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Thursday, July 17, 2014

BRICS establish Development Bank US$100bil in Shanghai to cut out Western dominance


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The BRICS New Development Bank was established Tuesday with an initial capital of $50 billion shared equally by the five BRICS countries. The Contingent Reserve Arrangement was also launched with an initial fund of $100 billion. The development bank's headquarters will be in Shanghai. Its first president will be from India, the first chair of the board of directors from Brazil and the first chair of the board of governors from Russia. The bank will have an African regional branch in South Africa.

The idea of a BRICS bank was first mooted by India. The five countries reached a consensus at last year's BRICS summit and the bank has been launched this year. The fast pace and its implications have created waves in the West. This landmark event shows that BRICS countries have turned from a forum to an entity and may signal a new beginning for global strategic trends.

The five emerging powers from four continents have formed a financial group. Prior to that, the world's financial power was held firmly by Americans and Europeans.

Without exception, Western opinions have all been centered on the deep-rooted discrepancies among the five BRICS nations. They didn't expect that the wishes and ability of the five countries to overcome these discrepancies were so strong.

Has the world's financial pattern changed? We cannot say this yet, but the old pattern in which the World Bank and the International Monetary Fund dominated the field will face competition from now on.

The BRICS bank not only forms a new financing channel, but also will display the democracy and equality that the old financial pattern lacks most.

Western opinions have tried to drive a wedge among BRICS countries and have speculated about China's hegemonic ambition to dominate the institution. The successful launch of the bank has dealt a heavy blow to them.

Western elites have expressed opinions on emerging countries with a biased mentality, which makes their views detached from reality.

That Shanghai is chosen to site the bank headquarters is good news. Shanghai is becoming a new geographic and financial center in the 21st century. It unites the development momentum of the whole of China and is a major international metropolis in the Western Pacific. It is bound to be an outstanding host city.

On the other hand, the opening of the BRICS bank will provide a new driving force for Shanghai.

China's reform and opening-up in the past 30 years have created huge potentials for this city, while the stage where it can display its strength is relatively small. The BRICS bank is a timely opportunity which will broaden the scope of Shanghai and boost its influence.

China is the most outstanding country among all the emerging powers. The launch of the BRICS bank with Shanghai as its headquarters is a testament to China's national strength, diplomatic capabilities and strategic position. The confidence of all the emerging countries will be boosted. The five nations used to be earthen BRICS, and with the development bank, they will truly become gold BRICS.

Source:Global Times Published: 2014-7-17

BRICS Agree on $50 Billion Bank With Something for Everyone;

Photographer: Nelson Almeida/AFP/Getty Images
Leaders of the five BRICS nations agreed on the structure of a $50 billion development bank by granting China its headquarters and India its first rotating presidency. Brazil, Russia and South Africa were also granted posts or units in the new bank.

The leaders also formalized the creation of a $100 billion currency exchange reserve, which member states can tap in case of balance of payment crises, according to a statement issued at a summit in Fortaleza, Brazil.

Both initiatives, which require legislative approval, are designed to provide an alternative to financing from the International Monetary Fund and the World Bank, where BRICS countries have been seeking more say. The measures coincide with a slowing of economic growth in the five countries to about 5.4 percent this year from 10.7 percent in 2007, according to economists surveyed by Bloomberg.

“The BRICS are gaining political weight and demonstrating their role in the international arena,” Brazilian President Dilma Rousseff said after a signing ceremony.

Until the eve of the summit, India and South Africa had vied with China to host the headquarters of the bank, dubbed the New Development Bank. The administration of Indian Prime Minister Narendra Modi gave in after it was reminded that his country’s previous administration had agreed to Shanghai as the bank’s headquarter, according to an Indian official, who requested not to be named because the talks were not public.

Shared Out

Russia’s Finance Minister Anton Siluanov told reporters that the BRICS decided in favor of Shanghai because the city offers better infrastructure, opportunities to capture private funding, and is home to more investors than the competitors.

Each member country got something out of the deal. The first chairperson of the Board of Governors will be from Russia, while the first chairperson of the Board of Directors will be Brazilian. South Africa will establish an African regional center for the bank, which may not get off the ground for another two years, according to Carlos Cozendey, secretary for international affairs at Brazil’s Finance Ministry.

Unlike the IMF and World Bank, which are managed by Europeans and Americans, the BRICS bank “is quite democratic,” Brazilian Finance Minister Guido Mantega told reporters. 

Each member country has the right to withdraw different amounts from the joint currency reserves, according to a statement from Brazil’s central bank. China can withdraw half the amount it earmarks or $20.5 billion. Brazil, Russia, and India may withdraw the same amount they commit or $18 billion, while South Africa can tap $10 billion, twice its contribution.

“It’s a type of insurance policy, speculators looking for weaker countries without backup, will run because those countries will have sufficient solidity to face a currency problem,” said Mantega.

Aiding Development

The BRICS have evolved from the original term coined in 2001 by then Goldman Sachs Group Inc. economist Jim O’Neill to describe the growing weight of the largest emerging markets in the global economy. In 2011, South Africa joined to give the BRICS a broader geographic representation.

Even with slowing economic growth in BRICS countries, there are still plenty of opportunities for business, and the newly-created development bank will help those opportunities become reality, said Jorge Gerdau Johannpeter, chairman of Brazilian steelmaker Gerdau SA.

“The bigger the financing possibilities, the bigger the chances of implementing projects,” Gerdau told reporters at the summit.

The biggest winner among the BRICS and its newly created bank may be South Africa, as it stands to gain financial expertise, investment and trade, said Colin Coleman, the Johannesburg-based head of Goldman Sachs Group Inc. in sub-Saharan Africa, who attended the BRICS Business Council meeting.

Greatest Benefit

“Arguably we have the greatest amount to benefit because we’re partnering diplomatically and otherwise with some of the world’s most important emerging-market economies,” Coleman said in a phone interview.

While BRICS trade ministers in a joint communique yesterday said that member countries stood by the World Trade Organization’s Bali agreement, Brazil’s Trade Minister Mauro Borges said he understood India had certain concerns about its implementation and that the BRICS countries didn’t intend to forge a common stance on the issue.

BRICS share of world exports rose to 16 percent in 2011, from 8 percent in 2001.

Russia also proposed at the summit in the northeastern coastal city of Fortaleza the creation of an Infrastructure Fund during the summit, Kirill Dmitriev, chief executive officer of the Russian Direct Investment Fund, told reporters today. The fund could start up as early as next year, he said

.- Bloomberg


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The West should not take a confrontational attitude toward the rise of the BRICS

How can the developing and developed countries coexist with each other? The answer relates to the reconstruction of the world order in 21st century.

Malaysian banks raise Base Lending Rate (BLR) or Base Financing Rate (BFR) to 6.85% pa

In tandem: Public Bank, Hong Leong Bank and Maybank are among banks which have confirmed that they have either adjusted or will be adjusting to the new rates.

A number of banks raise their base lending rates (BLR) and base financing rates (BFR) in tandem with Bank Negara’s announcement to raise the overnight policy rate (OPR) by 25 basis points (bps) from 3% to 3.25% effective yesterday, today and tomorrow.

As a result, the BLR and BFR has adjusted to 6.85% from 6.6% per annum previously.

The banks that have confirmed that the new rates effective from 16 July 2014 include Malayan Banking Bhd (Maybank), Hong Leong Bank Bhd (HLBB), CIMB Group Holdings Bhd, Public Bank Bhd, Alliance Financial Group Bhd and OCBC Malaysia, HSBC Bank Malaysia; effective 17 July 2014 include Citibank, Standard Chartered Bank;  effective 18 July 2014: UOB

It is understood that some banks may announce the interest rate revision on a different date, as they are still considering the quantum of the deposit rates, which will impact their earnings eventually.

Bank Simpanan Nasional senior vice-president and head of distribution Akhsan Zaini told StarBiz: “ We are still studying the impact of the rate hike on our bank before we announce the adjustment next week, tentatively.”

He also said the bank had yet to decide on how much it would adjust for its deposit rates

CIMB Research expects the rate hike to enhance banks’ earnings by 1% to 2%, as their net interest margins (NIM) widen.

Maybank Investment Bank Research, on the other hand, anticipates NIM growth to be short-lived due to price competition.

The research unit had said in an earlier report: “Our forecasts already assume a 50-bps rate hike in 2014, and as a result, we are looking at a marginal four-bps aggregate NIM improvement in 2015 versus a seven-bps contraction in 2014.”

Some banks have also announced the revision of their deposit rates, but the quantum varies from one lender to another as well as the deposit tenure.

Among others, Maybank’s deposit rates will be revised upwards by up to 15 bps.

HLBB and Hong Leong Islamic Bank Bhd (HLISB) will increase their fixed-deposit and Term Deposit-I rates by up to 25 bps.

Following the revision, HLBB and HLISB’s new deposit rates for one, six and 12 months would be 3.05%, 3.2% and 3.3%, respectively.

Hong Leong Banking Group’s managing director Tan Kong Khoon said the group would continue to work closely with its customers to address their financing and savings needs. Meanwhile, OCBC Bank (M) Bhd and OCBC Al-Amin Bank Bhd will be increasing their fixed-deposit and General Investment Account-i rates respectively by up to 20 bps, depending on tenures effective July 21.

In a statement, Maybank said: “The last revision in Maybank’s BLR and Maybank Islamic’s BFR was on May 11, 2011 when they were revised from 6.3% to 6.6% per annum.”

OCBC Bank’s mortgage lending rate, the alternative to using BLR for home loans, will also increase, to 5.7% compared with 5.45% previously.

JP Morgan Research noted that it was cautious on banks, as the combination of rate hikes and subsidy rationalisation would test the credit risk management of Malaysia’s consumer-led loan growth in the past five years.

It preferred liquid banks and upgraded HLBB and Maybank to “overweight” from “neutral”.

- By Ng Bei Shan/The Star/Asia News Network

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Tuesday, July 15, 2014

Big bosses are watching you !

Tracking device: Asia Insight employee Steven Li conducting a survey near Bugis Junction. He is using a tablet which has mobile data collection software, allowing his employers to track his work patterns. - The Straits Times / Asia News Network

BIG bosses are watching. Firms are keeping a closer eye on their employees’ punctuality and efficiency – thanks, or no thanks, to technology.

Larger companies are investing in advanced software in mobile devices that can detect location – and record the time taken to complete tasks.

And smaller firms have found that run-of-the-mill but inexpensive instant messaging apps can also be used to monitor workers. Employees of local property valuation firm GSK Global, for example, when out at meetings are told to send a picture of the venue to their departments’ WhatsApp group chat within 15 minutes of the designated time. Those who are consistently late will get their bonuses docked.

Bosses say they are not spying on their staff. Rather, they want to improve efficiency.

GSK Global boss Eric Tan said: “I want my staff to be punctual so they can be done with work earlier and go home by 8pm.”

Market research consultancy Asia Insight chief executive Pearly Tan agrees.

Her firm engaged local tech start-up Epsilon Mobile earlier this year to develop mobile data collection software that records the time employees take to interview people and co­m­plete surveys, among other things.

It costs “a few hundred thousand” but Tan said it was worth it. The software helps the company spot patterns in the way the surveyors work, and also intervenes to reduce errors and boost productivity.

Her firm plans to use the software, which is enabled with Global Positioning System (GPS), to detect its employees’ location.

Epsilon Mobile boss William Vo said besides market researchers, organisations such as voluntary welfare groups and chain restaurants had also shown interest in his data collection software.

Similarly, tech company FPT Asia Pacific provides a few fast-moving consumer goods firms with GPS-enabled data collection software to monitor roving sales staff.

While most surveillance techno­logy now focuses on tracking location and time, firms may soon be able to use it to monitor their wor­kers’ interactions with customers.

Local tech company FXMedia is in talks with some retailer groups to roll out a visitor analysis system in stores. The software detects the number of customers and consu­mers’ emotions using webcams.

However, bosses admit there are some drawbacks to using workplace surveillance technology; workers face extra stress and loss of privacy. — The Straits Times / Asia News Network

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