Chance for Asia to seize the day

Below is an excellent article in The Straits Times today that defied conventional wisdom. Sophie's World agrees with the writer especially the point about the Asian financial crisis. The writer said the Asian financial crisis and the sub-prime crisis showed that, again contrary to conventional wisdom, the culprit is the financial system in core countries, namely the US and Europe.

Sophie's World had earlier said about the 1997 Asian financial crisis: "True, the crisis was triggered by the Asian countries' flawed policies in some instances. There was no doubt many Asian countries had to reform their faulty economic and political systems then. But the foreign and mainly Western capital must also share the blame, and be regulated to help avoid sudden and overly destabilising effect on the real economies." Please see earlier posting.

Nobody will forget the famous picture of the International Monetary Fund's Michel Camdessus, with his arms crossed in what was seen as an arrogant gesture, overseeing former Indonesian President Suharto signing the agreement for an IMF bailout package worth nearly US$50 billion. The picture was widely used to personify Asia's loss of its independence following the financial crisis in 1997.

Chance for Asia to seize the day
By Joergen Oerstroem Moeller, For The Straits Times

BECAUSE this year marks the 10th anniversary of the Asian financial crisis, observers were prepared for yet more studies on what went wrong and how to avoid another crisis.

Only a few expected another financial crisis, even though it was common knowledge that the property sector in the US and some other countries had entered a period of 'irrational exuberance' - to borrow the famous phrase used by former Federal Reserve chairman Alan Greenspan.

But even those who expected a reversal of the property cycle did not predict the emergence of a threat to global financial stability, with the likelihood of recession in the United States raising uncertainty about global growth.

There are four lessons to be drawn from these two crises.

Lesson No.1 is that the world is actually less globalised than conventional wisdom tells us.

The financial crisis that began in Japan in early 1990, with nose- diving share prices and a property market locked in stalemate for 15 years, did not really affect other countries. This was so even though Japan's economy was the second biggest in the world.

Similarly, while the recession in the US in the first half of 1991 was felt by other countries, it did not drag the world into recession.

The Asian financial crisis in 1997 was the trigger, not the main reason, for a similar crisis in Russia and some Latin American countries. The US and Europe remained remarkably unaffected.

As for this year's sub-prime mortgage crisis in the US, we have to wait a bit before making a judgment, but so far its contagious effect also seems to be limited.

The conclusion one may draw is that while the world may look globalised, it is in fact regionalised. An economic slowdown in one country is felt by neighbouring countries, especially if they belong to the same economic grouping, but it has a limited impact on the global economy. The reason being that regional intra-trade as a share of total trade is high and growing, while dependence on other regions and/or countries is less important.

Intra-European trade comes to about two-thirds of all trade for the European countries. Exports to the US account for only 3 per cent of total European GDP.

Business cycles

LESSON No.2 is that while the business cycles of adjacent countries, and of countries inside the same grouping, tend to converge, the global picture is different.

Many observers expect globalisation and growing trade to synchronise business cycles, but the figures tell another story. International trade amounts to only 31 per cent of global GDP. For most countries, domestic consumption and investment are more important as economic pacesetters. The domestic business cycle is more insulated from outside effects than is widely believed.

This may change, as trade grows faster than GDP, but it will be some time before it rivals consumption and investment.

For the 15 years from 1991 to 2005 there were only four years (1993, 1994, 2001 and 2004) when economic growth in the three major economies (US, eurozone and Japan) moved in the same direction.

If the analysis is narrowed to the US and the eurozone, the business cycle moved in synchronisation in six years out of 15 (1993, 1994, 1995, 1997, 2001 and 2004). Economists may qualify these observations with theories about time-lag etc, but even that does not contradict the conclusion that, contrary to conventional wisdom, the global business cycle is a myth. The global economy is actually controlled by national and regional business cycles.

Lesson No.3 touches on the vulnerability and fragility of financial systems.

The Asian financial crisis and the sub-prime crisis showed that, again contrary to conventional wisdom, the culprit is the financial system in core countries, namely the US and Europe.

They have been irresponsible over due diligence, financial management and corporate governance. Instead, resting on the laurels of their established reputations, they went in blind pursuit of profit and market share without balancing risks against gains.

The Asian financial crisis, as we know now, was due to short- term borrowings (denominated in foreign currencies) to finance long -term investments with income denominated in national currencies. Financial institutions in core countries lending to Asian countries were the guardians of the international financial system.

This role should have compelled them to act as good corporate citizens. Instead they started a race among themselves for short-term profit. When problems arose they jumped out and left the borrower and the international institutions to pull the chestnuts out of the fire, devoting most of their efforts to avoiding losses.

The sub-prime crisis reveals the same behaviour. Financial institutions stepped in to lend without performing the necessary scrutiny. They gambled upon continually rising property prices as collateral for revolving credits, as if the perpetual moving machine had finally been invented - by them!

In both cases, some of the world's most prestigious financial institutions allowed themselves to enter into deals which, by their own rules, were indefensible.

Lack of judgment

NOTE the lack of judgment by all core financial institutions in core countries. It was not the financial systems in developing or newly industrialised countries which started the Asian financial crisis. Rather, it was lending from financial institutions in core countries.

Financial systems in non-core countries have so far - we do not yet know the whole story - weathered the sub-prime crisis far better than their supposedly renowned role models in core countries. To some extent, it may even be that that financial institutions in core countries dragged those in other countries into the mess.

Lesson No.4 is that the prime movers of globalisation are the above financial institutions.

Global capital movements are growing faster than global trade. Over the past 10 years, new financial institutions such as hedge funds and private equity funds have entered the arena and are playing a bigger role.

While the spillover of domestic growth into other countries is limited, the opposite is true for financial operations. Financial institutions are interacting with each other across borders by selling and buying financial instruments. In theory, this distributes risk among many institutions, which in principle should make the system more robust and solid.

But in practice it works the other way, spreading panic as all institutions seek to get out as soon as they smell the risk, knowing that those that get out last will run up the largest losses.

My fifth point is more an observation than a lesson. Most of the world's savings are in Asia. These savings are now being used to rescue or bail out some of the core financial institutions that have had their fingers burnt.

It is not difficult to draw the conclusion that Asian financial institutions, courtesy of the sub- prime crisis, have been given a chance to buy influence in globally established institutions. This will give Asia much stronger control over how its savings are used.

Asia may not have liked seeing financial institutions in the US and Europe earning money while reshuffling wealth originating in Asia, and not being able to do much about it. But now, when these established institutions are on their knees, the chance is there - and it has been taken.

The calamities of the sub-prime mortgage crisis will be temporary. But the impact of the Asian move to gain control over its own savings will be permanent.

The writer is a visiting senior research fellow at the Institute of Southeast Asian Studies, Singapore, and adjunct professor at Copenhagen Business School.

Half-Black or Female?

OK, back to serious news analysis after one week of satire and entertainment news.

By Uncle Cheng

Do you worry about the United States? I do. In recent months I have heard quite a few of my Chinese friends say things like “America is going bankrupt” or “America is finished - China is the future.”

But it is not just the constant drop in the value of the US dollar, and hence our own money, that is worrying.

Many Chinese seem to think the U.S. has lost its magic touch. They see the world going in one direction and America in another. I do not know about you, but I find these feelings very troubling.

This is because, despite its many defects, America remains a very important nation and everyone benefits from a rich, stable America. As the old saying states “When America sneezes, the whole world catches a cold.”

The truth is that America’s reputation in the world has been profoundly damaged by President Bush and his cronies. It seems amazing how quickly America has been able to destroy its accumulated international goodwill but that is what has happened.

About a year ago I explained in a previous column why I favoured Obama. A year later I see Barack Hussein Obama as America’s greatest hope for the future. Why, you may ask, do I support the half-black, quarter-or-so Muslim Obama?

Precisely because he is half black and a bit Muslim. He is the only person who stands a chance of transforming the global image of America. Obama was right to claim: “The day I am inaugurated, the world will look at America differently."

I also think the vast majority of the world’s population outside America will support Obama for President. That’s about 6.5 billion people!

People the world over can identify with Obama because he had a black Kenyan father, a white American mother, an Indonesian stepfather, and a Muslim education in Jakarta followed by an American university. Obama is the only person who as President can act as a bridge to the Islamic world, and a bridge to the many poor people in the world.

A leading Canadian politician expressed it well when he said: “It's clear Barack Obama would be the first globalized American leader, the first leader for whom internationalism would be in his veins."

I see the image of a Muslim terrorist, who is trained to hate America, switching on his TV and seeing an American President who is half black, has an Arabic middle name, and went to a Muslim school. How can the terrorist hate such a man?

On another matter I was greatly amused to read that Obama’s rival, Hillary Clinton, has been accused of being an opportunist and of lacking integrity. I ask you — are not all politicians opportunists and dishonest? Or will Obama prove to be the exception in that regard as well?

But this is not to say I dislike Hillary Clinton. Actually I like her. I am amused to think of Bill Clinton returning to the White House as ‘First Man’. And Hillary would be America’s first female President — also good for America’s image in the world.

Ruffled feathers over Singapore's Asian Idol win

Yippee, talkingcock published another piece of satire by Sophie's World. It's reproduced here for your reading pleasure:

by Sophie's World

Not just Malaysia, now other Asians across the region are up in arms over the unexpected victory of Singapore Idol Hady Mirza in the first-ever Asian Idol.

"This is unbelievable. Indonesia's Mike should have won. This is the result of how the Singapore Gahmen undermines Indonesia through a systematic cornering of our telecom market," fumed Indonesian government spokesman Cakap Ayam.

Other Asians who watched the contest and voted via a SMS system also cried fowl over the contest that was held in Jakarta, Indonesia, during the weekend.

"The Malaysian Indian girl was fantastic. Singapore and Malaysian governments must be working together to marginalise our Indian community further," said Indian activist Uthu Ayam Kumar, who added that he will organize another street protest to highlight 'ethnic cleansing' in Malaysia.

Central to the region's unhappiness was the SMS voting system, which they felt favoured Singapore.

Indonesia's Mr Ayam said Singapore Gahmen investment arm Temasek Business Group must have rigged the SMS contest through its control of two telcos – Telkomsel and Indosat.

"This shows our decision to force Temasek to sell one of the two Indonesian telcos is correct and necessary," Mr Ayam said, adding that Singapore must have conspired with the United States and staunch ally Israel to undermine predominantly Muslim Indonesia.

"Apa nama itu (What is the name of the) Temasek guy? Don't you think it's too coincidental that he's called Mr Israel? I rest my case," said Mr Ayam with a smirk.

Singapore Gahmen spokesman Ban Vanity was unruffled, when bombarded by intense media questions that were unseen since Temasek effectively triggered the Thai military coup in 2006.

"Their unwarranted questioning of the legitimacy of our Idol's win is tantamount to questioning of Singapore's sovereignty. We cannot allow that," Ms Vanity read from a prepared statement.

"We will defend our position vigourously and refer to the new Asean Charter to resolve the dispute and uphold our victory."

She added: "What's next if we don't defend our sovereignty over the Asian Idol issue?"

"They will claim Singapore's Idol is actually Malaysia's Idol since Singapore was part of Malaysia briefly, or it's Indonesia's Idol since Singapore's founder Sang Nila Utama was a Sumatran prince. How can like that?"

Hady Mirza is Asian Idol!!!

In an unexpected development, Singapore's Hady Mirza (Pix source: ST) has become the first Asian Idol!!!

Sophie's World is glad that TV viewers voted according to their conscience, instead of voting along nationalistic lines. This is because Singapore's Idol could not have won if voting by TV viewers across Asia were based on nationalism. Singapore has the smallest population among all the participating countries.

This bodes well for Asia's renaissance, despite many problems affecting the Asean region and the continent.

It's also amazing that Singapore's Idol won despite the rather frosty reception towards him at the onset of the competition yesterday.

Asian Idol Rock On!

TONIGHT'S the night when millions of viewers in Asia will be watching the Asian Idol competition.

According to The Straits Times, Hady Mirza (Pix source: ST), winner of the second season of Singapore Idol, is in the running. The report said he will be pitting his singing skills against a formidable cast of opponents - Indonesia's Mike Mohede, India's Abhijeet Sawant, Malaysia's Jaclyn Victor, the Philippine's Mau Marcelo and Vietnam's Phuong Vy.

Sophie's World hopes everyone will pick the best singer, instead of voting along nationalistic lines. Hopefully, the event will also display the best of Asia and push recent political problems in the region into the background. Asean has no shortage of problems, apart from their inability to deal with the murderers of Burma.

So, let's leave politics aside for a while and enjoy Asian Idol show tonight.

And here's a little satire by Sophie's World that was published by Singapore's premier satirical website talkingcock in October 2006, shortly after Hady won the Singapore Idol. Enjoy!

Proof: No Marginalization Going On
Posted on Sunday, October 08, 2006
Topic: International News
by sophies world

Malays and Chinese are not marginalised in Singapore or Malaysia respectively, contrary to claims from both sides of the causeway.

In Singapore: “This is conclusively proven by the fact that a second Malay has won the Singapore Idol," said Gahmen spokesman Ban Vanity shortly after Hady Mirza emerged as the winner in the hotly contested show watched by more than half of the island's 4 million people.

Ms Vanity pointed out that Hady is the second Malay to have clinched the coveted title, after Taufik Batisah in the previous year.

"The Malays trounced the Chinese for two consecutive years in Singapore Idol. How can Dr M say Malays are marginalized in Singapore? What utter rubbish!" said Ms Vanity at the packed press conference yesterday.

She was referring to Dr M's remarks that Malays are marginalized in predominantly Chinese Singapore.

"We could ask about the status of the Malays in Singapore, why they are not allowed to bear arms in the military or train to handle weapons," Dr M ranted earlier this week.

"Why is it that the Malays in Malaysia are so capable in the military field but the Malays in Singapore cannot hold high posts?"

The Malaysian figure had said it as a reaction to Singapore's MM Lee's comment that the Chinese are systematically marginalized in Malaysia.

But MM Lee was also incorrect about the Chinese in Malaysia, according to analysts who track the Idol phenomenon worldwide.

"A Chinese beat a Malay in last year's Malaysian Idol what!" said Sing Song Woon, referring to Daniel Lee who defeated Norhanita Hamzah for the crown in 2005.

The Idol findings are being regarded by both governments as being conclusive proof of each country’s progressive policies.

“The Idol results are very reliable,” said Singapore spokesperson Ms Vanity. “After all, they are extremely accurate in terms of forecasting talent.”

PS (15 Dec 2007): Singers who didn't quite make it to Asian Idol -- Pay Rise Needed to Maintain Hip Hop Lifestyle: Gahmen and MDA Rap Video Sparks Potential Gangsta War

Hahaha. Lovely satire and doctored pix but they are not done by Sophie's World!!!

Union Bank of Singapore

Some commentators have been rather critical about the Government of Singapore Investment Corporation or GIC for coming to the rescue of UBS of Switzerland. GIC will inject US$9.8 billion for a 9% stake in the Swiss banking giant to help it cope with the US sub-prime crisis.

The concerns are fair as it is the biggest single deal for GIC -- the guardian of Singapore's foreign reserves.

But critics are missing the big picture.

According to guest writer Hercules Morse, it's a great deal for GIC and Singapore.

"It's a great way to invest the nation's reserves in a first-class global institution, rather than spend it all on pointless projects," Hercules said.

Hercules Morse reckons that it's a great financial deal for GIC as there is very little premium priced into the conversion price compared to UBS' current market price. This means GIC is being paid 9% coupon on notes before conversion as an implied discount.

More importantly, the UBS deal will help promote confidence in Singapore as the new private banking capital of the world.

Sophie's World agrees. Singapore's two government investment arms -- GIC and Temasek Holdings -- are building up a formidable portfolio of banking assets.

Apart from GIC's stake in UBS, Singapore, through Temasek, has interests in major banking assets such as Standard Chartered (13%). ICICI Bank (7%), China Construction Bank (6%), Bank of China (5%), and homegrown DBS Bank (28%).

Temasek acquired the Stanchart stake in March 2006 from the family of the late Singapore-based Malaysian tycoon Khoo Teck Puat.

Since then, Stanchart has stepped up its plan in Singapore. In May this year, Stanchart made Singapore its global private banking HQ. And Stanchart early this year agreed to take up more than half a million square feet of space at the new Marina Bay Financial Centre -- Singapore's new downtown. Incidentally, DBS, which has been rumoured to be a merger partner of Stanchart, agreed to take up 700,000 square feet of space in the same neighbourhood this week.

It doesn't really matter whether DBS and Stanchart will tie the knot.

What's more important is Singapore's efforts to build a world-class financial centre by hosting the big banking players in Singapore, and by taking direct stakes in them like the UBS deal. By doing so, their fates are intertwined and entrenched.

UBS will, one day, be better known as Union Bank of Singapore!


Additional reading: Behind GIC's buy into UBS (15 Dec 2007)

Different trades

The stock exchanges of Malaysia and Singapore, which used to be one entity, have performed quite well since they split and went public at the turn of 2000.

They are the only two stock exchanges in Asean that have become listed companies although they remain as market regulators. Bursa Malaysia, formerly known as the Kuala Lumpur Stock Exchange, went public in 2004. The Singapore Exchange or SGX was floated in 2000.

But the two exchanges have not been able to join forces to become a more formidable player despite their close historical links and the natural combined liquidity of the two markets. Their plan to set up a cross-trading platform has effectively been aborted although both sides have not said so.

Their action shows they are more willing to tie up with other partners instead.

For instance, Bursa Malaysia today confirmed a news report that it’s in talk with the United States’s Chicago Mercantile Exchange (CME) on a possible tie-up that may involve equity holding. The Star had earlier reported that CME may buy a 10% stake in Bursa Malaysia at about RM20 per share. This is a huge premium to Bursa Malaysia’s last traded price of about RM15 and values the entire Malaysian exchange at more than RM10 billion.

Earlier, CME had a equal partnership with SGX to list commodity futures products, such as crude palm oil and rubber, on a Singapore-based exchange called Jade. However, in November this year, the CME group abandoned Jade, selling its stake in the venture to SGX. No real reason was given but one cannot discount the possibility that the failure was due to their ability to secure crude palm oil prices from Bursa Malaysia.

SGX has also moved on following the difficulty in setting up a cross-trading platform with Bursa Malaysia since 2005. SGX bought a 5% stake in the Bombay Stock Exchange in March for US$47.5 million, while the Tokyo Stock Exchange bought a 4.99% stake in the SGX in June for US$321 million.

The simple question remains: Why can't the listed stock exchanges of Singapore and Malaysia strike a commercial deal despite their two countries' long list of outstanding bilateral problems?

Divergent flight paths

Like many things about Malaysia and Singapore, their national airlines have taken quite different paths ever since the two countries split in 1965.

The two airlines used to operate as one entity called Malaysia-Singapore Airlines before they parted ways in 1972. Since then, Singapore Airlines (SIA) has become one of the most profitable airlines in the world, while Malaysia Airlines (MAS) has had a very turbulent flight path despite the recent turnaround.

The Star has a very colourful feature on the MAS story.

But no one should blame Singapore for inheriting the international routes of MSA in the divorce settlement.

This is because Malaysia didn't want the international routes in the first place, preferring to take the 50-seat Fokkers to help link West and East Malaysia. Singapore, with no hinterland, had to go international at all cost with its inherited Boeings.

Many things have changed since then.

MAS has returned to government control following the botched privatisation exercise in the late 1990s. SIA retrenched close to 500 people in one bad year in 2003 despite many good years.

One thing remains unchanged. The stewardesses of the two airlines continue to wear their sarong kebaya, albeit by different designers.

Way back into love

This is one of the best songs I have ever heard. You must watch the movie too!

Malaysian bullet train going to Singapore?

Malaysian tycoon Francis Yeoh has made it clear again that he plans to build a bullet train service all the way to Singapore from Kuala Lumpur, according to a report today.

Will he and his YTL Corporation succeed in linking the capitals of Malaysia and Singapore via a fast train that could cut down travel time to less than two hours for many long-suffering travelers between the two countries?

“I am confident (to secure the project) because everybody wants it. The Malaysian government is pragmatic and at the end of the day if the public wants it, why not?,” he reportedly said.

Sure, everybody wants it. But can the two governments agree to such a plan that will greatly benefit the people of the two countries? Can the two governments really cooperate for the benefit of the population of the two countries or will they be driven by their narrow self-interest?

Sophie's World is not sanguine. Apart from problems arising from Malaysia's haphazard railway blueprint, the two governments can't even agree on very basic and long outstanding matters such as the:

1. Renewal of the water agreements between Malaysia and Singapore;
2. Redevelopment of the Malaysian railway land in Singapore;
3. Exchange of land in Singapore for the joint redevelopment of the Malaysian railway land
4. Use of Malaysian airspace by Singapore;
5. Sale of Malaysian sand to Singapore for reclamation;
6. Release of CPF funds of West Malaysians who no longer work in Singapore;
7. Dispute over Pedra Branca/Pulau Batu Putih;
8. Diversion of heavy traffic to the Second Link from the causeway;
9. Plan to build an overhead bridge to replace the old causeway; and
10. Cleaning up the filthy Straits of Johor, which separates the two countries.

Like the current talk (just talk) to build a monorail link between the southern Malaysian city of Johor Baru and Singapore, it will be more ideal to build a new bridge to replace the causeway to facilitate the bullet train project. Please read earlier posting.

Now, where is the new Asean Charter?

Dancing in the Rain

Enjoy!

Sad day for Malaysian Indians, Part 2

How will history judge the current Indian drama in Malaysia?

There's no clear answer yet as the drama is still unfolding. Sophie's World is still saddened by the flurry of wild allegations thrown around. Many people are up in arms over the wild allegations made by Hindu Rights Action Force (Hindraf) in its ridiculous petition, its ridiculous claim of US$4 trillion from the former colonial master, and its leader not ruling out violence to achieve its aim.

Let's get things right before the water is muddied further.

Sophie's World supports any call to improve the welfare of marginalised or poor people, whether they are Indians, Chinese or Malays.

But Hindraf will not earn the respect of Sophie's World and other rational people should it continue to cry 'ethnic cleansing' by the government, or suggest violence to help raise awareness on the plight of the long-suffering Indian community in Malaysia.

Demolition of Hindu temples is not right although many of them are sited on illegal sites. But the act of demolishing illegal temples does not constitute ethnic cleansing. Let's not resort to hyperbole in such a sensitive issue. Ethnic cleansing refers to genocide in one extreme and the systematic removal of a particular race in a less extreme definition.

Although the Malaysian government has long favoured the majority Bumiputra community, such an act, though unfair, does not constitute a systematic removal or elimination of the Indian race or 'ethnic cleansing'.

Do you see the Chinese community crying 'ethnic cleansing'?

The Malaysian government may have no choice but to invoke the Internal Security Act to maintain law and order, and quell the careless propaganda by the Indian group. The Indian group will then cry 'ethnic cleansing' all over again. And the whole world will then condemn Malaysia for the 'persecution' of the minority community.

Here's Sophie's World's take to the long-suffering Indian brethren: The end does not justify the means. Resort to noble means or civil disobedience, instead of resorting to unfair means or violence, to achieve the noble end.

Gandhi would have wanted that too.

Causeway blues again

Source: Singapore's The Business Times (20 Jan 2007) The illustration shows the current toll rates for lorries and heavy vehicles, not cars and motorcycles.

Sometimes, you have to wonder whether policy makers look at the big picture at all.

Take the case of the toll rate at the Second Link connecting southern Malaysia and Singapore.

According to a report on Thursday, the Malaysian government will jack up the toll rates by 27% on vehicles using the Second Link Expressway from Jan 1. The other bridge connecting the two countries is the overused causeway, which links Woodlands in Singapore and the southern Malaysian city of Johor Baru.

The report said passenger cars using the Second Link route will have to pay RM10.80 (S$4.60) next year, compared with RM8.40 now, The Sun newspaper quoted Works Minister S. Samy Vellu as saying.

Rates will also go up at two other Johor toll booths. At the Perling toll, passenger cars will have to pay RM2.30 compared with RM1.80 now. And at the Lima Kedai booth, the toll will be increased to RM3.90 from RM3.10.

The report said the rise in the toll rates is part of contractual obligations the Malaysian government signed with companies that built and manage the highways.

So far, the argument sounds logical. But the whole argument falls apart when it is seen in the wider context of essential infrastructure between Malaysia and Singapore.

Here are some bigger questions and issues concerning the two major arteries:

1. Shouldn't the Malaysian government be lowering toll rates at the Second Link to encourage more motorists to switch from the perennially congested causeway to the Second Link? Toll rates are substantially lower at the causeway, which is owned jointly by the two countries. Even more motorists will avoid the Second Link and flock to the causeway following the jump in the toll rates at the Second Link.

2. So far, it's not clear whether the Singapore government will follow suit in jacking its toll rate as well on motorists using the Second Link, which was built jointly by the two countries. The Singapore government had a policy of matching the Malaysian toll rate when the Second Link bridge was opened in 1998 although the rationale was debatable.

3. Shouldn't Malaysia and Singapore sit down and discuss ways to promote greater usage of the Second Link and ease the congestion on the causeway? Shouldn't the two governments help facilitate the massive cross-border flow of people instead of imposing any further burden on them?

4. Shouldn't the two governments think of fresh ways to ease the flow of people and goods between the two countries, as they couldn't even agree on a simple overhead bridge to replace the aging causeway and clean up the dirty Straits of Johor?

5. Shouldn't the two governments refer to the recently minted Asean Charter, which waxes lyrical about cooperation and dispute resolution in the Asean spirit, to help resolve their bridge problems?

While the two governments remain at odds with each other over a host of bilateral issues, people on both sides of the causeway will continue to bear the brunt of the causeway bottleneck.

Olympics

By Uncle Cheng

Next year’s Olympics in Beijing is being heralded as an unprecedented national event of international importance. This, after all, will be the first time the Olympics will have been hosted on Chinese soil.

Apart from Toyko (in 1964) and Seoul (1988), and provided you do not consider Australia (Melbourne 1956, Sydney 2000) a part of Asia, no other Asian country has ever been given an opportunity to stage the games since they were first held over two thousand years ago.

While China’s economic resurgence marches onwards and upwards, it is perhaps understandable that Chinese nationalism treats the Olympics as especially significant. The government in Beijing has been progressively asserting China’s interests internationally.

It has actively cultivated strong economic and political ties in all corners of the world but especially in Africa and Australia, places where China’s understandable self-interest lies in their wealth of natural resources. Raising its international profile can only benefit China’s economic strength.

Against this background there are two aspects to the recent controversy concerning Martin Lee’s recent remarks about the Olympics games. To my mind it is not necessary to come to a definitive view whether Mr Lee was urging foreign countries to boycott the Olympics. As any lawyer might say, he is entitled to the benefit of the doubt.

However, one aspect that worries me is an obvious one. China considers the Olympics to be a matter of “face” and particularly the nation’s international “face”. Directly or indirectly linking the games to China’s record on human rights is fundamentally wrong, and indeed against the spirit of the Olympic ideal that demands the games remain apolitical.

But it is the second aspect that I find more important and crucial if the world is to appreciate the Chinese psyche. Initial strong memories of the 2008 games will necessarily fade in subsequent years but the suggestion that foreign forces and countries can somehow meddle in China’s national affairs is a justifiably sore point for the Chinese.

As any admirer of Chinese history must know, the present government’s approach to foreign influences is no different from that of its predecessors. Since the time of the first emperor 2,300 years ago until today China has always labelled those who seek foreign assistance as traitors. This intolerance of foreign influence is a hallmark of Chinese civilization that has enabled China to remain a unified state with an unbroken civilization for thousands of years.

I do not deny that China has been ruled by foreigners. The Yuan Dynasty of the thirteenth century may have been short-lived but it was essentially foreign. The more recent Ching Dynasty was also foreign but quickly lost its “foreignness” and became utterly sinonised.

To my mind, this is the key to understanding the attitude of the present Chinese government. It really does not matter whether the system in Beijing is feudal, national, communist or democratic. That is not the point. What matters is a full appreciation of China’s ancient and often uneasy relationship with anybody whose interests and loyalties lie outside China.

The classic example of this Chinese political psychology is Beijing’s strained relationship with the Vatican and its Erastian religion which would require China’s Catholics to maintain loyalty to a foreign government.