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Sunday, November 18, 2012

Asean facing new regional geopolitics

Asean can no longer duck difficult matters of regional security and must fashion a more pro-active strategy in the new environment.

THE Asean (Association of Southeast Asian Nations) summit, as well as other high-level meetings, notably the East Asia Summit (EAS), takes place from Nov 18 to 20 with its centrality in regional order-building under threat.

While the regional grouping is evidently disunited on how to pursue disputes four of its members have with China in the South China Sea, the cause runs deeper: the new regional geopolitics informed by a strategic contest for influence in Southeast Asia between China and the United States.

For over two years now the American strategic “pivot” towards the Asia-Pacific has arrested Southeast Asia’s strategic drift towards China.

The Asian giant’s economic rise and success not only won the admiration of Southeast Asian states, but also helped Beijing establish strong trade and financial ties with them.

Especially since the Asian financial crisis of 1997-98, when the United States was conspicuous by its inaction, China has forged deep ties with the region by addressing that crisis with regional states (not devaluing the RMB was of great help to struggling Southeast Asian economies), and by a close association now formalised in Asean + 3 (the three being China, Japan and South Korea).

In January 2010, the China-Asean Free Trade Area came into effect.

The United States had been pre-occupied with faraway military adventures in the Middle East and Central Asia, as well as, of course, with the financial and economic crisis since 2008. The pivot is a reassertion of interest to check the United States’ own drift towards sub-primacy in Southeast Asia.

In November last year, the United States joined the now 18-member EAS (comprising the Asean 10, China, Japan, South Korea, Austra­lia, New Zealand, India, Russia and America).

The previous June, at the Shangri-La Dialogue, the United States Secretary of Defence had announced the rebalancing of American naval forces in Asia-Pacific to 60% from 50% by 2020.

At a regional security conference in July 2010, Secretary of State Hillary Clinton declared American interest and commitment to freedom of navigation and the peaceful settlement of disputes in the South China Sea.

This was significant as it put China on notice which had been involved in a number of incidents at sea with smaller Southeast Asian claimant states before then, and since.

The United States has also reasserted its own economic interest in the region where American investment is still substantially larger than China’s. The strategic under-pinning is the Trans-Pacific Partnership which the United States is vigorously pursuing – and from which China is excluded.

With the contest joined, between a rising and a returning power, the new geopolitical environment presents a challenge to Asean. The grouping is premised on a regional order free of great power affiliation. Yet there was a desire for a counterweight to China which was becoming assertive in its South China Sea claims. But a counterweight to do what? Constrain, deter or contain China?

These questions and issues are discussed in a Special Report of LSE IDEAS (Centre for International Affairs, Diplomacy and Strategy), which concludes that Asean cannot any longer duck difficult matters of regional security and must fashion a more pro-active strategy if it is not to be a bystander in an essentially bipolar, even if crowded, regional space.

The conflict in the South China Sea has become the first serious test in the strategic contest between China and the United States in Southeast Asia. Indeed it is the test also of whether Asean unity will hold.

For the first time in its 45-year history, Asean foreign ministers failed to agree on a joint communique at the end of their meeting in Phnom Penh last July because of differences over how to word the incidents and disputes some of the members have with China – with specific reference to recent incidents or only generally.

China was the invisible elephant in the room. Cambodia, the chair of Asean, took Beijing’s side in only wanting a general reference. The Philippines, which was involved in a two-month stand-off with China last April, wanted specific reference to incidents which disturbed the peace – with Vietnam’s support which has had the most number of clashes with China. With no consensus, the meeting broke up in some disarray.

It is thought there are now two camps in Asean – with Cambodia, Myanmar and Laos supporting China, and the other seven opposed to Chinese belligerence in the South China Sea.

Actually, there is a soft middle of Asean states which believe the Philippines was over-emotional at the meeting and has been encouraged by the American pivot to take a firm stand. In any case, Asean is divided.

This is an uncomfortable fact Asean has to address. But it is not clear it wants to.

When the communique was not released, it was described first as a disaster.

Then as a dent to the organisation’s credibility. Later still, a setback. Finally, it became commonplace to claim the different perspectives on the South China Sea disputes do not on their own define what Asean is about. Asean is in denial.

Asean disunity will sour all other worthwhile efforts. The new geopolitics of the region has already drawn member states closer to China or the United States – whether or not they are involved in the South China Sea claims. How is Asean to find consensus, in the way it has always functioned, in this new environment?

Indonesia took the lead after the no-communique disaster to paper over the cracks by coming up with a six-point after-event agreement. Then its foreign minister worked hard on the code of conduct in the South China Sea which has eluded the region for the past decade.

Jakarta came up with what it called a “zero-draft” code, to placate Chinese sensitivities who have never been particularly keen on a specific, multilateral and binding code over an issue of “sovereign right”.

At a meeting of senior officials from Asean and China in Pattaya at the end of October, there was no agreement on the code.

It was put behind the development of guidelines to the declaration on the conduct of parties in the South China Sea, the UN General Assembly-like resolution first agreed to also all of 10 years ago.

It cannot be expected that Asean leaders at their summit this month will be able to forge a common regional perspective on the South China Sea dispute. But it must at least formally promote the Indonesian effort on the code of conduct as an Asean initiative.

Beyond this, the leaders must recognise the maritime dispute is a thorn in the flesh of regional peace and stability.

The danger of miscalculation by China, the more active Asean claimant states or, indeed, the United States could lead to a major conflagration.

Apart from the code, the leaders must launch a search for the means and paradigm that would find common benefit, based on joint development, perhaps founded on the idea of the common heritage of mankind – something which all developing countries were wedded to throughout the long and arduous negotiation of the UN Convention on the Law of the Sea.

President Obama is attending the EAS meeting following the Asean summit, underlining American involvement in the region.

So will Chinese Premier Wen Jiabao who will be stepping down next March – although continuity of China’s policy in the region and on the South China Sea is quite assured, as can be gathered from assertive statements at the 18th Party Congress.

Asean leaders would want to present as united a front as possible if they wish their organisation to be perceived as a third pole in the emerging regional balance of power.

Comment By Munir Majid
> Munir Majid, chairman of Bank Muamalat, is visiting senior fellow at LSE IDEAS. The full 90-page special report can be accessed at http://www2.lse.ac.uk/IDEAS/publications/reports/SR015.aspx.

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Saturday, November 17, 2012

Engage maids directly instead of costly maid agencies in Malaysia

WHEN put in perspective, if a spouse in a Malaysian household resigns from her job as a substitute for a maid, with a conservative average monthly income of RM3,000, that is RM36,000 less on the household table.

Take into account 300,000 Indonesian maids that used to work here and you have a scenario, where families in this country will be forgoing RM11bil in potential household revenue.

It seems obvious that middlemen are trying to blatantly profit from the urgent need for maids.

On one side of the coin, you have Malaysian maid agencies who used to charge up to RM8,000 for securing a maid and when the Government announced a moratorium on fees chargeable, the Indonesia side immediately claimed the fee was too low (See article below).

Invariably, both the employer and the maid are the victims. In any employment sector, it is very unusual for a potential employee to pay a fee to be employed.

The argument for deductions put forth by maid agencies, that the deduction is for loans given to maids and for training, does not make sense.

Perhaps a holistic solution would be to allow Indonesian agents to open offices in Malaysia and work directly with Malaysian employers.

Create a maid training facility, where maids can arrive and be trained within a short period of 10 working days.

Such a facility can be co-sponsored by the Malaysian Govern­ment. All it should entail is 10 to 20 low- to medium-cost flats that can house 200 to 300 maids, with a common area that allows for training.

Concurrently, increase the maid’s salary to RM800 per month in lieu of any advance payment and no increase in the agent’s fee.

There should be no need for any advance payment with full payment to be made upon final selection, when the employer takes the maid home. Peg the agent’s fee at RM1,500, with reimbursements for other costs, from levy to travel, that must be substantiated with proper receipts.

This is similar to what is charged in Singapore.

The training programme should not cost more than RM1,500. Which means the total cost can be pegged between RM4,500 and RM5,000 at most.

Get agreement with the Indonesian government on the process for direct engagement with maids.

Maids should only be required to go through an orientation programme similar to Singapore’s SIP (Settling-In-Programme) for foreign domestic workers.

Maids should not be allowed to work for more than eight hours a day. If required to work overtime, they should be entitled to a minimum hourly rate of RM8 to RM10 per hour.

Create a toll-free number manned by agencies that will monitor the welfare of maids, to ensure their overall well-being at all times.

Souce: B. J. FERNANDEZ  Shah Alam, The Star views

Maid agencies: Fees are too low?

By YVONNE LIM  The Star

PETALING JAYA: Maid agencies are adamant that the RM4,511 fee imposed by the Government for Indonesian maids is too low, as the actual cost to recruit a maid is double the amount.

Many described the fee, which was agreed to in the Memorandum of Understanding (MoU) between Jakarta and Kuala Lumpur last year, as “impossible to meet” and said that they have been running at a loss while trying to comply with it.

An agency owner, who declined to be named, said that despite demand, his agency had stopped recruiting Indonesian maids as he would spend up to RM10,000.

He said the fees charged by Indonesian maid suppliers started at RM5,500 including training, medical check-up, transport and recruitment fees, as well as duit susu, which is a contribution paid to the families of the maids.

“If we are being charged RM5,500 per maid, how can you expect agencies to comply with a fee of RM4,511, especially now that the cost has gone up for everything, including air travel?” he asked.

He urged the Government to review the amount and consult both Indonesian and Malaysian agency representatives so that a more realistic fee could be set.

Malaysian employers had previously called for Papa to justify the increase in Indonesian maid fees by agencies by up to RM12,000 and asked for a breakdown of costs.

Some had also urged the association to pressure its members to comply with the agreed fee, saying that the high demand for maids would compensate for it.

A spokesman for another agency said her company was now charging RM9,800 per Indonesian maid.

“We have already lowered the fee, but we cannot do much as our Indonesian partners are charging close to RM6,000 per maid,” she said.

Association of Foreign Maid Agencies (Papa) president Jeffrey Foo said that prior to the morato-rium on maids from Indonesia, employers had no qualms about paying up to RM9,000 for domestic helpers.

“We voiced our disagreement on the RM4,511 fee when the Govern-ment consulted us as it is simply too low, and were shocked when they settled on that price in the MoU anyway,” he said.

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Malaysia's GDP growth dips to 5.2% in Q3, beats economists' forecast

KUALA LUMPUR: Malaysia's gross domestic product (GDP) for the third quarter ended Sept 30 expanded 5.2% year-on-year, supported by domestic demand and investment activities.

The expansion in GDP beat economists' median expectations of 4.8%. GDP growth in the second quarter was revised upwards to 5.6% from 5.4%.

Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said at a briefing to announce the GDP data that growth in the quarter was supported by domestic demand, especially in the favourable performance of private and public sector consumption and investment activities.

She noted that growth was affected by slower external demand resulting in further decline in net real exports of goods and services.

“The world economic environment remained challenging in the third quarter.

“Growth in the advanced economies was uneven, with the US economy experiencing an improvement while several other major advanced economies continued to experience weak growth, constrained by fiscal adjustments, sluggish labour markets and impaired financial intermediation,” Zeti said.

Moving forward, Zeti said GDP growth trend in the fourth quarter was “likely to continue very much like the third quarter” but added that there were some uncertainties seen in the export sector.

“The export sector reflects the (economic) developments in the global environment. It will continue to remain weak because of the economic developments taking place in the developed world. But domestic demand is expected to continue being strong.

“And as such, the outcome (of this) is that we will, of course, be affected by external developments as we are not insulated but the anchor to our growth is from domestic demand and we expect this to continue to be strong,” she said.

On Bank Negara's growth estimates for the entire 2012, Zeti said GDP growth for the full year “would be at least 5% or better.”

“This (assumption) is given that (GDP growth in) the first three quarters have been better than expected. In the first half of the year, the exports sector was better than expected despite the challenging external environment.

“But as we entered the third quarter, we see exports became negative and it remains uncertain as how the exports sector will perform in the fourth quarter,” she said.

Bank Negara said that during the third quarter, domestic demand expanded by 11.4% (versus 14% in the second quarter) while gross fixed capital formation registered a robust performance of 22.7% from 26.1% in the second quarter (Q2), underpinned by capital spending by both the private and public sectors.

“Private sector investment was driven by capital spending in the services sector, particularly the transportation, real estate and utilities sub-sectors and the ongoing implementation of projects in the oil and gas sector,” Zeti said.

“For public investment, the capital spending by public enterprises was mainly channelled into the transportation, oil and gas and utilities sectors while the Federal Government's development expenditure was mainly channelled into the transportation, education and public utilities sectors,” she added.

Bank Negara noted that growth across most economic sectors had moderated in the third quarter.

The services sector growing by 7% from 6.6% in the second quarter, manufacturing slowed slightly with a 3.3% growth from 5.6% in the second quarter due to a moderation in export and domestic-oriented industries and the construction sector grew by 18.3% from 22.2% in the second quarter, driven by the civil engineering sub-sector such as the mass rapid transit mega project and the construction of the second Penang bridge.

Bank Negara said the agriculture sector recorded growth of 0.5% from minus 4.7% in the second quarter due to a recovery in crude palm oil production, while the mining sector contracted 1.2% from a 2.3% growth in the second quarter because of declines in natural gas production due to planned shutdown in facilities.

Economists told StarBizWeek that the third-quarter economic growth was commendable and they were unanimous that growth will most likely exceed 5% for the whole of this year.

“Malaysia's GDP growth of 5.2%, which is marginally slower than 5.6% in the previous quarter, is a gravity-defying performance. This is testament to continued consumer spending and economic transformation programme projects that have offset some external headwinds,” RAM Holdings group chief economist Dr Yeah Kim Leng said.

“My estimate for GDP growth for the third quarter was 4.5% earlier. For the full year, it is likely to be at the higher end of the range of forecast, likely above 5%. Of course, external risks still remain, given the contraction in eurozone and fiscall cliff situation in the US economy.”

Alliance Research chief economist Manokaran Mottain said that going forward, he was confident GDP growth would still be healthy at around 5% in 2013.

“This is in line with the Government's continued spending to develop infrastructure and its recently announced bonus to civil servants and cash hand-outs to targeted groups.

“The economy (in the third quarter) is still driven by domestic demand, led by private consumption and investment activities, reflecting the Government's drive to stimulate income growth, improve and develop infrastructure as well as ensuring a steady flow of foreign capital,” Manokaran said.

By DANIEL KHOO danielkhoo@thestar.com.my