Recent surveys in Indonesia found that the large majority of respondents stated that they were convinced that Pancasila is still the most ideal ideology for Indonesia.
The "inclusive" Pancasila ideology that was formulated at Indonesia's independence 65 years ago and applied until today, is still the best political system for the country. Because, adhering to Pancasila, the nation's religious and ethnic diversity are recognized and are allowed to exist in harmony side by side.
Most Indonesians do not favour adopting a strict Islamic system in which sharia laws would enforce the wearing of head-scarves for women or stoning for adultery. The overwhelming majority support the Five Pillars of Indonesia's State Ideology which was formulated by the country's founding fathers led by Soekarno in preparing Indonesia's Independence in the years prior to 1945.
This philosophical formulation was later incorporated as the "soul" of Indonesia's State Ideology as expressed in the Preamble to the 1945 Constitution. The Five Basic Principles of the State are: 1. Believe in the One True God. 2. Humanity, 3. The Unity of Indonesia, 4. Democratic decision-making through consensus among representatives and 5. Social Justice for All.
With the adoption of Pancasila, Indonesia, depite the fact that Indonesia's population was and is predominantly Muslim, nonetheless, is not an Islamic State. It is, however, also not a secular state in the strictest sense of the word, since the Constitution determines that Indonesians believe in the One God. In essence, Indonesia's state ideology stands for pluralism, inclusion, tolerance, moderation, democracy, justice and non-discriminination for all of its citizens.
With the arrival of the Reform Movement in 1997 and in the post-Soeharto years, the Pancasila ideology was considered to be anti-Reform as Soeharto had reaffirmed the ideology to deny the existence of communism, western-style liberal democracy and fanatical religious teachings. During the following years of Reform and transition to democracy, however, Pancasila gained ground again among the silent majority.
The majority of Indonesian Muslims have long been more orientated to pluralism and nationalism. In three general elections (in 1955, 1999, 2004 and 2009) the winning political party has always been one that is based on nationalism rather than on one specific religion.Furthermore, Indonesia's two largest Muslim civil organisations, the Nadhlatul Ulama and the Muhammadiyah embrace Pancasila.
This article appeared earlier on www.businesstrendsasia.com
Wednesday, March 24, 2010
Wednesday, March 17, 2010
Why should China solve global monetary chaos ?
On 12 March 2010, UNCTAD released its policy brief, titled “Global monetary chaos: Systemic failures need bold multilateral responses”. According to the brief, amidst continued financial crisis, the question of the global trade imbalances is back high on the international agenda. A procession of prominent economists, editorialists and politicians have taken it upon themselves to “remind” the surplus countries, and in particular the country with the biggest surplus, China, of their responsibility for a sound and balanced global recovery. The generally shared view is that this means permitting the value of the renminbi to be set freely by the “markets”, so that the country will export less and import and consume more, hence allowing the rest of the world to do the opposite. But is it reasonable to put the burden of rebalancing the global economy on a single country and its currency? This policy brief contends that the decision to leave currencies to the vagaries of the
market will not help rebalance the global economy. It argues that the problem lies in systemic failures, and as such, requires comprehensive and inclusive multilateral action.
The international community has allowed global monetary incoherence to reign before and after the crisis. Indeed, “markets” were permitted to manipulate currencies in a way that made some sovereign governments and central banks look like penniless orphans. The need for a new approach to global macro-economic governance is more urgent than ever, because today’s currency chaos has become a threat to international trade and could
be used as an alibi by major trading countries for resorting to protectionist measures.
In fact, the calm after the storm of the recent financial meltdown did not last for long. Institutional “investors” are back in business in global currency markets. With their resurgence, countries are again facing huge inflows of hot money that cannot be put to any productive use, but which create severe price misalignments and trade distortions. The global “casino”, nearly empty a year ago, is crowded again, and many new bets are on the table. However, the
recovery in the real economy is modest at best. In fact, the rebound of stocks, commodity futures and currency trade in several emerging and developing economies since March 2009 displays the makings of highly correlated big new bubbles and the threat of a new round of financial crisis. Of even greater concern is that the crisis notwithstanding, faith in “market fundamentalism” is unswerving. That faith continues to sustain the naïve belief that a solution
to misalignment may be found by leaving the determination of exchange rates to unregulated financial markets.
The effects of the new exuberance on financial markets are adverse for countries with once-fragile currencies, such as Brazil, Hungary and Turkey. Exploiting the differentials between interest rates, the so-called currency carry trade in these countries and in the big financial markets of the North has become even easier today. Rates in the North are generally close to zero, whereas maintaining “confidence” in countries with weaker currencies – under the aegis
of IMF programmes since the onset of the crisis – has called for higher rates than before. The first results of the new “confidence” in weak currencies are ominous. An appreciation of the Brazilian real and the Hungarian forint has forestalled urgently needed gains in competitiveness and could again lead to severe overvaluation, a dramatic distortion of trade patterns and new imbalances.
Recent actions taken by some developing economies, such as Brazil, to intervene in foreign exchange markets have to be evaluated in light of the dramatic failure of the currency markets to get the prices right. Re-imposing a 2% tax on purchases by foreign investors of real-denominated fixed-income securities and stocks, for example, is not a marketunfriendly policy. Rather, such measures serve to safeguard the efficiency of markets for goods and
services by protecting their prices from becoming a punching ball of financial market prices, which are driven by an undifferentiated (if not irrational) appetite for risk. In the brave new world of liberalized global trade and finance, the treasuries of sovereign governments of the largest developing economies – and even some developed countries – can be seriously challenged by the power of financial flows. And in the absence of a truly multilateral exchange
rate system, each country naturally pursues whatever works best in the circumstances.
In fact, as a response to the current global crisis that originated elsewhere, China has done more than any other emerging economy to stimulate domestic demand, and as a result its import volume has expanded significantly. Private consumption is rising at breakneck speed. According to several estimates, Chinese private consumption increased by 9% in 2009 in real terms, dwarfing all the other major countries’ attempts to revive
their domestic markets. But even in the preceding decade, real private consumption, at an average 8% growth rate, was an important driver of growth, backed by wage and salary increases in the two-digit range and strong productivity growth. Unit labour costs (nominal compensation divided by productivity) are rising more there than elsewhere, resulting in a continuous loss in competitive power even with a fixed exchange rate. Expecting that China will leave its exchange rate to the mercy of totally unreliable markets and risk a Japan-like appreciation shock ignores the importance of its domestic and external stability for the region and for the globe.
market will not help rebalance the global economy. It argues that the problem lies in systemic failures, and as such, requires comprehensive and inclusive multilateral action.
The international community has allowed global monetary incoherence to reign before and after the crisis. Indeed, “markets” were permitted to manipulate currencies in a way that made some sovereign governments and central banks look like penniless orphans. The need for a new approach to global macro-economic governance is more urgent than ever, because today’s currency chaos has become a threat to international trade and could
be used as an alibi by major trading countries for resorting to protectionist measures.
In fact, the calm after the storm of the recent financial meltdown did not last for long. Institutional “investors” are back in business in global currency markets. With their resurgence, countries are again facing huge inflows of hot money that cannot be put to any productive use, but which create severe price misalignments and trade distortions. The global “casino”, nearly empty a year ago, is crowded again, and many new bets are on the table. However, the
recovery in the real economy is modest at best. In fact, the rebound of stocks, commodity futures and currency trade in several emerging and developing economies since March 2009 displays the makings of highly correlated big new bubbles and the threat of a new round of financial crisis. Of even greater concern is that the crisis notwithstanding, faith in “market fundamentalism” is unswerving. That faith continues to sustain the naïve belief that a solution
to misalignment may be found by leaving the determination of exchange rates to unregulated financial markets.
The effects of the new exuberance on financial markets are adverse for countries with once-fragile currencies, such as Brazil, Hungary and Turkey. Exploiting the differentials between interest rates, the so-called currency carry trade in these countries and in the big financial markets of the North has become even easier today. Rates in the North are generally close to zero, whereas maintaining “confidence” in countries with weaker currencies – under the aegis
of IMF programmes since the onset of the crisis – has called for higher rates than before. The first results of the new “confidence” in weak currencies are ominous. An appreciation of the Brazilian real and the Hungarian forint has forestalled urgently needed gains in competitiveness and could again lead to severe overvaluation, a dramatic distortion of trade patterns and new imbalances.
Recent actions taken by some developing economies, such as Brazil, to intervene in foreign exchange markets have to be evaluated in light of the dramatic failure of the currency markets to get the prices right. Re-imposing a 2% tax on purchases by foreign investors of real-denominated fixed-income securities and stocks, for example, is not a marketunfriendly policy. Rather, such measures serve to safeguard the efficiency of markets for goods and
services by protecting their prices from becoming a punching ball of financial market prices, which are driven by an undifferentiated (if not irrational) appetite for risk. In the brave new world of liberalized global trade and finance, the treasuries of sovereign governments of the largest developing economies – and even some developed countries – can be seriously challenged by the power of financial flows. And in the absence of a truly multilateral exchange
rate system, each country naturally pursues whatever works best in the circumstances.
In fact, as a response to the current global crisis that originated elsewhere, China has done more than any other emerging economy to stimulate domestic demand, and as a result its import volume has expanded significantly. Private consumption is rising at breakneck speed. According to several estimates, Chinese private consumption increased by 9% in 2009 in real terms, dwarfing all the other major countries’ attempts to revive
their domestic markets. But even in the preceding decade, real private consumption, at an average 8% growth rate, was an important driver of growth, backed by wage and salary increases in the two-digit range and strong productivity growth. Unit labour costs (nominal compensation divided by productivity) are rising more there than elsewhere, resulting in a continuous loss in competitive power even with a fixed exchange rate. Expecting that China will leave its exchange rate to the mercy of totally unreliable markets and risk a Japan-like appreciation shock ignores the importance of its domestic and external stability for the region and for the globe.
Wednesday, February 24, 2010
Chinese better English speakers than Indians ?
Are the Chinese becoming better English speakers than Indians? This question was triggered in my mind after a conversation with a summer intern in my team. She is pursuing an undergraduate law degree in a local Chinese university.
She speaks good English, albeit with occasional grammatical mistakes, at the right pace and with an accent that is more than understandable. There are few business managers around the world who will confidently say the same thing about the Indians they have worked with, after either having offshored business processes to India or having done business with Indians. Most of the Indian workforce today probably speaks English with fewer grammatical mistakes, but there are huge question marks on their pace and accent, which makes it extremely difficult for a large percentage of the world to understand them.
Upon digging deeper, I realized something nothing short of phenomenal: the English speaking ability of Chinese students is getting better with each passing batch. This means, chances are that a student graduating from university this summer speaks better English as compared to a student who graduated last year. This of course is not true for everyone who graduates, as individual will and hard work play an important role, but the system has been designed to enable this.
This is very obvious at the work place as well. There is an almost visible disparity between the English language ability of a 27 and a 23 year old. This particular discovery assumes even more significance when you put it against the fact that in India, unless you are studying at a convent school or one of the elite public schools, it is likely that your English language ability is not even at par with people of your parent's generation.
Today, a large number of Chinese students do not just stop at English, as the one foreign language that they know. Learning French or Spanish, amongst other foreign languages, is becoming very common. More and more universities are facilitating this further by encouraging their students to go on exchange to Europe and other parts of the world.
This development, if sustained, is bound to open many more opportunities, in the manufacturing as well as the services sectors, for the next generation of Chinese entrepreneurs and business leaders. There reach will not just be limited to the English-speaking world, but can expand to other parts of Europe, Latin America and Africa.
About the author: Shantanu Bawari is Shanghai-based correspondent for Business Trends Asia. This article appeared earlier on www.businesstrendsasia.com
She speaks good English, albeit with occasional grammatical mistakes, at the right pace and with an accent that is more than understandable. There are few business managers around the world who will confidently say the same thing about the Indians they have worked with, after either having offshored business processes to India or having done business with Indians. Most of the Indian workforce today probably speaks English with fewer grammatical mistakes, but there are huge question marks on their pace and accent, which makes it extremely difficult for a large percentage of the world to understand them.
Upon digging deeper, I realized something nothing short of phenomenal: the English speaking ability of Chinese students is getting better with each passing batch. This means, chances are that a student graduating from university this summer speaks better English as compared to a student who graduated last year. This of course is not true for everyone who graduates, as individual will and hard work play an important role, but the system has been designed to enable this.
This is very obvious at the work place as well. There is an almost visible disparity between the English language ability of a 27 and a 23 year old. This particular discovery assumes even more significance when you put it against the fact that in India, unless you are studying at a convent school or one of the elite public schools, it is likely that your English language ability is not even at par with people of your parent's generation.
Today, a large number of Chinese students do not just stop at English, as the one foreign language that they know. Learning French or Spanish, amongst other foreign languages, is becoming very common. More and more universities are facilitating this further by encouraging their students to go on exchange to Europe and other parts of the world.
This development, if sustained, is bound to open many more opportunities, in the manufacturing as well as the services sectors, for the next generation of Chinese entrepreneurs and business leaders. There reach will not just be limited to the English-speaking world, but can expand to other parts of Europe, Latin America and Africa.
About the author: Shantanu Bawari is Shanghai-based correspondent for Business Trends Asia. This article appeared earlier on www.businesstrendsasia.com
Sunday, February 14, 2010
Guest lecture at Rotterdam Business School
In his guest lecture at the Trade Management Asia faculty of the Rotterdam Business School, on 12 February 2010, Matthijs van den Broek outlined Asia's response to the global economic crisis.Highlighted were:
1. Asia's focus on domestic consumption
2. Accelerated emergence of new trade & investment lines; intra-Asia, Asia-Middle-East and South-South.
3. "BIC instead of BRIC"; Brazil, India and China, without the "R"of Russia.
4. Indonesia with China and India in the top-3 of Asia's best performers.
5. Added value of, and new opportunities for, European SMEs and larger companies
Matthijs van den Broek is Managing Director of Further East Consult and Editor-in-Chief of e-magazine Business Trends Asia
Wednesday, February 3, 2010
Toys Not 4 Us
Toy retailers -local and international- in Indonesia and other Southeast-Asian countries like Thailand and the Philippines are struggling to stay in business. E.g. international giant Toys "R" Us tried to establish a presence in both Thailand and Indonesia but failed to make an impact.
The US toy retailer has withdrawn itself from both countries. Consumers in the expanding economies of Southeast-Asia will absorb many features of Western life. Toys for children are not among these. Several reasons lie behind this fact:- Traditional Western toys often imply an indoor lifestyle. In warm tropical countries life is traditionally outdoors and without air conditioning living indoors is uncomfortable. In countries like Thailand, Indonesia and the Philippines domestic aircon use is still in its infancy with a very low penetration level. Children are used to play outdoors which does not require an access to many toys making them unfamiliar with the concept of using toys for playing.- Gift-giving to children at certain fixed occasions in the year is in most Asian countries a non-existing phenomenon.
In Thailand, an occasion like Christmas does not exist and birthdays are traditionally not celebrated. Gifts to children come mostly in the form of new clothes. When toys are given it is rarely because of a special occasion.
In Indonesia, Christmas is an official festival but mostly a religious one without the gift-giving aspect. For most Indonesians the end of Ramadan celebrated during Idul Fitri marks the most important festive occasion of the year. Normally children will receive new clothes during this period rather than toys.
Children in Southeast-Asia are now more familiar with computer games than traditional toys. As computers and computer games also hold the interest of many parents the purchase of a computer plus games has a higher preference since more family members can enjoy the product which is not the case with a childs toy.The last factor also plays an important role in Western countries where children move away from traditional toys and more into computer games.
Children in Southeast-Asia attach themselves straight into this new development without first going through the traditional phase. In Thailand, for example, this happens either at home or in computer games arcades. Mostly these are shops with a few to up to a dozen computers on which children can play games, also interactively against an hourly rate of THB 20.- (€0.42). Children (99% boys) from as young as 6 up to late teens will occupy all machines when school is out.
Traditional Western toys like miniature cars, board games and dolls hold very little attraction for most Southeast-Asian children and traditionally they are also not exposed to them. Toy retailers in these countries normally survive on a Western (expat) clientele and a small percentage of the high-middle to upper-class local population. However, increased economic development and a higher standard of living will not create a demand for Western style toys in Southeast Asia.
This article appeared earlier on www.businesstrendsasia.com
The US toy retailer has withdrawn itself from both countries. Consumers in the expanding economies of Southeast-Asia will absorb many features of Western life. Toys for children are not among these. Several reasons lie behind this fact:- Traditional Western toys often imply an indoor lifestyle. In warm tropical countries life is traditionally outdoors and without air conditioning living indoors is uncomfortable. In countries like Thailand, Indonesia and the Philippines domestic aircon use is still in its infancy with a very low penetration level. Children are used to play outdoors which does not require an access to many toys making them unfamiliar with the concept of using toys for playing.- Gift-giving to children at certain fixed occasions in the year is in most Asian countries a non-existing phenomenon.
In Thailand, an occasion like Christmas does not exist and birthdays are traditionally not celebrated. Gifts to children come mostly in the form of new clothes. When toys are given it is rarely because of a special occasion.
In Indonesia, Christmas is an official festival but mostly a religious one without the gift-giving aspect. For most Indonesians the end of Ramadan celebrated during Idul Fitri marks the most important festive occasion of the year. Normally children will receive new clothes during this period rather than toys.
Children in Southeast-Asia are now more familiar with computer games than traditional toys. As computers and computer games also hold the interest of many parents the purchase of a computer plus games has a higher preference since more family members can enjoy the product which is not the case with a childs toy.The last factor also plays an important role in Western countries where children move away from traditional toys and more into computer games.
Children in Southeast-Asia attach themselves straight into this new development without first going through the traditional phase. In Thailand, for example, this happens either at home or in computer games arcades. Mostly these are shops with a few to up to a dozen computers on which children can play games, also interactively against an hourly rate of THB 20.- (€0.42). Children (99% boys) from as young as 6 up to late teens will occupy all machines when school is out.
Traditional Western toys like miniature cars, board games and dolls hold very little attraction for most Southeast-Asian children and traditionally they are also not exposed to them. Toy retailers in these countries normally survive on a Western (expat) clientele and a small percentage of the high-middle to upper-class local population. However, increased economic development and a higher standard of living will not create a demand for Western style toys in Southeast Asia.
This article appeared earlier on www.businesstrendsasia.com
Friday, January 15, 2010
Social network users go mobile
Social network site (SNS) users in Asia/Pacific indicate that MOBILE is now the way to go, potentially overtaking PCs as the device of choice, according to market research company IDC's recent survey-based report, Examining Usage, Perceptions, and Monetization: The Coming of Age for Social Network Sites in Asia/Pacific.
In countries such as China, India, Korea, and Thailand, over 50% of the users interviewed have now made accessing SNSs via the mobile phone a weekly habit. This is particularly widespread in the China and Thailand markets, where 62% and 65% of respective users regularly obtain news alerts and notifications, receive and reply to messages, upload photos, or update personal status and profiles on popular SNSs via mobile phone browsers.
By contrast, Australia and Singapore see the lowest percentage of users who access mobile versions of SNSs, where only 19% and 25% of respective users login weekly via their mobile browsers.
"The prevalence of owning a cellular phone over a PC in China, India and Thailand has directly boosted the popularity of mobile SNS access," said Debbie Swee, Market Analyst, IDC Asia/Pacific Emerging Technologies Research. "In Korea, however, there is strong usage for a different reason - the market is technologically advanced and has already seen mass adoption of mobile Internet as compared with all other countries surveyed in the study.
"As for Australia and Singapore, despite also being technologically advanced markets, the overwhelming importance of the PC over mobile has created strong inertia against adopting regular mobile access of SNSs," Debbie continues.
The IDC survey further indicated that mobile operators' pricing strategies are possibly keeping many non-users away from mobile social networking. Majority of users who have never logged in to SNSs through mobile phones before have cited the hefty data tariffs as the main obstacle. These service fees can be in the form of mobile Internet, SMS or MMS access.
SNS users have, however, asserted that more are likely to try out mobile versions of SNS if telcos offer more affordable data rates. The availability of user-friendly mobile applications is also perceived as a notable area of improvement, albeit to a lesser extent.
This article appeared earlier on www.businesstrendsasia.com
In countries such as China, India, Korea, and Thailand, over 50% of the users interviewed have now made accessing SNSs via the mobile phone a weekly habit. This is particularly widespread in the China and Thailand markets, where 62% and 65% of respective users regularly obtain news alerts and notifications, receive and reply to messages, upload photos, or update personal status and profiles on popular SNSs via mobile phone browsers.
By contrast, Australia and Singapore see the lowest percentage of users who access mobile versions of SNSs, where only 19% and 25% of respective users login weekly via their mobile browsers.
"The prevalence of owning a cellular phone over a PC in China, India and Thailand has directly boosted the popularity of mobile SNS access," said Debbie Swee, Market Analyst, IDC Asia/Pacific Emerging Technologies Research. "In Korea, however, there is strong usage for a different reason - the market is technologically advanced and has already seen mass adoption of mobile Internet as compared with all other countries surveyed in the study.
"As for Australia and Singapore, despite also being technologically advanced markets, the overwhelming importance of the PC over mobile has created strong inertia against adopting regular mobile access of SNSs," Debbie continues.
The IDC survey further indicated that mobile operators' pricing strategies are possibly keeping many non-users away from mobile social networking. Majority of users who have never logged in to SNSs through mobile phones before have cited the hefty data tariffs as the main obstacle. These service fees can be in the form of mobile Internet, SMS or MMS access.
SNS users have, however, asserted that more are likely to try out mobile versions of SNS if telcos offer more affordable data rates. The availability of user-friendly mobile applications is also perceived as a notable area of improvement, albeit to a lesser extent.
This article appeared earlier on www.businesstrendsasia.com
Wednesday, November 18, 2009
Greater Mekong Subregion Asian affair
(this article appeared in e-magazine Business Trends Asia (www.businesstrendsasia.com)
On 8 December 2009, the Netherlands Council for Trade Promotion in associaton with the Netherlands-Thai Chamber of Commerce and the Netherlands-Vietnam Chamber of Commerce, will stage a Greater Mekong Subregion Seminar in the Dutch port city of Rotterdam.
Among the speakers at the Seminar are representatives from the Asian Development Bank, a key initiator and facilitator in the Greater Mekong Subregion (GMS), and engineering and construction companies, DHV and Royal Haskoning, both active players in the region.
Although Western companies have a significant presence in the region, in particular in Thailand and Vietnam, and to a lesser extent in Cambodia and Laos, Asian companies are by far the leading investors in the countries along the Mekong River. The US$5.9 billion Vietnam International Township project by Malaysian conglomerate Berjaya Land Berhad makes Malaysia the largest foreign investor in Vietnam, while Thailand and Vietnam are the largest foreign investors in Laos, mainly in tourism and hydropower projects. Also the Chinese are appearing more and more on the GMS investment scene. Recently, grants and low-interest loans for funding of the US$86.4 million expansion of the airport of Luang Prabang in Laos were underwritten by the Chinese government. Also, Chinese investors are eyeing several hotel development projects in the country.
The recent removal of Laos and Cambodia of a United States blacklist that limits government support for U.S. companies doing business with the two nations, in an effort to counterbalance the rising influence of China, will therefore have little impact on the investment landscape in Laos and Cambodia. With or without the U.S., the Greater Mekong Subregion, is facing a bright economic future.
On 8 December 2009, the Netherlands Council for Trade Promotion in associaton with the Netherlands-Thai Chamber of Commerce and the Netherlands-Vietnam Chamber of Commerce, will stage a Greater Mekong Subregion Seminar in the Dutch port city of Rotterdam.
Among the speakers at the Seminar are representatives from the Asian Development Bank, a key initiator and facilitator in the Greater Mekong Subregion (GMS), and engineering and construction companies, DHV and Royal Haskoning, both active players in the region.
Although Western companies have a significant presence in the region, in particular in Thailand and Vietnam, and to a lesser extent in Cambodia and Laos, Asian companies are by far the leading investors in the countries along the Mekong River. The US$5.9 billion Vietnam International Township project by Malaysian conglomerate Berjaya Land Berhad makes Malaysia the largest foreign investor in Vietnam, while Thailand and Vietnam are the largest foreign investors in Laos, mainly in tourism and hydropower projects. Also the Chinese are appearing more and more on the GMS investment scene. Recently, grants and low-interest loans for funding of the US$86.4 million expansion of the airport of Luang Prabang in Laos were underwritten by the Chinese government. Also, Chinese investors are eyeing several hotel development projects in the country.
The recent removal of Laos and Cambodia of a United States blacklist that limits government support for U.S. companies doing business with the two nations, in an effort to counterbalance the rising influence of China, will therefore have little impact on the investment landscape in Laos and Cambodia. With or without the U.S., the Greater Mekong Subregion, is facing a bright economic future.
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