What the Asian Infrastructure Development Bank means for Asia and the world

12 Oct The Asian Investment Infrastructure Bank

Almost exactly a year ago, just prior to the Asia Pacific Economic Co-operation (APEC) hosted in Bali in October 2013, President Xi Jinping announced the proposal for the establishment of the Asian Infrastructure Investment Bank (AIIB). This was a major announcement which was unforeseen and unexpected particularly as no clear plans were outlined at the time.

Since the announcement however, Chinese officials have been very busy in encouraging other fellow Asian partners to be the initial founding partners of the AIIB.

To date, the Chinese Ministry of Finance has convinced over 22 Asian partners including the likes of Singapore and Bangladesh to confirm their participation as founding partners and contribute to the initial funding capital.

Other major partners such India, Qatar and Saudi Arabia have been very bullish about the prospects and the promise of the AIIB and have made very positive overtures publicly about their participation as founding members. Other South East Asia partners such as Thailand and Malaysia remain positive and other major partners such as South Korea and Australia are still studying the Chinese proposals.

 

The Asian Investment Infrastructure Bank

The role and rationale for the AIIB

The mandate of the AIIB, as a multilateral development institution, is to support the financing of infrastructure developments across Asia that supports economic growth and activity nationally and regionally.

Traditionally Asian nations have turned to the Asian Development Bank (ADB), the International Monetary Fund (IMF)  and the World Bank for financial support. However, the level of financial assistance, particularly from the World Bank and the IMF have dropped since the 2008 financial crisis.

The ADB is also being increasingly viewed as a bureaucratic entity which takes almost seven years to launch a project or initiative (from proposal to the approval of funding) which leads to significant delays due to red-tape.

These conditions do not support the urgent need for infrastructure investment by a number of Asian economies. The ADB estimates that Asia needs about US$8 trillion of physical infrastructure investment between 2012 and 2020. The OECD estimates that globally over US$50 trillion of infrastructure investment is required over the next two decades to support sustained economic activity.

The AIIB is expected to have an initial capital of between US$50 billion to US$100 billion with China contributing to half that amount. This will immediately create an entity that is stronger than the Asian Development Bank (which has a current capitalisation of about US$78 billion) and will be around half of the World Bank’s current capitalisation of between US$180 billion to US$200 billion.

 

Implications and impact for major Asian partners

The creation of the AIIB has a number of major implications for Asian economies. Growth prospects With depressed growth prospects – strong investment in infrastructure projects will support the creation of demand and improve production and consumption. The enhanced infrastructure will also support greater trade and economic expansion.

This is certainly the case for India which forecasted a need for approximately US$1 trillion to meet infrastructure requirements under its 12th five-year plan (from 2012 to 2017) but is struggling to meet the investment target. Participation in the AIIB will allow for India to raise greater capital and visibility for some of her public-private infrastructure initiatives. The rest of the South Asian subcontinent, including Sri Lanka, Bangladesh, Nepal and Pakistan have all either signed up with the AIIB or shown strong interest in the initiative. If India chooses to remain on the side lines, her influence across South Asia will further diminish. The AIIB will be a strong platform for India to take on a regional leadership role and be seen to be a partner for the region’s growth and success.

The AIIB will also certainly support a number of smaller Asian economies which have been unable to meet the stringent requirements or payment terms set out by the likes of the Asian Development Bank or the World Bank. This includes the likes of Nepal, Cambodia and Laos.

From a political perspective, the impact for Japan as a result of these developments is significant. The Asian Development Bank has traditionally been led by Japan (who along with the US share the majority voting rights in the ADB) which previously allowed Japan to exert her political and economic influence across Asia. The AIIB will certainly curtail Japan’s political influence across Asia and also strengthen China’s hand in the on-going disputes ranging from the South China Sea territorial issues to legacy World War II disputes.

South Korea on the other hand is trying to navigate its participation in the AIIB tenderly. On one side, Seoul has to please her largest trading partner, China, whom she is working closely with towards greater economic success. On the other side, Seoul’s traditional security partner, the US, remains a critical partner in South Korea’s regional defence strategy.

ASEAN (Association of Southeast Asian Nations) has certainly shown significant support for the AIIB. Indeed Singapore was one of the early founding members of the AIIB as they have a clear stated policy of working with China from the inside rather than remaining out on the side lines looking in. Other major ASEAN economies such as Thailand, Malaysia and Indonesia are likely to sign up to the AIIB to exert greater influence in the way the bank is run and managed which will in turn support their own investment and growth plans. However, there will be concerns, particularly from Philippines and Vietnam, which in recent times have had strong and sharp exchanges with China over the South China Sea islands. Their concern will be that should China take a greater role in economic influencing and funding, it will strengthen China’s hand and erode Vietnam and Philippines’ support in their respective claims in the South China Sea.

Asia has always traditionally had strong savings, currently estimated to be worth over US$3.99 trillion. This supply of savings can meet some of the immediate infrastructure requirements across Asia but there is a mismatch in channelling these savings towards the financing of the infrastructure projects. The AIIB can help resolve this funding gap moving forward.

 

Problems with Uncle Sam?

The US government has not hidden their opposition to the establishment of the AIIB.

Their biggest concerns are around how China will use the AIIB to further project her economic and political dominance across the region. It also gives greater clout to other major Asian partners such as South Korea and India whilst diminishing the influence of the United States’ traditional Asian partner, Japan (who leads the ADB as highlighted above). This does alter the geopolitical realities in the region and softens the US hegemony in the region.

Some of the other concerns highlighted by the US government is that the new bank will not have adequate and robust safeguards in areas such as environmental protection, human rights and a transparent procurement process which will undermine the need for good governance across the region. Indeed, if the AIIB fails to have strong safeguards, it will exacerbate the challenges of corruption, lack of accountability and proper due diligence which have remained endemic problems across Asia (and also around the world). However, it is likely that the AIIB will operate to very high and rigorous global standards when assessing and evaluating projects.

However, it must be noted that China has made it clear from the outset, and also recently at the Boao Forum for Asia, that they welcome the participation of the US and other European Union partners in the AIIB. This will provide an opportunity for non-Asian partners to support the bank and ensure that AIIB’s governance and strategy is in line with global standards.

The US should use this as an opportunity to partake in the region’s continued growth and stability. US participation in the AIIB (which will be subject to lengthy Congressional debates) will certainly do more to support US foreign policy of a safer and prosperous world rather than the current position of dissuading potential partners from participating in the AIIB.

 

The future

The AIIB will need to create strong and close collaborative partnerships with the likes of the World Bank and the ADB so that they are not working to cross purposes. Encouragingly, the World Bank have announced their wish to work closely with the AIIB when they launched the Global Infrastructure Fund (GIF) earlier in October 2014. Similarly, the ADB have also announced their intentions to work closely with the AIIB.

The AIIB will also need to create a viable and sustainable business model which channels funding appropriately towards infrastructure investment.

Recently, the BRICS Bank or the New Development Bank was set up by Brazil, Russia, India, China and South Africa. The BRICS Bank is headquartered in Shanghai and the Presidency is maintained by India for the initial five years. However, the funding from this BRICS bank is only available to the BRICS nations and not to the rest of Asia. The AIIB helps to alleviate this issue.

The AIIB can potentially create a platform that generates economic ties and greater unity across Asia. It provides a strong and credible opportunity for major Asian rivals to become partners towards growth and development. Initiatives such as these will help to provide resolution to tricky issues that always emerge between partners and friends.

 

Revitalising Scottish Football – a 10-point proposal

4 Oct A 10-point plan to revitalise Scottish football!

As a big fan of Scottish football for a while (I’ve been following Celtic since I was at university!), it has been sad to watch the decline of the game in Scotland over the last couple of decades.

I have been giving further thought as to what could be done to revitalise the game in Scotland and to inject vigour and excitement back into one of the old leagues in the world. Lest we forget, it was a Scottish team (Celtic) that was the first amongst British teams to win the European Cup; the largest attendance for a European game was at the 1970 European Cup Semi-Final at Hampden Park where over 130,000 fans watched the game; and one of the largest attendance for an international fixture was between Scotland and England when almost 150,000 fans watched the game! Scottish football has also provided other moments of magic. Indeed the jinking run made by Archie Gemmill as he scored against Holland in the 1978 World Cup remains one of the best goals ever seen in an international game.

I have a number of suggestions and initiatives which may support raising the global profile of Scottish football and in the process rejuvenate the league and raise the game.

1. Leverage off the tradition and history of Scottish football teams

The story of Celtic – a club established in 1888 by Brother Walfrid with a clear purpose of raising money for charity and alleviating the crippling poverty witnessed in the East End of Glasgow – is one that will resonate significantly across many societies and cultures in many parts of the world. Certainly the Confucian principles under which Celtic was set up will be a big draw in East Asia, if only more people knew more about it.

On the other hand, we have Rangers, another illustrious Glaswegian club with a rich sense of history. Together, Celtic and Rangers, or the Old Firm as they collectively know, form one of the world’s most enduring and exciting rivalries in football. The differences in social ideology, a rivalry that has lasted over a century and the collective successes of both clubs are huge sources of excitement for anyone anywhere in the world, regardless of background or creed.

It will be important for Scottish football teams to draw out their rich and vibrant histories and backgrounds and promote and sell a compelling story to the world! Where Scotland is concerned, there has always been a sense of romance, and perhaps it is this which Scottish football clubs should appeal to.

2. Host an Old Firm derby (or friendly) outside of the UK – possibly in China, Japan, India, Indonesia or in North America

The Old Firm derbies have always evoked a lot of passion and there is a certainly a rich sense of history to the games between Celtic and Rangers. One suggestion is for these derbies to be played outside of the UK in places like China, Japan (where Scottish football is already popular thanks to Japanese superstars like Nakamura), India or Indonesia or perhaps somewhere in North America where there is a strong Scottish diaspora present.

It will be important to invest in the marketing and promotion of the history of the Old Firm, the rivalry and the passion, so that people buy into the history which I’ve alluded to in point #1 above. Global football fans love a sense of history and if they can be educated on the excitement which is the Old Firm derby, it will be extremely popular and it will create an interest in the Scottish game which will result in positive externalities for the whole of Scottish football.

It is important for Scottish football to project and market itself beyond her current shores and capitalising on stories such as that of the Old Firm derbies will be an important part of that process.

3. Greater focus on youth and grassroots development (and innovative approaches around youth development)

Focus must also be paid to effective talent management and retention of youth footballers. The Scottish Football Association certainly has taken a lead in ensuring that the game reaches out at a grassroots level and youngsters across schools are being developed and talent spotted. Certainly this has to continue to ensure that the national team has a steady pipeline of talented football coming through the ranks. There should be further adoption of best practices from other successful youth academies such as the Dutch youth development schemes as well as from clubs such as Barcelona which has a world class development programme under the La Masia academy which has produced world class talent over the years. There has to be a focus on technical development towards individual improvement as well as a focus on unified team excellence.

Highly promising youngsters should also be sent on loan to other youth development programmes at other clubs and even continents to gain further exposure. They must be fully supported to ensure they develop with both footballing and academic skillsets which will support them throughout their lives.

4. Scottish U-21 national team or Celtic, Aberdeen, Rangers U-21 or ‘B’ teams to participate in emerging Asian leagues

Increasingly, we also see youth national teams participate in other leagues. For instance, the Singapore U-23 team participates in the Malaysian League and likewise the Malaysian youth team participates in the Singaporean Premier League. This has led to increased exposure for the younger players and has also helped to lay the foundations for the senior national teams.

One suggestion is for the Scottish U-21 national team or perhaps the U-21 or U-23 teams at the leading Scottish teams to participate in emerging Asian leagues in Asia (potentially Southeast Asia or South Korea, China or Japan). This will give greater exposure for the Scottish youth players whilst also providing them with the opportunity to pit their skills against senior and more experienced professionals. This will raise the quality of the game which will ultimately benefit the Scottish national team. It also will help to act as a strong brand agent for Scottish football and clubs in the countries they are playing in which will in turn drive greater interest for the Scottish game. Raising the visibility of Scottish football will be significantly easier through an initiative such as this.

5. Scottish football teams to engage international student societies in leading Scottish universities

I became a fan of Scottish football and Celtic when I was at university and it has remained an enduring and lasting relationship. I have remained a Celtic fan and have attended games where possible and also spent (considerable!) amounts on kits and souvenirs. I have also been a passionate advocate of Scottish football to friends around the world.

I do believe that if Scottish football clubs appeal to particularly the international student societies at the leading Scottish Universities such as Glasgow University, Uni of Strathclyde, Uni of Edinburgh, etc and provide heavily discounted or free tickets to students at universities, it will create a greater interest and participation by the international students of Scottish universities. These students will also return home to spread the word of the excitement of Scottish football and will become active ambassadors who will promote Scottish clubs and football and this will increase the visibility of the league and teams in Scotland.

Building an interest in the game at a local grassroot level is important and building it at an international level will require active global ambassadors and what better ambassadors than a young person from beyond Scottish shores whose imagination and passion has been captured.

6. Capitalise on Scotland’s greater international profile (off a very successful Commonwealth Games and the increased publicity as a result of the Independence Referendum)

Over the last year, Scotland has gained even more extensive international prominence in the eyes of the world. A hugely successful Commonwealth Games has helped to project Glasgow and Scotland in a very positive manner to viewers from around the world. Likewise, the very exciting Independence Referendum (please see a separate article here around the positive impact the referendum has had here) has also catapulted Scotland into the centre of world affairs. Scottish football should leverage from the positive goodwill accrued and use it to project her achievements and the history and gain further traction in the international arena.

7. Negotiate separate deals with Asian TV broadcasters 

Scottish football should also consider negotiating separate deals with national broadcasting companies in Asia, going beyond the current SKY/BT Sport models. One possible way of doing this is rather than selling entire football packages, the Scottish Professional Football League (SPFL) should consider a weekly 1-hour highlights programme which they edit (where the best of the week’s footballing content is captured) and sold to national TV companies across Asia and Europe which will create further excitement about Scottish football and also creates an additional revenue stream which benefits all the teams in the Scottish leagues.

If some of the other points here are implemented and there is a greater interest in Scottish football, it will allow for the SPFL to have a stronger hand in negotiating contracts and TV deals.

8. Twinning programme with other European clubs

Scottish football teams should consider formal twinning arrangements with clubs across Europe. For instance, Celtic could consider twinning with Barcelona, Abderdeen with Roma, Rangers with Juventus (given similar histories in their rise from lower leagues following demotion), etc.

The twinning arrangements could consider exchange of youth players, sharing of marketing, development of junior teams, charity matches and the sharing of best practices. This will allow for Scottish football clubs to implement and adopt global best practices in team and club management. The twinning arrangement could also extend to fans (where fans attend games of their twin clubs) and create greater camaraderie and friendship across borders.

This will lead to a greater level of dialogue and cross-cultural interactions which benefit not just the football teams but also the people behind the various teams. The exchange of youth players also aids in the player development which ultimately benefits both the Scottish clubs as well as the national team. It also improves the scouting network of Scottish teams which will again improve the quality and standard of players within the Scottish leagues.

9. Recommendation for an annual British Cup (featuring the top teams from the Home nations)

This idea may have been mooted before but it may be worth revisiting. There could be an end of season tournament each year where the top two teams from England, Wales, Northern Ireland and Scotland along with the respective FA Cup finalists taking part in a knockout tournament. Potentially this could see Manchester City, Liverpool, Celtic, Motherwell, Cliftonville, Linfield, The New Saints and Broughton all taking part in a knockout tournament (with each team playing each other only once at a stadium decided by a draw), leading to a semi-finals and then a final where the British Champions are crowned. This has significant potential for a global audience and will spur interest and support from not only the respective countries taking part, but also raise publicity for the lesser known clubs and unearth heroes who were hitherto unknown!

10. International and localised branding and marketing

Finally, in addition to some of the points highlighted above, once Scottish football and clubs have decided on target markets they are keen to extend their reach in, they should consider local language websites, collateral and more active publicity and branding campaigns in these countries. They should also consider adapting to different pricing structures for the sales of kit and collateral items to reach out to a larger target audience. They could do this through the kit partners (such as Nike, Reebok, etc) initially and then subsequently also consider setting up their own shops. These will have the effect of driving further revenue streams and also more importantly drive greater awareness and build brand recognition in the countries they are in.

Conclusion

The above suggestions could potentially go someway towards addressing some of the more pressing needs of Scottish football today. The suggestions individually may not have the desired impact, but collectively could reinforce Scottish football further and create the impetus required to grow and develop further.

I do fundamentally believe that Scottish football can punch beyond its weight and be a real force in European and world football. Ambition reinforced with vision and urgency will allow Scottish football to achieve its aims and collective goals.

What Scottish independence could mean for the world.

14 Sep

yes-no2

With the referendum on Scottish independence upon us imminently (taking place this coming Thursday on the 18th of September 2014), the results, either way, will have profound implications for the UK, for Scotland, and indeed, for the world.

Numerous analysts have written excellent in-depth assessments considering the economic, political, social and legal impacts of Scotland’s independence from the UK should it actually take place.

However there is another dimension to consider, the impact this has for Europe and the world. A Scottish seat in the UN may provide dreams and visions for other nationalists in other regions who have always sought independence.

An independent Scotland, oil rich and fiercely socialist, (not very dissimilar to Norway), may join the EU and not necessarily the Euro. I suspect that despite the rhetoric from the “No” team, an independent Scotland will retain the Pound Sterling in a currency union similar to that of Singapore and Brunei (which share a common currency).

Across Europe, I suspect we will see rejuvenated pro-independence/secessionist groups clamouring for their independence as well. We are already witnessing the Catalans protesting for independence from the rest of Spain as they have done for over three centuries. Basque also seeks independence from Spain – and the peaceful manner in which Scotland is pursuing the case – may form a template for the Basque nationalists to seek a similar approach.

In nearby Belgium, Flemish nationalists are also watching the Scottish independence referendum with interest. They have been seeking an independent Flanders/Flemish republic. In elections held earlier this year, the Flemish nationalist party, the New Flemish Alliance (N-VA) emerged as the party with the most votes. However, it must be noted that the majority of those living in Flanders have little appetite for full independence, yet, but are keen on greater autonomy.

Going a little further eastwards, we see that independence sentiments have also been very strong in Venice. In a poll conducted earlier this year, 2.36 million Venetians (63.2% of all eligible voters) participated in an online referendum. Almost 90% of those polled indicated that the region of Veneto (where Venice is) should be independent. Veneto’s President Luca Zaia said the region is tired of the lack of respect from Rome and seeks independence as a path towards greater freedoms and opportunity for Veneto.

The implications of what transpires from the Scottish independence vote may also potentially galvanise pro-independence movements from Quebec to Kurdistan to Kashmir. It may even inspire long dormant independence movements such as the Dravida Nadu movement (which seeks an autonomous or independent Southern India which is culturally, linguistically and historically distinct from the rest of India).

However, the manner in which the Scottish debate has been had is something other independent movements can learn from. Despite heated debates and sometimes a bit of mud-slinging by both sides, for the most part, the deliberations and remonstrations have been largely civil. Perhaps, the most important thing to come out from this referendum is that it is possible for independence and freedom to come from means other than at the end of a rifle.

Myanmar’s Development Agenda – Opportunities and Challenges

31 Aug Panel discussion: Myanmar's development agenda - opportunities and challenges

I was fortunate enough to participate at the recent Myanmar Development Summit held in Yangon on the 10th of August 2014. I participated in a panel discussion on the opportunities and challenges for Myanmar’s development agenda.

 

Panel discussion: Myanmar's development agenda - opportunities and challenges

Panel discussion: Myanmar’s development agenda – opportunities and challenges (L-R: Dr Thet Thet Khine, U Aye Chan, U Kyaw Tin, Dr Maung Maung Lay, Reza)

The panel was moderated by U Kyaw Tin, Chairman of the Myanmar Institute of Certified Public Accountants and I shared the panel with Dr Maung Maung Lay, Vice President of the Union of Myanmar Federation of Chambers of Commerce and Industry, UMFCCI, Dr Thet Thet Khine, Secretary General of the UMFCCI and U Aye Chan, CEO of IMA Group.

Developments to date

Over the last few years as Myanmar has opened up economically and politically, there have been some major strides made in a number of areas:

1. Social and political reforms:

Politically we have seen a greater freedom of speech, improved press freedom and broader steps towards national reconciliation. The ongoing dialogue with armed groups in a number of states is also a step in the positive direction.

In the last three years government spending on education has more than trebled (it was increased by 30% in the last year alone) and government spending on healthcare has almost increased five-fold (it grew by 78% in the last 12 months alone).

The government has also implemented a strategy for greater public financial management reforms to enhance efficiency and transparency of government spend.

 

2. Improved monetary policy and central bank independence

The monetary policy has improved starting with the unification of exchange rates (there used to be a time where the official kyat to US dollar rate was 8 kyat to a dollar whilst the market rate was closer to 800 kyat to a dollar!).

The regulations governing central bank independence have also been brought more in line with international best practices, granting the central bank greater independence and autonomy.

 

3. Improved tax collection and reforms

With support from the World Bank, Myanmar is also embarking on a series of ambitious tax  reforms to strengthen revenue administration, which will increase the effectiveness of tax and non-tax revenue mobilization.

This was further supported by the passing of the Union of Myanmar Revenue Law of 2014 and four other tax bills in March this year.

 

4. Improving business, investment and trade climate

Approved FDI has increased to US$4.1 billion in 2013/2014 (almost 300% from 2012/2013 when it was only US$1.4 billion). The investment has also been distributed across a diverse range of sectors from manufacturing (45%), telecommunications (30%) and hospitality hotels (10%). This will prove beneficial in the long term as it will increase employability whereas investment primarily in the resource sector would have not necessarily created sufficient job opportunities. The investment has also come from unlikely trade partners including Ooredoo of Qatar and Telenor of Norway (both in the telecommunications sector).

This improved business climate has come on the back of passing of the Foreign Investment Law (FIL) in late 2012 which provided better clarity for international businesses seeking to do business in Myanmar along with the removal of restrictions and barriers to foreign investment. The highly efficient Directorate of Investment and Company Administration (DICA) have also reduced the time for businesses to establish operations in Myanmar (this is also on the back of my own personal experience as we established our operations in Myanmar).

 

5. Progressive financial sector developments

The government is working very closely with industry stakeholders as Myanmar seeks to establish its first stock exchange in Yangon – the Yangon Stock Exchange (YSE).  This is following the passing of the Securities Exchange Law last year.  Japan’s Tokyo Stock Exchange (TSE) and Daiwa Securities Group, a Japanese investment company will supporting Myanmar in delivering the YSE by October 2015.

A microfinance law was also passed last year to improve access to finance for small and medium sized firms and to increase the level of liquidity in the market.

Banks are also being held to more stringent regulations and are required to improve their capital adequacy ratios to be more in line with international best practices.

 

Some key facts to consider:

  •  GDP growth was 7.5% in 2013 (forecasting 7.8% in 2014).
  • Agriculture provides jobs for over 50% of Myanmar’s workforce.
  • Government budget for 2014 was US$ 19.5 billion (a third of Myanmar’s GDP)
  • Inflation has been creeping up and is expected to increase to 6.6% in 2014 from 5.8% in 2013. This is as a result of the weakening of the kyat vis-à-vis the US dollar, increasing wages (both in the private and public sector), a real estate boom/bubble and increased credit.
  • According to McKinsey, Myanmar has the potential to achieve a GDP od US$200 billion per year by 2030 (it was just under US$60 billion in 2013).
  • The average productivity of a working individual in Myanmar is currently only US$1,500 per annum (which is 70% less than other Asian economies including Thailand, China, Indonesia, India, Vietnam, etc). This low productivity also results in the low GDP per capita.

 

Key areas of focus for sustained development and progress:

Below are seven areas I view as critical for Myanmar’s continued development and progress. The achievements to date remain delicate and can be easily derailed if some of the below trends and developments are not addressed sufficiently.

 

1. A need for harmonious development.

One of the biggest perils faced by rapidly emerging economies is a severely widening income gap. It is vital that Myanmar addresses the issue of income inequality by providing broader employment opportunities and increase the number of middle-class Burmese.

It is also important that Myanmar’s leadership resolves on-going ethnic and sectarian tensions and friction in the country. This can severely destabilise the country and reduce the quality of life for Myanmar’s people. There has to be greater social and religious tolerance. Persistent incidences of communal violence between the Buddhists and Muslims are exacerbating the tensions. The government should support further initiatives by centrist leaders of the Muslim and Buddhist communities and support greater dialogue between the various communities. There needs to be greater efforts to reform education starting with the primary levels, to encourage greater tolerance for the different ethnicities and religions in the country.

The role of the military is still not entirely clear and this ambiguity needs to be resolved for a greater entrenchment of democracy taking root in the country so as to produce the optimal opportunities for further growth.

 

2. Improving access to education and creating educational opportunities for all.

Myanmar’s investment in education has increased significantly over the last three years but it still has one of the lowest averages of schooling the world at just four years. The universities and institutions of higher learning remain chronically underfunded and after four decades of neglect, do not yet have adequate infrastructure. However, this is slowly changing with the likes of Yangon University, Yangon University of Economics and Dagon University striking up partnerships with other top universities and organisation. This will help improve the teaching faculty and also provide greater exposure for the students and staff of these universities which will in turn improve overall performance.

A good national education is also essential for enhanced social mobility. The notion of social mobility is critical in helping people move out from the cycle of poverty and in increasing the middle class segment of a nation. Social mobility can only take effect if the right opportunities and education is provided to the people. As Myanmar continues its growth and development, the educational institutions will need to prepare Burmese youth with the right skills and capabilities so that they can gain meaningful employment and support Myanmar’s development.

 

3. Improving employability, productivity and efficiency

For growth and development to remain inclusive and sustainable, it is important that investment continues in the areas of labour intensive industries and sectors such as manufacturing.

The majority of the population still live in poverty (GDP per capita based on purchasing power parity is about US$3.60 per day)

The government is focusing on an export-led growth supported by productivity gains in agriculture and industrial development. President Thein Sein’s ‘Framework for Economic and Social Reforms’ launched in 2011 emphasised the need for a market-driven economy to support economic growth and to provide jobs and opportunities for Burmese.

There must be greater support provided to farmers and the agricultural sector (which as I’ve stated above provides employment for more than half of Myanmar’s working population) to introduce modern practices and improve productivity. Over time, this ensures greater food security for Myanmar and it also helps to boost the export-driven economy which Myanmar is gearing up towards as food production increases. Myanmar’s agricultural sector is also endowed with the 25th largest arable land in the world and has ten times the per capita water endowment of China and India. This gives the opportunity for Myanmar to be a true powerhouse in agriculture and help feed the world’s growing population.

 

4. Increasing access to finance

As Myanmar’s banking sector continues with reforms, increasing access to finance for smaller and medium sized businesses will help increase further growth, productivity and employment. There isn’t sufficient liquidity in the market and SMEs in Myanmar do not yet have the same impact as SMEs in other ASEAN countries. Part of this is due to a lack of sufficient access to finance which will allow for Myanmar SMEs to compete with their regional counterparts.

On an individual level, more than half of Myanmar’s population have no access to financial services, 30% are using unregulated services and only 20% have access to regulated financial services. The limited access to regulated financial services not only impose significant costs on poor people given interest rates of up to 240%-a-year compared to up to 36%-a-year for regulated services, but informal mechanisms also offer individuals limited protection, less choice and lower returns.

 

5. Sustained commitment to reforms and global standards.

Myanmar has adopted international standards in a number of areas. They adopted the International Financial Reporting Standards (IFRS) along with the International Standards on Auditing (ISA). The government, in an effort to boost transparency and greater fiscal control and management have also adopted the International Public Sector Accounting Standards (IPSAS).

Myanmar is also currently reforming the Companies’ Act which is still loosely based around the 1914 Burma Companies Act! This will ensure greater clarity for enterprises operating in Myanmar and also improve business and investor confidence and sentiment.

Myanmar has also recently become a signatory to the Extractives Industries Transparency Initiative (EITI), a global anti-corruption scheme that requires member governments to disclose payments earned from oil, gas and mineral wealth. Burma’s EITI arrangement could also be expanded to include hydropower and forestry.

Such initiatives will support Myanmar’s reform efforts and development and pave the way towards strong frameworks that support sustainable and inclusive growth.

 

6. Greater transparency, accountability and robust governance

President Thein Sein set up an anti-corruption committee to weed out corrupt public officials. Corruption poses one of the most severe threats to Myanmar’s reforms and development. Crony capitalism exacerbates issues of income inequality and social discontent and the government will need to continue to act to curb corruption.

He also implemented various initiatives to improve administrative reform and cutting red tape.

Though efforts have been made to establish a stronger rule of law, the daily papers recount stories of land grabs, ethnic and sectarian conflicts and corruption and the pervasive conflicts of interests across all levels of government and business. There needs to be grater efforts in the areas of establishing an independent judicial system that will allow for a stronger implementation of rule of law. A clear and robust rule of law improves public confidence, enhances investor sentiments and paves the platform for sustainable growth.

 

7. Capacity building with an eye on sustainability

Myanmar has to undertake sufficient capacity building – both in terms of people capacity as well as physical capacity.

Myanmar’s current physical infrastructure is not adequate to meet future growth demands needs. Massive infrastructure investment in the areas of power, water, rail, road are being planned both locally and with foreign investors’ assistance. However, as Myanmar builds more roads, more railway tracks, better power grids and improved water systems, it will be important that there is effective and well-managed town planning and resourcing. We already are witnessing severe traffic congestion and delays, particularly during peak periods, and it this continues, Yangon’s traffic issues could well rival Jakarta’s or Bangkok’s and this becomes a huge social and business cost. Investment in technological upgrades and telecommunications must also continue as Myanmar’s telecommunications and Internet infrastructure still lags that of the rest of ASEAN.

These infrastructure improvements must also consider the wider impacts on sustainability (including social, human and environmental). Myanmar’s decision to suspend the construction of the Chinese-backed Myitsone Dam in Kachin state due to environmental concerns was a step in the right direction. It is important that Myanmar’s leadership consider the longer term impacts over the possible short-term benefits when making infrastructure plans and decisions.

Physical capacity building must be matched by sufficient human capacity building too. As has been described earlier, there needs to be appropriate educational, training and development opportunities for people to ensure that they have the right skill sets, aptitudes and capabilities necessary to support Myanmar’s development. People and physical infrastructure development go hand in hand and a holistic approach needs to be taken to ensure longer term, viable and sustainable development for Myanmar.

Ultimately, it is vital that the right implementation approach is taken to the policy developments taking place in Myanmar. Policy must translate into action or inclusive growth, economic and social progress and sustainable development will merely remain a pipe dream for Myanmar.

 

References:

  1. Myanmar Economic Update, Asian Development Bank
  2. Myanmar’s Moment, McKinsey
  3. Myanmar:  Between Economic Miracle and Myth, Institute of Southeast Asian Studies (ISEAS)
  4. Sustaining Myanmar’s Transition, Asia Society

 

The Ice Bucket Challenge – a rudimentary cost-benefit analysis

26 Aug

image

 

Roughly 1.5 million video shares of the Ice Bucket Challenge (mostly US based and not including out of US video shares).

The UN states the average person needs 50 litres of water per day (in Africa – they do with 20 litres – with a billion people with little or no access to water)

An average small bucket holds about 10 litres of water.

On a low estimate (ignoring group ice bucket challenges), roughly 1.5 m X 10 l = 15 m litres of water has been used (the Washington Post estimated 5 million gallons or roughly 18 m litres of water used till 13 August)  across the videos.

Which translates to the water usage of 750,000 individuals in Africa for one day.

The ALS has raised about US$80m as a result of these challenges (they raised US$2m the same time last year).

I’m not sure whether the costs and benefits add up necessarily here.

Don’t want to pour cold water on good intentions though…..

 

Some interesting reading:

http://www.un.org/africarenewal/magazine/october-2007/bringing-water-africa%E2%80%99s-poor

http://thewaterproject.org/water_stats

A review of Prime Minister Lee Hsien Loong’s 2014 National Day Rally

19 Aug

It was an interesting National Day Rally session by Prime Minister Lee this year. The Pioneer Generation was saluted, challenges were outlined, the government’s responses to the challenges were highlighted and there was a strong call to action to not forget the past and to reflect on the successes made by Singapore over the last five decades.

Below is a graphic illustration and personal take on the overall session and some of my own interpretations and thoughts. (Please click on image if it doesn’t appear clearly on your browser)

A summary of key messages (and some personal interpretations) of the 2014 National Day Rally by PM Lee

A summary of key messages (and some personal interpretations) of the 2014 National Day Rally by PM Lee

There was an interesting statement on the need to be ‘hard-headed’ in order to be ‘good hearted’ in relation to the need for economic growth to create opportunities. It remains to be seen what these hard-headed options are that are required for economic growth.

The PM’s take on the need to go beyond just academic qualifications and to also focus on relevant skills and qualifications is also an important one. This is what will support the employability agenda eschewed by the government which in turn addresses issues of social mobility and in the process go some way to resolving the widening income equality within the country.

Whilst the emphasis on the ‘Pioneer Generation’ (or PG) is important, it will be vital to support the upcoming ‘Frontier Generation’ (whom I have classified broadly as falling into the 18-35 group) and allowing them to fully explore their passions which are as important as the determination and resolve the PM highlighted in his speech.

On the whole, a thoroughly enjoyable rally with a rousing finale!

Leadership and management lessons from the first men to reach the South Pole

4 Aug

As I was watching Eight Below on HBO this afternoon (great film by the way), I started reading up on the first men who went to the ends of the world and was thoroughly impressed with the feats of the men who sacrificed life, limb, wealth, friendships, family and sanity in an era that was also considered the Heroic Age of Antarctic Exploration.

As I started reading more about the various principal characters involved, I became particularly intrigued by two individuals, Roald Amundsen and Robert Falcon Scott. Both these men vied with each other for the title of being the first person to reach the South Pole. Amundsen ended up with the honour of being the first to get to the South Pole. Scott got there later but met with a tragic end and never returned back to his camp after reaching the Pole.

There are numerous accounts about their journeys and the historical reactions and developments about both Amundsen’s and Scott’s achievements. However, I want to touch on some of my own observations on what businesses and leaders can learn from Amundsen’s trip to the South Pole:

1. Clarity of mission
2. Clear leadership
3. Attention to detail
4. Constant preparation
5. Always find subject matter experts (and avoid arm-chair experts!)
6. Luck – is what you make of it

 

Amundsen-Early-Exploration

1. Clarity of mission

Amundsen was very clear that his primary objective was to be the first man to reach the South Pole. He expended his energy, his thoughts and his efforts to this one single endeavour.

On the other hand, Scott’s agenda was never very clear and he wanted to conduct scientific research, exploration and also reach the pole but nothing was clear defined. One example was when Scott and his team were returning from the Pole, defeated and already running low on supplies, he decided to stop at the top of the Beardmore glacier and deemed it fit to ‘geologise’ and subsequently add more than 15 kilograms of rock to their loads, which slowed them down further and precipitated the crew’s sad demise.

Amundsen was very clear about what his expedition’s objectives were and what his own ambition was and set out to dispassionately attain it.

 

2. Clear leadership

Scott was a product of his times and was extremely formal, conventional and hierarchical and this is what the English establishment demanded this of anyone who was leading an official British mission.

Amundsen on the other hand was an extremely competitive, relentless and focused individual who was also hugely innovative and was ruthlessly direct in his leadership.

As an example, most of Scott’s team (which was made up of sixty five men) was was picked by various external parties. Within that team included a Captain Oates with whom Scott clashed with on numerous ocassions. Oates was never silent about his conflict with Scott either which only served to undermine Scott further.

Amundsen on the other hand handpicked 19 men for his lean Fram expedition. In his team was a Hjalmar Johansen who was a noted explorer too. However, there was an incident where Amundsen made a mistake in setting off for a trek too early. This mistake almost cost the life of one of the men and Johansen publicly berated Amundsen in front of the other men. Amundsen dismissed Johansen from the expedition to preserve the unity and integrity of the team.

One may argue that Amundsen could have taken a different tact or approach. Ultimately, for an expedition into a great unknown, there has to be absolutely clarity and trust. Constant undermining of leadership would have led to mistrust and confusion and in the end cost lives.

As the National Geographic  puts it very eloquently, “Amundsen was also a man of towering ambition, prey to the same dangerous dreams and impulses that drive all explorers to risk their lives in wild places. Amundsen’s greatness is not that he lacked such driving forces but that he mastered them.”

 

3. Attention to detail

The clarity of the big picture is important. For any project or mission to succeed, the attention to detail, regardless of how minute, is also crucial.

In the case of Amundsen, he had a laser-like focus on every aspect of the Fram expedition – from the food chosen to the mode of travel to the choice of clothing.

Amundsen knew that in order to travel the distances they were targeting, they had to be able to get around quicker than if they were to do so purely on foot. To this end, Amundsen spent considerable time perfecting their ski equipment and footwear. This was something Scott’s team did not do sufficiently and towards the later stages of Scott’s expedition, this proved to be fatal.

Amundsen also spent considerable time with the Inuits and adopted fur suits along with their windproof outfits. The Inuits also wore their clothing loosely to reduce sweating (which helps retain body heat and also prevent freezing of clothes).

Even the way the fuel cans were sealed played a big role in the Antarctic expeditions. Scott had used incorrect washers for the fuel cans which led to evaporation of the fuel – which is a critical component in turning ice to water for drinking. Amundsen had worked this out earlier and had ensured that the cans were sealed properly to prevent any loss of fuel.

Food was an important component in the expedition which Amundsen paid a great deal of attention to. Amundsen, following his time with the Innuits, understood that an exclusively meat diet consisting of penguin and fresh seal meat was vital to remaining healthy. Although this wasn’t understood scientifically then, fresh seal and penguin meat provided enough Vitamin C to prevent scurvy (an ailment that afflicted sailors in those days and which was fatal in the long run if not treated).

On the other hand, a number of historians have indicated that the lack of good nutrition was one of the many reasons for Scott’s failure. They also tended to overcook the penguin and seal meat  (to remove the ‘fishy’ taste) which destroyed the Vitamin C present in them. Amundsen’s indifference to palate meant that his expedition ensured that they ate very unappetising biscuits (made from oatmeal, yeast – with enough Vitamin B, beef fat and pounded dried beef!) and which provided them with essential roughage. Again, this is something the British expedition team chose to ignore.

As Geir Klover, director of the Fram Museum in Oslo, explains, “”Amundsen had a tremendous reputation. He was a meticulous planner, easily the best organised explorer of his generation.”

The attention to detail, especially for major campaigns, is absolutely critical in not only determining the success or failure of the campaign, but between life and death.

 

 

4. Constant preparation

During the winter months, Amundsen and his team spent the days optimising their equipment, their clothing, their logistics and working to improve their efficiency. It was an extremely focused team with a clear view of what needed to be done to achieve the task at hand.

Scott’s team spent the time engaged in a series of meetings, lectures and reading. This led to missed opportunities for the team to review their practical and operational needs and performance.

A clear vision, decisive leadership and attention to detail are matters which determine how well a team is prepared for a mission.

 

5. Always find subject matter experts (and avoid arm-chair experts!)

Amundsen had one of Norway’s skiing champions in his team (despite the fact he wasn’t an explore or mountaineer). He also ensured that he had canine experts and dog handlers to choose the best dogs for his journey. (Scott chose not to use dogs – which he thought was more noble). This was also counter to the prevailing view in Britain in those days that dogs were of dubious value as a means of Antarctic transport (which was subsequently proven to be false).

On the other hand, Scott had instructed a member of his team who knew nothing about horses to choose the ponies for the expedition. The ponies chosen were of poor quality, age and condition and which only served to hinder Scott’s expedition.

 

6. Luck – is what you make of it

Amundsen summed it up best when he said:

“I may say that this is the greatest factor—the way in which the expedition is equipped—the way in which every difficulty is foreseen, and precautions taken for meeting or avoiding it. Victory awaits him who has everything in order — luck, people call it. Defeat is certain for him who has neglected to take the necessary precautions in time; this is called bad luck.”

 

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