A new era for world powers

Meeting of minds: Xi talking to Obama during a high-level ‘Leaders Summit on Peacekeeping’ during the 70th session General Debate of the United Nations General Assembly at United Nations headquarters in New York. — EPA

THE visit last week by President Xi Jinping to the United States was significant on many levels. It will take months, perhaps years, to fully gauge its implications, but it is not too soon to make some preliminary remarks.

While the main focus was on the fact that it was a full scale state visit with all the trappings, the programme actually comprised three legs: a high-profile meeting with US business leaders in Washington State; the formal state visit in Washington DC including meetings with President Barack Obama; and a speech to the United Nations General Assembly in New York.

On the first leg, Xi assured the US business community that China would remain open to them – as a market for their products and services, as a destination for their investments, and as a source of the goods US consumers want. The underlying message was a very important one: China is now fully plugged in to the global economy, and intends to remain so forever.

The second leg was more notable for the pomp and ceremony rather than for its tangible achievements. There was a Guard of Honour to be inspected, a 21-gun salute on the South Lawn of the White House, a full-scale state dinner plus several meetings with Obama in greater or smaller groups, and even a “private” stroll in the garden.

The third leg saw Xi in the role of international statesman. His measured address to the world body included a pledge of US$2bil (RM8.82bil) to help poorer countries to develop, and the promise of debt relief to those governments who are most hard up.

All high-profile visits of this type have three distinct audiences – one in the host country, one in the home country, and one in the international community at large.

It is probably fair to say that the public in the US took more interest in the coincidental visit of Pope Francis. Then just when the focus began to swing back toward the Chinese leader, the Speaker of the House of Representatives John Boehner announced his resignation and briefly captured the headlines.

Nonetheless, it is the visit of China’s president that will have left the more enduring and deeper impression, especially with the audience that matters most in politics, the media and commerce. The sight of the titans of US business queueing up to greet him on arrival in Seattle, Washington, will linger, as will the mutual respect shown during the formal proceedings, and the heavyweight address to the UN. All these have raised China’s profile with the US people.

For Obama, the visit required the striking of a delicate balance. His overriding priority during the next 16 months is to preserve the main items of his legacy, in particular the Iran nuclear deal and the affordable healthcare legislation.

That means, if possible, he must try to ensure that another member of the Democratic Party succeeds him. If the Republicans were to take the White House and maintain their majorities in both houses of Congress, they could do a great deal to undermine his achievements. The audience back home in China cannot fail to have been impressed. There was the president rubbing shoulders with Bill Gates, Tim Cook and Mark Zuckerberg – all household names – who could not wait to greet Xi. Similarly, officials at all levels will have got the message that engagement with the US is inevitable and needs to be handled pragmatically. Recognition for Xi as a major player in front of the UN added further luster.

Other nations around the world will have seen the same events as people in the US and China. Government leaders in Tokyo, Seoul, Pyongyang, Canberra and other capitals will have to factor in the developments in Sino-US relations to their own policies and strategies going forward. The world has changed and a new era has begun. - China Daily

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Job cuts: rightsizing the oil and gas industry

THE slide in global crude oil prices has left a trail of casualties in its wake.

Oil companies and governments that rely on the price of crude oil for profit and revenue have been hurt by plunging receipts from lower crude oil prices.

For countries dependent on commodities such as crude oil, the effect cuts deeper. Their currencies have felt the brunt from the weaker crude oil prices and it is this group of countries that have a reliance on commodities that have seen the biggest depreciation against the US dollar compared with oil importing countries.

While the macro picture hogs the headlines and generates most of the chatter, the real micro cost of plunging crude oil prices has been felt by employment in the sector.

Many oil majors have announced job cuts to manage costs that had spiralled upwards during the boom days in the industry. Oil majors now have resorted to slashing their workforce amid the biggest downturn in the industry for decades.

For Malaysia, that impact is telling. Between January and July, the Malaysian labour market has laid off 6,547 people (not inclusive the voluntary separation schemes for Malaysia Airlines and banks). But 30% of that number, or nearly 2,000 people who lost their jobs, have come from the oil and gas industry alone.

“It is getting worse,” an oil industry executive says on the job cuts plaguing the industry. He says the oil major he works for is in the midst of a rightsizing exercise and that will mean many jobs will need to be slashed in the coming months.

“We have to reach a new equilibrium for the economies in the oil and gas sector.”

And it does not seem like the industry has hit a trough when it comes to retrenchment.

Part of that is down to the outlook for the price of crude oil. Although there is optimism that prices have hit a bottom, there is another school of thought that predicts more pain for the sector.

Supply from shale oil and future Iranian oil, once trade sanctions are lifted, are clouding the supply dynamics for crude oil and gas.

With expectation that oil prices will remain weak for the foreseeable future, oil majors continue to announce job layoffs. More jobs are expected to be cut next year.

In the US alone, oil companies are reported to have laid off more than 86,000 personnel from June last year up to September of this year. With many global giants having a presence in Malaysia, the workforce in the country will likely be included as part of a global cut in workforce.

Poor profit

The main culprit for job cuts among oil and gas has been the financial performance of those companies. As profits plunge, the knee-jerk reaction is to cut costs, and employment is in the crosshair of such cuts.

The hit on leaner employment prospects has already been told through not only the fall in crude oil prices but also cuts in capital expenditure and operating expenditure by Petronas Nasional Bhd. Companies that service the upstream segment of the industry have been the worst hit.


Downsizing: The main culprit for job cuts among oil and gas has been the financial performance of O&G companies. As profits plunge, the knee-jerk reaction is to cut costs, and employment is in the crosshair of such cuts. — EPA

Petronas, the driver of the local oil and gas industry, has cut its operating costs and that has meant lesser demand for services provided by the oil and gas industry.

An industry official says Petronas, for its part, is not retrenching employees at the moment despite pressure to maintain profitability. It will cut bonuses in order to keep its permanent staff.

“There is no rightsizing of permanent staff at Petronas but whether it renews the contracts of high-paying employees is another thing,” he says.

The hardest hit segment on the industry’s value chain has been upstream activity. The cut in the number of exploration rigs and the associated services indicates the predicament the industry is going through.

The collapse in the price of crude oil has meant that companies are less inclined to spend on searching for new sources of crude oil. It makes matters worse when it is already costly to search for such oil in areas such as deepwater oil fields.

“As revenue comes down, staff are being redeployed from upstream to downstream. Staff will also be asked to multi-task but whether they can do that is another thing,” he says.

A pickup in hiring activity in the upstream segment is not expected as long as crude oil prices are anaemic.

Job cuts have taken place in that segment as a result of dimmed prospects in the industry.

With prices not expected to bounce up significantly, job prospects will remain dim. The general consensus is that crude oil prices are expected to remain sluggish for the short- to medium-term and that has necessitated the cut in expenditure and staff costs.

Trickle down effects

The oil and gas sector is not the only segment that has laid off workers as the pace of retrenchments seemed to have picked up pace.

Maybank Investment Bank says in a report that retrenchments rose sharply in the second quarter, up 56.7% year-on-year to 3,213 in the second quarter compared with a 14.4% increase to 2,789 in the first quarter of this year. “Retrenchments in the construction sector went up as a number of major projects are nearing completion amid slow replenishment rate. The oil and gas sector’s retrenchment has been on the uptrend since the second half of 2014, coinciding with the plunge in crude oil price.

“At the same time, services industries like ‘finance, insurance, real & business services’ and ‘transport, storage & communications’ also showed uptrends,” it says.

Between January and July of this year, statistics indicate that 47% of retrenched workers are skilled, 40% semi-skilled and 13% unskilled.

It is the loss of skilled jobs, such as that by the oil and gas sector, that will have a big knock-on effect on the rest of the economy. The higher than average salaries that those workers once commanded will evaporate from the system and the absence of which will trickle down to the different sectors of the economy.

The slump in the industry has already been felt in the areas surrounding KL City Centre (KLCC), which is said to be the operational hub for oil and gas companies in Malaysia.

Hotel occupancy is down in Kuala Lumpur, especially those around KLCC. The Kuala Lumpur Shangri-la, which is the benchmark for hoteliers in the country, has announced a 10% drop in revenue in the second quarter of this year.

Apart from hotels, rental demand for houses surrounding the KLCC area has been acutely felt with the loss of jobs in the oil and gas industry.

“There has been a knee-jerk reaction especially around the KLCC area,” says a property consultant.

He says tenancies have been cancelled with oil and gas workers retrenched and for those who still have their jobs, their employers are housing them in different areas in the city.

“The numbers are down but it is not significant. There has, however, been a downgrade in the choice of accommodation,” he says.

The outlook though is not going to be rosy. With gross domestic product clocking a growth rate of 4.9% in the second quarter compared with growth of 5.6% in the first quarter, the slower growth rate will eventually bite into the prospects of employment.

“The labour market lags economic activity. There will be a lag of one or two quarters as companies won’t immediately lay off workers,” says an official.

By JAGDEV SINGH SIDHU

Fewer job vacancies due to wait-and-see attitude.

INDUSTRY experts say the shrinking number of job vacancies in the country is due to companies adopting a “wait and see” approach, putting on hold any expansion plans because of economic uncertainty..

Other worse-affected businesses which cannot afford to wait, they said, are downsizing, contributing to the rising number of retrenchments that totalled 6,547 until July this year..

While retrenchments are pressured to rise, what is worrisome is that the number of job vacancies has been on a decline over the past few years. The new openings for jobs have fallen from 1.62 million jobs in 2012 and 1.4 million in 2013 to only 1.07 million last year..

The biggest drop in vacancies was seen in the manufacturing sector, followed by the services sector..

Vacancies in the manufacturing sector fell from 598,890 in 2012 to 352,784 positions last year, a massive 45% drop in just three years..

Retrenchments in the sector was also the highest last year with 5,716 job cuts..

In the services sector, job vacancies went down from 369,983 in 2012 to 275,199 available positions in 2014, while retrenchments were up by an additional 1,151..

The construction sector also saw fewer job vacancies last year, with only 202,878 positions compared to 310,954 two years earlier..

Vacancies in the mining and quarrying sectors saw a marginal increase, up 19% from 2,180 to 2,605 jobs. But conditions have soured in the mining industry led by the slump in global crude oil prices..

The sector saw retrenchments surge almost four-fold from only 81 in 2012 to 318 job cuts last year..

Economist Yeah Kim Leng says the authorities must scrutinise data very carefully to find out to what extent the drop in job opportunities are due to the slowdown in investments and business expansions..

“The Government needs to look at the factors affecting business confidence and the measures to alleviate these factors..

“Given that the investment pipeline seems healthy, the declining number of vacancies is very surprising,” he says..

Yeah expects the situation to improve in the second half of next year, once the Chinese economy stabilises and commodity prices recover..

The Government is currently mulling the possibility of setting up an Employment Insurance Scheme to help retrenched workers in the country..

Deputy Human Resources Minister Datuk Seri Ismail Abd Muttalib said early this month that the scheme, aimed at helping retrenched workers through temporary financial aid, reskilling and upskilling, was announced in Budget 2015 last year..

“In Malaysia, during the economic crisis of 1997-1998 and 2008-2009, we had a steady increase of unfair dismissal cases filed at the Industrial Relations Department. “After those periods, the cases returned to a normal pace. With an economic downturn possibly occurring in the near future, we are getting worried that dismissal and retrenchment cases would go up tremendously,” he said..

The total job loss in Malaysia as a result of the 2008/09 global economic crisis was around 40,000, out of which around 60% were in the manufacturing sector..

This was less severe compared with the estimated total job loss of 84,000 during the 1997/98 Asian financial crisis..

The unemployment problem in Malaysia during the global economic crisis was somewhat cushioned by the “more considerate” strategies taken by companies, which included cutting down their operating hours or days and reducing the salaries of their workers, so as to retain as many workers as they possibly could, instead of cutting headcount..

Weak business sentiment.

Although there has been an increase in investment approvals by the Malaysian Investment Development Authority, Yeah says, business sentiment needs to be monitored..

“We must monitor closely to see if they are going ahead with their investments or are pulling out,” he says..

Business conditions in Malaysia have deteriorated this year, with the Business Conditions Index by the Malaysian Institute of Economic Research painting a grim outlook after the second quarter of the year..

The index fell to 95.4 points from 101 points in the previous quarter. A reading below 100 indicates pessimism..

It also found that the local and export sales outlook was bleak, and capacity utilisation rate had dipped further..

The survey, conducted each quarter to assist in assessing the short-term economic outlook, covers a sample of over 350 manufacturing businesses operating in 11 industries..

Areas explored include production level, new order bookings, sales performances, inventory build-up and new job openings..

In June, Minister in the Prime Minister’s Department Datuk Seri Abdul Wahid Omar said although Malaysia had more than 400,000 people looking for jobs at any given time, the Government had set a target that 75% of graduates would find employment within six months of graduation..

According to the latest numbers from the Department of Statistics, in July this year, there were 459,900 Malaysians unemployed compared to 394,100 in July last year, a 16.7% increase..

The unemployment numbers have been on a rise every month since April this year, from 429,000 to 460,000 persons jobless in July..

Malaysian Employers Federation executive director Datuk Shamsuddin Bardan says the situation is worrying as it means that many graduates would not be able to secure employment due to the shrinking number of vacancies..

“The ability to create middle-level management vacancies is a challenge now due to the economic condition..

“Nobody is sure what is going to happen, so companies have adopted a wait-and-see attitude..

“They are not making any new commitments. They are just maintaining what they have – if possible – or downsizing,” he says..

Shamsuddin says employers need the extra confidence from authorities in order to fix the situation..

“To stimulate employment, incentives have to be given directly to the sector. For example, there are incentives for companies that hire women who have been on a career break for over six months..

“The same can be done for companies that hire fresh graduates, for example, who have not secured jobs after a certain period,” he says..

This, he says, could be in the form of salary subsidies for the first few months..

By P. ARUNA.

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Urgent to tell the truth !

THE greatest tribute that Malaysians can pay to the memory of Kevin Morais and others like him who had sacrificed their lives fighting against the abuse of power is to protect and strengthen those institutions tasked with ensuring that integrity and good governance define our identity as a nation.

Each and every one of those institutions – from the Malaysian Anti-Corruption Commission (MACC) to Bank Negara – is under some sort of stress and strain today. Fulfilling their amanah (trust) – doing what they are required to do by law and convention – has become a major challenge. Why are they in such a situation today?

One, we continue to be burdened with a neo-feudal psychology which accords precedence to unquestioning loyalty to a leader, however wrong he may be, over allegiance to values, principles and institutions associated with integrity. The neo-feudal leader himself expects such blind loyalty and cultivates it assiduously through material rewards and allurements.

Two, in a society where communal consciousness is pervasive there is always a tendency among a significant segment of society to demonstrate fidelity to communal identities, institutions and personalities. Such fidelity often results in the subordination of values such as integrity and honesty.

Three, when loyalty to communal identity becomes obsessive, it is not difficult to whip up fear and hatred of the other to a point where collective fear overwhelms concern for integrity or righteousness. The manipulation of fear, by no means confined to ethnic and religious sentiments, is sometimes a tool that elites employ in order to perpetuate their power.

Four, when a party has been dominant for a long while – as the Barisan Nasional was until 2008 – and has not been held in check by a culture of accountability and transparency, it develops a mindset that is dismissive of anything that questions its exercise of power. Integrity is often the victim of such a mindset.

Five, a major episode in the life of a nation that devastates the integrity of a vital institution of governance can weaken the principle and practice of amanah in society as a whole for decades to come. This is what happened in Malaysia in 1988 when the head of the Judiciary was removed on flimsy, fabricated charges and senior judges dismissed.

For all these reasons, institutions which are expected to preserve and protect values and principles such as truth, justice, integrity and honesty have not been able to function as well as they should. The investigations into 1MDB and the RM2.6bil in the Prime Minister’s personal bank account which have been hampered and hindered by various moves and manoeuvres underscore this.

In more concrete terms, the PAC has been immobilised. There is still no action on the report submitted by Bank Negara to the Attorney-General which called for enforcement. There has been very little progress in apprehending key individuals wanted in both the 1MDB and RM2.6bil investigations.

The Prime Minister has yet to sue the Wall Street Journal for alleging financial improprieties on his part. Those who are concerned about integrity in public life are understandably disillusioned about the whole situation. This may explain why some of them may have sought external avenues to address the malaise.

There is no doubt at all that foreign actors who are focusing upon the current controversies in Malaysia have their own agendas. Given the orientation of the Wall Street Journal, the New York Times and the Washington Post, one is not surprised that they are exploiting the controversies to achieve their own goals which may include regime change in Putrajaya – a possibility which I had alluded to in an article on Feb 17.

Apart from Prime Minister Najib Razak’s explicit support for Hamas which has incensed Israel and its backers in the United States, it is also quite conceivable that Malaysia’s military cooperation with China reflected in the four-day joint naval exercise between the two nations in the strategic Straits of Malacca from Sept 18 – the biggest that China has conducted with any Asean state – has upset some circles in Washington DC.

It has also been argued that the targeting of Najib in the US media may be part of the attempt to ensure that Malaysia signs up to the Trans-Pacific Partnership (TPP) Agreement.

Whatever the motives, it is obvious that the Malaysian Government’s acts of commission and omission on 1MDB and the RM2.6bil account have provided foreign manipulators with a lot of ammunition to hit Najib.

This is why it is extremely urgent to tell the whole truth. The yet to be completed report of the Auditor-General which would be the basis for the reconstituted PAC to finish its work, and the finalisation of the MACC’s investigations, together with Bank Negara’s report which is with the Attorney-General, should reveal the truth about 1MDB and the RM2.6bil account. Foreign investigations may also help.

The Malaysian people should send a clear message to our Government. The investigations into the two related controversies should be closed and the whole truth should be made known to the nation and the world by the end of this year.

To allow the controversies to drag on into 2016 will only bring our nation to the edge of the precipice.

DR CHANDRA MUZAFFAR Kuala Lumpur

(Dr Chandra Muzaffar has been writing and speaking on integrity in public life since the nineteen seventies.)


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