Trends in US, Europe will affect the Malaysian Economy

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Economist: Trends in US, Europe will affect M’sia

By LIZ LEE lizlee@thestar.com.my

KUALA LUMPUR: Malaysia should keep an eye on political trends and unemployment rates in the United States and European countries as these factors will affect the local economy, says UBS Investment Bank managing director and global economist Paul Donovan.

Due to persistent long-term unemployment in the United States and Europe, governments in these countries would want to protect their local jobs and therefore limit international trade, he said at a roundtable session with the media yesterday.

As a result, Donovan said, politicians would try to run economies, which meant rising political risk in the global economy.

Donovan: I believe we will now see a period of relative stability.

 

Donovan said while politics had always influenced Asian economies, the United States and European governments had for the past two decades maintained a declining role in managing their economies.

“If we look back, the trend of reducing political risk will be reversed as politics is rising in the United States and Europe (now). What happens there will affect this region significantly.

“Malaysia, as a global open economy, will have to take note as decisions made in these foreign countries will have implications as to where the Malaysian economy is heading in the next few years,” he added.

Donovan said the Middle East remained potentially volatile but would not be the biggest political risk for this region.

“Through regulation, governments are playing a direct role in managing the economy. Certain countries will impose capital control and restriction on investments, which changes capital flow around the world.

“The trade protection that the United States and Europe has put in place means that Asia has to change the way it generates growth,” he said.



Donovan noted that exports would no longer be a reliable source for economic expansion. “Malaysia should look into (having a) domestic-focused economy with more domestic investments and consumption,” he said.

As for the world economy, Donovan said the forecast 3.9% growth had been slightly revised downward to 3.6% following the natural disasters in Japan recently.

“At the start of this year, growth momentum was quite good. First-quarter GDP numbers were better than expected in Malaysia but economists say there will be a levelling off of growth.

“I believe we will now see a period of relative stability,” he said, attributing that to continued fair growth in the United States and Europe.

He added that there would be limited slowdown in Malaysia in the second and third quarters.

“We will see a trend-like growth globally, which will continue to keep the Malaysian economy at a reasonable growth rate of 4.5% or 5% over the next two years,” Donovan added.

However, he said, this also meant that things did not get worse or better, reflecting the unchanging unemployment rates and spare capacity in countries that had not recovered well from the recession in 2008 and 2009.

The United States is facing its highest unemployment rate since 1983, with more than 40% of its citizens unemployed for more than six months.

Astro Astro to revise rates despite being urged to review price hike; Boycott threat looms!

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Astro to go ahead with plans to revise rates from Monday

By RISEN JAYASEELAN and EUGENE MAHALINGAM starbiz@thestar.com.my  Friday July 8, 2011

PETALING JAYA: Despite all the brouhaha that has arisen following Astro's planned revision of its rates, indications are it will take effect this Monday as planned.

This is according to industry sources. Astro has yet to reply to e-mail questions on this at the time of writing.

Industry experts also said the Communications and Multimedia Act 1998 (CMA) did not prevent Astro from carrying out its price revisions.

Corporate lawyers familiar with the CMA pointed out that companies operating under the Act did not need the prior approval of the Malaysian Communications and Multimedia Commission (MCMC) for price revisions.
 

“The same applies to all broadcasters and telecommunications operators. The Act doesn't require them to seek approval for any price changes.

“Telco's change their rates all the time as it is a dynamic industry. It would also not be feasible for these operators to seek the commission's approval for price changes every time,” a lawyer explained.

Another lawyer said that while the minister in charge had the right to intervene in the determination of rates of companies licensed under the CMA, as provided for by section 199 of the Act, that section should be read in the full context of the CMA.

“In particular, reference must be made to section 198, which determines the general guidelines for licensees to determine rates,” he said.

Section 198 of the CMA states among other things that rates must be fair and not unreasonably discriminatory and should be based on costs of the operator. It also states that rates should be structured at levels “set to attract” investment into the communications and multimedia industry.

In an advertorial published in major newspapers yesterday, Astro clarified that its price adjustment was in essence “a rationalisation of its existing packages, with the specific intention of creating more value for the customer.”

“Under the previous structure, prices were based on an add-on rate. Under the revised price structure, the more packs purchased, the greater the discount.

“Depending on the choice of package, customers could either save, experience a price increase or remain unaffected by the new price revision,” Astro said.

Astro also said the rationale for the new price structure was due to escalating global and local content costs.

“In 2007, our total content cost was at RM760mil and this figure escalated to a staggering RM1.3bil this year. Where premium content is concerned, the increase has been as high as 300% with every renewal of content rights.

“While Astro has absorbed escalating content costs over the years, it can no longer do so without compromising on the quality of its services,” it said.

Meanwhile, an analyst who used to cover the stock when Astro was listed said the rate increase was justified to cover its rising content cost.

“With rising content cost, it makes sense to raise prices. Of course, passing it on to customers is not the best way to do it, but it's the only way,” she said.

The analyst said Astro had been trying to “re-jig” the cost of its packages over the years to ensure that it was not a burden on the lower-income group of customers.

“The prices of its basic packages have not changed for many years.” She said it made business sense to raise rates or it would be difficult to sustain profitability.

“Content cost has been going up over the years and the only way to combat it is by increasing rates.”
Another analyst said Astro had been investing a lot in upgrading its facilities, adding that a price hike was necessary.

“When they started offering their packages in high-definition, content cost naturally went up.”

He also said from his understanding, in the past, Astro only needed to inform the MCMC about potential rate hikes and that no approval was necessary.

Astro urged to review price hike 

By Karen Arukesamy , newsdesk@thesundaily.com July 1, 2011

KUALA LUMPUR: Domestic Trade and Consumer Affairs Minister Datuk Seri Ismail Sabri Yaakob urged local pay-television giant Astro to be sensitive to consumers' needs and review its price increase.

Saying that the price increase will indeed burden the people, especially middle and low-income subscribers, he said Astro's price revision should be in line with the government's initiative to reduce prices.

"Astro should rethink about increasing the price for its service channels. "Not just Astro but all other corporate companies should be more sensitive to the needs and burdens of the people," Ismail told a press conference today after launching the National Consumers Month 2011 at KL Sentral here.

Noting that Astro is under the purview of the Information, Communication and Culture Ministry, Ismail Sabri said he will engage with Minister Datuk Seri Dr Rais Yatim to ensure that the people are not burderned by the price hike.

"It is not under my jurisdiction and my ministry cannot take action against it but I have advised Astro about my concern and the concerns of the people on the price revision," he added.

He stressed that it is "inappropriate and wrong" for Astro to state that its price hike is "inevitable" despite Rais's reminder that it has to first get the approval of the Malaysian Communications and Multimedia Commission (MCMC) before increasing the subscription fee.

He said the consumers have the right to demand for a reasonable price for the goods and services they purchase.

Reiterating the theme of the programme "Consumers Rights Are Your Responsibility", Ismail Sabri said consumers can lodge reports on any unsatisfactory service or products with the Consumer Tribunal.

On recent calls by various consumer associations to boycott Astro by freezing payment for three consecutive months due to its price hike, he said: "It is their right to boycott."



Ismail said consumers have a choice and they can choose to boycott satelite pay-television and revert to the local television channels which are free.

On June 15, Rais said the ministry would discuss with Astro on the issue and the notice issued by Astro that from July 11, Astro customers may experience increases ranging from RM1 to RM15 per month was considered invalid as it did not obtain the approval from the MCMC.

However, Astro chief operating officer Henry Tan had in a statement on June 22 said that the hike was imminent and inevitable because the content costs had increased to RM1.3 billion in 2011 from RM760 million in 2007.

The company, however, will maintain the price of its Family Pack at RM37.95 per month with access to 38 channels.

The price adjustment effective July 11 is based on the subscribers' package selection. Some subscribers may be charged an increase of between RM1 and RM15 per month, while some would enjoy a reduction of between RM4 and RM14.95 per month.

Boycott threat looms over Astro

KUALA LUMPUR (June 27, 2011): Consumer associations urged Astro subscribers to boycott the pay-television giant for its decision to increase prices from July despite the government’s pending review.

The Malaysian Islamic Consumers Association (PPIM), along with over 70 NGOs including the Consumers Association of Penang and Federation of Malaysian Consumers Associations, have urged all Astro subscribers to stop payments for three months.

PPIM chairman Tunku Azwil Tunku Abdul Razak said that this is in view of Astro chief operations officer Henry Tan’s statement that the price hike is “imminent and inevitable”.

“Since Astro did not take heed of consumers’ demands made in a statement on June 17, PPIM urges all subscribers to boycott its services until it fulfils consumer demands to reduce the price and enhance its quality,” he said at The Mall here today.

He said the NGOs will also be calling for a boycott of all products that are advertised on Astro in order to demonstrate consumer power.

He said PPIM has set up a secretariat to monitor complaints on Astro’s price increase and services, and to take note of companies advertising with it.

He said that the NGOs are not against Astro but want the company to be more responsible and adhere to customers demands.

“We regret that Astro is not being considerate with the public’s complaints, and dissatisfaction over its price hike and deteriorating service quality that is not in line with the government’s motto of People First; Performance Now.”

He said thousands of complaints have been received from consumers via an online survey and more was coming in through Twitter, Facebook and phone calls.

Tunku Azwil was disappointed to note that Astro had denied that the public was against the increase when the association had submitted its customer demands on June 17.

He said that the 70 NGOs comprising consumer groups and non-consumer groups have three million supporters.

Tunku Azwil urged the government to pay heed to this boycott by ensuring that consumer demands are fulfilled.

“We call on the Domestic Trade and Consumer Affairs Ministry and Information, Communications and Culture Ministry, to protect consumer rights.”

He said the government should stop monopolies.

From July 11, Astro customers may experience increases ranging from RM1 to RM15 a month but this will be balanced by savings of RM4 to RM14.95 a month in subscriptions.

The company, however, will maintain the price of its Family Pack which gives access to 38 channels at RM37.95 a month.

Sundaily

Rote learning, painful lessons!

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Painful lessons on rote learning

Indian Diary By Coomi Kapoor

In spite of India’s universities churning out some two million graduates every year, there has been no Bill Gates or a Nobel laureate among them in a long time. The education system that rewards rote learning over originality and creativity seems to be at fault.

AN unusual announcement by a Delhi University college recently made headlines. The elite college said only those with 100% score in the school-leaving board exam should apply for admission to an honours degree course in commerce.

This left tens of thousands of anxious students who did the college trail mid-June at their wits’ end. Human Resource Development Minister Kapil Sibal was not happy, either. But there was little he could do since university colleges enjoy a good degree of autonomy.

 
Flood of applicants: Crisis in higher learning has manifested in a high percentage of school-leavers seeking admission to Delhi University and others located in big cities. – AP

The 100% cut-off, however, helped focus on the growing malaise in higher education. Schoolleavers with 90% to 95% marks could not be certain of admission to colleges and courses of their choice. And those with 70% or lower could well drop t he idea of doing an undergraduate course at the University of Delhi.

Indeed, it would be hard for the vast majority of the teaching community in the university to gain admission on the basis of their ma rks now. Until very recently, it was rare for anyone to score a perfect 100 in school-leaving exams.

A good first class, say, 70%, was enough to get one in a couple of decade s ago. Following complaints of subjective and erratic marking in the school-leaving exams, the Central Board of Secondary Education tried to make the system as objective as possible. Unfortunately, the big downside of the new system was that it further privileged rote learning over intelligence and understanding.

Overnight, there was a huge inflation in marks across the board. The grade inflation did not translate into brighter and better stud ents. Barring a small percentage, a vast majority of school-leavers lacked basic understanding of subjects in which they had scored very high marks. It was sheer rote learning.

Also, along with the grade inflation, almost simultaneously college cut-offs for admissions to various courses touched new highs.

Crisis in higher learning also manifested in an inordinately high percentage of school-leavers seeking admission to Delhi University and others located in big cities like Bombay, Chennai, Calcutta, Bangalore, and Hyderabad. Clearly, the standard of education in the hinterland was not the same as it was in big cities.

With the number of colleges in big metros not keeping pace with the exponential growth in the student population, it was natural for the elite institutions to feel the pressure. Hence, the 100% benchmark for admission to the capital’s most prestigious commerce college.

Though old-timers bemoan the decline in standards at even the most prestigious colleges in big metros, there still existed a wide gulf in the quality of education in main centres and provincial towns.

Besides, there was a cache attached to not only British era universities such as those in Mumbai, Delhi, and Calcutta, but also to elite colleges which made it easier in later life to seek jobs and even matrimonial alliances.

With 400-odd universities churning out some two million graduates annually, including over half-a-million in engineering courses, there was an increasing demand for a basic college degree for joining the job market.

Employers insisted on a college degree even for menial j obs such as a peon or a chauffeur. No wonder there was such a huge rush for admissions to undergraduate colleges.



Admittedly, vocational education for school-leavers was talked about as one of the ways to ease pressure on college admissions. Given the social and economic backgrounds of a vast majority of aspirants for college education, the authorities believed they were better off learning professional skills.

A fast-growing economy with a rising middle class needed carpenters, masons, air-conditioning and refrigeration mechanics, television and computer repairmen, etc. in increasingly large numbers.

Unfortunately, even those who ended up as unskilled workers such as clerks and couriers insisted on acquirin g a plain bachelor’s degree because most employers in public and private sectors had laid that down as the minimum educational qualification. There was a low demand for admissions in vocational courses in the few institutions that existed in big cities like Delhi.

Despite all the emphasis on a college degree, it was notable there were no great achievers in scientific research and academic fields. The sole emphasis being on passing the exams through rote, improvement of mind naturally took a back seat.

That explained the total lack of achievers in various disciplines of educational instruction. In short, in spite of India’s universities churning out some two million graduates every year, there has been no Bill Gates, no Steve Jobs and no Nobel laureate among them in a long, long time. When the education system rewarded rote over mind, it was not surprising that originality and creativity was at a huge discount.

Recognising the value of learning by rote, a huge number of coaching institutions sprouted up all over the country.

Private tutors charged large amounts on students eager to score high marks in school-leaving exams. Indeed, even the all-India exams for admission to class one central government services had become a simple matter of learning by memory.

In recent years, Kota, a mid-sized town in Rajasthan, has gained prominence all over the country for its record number of coaching institutions.

Here, each institution vies with the other in boasting that its students scored the highest marks in various competitive exams, beginning with the school-leaving one.

Eager to enrol fresh students, such “shops” regularly take out fullpage advertisements in newspapers to claim “100% success” of its alumni in various exams. Essentially, these coaching coll eges help students mug the answers to questions asked in the relevant exams over the previous two decades or so. That was it.

However, a further damage to the quality of students getting into regular university colleges was done by the abolition of the interview at the screening stage.

Following complaints that interviewers were often subjective in assessing admission-seekers, the entire emphasis was shifted to percentage of marks in the school-leaving exam.

Thus, there was no way of knowing whether an admission-seeker was otherwise mentally-equipped for further education. No wonder India’s colleges no longer produce alumni who are good in studies, sports and extra-curricular activities.