. The announced initiatives were included in Task Force's interim report that was released in December 2011. For example. the government notes that it has amended regulations (see Ontario Regulation 194/11) to ensure that treatments are provided as invoiced and issued a Superintendent’s Guideline to ensure that insurers are not being invoiced for medical devices at a significantly higher than market rate. The Budget document also sets out areas where the Task Force has committed to making recommendations.

2. Scientific and Evidence-Based Approaches

The government has signalled that it is moving ahead on two important projects. One is that minor injury guideline is to be developed the is evidence-based, that is, based on medical ad scientific research to be conducted by a consultant. FSCO released a Request for Proposals in November 2011 to hire the consultant but no announcement has been made regarding the successful bidder. This work should take two years to complete.

The second project is deals with the definition of catastrophic impairment found in the Statutory Accident Benefits Schedule (SABS). In December 2010 FSCO appointed a Expert Panel lead by Dr. Pierre Cote to review the SABS definition. That panel submitted two reports to the Superintendent which are both available on the FSCO website. The Budget document indicates that the Superintendent has made his final recommendations and his report will be made public. In addition, the government intends on making amendments to the SABS based on those recommendations. No time frame has been provided but regulation changes do not need to go to the Legislature for approval. Cabinet has the authority to amend the SABS.

The Expert Panel reports deal with such things as combining psychological and physical impairments, more objective tests for spinal cord, brain and psychiatric impairment and interim benefits for those waiting for a catastrophic determination. Hopefully the government will move quickly on this issue.

3. Other Initiatives

The government has signalled that it will review FSCO's Dispute Resolution System. Cracks have appeared in the system which has not undergone significant reform since it was first introduced in 1990. However just think about how much Ontario's auto insurance system has evolved over the past 22 years. Apart from the mediation backlog, a comprehensive review is likely overdue. No timeframe has been provided nor a mechanism for undertaking that review.

The government has signalled a willingness to work with insurers to explore voluntary usage-based auto insurance policies. I will likely address this issue in future postings. I feel that as traditional risk classification criteria are being chipped away at (ie, credit scoring, territories), usage-based policies may be the answer to predicting risk.

The government will harmonize the timing of statutory automobile insurance reviews. There are currently three statutory reviews in the Insurance Act. At least once every two years, the Minister is required to table a report before the Legislature in respect of the adequacy of statutory accident benefits and setting out changes made to the SABS (section 289). The Superintendent is required to undertake a review of Auto Insurance sections of the Insurance Act and related regulations at least every five years and recommend any amendments that the Superintendent believes will improve the effectiveness and administration of the Act and regulations (section 289.1). The Superintendent is also required, at least once every three years, to consult on the operation of those sections of Ontario Regulation 664 that deal with rating and risk classification and submit to the Minister a report containing the Superintendent’s recommendations for amendments to the regulations (section 417.1). A similar recommendation was made in the Superintendent's Five Year Review report in 2009 and the 2011 Auditor General's report.

The government intends to propose amendments to give the Superintendent the authority to impose administrative monetary penalties (AMPs) in the insurance sector. AMPs are monetary penalties viewed as a middle ground between a ‘slap on the wrist’ and quasi-criminal proceedings, enabling insurance regulators to issue a penalty proportionate to the infraction.

Read More

Auto Insurance Annoucements in the 2012 Ontario Budget

Insurance

In 2010, the government made major changes to the auto insurance system. As a result, premiums are stabilizing for drivers across Ontario. Building on the success of the 2010 reforms, the government is taking action to tackle fraudulent and abusive practices, base insurance benefits on scientific and medical principles, and ensure its regulator continues to identify and respond to new and emerging issues. The government’s ongoing work in the area of auto insurance, including fraud, should continue to reduce the pressure on premiums.

Auto Insurance Anti-Fraud Task Force

The government remains committed to combating insurance fraud and continues to support the Auto Insurance Anti-Fraud Task Force. The Task Force was announced in the 2011 Budget and delivered an interim report in December 2011. The government is working with stakeholders to address the Task Force’s early recommendations and has already:

• enhanced auto insurance fraud training for police officers;
• started a pilot project using the Health Claims for Auto Insurance database, which will allow health care providers to flag clinics that are misusing their credentials and cut down on identity theft;
• amended regulations to ensure that treatments are provided as invoiced;
• issued a Superintendent’s Guideline to ensure that insurers are not being invoiced for medical devices at a significantly higher than market rate;
• encouraged the industry to communicate the issue of fraud across a number of media platforms, and measure the current state of consumer engagement and awareness on the issue; and
• required CEOs of automobile insurers in Ontario to annually attest that their accident benefit cost controls are effective and that legitimate claimants are treated fairly.

The Task Force recommended that the government should provide the Superintendent of Financial Services with the power to impose administrative monetary penalties for contraventions of legislation and regulations. The government is proposing amendments that will provide this authority in order to enhance regulatory effectiveness.

The Task Force is continuing its important work this year. Since the interim report, it has been building relationships with the Workplace Safety and Insurance Board (WSIB) and Crime Stoppers to share best practices in fraud prevention.

The Task Force’s final report will provide recommendations on the following:

• regulation of health clinics;
• other gaps in regulation;
• establishment of a dedicated fraud unit;
• consumer education and engagement strategy; and
• a single web portal for auto insurance claimants.

Scientific and Evidence-Based Approaches

Scientific and medical knowledge on how to identify and treat a variety of injuries has improved remarkably over the last decade. The government will ensure, where possible, that insurance regulations reflect the most relevant science on identifying and treating injuries from automobile accidents. Clarity will help minimize disputes in the auto insurance system, ensure people get the treatment they need and ensure that treatments provided are based on medical evidence.

Newer scientific and evidence-based approaches can be applied to serious and minor automobile accident injuries. Recommendations on a new Minor Injury Guideline, based on the latest research on successful treatment, are being developed. The government has also received the report of the Superintendent of Financial Services on catastrophic impairment based on the work of an expert panel. The government will make the Superintendent’s report public and will move forward to propose regulatory amendments in this area.

Modern Insurance Regulation

Ontario’s insurance regulator, the Financial Services Commission of Ontario (FSCO), will continue to modernize to meet today’s challenges. The government has welcomed the recommendations of the Provincial Auditor General, which will strengthen the oversight of the auto insurance system in particular. The government will further enhance the effectiveness of FSCO regulation of the insurance sector by proposing to:

• engage in a review of the automobile insurance dispute resolution system;
• strengthen the Superintendent’s authority regarding Unfair or Deceptive Acts or Practices;
• clarify the Superintendent’s authority regarding rate and risk classification approvals;
• support a Superintendent’s review of the profit provision benchmark in auto insurance rate change approvals;
• work with insurers to explore the implications of voluntary usage-based auto insurance policies;
• harmonize the timing of statutory automobile insurance reviews; and
• improve solvency supervision of Ontario insurers.

Analysis and comments to follow.

Read More

Texas Holdem (Ways To Lose Your Money Other Than Playing Stocks)

This is my favourite card game, and the only game I would play when I am at a casino, which meant that I do not frequent the casinos in Malaysia and Singapore. They do not have Texas Holdem for players only (the Carribean and other versions are stupid odds-favouring the casino bullshit games) because its a low yielding game. Money basically changes hands among the players themselves and the house just takes a cut after every hand. Too small for the casinos in Malaysia and Singapore apparently.


I don't undrestand that because the biggest gaming place is Macau and Texas Holdem is very big there as in everywhere else.Most people like poker, but nothing can compare to Texas Holdem because of the various possibilities. Many people who play like to think they are good players, me included (lol), just like many people who invest in stockmarkets like to think they are better than the average (again, wrong). To make money in stockmarkets you NOT only have to be better than 50% of the players. You have to be in the top 20% because only 20% or so really make money over the long run, the other 80% will eventually lose - want to know why, come to the seminar on 14 April and remind me to tell you.


Anyway, back to the game, got nothing to write about the local markets for the past many weeks cause its a punting penny stocks phase. If I write, then I am becoming too speculative, so better not to write anything. Only thing worth writing about, which I have written already, is plantations. I think if you stick to second tier plantations, you should be getting 30%-50% return if you hold for rest of the year (i.e. NOT IOI Corp, Sime Darby, UM,  ... go for those I did not mention).


I like the game because its not about cards or what you have, most games end up not having to flip over any cards, so I don't know why people are so enamoured over what two cards they have in the first place. The first video is the great Johnny Chan, why, he shows us clearly never to fall in love with high pairs. Be them aces, kings, queens ... many people will never get away from them. The flop shows 6, J, J .... and you have two players in as well. Chances are high that at least someone will "decent high cards", i.e. J (one out of 4 cards in the other two persons).. not to mention anyone having a solo 6 to boot, your pocket Aces is almost worthless after the flop. But how many will still keep playing them with gusto, and wondering why they lost.


Play the players and your math skills. People wondered why they never make a lot of money when they have big cards, they curse when they get small pots when they have high pairs ... then that person does not understand and appreciate the game that well. Big pots has to do with somebody else having a hand and the flop has to be open and having some thing for everyone.





Among the current crop of players I really like is Tom Dwan, he is young and has balls of steel. Watch how he plays in a CASH game. He never needs to have the best hand. His skill is trying to make others think you have the ultimate best hand. After the K came out on the turn, his cards does not matter anymore. All Tom is doing is making the other person think he has the best hand. Maybe it does not work all the time because the ultimate best hand usually only happens 1 in 10 hands. But you still need balls of steel.


Because in a hand, when Phil Laak has the K pair, he can be beat by trips 5s, hidden pairs of 3s, or trips Qs.





Which is why, if you want to master the game (you will never, btw) instead of watching great wins, study the great folds. Ask yourself, would you have folded if you held those hands.

Read More

Some U.S. States are Considering Credit Score Restrictions

As in prior years, proposed credit scoring restrictions continue to be a focus in many states. Here is a brief recap of some recently introduced bills:

• Illinois: HB 5839 proposes to require insurers, which are using credit information to underwrite or rate risks, to recalculate the insured's insurance score at the request of the insured, but not more than once annually. The purpose is to determine whether the insured is eligible for a reduction in his or her premium rate.

• Kentucky: SB 121 would require insurers to provide reasonable exceptions for extraordinary life circumstances, as well as prohibit insurers from declining, refusing to renew or cancel an automobile policy solely because of credit history, lack of credit history or extraordinary life circumstances that directly influence the credit history of the applicant or insured. SB 31 would declare the use of credit history or the lack of credit history, including a credit score or insurance score, of an insured or an applicant as the basis in whole or in part to decline, refuse to renew, cancel, rate, or determine the premium rate for any insurance policy, contract, or plan of insurance an unfair or deceptive trade practice.
  

• Maryland: SB 785 proposes a prohibition on private passenger motor vehicle insurers from rating a risk based, in whole or in part, on the credit history of an applicant or insured in any manner.
• Minnesota: HF 2279 would require that no insurer be permitted to limit coverage under or determine the premium rate for any person, in whole or in part, on the basis of credit information, without consideration and inclusion of any other applicable underwriting factor. Insurers would also not be permitted to use credit as a factor in adverse decision considerations if the credit information is adversely impacted or cannot be generated due to the absence of credit history.
  
  
• Missouri: HB 1406 proposes to prohibit taking any adverse action based on a credit report or insurance credit score against a person currently insured under an existing insurance contract with the insurer.
  
  
• Rhode Island: Both SB 2296 and HB 7411 would prevent the consideration of an applicant's credit history in determining automobile insurance rates.
  
  
• Virginia: HB 355 proposes prohibiting an insurer from setting rates or making pricing decisions based on a person’s credit information contained in a consumer report, bearing on an individual’s creditworthiness, credit standing, or credit capacity except as otherwise permitted under existing Virginia law. Also, an insurer would not be permitted to take any adverse action based in whole or in part upon an individual applicant’s or individual insured’s credit information contained in a consumer report if the applicant or insured has a perfect driving record. Both HB 432 and SB 350 would prohibit insurers from setting rates or making pricing decisions based on a person’s credit history, lack of history or credit score.
  
  
• West Virginia: HB 2049 proposes to prohibit the use of a person's credit history in insurance transactions, while HB 2319 would prohibit the use of a credit score in casualty insurance rate filings. HB 2467 proposes to prohibit credit scoring from being considered as a factor in calculating rates in homeowners or automobile liability policies.

Read More

Insurance News - Friday, March 23, 2012

New York Senate Passes Tough Auto Insurance Fraud Measures

On Thursday the New York Senate passed three bills to combat auto insurance fraud, which costs New Yorkers more than $1 billion a year, as well as legislation that would impose stronger criminal penalties for staging auto accidents. Recent cases of auto insurance fraud have uncovered massive crime rings, including doctors, lawyers and scam artists who staged accidents and used New York’s no-fault insurance program as their own, giant, state-sponsored ATM machine.

Senate Bill 4507B would enable insurance companies to retroactively cancel policies taken out by people who commit auto fraud. Senate Bill 1685 would establish a new felony-level crime of staging a motor vehicle accident. Senate Bill 2004 would make the use of “runners” illegal in New York. All three bills need to be passed by the state House before becoming law.

read more...

Read More

Music Empowering Women

I still remembered the recent talk show section in BFM which focused on why women aren't climbing the corporate ladder more successfully. The world has never been treating women nowhere near fair since the beginning of time. Just pluck any cross section from historic times. We have made strides over the past 100 years or so but oh, we still are so far from being "fair".


In the corporate world, much has been said about women being represented in the board rooms and top management. The US being a much touted place for equality, and even Australia, are still poorly represented in those areas.


Do we dare to say women are not as capable? I don't think so. Look at the academic results for the past 20 years, given a fair go, women generally outperform men. Maybe success and a career in the corporate world requires more than just academic excellence, for sure actually. Leadership skills, charisma, interpersonal skills,  soft skills, high EQ, ambition, resilience of character, risk taking ability ... while most of those may "favour men" in their "natural makeup", it is not absolute.


The burden for women when it comes to child bearing, family, birth control, victims of sexual discrimination and abuse, etc... is for all to see. For a woman to make it to the same position as a man demands even more "productivity", perseverance and intelligence from them. Luckily for many women, that is not too difficult because men are generally assholes, yes, especially in the corporate world of chumminess, scratch my back - I scratch yours, old school ties, collusive behaviour, etc..


Sadly, the same can be said for women in relationships. Many are still locked in a time warp. Taking charge, knowing your worth as a person, self actualisation, being responsible for your own happiness ... are important objectives for a well functioning person of any gender. To rely on men to "open up" the boundaries for women is too passive. Too many women still play the role of "victims", docile in too many ways that represses the character. Too reliant on the other party for one's happiness and well being.


Equality for the sake of equality is hollow an ideal. Equality because we know its the right thing to do, because we are different yet the same, respecting the soul and integrity of a person ... then that means the world.


There are wonderful songs about empowering women (no, not I've Never Been To Me ... which is very much the exact opposite to what I have been writing):


Lesley Gore's "You Don't Own Me" back in 1964 says so much ...



Burt Bacharach's wonderful song sung resolutely by Dionne Warwick in 1963. "Don't Make Me Over".



What a song title by Meredith Brooks, all about the angst of being a female, in the roles of a girlfriend, mother, wife, daughter, lover.



Tori Amos' Silent All These Years, a thinking woman's empowering song, note the gut wrenching lyrics.

Excuse me but can I be you for a while
My dog won't bite if you sit real still
I got the anti-Christ in the kitchen yellin' at me again
Yeah I can hear that
Been saved again by the garbage truck
I got something to say you know
But nothing comes
Yes I know what you think of me
You never shut-up
Yeah I can hear that


But what if I'm a mermaid
In these jeans of his
With her name still on it
Hey but I don't care
Cause sometimes
I said sometimes
I hear my voice
And it's been here
Silent All These Years


So you found a girl
Who thinks really deep thougts
What's so amazing about really deep thoughts
Boy you best pray that I bleed real soon
How's that thought for you
My scream got lost in a paper cup
You think there's a heaven
Where some screams have gone
I got 25 bucks and a cracker
Do you think it's enough
To get us there


Cause what if I'm a mermaid
In these jeans of his
With her name still on it
Hey but I don't care
Cause sometimes
I said sometimes
I hear my voice
And it's been here
Silent All These...


Years go by
Will I still be waiting
For somebody else to understand
Years go by
If I'm stripped of my beauty
And the orange clouds
Raining in head
Years go by
Will I choke on my tears
Till finally there is nothing left
One more casualty
You know we're too easy Easy Easy


Well I love the way we communicate
Your eyes focus on my funny lip shape
Let's hear what you think of me now
But baby don't look up
The sky is falling
Your mother shows up in a nasty dress
It's your turn now to stand where I stand
Everybody lookin' at you here
Take hold of my hand
Yeah I can hear them


But what if I'm a mermaid
In these jeans of his
With her name still on it
Hey but I don't care
Cause sometimes
I said sometimes
I hear my voice [x3]


For pure fun, Shania's "Man! I Feel Like A Woman!". Nuff said.

Read More

Chart Of The Year

I have always had the same chart, only instead of level of income, I had the level of development of each country. The less developed would see more corruption and so on. The chart below says the same thing but on matters that speaks clearer to us. You want to know how to get higher income per capital (i.e. the average annual income per person for that country)... yes, less corruption.

To be fair, there are a few discussion points to the above chart. Indonesia for example has an abnormally large number of islands and people living in secluded areas which may be difficult to reach or partake of the general business economic activity. They may be classified as self sustaining farmers at best, people really living off the land and sea. Hence when you average them out as well, Indonesia's real figure should be a lot higher. Same goes for China. 

To be fair, corruption exists in every country, its the level of pervasiveness and the relative amount of leakages. We know that Taiwan and Korea are not very clean as well, the ties between the triads and government officials in Taiwan is well known, the unusually cozy relationships between major corporate figures and the Korean government is also well documented.


We cannot be too optimistic that eradication of corruption can be done in 10 years or even 20. I mean HK took at least 20 years and Singapore needed a heavy handed treatment for a very long time. Hence even if we do effect a change in government in the next elections, safe to say its just baby steps, but at least we must move forward.

This makes Malaysia's position even more untenable. Except for HK, I believe Malaysia's per capita income was higher than Korea, Singapore, Taiwan some 35 years ago ... vellapan ... do we need to ask why, we all know why. That is why when I hear politicians championing how good Malaysia's growth had been  for the last 20 years ... we have actually been grossly underperforming.

Read More

Vellapan To the Markets?

A good friend just got back from holidays with her kids and asked what happened to the Malaysian markets? She said that I wrote about the bull market being back and so on. I said, yes, everywhere else the bull is moving steadily... but in Malaysia there are two things which pulled it back. 


One was the article saying EPF had sold so much shares. That article was true and factual but not complete. And by being incomplete, it gives off the wrong signal to a lot of retail investors. We all know how much retail investors' participation there was since the beginning of the year. Go to any broking gallery now and ask them what shares they are buying, they'd be saying how to buy shares when even EPF is selling.


The article is incomplete in that to be a fair article, it has to note the times when EPF has been selling, how about every March for the past few years? I suspect it is portfolio rebalancing rather than an actual selling because, seriously, the article did not note the amount of local shares EPF is holding. It is more likely to be a seasonal effect, just as EPf is more likely to do window dressing towards year end closing. 


As a percentage of holdings its so miniscule. But if you did not elaborate, the general public will think something is amiss. Anyway, bygones be bygones.


The second effect which is a relatively new phenom, as families grew richer, school holidays are a must to venture somewhere. It is almost akin to the Western world's Christmas holidays. This is a relatively new phenom, maybe for the past 3 years or so. There you go, shifting cultural and social norms. I can safely say that almost one third of the movers and shakers in the market place were on holidays - how to move the markets?


Then I tried to extricate myself by saying, the bulls are primarily first into indexed stocks, which is why index wise everywhere have held up. Then after a while, it will move to the broader market. I know one and all are hoping that I am right.

Read More

Global Capital Flows - Developing Markets

Excellent analysis piece from Bloomberg Markets, my fav biz mag, on global capital flows to developing and frontier markets. Some call it emerging markets, but we need to divide them to developing and frontier to be more precise. Following the sub prime crisis and the subsequent Euro-crisis, the trend towards more exposure for emerging markets should be increased. 
 

How investors allocate their funds is what we call capital flows. Owing to the size of the recipient countries, such flows can make a huge difference to these markets. As much as investors can plough into MSCI markets, they can also take out funds. Last year, the MSCI valuations dropped some 20% on the view that the Europe's debt crisis would curb global growth. In January 2012, the figure was 30% off its historical average. 


Realising a calmer settlement to the Greece-led debacle, it is fair to say that valuations and funds should start coming back to MSCI countries. However, not all will benefit in the same manner, fund managers will index some of their holdings but many will allocate according to "outlook".
 

Using IMF data 2012-2016, Bloomberg Markets have created a top markets for attractiveness:
(country)  (cumulative GDP growth) / (gov debt/GDP) / PE / (ease of doing business, lower the better)
1  China             46.7% / 16% / 11.5x / 91
2  Thailand         23.3% / 45.3% / 12.5x / 17
3  Peru              23.7% / 13.6% / 11.6x / 41
4  Chile             19.4% / 10.7% / 18.2x / 39
5  Malaysia       18.6% / 56.8% / 17.3x / 18
6  Poland          19.7% / 55.9% / 8.3x / 62
7  Turkey          16% / 35.4% / 11x / 71
8  Russia           23.3% / 15% / 5x / 120
9  Indonesia      30.3% / 21.4% / 16.7x / 124
15 India            35% / 60.7% / 15.3x / 132


There are a few notables, the BRICs which were the flavour of the decade, have slipped enormously. Despite China still holding onto the number one position, its attractiveness in terms of growth has slowed, and that is understandable owing to the much larger base that they have grown to. Brazil has dropped out of the top 15, mainly owing to very exorbitant inflation and extremely high PE valuations. India has also dropped to #15 mainly due to inflation which is expected to average 6% for the next few years. 


One main determinant in attractiveness, which I have not put up is inflation rate expectations. The ones downgraded have exceptionally high inflation, which cancels out much of the growth and puts in a lot of side economic and operating problems. Russia's inflation is expected to average 6.8%, while the rest are maintaining below 3%.One can also argue that certain countries published inflation rate may be managed, which may explain why China is not as attractive now despite posting a likely inflation rate of just 3.1% for the next few years as many deem that to be way understated.
 

Indonesia which is way more favoured by foreign funds than Malaysia is ranked lower because of its 5.3% inflation rate. Malaysia seems to come out well from the rankings, and must continue to improve its ease of doing business as that has helped a lot. However our government debt as a percentage of GDP has to come down to below 30% soon or it will just spiral out of control. Inflation is at 2.4% but we all know its actually closer to 3.5%, don't we. We also have the problem of managing inflation via excessive subsidy, and that is a bad thing. The sooner we dismantle them except for critical items, the better.


One bad sign creeping in among big listed Malaysian firms is the "tidak payah" attitude in soliciting foreign funds investment. A couple of international houses which did major roadshows to the US and Europe saw only a couple of Malaysian firms willing to join while they get some 15 firms from Indonesia. Is it because many of them are GLCs? But even the multi millionaire Malaysian owners are not keen. While the Indonesian contingent are made up of mostly billionaire owners - go figure.


I believe this attitude stems primarily from the local funds (PNB and EPF) being very substantial shareholders of many of the Malaysian big listed firms. This is not a good development for many reasons. When everything is so cosy, there tend to be too much government to big listed firms contract given at the expense of smaller players. Business becomes for the big boys only. The cosier the relationship, the more likely you are to be loose on corporate governance, related party transactions and even transparency issues. 


We have to ask ourselves honestly, are we propping up the listed index with our own money? If we reduce EPF and PNB funds by half, will foreign funds come in to buy? If not, do you know why? Or we just don't care! 

Read More

CD Of The Year So Far

Winnie Ho has built up her repertoire well since winning the Astro singing competition many years back. Her resume include two quite brilliant albums under the guise of 2V1G, with master guitarist Roger Wang. I have been waiting for a long time for this to come out since Winnie did a few concerts dubbed as The Jazzy Sounds of Teresa Teng. Those who have been to those concerts know fully well what I am talking about. While Teresa Teng has a very special place in most Chinese music lovers, some of her tunes do sound dated, nothing much she can do about it really.


The simply ingenious music arrangement by Tay Cher Siang basically shone a warm brilliant light on Teresa's songs. Coupled with Winnie's resonating yet layered vocals, we have a wonderful album indeed. You will hear and appreciate Teresa all over again, you will fall in love with both Teresa and Winnie, all over again.


Its always dangerous to do full covers of just one artiste, and one such as Teresa's stature which is numero uno to the max. Fittingly, Cher Siang also composed a song dedicated to Teresa's legacy called Songbird, exquisitely sung by Winnie.


There have been tons of tribute albums of Teresa's songs, and this one is so high up the top of the heap. Just so happens to be fully Malaysian made. HK and Taiwan critics who have heard are surprised and making inquiries to bring the album to HK and Taiwan. Get it before being told by your HK and Taiwanese friends how wonderful this album is (malu-la).



CD Rama (Popular Bookstores) is having their annual musical carnival at 1 Utama, go get Winnie's album at a discounted rate. CD Rama has strongly supported this album by procuring 3,000 copies (mind you, Jay Chou and Eason Chan only sell around 1,500 albums in Malaysia with each release). CD Rama is also having a big sale on the ground floor of the new wing, many wonderful albums going for just RM9.90 ... go see it to believe. Best buy has to be The Police's 3 discs set for RM9.90, which include 2 live concerts CDs and one DVD of their live performance (and I paid RM50 for the same thing 3 weeks back)!!!

Read More

New York State Targets Doctors Involved in Auto Insurance Fraud

In the wake of an epic car-insurance scam, New York state officials are preparing to crackdown on doctors who loan their names to clinics that are nothing more than billing mills.

New York Superintendent of Financial Services Benjamin Lawsky said he plans to zero in on white-collar criminals in white coats within a month.

A rigorous statewide initiative is underway to close medical offices billing for services that are either wholly unnecessary or never rendered to auto accident victims. Under the new regulation, physicians engaging in unscrupulous billing practices to siphon funds from New York’s personal injury protection (PIP) system will ostensibly turn themselves into pariahs, at least in the professional sense.

The Department of Financial Services has already identified 135 medical providers whose billing practices have raised concerns regarding possible no-fault fraud through audits and information obtained from law enforcement and insurers. As part of an ongoing investigation, letters are being sent to all 135 medical providers demanding a response and information. According to the department, failure to answer the letters may automatically lead to the medical provider being banned from the no-fault system.

The Federal government in March charged 36 people in a massive $279 million scheme to bilk New York insurers out of the state's PIP no-fault benefit. The fraud is alleged to have started in 2007 and continued until discovered last year. The organization allegedly scammed the medical system by having doctors prescribe physical therapy, acupuncture and chiropractic treatments as many as five times a week.

Read More

Smart Fund Raising Move By Khazanah

This is a smart fund raising by Khazanah, well advised by the investment bankers involved. This enabled Khazanah to lock in better than zero rates funding. It is also potentially giving up its stake (i.e. selling around current price) in Parkson Retail. Only when PR moves much higher will bond holders exchange into PR shares, technically at least 5%-7% upside from here before they consider switching. Its a good strategy if you think PR does not present much further upside (more than 20% over the next 2-3 years). Even so, locking in better than zero rates has to be worth something much more, Khazanah would be paying at least 2.5% I think, so thats a $7m savings a year at least.
 



The other consideration is the USD exposure. Make your own conclusions. Some listed Malaysian companies may want to consider such equity-exchangeable bonds as alternative fund raising - of course if its in the same listed vehicle, then its actually a convertible bond. Some companies hold lesser stakes in other listed vehicles, that may be the way to go. I am thinking about Vincent Tan's Facebook stake, sigh, I think this advice alone is worth RM2m ... somebody write me a cheque!!! If its Facebook, and before listing, I think VT can raise funds at WAAAY below zero rates. Say Facebook is going for an IPO price of $90 a share - VT could issue a bond to raise a similar amount but convertible at $120 over 3 years. This way, you lock in a good selling price, possibly negative rates, maybe -5% for $500m (provided VT has better use to reinvest the $500m of course ... maybe Ananda's power assets, locking in the yields differential). .... OK give me my fees now!!!
 



FINANCEASIA: Khazanah Nasional last night returned to the equity-linked market with a $358 million exchangeable Islamic bond, which was aggressively priced and confirmed that there is indeed huge investor appetite for deals backed by strong credits. The bonds are exchangeable into Hong Kong-listed Parkson Retail Group and are backed by Khazanah’s remaining 220 million shares in the company – one of the largest nationwide department store operators in China.


The deal attracted more than $1.5 billion of demand and well over 100 investors. It was also priced at best terms for the issuer, including a slight negative yield. This meant it pushed the envelope a bit further than triple-A rated Temasek, which issued two exchangeable bonds in the fourth quarter last year at a zero coupon and zero yield.


The fact that Khazanah is the investment arm of the Malaysian government and therefore viewed as a top-quality issuer was clearly part of the attraction, but the ability to hedge the underlying equity, the lack of equity-linked supply so far this year and continued optimism about the China consumer story all helped draw investors into the deal, sources said. Parkson may no longer be growing at 30% to 40% every year, but it is still viewed as a good story, one source said. However, according to Bloomberg data, 22 of the 28 analysts covering the stock currently have a “hold” recommendation on it. The rest are split evenly between “buy” and “sell”.
 



This is the first time in four years that Khazanah is tapping the equity-linked market and the fourth time that it sells exchangeable bonds that are compliant with Shar’iah law. The most recent deal, in March 2008, was also exchangeable into Parkson. Indeed, a portion of the shares underlying this latest deal are also underlying the previous bond, of which 55% is still outstanding.


However, the 2008 bonds are well out of the money and are not expected to be exchanged for equity before they mature in March next year. As a result, Khazanah has received approval from Shar’iah scholars to use those same shares to back a new transaction. The 220 million shares account for 7.8% of Parkson’s share capital and at the final terms, the total size of the new exchangeable bond is $357.8 million.


The bonds, or zero periodic payment exchangeable trust certificates as they are called for the purpose of complying with Shar’iah law, have a seven-year maturity, but can be put back to the issuer after three years at a price of 99.25. The long remaining maturity after the put – referred to as a certificate-holder optional dissolution – is a reflection of the fact that interest rates are at record lows right now and Khazanah is taking the opportunity to lock bondholders in for an additional two years at that same rate if they decide not to put the bonds back after three years. The normal practice is to leave only two years after the put, i.e. a five-put-three or seven-put-five maturity. There is also an issuer call after three years, subject to a hurdle of 130%.
 



The coupon, which on Islamic issues is referred to as a periodic payment, was fixed at zero percent at launch, but the yield was offered in a range between -0.25% and zero percent and the conversion premium came at 25% to 30%. As noted, both were fixed at the issuer friendly end, resulting in a yield of -0.25% and an exchange premium of 30% over Parkson’s closing price of HK$9.71 yesterday. The latter gave an initial exchange price of HK$12.623 – a level that Parkson hasn’t traded above since February 2011.


This is the first non-yen equity-linked deal in Asia with a negative yield since May 2011 when Taiwan’s United Microelectronics Corp sold $500 million of convertible bonds with a yield of -0.25% and a 39% conversion premium.However, that deal was linked to the new Taiwan dollar, although it was settled in US dollars. Looking at dollar-denominated transactions, there hasn’t been any issues with a negative yield since 2009.


The Khazanah bonds traded up to about 101 in the grey market during the two-and-a-half-hour bookbuilding, which boosted investor confidence in the deal even further.


The buyers included a mix of investors, including traditional CB hedge funds and outright investors, but also a lot of cross-over accounts, some credit accounts and some straight equity accounts, one source said. The demand from Islamic investors was lower than on Khazanah’s previous exchangeable sukuk, however, which may partly be due to the fact that they take longer to make investment decisions. Following the real estate crisis in the Gulf region there are also fewer investors looking at asset classes outside of straight bonds, one observer said.


The source estimated the Islamic, or Middle Eastern, demand at about 20% of the total, with Asia accounting for about 50% and Europe the remaining 30%. Khazanah’s latest two Islamic exchangeables – the 2008 deal into Parkson and a 2007 deal into Malaysia-listed Plus Expressways – got about 50% of demand from the Middle East


The latest bonds were marketed at a credit spread of 150bp, a dividend yield of 2% and a stock borrow cost of 50bp. Sources noted that there is plenty of borrow available in the market, but in case it becomes more difficult to access later on, the bookrunners will provide borrow through a stock lending agreement with Khazanah.


At the final terms, this translated into a 92.8% bond floor and an implied volatility of about 27%, which compares with a historic vol of about 35%.


The deal came after two Hong Kong-listed companies tapped the convertible bond market for a combined $434 million on Tuesday, breathing new life into a market that had seen only three deals so far this year.  The two issuers –361 Degrees and China Overseas Grand Oceans Group – offered two very different deals in the sense that one of them was viewed as quite expensive (361 Degrees) while the other one was very cheap. Both saw good demand, however, suggesting that investors are happy to use the CB market as a less risky way to gain exposure to Asian equities as the regional markets continue to recover from last year’s slump.
 



Earlier in the year, CB investors were very cautious about deals that were not hedgeable and said they would prefer to see more paper from high-grade issuers. Khazanah seems to have listened, and its decision to monetise its remaining shares in Parkson a year ahead of the maturity of the initial exchangeable has clearly paid off – if the bonds aren’t exchanged into equity, the company is even getting paid to take investors’ money for at least three years.


Khazanah invested $69 million into Parkson at the time of its Hong Kong IPO in November 2005 and when the Malaysian investment company issued its first exchangeable into the stock it owned about 9.8% of the company. The 2008 exchangeable was sold concurrently with a $96.8 million placement, which reduced Khazanah’s overall stake and left 220 million shares (adjusted for a five-for-one stock split) to back up the $550 million exchangeable.


About 45% of that first bond was put back in March 2011, leaving about 110 million shares still tied up in that exchangeable. The deal is exchangeable into equity at a price of HK$19.45 per share, and given that the stock is currently trading at about half that price it is unlikely that it will ever be converted. However, if the share price were to recover, Khazanah has the option to settle the exchange of both bonds in cash, meaning there is no risk that it will get caught out with too few shares to deliver to investors on either deal.


The exchangeable was jointly arranged by CIMB, Deutsche Bank and J.P. Morgan.

Read More

Florida Passes Auto Insurance Reform Law

Governor Rick Scott got the legislation he wanted to reform Florida’s mandatory motor vehicle no-fault law and crack down on the abuses in personal injury protection cases that have led to skyrocketing increases for coverage.

Whether the new measure will be effective remains to be seen.

The measure (HB 119) passed on a 22-17 vote in the State Senate after some heavy duty lobbying by Gov. Scott on Friday, March 9th just before the annual legislative session was to end. The Bill had passed the House earlier in the day.

The personal injury protection (PIP) law was adopted in 1972 to make sure anyone injured in an auto accident would quickly get money to treat their injuries. The legislation provided that a driver’s insurance company pay up to $10,000 to cover medical bills and lost wages after an accident, no matter who is at fault.

PIP costs have risen by $1.4 billion since 2008, largely because of the runaway fraud that threatens the system, most notably in the metropolitan Miami and Tampa areas. Florida ranks first nationally in staged accidents.

The legislation requires an accident victim to obtain treatment within 14 days in an ambulance or hospital, or from a physician, osteopathic physician, chiropractic physician, or dentist. The full $10,000 PIP medical benefit is available only if a physician, osteopathic physician, dentist, or a supervised physician’s assistant or advanced registered nurse practitioner determines that the insured has an “emergency medical condition.” Otherwise, the PIP medical benefit is limited to $2,500.

Follow-up services and care requires a referral from a physician, osteopath, chiropractor or dentist. Massage therapists and acupuncture was eliminated from eligibility for PIP benefits.

The bill would also establish an organization within the Division of Insurance Fraud to combat motor vehicle insurance fraud.

Health-care practitioners found guilty of insurance fraud would have their licenses revoked for five years and banned from seeking PIP reimbursement for a decade.

Another provision in the bill requires the Office of Insurance Regulation to hire an independent consultant by September to calculate the savings expected from the Act.

The bill includes a 10 percent rate reduction on PIP that’s not guaranteed. If insurers who offer PIP do not provide their customers a minimum 10 percent rate reduction, they must explain in detail why not. A second rate filing required on Jan. 1, 2014, proposes insurers have a 25 percent premium reduction for policyholders unless they can show why they’re unable to provide the cut.

The final bill represents a compromise as both the Senate and House had passed different legislation to reform PIP. However a bill must be passed by both bodies to become law.

The original House bill required those injured in auto accidents to get treatment in an emergency room within 72 hours or with the medical provider of their choice if the cost is under $1,500. It also capped attorneys' fees in both individual and class-action disputes and allows insurance companies to examine policyholders under oath when investigating claims.

The original Senate bill tightened procedures for licensing medical clinics and authorizing who can provide treatment and required long-form incident reports as a way to root out staged accidents. It updated the bill-payment system and gave hospitals priority standing in personal injury protection claims.

Lessons for Ontario:

One of the shortcomings of the Ontario system is the ability of a wide range of health care practitioners to recommend treatment and assessments. The Florida bill requires treatment recommendations come from a physician, osteopathic physician, dentist, or a nurse practitioner. Otherwise only $2,500 in treatment is available. However, in Ontario treatment has already been restricted to $3,500 for accident victims with minor injuries.

Florida has essentially delisted massage therapy and acupuncture treatment. In Ontario there is a need to limit treatment to interventions where there is scientific evidence to support those interventions.

The Florida bill would ban health care providers who are convicted of fraud from billing auto insurers for 10 years. A similar ban is needed in Ontario.

Bill HB 119 can be found here.

Read More

The Curse Of Being Rich In Natural Resources (Yes, You, Malaysia!)

We have heard this again and again, the curse of being too reliant on natural resources. There are of course exceptions, countries which are resource rich and deployed their gains well, invested in their people and education system, such as Australia and Norway ... but by and large resource rich nations are always underperforming.

Josh Haner/The New York Times

Thomas L. Friedman won the 2002 Pulitzer Prize for commentary, his third Pulitzer for The New York Times. He became the paper’s foreign-affairs Op-Ed columnist in 1995. Previously, he served as chief economic correspondent in the Washington bureau and before that he was the chief White House correspondent. In 2005, Mr. Friedman was elected as a member of the Pulitzer Prize Board.

Mr. Friedman joined The Times in 1981 and was appointed Beirut bureau chief in 1982. In 1984 Mr. Friedman was transferred from Beirut to Jerusalem, where he served as Israel bureau chief until 1988. Mr. Friedman was awarded the 1983 Pulitzer Prize for international reporting (from Lebanon) and the 1988 Pulitzer Prize for international reporting (from Israel).

EVERY so often someone asks me: “What’s your favorite country, other than your own?”

I’ve always had the same answer: Taiwan. “Taiwan? Why Taiwan?” people ask.

Very simple: Because Taiwan is a barren rock in a typhoon-laden sea with no natural resources to live off of — it even has to import sand and gravel from China for construction — yet it has the fourth-largest financial reserves in the world. Because rather than digging in the ground and mining whatever comes up, Taiwan has mined its 23 million people, their talent, energy and intelligence — men and women. I always tell my friends in Taiwan: “You’re the luckiest people in the world. How did you get so lucky? You have no oil, no iron ore, no forests, no diamonds, no gold, just a few small deposits of coal and natural gas — and because of that you developed the habits and culture of honing your people’s skills, which turns out to be the most valuable and only truly renewable resource in the world today. How did you get so lucky?”

That, at least, was my gut instinct. But now we have proof.

A team from the Organization for Economic Cooperation and Development, or O.E.C.D., has just come out with a fascinating little study mapping the correlation between performance on the Program for International Student Assessment, or PISA, exam — which every two years tests math, science and reading comprehension skills of 15-year-olds in 65 countries — and the total earnings on natural resources as a percentage of G.D.P. for each participating country. In short, how well do your high school kids do on math compared with how much oil you pump or how many diamonds you dig?

 The results indicated that there was a “a significant negative relationship between the money countries extract from national resources and the knowledge and skills of their high school population,” said Andreas Schleicher, who oversees the PISA exams for the O.E.C.D. “This is a global pattern that holds across 65 countries that took part in the latest PISA assessment.” Oil and PISA don’t mix. (See the data map at:http://www.oecd.org/dataoecd/43/9/49881940.pdf.)

As the Bible notes, added Schleicher, “Moses arduously led the Jews for 40 years through the desert — just to bring them to the only country in the Middle East that had no oil. But Moses may have gotten it right, after all. Today, Israel has one of the most innovative economies, and its population enjoys a standard of living most of the oil-rich countries in the region are not able to offer.”

So hold the oil, and pass the books. According to Schleicher, in the latest PISA results, students in Singapore, Finland, South Korea, Hong Kong and Japan stand out as having high PISA scores and few natural resources, while Qatar and Kazakhstan stand out as having the highest oil rents and the lowest PISA scores. (Saudi Arabia, Kuwait, Oman, Algeria, Bahrain, Iran and Syria stood out the same way in a similar 2007 Trends in International Mathematics and Science Study, or Timss, test, while, interestingly, students from Lebanon, Jordan and Turkey — also Middle East states with few natural resources — scored better.) Also lagging in recent PISA scores, though, were students in many of the resource-rich countries of Latin America, like Brazil, Mexico and Argentina. Africa was not tested. Canada, Australia and Norway, also countries with high levels of natural resources, still score well on PISA, in large part, argues Schleicher, because all three countries have established deliberate policies of saving and investing these resource rents, and not just consuming them.

Add it all up and the numbers say that if you really want to know how a country is going to do in the 21st century, don’t count its oil reserves or gold mines, count its highly effective teachers, involved parents and committed students. “Today’s learning outcomes at school,” says Schleicher, “are a powerful predictor for the wealth and social outcomes that countries will reap in the long run.”

Economists have long known about “Dutch disease,” which happens when a country becomes so dependent on exporting natural resources that its currency soars in value and, as a result, its domestic manufacturing gets crushed as cheap imports flood in and exports become too expensive. What the PISA team is revealing is a related disease: societies that get addicted to their natural resources seem to develop parents and young people who lose some of the instincts, habits and incentives for doing homework and honing skills.

By, contrast, says Schleicher, “in countries with little in the way of natural resources — Finland, Singapore or Japan — education has strong outcomes and a high status, at least in part because the public at large has understood that the country must live by its knowledge and skills and that these depend on the quality of education. ... Every parent and child in these countries knows that skills will decide the life chances of the child and nothing else is going to rescue them, so they build a whole culture and education system around it.”

Or as my Indian-American friend K. R. Sridhar, the founder of the Silicon Valley fuel-cell company Bloom Energy, likes to say, “When you don’t have resources, you become resourceful.”

That’s why the foreign countries with the most companies listed on the Nasdaq are Israel, China/Hong Kong, Taiwan, India, South Korea and Singapore — none of which can live off natural resources.

But there is an important message for the industrialized world in this study, too. In these difficult economic times, it is tempting to buttress our own standards of living today by incurring even greater financial liabilities for the future. To be sure, there is a role for stimulus in a prolonged recession, but “the only sustainable way is to grow our way out by giving more people the knowledge and skills to compete, collaborate and connect in a way that drives our countries forward,” argues Schleicher.

In sum, says Schleicher, “knowledge and skills have become the global currency of 21st-century economies, but there is no central bank that prints this currency. Everyone has to decide on their own how much they will print.” Sure, it’s great to have oil, gas and diamonds; they can buy jobs. But they’ll weaken your society in the long run unless they’re used to build schools and a culture of lifelong learning. “The thing that will keep you moving forward,” says Schleicher, is always “what you bring to the table yourself.”

Read More