Commentary: Malaysia PM Anwar’s reform credentials on the line in possible Cabinet reshuffle

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ANWAR’S BALANCING ACT

What is often not recognised is that Mr Anwar’s options may be limited.

First, he will have to decide if he wants a mini reshuffle, replacing new ministers in key portfolios and keeping the rest intact, or a major reshuffle where changes are not only made to the Cabinet, but also to the top layer of the civil service, government-linked companies and key statutory bodies.

Second, and this is the tricky bit, Mr Anwar will have to “balance” the representation in Cabinet. After a decades-long wait for the prime ministership, Mr Anwar was finally sworn into power on Nov 24 last year. There were many twists and turns, but a Pakatan Harapan (PH)-led ruling coalition finally came together comprising previous ruling coalition Barisan Nasional, Gabungan Parti Sarawak, Gabungan Rakyat Sabah and Parti Warisan.

Each party in his unity government must get their share or it will lead to political instability. There is already unhappiness among the Chinese that PH component party Democratic Action Party, with the largest number of seats in Parliament on the government side, is under-represented. UMNO and the East Malaysians, on the other hand, are over-represented.

On top of that, Mr Anwar must consider the status of those he wishes to appoint. Obviously, they must hold senior positions in their respective parties or have some special skill set.

Mr Anwar must also carve up the work in “overlap” areas to avoid perceptions of conflict. For example, sections of the business community are not happy with the way the Ministry of Economy under Rafizi Ramli and the Ministry of Investment, Trade and Industry under Tengku Zafrul Aziz are creating additional red tape and approvals because two ministries are involved.

Many in the business community would prefer the Economy Ministry, which was first established in 2018, to be scrapped and its core functions returned to the finance ministry.

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TSMC to help Europe break its Asia chip dependency

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In contrast to Dutch manufacturing equipment maker ASML’s position at the center of the US-China trade and technology conflict, most European semiconductor makers are maintaining a low profile.

For those who have not been following the issue, Netherlands-based ASML has a monopoly on the most advanced semiconductor lithography equipment (EUV), which it is not permitted to sell to China under US export restrictions.

Europe’s largest semiconductor makers are Germany’s Infineon, Switzerland-headquartered STMicroelectronics and the Netherlands’ NXP, which rank 9th, 10th and 12th worldwide in terms of sales. In the second quarter of 2023, Infineon’s sales were 35% as large as industry leader Intel’s.

In July, on a visit to the Inter-University Microelectronics Center (IMEC) in Belgium, European Commission President Ursula von der Leyen said, “We need to reduce our dependency on too few suppliers from East Asia. And we actively have to de-risk our supply chains for chips – it is vital.”

The Europeans think their semiconductor industry is too small and, in fact, data from market research and industry organizations indicate that only 5% of global semiconductor production capacity is based in Europe and that European companies account for only 9% of global chip sales. Europe buys about 20% of the world’s semiconductors.

With this in mind, von der Leyen said, “We need to promote the design, testing and production [of semiconductors] here in Europe. For that, the Chips Act is the game changer.”

European Commission President Ursula von der Leyen, shown at a press conference after a virtual summit between EU and China in Brussels on June 22, 2020, wants Europe to up its chip-making game. Photo: Asia Times Files / AFP / Dursun Aydemir / Anadolu Agency

That was a reference to the European Chips Act, which was adopted on July 25. In the words of the European Commission, it “will mobilize more than 43 billion euros (US$45.5 billion) of public and private investments and set measures to prepare, anticipate and swiftly respond to any future supply chain disruptions, together with Member States and our international partners.”

The European Chips Act aims to:

  • Strengthen Europe’s research and technology leadership towards smaller and faster chips;
  • Build and reinforce capacity to innovate in the design, manufacturing and packaging of advanced chips;
  • Address the skills shortage, attract new talent and support the emergence of a skilled workforce;
  • Put in place a framework to increase production capacity to 20% of the global market by 2030; and
  • Develop an in-depth understanding of the global semiconductor supply chains.

More specifically, it entails: 

  • Investments in next-generation technologies;
  • Providing access across Europe to design tools and pilot lines for the prototyping, testing and experimentation of cutting-edge chips;
  • Certification procedures for energy-efficient and trusted chips to guarantee quality and security for critical applications;
  • A more investor-friendly framework for establishing manufacturing facilities in Europe;
  • Support for innovative start-ups, scale-ups and SMEs in accessing equity finance;
  • Fostering skills, talent and innovation in microelectronics;
  • Tools for anticipating and responding to semiconductor shortages and crises to ensure the security of supply; and
  • Building semiconductor international partnerships with like-minded countries.

All that should keep EU bureaucrats busy but might be enough only to keep pace – not catch up – with technology and workforce development, market security measures, capacity additions and industry subsidies in the US, Taiwan, South Korea, Japan and China. But it needs to be done and should make a substantial future contribution to Europe’s economy.

On August 8, TSMC, Bosch, Infineon and NXP announced plans to establish a joint venture known as the European Semiconductor Manufacturing Company (ESMC). Situated in Dresden, Germany, it will provide semiconductor manufacturing services for the automotive, industrial (including IoT, or internet of things) and other economic sectors. One of the world’s largest semiconductor manufacturing complexes is already in Dresden.

Headquartered in Taiwan, TSMC is the world’s largest and most technologically-advanced integrated circuit (IC) foundries. It is the most prominent of von der Leyen’s “too few suppliers from East Asia” upon which Europe now depends. Bosch is a leading German supplier of automotive, industrial, IoT and other technology and services.

TSMC will own 70% of the ESMC joint venture and its three local partners – which will also be its main customers – will own 10% each. The total investment is expected to exceed 10 billion euros ($10.6 billion), including equity, bank borrowings and subsidies from the EU and German government and falls within the framework of the new European Chips Act.

Construction of a wafer fabrication facility (fab) with a monthly production capacity of 40,000 300mm (12-inch) wafers per month is scheduled to start in the second half of 2024. The scale is similar to that of TSMC’s operations in Nanjing, China, and its joint venture in Japan.

TSMC will operate the fab, utilizing its 28/22 nanometer (nm) planar CMOS and 16/12nm FinFET process technology. Most German semiconductors are fabricated at these process nodes. Production is scheduled to commence by the end of 2027.

TSMC deputy spokesperson Nina Kao told electronic engineering trade paper EE Times that “Bosch, Infineon and NXP are all long-time TSMC customers and key European players in the automotive segment and industrial semiconductor supply chain.” ESMC will make chips that would otherwise be made in Taiwan.

The production start date might seem less than urgent, but is probably realistic. On September 26, The Wall Street Journal reported that Intel’s heavily-subsidized fab construction project in Germany faces delays due to an acute shortage of technicians, high energy prices and “an at-times Byzantine bureaucracy.” Production is slated to begin four or five years from now.

TSMC will give Europe’s chip-making drive a big helping hand. Photo: Handout

By the end of the decade, Intel plans to build two leading-edge fabs in Magdeburg, a Germany city between Hanover and Berlin, to make Intel products and serve Intel foundry customers. The total investment is expected to exceed 30 billion euros ($31.7 billion) – “the single largest foreign direct investment in German history,” according to Chancellor Olaf Scholz.

“Along with Intel’s existing wafer fabrication facility in Ireland and its recently announced assembly and test facility in Poland,” says Intel, “the new wafer fabrication site in Magdeburg will create a first-of-its-kind, leading-edge end-to-end semiconductor manufacturing value chain in Europe, serving European customers and helping to fulfill the EU’s ambitions for a more resilient semiconductor supply chain.”

There are currently no European companies among the world’s leading semiconductor foundries, memory chip makers or makers of cell phone, computer and AI processors. But over the next several years, TSMC and Intel will add foundry services and processors to Europe’s production base. The Europeans can also buy memory chips from America’s Micron Technology if they don’t want to overly depend on South Korea.

Still investing in Asia

That said, the Europeans are adept at making automotive ICs. According to market research firm TechInsights, Infineon, NXP and STMicro ranked first, second and third worldwide in terms of sales in 2022, with a combined global market share of 33%. They also have a major presence in other industrial-use ICs.

In June, STMicro announced a joint venture with China’s Sanan Optoelectronics to make SiC (Silicon Carbide) power semiconductors in Chongqing for electric vehicle, industrial and alternative energy (solar and wind) applications. The total investment is expected to reach about 3 billion euros ($3.2 billion) and production is scheduled to start by the end of 2025.

In August, Infineon announced plans to spend up to 5 billion euros ($5.3 billion) on a large additional expansion to its fab in Kulim, Malaysia, with an aim of raising its share of the global market for SiC power devices from 12% to 30% by 2030.

This investment decision is supported by design wins and prepayments from six customers in the auto industry, three of them from China; four customers in renewable energy, including three Chinese photovoltaic and energy storage companies; and a capacity reservation for Schneider Electric.  

These projects are driven by market dynamics, not the European Chips Act, and they were launched without interference from Brussels or Washington, DC.

Follow this writer on Twitter: @ScottFo83517667

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Evergrande: Why should I care if China property giant collapses?

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A man and children cycle past the Guangzhou FC football stadium, which is being built by Evergrande.Getty Images

A crisis at the world’s most indebted company has worsened after its chairman was placed under police surveillance.

It follows earlier reports that other current and former executives at Chinese property giant Evergrande had also been detained.

Evergrande suspended the trading of its shares in Hong Kong on Thursday until further notice.

It marks another low for the firm which was declared to be in default in 2021 after missing a crucial repayment deadline, triggering China’s current real estate market crisis.

What does Evergrande do?

Businessman Hui Ka Yan founded Evergrande, formerly known as the Hengda Group, in 1996 in Guangzhou, southern China.

According to the company’s website, Evergrande Real Estate currently owns more than 1,300 projects in more than 280 cities across China.

The broader Evergrande Group encompasses far more than just real estate development.

Its businesses range from wealth management to making electric cars and food and drink manufacturing. It even owns a controlling stake in what was one of the country’s biggest football teams, Guangzhou FC.

Mr Hui was once China’s richest person with his fortune estimated at $42.5bn (£34.8bn) by Forbes, but his wealth has plummeted since then, largely as Evergrande’s problems have grown.

Why is Evergrande in trouble?

Evergrande expanded aggressively to become one of China’s biggest companies by borrowing more than $300bn.

In 2020, Beijing brought in new rules to control the amount owed by big real estate developers.

The new measures led Evergrande to offer its properties at major discounts to ensure money was coming in to keep the business afloat.

Now it is struggling to meet the interest payments on its debts.

This uncertainty has seen Evergrande’s shares lose 99% of their value in the past three years.

In August, the firm filed for bankruptcy in New York, in a bid to protect its US assets as it worked on a multi-billion dollar deal with creditors.

Why would it matter if Evergrande collapses?

There are several reasons why Evergrande’s problems are serious.

Firstly, many people bought property from Evergrande even before building work began. They have paid deposits and could potentially lose that money if it goes bust.

There are also the companies that do business with Evergrande. Firms including construction and design firms and materials suppliers are at risk of incurring major losses, which could force them into bankruptcy.

The third is the potential impact on China’s financial system: If Evergrande collapses, banks and other lenders may be forced to lend less.

This could lead to what is known as a credit crunch, when companies struggle to borrow money at affordable rates.

A credit crunch would be very bad news for the world’s second largest economy, because companies that can’t borrow find it difficult to grow, and in some cases are unable to continue operating.

This may also unnerve foreign investors, who could see China as a less attractive place to put their money.

Is Evergrande ‘too big to fail’?

The very serious potential fallout of such a heavily indebted company collapsing has led some analysts to suggest that Beijing may step in to rescue the company.

However, Jackson Chan from financial markets research platform Bondsupermart does not think that will now happen.

“To be honest, Evergrande has already collapsed,” says Mr Chan, adding that he believes “it is on the brink of a forced liquidation”.

This could have a major effect on China’s economy as the property sector contributes roughly a quarter of its growth.

Mr Chan also suggests that the country could be following a similar path to Japan in the 1980s, when it slipped into decades of economic stagnation.

However, others think it is unlikely that Evergrande will be allowed to completely collapse.

“That could spiral, affecting other indebted companies and further hurt the overall property sector which is very important to the growth of the economy,” Dexter Roberts, director of China affairs at the Mansfield Center at the University of Montana, told the BBC.

“At the same time, many people whose household wealth is mainly in their apartments will also be badly hurt,” he added.

Mr Roberts, who spent more than two decades in China as a journalist, said “the old Evergrande no longer exists” and while the authorities may keep it afloat, “it will be as a radically diminished company.”

Reporting by Peter Hoskins and Mariko Oi

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EU rethinking China business ties, state by state

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Western nations and multinational corporations, severely impacted by Covid-19 restrictions and supply chain disruptions, are reevaluating their approaches toward China. While many Western businesses view China as a vital market, there is considerable uncertainty about the Chinese economy’s potential recovery.

Amid the backdrop of uncertain economic trends in China and globally, the interactions between the world’s two largest economies, China and the United States, hold significance. Relations are continuing to deteriorate. Chinese President Xi Jinping even accused the United States of trying to hinder China’s technological advances in March 2023.

Geopolitical tensions also exist, particularly over the Taiwan issue. While a military resolution to the matter remains largely hypothetical, the dynamics within the business community demonstrate that political tensions tend to take a backseat to economic considerations.

Since China lifted its restrictive Covid-19 measures in late 2022, it has reopened to foreign visitors and businesspeople. But despite political criticism of Beijing’s assertive stance in the South China Sea and Taiwan, Western businesses recognize the Chinese market’s importance to their companies or personal wealth accumulation. 

If they ever need to take definitive actions, they would prefer to “de-risk” rather than completely sever ties with China.

The CEOs of prominent US companies such as Apple, Pfizer and BHP attended the China Development Forum in Beijing in April 2023. Elon Musk, Tesla founder and currently the wealthiest individual on Earth, visited China two months later. 

China is Tesla’s second-largest sales market after the United States, accounting for around one-quarter of total revenue. In June, Microsoft CEO Bill Gates held a meeting with Xi in Beijing, during which the Chinese leader referred to Gates as the first “American friend” he has encountered in recent times.

One of Xi’s few American friends these days. Image: Twitter

Poor economic data indicates that even Chinese consumers harbor doubts about the future trajectory of China’s economic development. Statistics reveal challenges in the real estate sector, traditionally a key driver of China’s GDP. 

Despite recent efforts by Chinese banks, such as slashing interest rates to stimulate consumption and investment, the outlook for the Chinese economy remains lackluster.

As the Washington–Beijing relationship deteriorates, European Union member states are adopting divergent strategies in their interactions with China. These strategies are influenced by multiple drivers, including each nation’s economic interests, historical experiences with authoritarian regimes during the Cold War, and values such as freedom and democracy.

For example, Lithuania adopts a distinct and principled policy towards China. Lithuania actively champions the fundamental values and democratic principles of the European Union. 

It openly cultivates political relations with Taiwan and does not shy away from critiquing human rights violations in authoritarian regimes. After Lithuania agreed to exchange diplomatic offices with Taiwan, China effectively imposed an unofficial blockade against Lithuanian imports.

France – the second-largest economy in the European Union – adopts a more prudent approach when it comes to engaging with China. During French President Emmanuel Macron’s visit to China in April, he led a delegation of business leaders to forge new agreements. While this does not imply indifference to human rights issues, France recognizes the crucial significance of its business ties with China.

There is also a divergence in political approaches towards China within individual countries. In Germany, there is a faction characterized by a “business first” approach, exemplified by individuals as well as German manufacturers with business operations in China.

On the other side, there is a cohort of EU advocates who closely align themselves with the US stance on China, including the German Foreign Minister Annalena Baerbock. 

This group advocates for reduced reliance on Chinese exports, intensified scrutiny of Chinese investments within the European Union and more stringent regulations on outbound investments into China. The Netherlands’ ban on exports of ASML chipmaking machines to China in June 2023 is in line with this policy.

Many European officials are increasingly aligning with US views on China while safeguarding their economic interests. For example, the Italian government has indicated its intention to pull out of China’s Belt and Road Initiative. 

European Commission President Ursula von der Leyen is pushing for export controls on sensitive technologies. Hungary and Poland are both stepping up their economic cooperation with China. For the seventh consecutive year, China is Germany’s largest trading partner, with bilateral trade reaching US$322 billion in 2022.

As its overall trade deficit with China rises to unprecedented levels, the European Union is becoming more pragmatic about future economic cooperation with China. This leads to the de-emphasizing of China for many multinational companies and calls for “decoupling.”

Germany’s latest China strategy affirms the pressing need to establish effective frameworks for future engagements with Beijing.

German Foreign Minister Annalena Baerbock sees China through an American lens. Image: Twitter / Screengrab

Despite undeniable evidence of worsening relations between the United States and China, Western businesses continue to maintain ties with China. But even within the European Union, member states have varying approaches when it comes to dealing with China. 

While at the EU level, China is perceived as a competitor, at the national level, each country possesses a unique set of business interests related to China, which shape their official policies.

Striking a balance between accommodating these interests and upholding EU approaches is an arduous task for every country.

Marian Seliga is head of China Desk and advisor to the board at J&T Banka, Czech Republic.

This article was originally published by East Asia Forum and is republished under a Creative Commons license.

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What China’s economic problems mean for the world

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Tourists visit the Nanjing Road Walkway in the rain in Shanghai, China, September 14, 2023.Getty Images
By Nick Marsh
Asia business correspondent

There is a saying that when the United States sneezes, the rest of the world catches a cold. But what happens when China is unwell?

The world’s second-largest economy, home to more than 1.4 billion people, is facing a host of problems – including slow growth, high youth unemployment and a property market in disarray.

While these issues add up to a major headache for Beijing, how much does it matter to the rest of the world?

Analysts believe worries of an impending global catastrophe are overstated. But multinational corporations, their workers and even people with no direct links to China are likely to feel at least some of the effects. Ultimately, it depends on who you are.

Winners and losers

“If Chinese people start cutting back on eating out for lunch, for example, does that affect the global economy?” asked Deborah Elms, executive director of the Asian Trade Centre in Singapore.

“The answer is not as much as you might imagine, but it certainly does hit firms who directly rely on domestic Chinese consumption.”

Hundreds of big global companies such as Apple, Volkswagen and Burberry get a lot of their revenue from China’s vast consumer market and will be hit by households spending less. The knock-on effects will then be felt by the thousands of suppliers and workers around the world who rely on these companies.

When you consider that China is responsible for more than a third of the growth seen in the world, any kind of deceleration will be felt beyond its borders.

The US credit rating agency Fitch said last month that China’s slowdown was “casting a shadow over global growth prospects” and downgraded its forecast for the entire world in 2024.

However, according to some economists, the idea that China is the engine of global prosperity has been exaggerated.

A worker works on a production line at a packaging company in Lianyungang city, East China's Jiangsu province, Sept 27, 2023

Getty Images

“Mathematically, yes, China accounts for around 40% of global growth,” says George Magnus, an economist at the University of Oxford’s China Centre.

“But who is that growth benefitting? China runs a huge trade surplus. It exports so much more than it imports, so how much China grows or doesn’t grow is really more about China than it is about the rest of the world.”

Nevertheless, China spending less on goods and services – or on housebuilding – means less demand for raw materials and commodities. In August, the country imported nearly 9% less compared to the same time last year – when it was still under zero-Covid restrictions.

“Big exporters such as Australia, Brazil and several countries in Africa will be hit hardest by this,” says Roland Rajah, director of the Indo-Pacific Development Centre at the Lowy Institute in Sydney.

Weak demand in China also means that prices there will stay low. From a Western consumer perspective, it would be a welcome way of curbing rising prices that does not involve further raising interest rates.

“This is good news for people and businesses struggling to deal with high inflation,” Mr Rajah says. So in the short-term, ordinary consumers may benefit from China’s slowdown. But there are longer term questions for people in the developing world.

Over the last 10 years, China has invested more than a trillion dollars in huge infrastructure projects known as the Belt and Road Initiative.

More than 150 countries have received Chinese money and technology to build roads, airports, seaports and bridges. According to Mr Rajah, Chinese commitment to these projects may start to suffer if economic problems persist at home.

“Now Chinese firms and banks won’t have the same financial largesse to splash around overseas,” he says.

China in the world

While reduced Chinese investment abroad is a possibility, it is unclear how else China’s domestic economic situation will affect its foreign policy.

A more vulnerable China, some argue, may seek to repair damaged relations with the US. American trade restrictions have partly contributed to a 25% drop in Chinese exports to the US in the first half of this year, while US Trade Secretary Gina Raimondo recently called the country “uninvestable” for some American firms.

But there is no evidence to suggest China’s approach is softening. Beijing continues to retaliate with restrictions of its own, frequently blasts the “Cold War mentality” of western countries and appears to maintain good relations with authoritarian leaders of sanctioned regimes, such as Russia’s Vladimir Putin and Syria’s Bashar Al-Assad.

At the same time, a stream of US and EU officials continue to travel to China every month to keep up talks on bilateral trade. The truth is that few people really know what lies between Chinese rhetoric and Chinese policy.

One of the more extreme readings of this uncertainty comes from hawkish observers in Washington, who say a downturn in the Chinese economy could impact how it deals with Taiwan, the self-governing island that Beijing claims as its own territory.

US Secretary of State Antony Blinken (L) shakes hands with China's President Xi Jinping at the Great Hall of the People in Beijing on June 19, 2023.

Getty Images

Speaking earlier this month, Republican Congressman Mike Gallagher – chair of the US House Select Committee on China – said problems at home were making China’s leader Xi Jinping “less predictable” and could lead him to “do something very stupid” with regards to Taiwan.

The idea is that if, as Mr Rajah argues, it becomes apparent that China’s “economic miracle is over”, then the Communist Party’s reaction “could prove very consequential indeed”.

There are, however, plenty of people who dismiss this notion, including US President Joe Biden. When asked about this possibility, he said Mr Xi currently had his “hands full” dealing with the country’s economic problems.

“I don’t think it’s going to cause China to invade Taiwan – matter of fact the opposite. China probably doesn’t have the same capacity as it had before,” Mr Biden said.

Expect the unexpected

However, if there is one lesson to learn from history, it is to expect the unexpected. As Ms Elms points out, few people before 2008 anticipated that subprime mortgages in Las Vegas would send shockwaves through the global economy.

The echoes of 2008 have got some analysts worried about what is known as “financial contagion”. This includes the nightmare scenario of China’s property crisis leading to a full-blown collapse in the Chinese economy, triggering financial meltdown around the world.

Dozens of freighters dock for loading and unloading at the Qingdao section of the Shandong Pilot Free Trade Zone in Qingdao, Shandong province, China, Sept 27, 2023.

Getty Images

Parallels with the subprime mortgage crisis – which saw the collapse of Wall Street investment giant Lehman Brothers and a global recession – are certainly tempting to make. But, according to Mr Magnus, they are not completely accurate.

“This is not going to be a Lehman-type shock,” he says. “China is unlikely to let their big banks go bust – and they have stronger balance sheets than the thousands of regional and community banks that went under in the US.”

Ms Elms agrees: “China’s property market is not linked to their financial infrastructure in the same way that American subprime mortgages were. Besides, China’s financial system is not dominant enough for there to be a direct global impact like we saw from the United States in 2008.”

“We are globally interconnected,” she says. “When you have one of the large engines of growth not functioning it affects the rest of us, and it often affects the rest of us in ways that weren’t anticipated.”

“It doesn’t mean I think we’re headed for a repeat of 2008, but the point is that what sometimes appear to be local, domestic concerns can have an effect on us all. Even in ways that we wouldn’t have imagined.”

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South India’s progressive politics vs North’s regressive politics

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“You cannot expect any rational thought from a religious man. He is like a rocking log in water.” – E V Ramasamy

Erode Venkatappa Ramasamy, revered by his followers as Periyar, was an Indian social activist and politician who started the Self-Respect Movement. He is known as the “Father of the Dravidian movement.”  

Dravidianism or Dravidian nationalism is based on the idea that people living in the southern part of India are racially and culturally different from the North Indian (Indo-Aryan). Periyar claimed that Brahmins of the south were originally Aryan migrants from Northern India, who spoke Sanskrit and brought caste system to South India.

Periyar promoted Dravidian nationalism, which was based on the principle of rationalism, dismantling Brahmin hegemony by abolition of the caste system and revitalization of Dravidian languages.

He rebelled against Brahminical dominance by preaching to people that the Brahmins had monopolized and cheated other communities for decades and deprived them of self-respect. Periyar also led a strong rebellion against the imposition of Hindi as a compulsory subject in Tamil Nadu schools, viewing it as an attempt to establish “North Indian imperialism.”

Periyar’s legacy of self-respect, women’s rights, and caste eradication continues to influence South Indian politics, particularly in the state of Tamil Nadu. 

On September 2, Udhayanidhi Stalin, minister of youth welfare and sports development and son of Tamil Nadu Chief Minister M K Stalin, while speaking at a writers’ conference in Chennai, sparked a massive controversy with his remarks on Sanatana Dharma (Hindu religion).

He said Sanatana Dharma is against the idea of social justice and must be “eradicated.” He argued that the idea is inherently regressive, dividing people based on caste and gender, and is fundamentally opposed to equality and social justice. The controversial remarks drew widespread condemnation from the Bharatiya Janata Party, with the BJP terming it a “genocidal call.”

 In defense, Udhayanidhi Stalin wrote on Twitter that he never called for genocide, but opposed the principle of Santan Dharma, which divides the people in the name of caste.

He has accused BJP leaders of twisting his statements and vowed legal action.

After the remarks, Paramhans Acharya, the chief priest of the Tapaswi Chawni temple of Ayodhya, Uttar Pradesh, the largest North Indian state, offered the equivalent of US$1.2 million to the one who beheads Udhayanidhi Stalin over his remarks against Sanatana Dharma.

But the bigger question is why North India is becoming so sensitive or radicalized with respect to its religion. A society must be able to understand that every religion has certain flaws, which must be corrected over time.

Certainly, Periyar’s views of making a rational society rather than a religious one based on superstitions and prejudice have played a crucial role in the development of South Indian states. 

What North India can learn from South India

Telangana, Andhra Pradesh, Kerala, Karnataka and Tamil Nadu are commonly considered South Indian states. Bangalore, the capital city of Karnataka, is known as the “Silicon Valley of India” and accounts for one-third of India’s software exports. Tamil Nadu is known for manufacturing as it alone accounts for two-thirds of exports of personal vehicles from India.

Andhra and Telangana are known for being a pharmaceutical hub, accounting for 22.5% of all pharma manufacturing facilities in India.

Kerala is famous for its tourism industry. According to 2018 official data, tourism constitutes 10% percent of Kerala’s GDP and provides about 23.5% of employment in the state.

Millions of migrant workers from the North reach the South in search of better jobs, putting an extra burden on the states. Data show that southern Indian states continue to outperform the rest of the country in health, education, and economic opportunities.

Kerala has the highest literacy rate in India. A state’s prosperity is measured on two indicators, gross state domestic product (GSDP) and per capita income. According to Wikipedia, four of the five South Indian states rank among the top 10 Indian states in terms of GSDP. Telangana, Karnataka, and Kerala make it into the top 10 states by per capita income.

Besides a strong industrial and IT base, the southern states have also been blessed with robust banking and finance infrastructure. Apart from public and private sector banks, NBFCs (non-banking financial companies) play a crucial role in lending infrastructure, a vital factor in supporting entrepreneurial spirit.

Today’s South Indian states are far better than all the other regions of India on every Human Development Index. But the bigger question is what led the South Indian states to march ahead of their North Indian counterparts. 

In South India, social revolution always preceded the political revolution. But in the North, it’s just the opposite.

North Indian electorates remain swayed by emotive, irrational appeals by following a herd mentality to vote based on caste and religion, leading to long-term dominance by one party more than a decade.

The Indian National Congress ruled across North Indian states for five decades. Such a monopoly disconnects citizens from government activity and the government takes the people for granted, which results in less development in those states compare to South.

However, South India experiences stable political competition, with alternating parties in power such as the DMK and AIADMK in Tamil Nadu, LDF and UDF in Kerala, BJP, Congress and JDS in Karnataka, Congress, YSR Congress and TDP in Andhra. This healthy competition encourages governments to perform better and promotes citizen participation and activism, unlike the North, where politics tends to overshadow governance.

This has resulted in quality of governance and better leadership, which pushed the states on the path of development and prosperity. Effective population control consistently over the decades is a testimony of their leadership.

However, statistics show that South India is not getting enough reward for such good performance from the central government. Even South Indian politicians have expressed concerns about the state of federalism in India.

North’s regressive politics pulling India down

The central government collects taxes from all states and distributes them among states based on Finance Commission recommendations, considering three criteria: needs, equity, and state performance.

Recently the 15th Finance Commission increased weightage for the population criterion to 15% from the previous 10%, which some critics in South India believe is rewarding states with high populations that haven’t controlled population growth or provided better governance. 

As a result, states like Uttar Pradesh, which have a large populations but low Human Development Index scores, receive more funding (17.9% ) than states with higher development indices like Karnataka (3.65%), Tamil Nadu (4.08%), and Kerala (1.09%). This appears to reward mis-governance, low productivity, and irrationality, raising questions about the fairness of Indian federalism.

More important, South Indian politicians are denied opportunities at the central leadership despite excellent performance in their respective states. The fact that only three cabinet ministers from South India are in the current Modi government is a testimony. 

South India seems to be the biggest loser from this financial arrangement, where South Indians work hard to contribute more to national growth, while the North gets all the rewards for mis-governance and low productivity.

More important, the question arises, how long will South India fund the mismanagement and political shambles in North India, allowing non-performing states to set the country’s agenda? Udhayanidhi Stalin’s statement reflects the frustration with the kind of politics done in North India or Delhi for which South Indians have to pay a price.

Rather than tackling the issue of governance, productivity, HDI, economic opportunity, jobs, and better infrastructure, religion has become the center of the debate for the last nine years. In the real world, one who pays the bills is likely to get most of a deal. Unless we support the principle of prosperous regions always assisting poorer ones.

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MRANTI intensifies efforts to accelerate healthtech innovation 

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AWS collaboration strengthens capability building and market access 
Regulatory framework for sandboxing medical devices to be released soon

The Malaysian Research Accelerator for Technology and Innovation (MRANTI) embarked on yet another initiative to accelerate the pace of healthtech innovation development for the country. 
In collaboration with Amazon Web Services (AWS), in early Sept, the two…Continue Reading

Untimely: Israeli think-tank proposes defense treaty with US

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A well-respected Israeli think-tank, the Institute for National Security Studies (INSS), has proposed that Israel ask for a security treaty with the United States. 

The proposal is in an editorial form and has no signatures attached to it. Therefore it isn’t clear if the proposal comes from the INSS director, Manuel Trajtenberg, or is the consensus of the organization’s research staff. 

Such a defense treaty has long been opposed by most of Israel’s security establishment on the grounds it would inhibit the country’s freedom of action and tie Israel irrevocably to the United States.

INSS was originally founded inside Tel Aviv University. Its first head was Major-General Aharon Yariv. When founded it was known as the Center for Strategic Studies. The name was changed to the Jaffee Center for Strategic Studies, and in 2006 to the current name. 

Its most dynamic head until 2021 was General Amos Yadlin. The current executive director, Manuel Trajtenberg, does not have a military or intelligence background. INSS is no longer part of Tel Aviv University.

Saudi treaty?

According to the policy proposal, the reason for Israel to pursue a defense treaty is ostensibly that Saudi Arabia is pursuing such a treaty and that without Israel also applying for one, the Saudi proposal won’t be accepted. 

It is quite true that there is serious opposition to Saudi Arabia in the US Congress, mainly on the basis of human-rights complaints. A defense treaty would require a two-thirds vote of approval in the US Senate.  Saudi Arabia on its own would fail to get Senate approval and “bundling” an Israeli treaty with a Saudi one is probably not possible, even though INSS somehow thinks it can be done.

It is by no means clear why Israel would want a defense treaty, given its strong need to have freedom of action toward Iran, which may soon start producing nuclear weapons. To begin with, despite many and sundry claims by the United States that it would never allow Iran to possess nuclear weapons, the truth of the matter is different. 

The current administration, for example, is helping Iran move forward on the nuclear path by offering numerous concessions to the Iranian regime even before any agreement on Iran’s nuclear program is concluded. A good example is the findings of the International Atomic Energy Agency on Iranian violations of existing nuclear inspections, which the Joe Biden administration has simply swept under the rug.

For Israel the question is difficult in that it can hardly wait until Iran deploys nuclear weapons, at which point trying to eliminate them would potentially involve the use of nuclear weapons either by Iran or pre-emptively by Israel. This is what Benjamin Netanyahu mentioned at the UN, although his remarks were “walked back” by the Prime Minister’s Office. 

It is hard to see what value a defense treaty would have in the context of Iran’s push for nuclear weapons and long-range missile delivery systems.

Similarly, it is hard to see how Saudi Arabia would benefit from a US defense treaty, since the US is unlikely to bomb Tehran to stop its nuclear-weapons buildup. A Saudi-US defense treaty would potentially help the kingdom if Iran directly attacked the country. But even when it has done so, as the attacks on the Abqaiq and Khurais oil installations that came directly from Iranian territory, Washington did nothing and said very little.

Of course the whole problem for Saudi Arabia gets complicated when Iran uses proxies to launch ballistic missiles, drones and cruise missiles on Saudi targets. Most of these originate in Yemen, some from Iraq. The US offers little help to combat such attacks.

There are other complications for Israel as well. Would a defense treaty apply to attacks by non-state actors such as Hezbollah, Hamas or Islamic Jihad, or attacks originating from the Palestinian West Bank? The US would never agree to a text that obliged it to come to Israel’s aid under a terrorist attack. In fact, the US response to terror attacks against Israel and Israeli citizens has always been subdued at best.

Presumably a defense treaty would protect Israel from a Russian attack, but a direct Russian attack is extremely unlikely. However, the Russians would see a defense treaty between the US and Israel as Israel taking sides in the bigger geo-strategic struggle between Washington and Moscow. This could encourage the Russians to step up arms supplies to Syria and Iran, something that does not serve Israel’s interests. 

In practice Israel and Russia have found ways to cooperate and to try to avoid confrontation. Whether that will hold in the long run is an open question, especially as Russia starts supplying Iran with advanced weapons including the Su-35.  

Weapons access

INSS makes the point that a defense treaty might facilitate defense-technology cooperation with the United States. In many ways Israel is a brain trust already for the United States and is able to pioneer in many areas important to US security. 

For example, Israel’s Ballistic Missile Defense Organization is partnered with the US Missile Defense Agency and cooperates on air defenses including, most recently, exoatmospheric defense in the form of Arrow-4 development. 

Israel is also rapidly developing sophisticated sensor-to-shooter technologies, advanced microelectronics and artificial intelligence. 

These and other technologies are already sought after by the US Defense Department and by US defense companies, not to mention important US commercial companies including Intel, Microsoft, Google and many others. 

There is no reason to think that a defense treaty would improve technology sharing or cooperation.

INSS says: “As an official ally, Israel’s access to advanced American weaponry and unique technologies would be guaranteed for the long term, thereby maintaining Israel’s qualitative military edge over time.” 

Unfortunately, defense treaties do not guarantee or assure access to US weapons or unique technologies. Technology sharing is always a matter of national interest that is defined by time and circumstances. 

Take the case of the F-35 stealth fighter. This is America’s fifth-generation fighter aircraft, stuffed with exotic technology.  Lockheed, the US defense giant that manufactures the F-35, desperately wanted Israel to adopt the plane and not buy a new, advanced version of the F-15. Lockheed believed, correctly, that if Israel incorporated the F-35 as its top frontline fighter, other customers would gravitate to the F-35. 

Lockheed was right. Lockheed, not the US, needed a defense treaty to do the deal, and in fact Israel got concessions on technology that exceed cooperative deals with major European and Japanese partners.

What isn’t clear is why INSS decided that Israel needs a defense treaty now. If it was to help out Saudi Arabia, there is no reason to believe it would do so.

There is little evidence that favors a US-Israel defense treaty, unless the real idea is to make Israel depend on the US for its future security. If that is the point, Israel should be wary of depending on US help. It has to defend itself.

In short, a US-Israel defense treaty is an untimely idea.

Stephen Bryen is a senior fellow at the Center for Security Policy and the Yorktown Institute. This article was originally published on his Substack, Weapons and Strategy. Asia Times is republishing it with permission.

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Director of 186 firms fined after one company was used to launder US.36 million in scam proceeds

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SINGAPORE: A jobless man who was unable to find employment during the COVID-19 pandemic agreed to act as the director for 186 companies in exchange for payment.

One of those firms was used to launder US$2.36 million (S$3.24 million) obtained from victims who had been cheated overseas.

Er Beng Hwa, a 49-year-old Singaporean, was fined S$4,000 by a court on Wednesday (Sep 27), after pleading guilty to one count of failing to exercise reasonable diligence as a director. A second similar charge was considered in sentencing.

He was also disqualified from being a company director for three years.

The court heard that Er, also known as Adrian, had a Bachelor’s degree in business and worked various jobs to earn a living in 2020 and 2021.

Between April and June in 2020, he could not find a job because of the pandemic and was unable to pay his rent and other debts.

His previous landlord introduced him to a Chinese national named Zheng Jia.

Zheng was a chartered accountant who provided accounting and corporate secretarial services via the companies Atoms Global, Zhuoxin Global (Singapore) and Panasia Secretarial Services.

He suggested an arrangement for Er to act as a local director for companies incorporated by Atoms Global for Zheng’s clients.

Zheng said Atoms Global would conduct the necessary checks on clients and handle paperwork and checking of accounts.

Other than signing documents for company registration and opening bank accounts, Er “need not do anything”, Zheng said.

Er understood that he would be a director of the companies in name only and would not have any responsibility over the actual running of the firms.

In exchange, he would receive S$50 per year for each company that he stood as nominee director for. He would also be paid S$50 if he needed to open a bank account for the company or make any trip to sign documents.

Er did not know what work Zheng or his companies did, but agreed to the arrangement.

Under this agreement, Er was registered as local director and secretary of a Singapore company called Rui Qi Trading, incorporated in August 2020.

One of Zheng’s clients, Chinese national Hou Xiaohui, was registered as the foreign director of Rui Qi, which supposedly dealt with the wholesale of industrial, construction and related equipment.

BANK ACCOUNTS USED TO FUNNEL CHEATING PROCEEDS

Rui Qi opened two bank accounts under Hou’s name, which were used to funnel the proceeds of cheating. 

These include a sum of US$1.2 million, which Texas Capital Bank was cheated into transferring in November 2020 via a spoof email scam.

The sum went to one of Rui Qi’s bank accounts and was transferred to various accounts in China, Hong Kong, India and Indonesia.

Another scam victim was German company Gasfin Development Gmbh, which received purported emails from its supplier requesting payments.

Gasfin fell for this business impersonation scam and transferred a sum of about US$176,400 to a bank account.

Of this sum, about S$237,000 was transferred to Rui Qi’s account and dissipated to other bank accounts in China and Hong Kong.

A third victim was Abu Dhabi Ports, which received a fraudulent email presenting an invoice from Bengal Tiger Line.

The company was deceived into transferring nearly US$980,000 to Rui Qi’s account. The money was further transferred to bank accounts in Hong Kong.

Police reports were lodged in Singapore over the three cases of cheating. Investigations revealed that Hou had not entered Singapore, and that Rui Qi’s bank account was opened through exploiting local banks’ remote account opening processes.

Certain processes were allowed to be done through video-conferencing during the COVID-19 pandemic.

As of January 2021, Er was found to be a director of 186 companies in Singapore. He stopped acting as a director of Rui Qi in August 2021.

PROSECUTION SEEKS FINE

The prosecution sought a fine of S$3,000 to S$4,000 and for Er to be disqualified from standing as a nominee director for three years.

Deputy Public Prosecutor Vincent Ong said it is “almost impossible to exhibit greater negligence as a director” than Er was in this case, “having absolutely washed his hands clean of the affairs of the company”.

“It is only due to his ability to point to the fact that he was effectively told to do so by Zheng that prevents his conduct from crossing into the realm of gross negligence – the facts indicate that he had been assured to some degree that Zheng would handle everything other than signing documents for the company,” said Mr Ong.

Er was motivated by monetary returns for doing “essentially nothing” in exchange for payment of S$50 per company per year, and a later employment with a salary of S$1,400 per month, said Mr Ong.

“The fact that he was a director of 186 companies as at January 2021 would have generated a return of at least more than S$9,000,” he said.

For failing to exercise reasonable diligence in the discharge of his duties as director, Er could have been jailed for up to 12 months or fined up to S$5,000.

Zheng faces charges under the Companies Act and his case is pending before the courts.

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