Friday, 15 June 2012
Wednesday, 13 June 2012
Colour Me Blue
There is black and white
but we know no one can be completely unblemished or the other extreme
Knowingly or unknowingly, we take on shades of grey
Some start from white while some tries to lighten from the dark side
Politics and business, you cannot have one without the other
We all can be different shades of grey
but there is a difference when you knowingly keep adding black to the mix
We all can be shades of grey
but there is a difference when we keep trying to move towards white
The really sad part about my country is when grey is the colour of choice
and I see no outcry when there is injustice and unfairness
Grey silences us all
Grey locks up our integrity and do not allow our true values to come to the fore
Grey shuns difficult paths
and takes the safest and easiest path to myob
When your grey keeps taking on black
you start to forget about the sanctity of white
The balance of powers reside too close to the power magnet of black
Is this how a society loses its soul
Colour me blue
Sunday, 10 June 2012
What Is Your Investing Values' System
Like it or not, we all practice some sort of value system when we buy and sell shares, knowingly or otherwise. If you have no value system, then you are among a small group of people, your mantra would be: "As long as I can make money, then its my value system".
At the one extreme is Zero Value System, whereby anything goes, you don't care whether its syndicated ramping or the owner is a bastard, or anything, as long as you can buy and sell at a profit, thats all that matters. Anything beyond that is superfluous to you.
Legality - This should be first level of screening. Most of us would not touch something even if it makes us money if its illegal, e.g. money laundering, Ponzi schemes, etc.
Religion - The most well known is the Shariah compliant investing, self explanatory, no harm industries. We may not see this is Asia but its popular in the US, Christian based funds. Generally, they stay away from porn, tobacco, liquor, gaming and firearms. There are also Catholic Funds, specifically, this means the fund never invests in companies involved in abortion or pornography, nor does it invest in any company that contributes to Planned Parenthood. The fund also screens out companies that offer nonmarital partner benefits. These funds certainly give a new meaning to the "value investing", or rather "values investing".
Green Values - So you may not be so religiously inclined, but you may feel strongly about investing in companies that "behaves properly" in terms of maintaining a sustainable ecosystem, minimal damage to the environment, green corporate philosophies, into renewable energies, promotes resource efficiencies, etc.
Moralistic Fine Lines - Are you OK buying gaming companies, knowing full well that many families would have been wrecked by excessive gaming addiction, and these companies prey on these exact people to maintain their profits? How about if a a company operated brothels professionally, do you want to participate and support a company that reaps profits from "exploitation of the flesh"?
GLCs - Maybe this applies just to Malaysia, but Mr. Koon and I have the same "value system", we stay away from GLCs. This is because the whole structure of GLCs in Malaysia feeds mostly from patronage and contracts awardment. We have not seen a good display of management superiority or the ability to galvanise resources and advantages to move to the next level. So, generally we stay away from investing in GLCs.
Political - Obvious reasons. If you strongly political, you will not want to participate in the companies that benefit from the "ties and advantages" of being in bed with certain political heavyweights.
Syndicate Stocks - Most Malaysians have no qualms about touching syndicated stocks, they say that if they don't trade in them, there'd be nothing left to trade!!?? Then there are those who strongly abhor these stocks, by virtue of participating in them, you are akin to supporting their manipulative behaviour. Most Malaysians think this is a grey area or necessary evil, rather than a sinister behaviour.
Treatment of Minority Interests - This one again eludes most Malaysians investors as an issue of concern. To me, this is a major concern. To cite examples, some may think that the privatisation and relisting of Bumi Armada may have "over-trampled" on minority interests. Some would say the same for Felda Global Ventures. In my case, I won't be buying any of the two until I feel that MI has been properly treated.
So, what is your personal investing values' system?
At the one extreme is Zero Value System, whereby anything goes, you don't care whether its syndicated ramping or the owner is a bastard, or anything, as long as you can buy and sell at a profit, thats all that matters. Anything beyond that is superfluous to you.
Legality - This should be first level of screening. Most of us would not touch something even if it makes us money if its illegal, e.g. money laundering, Ponzi schemes, etc.
Religion - The most well known is the Shariah compliant investing, self explanatory, no harm industries. We may not see this is Asia but its popular in the US, Christian based funds. Generally, they stay away from porn, tobacco, liquor, gaming and firearms. There are also Catholic Funds, specifically, this means the fund never invests in companies involved in abortion or pornography, nor does it invest in any company that contributes to Planned Parenthood. The fund also screens out companies that offer nonmarital partner benefits. These funds certainly give a new meaning to the "value investing", or rather "values investing".
Green Values - So you may not be so religiously inclined, but you may feel strongly about investing in companies that "behaves properly" in terms of maintaining a sustainable ecosystem, minimal damage to the environment, green corporate philosophies, into renewable energies, promotes resource efficiencies, etc.
Moralistic Fine Lines - Are you OK buying gaming companies, knowing full well that many families would have been wrecked by excessive gaming addiction, and these companies prey on these exact people to maintain their profits? How about if a a company operated brothels professionally, do you want to participate and support a company that reaps profits from "exploitation of the flesh"?
GLCs - Maybe this applies just to Malaysia, but Mr. Koon and I have the same "value system", we stay away from GLCs. This is because the whole structure of GLCs in Malaysia feeds mostly from patronage and contracts awardment. We have not seen a good display of management superiority or the ability to galvanise resources and advantages to move to the next level. So, generally we stay away from investing in GLCs.
Political - Obvious reasons. If you strongly political, you will not want to participate in the companies that benefit from the "ties and advantages" of being in bed with certain political heavyweights.
Syndicate Stocks - Most Malaysians have no qualms about touching syndicated stocks, they say that if they don't trade in them, there'd be nothing left to trade!!?? Then there are those who strongly abhor these stocks, by virtue of participating in them, you are akin to supporting their manipulative behaviour. Most Malaysians think this is a grey area or necessary evil, rather than a sinister behaviour.
Treatment of Minority Interests - This one again eludes most Malaysians investors as an issue of concern. To me, this is a major concern. To cite examples, some may think that the privatisation and relisting of Bumi Armada may have "over-trampled" on minority interests. Some would say the same for Felda Global Ventures. In my case, I won't be buying any of the two until I feel that MI has been properly treated.
So, what is your personal investing values' system?
Friday, 8 June 2012
What If Unemployment Hits 20% In Asia? (Revisited)
As usual, the employers are the ones opposing the much needed unemployment benefits plan by the government. Any additional costs will always be frowned upon by employers. But what are the key issues here:
a) a more cohesive, inclusive society, that tries to lessen overall burden during hard times
b) the lack of safety nets for Malaysian workers in the labour markets, we are left to fend for ourselves the moment we are out of a job, that is not the sign of a developing caring nation
c) cost will rise, but some cost are necessary to achieve higher goals, we cannot keep a low cost structure all the time as that will only keep fostering low yield, sunset industries for the economy
d) although 20% is scary, we will be in pretty tough waters even if it just goes to 6%-7%
e) we have a "too structured civil service", if we employ the scheme, we may be able to do strategic "staff attrition" without as much fallout or displacement in the future
-------------------------------
(Malaysian Insider) KUALA LUMPUR, June 9 — The federal government plans to introduce unemployment benefits by pushing through legislation as early as September, a move that has angered small-medium enterprises (SME) as employers could bear 40 per cent of the cost.
The Malaysian Insider has learnt that Putrajaya completed consultations with stakeholders at local and national levels last month for unemployment insurance (UI), with a proposed contribution from the government and employers each doubling what employees fork out.
Teh wondered whether employers can digest another compulsory cost from the government.
A source said the government is looking at announcing the move as soon as September, the same month Prime Minister Datuk Seri Najib Razak will table Budget 2013, likely before leading Barisan Nasional (BN) into polls for the first time.
“The UI is for those retrenched after confirmation. There has been a proposal that those confirmed after three months of work be compensated for up to 24 months,” the source told The Malaysian Insider.
But SMEs, who have previously complained of crippling wage bills under the minimum wage policy announced on Labour Day, are questioning the need for more compulsory labour costs.
They say they were left in the dark over UI until a few weeks ago. The Small-Medium Industry Association of Malaysia (SMIAM) has since pressured the Human Resources Ministry and the Social Security Organisation (Socso) into a dialogue session to be held today.
SMIAM president Teh Kee Sin told The Malaysian Insider that they were left out of earlier consultations despite being the hardest hit from any hike in labour costs.
SMEs, which make up 99 per cent of operational companies and employ 59 per cent of the labour force, or seven million workers, are the most labour-intensive, with 15 per cent of manufacturing costs coming from human resource.
“We have no idea what the progress is. What we want to know is whether this is to replace compensation already set out in the Employment Act or a new parallel system. We are already making compulsory monthly contributions for Socso and the Human Resources Development Fund.
“The government is now attempting to introduce UI. Can we digest another compulsory cost from the government?” Teh asked, saying that the move “seems to promote unemployment” rather than aid the local export-oriented economy amid global financial troubles. According to the Malaysian Trades Union Congress (MTUC), the umbrella body representing 800,000 workers from 390 unions, the government completed “regional and national satellite workshops on May 24 to gain feedback” from the three main stakeholders, i.e., the government, employers and workers.
Abdul Halim said the government was drafting legislation to introduce the scheme.
“The steering committee is led by Socso. The International Labour Organisation (ILO) has been involved from the start and will send in their expert advice by the end of June,” MTUC secretary-general Abdul Halim Mansor told The Malaysian Insider.
The Malaysian Insider also reported this week that general elections will likely be delayed until November to allow the ruling BN to shore up support with Deputy Prime Minister Tan Sri Muhyiddin Yassin suggesting that more cash handouts are in store.
Putrajaya has previously toyed with the idea of a retrenchment fund to be set up with equal contributions from both employers and employees but the plan was met with scepticism from companies.
The UI appears to be a revival of the idea as Abdul Halim had also told The Malaysian Insider last month that the government was drafting legislation to introduce the fund.
Most developed economies practise a form of unemployment benefit, with the United Kingdom practising a Jobseekers’ Allowance (JSA), commonly known as “the dole.”
The British scheme compels those seeking welfare payments to commit to actively seeking employment but imposes no time limit, leading to accusations that many of the 5.5 million on the dole are purposely trying to remain unemployed.
The United States, however, imposes a 99-week limit on unemployment benefits.
But headwinds from the euro-zone crisis and a cooling Chinese economy has hit Malaysian exports, slowing growth to 4.7 per cent for the first three months of the year, the third consecutive quarterly drop since Q2 2011.
Several manufacturing associations told The Malaysian Insider recently they are already “cautious” and looking to “consolidate rather than expand” over the next 18 months without added pressure on their balance sheets from contributions to UI.
Teh also warned the Najib administration not to go down the same path as the controversial minimum wage policy “where they only consulted us at the last minute” over the move which the SMIAM said would add 30 per cent to employers’ labour costs.
“We want time to give our input, to object and protest if need be,” he said.
Previous Postings
The experience of the current Eurozone crisis, in particular with respect to unemployment, has enormous lessons for Asian economies. Yes, we did navigate our way out of the 97 financial tsunami after a couple of years. The thing is, in most Asian countries there are very few safety nets. Once you lose your jobs, thats it, you are out on your own. You have mortgages, education fees for your kids, extended family financial support payments, car loans, credit card loans, etc ... The dislocation can be enormous.
We can learn from the E.U. experience by implementing our own unemployment insurance scheme (opinion at end of posting). We were relatively lucky in that the 97 Asian crisis was relatively "minor" compared to the current E.U. combustion.
Look at the current unemployment rate in E.U.:
Spain 23.3%
Greece 20.7%
Portugal 14.8%
Give that to any Asian country, you can see massive unrest, maybe even riots. The real unemployment rate is also skewed negatively for younger people, hence you can gauge the resentment.
However, why the situation is still relatively "calm" over in Europe is because of their relatively generous unemployment insurance scheme. You will gawk with envy, but we should all learn something from this before it comes around to our shores. And you can bet that such events will go around the world if history is any guide.
Wednesday, February 11, 2009
Our government has been postponing the need for unemployment insurance for too long. We do not have sufficient safety nets underpinning our country's social and economic systems. The concern has always been the cost side. The other argument is the incentive not to work. There is a bigger danger in having unemployment insurance - companies may be more "willing" to bite the bullet to lay off workers in such an environment.
We already have too many archaic rules pervading the economic life of Malaysians. Its quite debilitating really. We have no unemployment insurance, and every 7-10 years we will have a massive recession and many might not be able to honour their commitments owing to forces greater than them.
We can take the pedestal and say they deserve it for not being able to manage their financial affairs properly, but seriously, even drug addicts and prisoners get a second chance to rebuild their lives. I am not here to justify reckless behaviour, but to ask that the laws be fairer to the normal person. When you unfairly penalises a person, it does not just affect the person alone, in Malaysia's culture, people also have to take care of their parents and extended families. Hence the social impact is substantial.
I am not an insurance guy, but I think we can come up with a semi government body to do this, or even be part of EPF to do this. EPF can do this role well as it already has the database for checks and balances.
How about all employees contribute 1.5% to this Fund and the employer puts in another matching 1.5% of salary. Only employees who have contributed more than 1 year will be able to enjoy the benefits. If you are laid off, you will get 3 months full pay and 5 months of half pay of your last salary.These will be paid like normal salaries on a monthly basis, thus covering most expenses for at least 8 months. This will be in additional to the normal notice pay and severance pay. Once you have taken the unemployment benefits, you will need to be working for at least another year before being qualified to obtain the benefits again.
Like I said I am no actuary, but all things being equal, the monthly 3% to the fund basically means 1 person is covered for every 33 employees. All things being equal again, in a downturn the Fund should be more than able to carry a 300 basis point jump in unemployment (e.g. if unemployment rate jumps from 3.5% to 6.5%, technically speaking we are better equipped to deal with it). EPF has the database and will be able to verify when a person has found new employment. In any system there will be bad hats trying to find loopholes - heavy penalties should be meted out to discourage bad behaviour by employers and employees.
During good times, the Fund will be able to accumulate surpluses, thus covering the outflows during bad times. It is not meant to be a crutch but part of a developing structure for a developing nation, that seeks to minimise social costs, where we can grow and shoulder the good and bad together. Any major shortfall will be borne by the government, which won't be necessary if the calculations are made properly. Its not a crutch really because its NOT borne by the taxpayers but by the contributors to the insurance scheme. That 8 months of pay will be very important as many are shouldering mortgages that needs to be serviced - its not like, no job then can go back to kampung and stay with parents or live off the land. Let's be realistic.
a) a more cohesive, inclusive society, that tries to lessen overall burden during hard times
b) the lack of safety nets for Malaysian workers in the labour markets, we are left to fend for ourselves the moment we are out of a job, that is not the sign of a developing caring nation
c) cost will rise, but some cost are necessary to achieve higher goals, we cannot keep a low cost structure all the time as that will only keep fostering low yield, sunset industries for the economy
d) although 20% is scary, we will be in pretty tough waters even if it just goes to 6%-7%
e) we have a "too structured civil service", if we employ the scheme, we may be able to do strategic "staff attrition" without as much fallout or displacement in the future
-------------------------------
(Malaysian Insider) KUALA LUMPUR, June 9 — The federal government plans to introduce unemployment benefits by pushing through legislation as early as September, a move that has angered small-medium enterprises (SME) as employers could bear 40 per cent of the cost.
The Malaysian Insider has learnt that Putrajaya completed consultations with stakeholders at local and national levels last month for unemployment insurance (UI), with a proposed contribution from the government and employers each doubling what employees fork out.
Teh wondered whether employers can digest another compulsory cost from the government.
A source said the government is looking at announcing the move as soon as September, the same month Prime Minister Datuk Seri Najib Razak will table Budget 2013, likely before leading Barisan Nasional (BN) into polls for the first time.
“The UI is for those retrenched after confirmation. There has been a proposal that those confirmed after three months of work be compensated for up to 24 months,” the source told The Malaysian Insider.
But SMEs, who have previously complained of crippling wage bills under the minimum wage policy announced on Labour Day, are questioning the need for more compulsory labour costs.
They say they were left in the dark over UI until a few weeks ago. The Small-Medium Industry Association of Malaysia (SMIAM) has since pressured the Human Resources Ministry and the Social Security Organisation (Socso) into a dialogue session to be held today.
SMIAM president Teh Kee Sin told The Malaysian Insider that they were left out of earlier consultations despite being the hardest hit from any hike in labour costs.
SMEs, which make up 99 per cent of operational companies and employ 59 per cent of the labour force, or seven million workers, are the most labour-intensive, with 15 per cent of manufacturing costs coming from human resource.
“We have no idea what the progress is. What we want to know is whether this is to replace compensation already set out in the Employment Act or a new parallel system. We are already making compulsory monthly contributions for Socso and the Human Resources Development Fund.
“The government is now attempting to introduce UI. Can we digest another compulsory cost from the government?” Teh asked, saying that the move “seems to promote unemployment” rather than aid the local export-oriented economy amid global financial troubles. According to the Malaysian Trades Union Congress (MTUC), the umbrella body representing 800,000 workers from 390 unions, the government completed “regional and national satellite workshops on May 24 to gain feedback” from the three main stakeholders, i.e., the government, employers and workers.
Abdul Halim said the government was drafting legislation to introduce the scheme.
“The steering committee is led by Socso. The International Labour Organisation (ILO) has been involved from the start and will send in their expert advice by the end of June,” MTUC secretary-general Abdul Halim Mansor told The Malaysian Insider.
The Malaysian Insider also reported this week that general elections will likely be delayed until November to allow the ruling BN to shore up support with Deputy Prime Minister Tan Sri Muhyiddin Yassin suggesting that more cash handouts are in store.
Putrajaya has previously toyed with the idea of a retrenchment fund to be set up with equal contributions from both employers and employees but the plan was met with scepticism from companies.
The UI appears to be a revival of the idea as Abdul Halim had also told The Malaysian Insider last month that the government was drafting legislation to introduce the fund.
Most developed economies practise a form of unemployment benefit, with the United Kingdom practising a Jobseekers’ Allowance (JSA), commonly known as “the dole.”
The British scheme compels those seeking welfare payments to commit to actively seeking employment but imposes no time limit, leading to accusations that many of the 5.5 million on the dole are purposely trying to remain unemployed.
The United States, however, imposes a 99-week limit on unemployment benefits.
But headwinds from the euro-zone crisis and a cooling Chinese economy has hit Malaysian exports, slowing growth to 4.7 per cent for the first three months of the year, the third consecutive quarterly drop since Q2 2011.
Several manufacturing associations told The Malaysian Insider recently they are already “cautious” and looking to “consolidate rather than expand” over the next 18 months without added pressure on their balance sheets from contributions to UI.
Teh also warned the Najib administration not to go down the same path as the controversial minimum wage policy “where they only consulted us at the last minute” over the move which the SMIAM said would add 30 per cent to employers’ labour costs.
“We want time to give our input, to object and protest if need be,” he said.
Previous Postings
The experience of the current Eurozone crisis, in particular with respect to unemployment, has enormous lessons for Asian economies. Yes, we did navigate our way out of the 97 financial tsunami after a couple of years. The thing is, in most Asian countries there are very few safety nets. Once you lose your jobs, thats it, you are out on your own. You have mortgages, education fees for your kids, extended family financial support payments, car loans, credit card loans, etc ... The dislocation can be enormous.
We can learn from the E.U. experience by implementing our own unemployment insurance scheme (opinion at end of posting). We were relatively lucky in that the 97 Asian crisis was relatively "minor" compared to the current E.U. combustion.
Look at the current unemployment rate in E.U.:
Spain 23.3%
Greece 20.7%
Portugal 14.8%
Give that to any Asian country, you can see massive unrest, maybe even riots. The real unemployment rate is also skewed negatively for younger people, hence you can gauge the resentment.
However, why the situation is still relatively "calm" over in Europe is because of their relatively generous unemployment insurance scheme. You will gawk with envy, but we should all learn something from this before it comes around to our shores. And you can bet that such events will go around the world if history is any guide.
Germany: in accordance with the social code, financed by obligatory social contributions of all workers, the unemployment insurance is allocated for a period depending on the age and on the duration of contributions to the unemployed who can justify at least 12 working months in the last 3 years. The unemployment assistance, financed by tax, complements the unemployment benefits for people who have exhausted their rights. The benefit rates are 60% of the net salary for unemployed without children and 67% for unemployed with children. Specific measures are set for older unemployed Austria: a system very close to the German system is defined by the law. Benefit rates are 55% of the net salary for the unemployment insurance and 92% of the minimum income for the unemployment assistance.
Belgium: Defined by the law, unemployment benefits are financed by an obligatory contribution of workers. They are allocated for an unlimited duration under the condition to have been working for 312 days in the last 18 months or 624 days in the last 36 months. Their level is defined by a percentage of the previous average salary limited to 63 € a day, 60% the first year and 44% the following years for a single person, 60% for people with dependant family members, 55% the first year for « coinhabitants » (unmarried couple living under the same roof) without dependent family members. Specific measures are set for older unemployed.
Denmark: defined by the law, the principle is based on the voluntary contribution of the worker. Benefits are allocated on the condition to have been working 52 weeks during the last 3 years and to have been affiliated to a fund for at least one year. The entitlement duration is one year (6 months for young under 25’s), then at the most 3 years on the condition to participate in different measures against unemployment. The benefit rate is 90% of the reference salary and limited to 1624 € a month (1232 for young under 25). Specific measures are set for older unemployed.
Spain: The unemployment insurance is defined by the law. It is financed by obligatory social contributions. It is allocated to unemployed who have worked at least 360 days in the last 6 years for a period from 4 months to 2 years according to the paid contributions. The amount is worth 70% of the reference salary for the first 182 days and then 60%. Specific measures are set for older unemployed. The unemployment assistance complements the unemployment benefits during 6 to 18 months at the most for people who have exhausted their rights. The unemployment assistance is worth 75% of the minimum wage during the first 6 months.
Finland: Defined by the law, the system is made of an unemployment insurance divided in two parts: a basic allowance for those who have worked 43 weeks during the last 24 months with a minimum of 18 hours a week and an allowance proportional to incomes for those who affiliated to a voluntary fund during the same period. The entitlement duration is 500 days. The basic allowance is a bit less than 23 € and the proportional allowance adds 42% of the difference between the daily wage and the basic allowance. Young people aged 17 who have not finished their training course or the ones aged from 18 to 25 who refused employment schemes or training are excluded from the system. Specific measures are set for older unemployed. The unemployment assistance covers those who are not entitled or have exhausted their rights. The amount is equal to the basic allowance.
France: The unemployment insurance is defined by long term agreements between employer's organizations and trade unions that administrate the UNEDIC which is a private law organization. These agreements must respect the principles of the labour law and thus be officially approved by the government. The financing is ensured by contributions based on the salaries paid by employers and workers. The duration of entitlement vary from 7 to 42 months in accordance with the previous working period and the age. The amount is worth 57,4% of the gross salary of reference. A specific solidarity allowance (ASS) takes over the unemployed insurance for the unemployed who have exhausted their rights, under some conditions, specifically the level of the family income. At the most, the ASS is worth 13,57 € a day (19,47 for older unemployed aged more than 55). Until now, the entitlement was unlimited, but the question was raised to limit it to 2 years, Nethertheless, this measure is under discussion. There are some complicated systems for older unemployed.
Greece: Defined by the law, the unemployment insurance is allocated to unemployed workers who have a sickness insurance affiliation to a social security organization, and who have worked at least 125 days during the last 14 months or 200 days during the last 2 years before their redundancy. The duration of the entitlement depends on the duration of the previous working period. The amount of allowances is worth 50% of the daily wage or 50% of the monthly salary depending on the worker's status. Specific measures are set for older unemployed.
Ireland: The unemployed insurance system is defined by the law. It is financed by obligatory contributions taken out of the salaries. Allowances are allocated to unemployed who have paid contributions during 39 weeks in the year before their redundancy or 26 weeks during the two previous years for an entitlement of a maximum of 390 days. The allowances are uniform and are worth 475 €. Specific measures are set for older unemployed. The unemployment assistance, financed by tax takes over the allowances for those who have exhausted their rights, it is depending on resources conditions and is worth 475 €.
Italy: defined by the law, the system covers full unemployment and short time unemployment. Allowances are given to unemployed who have paid at least 52 monthly contributions in a 2 years period. People are entitled for a maximum of 180 days (270 for unemployed older than 50). The amount is 40% of the salary of reference for the 3 last month preceding the redundancy with a limit of 760 € for salaries below 1644 € and 913 for the others. As for short time unemployment, a supplement is added on the salary to workers in firms of specific category and locality which do not fit with demanded conditions enabling to be under the full employment system. There is not any specific measure are set for older unemployed.
Luxembourg: Defined by the law, the system ensures an unemployed allowance to those who have worked at least 26 weeks during the year before the redundancy. The standard duration of entitlement is one year and can be extended to 182 days for unemployed who have difficulties to find a job, it can also be extended to durations depending on the duration of affiliation for people older than 50. The allowance rate is worth 80% of the salary of reference. Specific measures are set for older unemployed.
Netherlands: The system is defined by the law. Allowances are allocated to unemployed who have worked at least 26 weeks in the last 39 weeks. The duration varies between 9 months and 4 years. The allowance rate is worth 70% of the last salary with a maximum daily amount of 159 €. Specific measures are set for older unemployed.
Portugal: Defined by the law, the system is based on a social insurance regime compulsory for workers. It is completed by the unemployment assistance for those who are not entitled to unemployment insurance. Allowances are allocated to those who have worked at least 540 days during the last 24 months before their redundancy, for a period going from 12 to 30 months at the most and according to the age. The amount is worth 65% of the salary of reference. The unemployment assistance is allocated to those who can justify 180 working days during the last 12 months. The entitlement periods follow the same rules as the unemployment insurance but when assistance allowances are allocated after people have been allocated insurance allowances, the duration is divided by two. The amount of the unemployment assistance allowances are worth 80% of the minimum wage. Older unemployed are compulsorily retired when their rights are exhausted.
United Kingdom: defined by the law, the system provides an unemployment allowance financed by compulsory social contributions of workers and an assistance financed by tax. Allowances are allocated according to family resources conditions for a period of a maximum of 182 days as far as insurance is concerned and an unlimited period for the assistance. The basic rates of these allowances are 340 € a month (204 for young aged 16 – 17, 268 for the 18-24) and 523 € for a couple. There is not any specific measure are set for older unemployed.
Sweden: Defined by the law, the system has two constituents: an allowance proportional to the income (80% of the income) for people who chose to affiliate an unemployment insurance fund for at least 12 months; a basic allowance for people older than 20 For an East – West solidarity of the social movements years old who cannot get the proportional allowance and who have worked at least 6 months, 70 hours a month. The basic allowance is allocated for 300 days at the most and is worth 29 € a day. There is not any specific measure set for older unemployed.
----------------------------------
Our government has been postponing the need for unemployment insurance for too long. We do not have sufficient safety nets underpinning our country's social and economic systems. The concern has always been the cost side. The other argument is the incentive not to work. There is a bigger danger in having unemployment insurance - companies may be more "willing" to bite the bullet to lay off workers in such an environment.
We already have too many archaic rules pervading the economic life of Malaysians. Its quite debilitating really. We have no unemployment insurance, and every 7-10 years we will have a massive recession and many might not be able to honour their commitments owing to forces greater than them.
We can take the pedestal and say they deserve it for not being able to manage their financial affairs properly, but seriously, even drug addicts and prisoners get a second chance to rebuild their lives. I am not here to justify reckless behaviour, but to ask that the laws be fairer to the normal person. When you unfairly penalises a person, it does not just affect the person alone, in Malaysia's culture, people also have to take care of their parents and extended families. Hence the social impact is substantial.
I am not an insurance guy, but I think we can come up with a semi government body to do this, or even be part of EPF to do this. EPF can do this role well as it already has the database for checks and balances.
How about all employees contribute 1.5% to this Fund and the employer puts in another matching 1.5% of salary. Only employees who have contributed more than 1 year will be able to enjoy the benefits. If you are laid off, you will get 3 months full pay and 5 months of half pay of your last salary.These will be paid like normal salaries on a monthly basis, thus covering most expenses for at least 8 months. This will be in additional to the normal notice pay and severance pay. Once you have taken the unemployment benefits, you will need to be working for at least another year before being qualified to obtain the benefits again.
Like I said I am no actuary, but all things being equal, the monthly 3% to the fund basically means 1 person is covered for every 33 employees. All things being equal again, in a downturn the Fund should be more than able to carry a 300 basis point jump in unemployment (e.g. if unemployment rate jumps from 3.5% to 6.5%, technically speaking we are better equipped to deal with it). EPF has the database and will be able to verify when a person has found new employment. In any system there will be bad hats trying to find loopholes - heavy penalties should be meted out to discourage bad behaviour by employers and employees.
During good times, the Fund will be able to accumulate surpluses, thus covering the outflows during bad times. It is not meant to be a crutch but part of a developing structure for a developing nation, that seeks to minimise social costs, where we can grow and shoulder the good and bad together. Any major shortfall will be borne by the government, which won't be necessary if the calculations are made properly. Its not a crutch really because its NOT borne by the taxpayers but by the contributors to the insurance scheme. That 8 months of pay will be very important as many are shouldering mortgages that needs to be serviced - its not like, no job then can go back to kampung and stay with parents or live off the land. Let's be realistic.
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Monday, 4 June 2012
Shanghai Index Shaming China's Government?
This is uncanny. Can this be tweaked? Now there should be a big crackdown to look for "culprits".
China's share benchmark has fallen foul of the country's internet censors by appearing to mark the 23rd anniversary of the Tiananmen Square crackdown on pro-democracy protesters.
In an unlikely coincidence certainly unwelcome to China's communist rulers, the stock benchmark fell 64.89 points on Monday, matching the numbers of the June 4, 1989 crackdown in the heart of Beijing.
In China's lively microblog world, 'Shanghai Composite Index' soon joined the many words blocked by internet censors.
Coincidence ... China's share benchmark fell 64.89 points on Monday, matching the numbers of the June 4, 1989 Tiananmen Square crackdown.
In another odd twist, the index opened Monday at 2,346.98. That is being interpreted as 23rd anniversary of the June 4, 1989 crackdown when read from right to left.
Public discussion of the Tiananmen crackdown, which the Communist Party branded a "counter-revolutionary riot", remains taboo. Analysts refused to comment on the numbers.
On the popular Sina microblog site, searches using 'June 4', '64.89', 'stock market', and 'benchmark Shanghai Composite Index' were all blocked.
Such searches draw the response: "According to law such words cannot be shown."
In Beijing, the anniversary passed without any major sign of protest. The front page of the party newspaper, People's Daily, trumpeted the "Stable, fast development of the Chinese economy: Advancing to be the World's No.2".
The melee as soldiers fought their way into Beijing to clear Tiananmen Square is believed to have left hundreds dead. In response to the violence in the capital, demonstrations erupted in more than 180 cities.
Foreign Ministry spokesman Liu Weimin objected to a US State Department call for a reconsideration of the party's stance as "rude interference in China's internal affairs".
In the semi-autonomous Chinese city of Hong Kong, tens of thousands crowded into a large park to mark the anniversary. They held aloft white candles that transformed the area of soccer pitches into a sea of light, before observing a minute of silence.
Read more: http://www.smh.com.au/business/world-business/china-stock-index-evokes-tiananmen-with-6489point-fall-20120605-1zsoe.html#ixzz1wsgdYT8w
China's share benchmark has fallen foul of the country's internet censors by appearing to mark the 23rd anniversary of the Tiananmen Square crackdown on pro-democracy protesters.
In an unlikely coincidence certainly unwelcome to China's communist rulers, the stock benchmark fell 64.89 points on Monday, matching the numbers of the June 4, 1989 crackdown in the heart of Beijing.
In China's lively microblog world, 'Shanghai Composite Index' soon joined the many words blocked by internet censors.
Coincidence ... China's share benchmark fell 64.89 points on Monday, matching the numbers of the June 4, 1989 Tiananmen Square crackdown.
In another odd twist, the index opened Monday at 2,346.98. That is being interpreted as 23rd anniversary of the June 4, 1989 crackdown when read from right to left.
Public discussion of the Tiananmen crackdown, which the Communist Party branded a "counter-revolutionary riot", remains taboo. Analysts refused to comment on the numbers.
On the popular Sina microblog site, searches using 'June 4', '64.89', 'stock market', and 'benchmark Shanghai Composite Index' were all blocked.
Such searches draw the response: "According to law such words cannot be shown."
In Beijing, the anniversary passed without any major sign of protest. The front page of the party newspaper, People's Daily, trumpeted the "Stable, fast development of the Chinese economy: Advancing to be the World's No.2".
The melee as soldiers fought their way into Beijing to clear Tiananmen Square is believed to have left hundreds dead. In response to the violence in the capital, demonstrations erupted in more than 180 cities.
Foreign Ministry spokesman Liu Weimin objected to a US State Department call for a reconsideration of the party's stance as "rude interference in China's internal affairs".
In the semi-autonomous Chinese city of Hong Kong, tens of thousands crowded into a large park to mark the anniversary. They held aloft white candles that transformed the area of soccer pitches into a sea of light, before observing a minute of silence.
Read more: http://www.smh.com.au/business/world-business/china-stock-index-evokes-tiananmen-with-6489point-fall-20120605-1zsoe.html#ixzz1wsgdYT8w
Commodities Correction - Something Sinister In The Works?
We can all appreciate stock markets correcting with the E.U. crisis somehow managing to find more things to worry about. However, the smarter ones would have been asking why the commodities have been falling way before stocks, and now seems only going stronger in its downfall together with global equities.
Commodities have been a good gauge of the strength of economic recovery. Hence are we saying the global economy is headed for a tailspin? A minor correction is understandable but the way they have been correcting implies there is something graver in the works.
Price of oil has fallen into a hole, so much so that it is below some of the OPEC members' production cost even. Other commodities have done likewise. What was interesting was that although gold did perk up, it did not reflect a stampede to get out of all assets with the fear of inflation in mind.
The negative yield into German papers indicate that people are rushing to solid currencies. Before we venture further let's look at the 2011 asset class returns. Almost everything went into a hole except for bonds, corn and oil. Hence we cannot say there had been any over exuberance over the past 18 months.
The Contango Effect
Malaysian market players from the 90s would be well aware of the word contango. Say you buy shares with minimal deposit or no deposit for say RM100,000 and you have no bloody intention of picking them up, or have the ability to. You have to rollover, that's contango. In the futures markets for commodities, a substantial portion of trades are contango trades.
Final Word - I do not think this is developing into a catastrophic scenario. I believe the correction in commodities is more a congruence of factors aligning itself at the same time. Nothing much to do but sit and wait.
Commodities have been a good gauge of the strength of economic recovery. Hence are we saying the global economy is headed for a tailspin? A minor correction is understandable but the way they have been correcting implies there is something graver in the works.
Price of oil has fallen into a hole, so much so that it is below some of the OPEC members' production cost even. Other commodities have done likewise. What was interesting was that although gold did perk up, it did not reflect a stampede to get out of all assets with the fear of inflation in mind.
The negative yield into German papers indicate that people are rushing to solid currencies. Before we venture further let's look at the 2011 asset class returns. Almost everything went into a hole except for bonds, corn and oil. Hence we cannot say there had been any over exuberance over the past 18 months.
| 2011 Sector Performance | Performance | Potentially Similar ETF |
| Utilities | 13.10% | (XLU) |
| Healthcare | 10% | (XLV) |
| Services | 4.20% | n/a |
| Consumer Goods | 2.60% | (XLP) |
| Technology | -3.60% | (XLK) |
| Conglomerates | -3.90% | n/a |
| Indusrial Goods | -4.90% | (XLI) |
| Basic Materials | -10.40% | (XLB) |
| Financials | -18.80% | (XLF) |
| 2011 Capitalization Performance | Performance | Potentially Similar ETF |
| Large | -4.40% | (SPY) |
| Mid | -4.60% | (MDY) |
| Mega | -6.60% | (DIA) |
| Nano | -8.30% | n/a |
| Small | -9.10% | (IJR) |
| Micro | -16.10% | (IWC) |
| 2011 Index Price Performance | Performance | Potentially Similar ETF |
| S&P 500 | -0.02% | |
| Shanghai | -22.42% | (FXI) |
| Nikkei 225 | -17.34% | (EWJ) |
| Hang Seng Index | -19.27% | (EWH) |
| Euro Stoxx 50 | -18.41% | (FEU) |
| S&P/TSX Composite Index | -11.01% | (EWC) |
| 2011 Currency Performance | Performance | Potentially Similar ETF |
| EUR/USD | -1.30% | n/a |
| USD/JPY | -5.91% | n/a |
| USD/CAD | 1.64% | n/a |
| USD/CNY | -4.62% | n/a |
Note: currency ETFs do exist, but without detailed explanation of how they work I thought it prudent to leave out the tickers.
| 2011 Commodity Performance | Performance | Potentially Similar ETF |
| Gold | 10.19% | (GLD) |
| Oil | 6.33% | (DBO) |
| Natural Gas | -42.21% | (GAZ) |
| Silver | -9.75% | (SLV) |
| Copper | -19.56% | (JJC) |
| Wheat | -23.89% | (JJA) |
| Soybeans | -5.81% | " |
| Corn | 15.43% | " |
| 2011 Bond ETF Performance | Performance | ETF Used in Calculation |
| Long Term US Treasuries | 30.25% | (TLT) |
| iShares Aggregate Bond Fund | 4.68% | (AGG) |
| TIPS | 9.28% | (TIP) |
| Investment Grade | 5.17% | (LQD) |
| High Yield | -0.78% | (HYG) |
The Contango Effect
Malaysian market players from the 90s would be well aware of the word contango. Say you buy shares with minimal deposit or no deposit for say RM100,000 and you have no bloody intention of picking them up, or have the ability to. You have to rollover, that's contango. In the futures markets for commodities, a substantial portion of trades are contango trades.
A simple explanation for the commodities price fall would be that investors and traders have given up rolling over positions and just squaring. Generally in contango trades, you are usually long. It is infrequent that contango trades being short trades. Many hedge funds or large investors do contango trades because of the "super cycle theory", which Jim Rogers is famed for, i.e. we are supposedly on a very long bull run for commodities.
There are probably contributing factors to the diminishing contango positions: more ideal weather patterns for agriculture products (a weakened La Nina), a genuine reassessment that the China engine may not be as strong as first thought. Lump that in with the renewed E.U. crisis implosion (European elections), you have a potent mix.
Final Word - I do not think this is developing into a catastrophic scenario. I believe the correction in commodities is more a congruence of factors aligning itself at the same time. Nothing much to do but sit and wait.
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