Ernst and Young (India) on 11 May released the report The New Market "Shehers": Tapping Potential Beyong the Metros, identifying the trends in consumption patterns and marketing spends in small town India. The report provides an insight on how non-metro urban markets are becoming more relevant in India's consumption story and how marketers are restructuring their budgets to take advantage of the new urban consumer.
The report highlights consumption patterns of consumers across Key Urban Towns (KUTs) and Rest of Urban India (ROUI).
For the report, India was divided into 4 geographical categories - the top-6 Metros (Mumbai, Delhi, Bangalore, Hyderabad, Chennai and Kolkata); the KUTs, which are 22 cities immediately following the metros in their market potential, e.g., Amritsar, Surat abd Ludhiana; cities in the ROUI and the KUTs, e.g., Kota, Jalandhar, Jabalpur and rural India.
Key findings:
- Retail presence in the KUTs and the ROUI through organized retail chains and malls has increased significantly. Over a 2 year period, the percentage growth in the number of malls in the KIT (55%) was more than twice that of the metros (24%).
- Consumers in the KUTs show an increasing preference for the premium products and services of established mass barnds. For instance, the sale of LCD TVs and wellness services is on the rise in the KUTs.
- Significant uptake in the leisure and lifestyle spends of consumers in the KUTS. Men are utilizing wellness services more than ever before, not just in the big metros, but also in tier II and III cities. Womens in small twons are more willing to pay large amounts for age correction, body sculpting and removing skin imperfections, etc..
- The share of KUTs and the ROUI in newpaper advertising (by volume of activity) in 2009 was higher that 50% across most categories. For categories such as cellular skinacare, orla hygiene, hair care and consumer durables, the advertising share is even higher at 75%.
- The KUTs and the ROUI comprise more than 50% of total below-the-line (BTL) activity in the country. BTL activity has grown significantly in non-metros (40% in 2009 vs. 15% during 2007), as compared to metros (60% in 2009 vs. 85% during 2007). 60% of BTL activity is concentrated in the ROUI and in rural India with sectors such as telecom, consumer durables and certain categories of FMCG products.
- Mobile advertising is also catching up more effectively in the KUTs and ROUI as opposed to person-to-person marketing with more than 500 million mobile users base in these regions.
The metros and the KUTs are driving growth in later-stage consumption (higher trandaction value products and discretionary goods), the ROUI are driving growth in early-stage consumption (necccesities and products with lower transaction value).
Marketers are taking cognizance of this new urban consumer and are aggressively targerying these KUTs and ROUIs, which has resulted in a ficus shits in media spends from the metros to the non-metros. This trend is likely to continue with the changing consumption pattern of consumers, fuelled by greater purchasing power.
This article appeared earlier on www.businesstrendsasia.com
Tuesday, June 8, 2010
Friday, May 21, 2010
Talent shortages in Asia-Pacific high
Manpower Inc. on 20 May released the results of its fifth annual Talent Shortage Survey, revealing that talent is elusive - it's everywhere yet nowhere, as talent shortages persist in many countries and industry sectors. Thirty-one percent of employers worldwide report having difficulty filling key positions within their organization - a rise of one percentage point from 2009, amidst a perpetual global pool of available workers.
The top hardest to fill jobs are Skilled Trades, Sales Representatives, Technicians and Engineers according to the survey of more than 35,000 employers across 36 countries. These are the same top jobs that employers have reported struggling to fill for the past four years, demonstrating that there is an ongoing global mismatch in these key areas.
Globally, employers having the most difficulty finding the right people to fill jobs are those in Japan (76%), Brazil (64%), Argentina (53%), Singapore (53%), Poland (51%), Australia (45%), Hong Kong (44%), Mexico (43%), Peru (42%), Taiwan (41%), China (40%) and Panama (38%). Compared to 2009, employers are reporting that talent shortages are considerably less pervasive in Romania (down 26 percentage points), Taiwan (down 21 percentage points), and South Africa (down 19 percentage points).
Talent shortages in Asia Pacific are ten percent higher than the global average, with 41% of the region's employers indicating they are having difficulty filling positions due to the lack of suitable talent in their markets. This is a nine percentage point increase when compared to the 2009 survey.
Employers having the most difficulty finding the right talent to fill jobs are those in Japan (a huge 76%), Singapore, (53%), Australia (45%) and Hong Kong (44%). The talent shortage appears to be least problematic in India (16%).
There remains a clear talent shortage of skilled sales representatives in Asia Pacific, as this job remains the most difficult to fill for the fifth year in succession.
The top hardest to fill jobs are Skilled Trades, Sales Representatives, Technicians and Engineers according to the survey of more than 35,000 employers across 36 countries. These are the same top jobs that employers have reported struggling to fill for the past four years, demonstrating that there is an ongoing global mismatch in these key areas.
Globally, employers having the most difficulty finding the right people to fill jobs are those in Japan (76%), Brazil (64%), Argentina (53%), Singapore (53%), Poland (51%), Australia (45%), Hong Kong (44%), Mexico (43%), Peru (42%), Taiwan (41%), China (40%) and Panama (38%). Compared to 2009, employers are reporting that talent shortages are considerably less pervasive in Romania (down 26 percentage points), Taiwan (down 21 percentage points), and South Africa (down 19 percentage points).
Talent shortages in Asia Pacific are ten percent higher than the global average, with 41% of the region's employers indicating they are having difficulty filling positions due to the lack of suitable talent in their markets. This is a nine percentage point increase when compared to the 2009 survey.
Employers having the most difficulty finding the right talent to fill jobs are those in Japan (a huge 76%), Singapore, (53%), Australia (45%) and Hong Kong (44%). The talent shortage appears to be least problematic in India (16%).
There remains a clear talent shortage of skilled sales representatives in Asia Pacific, as this job remains the most difficult to fill for the fifth year in succession.
Tuesday, April 27, 2010
Korean invasion in the Philippines
What started as an embracing of foreign guests and their culture has gone to be a noticeable phenomena with a growing and increasingly noticeable presence of a Korean "diaspora" in the Philippines. To date there is an estimated 100, 000 Koreans living in the country while tourists (most are students) who visits every year has been steadily increasing for almost 5 years now.
In 2005, according to the Philippines' Commission on Higher Education, Koreans comprise 25% of the total number of foreign students enrolled in that year, in fact the highest number foreign nationals entering colleges and universities here. And with the increasing numbers of English learning school for Koreans in Baguio, Pasay City, Makati and Davao, the number of students not only exchange students have been steadily increasing.
The Department of Tourism reported that for the first half of 2008 a total of 380,000 Korean residents visited the Philippine compared to 375,000 for the same period last year. Making Koreans the largest group of tourists in the Philippines, surpassing the Americans and Japanese, with a steady average annual growth of 1.5% since 2005.
Koreatowns in Makati, Paranaque, Baguio City and even in Davao in Mindanao Islands are starting to be as prominent as the Chinatown in Binondo Manila. With Korean restaurants, Christian churches, salons, and spas sprouting here and there although Philippine law prohibits foreign nationals to engage on retail trade as well as purchasing of properties under their name. They do so by marrying Filipinas and / or making Filipino workers "owners" of their businesses.
The Philippines' low cost of living as well as its good reputation in English education, are just two of the many factors why this Southeast Asian country of 85 million people has been one of the favorite destinations of Koreans since the Korean wave hit Asia in the 1990s. "Korean wave" refers to the recent surge of popularity of South Korean popular culture in other countries, especially in Asian countries.
With this fast and at first unnoticed influx of Korean community, where existing barriers are now slowly disappearing, Korean community remained as a closed group compared to the Chinese and Indians residing in the country. Korean restaurants and stores cater mostly to Koreans alone compared to Chinese restaurants where everyone can eat and enjoy their menu. Though there is no big issue of discrimination , Koreans have been critised for keeping to themselves and by seemingly bringing Korea to the Philippines.
There are also reports of growing concerns on how Koreans behave themselves in hotels, clubs, resorts and other public places. This results to some hearsay that Koreans were banned in some private establishments. Some say this is alarming, others say that this is a big help to the country's struggling economy. Whatever the pros and cons, it is inevitable that the Korean diaspora has definitely made a mark and will continue to thrive just like the Chinese and Indian did many years ago.
About the author: Edwin Padillo is Manila-based correspondent for Business Trends Asia. This article appeared earlier on www.businesstrendsasia.com
In 2005, according to the Philippines' Commission on Higher Education, Koreans comprise 25% of the total number of foreign students enrolled in that year, in fact the highest number foreign nationals entering colleges and universities here. And with the increasing numbers of English learning school for Koreans in Baguio, Pasay City, Makati and Davao, the number of students not only exchange students have been steadily increasing.
The Department of Tourism reported that for the first half of 2008 a total of 380,000 Korean residents visited the Philippine compared to 375,000 for the same period last year. Making Koreans the largest group of tourists in the Philippines, surpassing the Americans and Japanese, with a steady average annual growth of 1.5% since 2005.
Koreatowns in Makati, Paranaque, Baguio City and even in Davao in Mindanao Islands are starting to be as prominent as the Chinatown in Binondo Manila. With Korean restaurants, Christian churches, salons, and spas sprouting here and there although Philippine law prohibits foreign nationals to engage on retail trade as well as purchasing of properties under their name. They do so by marrying Filipinas and / or making Filipino workers "owners" of their businesses.
The Philippines' low cost of living as well as its good reputation in English education, are just two of the many factors why this Southeast Asian country of 85 million people has been one of the favorite destinations of Koreans since the Korean wave hit Asia in the 1990s. "Korean wave" refers to the recent surge of popularity of South Korean popular culture in other countries, especially in Asian countries.
With this fast and at first unnoticed influx of Korean community, where existing barriers are now slowly disappearing, Korean community remained as a closed group compared to the Chinese and Indians residing in the country. Korean restaurants and stores cater mostly to Koreans alone compared to Chinese restaurants where everyone can eat and enjoy their menu. Though there is no big issue of discrimination , Koreans have been critised for keeping to themselves and by seemingly bringing Korea to the Philippines.
There are also reports of growing concerns on how Koreans behave themselves in hotels, clubs, resorts and other public places. This results to some hearsay that Koreans were banned in some private establishments. Some say this is alarming, others say that this is a big help to the country's struggling economy. Whatever the pros and cons, it is inevitable that the Korean diaspora has definitely made a mark and will continue to thrive just like the Chinese and Indian did many years ago.
About the author: Edwin Padillo is Manila-based correspondent for Business Trends Asia. This article appeared earlier on www.businesstrendsasia.com
Wednesday, April 21, 2010
Bangkok demonstrations just tip of iceberg
This article appeared earlier on www.businesstrendsasia.com
The demonstrations in Bangkok of Saturday, 10 April, 2010, during which 25 people died, caught the attention of the global media. The violence made international headlines but has not put a stop to the demonstrations nor have the Red Shirts (Thaksin supporters) left the capital. But the Bangkok demonstrations form just the tip of the iceberg of the power shift taking place in the country.
All over the Central, North and Northeast part of the country have the supporters of Thaksin, united under the UDD-banner (United front of Democracy against Dictatorship) and characterized by their red shirt outfits, taken control of provincial and municipal institutions, blocking any communication from the Thai government and effectively taken power from the central government who has lost control of the country outside Bangkok and the South.
Rumours about HM the King fuel further unrest. He remains in Siriraj hospital in Bangkok since fallen ill late-2009 and is completely shielded from the public. Prime-Minister Abhisit Vejjajiva is rumoured to have asked the King to leave for the royal residence in Hua Hin where the king has lived for the past years. HM the King has supposedly refused to leave the Bangkok hospital as he feels this would lead to his immediate death. However the actual status of his health remains a closely guarded secret of which the public at large has no knowledge. Should the King still be alive and able to communicate he could reassume his mediating role.
On the other hand many UDD supporters believe the monarchy is not on their side but part of the "other camp", the so-called Yellow Shirts (yellow is the colour of the Thai monarchy), and would no longer accept HM the King as a non-partisan mediator nor accept his judgement anymore. The feeling that the King and the royal family have actively taken sides against them creates a feeling of "nothing left to lose" among the UDD supporters, diminishing the stabilizing capabilities of the king during times of turmoil.
Another rumoured twist sees the "devious" genius of Privy Councillor, and close friend of the king, Prem Tinsulanonda, as a master puppet player despite his well advanced age. Apparently Prem is supposed to have obtained documents signed by HM the King and foreseen with the Royal Garuda seal in which all the king's powers have been assigned to him and that he is now in full control of the monarchy.
The Bangkok demonstrations are just the outer symptoms of a massive power struggle among Thailand's elite whereby the winner will be awarded with the ultimate price i.e. full control of the country.
It still remains possible that Thailand will turn into another Burma !
The demonstrations in Bangkok of Saturday, 10 April, 2010, during which 25 people died, caught the attention of the global media. The violence made international headlines but has not put a stop to the demonstrations nor have the Red Shirts (Thaksin supporters) left the capital. But the Bangkok demonstrations form just the tip of the iceberg of the power shift taking place in the country.
All over the Central, North and Northeast part of the country have the supporters of Thaksin, united under the UDD-banner (United front of Democracy against Dictatorship) and characterized by their red shirt outfits, taken control of provincial and municipal institutions, blocking any communication from the Thai government and effectively taken power from the central government who has lost control of the country outside Bangkok and the South.
Rumours about HM the King fuel further unrest. He remains in Siriraj hospital in Bangkok since fallen ill late-2009 and is completely shielded from the public. Prime-Minister Abhisit Vejjajiva is rumoured to have asked the King to leave for the royal residence in Hua Hin where the king has lived for the past years. HM the King has supposedly refused to leave the Bangkok hospital as he feels this would lead to his immediate death. However the actual status of his health remains a closely guarded secret of which the public at large has no knowledge. Should the King still be alive and able to communicate he could reassume his mediating role.
On the other hand many UDD supporters believe the monarchy is not on their side but part of the "other camp", the so-called Yellow Shirts (yellow is the colour of the Thai monarchy), and would no longer accept HM the King as a non-partisan mediator nor accept his judgement anymore. The feeling that the King and the royal family have actively taken sides against them creates a feeling of "nothing left to lose" among the UDD supporters, diminishing the stabilizing capabilities of the king during times of turmoil.
Another rumoured twist sees the "devious" genius of Privy Councillor, and close friend of the king, Prem Tinsulanonda, as a master puppet player despite his well advanced age. Apparently Prem is supposed to have obtained documents signed by HM the King and foreseen with the Royal Garuda seal in which all the king's powers have been assigned to him and that he is now in full control of the monarchy.
The Bangkok demonstrations are just the outer symptoms of a massive power struggle among Thailand's elite whereby the winner will be awarded with the ultimate price i.e. full control of the country.
It still remains possible that Thailand will turn into another Burma !
The Indonesian woman: a century after Kartini
This article appeared earlier on www.businesstrendsasia.com
Every 21 April, Indonesia celebrates Kartini Day. Born in Central Java on 21 April 1879, Kartini is Indonesia's foremost woman pioneer. It was through her aspirations which she so poignantly wrote in her letters to friends in Holland, and who later published them in the book entitled "Door Duisternis tot Licht" ("Through Darkness into Light"), opened the gates for Indonesian women to break free from the restrainings shackles of tradition, and demand equal education for daughters as for sons.
Living in the latter of part of 19th Century, Kartini was the daugther of the regent of Rembang in Central Java. Although living a life of comparative luxury for the time, yet following tradition, she was, nonetheless, confined to her home and was only allowed to play with her sisters in the backyard. Seeing Kartini's strong desire to learn more, however, her father hired a private Dutch tutor to teach the sisters reading and writing, embroidery and western cooking. Through the tutor, Kartini received and read women's magazines and newspapers from Holland, which opened up her horizon. Reading about women's emancipation in far off Europe, Kartini dreamt of the day when Javanese girls would also be allowed top enjoy equal education and freedom to pursue their dreams as enjoyed by boys. Kartini yearned for independence, if not for herself, at least for other girls. "I dream of the Javanese girl, who holding her head high, will step lightly and confidently out into the world", writes Kartini, at the young age of 24.
Tragically, though, and still true to tradition and obeying her parent's wishes, Kartini was married off to a neighbouring regent as his fourth wife, albeit his chief wife. But even during this time, Kartini never lost sight of her dreams, founding a school for girls. She also promoted the establishment of more Kartini schools around the region. But, at the tender of 25 Kartini died, four days after giving birth to a son.
Today, in the first decade of the 21st Century, more than a hundred years after her death, much of Kartini's dreams have been realized. Indonesian women today enjoy much by way of freedom and equal opportunities in education. The Indonesian Consitution guarantees equal education and opportunities for all regardless of gender, race or religion. Indonesia had a first woman president, Megawati Soekarnoputri, daughter of the country's first president, Soekarno.
Today, President's Yudhoyono's cabinet includes four women Ministers holding important and strategic portfolios. These are the Minister for Finance, Sri Mulyani, the Minister for Trade, Mari Elka Pangestu, Minister for Health, Siti Supari, and Minister for Women Empowerment, Meutia Hatta. While, in Indonesia's Central Bank, the second in command in the position of Senior Deputy Governor is a woman, Miranda Gultom.
In local government, Indonesia today has a popularly elected woman Governor in the province of Banten, Ratu Atun. and the most recently appointed Mayor of Central Jakarta, as well as a number of popularly directly elected district heads.
In the private sector, outstanding industrialists include Martha Tilaar and Mrs. Mooryati Soedibyo, who have both built themselves empires in herbal cosmetics and traditional court beauty treatment. There are also oustanding women CEOs in banking, telecommunicatiosn, sports fashion, and other areas. Indonesia now also has a woman Police Officer with the rank of Brigadier General and even has a female trained astronaut, although she has not had actually had the opportunity to be launched into space !
Dress-wise Indonesian women are also free to choose their own dress code. Those wishing to wear the Muslim dress, wear headscarves to cover the hair. While other women wear western dress daily, office attire or tight-fitting jeans, or local or national costumes on official occasions.
Nonetheless, despite this progress, Indonesian women still face substantial challenges which include access to education (mostly held back by poverty), and protection from domestic violence. In regard to marriage law, Indonesian women may now also refuse to accept polygamy when her husband insists on taking a second wife. The wife is allowed to file for divorce. Such cases have been widely published especially involving TV idols or well-known public figures.
In society today, with the enforcement of regional autonomy in Indonesia, women activitists observe with concern the increasing number of bylawas that are issued by regional legislators citing "public morality" and "religious considerations", that in effect aim to seriously restict women's freedom from reaching her utmost possibilities. Prof. Saparinah Sadli, former Chairperson of the National Commission for Women, added that, while the state has issued 29 new policies at national, regional and local level to readicate violence against women, yet on the other hand, regions have issued 27 new bylaws that discriminate women, regulating women's dress, behaviour and mobility.
In this regard, Director for Executive Reform Insitute, Yudi Latif, explains that in Indonesia today, following the Reform movement, which since decade ago transformed Indonesia from a highly authoritarian regime to the present-day democracy, civil society now finds itself no longer facing the state but instead now faces fantaticsm that is anti-equality.
About the author: Wuryastuti Sunario is the Managing Director of Indonesia-based TBSC-Strategic Communication, which publishes news bulletin Indonesia Digest
Every 21 April, Indonesia celebrates Kartini Day. Born in Central Java on 21 April 1879, Kartini is Indonesia's foremost woman pioneer. It was through her aspirations which she so poignantly wrote in her letters to friends in Holland, and who later published them in the book entitled "Door Duisternis tot Licht" ("Through Darkness into Light"), opened the gates for Indonesian women to break free from the restrainings shackles of tradition, and demand equal education for daughters as for sons.
Living in the latter of part of 19th Century, Kartini was the daugther of the regent of Rembang in Central Java. Although living a life of comparative luxury for the time, yet following tradition, she was, nonetheless, confined to her home and was only allowed to play with her sisters in the backyard. Seeing Kartini's strong desire to learn more, however, her father hired a private Dutch tutor to teach the sisters reading and writing, embroidery and western cooking. Through the tutor, Kartini received and read women's magazines and newspapers from Holland, which opened up her horizon. Reading about women's emancipation in far off Europe, Kartini dreamt of the day when Javanese girls would also be allowed top enjoy equal education and freedom to pursue their dreams as enjoyed by boys. Kartini yearned for independence, if not for herself, at least for other girls. "I dream of the Javanese girl, who holding her head high, will step lightly and confidently out into the world", writes Kartini, at the young age of 24.
Tragically, though, and still true to tradition and obeying her parent's wishes, Kartini was married off to a neighbouring regent as his fourth wife, albeit his chief wife. But even during this time, Kartini never lost sight of her dreams, founding a school for girls. She also promoted the establishment of more Kartini schools around the region. But, at the tender of 25 Kartini died, four days after giving birth to a son.
Today, in the first decade of the 21st Century, more than a hundred years after her death, much of Kartini's dreams have been realized. Indonesian women today enjoy much by way of freedom and equal opportunities in education. The Indonesian Consitution guarantees equal education and opportunities for all regardless of gender, race or religion. Indonesia had a first woman president, Megawati Soekarnoputri, daughter of the country's first president, Soekarno.
Today, President's Yudhoyono's cabinet includes four women Ministers holding important and strategic portfolios. These are the Minister for Finance, Sri Mulyani, the Minister for Trade, Mari Elka Pangestu, Minister for Health, Siti Supari, and Minister for Women Empowerment, Meutia Hatta. While, in Indonesia's Central Bank, the second in command in the position of Senior Deputy Governor is a woman, Miranda Gultom.
In local government, Indonesia today has a popularly elected woman Governor in the province of Banten, Ratu Atun. and the most recently appointed Mayor of Central Jakarta, as well as a number of popularly directly elected district heads.
In the private sector, outstanding industrialists include Martha Tilaar and Mrs. Mooryati Soedibyo, who have both built themselves empires in herbal cosmetics and traditional court beauty treatment. There are also oustanding women CEOs in banking, telecommunicatiosn, sports fashion, and other areas. Indonesia now also has a woman Police Officer with the rank of Brigadier General and even has a female trained astronaut, although she has not had actually had the opportunity to be launched into space !
Dress-wise Indonesian women are also free to choose their own dress code. Those wishing to wear the Muslim dress, wear headscarves to cover the hair. While other women wear western dress daily, office attire or tight-fitting jeans, or local or national costumes on official occasions.
Nonetheless, despite this progress, Indonesian women still face substantial challenges which include access to education (mostly held back by poverty), and protection from domestic violence. In regard to marriage law, Indonesian women may now also refuse to accept polygamy when her husband insists on taking a second wife. The wife is allowed to file for divorce. Such cases have been widely published especially involving TV idols or well-known public figures.
In society today, with the enforcement of regional autonomy in Indonesia, women activitists observe with concern the increasing number of bylawas that are issued by regional legislators citing "public morality" and "religious considerations", that in effect aim to seriously restict women's freedom from reaching her utmost possibilities. Prof. Saparinah Sadli, former Chairperson of the National Commission for Women, added that, while the state has issued 29 new policies at national, regional and local level to readicate violence against women, yet on the other hand, regions have issued 27 new bylaws that discriminate women, regulating women's dress, behaviour and mobility.
In this regard, Director for Executive Reform Insitute, Yudi Latif, explains that in Indonesia today, following the Reform movement, which since decade ago transformed Indonesia from a highly authoritarian regime to the present-day democracy, civil society now finds itself no longer facing the state but instead now faces fantaticsm that is anti-equality.
About the author: Wuryastuti Sunario is the Managing Director of Indonesia-based TBSC-Strategic Communication, which publishes news bulletin Indonesia Digest
Wednesday, March 24, 2010
Pancasila & Islam in Indonesia
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
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 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.
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