The Episodes: Chapter 2 Episode 1 is Now Out!

I have started Chapter 2 of My Story, entitled Training Days: The Education of a Policy Wonk.  Here is Episode 1:  Going Down Under.

Read it here

Saudi State Oil Company Says Oil Prices are ‘Too Low”

The Malays Mail Online

Published: January 27, 2015 04:42 PM

RIYADH, Jan 27 — World oil prices have fallen too far, the president of state-owned energy giant Saudi Aramco said today, stressing it was for the market not OPEC producers to shore them up.

“It’s too low for everybody,” Khalid al-Falih told a conference.

“I think even consumers start to suffer in the long term.”

Falih also said American shale oil production is important for the world’s long-term energy future and Saudi Aramco has marked an additional US$7 billion for its own shale projects.

Saudi Aramco is the world’s largest oil company in terms of crude production and exports.

The kingdom is the leading exporter and top producer in the Organisation of the Petroleum Exporting Countries (OPEC).

In November, the cartel decided to maintain its output ceiling at 30 million barrels per day, deepening the global price drop which began in June.

Oil was then trading at more than US$100 (RM360) a barrel but today international benchmark Brent crude for March delivery was fetching just US$48.28 in Asian trade.

In the News: Will Low Oil Prices Lead to a Current Account Deficit?

BY SHERIDAN MAHAVERA

The Malaysian Insider

Published: 24 January 2015 9:00 AM

Brent Crude Oil Falling
USD 48.74 on 23rd January 2015

As global oil prices dip lower than what Putrajaya has calculated for in its revised 2015 budget, economists have mixed views on how this will affect the country’s current account and the local economy.

Some economists warned that it could negatively impact the country’s current account and have dangerous effects on the economy. Others, however, do not believe that the current account balance is under threat and argued that a weak ringgit would drive up exports and dampen imports.

Such a trade surplus where exports are higher than imports would drive up the current account surplus, said Dr Yeah Kim Leng of the Malaysia University of Science and Technology (MUST).

But Tan Sri Kamal Salih, adjunct professor of Economics and Development studies at Universiti Malaya, said that if oil prices fall below US$40 per barrel it could hurt government revenue and subsequently impact the nation’s current account.

Kamal said a current account deficit would be dangerous given the country’s depleting foreign currency reserves, high debt levels and a weak ringgit.

“We could hit this critical turning point if oil drops below US$40 per barrel which some analysts are predicting it would,” said Kamal.

Red Lights Blinking on Malaysia’s Economic Dashboard

BY VIDYA RANGANATHAN
Reuters
Singapore, Tue Jan 20, 2015 6:06pm EST

Credit markets now rank Malaysia the riskiest in Southeast Asia

Tumbling oil prices are putting pressure on Malaysia's commodity-driven economy, not merely by hurting its exports and currency but more so by putting an unwelcome spotlight on the huge debts that the country runs.

Malaysia, a major exporter of liquefied natural gas and oil, is suddenly faced with the risk that the cheapness of oil and other commodities will drive the current account into a deficit.

That would be the fourth red light blinking on the dashboard of an economy running on debt on all fronts: government, households and the capital account.

The possibility has unnerved foreign investors who have US$45 billion (RM160 billion) parked in the country's bonds and have lent a total of US$208 billion (RM741 billion) to the high-yielding Southeast Asian country.

The current account surplus narrowed by almost a third to RM7.6 billion between the first and third quarter of 2014, and the prospects of a deficit are looming as oil and gas export earnings fall.

Malaysia already is a net importer of foreign capital.

Its households are bursting at the seams with debt.

And the government, which until recently could always count on generous oil revenues to fund pet projects, has borrowings that amount to 53 percent of economic output, almost equalling Asian giants India and China.

Digging a little deeper, it is easy to understand why credit markets now rank Malaysia the riskiest in Southeast Asia

Revised Budget 2015

The Malaysian Insider
BY LEE SHI-IAN
Published: 20 January 2015

A postponement in the electricity tariff hike and a halt to the National Service Training Programme (PLKN) this year are two highlights in Putrajaya's revised budget that will bring some cheer to Malaysian consumers.

The scheduled gas price hike for the industrial sector has also been postponed, Prime Minister Datuk Seri Najib Razak announced today in revisions to the national budget for 2015.

Deferring the national service training programme for one year will save some RM400 million as government tries to trim expenditure and stimulate investment and consumption.

Overall, the government's operating expenditure is expected to be reduced by RM5.5 billion through reprioritising spending, Najib said.

Asia’s big demons: debt, deflation, demographics

By Andy Mukherjee

Reuters, published 16th January 2015

Asia is battling not one but three demons. The unholy trinity of debt, deflation and demographics threatens to sap the region’s growth potential. Fending off the challenge requires central banks to cut borrowing costs. But they are reluctant to do so when U.S. interest rates are poised to rise. That could turn out to be a huge error.

Consider the debt overhang. Taken together, the private sector in Asia-Pacific now owes 1.5 times the region’s combined annual output, according to the Bank for International Settlements. As a big chunk of the borrowing is in the opaque shadow banking system, particularly in China, the debt could be even larger. Either way, servicing the loans requires incomes to increase quickly. Yet, real GDP growth is slowing almost everywhere in the region.  

The threat of slowly rising consumer prices slipping into outright deflation is making things worse. Producer prices are sliding across Asia-Pacific. Falling energy costs provide a convenient excuse for margin-starved employers to skimp on pay hikes, just as they did in the late 1980s. That makes the situation harder for borrowers in Malaysia,

Malaysia - Southeast Asia's biggest sovereign debt risk?

Umesh Desai, Hong Kong, Reuters
Published on12th January 2015

The cost of insuring Malaysian sovereign debt has risen the most this year compared with that of its Southeast Asian peers as state investor 1MDB's financing woes grew and concerns deepened about the prospects for the net oil exporter's petroleum revenues.

Malaysia's five-year credit default swaps, which investors use to hedge against risks of debt default, have jumped some 40 basis points in the first two weeks of 2015 to 142/148 bps. That compares with the performance of Malaysia's nearest peerThailand, whose CDS have risen 10 bps, and Indonesian CDS, which have gained 14 bps.

Southeast Asia sovereign CDS performance.

While global rating agency S&P says 1MDB's failure to meet a loan obligation has little impact on the company's bonds, investors are worried about the wider implications for the country's sovereign rating. About 45 percent of Malaysian sovereign debt is owned by foreigners.

"Onshore participants are skeptical of the name, but they feel it is too strategically important and will be bailed out," said a Singapore-based credit trader, referring to the indebted and loss-making 1MDB. "You will upset lot of people including (Malaysia's) strategic partners in the Middle East if a default happens."

The concerns first emerged when oil prices started to slide, a downdraft that has taken them to their lowest levels since April 2009. Malaysia stands at A3/A-/A-, a notch higher than Thailand's Baa1/BBB+/BBB+ and three to four steps above Indonesia's Baa3/BB+/BBB-.

Kudos to the G25

BY ZAINAH ANWAR

The Star Online

Published on 11th January 2015

I WROTE a year ago that the people of Malaysia will not be pawns in a dangerous political gamesmanship that is leading this country to the precipice of racial and religious conflict.

If our political leaders have neither the will nor the courage to do what is right for this nation, then we the people will show them. We want to build bridges, live together, understand and respect each other. Too many among us have kept quiet for too long while our democracy was being trampled upon. It is time now to stand up and be counted.

Picture from The Star Online

The year 2014 was indeed a very difficult and challenging one for Malaysia. The use and abuse of race and religion for political gain continued unabated and the ensuing gloom and doom about our future was further dampened by the tragedies of MH370 and MH17 and now the worst floods in our history and the crash of Indonesia Air Asia flight QZ8501.

But amid this pain and misfortune, a new sense of hope has been ignited by the G25 letter urging the Prime Minister to take action to bring clarity and vision to end the unresolved disputes on the position and application of Islamic laws in this country.

That 25 prominent Malay establishment figures chose to speak out and express in public their deep concern on the direction this country is taking with regard to Islam within our constitutional democra­tic framework reflects how much is at stake for so many Malaysians. They will keep quiet no more.

The issues raised in the G25 open letter have been festering for decades but have grown increasingly contentious as belligerent supremacist groups and individuals brazenly utter racist and bigoted statements, and as some religious authorities continue to violate the rule of law in their enforcement actions.

And yet the political leadership has shown neither the political will nor courage

The Episodes Chapter 1 Episode 5 is Now Out!

Continuing the story of my early life, the Last Episode for Chapter 1.

Templer's Dream Read it here

I don’t know exactly when I got interested in joining the Royal Military College, RMC, the school built in Port Dickson in 1953 by General Sir Gerald Templer, the last British Governor General of Malaya.  But I know it was before I moved to Victoria Institution that I first heard about it.

Just in the final term of Std Six, I moved from my cousin’s house near the old Taiping airport to another relative’s house in Assam Kumbang, a suburb nearer to Taiping town centre, with a bus service that would take me past KE.  Bang Alias was a cousin of Bang Kassim, my elder sister’s husband who drove a taxi plying between Pantai Remis, near Kg. Panchor where they lived, and Taiping.  Bang Alias, a government servant, had, besides a three-year old daughter, two boys, the elder one Zainal Abidin, we call him Sobri, already in Form 2 in KE, the younger brother one year behind me.  I used to play kick football with them and a few other local boys, together with Ahmad Nazri, a Perak State player and a fullback for the Malayan national team. He had featured in the first Merdeka football tournament initiated by Tunku Abdul Rahman, Malaysia’s first Prime Minister, as an annual commemorative showcase in conjunction with the country’s Independence in 1957.  It was for a while the major football tournament in Asia at the time.  Ahmad Nazri, greatly admired, served as a kind of mentor/coach to us. It must have been during one of those non-competitive sessions that I heard that Sobri was joining the Boy’s Wing of RMC.

General Templer’s vision for RMC was the training of boys to become eventual leaders in the armed forces, the civil service, academia, 

Read More Here

Who Is Behind The Oil War, And How Low Will The Price Of Crude Go In 2015?

By Michael Snyder

The Economic Collapse

Published on December 31st, 2014

Who is to blame for the staggering collapse of the price of oil?  Is it the Saudis?  Is it the United States?  Are Saudi Arabia and the U.S. government working together to hurt Russia?  And if this oil war continues, how far will the price of oil end up falling in 2015?  As you will see below, some analysts believe that it could ultimately go below 20 dollars a barrel.  If we see anything even close to that, the U.S. economy could lose millions of good paying jobs, billions of dollars of energy bonds could default and we could see trillions of dollars of derivatives related to the energy industry implode.  The global financial system is already extremely vulnerable, and purposely causing the price of oil to crash is one of the most deflationary things that you could possibly do.  Whoever is behind this oil war is playing with fire, and by the end of this coming year the entire planet could be dealing with the consequences.

Ever since the price of oil started falling, people have been pointing fingers at the Saudis.  And without a doubt, the Saudis have manipulated the price of oil before in order to achieve geopolitical goals.

In the News : Abd Razak Hussin - Golongan Intelektual Aset Bangun Negara

Abd Razak Hussin

Harian Metro

Published 5 January 2015

Kalau dapat dikaitkan dengan maksud 'intelektual', 'rausyanfikr' atau 'ulil albab', penulis dapat melihat ciri-ciri tiga istilah itu wujud pada susuk Tan Sri Dr Kamal Mat Salih, penerima Ijazah Kehormat Doktor Falsafah (Penbangunan Sosial dan Ekonomi) Universiti Kebangsaan Malaysia pada majlis konvokesyen yang lalu.  Seperti Soedjatmoko Mangoendiningrat, intelektual Indonesia berpengaruh yang resah dengan kemunduran masyarakatnya, demikianlah Kamal Mat Salih, berasa gundah dengan kepincangan masih wujud dalam kalangan rakyat.  Inilah yang beliau intilahkan sebagai cabaran lama dan baru serta kontradiksi pembangunan dalam masyarakat negara ini.

Dalam ucapan penerimaan ijazah kehormat itu, Kamal menyeru khususnya ahli akademik untuk menjadi pemikir dan intelektual yang mengambil tahu, dengan memanfaatkan ilmu tingginya besama-sama mencari penyelesaian terhadap gejolak masyarakat.

Soedjatmoko mengungkapkan dalam bahasa yang mudah, intelektual seharusnya seorang aktivis yang berasa peduli kepada masyarakatnya,

In the News : Nur Jazlan - Agenda Bumiputera jangan di’bangsat’kan

Nur Jazlan

The Malaysian Insider

Published: 7 January 2015

Nampaknya jika ada mana-mana pihak yang cuba menyentuh mengenai perbincangan agenda Bumiputera, sudah pasti mereka akan dihentam dan dituduh dengan pelbagai gelaran serta diancam Pertubuhan Bukan Kerajaan (NGO) Melayu yang berhaluan kanan.

Ini nyata dapat dilihat apabila kenyataan pakar ekonomi, Tan Sri Dr Kamal Salih yang juga bekas Ahli Parlimen Barisan Nasional (BN) dan Ahli Majlis Tertinggi Umno mengenai agenda Bumiputera yang disiarkan sebuah portal berita baru-baru ini, menerima kecaman daripada NGO-NGO Melayu berhaluan kanan.

Perkataan agenda Bumiputera seperti sudah menjadi perkataan suci yang mana tidak boleh mana-mana pihak mengkritiknya walaupun daripada orang Melayu sendiri dengan dilabel sebagai munafik.

Hakikatnya, sebagai kaum majoriti di negara ini dengan populasi melebihi 60% daripada rakyat negara ini, semakin ramai orang Melayu semakin sedar apa yang digubal dalam Dasar Ekonomi Baru (DEB) cetusan pemikiran perdana menteri kedua Tun Abdul Razak Hussein selepas tragedi berdarah 13 Mei 1969 juga perlu berubah seiring dengan peredaran masa.

Ia juga perlu seiring dengan pemikiran orang Melayu sendiri yang kini membentuk kelas menengah yang besar mendiami kawasan bandar serta separa bandar, hasil daripada roh agenda Bumiputera yang dimasukkan dalam DEB.

Jika orang Melayu tidak boleh berdebat dan berhujah secara intelektual mengenai agenda Bumiputera dan terus melaungkan kerajaan terus gagal membangunkan kaum Bumiputera atau lebih tepat lagi, orang Melayu... bagaimana agenda Bumiputera ini boleh mencapai matlamatnya pada masa depan?

In the News :Putrajaya Must Revise Budget In Light Of Oil Slump, says Economist

BY ANISAH SHUKRY

The Malaysian Insider
Published: 3 January 2015

Tan Sri Dr Kamal Salih, an adjunct professor of Economics and Development Studies at Universiti Malaya, has dire warnings for the Malaysian economy in light of falling crude oil prices. Petronas is a major contributor to the budget. – The Malaysian Insider pic by Seth Akmal, January 3, 2015. 

As Putrajaya responds to falling global oil prices by prioritising domestic spending and investments, a leading economist has warned that the national budget for 2015 was unsustainable if it is not revised to account for the price drop in the commodity, of which Malaysia is a net exporter.

Tan Sri Dr Kamal Salih, an adjunct professor of Economics and Development Studies at Universiti Malaya, said no amount of tax increase could compensate for Petroliam Nasional Bhd’s (Petronas) lower revenue contributions to Putrajaya.

 “Of course, the government has to revise the budget. The assumption of the oil price was quite high and now it must be reduced to a realistic level, especially as the price may go down for a long time,” he said.

“The current budget is not sustainable now.”

Budget 2015 of RM273.9 billion was tabled last October and passed by the Dewan Rakyat on November 25. It was prepared on the assumption that oil prices would hover around US$100 (RM351) to US$105 a barrel. 

The government

In the News - Do away with Bumiputera agenda, prominent economist tells Putrajaya

The Malaysian Insider

BY ANISAH SHUKRY

Published: 2 January 2015

It is time Putrajaya shelves the Bumiputera agenda and focuses its entire effort on a national policy – one that will uplift all Malaysians regardless of race, says prominent economist Tan Sri Dr Kamal Salih.

The Bumiputera agenda has been the backbone of the Barisan Nasional (BN)-led government’s economic plans since 1969, its pro-Malay policies justified for decades by the economic backwardness of the Malays as a result of the British colonial policy of divide and rule.

“Putrajaya must go for the national agenda and create a national policy that is more inclusive. And if it does that properly, and avoid the pitfalls of the past, then I think it can achieve its economic goals, without having this red flag of being a ‘Bumiputera agenda’.

“If you are trying to reduce inequality and reduce the gap between the rich and the poor, the beneficiaries will be largely Bumiputeras anyway.

“So why go through the pain of being accused of being racist, when you can achieve the same goals without being racist?” Kamal, an adjunct professor of Economics and Development Studies at Universiti Malaya, told The Malaysian Insider in a recent interview in Kuala Lumpur.

Last November, the New Straits Times had reported that the government had spent RM46.5 billion to boost the Bumiputera economy through 23 programmes since September last year.

Bumiputera Agenda Steering Unit (Teraju) chief executive Husni Salleh, who is also Bumiputera Economic Council (MEB) secretary, said that all 23 ministers, secretaries-general and GLCs now have key performance indicators on Bumiputera economic programmes, monitored by Prime Minister Datuk Seri Najib Razak.

At last year’s Umno general assembly, the party’s deputy president, Tan Sri Muhyiddin Yassin, had proposed that a “new” National Economic Policy (NEP) be created to turn the Bumiputera economic agenda into a national agenda.

However, Kamal, who has dedicated his career to policy research, noted that inequality was more prominent within ethnic groups, rather than between them, and poverty could no longer be defined along racial lines.

“Ethnicity is no longer the basis for inequality.

Sad and horrible 2014 – Tengku Razaleigh Hamzah

The Malaysian Insider, Published 1 January 2015

Statement by Tengku Razaleigh Hamzah

It has been a sad and horrible 2014 for all Malaysians. The news, of economic trends, man-made (the two MH and the latest AirAsia airplane crashes, and the Cameron Highlands landslides) and natural disasters (the floods), and of political and ethnic relations setbacks, all made last year our annus horribilis. 

Little wonder Malaysia, long tiring of being bogged down by negativities, is overdue for some positive and lifting news in 2015.

Doubtless we have made great strides since Independence. Our people are invariably better fed, more educated and on the whole more prosperous. But we are seemingly not that happy, much less satisfied. Relative to our potential as a people, goaded on by our very own diversity, many think we can do more towards a new vision of development. And in comparison with our neighbours, we are some years behind some of them.

As we enter the New Year, we are reminded of how far we have deviated from the original path of economic, political and social development set by our founding fathers six decades ago. Some of the more serious developments, such as the increasing polarisation in race relations, the narrowing of perspectives on religion and religious practices long accepted, the many intractable and new imbalances and inequalities in our economy, and a politics that clouds the vision of a maturing democratic system, seem to have set everything back by a few decades.

We have to find solutions to our

Go West, young Han: How China and the New Silk Road threaten American Imperialism

High-speed railways are revolutionizing trade in Eurasia -- and could upset the global balance of power

PEPE ESCOBAR, TOMDISPATCH.COM

Published on THURSDAY, JAN 1, 2015 03:00 AM MYT

A CRH high-speed train leaves the Beijing South Station in Beijing, China. (Credit: AP/Andy Wong)

November 18, 2014: it’s a day that should live forever in history. On that day, in the city of Yiwu in China’s Zhejiang province, 300 kilometers south of Shanghai, the first train carrying 82 containers of export goods weighing more than 1,000 tons left a massive warehouse complex heading for Madrid. It arrived on December 9th.

Welcome to the new trans-Eurasia choo-choo train.  At over 13,000 kilometers, it will regularly traverse the longest freight train route in the world, 40% farther than the legendary Trans-Siberian Railway. Its cargo will cross China from East to West, then Kazakhstan, Russia, Belarus, Poland, Germany, France, and finally Spain.

You may not have the faintest idea where Yiwu is, but businessmen plying their trades across Eurasia, especially from the Arab world, are already hooked on the city “where amazing happens!” We’re talking about the largest wholesale center for small-sized consumer goods — from clothes to toys — possibly anywhere on Earth.

The Yiwu-Madrid route across Eurasia represents the beginning of a set of game-changing developments. It will be an efficient logistics channel of incredible length. It will represent geopolitics with a human touch, knitting together small traders and huge markets across a vast landmass. It’s already a graphic example of Eurasian integration on the go. And most of all, it’s the first building block on China’s “New Silk Road,” conceivably the project of the new century and undoubtedly the greatest trade story in the world for the next decade.

Go west, young Han. One day, if everything happens according to plan (and according to the dreams of China’s leaders), all this will be yours — via high-speed rail, no less. 

Why oil prices keep falling — and throwing the world into turmoil

Brad Plumer, Published in Vox.com,
On 31st December 2014, 2.40pm ET

The plummeting price of oil is still the biggest energy story in the world right now. It's bringing back cheap gasoline to the United States while wreaking havoc on oil-producing countries like Russia and Venezuela.

But why does the price of oil keep falling? Back in June 2014, the price of Brent crude was up around $115 per barrel. By the end of the year, it had fallen in half, down to $57 per barrel:

Chart of Brent crude prices through December 16, 2014. (Joss Fong/Vox)

The short version of the story goes like this: For much of the past decade, oil prices were high — bouncing around $100 per barrel since 2010 — because of soaring oil consumption in countries like China and conflicts in key oil nations like Libya. Oil production couldn't keep up with demand, so prices spiked.

BY 2014, OIL SUPPLY WAS MUCH HIGHER THAN DEMAND

But beneath the surface, many of those dynamics were rapidly shifting. High prices spurred companies in the US and Canada to start drilling for new, hard-to-extract crude in North Dakota's shale formations and Alberta's oil sands. At the same time, demand for oil in places like Europe, Asia, and the US began tapering off, thanks to weakening economies and new efficiency measures. On top of that, the conflict in Libya was slowly easing.

By late 2014, world oil supply was on track to rise much higher than actual demand, as the chart below from the International Energy Agency shows. And, in September, prices started falling sharply.

(International Energy Agency)

As prices slid, many observers waited to see whether OPEC, the world's largest oil cartel, would cut back on its production to prop prices up. (Many OPEC states, like Saudi Arabia and Iran, need high prices to balance their budgets.) But at its big meeting in November, OPEC did nothing. Saudi Arabia didn't want to give up market share, and it hoped that lower prices would help throttle the US oil boom. That was a surprise. So oil went into free-fall.

The oil price crash is now upending the global economy, with ramifications for every country in the world. Low prices are excellent news for oil consumers in places like Japan or the US, where gasoline is the cheapest it's been in years. But it's a different story for nations reliant on oil sales. Russia's economy is facing a potential meltdown. Venezuela is facing serious unrest. Even better-prepared countries like Saudi Arabia could face heavy pressure if oil prices stay low.

Read on for the longer guide to how we got here — and how countries around the world could be affected by the oil crash:

The Episodes Chapter 1 Episode 4 is Now Out!

Continuing the story of my early life.

Pet Teachers Read it here