The cause of unethical activities

HUMAN beings are born the same way, yet we live and die differently.

From the cradle, we pick up habits from our parents. On growing up, we learn from our teachers and society.

Some of us attend moral classes, celebrate various days and practise rituals regularly. Yet we may still be unethical.

The four main goals that everyone competes for in life are money, energy, time and food.

Deprivation of any of these may lead to unethical behaviour.

People accumulate wealth more than they need. As the ‘haves’ constantly multiply their wants, the ‘have-nots’ are deprived from having sufficient food, clothing, shelter, energy and time.

These in turn create social problems such as conflicts (i.e. civil wars, nations against nations, terrorism, religious conflicts and personal conflicts), environmental crisis (i.e. global warming, water pollution, air pollution, food inadequacy, waste production and earthquakes/tornadoes) and social crisis (i.e. rampant corruption, AIDS/HIV, divorce rate/single parents, child abuse/violence, suicide, living together and teenage pregnancy).

Human beings become unethical due to six enemies (i.e. lust, anger, greed, fear, jealousy and hatred) embedded in our subconscious mind.

When the negative energy is activated, it emotionally influences one to be unethical.

In other word, human beings become unethical due to the influence of the negative energy unknowingly.

Although every human being has the six enemies rooted in them, the dominant energy prevails.

Some might be controlled or driven by anger, while others by jealousy.

This dominant force will influence our perception which we form from the five perceptions hearing, sensing, sight, taste and smell.

Negative perception will lead us to be unethical.

The fundamental causes originate from childhood conditioning, life experiences and the current living environment.

Childhood conditions play a vital role in the formation of a person.

Human beings are formed by the age of five years and the experience is strongly rooted in the subconscious mind.

The positive energy embedded will help them to be good citizens.

However, the negative energy (i.e. childhood wounds) will lead them to being challenging human beings due to low self-esteem caused by the feeling of being powerless, abandonment and worthlessness.

Life experiences may induce negative energy into us. Based on Abraham Maslow’s hierarchy of needs, the third need being the social need plays a vital part.

If a person is always being eliminated in the development of society and country, he/she will end up being frustrated or angry, and in turn will take revenge without realising.

This is one of the reasons for the origin of criminals, gangsters and terrorists.

The current living environment, sometimes known as peer pressure, also is vital in inducing the negative energy.

In the process of meeting the needs of others or competing for equal status, human beings carry out unethical activities such as breach of trust, corruption, bribery and even discrimination.

In a nutshell, no human being would like to harm a fellow human being.

The six enemies embedded in our subconscious mind may lead to the unethical activities.

Unethical activities will not be eradicated until we understand the actual meaning, fundamental cause and origin of the fundamental cause of being unethical.

Unethical activities can be eradicated when the vision/mission of an individual’s life is noble and the nation’s administration has good governance, transparency, control and measures.

Everyone, especially the “haves” accept that the inherent quality of human being is to have self-integrity which leads to having full control over their life and work towards the betterment of human beings.

Unethical behaviour can only be eradicated when “every pulse of us is filled with love towards fellow human beings”.

By DR RAJENDRAN MUTHUVELOO
Universiti Sains Malaysia, Penang

Penang residential prices to rise 8%

RESIDENTIAL property prices in Penang are likely to rise by 7% to 8% by the first half of 2013 due to the steady demand and a stronger gross domestic product (GDP) projection for 2013.

< Geh says new properties launched with a bundled-up financial package would be most popular.

According to the latest Finance Ministry report, the GDP forecast for 2013 is between 4.5% and 5.5%, riding on the growth in the agriculture, construction, mining, manufacturing, and services sectors.

Raine & Horne Malaysia director Michael Geh says new properties launched with a bundled-up financial package would be most popular.

“This is why this segment will perform better than those properties in the sub-sales market, where the buyer and seller have to do more paper work,” he says.

Saw says harder loans may be cause of lower volume.>

Currently, the price for terraced property in prime locations such as Tanjung Bungah and Tanjung Tokong is around RM1.2mil to RM1.5mil.

The selling price of development land in prime locations ranges between RM450 and RM1,000 per sq ft.

“The stringent guidelines for housing loan, now based on the evaluation of net income rather than on gross income and the difficulty in obtaining the desired valuation report will mean that the sales of condominiums in the secondary market will face more challenges,” he says.

The new guidelines from the Penang government for foreign purchasers to buy only high-rise and landed properties priced from RM1mil and RM2mil respectively will impact adversely on foreign property transactions in Penang, according to Geh.

“More foreigners will prefer to rent than to buy, thus one can expect rental yield in the state to increase gradually,” he adds.

According to the latest National Property Information Centre's (Napic) property market report, total transactions for residential properties in Penang hit around 18,316 for the first nine months of 2012, with a transacted value of RM5.2bil.

The whole of 2011 saw the state registering some 30,674 residential property transactions valued at RM7.7bil.

Geh says the total volume of property transacted for 2012 was unlikely to catch up with 2011's.

“That the total value of property transactions has risen although the volume transacted has decreased is not surprising, as this is normally the trend,” he adds.

PPC International Sdn Bhd director Mark Saw says the lower volume of transactions may be because housing loans are harder to obtain nowadays.

“Another reason could be that the preferred choice of properties might not be available,” he says.

Malaysian Institute of Estate Agents deputy president Siva Shanker says Malaysia is unique as property prices have not dropped following the decline in transactions.

“In fact property prices will hold and then shoot up when times are good again,” he says.

Penang Master Builders & Building Materials Dealers Association president Lim Kai Seng says construction cost will likely be maintained in the first quarter of 2013.

“Although sand prices have gone up, the smaller volume of construction jobs available is offseting the impact of rising sand prices.

”Due to the competition for jobs, construction cost will be maintained,” he says.

The price of sand per load of 30 tonnes is around RM1,200, compared to about RM800 in early 2012.

Since the price of cement went up in August, the cost of construction has increased by about 3%, Lim says.

Who invented bank deposit insurance?

I LOVE the Internet. The best Christmas present I got last year was a preview of a forthcoming book by a banker/historian in Boston. He sent me electronically his PhD thesis, a piece of masterly detective work on how ideas travel over time and space, become adopted successfully in a different place, and then comes back to where they started.

Dr Frederic Grant Jr's forthcoming book uncovered how the US bank deposit insurance system has its root in ideas borrowed from Canton (Guangdong province in southern China) of the 19th century. The origins of the US deposit insurance scheme arose from the 1828 The Safety Fund statute of the State of New York, drafted by a legislator named Joshua Forman.

In those days, if the state-authorised banks failed, the state would have to pay for their failure. Forman borrowed the idea from Canton that those authorised for privileged trade (in banks the privilege of private currency issue) should be responsible for their own debts.

The success of the New York Safety Fund inspired the adoption of similar schemes by 13 other American states. In 1933, the Banking Act of 1933 created the Federal Deposit Insurance Corp (FDIC), following the failure of many banks across the US. This idea of a national deposit insurance scheme has been adopted by many countries around the world, and is currently being considered in China.

How did Forman get the idea about the Canton Guaranty Scheme? Apparently, New York was already the major port for US-China trade and the scheme was familiar to New York businessmen.

How the Canton system evolved

It all came about because the Qing dynasty official merchants, namely merchant houses (or hongs) authorised by Beijing to conduct foreign trade, often require trade credit to conduct business with foreigners in Canton. If these traders defaulted on their loans, the foreigners threatened to take action on the weak Qing dynasty. Hence, in order to prevent individual merchant failure, the Qing government used a collective responsibility method evolved by the Manchu court in Beijing that ensured that those authorised to benefit from the foreign trade also collectively guaranteed each other's trade debt, and a premium was paid yearly into a fund to pay off any individual failure.

The Qing government solved the problem of defaults by imposing collective responsibility everyone was responsible for the group's debt. The good news is that the group as a whole made sure that no member got into trouble, engaging in what is today called “peer surveillance”. The bad news is that with collective guarantee, the smaller traders have an incentive to take higher risks, creating moral hazard private gain at collective loss. Moreover, as history showed, if trade was really bad, more traders failed and since the Qing government also borrowed or taxed the accumulated fund regularly, there were not enough money in the fund to settle all debts. Eventually the Canton Guaranty Fund also failed.

Corruption and misappropriation of fund was to blame, but the main culprit remained what Grant called “the perennial dilemma of inadequate capital and lack of access to affordable credit” for smaller hongs.

These problems plagued all deposit insurance schemes, even today. Large banks loath to support deposit insurance because they pay a larger share of the premium than smaller banks. Small banks enjoy the group insurance, but are more prone to failure because they were more likely to take more risks, which meant that there should be supervision to make sure that these riskier players do not destroy the group as a whole.

Deposit insurance worked very well in the United States, as the FDIC not only participated in supervision of the insured banks, but also engaged actively as the mortuary of failed banks. In the recent crisis, from 2009 to currently, the FDIC smoothly managed the exit of over 400 banks in the United States, without disruption to the system as a whole. But this time round, it was the failure of the shadow banks and larger banks that created the problem. Yes, smaller banks failed, but they did not take down the whole system because deposit insurance prevented large-scale bank runs at the retail level.

The time has come for China to adopt a formal deposit insurance scheme. There are at least three good reasons why it should occur. The first is that deposit insurance will help stop retail bank panic, exactly the reason for the Canton Guaranty Fund. The second is that there must be an orderly exit mechanism for financial institution failure. Some argue that a deposit insurance would duplicate supervision. Today we realise why we have two kidneys instead of one we need redundancy in the system, in case one fails.

The third, based on my personal experience, is that regulators who are good at daily operations may not always be very good at conducting the messy operations of restructuring failed banks. This is a very complicated process that needs strong skills, good bankruptcy laws and more investment banking skills than regulation. Deposit insurance is specialised work and needs specialised skills.

As Grant rightly said, the historical record of the Canton Guaranty System offers a number of valuable lessons to the modern world. “These include (1) that the tax that supports a guaranty fund must be based on measured risk of loss; (2) that the fund and its insureds must be made subject to strong independent supervision; (3) that laws enacted to avoid risk contingencies must be enforced; and (4) that both corruption and the diversion of fund assets must be strictly prohibited.”

The trouble with history is that we never seem to learn from history.

THINK ASIAN
BY ANDREW SHENG

 > Tan Sri Andrew Sheng is president of the Fung Global Institute. 

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