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Getty ImagesEarlier this month, a woman was stripped and paraded naked in India, sparking outrage. It’s a depressingly familiar headline, but legal experts and gender rights activists say the law is still not equipped to deal with such heinous crimes against women.
Warning: This article contains details some readers may find distressing.
It was sometime after 1am on 11 December when more than a dozen people barged into Sasikala’s [not her real name] house.
The 42-year-old was dragged out, stripped and paraded naked around the village, tied to an electricity pole and beaten for hours.
A resident of Hosa Vantamuri village in Belagavi district in the southern Indian state of Karnataka, she was being punished because her 24-year-old son had eloped with his 18-year-old girlfriend.
The young woman had been betrothed by her family to another man and was to get married the next day. Her furious family wanted to know where the couple were.
The police reached the village around 4am after they received a tip-off and rescued Sasikala and took her to hospital. She’s reported to be suffering from severe trauma. Her husband later told a visiting state minister that “my wife and I didn’t even know about the relationship”.
More than a dozen people have been arrested and a local police officer has been suspended for “dereliction of duty”.
The incident made national headlines and authorities took notice. Karnataka Chief Minister Siddaramaiah called it an “inhuman act” and promised justice to her.
The government also gave her some agricultural land and money, although authorities have acknowledged there could be no compensation for the humiliation she endured.
Karnataka high court Chief Justice Prasanna Varale and Justice MGS Kamal, who summoned the police and initiated a hearing on their own, said they were “shocked” that such an incident could take place in modern India.
But the incident in Belagavi is not really rare and several similar incidents have made headlines in India in recent years.
One such story that sparked global outrage came from the north-eastern state of Manipur in July. A viral video showed two women being dragged and groped by a mob of men before one of them was allegedly gang-raped.
The horrific attack had a political angle – Manipur was gripped by violent ethnic clashes involving the Kuki and Meitei communities.
But reports from other states show such incidents are often rooted in caste or familial conflicts, with women’s bodies routinely becoming the battleground.
In August, a 20-year-old pregnant woman was paraded naked in Rajasthan by her husband and in-laws after she reportedly left him for another man. A 23-year-old tribal woman in Gujarat was punished in a similar manner for eloping with another man in July 2021.
In May 2015, five Dalit women were paraded naked and caned by members of a higher caste in Uttar Pradesh after one of their girls eloped with a Dalit boy. In 2014, a 45-year-old woman in Rajasthan was paraded naked on a donkey after being accused of killing her nephew.
These are just some cases that made headlines, but there’s a general lack of data on such incidents. Some cases get politicised, with opposition parties raising them to embarrass a state government. But activists say women often do not report these crimes because of fear of insensitive questioning by the police and in courts.
“Cases involving assault of women are always under-reported because of shame. Families don’t come forward because it’s a matter of honour and the system does not support the survivors or give them a safe space to report these crimes,” says lawyer and rights activist Sukriti Chauhan.
In the National Crime Records Bureau database, disrobing is recorded under a broad description called “assault with intent to outrage [a woman’s] modesty”, which clubs the crime with cases of street harassment, sexual gestures, voyeurism and stalking. Last year, 83,344 such cases were recorded with 85,300 affected women.
Such cases are dealt with under article 354 of the Indian Penal Code and are punishable by a mere three to seven years in jail – which, Ms Chauhan says, is “grossly inadequate”.
“It’s a mockery of justice. Law works only when it deters. Right now this law is not a deterrent and that undermines women. It needs to be amended to enhance the punishment,” she says.
In the Karnataka high court, the justices also noted that the assault in Belagavi was watched by “a crowd of 50-60 villagers”, adding that “only one man tried to intervene and he was also beaten up”.
Highlighting the need for “collective responsibility” to stop such atrocities, the judges cited a case from the 1830s – when India was governed by the British – pointing out that an entire village was made to pay for a crime.
“All village people should be made responsible… Somebody could have tried to stop that,” they said.
Chief Justice Varale also invoked Draupadi from the epic Mahabharat, who’s saved by Hindu god Krishna when she’s being disrobed, to advise women “to pick up arms as no god will come to protect you”.
That advice, Ms Chauhan believes, is not practical.
“We are not Draupadis and there are no weapons to be picked up. Also, the onus cannot be on women. The law has to talk to the wrongdoer, but it’s still telling women that they have to find a way to stay safe,” she says.
“The message we need to get across is stop fighting your ethnic, caste and family battles on our bodies, they are not your battlefield,” she adds.
Maumil Mehraj, a research analyst who works with young people on gender equity, says the reason a woman’s body is treated as a battlefield is because it’s connected to her – and by extension her family, caste and community’s – honour.
“It’s always why women disproportionately have to bear the brunt during conflicts,” she says.
Such incidents, she says, also have an element of voyeurism because they are seen, photographed and filmed.
In Belagavi, she says, one of those arrested is a minor, indicating that such crimes have been normalised to such an extent that even the next generation has grown up with entrenched gender ideas.
“So will a law be enough to deal with such cases? I think the only solution is bringing up better boys. It’s necessary to teach them that connecting a woman’s body to her honour is problematic,” she says.
“It’s a Herculean task, but has to start early. Otherwise this vicious violence against women will continue.”
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The Progressive Social Security group emerged as a winner in the country’s first Social Security Board (SSB) election on Sunday, with the vote count almost complete.
In the election, 14 new board members were chosen by members of the Social Security Fund (SSF). Of them, half fill the quota for employees’ representatives, and the other half represent employers.
Ten groups consisting of 228 people applied to be employee representatives. On the employer side, there were 65 candidates.
By law, the SSB consists of ministries such as labour, finance, interior, and public health, as well as the Budget Bureau, employers and employees.
With nearly all votes counted (99.57%), seven people leading the tally were Sattharam Thammabusadee, Thanapong Chuamuangpan, Chalit Ratthapana, Sivawong Sukthawee, Nalatporn Krairuek, Laksamee Suwanphakdee, and Prathana Podee. The first six are from the Progressive Social Security group.
On the employer side, the vote count is complete. The seven winning candidates were Montri Thirakhothai, Vipawan Maprasert, Siriwan Romchatthong, Sompong Nakhonsri, Suwit Sipioan, Thaweekiat Rongsawata and Phetcharat Aeksangkul.
Mr Sattharam, an academic from Thammasat University, hailed the group’s win as a victory for the pro-democracy camp, saying the workers demonstrated they wanted change and better welfare benefits.
He thanked SSF members for voting for the Progressive Social Security group and promised to fight for workers’ rights and better protection.
He said the group’s first mission was to increase benefits for insured workers, push for equity in healthcare coverage and transparency in Social Security Fund investments.
The SSB has a wide range of responsibilities, including advising the minister on social security policy and establishing regulations for SSF management, which require approval from the Finance Ministry.
According to the TDRI, two key challenges facing the SSF are medical welfare benefits and the financial sustainability of the pension fund.
Meanwhile, Labour Minister Phiphat Ratchakitprakarn expressed disappointment at the low voter turnout.
While more than 850,000 members of the social security system registered to vote, only 150,000 did so, accounting for only 18.36%.
The turnout for employers was 46.82%, which was close to what was expected.
Nippon Steel’s plan to acquire US Steel has triggered an uproar among the US Congress, the United Steelworkers and economic nationalists alarmed by the buyout of an American icon and the US$14.9 billion deal’s potential implications for US employment and the economy.
The reaction has been particularly strong in President Joe Biden’s birth state of Pennsylvania, where US Steel’s headquarters and several plants are located. Senator John Fetterman, a member of Biden’s Democratic Party, issued a populist statement saying:
I live across the street from US Steel’s Edgar Thompson plant in Braddock. It’s absolutely outrageous that US Steel has agreed to sell themselves to a foreign company. Steel is always about security – both our national security and the economic security of our steel communities. I am committed to doing anything I can do, using my platform and my position, to block this foreign sale.
This is yet another example of hard-working Americans being blindsided by greedy corporations willing to sell out their communities to serve their shareholders. I stand with the men and women of the [United] Steelworkers and their union way of life. We cannot allow them to be screwed over or left behind.
Fetterman was joined in opposition to the deal by a bipartisan group of politicians including Senator Bob Casey (Democrat, Pennsylvania), Senator J D Vance, (Republican, Ohio), Senator Josh Hawley (Republican, Missouri), Senator Marco Rubio (Republican, Florida), Congressman Chris Deluzio (Democrat, Pennsylvania) and Pennsylvania State Senator Jim Brewster (Democrat).
Do they have a case? On December 18, Nippon Steel and US Steel announced the signing of an agreement under which Nippon Steel will acquire 100% of US Steel in an all-cash transaction priced at $55 per share, equivalent to an equity value of $14.1 billion, Nippon will also assume US Steel’s debt, bringing the deal’s total enterprise value to $14.86 billion.
The purchase price is nearly 40% above US Steel’s closing stock price on December 15 of $39.33 and 57% more than the rival offer made by iron and steel company Cleveland-Cliffs last August, which valued US Steel at $35 per share.
US Steel’s share price jumped 26% to a 12-year high the day the Nippon transaction was announced and closed at $47.97 on December 22. Nippon Steel agreed to pay about 12 times earnings for US Steel, which is almost twice its own current valuation.
The Wall Street Journal noted, “that by shelling out so much for US Steel, Nippon [Steel] is actually making a bet that the American manufacturing renaissance will succeed, with steel demand heading structurally higher.” But, it continued, “That still won’t stop politicians from taking potshots.”
Cleveland-Cliffs CEO Lourenco Goncalves issued a statement saying:
We identified US Steel as an extremely undervalued company with significant synergy potential when combined with Cleveland-Cliffs, creating a union-friendly American champion among the top 10 steelmakers in the world.
Even though US Steel’s board of directors and CEO chose to go a different direction with a foreign buyer, their move validates our view that our sector remains undervalued by the broader market, and that a multiple re-rating for Cleveland-Cliffs is long overdue. We congratulate US Steel on their announcement and wish them luck in closing the transaction with Nippon Steel.
Closing the deal, however, could be difficult amid the nationalistic backlash. Senator Vance said, “Today, a critical piece of America’s defense industrial base was auctioned off to foreigners for cash.”
For cash plus the assumption of debt, actually, and a lot more than the competing offer. In short, a great deal for US Steel shareholders.
Nippon Steel’s share price declined after the announcement, dropping more than 5% on December 19. Since the end of November, when word of the transaction may have been circulating, it is down 13%. This raises a question: Is Nippon Steel making an overpriced mistake?
Judging from the reaction of the United Steelworkers, it might be. In both the announcement of the acquisition and its presentation to investors, Nippon Steel emphasizes that all of US Steel’s commitments to its employees and agreements – including collective bargaining agreements – with the union will be honored.
But United Steelworkers International President David McCall has his doubts. “We remained open throughout this process to working with US Steel to keep this iconic American company domestically owned and operated, but instead it chose to push aside the concerns of its dedicated workforce and sell to a foreign-owned company,” McCall said.
“Neither US Steel nor Nippon [Steel] reached out to our union regarding the deal, which is in itself a violation of our partnership agreement that requires US Steel to notify us of a change in control or business conditions,” he said.
“Based on this alone, the USW does not believe that Nippon [Steel] understands the full breadth of the obligations of all our agreements, and we do not know whether it has the capacity to live up to our existing contract,” McCall added.
Labor has good reason to fear corporate takeovers, but it is American, not Japanese, management that is known for mass lay-offs.
In fact, US Steel’s workforce shrank from 29,000 in 2018, when then-president Donald Trump slapped a 25% tariff on imported steel, to less than 23,000 in 2022. That figure is set to drop by another 1,000 due to the downsizing of the company’s plant in Granite City, Illinois, which was announced on November 28 this year.
All in all, US Steel’s workforce has been slashed by 25% since 2018. Trump’s tariff was supposed to protect American jobs but had the opposite effect, and the union couldn’t and apparently still can’t do anything about it.
Ironically, Dan Simmons, president of United Steelworkers Local 1899, which represents the workers in Granite City, told reporters that “The optimistic side of this [the acquisition] is that Nippon [Steel] was a part of a joint venture back many years ago with National Steel, when I was an employee then and they were a good partner to have.”
Rather than downsizing, Simmons says, “The right decision would be to fire those furnaces back up and make steel again because prices are very good.”
Nippon Steel may do just that. Its rationale for the acquisition includes the attractiveness of the US steel market, where quality standards are high and the rebuilding of manufacturing and infrastructure are expected to support long-term growth in demand.
It also needs to get behind the wall of tariffs first erected by Trump and built out by Biden that is unlikely to be dismantled regardless of who wins the presidential election in November 2024.
Nippon Steel has been operating in the US through joint ventures and largely- or wholly-owned subsidiaries since the 1980s. Wheeling Nippon Steel began as a joint venture with Wheeling-Pittsburgh Steel in 1984 and is now a 100%-owned subsidiary.
It was followed by the establishment of Nippon Steel Pipe America, International Crankshaft, the Indiana Precision Forge and Suzuki Garphyttan steel bar and wire companies, Standard Steel (steel wheels) and the steel sheet joint ventures NS Bluescope and AM/NS Calvert, which ArcelorMittal and Nippon Steel bought from ThyssenKrupp in 2014.
Nippon’s acquisition of US Steel, if it is completed, will be its ninth investment in the US. It would add US Steel’s integrated steel mills in the US and Slovakia to those of Nippon Steel in Japan, India, Thailand, Brazil and Sweden. Nippon Steel has downstream operations in China, Southeast Asia, the Middle East, Brazil and the US.
The deal would raise Nippon Steel’s total annual crude steel capacity from 66 to 86 million metric tons as calculated using the methodology of the World Steel Association – i.e., the sum of the nominal full production capacity of companies in which it has a 30% or greater equity interest.
Nippon Steel would then vault from 4th to 2nd place in the world steel rankings, overtaking Ansteel and ArcelorMittal to become nearly two-thirds the size of China’s top-ranked Baowu Steel, which has an annual crude steel production capacity of about 130 million metric tons.
The acquisition was unanimously approved by the boards of directors of both companies. It is subject to approval by US Steel shareholders and regulatory authorities, neither of which is expected to oppose the deal.
Nippon Steel plans to fund the transaction primarily through borrowings from Japanese banks, from which commitment letters have already been received. The deal is expected to close in the second or third quarter of 2024.
If US Steel had instead accepted Cleveland-Cliff’s offer, the combined entity would have had a monopoly on blast furnace steel production in the US and a dominant share of the market for steel used in the US motor vehicle industry.
As part of the Nippon Steel Group, the US steel industry will remain competitive. US Steel will retain its brand name and headquarters in Pittsburgh under the deal.
On December 19, Senators Fetterman and Casey and Representative Deluzio sent a letter to Treasury Secretary Janet Yellen, who is also chair of the Committee on Foreign Investment in the United States (CFIUS), urging her to block the proposed acquisition. They wrote:
With the passage of the Inflation Reduction Act, the Infrastructure Investment and Jobs Act, and the CHIPS and Science Act, the United States has acted to make the US market the most competitive in the world and to reshore critical supply chains. Allowing for the ownership of a major industrial participant in infrastructure and clean energy investments to be acquired by a foreign entity would be a step backwards in our commitment to supply chain integrity and economic security.”
We question whether a foreign company that has been found to be dumping steel into the US market at prices below fair market value is the best buyer for US Steel. Of further concern, Nippon Steel has facilities in the People’s Republic of China, a foreign adversary of the US.”
Senators Hawley, Vance and Rubio likewise wrote to Secretary Yellen, saying in a statement:
The transaction was not entered into with US national security in mind… [It] was not the product of careful deliberation over stakeholder interests, but rather the result of an auction to maximize shareholder returns.
Trade protections can and should induce foreign investment that expands domestic production and creates American jobs. This corporate takeover is out of step with those goals. Allowing foreign companies to buy out American companies and enjoy our trade protections subverts the very purpose for which those protections were put in place.
NSC [Nippon Steel Company] does not share US Steel’s storied connection to the United States, and its financial interests are tied into those of Japan. Earlier this year, NSC received more than $3 billion in subsidies from Japan’s Ministry of Economy, Trade and Industry. And NSC has even flouted American trade law. As recently as August 2021, NSC was found guilty of unlawfully dumping flat-rolled steel products into the US market.
The world’s leading business dailies have taken issue with these nationalistic views. The Wall Street Journal, for one, criticized both what it sees as a throwback to protectionism and the inability of politicians to distinguish between Japan and China. It asked: “Do they think the Japanese are going to bomb Pearl Harbor?”
The Financial Times, in an editorial entitled “The misguided US backlash against Nippon Steel raises a question of trust,” asks “If Japan does not count as a legitimate buyer of assets in the US, who does?”
Japan’s Nikkei said “US Steel takeover opposition sends the wrong message to Japan” and quotes Joshua Walker, president of the Japan Society, saying that “It sends all the wrong messages. We can’t celebrate Japan as our most important and critical ally and then attack Nippon Steel with the type of xenophobic rhetoric we are seeing.”
All this puts Biden, a self-proclaimed strong supporter of both labor unions and the US-Japan alliance, in a tight spot. In a statement issued by the White House, National Economic Advisor Lael Brainard said:
The President believes US Steel was an integral part of our arsenal of democracy in WWII and remains a core component of the overall domestic steel production that is critical to our national security. And he has been clear that we welcome manufacturers across the world building their futures in America with American jobs and American workers. However, he also believes the purchase of this iconic American-owned company by a foreign entity—even one from a close ally—appears to deserve serious scrutiny in terms of its potential impact on national security and supply chain reliability.
At this point, it seems likely Biden will pass the buck to Treasury’s CFIUS to approve or reject the deal. But the final decision may not be made until June or even September, which will put the US Steel-Nippon deal in a politicized spotlight in the run-up to the November 2024 election in an important swing state.
Follow this writer on Twitter: @ScottFo83517667
Since the World Bank published “The East Asian Miracle“ report in 1993, a myriad of studies debating the merits of industrial policy have appeared.
Proponents argue that the success of Hong Kong, South Korea, Singapore and Taiwan was due to selective industrial policies, including trade and protection policy, capital controls and labor market restrictions.
Critics argue that the impressive growth of the East Asian “tigers” was, on the contrary, the result of economically orthodox strategies such as stable macroeconomic management, non-discriminatory and incentive-based export promotion measures, exchange rate stability and commitment to human capital formation.
Now, three decades later, industrial policy seems to have made a comeback. In Indonesia, where slow industrial growth is a concern, President Joko Widodo is promoting an activist industrial policy by pursuing “downstreaming.”
He has banned exports of nickel ore to encourage domestic processing and, motivated by a significant increase in the exports of processed nickel, has extended the strategy to bauxite and other minerals as well as resource commodities such as crude palm oil and seaweed.
This strategy is a touchstone of Indonesia’s new 2025–45 National Long-Term Development Plan.
In Malaysia, the New Industrial Master Plan 2030 aims to build more competitive industries and “advance economic complexity,” and South Korea and Japan have also tailored their industrial policy to foster their semiconductor industries to compete with China and the United States.
In the past, industrial policies were largely domestically oriented, subsidizing the expansion of certain sectors over others. As countries engaged more in international trade, policies were used to affect cross-border flows of goods and services. Industrial and trade policies do not operate in isolation.
Recent industrial policies for commercial purposes take many forms, as opposed to the blunt import tariffs commonly used in the past. The most prominently used strategies at the global level are trade financing, state loans, financial grants, financial assistance to expand foreign markets, local sourcing, loan guarantees and import tariffs.
In countries such as Indonesia, Vietnam, Thailand, Malaysia and China, frequently used industrial policies include capital injection and equity stakes, anti-dumping measures, tax or social insurance relief, state loans and financial grants.
There are several reasons for the resurgence of industrial policy. Economic shocks such as the Global Financial Crisis and the Covid-19 pandemic have increased the appetite for government intervention.
Recent US legislation addressing inflation, semiconductor supply chains and employment is a significant driver of industrial policy. This is also the case with the EU’s Green Deal Industrial Plan and the Made in China 2025 initiative. Such an embrace of industrial policy by major economic powers has motivated other countries to follow suit.
At the same time, the global trading system has become more fragmented and the WTO has weakened. Member countries have introduced trade measures that do not legally comply with WTO regulations.
Policymakers’ misreading of history has also repopularised industrial policy. The false belief that richer countries were successful because they protected manufacturing gave respectability to arguments favoring industrial policy. Industrial policy is also tied up in political agendas.
In Indonesia, for example, industrial policy is often linked with nationalism and self-sufficiency, objectives which have roots in the country’s colonial history. In this regard, Indonesian industrial policy in the form of trade protection is easier, more expedient and politically popular.
Most industrial policies implemented in East Asia are designed to increase domestic value added. At the same time, governments want to establish vertical integration in the global value chain. These two objectives are contradictory – global value chains involve the slicing up of production processes across borders, which thins out the domestic value added in each process.
The emphasis on the share of domestic value added in exports as a policy criterion is misguided. First, production for export markets requires high-quality inputs procured in the world market to maintain competitiveness. Second, total export earnings are driven by volume rather than per unit of value added.
Third, intermediate production is typically capital intensive, while final assembly is labor intensive, so shifting domestic production towards the latter would generate better jobs in countries like Indonesia.
Finally, in the case of resource-rich countries, most major producers export large amounts offshore for processing as the domestic demand and processing capacity are far smaller.
There are areas in which industrial policy is justifiable. One is in response to climate change. As environmental problems involve externalities, it is likely that state interventions in this area will increase.
The challenge is how to disentangle the objective of mitigating climate externalities from the protection of domestic industries from foreign competition. The semiconductor and electric vehicle battery industries are examples of this.
As in other parts of the world, it seems that the use of industrial policy in East Asia will remain a factor, if not an increasing issue. This is not necessarily a bad thing.
To ensure that the policy is not simply about picking winners, but enhancing the productivity of the overall economy, it should prioritize measures with the least distortion – incentives instead of targets and export taxes instead of export bans.
Complementary policies are also needed. These include labor market, bureaucratic and regulatory reforms. Governments should focus on domestic issues and seek the most appropriate solution, not just copy others.
They should also note that many countries have become advanced or are fast developing largely due to globalization, while many past industrial policies have failed.
East Asia and countries like Indonesia and Malaysia need to find the right balance of industrial and trade policies so they do not lose out on the benefits of participating in global trade.
Policymakers should not forget past failures of industrial policy, exemplified by Malaysia’s and Indonesia’s unsuccessful transition from Japanese and Korean automobile components to domestically produced parts or the government-funded Nihon Aircraft Manufacturing Corporation’s failed attempt to commercialize an economically viable domestic civilian airliner in Japan.
Arianto A Patunru is a member of the ANU Indonesia Project and a Fellow at the Arndt-Corden Department of Economics, Crawford School of Public Policy, The Australian National University.
This article was originally published by East Asia Forum and is republished under a Creative Commons license.
KUALA LUMPUR: Ethnic Malay interests remain front and centre in Prime Minister Anwar Ibrahim’s Malaysia Madani. An uptick in ethnic polarisation and a poor showing by parties from Anwar’s unity government in Malay-majority seats in 2023’s state elections leave the administration under pressure to shore up Malay support.
To that end, the Malaysian government will be wheeling out a Bumiputera economic congress in January 2024 (Bumiputera, meaning “sons of the soil” in Malay, is an official term for Malays and indigenous ethnic communities).
Decades after the inception of the New Economic Policy affirmative action program and its various reincarnations, Anwar has flagged the need to review the use of Malay corporate equity as the yardstick of Bumiputera empowerment and move towards a “participation rate and … control of the Bumiputera economy (that are) more meaningful”.
This is a step in the right direction. Malaysia’s muddled Bumiputera empowerment plans and metrics are in dire need of change.
Championing Malay corporate equity is historically synonymous with Bumiputera empowerment. But the approach fails to empower the Malay majority and sidelines vulnerable communities while enriching the politically connected.
Yet the recent uproar over the arranged sale of Boustead Plantations (BPlant) – a Bumiputera government-linked company (or GLC, denoting part or whole state ownership) – to the primarily Malaysian Chinese-owned multinational company Kuala Lumpur Kepong suggests two things.
First, securing buy-in for non-equity metrics will be an uphill battle because of political sensitivities. Second, significant issues, such as the principal-agent problem in Bumiputera empowerment agendas, remain unaddressed.
The government extended financial lifelines to the Armed Forces Fund Board (LTAT) in October. LTAT is a government-linked investment company (GLIC) legally mandated to provide retirement earnings to Malaysia’s military personnel through profits generated via the GLCs in which it – or LTAT’s holding company Boustead Holdings – holds stakes.
The roster of GLCs includes BPlant, Boustead Naval Shipyards and Pharmaniaga – all of which have added to LTAT’s financial woes by underperforming, due to mismanagement and corruption.
Successive CEOs have undertaken asset fire-sales and divestments to alleviate LTAT’s debts and improve cash flow, most recently through BPlant’s sale to Kuala Lumpur Kepong. But this acquisition was cancelled at the last minute. While LTAT did not clarify why, several factors suggest that racial optics deterred the acquisition.
Ethnic Malay interests remain front and center in Prime Minister Anwar Ibrahim’s Malaysia Madani. An uptick in ethnic polarization and a poor showing by parties from Anwar’s unity government in Malay-majority seats in 2023’s state elections leave the administration under pressure to shore up Malay support.
To that end, the Malaysian government will be wheeling out a Bumiputera economic congress in January 2024 (Bumiputera, meaning “sons of the soil” in Malay, is an official term for Malays and indigenous ethnic communities).
Decades after the inception of the New Economic Policy affirmative action program and its various reincarnations, Anwar has flagged the need to review the use of Malay corporate equity as the yardstick of Bumiputera empowerment and move towards a “participation rate and […] control of the Bumiputera economy [that are] more meaningful.”
This is a step in the right direction. Malaysia’s muddled Bumiputera empowerment plans and metrics are in dire need of change. Championing Malay corporate equity is historically synonymous with Bumiputera empowerment. However, the approach fails to empower the Malay majority and side-lines vulnerable communities while enriching the politically connected.
Yet the recent uproar over the arranged sale of Boustead Plantations (BPlant) — a Bumiputera government-linked company (or GLC, denoting part or whole state ownership) — to the primarily Malaysian Chinese–owned multinational company Kuala Lumpur Kepong suggests two things.
First, securing buy-in for non-equity metrics will be an uphill battle because of political sensitivities. Second, significant issues, such as the principal-agent problem in Bumiputera empowerment agendas, remain unaddressed.
The government extended financial lifelines to the Armed Forces Fund Board (LTAT) in October 2023. LTAT is a government-linked investment company (GLIC) legally mandated to provide retirement earnings to Malaysia’s military personnel through profits generated via the GLCs in which it — or LTAT’s holding company Boustead Holdings — holds stakes.
The roster of GLCs includes BPlant, Boustead Naval Shipyards and Pharmaniaga — all of which have added to LTAT’s financial woes by underperforming, due to mismanagement and corruption.
Successive CEOs have undertaken asset fire-sales and divestments to alleviate LTAT’s debts and improve cash flow, most recently through BPlant’s sale to Kuala Lumpur Kepong. But this acquisition was canceled at the last minute.
While LTAT did not clarify why, several factors suggest that racial optics deterred the acquisition. Meanwhile, the 2024 Budget notes that the government’s 2 billion ringgit (US$428 million) guarantee, part of which is meant to rehabilitate BPlant, is linked to the Bumiputera agenda as an attempt to burnish the Anwar administration’s Bumiputera-protection credentials.
Members of parliament have vocally criticized this “bail-out“, asking who is accountable for LTAT’s mismanagement, why taxpayer funds are being channeled to Boustead Holdings, and why BPlant was not sold to a lower Bumiputera bid.
These are important questions. They scrutinize fiscal management decisions, move towards redress for poor GLC governance and reflect democratic policymaking. But this focus skirts around a key force shaping the event. Despite protracted debate, few — if any — are asking what protecting Bumiputera interests means in this case, and whether it should be done.
This is a classic example of the principal-agent problem, wherein conflicts of interest arise between the represented party and their elected representatives. Elevated Malay insecurity makes questioning Bumiputera interests risky. But the irony is that if lawmakers fail to question whether Bumiputera interests are misrepresented, they are not looking out for those interests.
Again, there may have been no good options in rehabilitating LTAT and its holdings, with Kuala Lumpur Kepong or otherwise. But absent such a debate and government communication on these matters, it is unclear what fuzzy terms around saving LTAT and its holdings for the Bumiputera agenda actually entail, or whether they even serve those interests.
GLC reforms — such as an independent panel to oversee how the Ministry of Finance governs the many GLICs and GLCs under its purview — are necessary. But a hard look at the untouchable loopholes of Malaysia’s political economy is too.
Without parameters for exceptions such as Bumiputera interests, the cycle of propping up underperforming entities and avoiding reforms that appear — but may not actually be — hostile to Bumiputera interests will be perpetuated.
Constrained policy space and limited scope for Bumiputera interests may be a hard sell to the Malay majority. But reining in careless invocation and abuse of the concept is not without benefit to the Bumiputera empowerment agenda itself.
There is also a case to be made for greater political will to question Bumiputera interests. This could force more thorough assessments of whether politicians are assisting Bumiputera interests or misrepresenting them while smuggling in other policies.
Greater scrutiny may also facilitate structural reforms by offering different perspectives that dissemble more problematic Bumiputera protection practices, such as the Malay corporate equity benchmark the Anwar administration is seeking to review.
Amalina Anuar is an independent research analyst based in Malaysia.
This article was originally published by East Asia Forum and is republished under a Creative Commons license.
“Asia is expected to account for 60% of global GDP growth in 2024 – higher than the pre-pandemic average. Despite higher risk attached to geopolitics and China’s economy, it will remain the main region for growth opportunities,” says the Economist Intelligence Unit.
The EIU reports that Bangladesh, Indonesia, Vietnam, Malaysia and, to a certain extent, the Philippines are likely to see accelerated growth in the medium term. These nations are expected gradually to approach the GDP per capita levels observed in developed Asian economies such as Japan, Singapore and South Korea.
The outlook for Asia has generated substantial optimism concerning potential prospects in the region’s stock markets for the upcoming year.
The anticipated robust growth and a relatively promising outlook in Asia could present attractive potential for discerning investors in 2024.
A significant theme is the potential for disruptive technological innovation, providing investors with rewarding and untapped opportunities in companies well positioned to benefit from ongoing transformations.
We expect the attractiveness of small-cap companies to rise for investors too.
Also, there is an expectation of a dual impact on stock markets in the Asia-Pacific region.
The possibility of a more relaxed global monetary policy might facilitate price-to-earnings expansion and higher prices.
But there are also fears about companies facing issues to prevent declining earnings in the event of weak economic growth and rising unemployment, especially in key markets such as the US.
Despite these concerns, there is an anticipation of an upswing in earnings and dividends within the technology sector.
Additionally, assertions are made that infrastructure, property, and telecom stocks may experience relief due to a halt in the ascent of interest rates.
The correlation between Asian earnings and export growth is emphasized, acknowledging a challenging backdrop for exports in 2023. Nevertheless, positive signs of recovery have emerged in Asian exports, providing a basis for earnings growth in 2024.
Additionally, Asian economies with robust local demand, a solid tourism recovery, and the ability to capitalize on AI (artificial intelligence) demand are expected to contribute to bolstering earnings growth.
Goldman Sachs Research predicts a resurgence in the Japanese equity market in 2024, driven by robust global economic growth and reforms in the stock market.
The TOPIX, a gauge of Japanese stocks, is expected to climb by about 13%, reaching 2650 by the conclusion of 2024.
Its economists anticipate another year of growth outperformance across various economies, including Japan’s. The country’s real (inflation-adjusted) GDP growth is forecast to expand by 1.5% in 2024, surpassing the consensus estimate of 1% from economists surveyed by Bloomberg.
A pivotal element in TOPIX analysts’ projections is the Tokyo Stock Exchange’s reforms in company governance, which they assert “have significantly impacted the Japanese equities market.”
The TSE has introduced incentives for listed companies to enhance valuations and earnings, with the possibility of delisting companies unable to demonstrate efficient capital utilization.
Investors will view the reduction of cross-shareholdings in Japanese companies, where firms own shares in their business partners to maintain relationships, as a positive indicator of improved governance.
All in all, we expect a positive year for Asia equities in 2024 driven by strong growth momentum.
Nigel Green is founder and CEO of deVere Group. Follow him on Twitter @nigeljgreen.
SHANGHAI: China’s proposal to drastically raise the bar for investing in private equity (PE) and venture capital (VC) funds is facing backlash from industry players concerned it could wipe out small funds and choke financing to startups struggling in a weak economy. The country’s securities regulators published draft rules lateContinue Reading
Hāpai Te Hauora When New Zealand’s new government announced it was scrapping the country’s world-leading tobacco laws, it came as a particularly hard blow to the Maori people.
With the indigenous community being the country’s heaviest smokers, its leaders had fought for reforms for years.
The country’s model was the first to spell a complete end to smoking – and so was hailed by health advocates globally.
From 2024, the laws would have cut nicotine levels in cigarettes to non-addictive levels, eliminated 90% of retailers allowed to sell tobacco, and created “smoke-free” generations of citizens by banning cigarette sales to anyone born after 2008. But with the measures now abandoned, the Maori will suffer the most, advocates say.
Last year, Teresa Butler and her six-year-old daughter sat in front of a room full of politicians, begging them to enact the laws.
Dressed in a traditional feathered cloak, her voice quavered as she thrust a photo of her mother at the committee. She presented the death certificate.
Cause of death: Emphysema, the result of more than 30 years of tobacco smoking.
Teresa had her first cigarette aged eight. She recalls running down to the shops in Christchurch, with five dollars in hand and a note from her mum for a packet of smokes.
She only kicked the habit when she fell pregnant.
“I wanted a healthy baby to continue a healthy strong whakapapa [family line],” she said.
She has spent the last seven years of her life as an anti-smoking counsellor, going into Māori neighbourhoods to try and wean people off the deadly addiction.
These days, only 8% of New Zealand’s adult population are daily smokers, but the number is more than double that- 19.9% – among Māori. It is even higher among Māori women.
It takes a toll, not only on health but finances.
A packet of cigarettes in New Zealand costs NZ$40 (£19; $24) on average. Chain smokers can inhale a pack a day.
“It’s stress, it’s a lack of education, they have children, they’re single mums,” says Ms Butler, relaying a typical encounter.
“I go into a home and I can clearly see her kids don’t have any nappies on. There’s no food in the cupboard. And I’m saying to her: ‘It’s winter time, you’ve got no power. Why don’t you have any money?’ And she’ll tell me: “Because I’ve just spent the last $30 on smokes.”
Smokers tell her they want to kick the habit but feel trapped.
“They say to me: ‘Look, it’s too easy to access this Teresa. I can wake up at one o’clock in the morning, have anxiety, be depressed and go down to the local shop, the 24-hour petrol station and purchase cigarettes.’ It’s just a quick fix, just like alcohol.”
The proposed policies – especially denicotisation and the so-called Smokefree generation – have never been implemented anywhere.
But public health researchers considered New Zealand – a high-income country of just over five million people – an ideal setting to try and achieve tobacco “endgame”.
What was new here was the focus: targeting the industry, not the individual.
Almost all smokers will tell you that they want to stop, researchers say. The problem, for many, is individual capability and access to resources.
Like other countries, New Zealand had already had anti-smoking measures in place for years: excise increases on cigarettes, a Quitline phone service, and mass media campaigns carrying health warnings.
But while these helped drive down the smoking rate for European and Asian populations, the rate among Māori and Pasifika groups remained stubbornly high at around 20%.
“The problem we realised was because it was reliant on individuals too much,” says Andrew Waa, an associate professor of public health at the University of Otago who is Māori and who has led most of the tobacco control studies in the country.
He says these measures targeted “more superficial aspects” of tobacco control – for example focusing on helping people quit – instead of targeting fundamental causes for why people take up smoking and continue to smoke – like the widespread availability of cigarettes, and the tobacco industry’s role.
And the resources needed to quit aren’t equally distributed across New Zealand, researchers say. There remain significant hurdles.
There are many drivers behind “health inequity” – but the underlying reasons are rooted in New Zealand’s colonial history. White Europeans took over the Pacific nation in the 18th century.
“Colonisation is an underlying driver of ethnic inequalities in smoking behaviour,” Associate Prof Waa and other researchers wrote in the Tobacco Control journal last year.
They noted Indigenous’ people’s experience of generational theft, racism and cyclical poverty were the “basic causes” affecting access to income and housing and overall health.
So when the Smokefree measures were introduced in 2021, the resounding praise from public health circles was rooted in the view that such policies would vastly improve health equity.
And in a clear example of best practice, where policy is enacted not “on” Māori but “by” Māori, the laws were also the direct extension of a political push by Maori politicians in the mid-2000s, when one MP first suggested an end to tobacco sales.
In 2010, Māori legislators set up the country’s first large-scale inquiry into tobacco’s harm on Māori and other communities nationally- the parliament inquiry heard from a range of groups across the country.
The results of this inquiry led to the New Zealand government in 2011 setting one of the most daring public health targets in the world: a Smokefree country by 2025, with smoking prevalence under 5%.
However the National government at the time did little by way of policy to achieve it, researchers say.
It was only Jacinda Ardern’s government, a decade later, who decided to launch a package of radical reforms to get the country and in particular its Maori people across the finish line.
She appointed Ayesha Verrall, a doctor and epidemiologist, as health minister – who prioritised Māori community consultation in shaping legislation. The government further dedicated $14m to community health programmes, and set up Te Aka Whai Ora, the Maori Health Authority, an independent government body that sets Māori health policy and tailors the country’s health system delivery to Indigenous people.
The scientific modelling backed up the Smokefree reforms. Simulation studies conducted by Associate Prof Waa and other researchers concluded the measures would see the smoking rate for Māori drop to 7.8% by 2025, compared to a 2040 timeframe under previous smoking policy.
More profoundly, the mortality gap for Māori women would be shortened 23%, for Māori men nearly 10%.
“It is unlikely that any other feasible health intervention would reduce ethnic inequalities in mortality by as much,” the researchers wrote.
But New Zealanders in October voted in a change of government.
The conservative coalition then said it intended to repeal the health laws to fund tax cuts – a policy blindside given the leading National party never once mentioned the Smokefree laws during campaigning. The new government also plans to dismantle the Māori Health Authority.
“We thought that once the legislation was passed last year it was a done deal. So we’re really confused as to how and why this can happen,” says a furious Ms Butler.
“It’s heartbreaking because this is life changing, life-saving legislation, particularly for Māori,” she says.
Currently about 5,000 people die each year in New Zealand from smoking and smoking-related problems – nearly a 1,000 of whom are Māori, according to a New Zealand Medicine Journal study.
National has said they feared the smoking crackdown would fuel an already existing black market for tobacco in New Zealand and increase crime – arguments first used by tobacco companies opposing the laws.
Prime Minister Christopher Luxon argued that reducing the number of retailers would turn the shops left selling tobacco into a “massive magnet for crime”. Meanwhile, Deputy Prime Minister Winston Peters has argued the smoking ban is a violation of people’s rights and free choice.
The finance minister also revealed that the “about a billion dollars” in tax raised from cigarette sales would go directly into funding “tax relief for working Kiwis”. It has blamed negotiations with Act and New Zealand First, two right-wing, populist minor parties it needed to form government, for forcing their hand.
The New Zealand Health Minister’s office admitted to the BBC the repeal of Smokefree laws were “not a National Party policy – but that’s the nature of a negotiation.”
But previous government modelling had shown that Smokefree would save the country’s healthcare system $1.4bn over two decades.
Dr Shane Reti, the new Health Minister, has faced calls from the nation’s practitioners to step down from his medical registrations – given his abandonment of the public health policy.
His office told the BBC the government “remained committed to reducing smoking rates” but did not answer questions on how it would achieve that now with the Smokefree policies scrapped.
Critics have also raised questions about the tobacco industry’s influence in the policy reversal. New Zealand had been viewed as the dangerous ‘endgame’ precedent for Big Tobacco, Prof Waa says.
Since New Zealand announced the laws in 2021, they had inspired other countries; the UK this year also announced ambitions for a smokefree generation.
The National party declined to answer the BBC’s questions about political funding from tobacco companies.
Meanwhile, health activists and Māori leaders are fighting again to keep their hard-won reform. More than 20,000 New Zealanders signed a petition last week calling for the laws to stay.
“We simply cannot afford to go backwards, while our whānau continue to die at the hands of this product,” read the Hāpai Te Hauora petition.
Thousands also protested on the streets in capital city protests around the country this week, criticising the incoming government for its “anti-Māori” policies with many singling out the dismantling of Smokefree laws.
But there are murmurings and concerns that the government, with a majority in parliament, could scrap the laws by Christmas.
