ahmad rafiki

الأعمال من أجل المتعة

Dikti di Seberang Harapan?

February 16, 2012 by · No Comments · News

Pada tanggal 27 Januari lalu Direktur Jenderal Pendidikan Tinggi, Kementerian Pendidikan dan Kebudayaan, mengirim surat edaran kepada semua perguruan tinggi di Indonesia. Isinya mengejutkan banyak orang, khususnya pihak-pihak terkait.

Sesudah mengeluhkan bahwa keluaran (output) karya ilmiah perguruan tinggi Indonesia kalah jauh dibandingkan dengan Malaysia, diberikan ketentuan: mulai Agustus 2012, untuk bisa lulus sarjana harus dihasilkan makalah yang terbit pada sebuah jurnal ilmiah, untuk lulus magister makalah harus terbit dalam jurnal ilmiah nasional, dan untuk mau menjadi doktor harus di jurnal internasional.

Astaghfirullah! Itukah obat bagi anemia output ilmiah bangsa Indonesia? Muncul dua pertanyaan. Pertama, dapatkah rencana Pak Dirjen direalisasikan? Kedua, kalau dapat direalisasikan, siapa yang akan membaca ribuan makalah setiap bulan di jurnal-jurnal itu?

Pertanyaan pertama

Mengikuti beberapa rekan (di internet), mari kita berhitung. Andai makalah calon lulusan S-1 sepanjang 10 halaman—makalah S-2 dan S-3 15 halaman—dan kalau setiap tahun rata-rata ada 100.000 calon lulusan S-1, perlu disediakan sejuta halaman ”jurnal ilmiah”. Kalau satu jurnal rata-rata 150 halaman dan terbit 12 kali (!) setahun, yang harus disediakan adalah sekitar 555 ”jurnal ilmiah” baru. Namun, dengan kemungkinan ”jurnal ilmiah” online, pelaksanaan fisik bisa diatur.

Lain hal jurnal ”ilmiah nasional” yang diharuskan bagi para calon magister dan tidak bisa hanya online. Andai ada 3.000 calon magister per tahun, perlu disediakan 45.000 helai, jadi 25 jurnal (terbit 12 kali per tahun) baru.

Masalah ini pun masih bisa dipecahkan. Biarlah perguruan tinggi (PT) menerbitkan jurnal ”ilmiah nasional”, biayanya ditagih ke mahasiswa yang mau memublikasikan makalahnya (seperti penerbit Brill di Leiden, Belanda, yang spesialisasinya memublikasikan disertasi-disertasi yang tidak menemukan penerbit bermutu asal penulis membayar).

Kewajiban para calon doktor untuk mendaratkan makalah di jurnal internasional lebih sulit. Direktorat Jenderal Pendidikan Tinggi (Ditjen Dikti) luput memperhatikan sesuatu: antara lingkungan akademik kita dan lingkungan akademik luar negeri (LN) tidak ”nyangkut”. Kemungkinan besar tulisan orang kita yang an sich cukup ilmiah, tetapi dari segi diskursus ilmiah di LN tetap kelihatan polos, di luar konteks, ”ketinggalan zaman”. Saya sendiri selama 43 tahun sebagai dosen filsafat memang bisa memublikasikan cukup banyak tulisan di LN, tetapi hanya dua dalam majalah filsafat kelas I! Memang, barangkali bisa ditemukan sebuah jurnal obscure di India yang bersedia memuat karangan-karangan calon lulusan S-3 kita. Namun, apa itu yang dimaksud Ditjen Dikti?

Mensyaratkan publikasi di LN bagi calon lulusan S-3, begitu pula dalam rangka kenaikan pangkat akademis dan sertifikasi, menurut saya betul-betul salah kaprah. Suatu gagasan yang lahir dari otak para birokrat yang tidak tahu realitas akademik, tetapi bikin susah orang lain.

Namun, saya punya jalan keluar, jalan cemerlang! Begini! Katakanlah setiap tahun ada 300 calon lulusan S-3, ditambah 1.000 dosen yang mengurus rangka kenaikan pangkat/sertifikasi. Jadi, setiap tahun 1.300 makalah, 19.500 helai, perlu dipublikasi di LN. Nah, biar Dikti membuka perwakilan di Timor Leste. Di sana Dikti mendirikan 10 jurnal ilmiah saja (terbit 12 kali setahun, pembiayaan ditagih dari para penulis). Masalah pun terpecahkan.

Solusi Timor Leste itu mempunyai tiga keuntungan: para calon doktor/dosen kita terjamin publikasinya di LN, Dikti bisa menaikkan pendapatan sekian karyawannya (mereka yang terlibat dalam produksi 10 jurnal itu), dan Indonesia memberi sumbangan kepada perekonomian Timor Leste. Cukup genial, bukan?

Pertanyaan kedua

Jadi, surat edaran Pak Dirjen bisa saja dilaksanakan. Hanya, ada dua masalah. Pertama, siapa yang mau membaca ribuan makalah setiap bulan itu yang ditulis oleh mahasiswa yang belum lulus dan yang banyak akan lulus dengan nilai B atau C? Apa Dikti sendiri bisa mengecek 1.450.000 halaman makalah-makalah itu?

Namun, dan itu masalah kedua, kalau mahasiswa tahu bahwa makalahnya tidak mungkin dibaca dengan sungguh-sungguh, mereka tidak punya motivasi apa pun untuk menulis sesuatu yang bermutu. Jadi, mereka akan menulis ”sampah”. Dengan lain kata, surat edaran Dirjen Dikti ini adalah sarana mujarab untuk mengajak para calon akademisi kita untuk memproduksi sampah!

Jadi, kebijakan Dikti justru bisa bikin celaka. Alih-alih mendorong mutu output ilmiah PT-PT kita, Dikti malah mengharuskan kebijakan yang hasilnya adalah menciptakan budaya asal-asalan, yang lebih buruk daripada yang ada sekarang: budaya asal tulis 10 halaman, budaya asal tulisan itu bisa ditampung di jurnal.

Menurut saya, maaf, dalam hal ini Dikti salah besar, yakni mau meningkatkan mutu dengan paksaan dan ancaman. Bahkan, dengan cara yang—kalau mau dilaksanakan menurut maksud Pak Dirjen—mustahil terlaksana. Hal yang justru terlupakan: hanya ada satu dasar bagaimana mutu intelektual bisa mencuat, yakni motivasi di batin para dosen dan mahasiswa. Ironisnya, motivasi itu justru akan dibunuh dengan surat edaran baru itu.

Masihkah ada harapan?

Sebenarnya masalah yang mendasari defisit naluri peneliti-ilmiah di kalangan mahasiswa (dan dosen) kita sudah sering diangkat, tetapi barangkali belum di Dikti: pola pendidikan kita, mulai dari SD, harus diubah. Dari pendekatan yang memperlakukan anak-anak sebagai obyek pasif yang kelakuannya dimanipulasi dan otaknya diisi oleh guru/sekolah/Kemdikbud ke pendekatan yang memandang anak (anak kecil!) sebagai subyek yang dihormati identitasnya. Oleh karena itu, perlu dirangsang semangatnya untuk ingin tahu, untuk mencari yang baru, berani bertanya, bertanya ”mengapa”, dan untuk berani mengemukakan pendapat sendiri.

Jadi, kreativitasnya dirangsang. Mereka yang melawan tren dipuji, perbedaan pendapat dihormati, bahkan dihargai oleh guru. Anak juga dirangsang belajar berdebat. Jadi, dari anak yang diharapkan manutan alias penurut menjadi anak yang percaya diri, terbuka, berani, dan kreatif.

Itu tentu tidak mungkin dilaksanakan dalam satu tahun. Namun, Kemdikbud bisa berbuat sesuatu, misalnya semakin memperhatikan pendidikan karakter. Guru-guru memberi dorongan supaya berani membebaskan diri dari pola pendekatan ”menggurui”.

Kunci perkembangan intelektual mahasiswa adalah para dosen. Merekalah yang menentukan suasana belajar. Maka, Dikti diharapkan memberi dukungan agar dosen dapat berkembang secara terbuka, intelektual, dan kreatif. Untuk itu, perlu segala ”kebijakan” yang berupa harassment, pelecehan, dihentikan. (Misalnya, pengecekan terhadap data untuk kenaikan pangkat/sertifikasi yang sudah kegila-gilaan sehingga portal Kopertis/Dikti kelebihan beban [overloaded]. Sampai-sampai karyawati kami dianjurkan mengunduh [men-download] gunung data itu pagi-pagi menjelang subuh). Segala kebijakan positif seperti sertifikasi (tetapi, ya, tanpa harassment tadi) perlu diteruskan.

Pertanyaan saya, seorang pensiunan tua, kepada rekan-rekan di perguruan tinggi: berapa lama kita—perguruan tinggi di Indonesia—membiarkan diri dipermainkan oleh birokrat-birokrat yang wawasannya kadang-kadang berkesan beyond hope, melampaui harapan?

Akan tetapi, tentu harapan masih ada, bahkan di Kemdikbud dan Ditjen Dikti.

Oleh Franz Magnis-Suseno SJ

India risk: Alert – A small step forward

February 1, 2012 by · No Comments · Economics, News

On January 10th India’s government announced that single-brand foreign retailers may open fully owned stores in the country. This change was first announced in late November, but its implementation now does not amount to the full reinstatement of the much-lauded package of retail reforms unveiled then. Soon after the initial announcement on November 24th, vehement political opposition caused the government to back-track on opening the market to multi-brand foreign retailers. But the decision to allow 100% investment by foreign single-brand stores was never rescinded, perhaps in part because this move is much less controversial. The single-brand reform will also have a lesser impact on India’s retail sector and broader economy, as foreign entrants will have to adhere to strict conditions and will cater primarily to more affluent consumers.

The story of India’s recent retail-reform efforts is short but convoluted. The reforms announced in late November after years of deliberation and delay were twofold, relating to single-brand and multi-brand retailing respectively. In the multi-brand space, where foreign direct investment (FDI) is banned, the government said it would allow foreign ownership of up to 51%. For single-brand retailers, the government announced that the permissible level of FDI would rise from 51% to 100%.

Taken together, these changes would have the potential to transform India’s retail sector. For years, FDI restrictions have largely kept foreign retailers out of Asia’s third-largest market. The 51% limit on single-brand stores excluded companies such as IKEA or Starbucks that were unable or unwilling to set up shop in India with a local partner, while the multi-brand ban limited the presence of major global chains like Walmart, Carrefour and Tesco.

As a result, the November 24th announcement was loudly welcomed by foreign and domestic investors alike. But the reform package was also politically incendiary, and sharp opposition quickly emerged on the streets and in the legislature. Worse, the government appeared not to have prepared to defend its reform package in parliament particularly as two of its coalition partners came out strenuously against it. By December 8th the government had buckled under the pressure, announcing the suspension of the multi-brand opening. However, the single-brand reform remained on the cards, and it is this change that has now come into effect.

Industry impact

Foreign investors will welcome the single-brand liberalisation, which will encourage FDI in the retail sector. However, a number of caveats need to be kept in mind. For a start, the effects of the reform will be diluted by several restrictions. For example, foreign-owned stores will be required to source 30% of their products from small farmers and producers in India. As a result of these restrictions, the economic effect of the reform may actually be relatively limited.

Indeed, the comparatively uncontroversial status of the single-brand reform reflects its lesser expected impact. Whereas the entry of foreign multi-brand chains would shake up labour markets and produce big knock-on effects in related industries, such as transport and logistics, many of the single-brand stories looking to enter India would cater to consumers making optional purchases of relatively expensive goods. The expected impact of the multi-brand reform, by contrast, would shake up the crucial supermarket sector, pitting giant foreign conglomerates against India’s millions of small, independent shops.

Hopes that the implementation of the single-brand reform may be a precursor to liberalisation of multi-brand FDI are probably too optimistic. On the contrary, there is very little reason for confidence in the beleaguered ruling coalition’s determination or ability to push for the much more unpopular multi-brand change. In the context of India’s fractious political scene, the government’s promise to delay the multi-brand change until a political “consensus” is reached is tantamount to a suspension of the reform. In addition, the approach of several state elections in the next few months is likely to dampen enthusiasm for taking a stand on unpopular liberalising reforms. Although multi-retail reform might be expected eventually to help ease inflation and lower food prices, it could also inflict considerable short-term pain on India’s small retailers.

Ultimately, then, the government’s latest move sends a mixed message. On the one hand, any liberalisation of India’s highly inefficient retail sector is a positive step for the economy and for foreign investors. On the other hand, the impact of the single-brand reform alone is likely to be overshadowed by the government’s back-tracking on more momentous reforms in the multi-brand segment. Given that further progress will require considerable political courage and cohesion, the wait for the government to reverse its earlier reversal is likely to be long.

Reference: EIU

World economy: The US, downgrading emerging markets

February 1, 2012 by · No Comments · Economics, News

Europe’s financial crisis will continue to weigh on the global economy in 2012, and still has the potential to cause disaster. There is little change this month to the Economist Intelligence Unit’s forecast for aggregate global GDP growth. We sharply lowered our euro zone forecast last month, and have not materially changed our view since then. In contrast, we think growth prospects in other regions and their ability to weather the global slowdown have changed in significant respects. Most notably, we have raised our forecast for US growth but have cut our forecasts for some emerging markets.

We expect world GDP to grow by 3.1% at purchasing-power parity in 2012. This marks a considerable slowdown from 2010 and 2011, and by some definitions would put the global economy perilously close to another recession. However, we reckon that growth would need to weaken to about 2% to qualify as a recession. While trading conditions have clearly become more challenging in many countries, the world is still quite some way from that bleak outcome. This assumes that implosion is prevented in Europe; a break-up of the euro zone remains a very real threat, and if that were to occur the global economy would suffer a recession much worse than the one recorded during the post-Lehman financial crisis of 2008-09.

Political bickering in Europe continues to hamper efforts to save the single currency. Policymakers haven’t done nearly enough to prevent further contagion, and the viability of the euro remains in question. We still attach a 40% probability to a euro break-up occurring within the next two years. The “fiscal compact” announced in early December looks unpromising, which matters not just for future economic governance in the EU but also because in the short term it may discourage the European Central Bank (ECB) from overcoming its reluctance to intervene more heavily in government bond markets. The ECB did take an important step in mid-December by boosting liquidity, but this welcome development was quickly followed by further bad news, including the decision by Standard & Poor’s to downgrade its credit ratings for nine euro members. Even if policymakers ultimately do enough to save the euro, which is still our core assumption, the process won’t be quick or painless.

The poor economic outlook for the euro zone is being offset globally by a more promising prognosis for the US. Most economic indicators have improved, and growth in the fourth quarter of 2011 is likely to have been above 3% in annualised terms. But the US economy is still weak by almost any standard. Partisan politics is making serious policy decisions all but impossible, and there is an added risk of contagion if conditions in the euro zone worsen.

Elsewhere, the negative effects of the euro crisis and slowing global growth are rippling through into emerging markets. Eastern Europe faces the twin spectres of weaker demand from its main export market and a credit squeeze as western European lenders deleverage. In Latin America and Asia, meanwhile, Europe’s problems have hit growth prospects for commodity producers and countries that rely on manufacturing exports. We have also lowered our forecasts for Africa.

Developed world

The US economy continued to gain momentum towards the end of 2011, shrugging off financial disruption from the euro crisis. Consumers proved surprisingly spendthrift during the holiday season, and the labour market is showing signs of moving past the soft patch it suffered during the summer, with non-farm payrolls rising by 200,000 in December. We have raised our GDP growth forecast for 2012 to 1.8%, from 1.3% previously, to reflect the improvement in current conditions. However, the US cannot fully escape the drag that the euro zone’s recession will create. Moreover, households still have a long way to go with deleveraging, which will make it difficult to sustain more rapid economic growth.

The euro zone probably slipped into recession in the fourth quarter of 2011, and we continue to forecast a 1.2% contraction in 2012. The ECB has provided nearly 500bn of three-year funding to commercial banks at low interest rates, which has eased their funding pressures. However, it is far from clear that banks will now become more willing to lend. Strong risk aversion and the need to increase capital-adequacy ratios will encourage lenders to hoard their new funds. Meanwhile, pressure on the region’s troubled sovereigns remains intense, even if bond yields have come down slightly. Leaders are sticking by their stance that austerity is the route out of this crisis, but in the drive to become fiscally virtuous there is a risk that policy will become damagingly pro-cyclical, exacerbating the recession. For example, Germany, which cut its fiscal deficit to only 1% of GDP in 2011, is reluctant to relax fiscal policy even though this would stimulate demand in the rest of the euro zone.

Japan has largely overcome the disruption to supply chains that crippled its economy in the wake of the natural disaster in March 2011. A surge in residential construction in the third quarter suggests that rebuilding following the disaster is well under way, and we expect reconstruction to boost the economy throughout 2012. Weak external demand and a strong yen will, however, limit the strength of Japan’s recovery. We expect GDP growth of 2% this year.

Emerging markets

Most developing economies will perform decently this year thanks to robust domestic demand, but few will remain immune to the slowdown in the West. Economic growth in globally integrated Asia and Australasia (ex Japan) is set to slow from 6.5% in 2011 to 6.1% this year, although the region will remain the world’s fastest-growing. Despite a slight downgrade to our forecast for Chinese GDP growth, we do not expect a hard landing by the region’s main economic engine. Instead, the most worrying signs are emanating from India, which is more sheltered from global headwinds but faces a year of economic weakness and political paralysis. We now expect Indian GDP to expand by just 6.3% in 2012.

In eastern Europe, the looming recession in the euro zone is casting deep shadows over economic prospects. The euro zone’s troubles will sharply curtail economic activity in neighbouring countries in 2012, with trade, investment and financing conditions set to weaken further. As external demand falters, domestic demand will not be robust enough to pick up the slack. On the policy front, large budget deficits raise worrying questions about debt sustainability and the ability of governments to roll out stimulus. We expect regional growth to slow from 3.5% in 2011 to 2.3% in 2012.

Latin American economies are losing impetus after a stellar recovery in 2010-11. As a result, policymakers are shifting their focus from dampening inflation and currency appreciation to supporting growth. We think regional growth will slow to 3.5% this year, largely as an outcome of poor performances by the EU and US. But provided that the global slowdown is not too protracted, sound macroeconomic policies and resilient domestic demand will mean that Latin American growth starts to accelerate again next year.

In the Middle East and North Africa, the economic outlook for 2012 reflects the divergent impacts of the Arab revolutions. Those countries directly affected by unrest have suffered sharp economic slowdowns. Others, particularly oil producers, have been able to boost public spending. In the year ahead, political instability and a more hostile external environment will weigh on growth across the region, but these negative factors will be balanced by massive infrastructure investment in Saudi Arabia, robust growth in Iraq and a surging recovery in Libya. Overall, we expect regional GDP to rise by a relatively robust 4% in 2012 although prospects would change drastically if the geopolitical risks emanating from Iran led to open conflict. In Sub-Saharan Africa, the economic outlook is worsening as the West stumbles and China slows. Specific risks include tighter trade credit, lower commodity prices, contracting external demand and falling remittances. We have revised down our forecast for regional GDP growth in 2012 to 4%.

Exchange rates

The US dollar has soared against the euro in recent weeks, a trend that most analysts including the Economist Intelligence Unit had expected to happen far earlier. In mid-January the dollar was trading at around US1.26:1, its highest level since August 2010. We expect the euro to remain relatively weak against the dollar in 2012, averaging around US1.27:1. Upward pressure on the yen will continue. Meanwhile, emerging-market currencies can be expected to remain under downward pressure until risk aversion subsides.

Commodities

We expect commodity prices to remain hostage to sentiment surrounding the outcome of the euro crisis and global economic prospects. A marked deterioration in the outlook for the euro zone could lead to dramatic falls in commodity prices. Even if that does not occur, most commodity prices will be lower on average in 2012, owing to slower consumption growth and depending on the commodity some improvement in supply. A stronger US dollar will also be negative for commodity prices. Brent crude prices will ease to an average of US$100/barrel this year, although this is higher than our previous forecast of US$95/b owing to supply uncertainties and to the upgrade in our US GDP forecast (which implies higher US oil consumption).

 Reference: The Economist Intelligence Unit

USA politics: Battle ready

February 1, 2012 by · No Comments · News, Politics

The state-of-the-union address delivered on January 24th amounted to the opening salvo of President Barack Obama’s re-election battle. But rather than a frontal assault on his adversaries, he used the bully pulpit that the president alone can ascend and its access to an estimated 40m viewer to put forth his blueprint for what he hopes will be a second term. It was his first big opportunity to retake the initiative after a difficult 2011 and nine months before the November election. He did this by focusing mostly on job creation and domestic economic issues under the general theme of fairness, and reiterating policies he has championed throughout his three years in office. In the end, the speech itself will have little impact on the outcome of the presidential race, but it put in stark contrast his vision of a continued role for government in the economy’s recovery, against the small-government ideology of the Republicans. It also highlighted his optimism and confidence against the nasty tone that has shadowed the divisive Republican nomination process.

Mr Obama set the stage for what will be an extremely competitive contest, in which, given his mediocre approval ratings, his re-election is far from assured. With little if anything likely to be accomplished in the gridlocked Congress this year, he laid out proposals for the future and also defended his accomplishments in the face of fierce GOP criticism of his record in a sense trying to inoculate himself against the attacks to come in the general election. Although he book-ended the speech at its start and finish with praise of the military and its achievements in Iraq and against Al Qaeda, the themes were mostly economic in nature and the same ones that have dominated his presidency income inequality, tax fairness and job creation. He directed his words mostly at the concerns of middle-class Americans and undecided voters.

While he pointed out better economic data on job creation and other signs of a stronger growth, he highlighted that more needed to be done to build an economy to last. He proposed tax incentives and other measures to promote American manufacturing and job creation (such as ending tax breaks that reward outsourcing of jobs overseas and offering new ones for companies creating jobs at home); aid to exporters (touting the benefits of recently approved free-trade agreements with South Korea, Colombia and Panama); tackling unfair trade practices by countries like China (he announced the creation of a new trade enforcement unit to investigate and address such practices); and new measures to alleviate the skills shortages in the US and to further upgrade the education system and make it more flexible. He also alluded to steps to promote innovation and assist start-up companies, and briefly made mention of the need for immigration reform (at least to allow talented foreign-born students and veterans to remain in the country).

Tax hikes as shared responsibility

Many of these recommendations might equally have come from a Republican president or candidate. However, Mr Obama’s reiteration of his proposals to reform the tax code and raise taxes on wealthy Americans stood him starkly apart from his Republican rivals. He emphasised his support for hiking taxes using the so-called Buffett rule named after the investor Warren Buffett which proposes that anyone earning more than US$1m be obliged to pay a tax rate of no less than 30%. He argued that this was not class warfare but shared responsibility. This was implicitly a criticism of his likely general-election opponent, Mitt Romney, whose just-released tax returns show he paid less than 15% of his income in tax because most of his earnings came from investments instead of regular salary income.

Mr Obama also highlighted and defended his signature clean energy strategy as a means to create jobs, improve the environment and ease reliance on (imported) oil. He called on Congress to pass clean energy tax credits and to set new clean energy standards, which it is has thus far failed to do.

Infrastructure development, relief for mortgage holders (though a new government plan to help them quickly refinance their loans) and the benefits of the newly created Consumer Protection Agency were also promoted by the president. In all of these areas, and in his backing for smart regulations, Mr Obama steadfastly defended his administration from the criticism that it has created far too many rules, spent too much money and overextended its reach themes that will form the basis of the GOP’s attacks against him during this year’s campaigning.

Finally, Mr Obama appealed to Congress and the political parties to end the gridlock, lower the temperature and ceases the perpetual campaign of mutual destructions. These appeals hark back to the post-partisan themes he emphasised in his 2008 presidential campaign. He again cited the successful way the military works together, where all that matters is the missions. He twice referred to the killing of Osama bin Laden by US special forces, a highly symbolic military achievement for a president whose main strategy involves extracting the US from a messy war in Iraq, and beginning to do so in Afghanistan.

Lying in ambush

The speech, overall, was politically shrewd, laying out campaign themes, deflecting some of the criticism from the Republicans and largely avoiding the most contentious issues such as debt and deficit reduction. Mr Obama was strong and in some places defiant, but not overly confrontational towards his opponents. The Republican response, delivered by Gov Mitch Daniels of Indiana, was far gloomier (the state of the union is grave), previewing the negative tone and attacks on big government that will be central to the GOP’s offensive. None of this was surprising.

Both sides have now laid down the gauntlet, but Mr Obama, on this day, seemed to have gained some ground, at least temporarily. But more important to his prospects will be two other variables: the trajectory of the economy and the outcome of the GOP primaries. The economy’s direction looks positive for now, but there are substantial risks, not least coming from the sovereign debt crisis in Europe or a potential stagnation in job-creation or other numbers. The GOP’s final choice of a candidates and how much damage the Republicans will have inflicted on him during their internal fight could also be decisive. Mr Romney could win the general election, but not if he is terribly tainted. The other top contender, Newt Gingrich, looks like a sure loser.

Reference: EIU

Germany cars: Premium league

December 28, 2011 by · No Comments · News

Audi is getting ever closer to its goal of overtaking BMW and Mercedes to become the world’s leading premium car manufacturer.

The competition between Germany’s premium carmakers is getting more evenly matched as all three head for record years. In the full-year 2011, Audi is highly likely to outsell its more established rival Mercedes-Benz for the first time ever. The Volkswagen-controlled brand is not a million miles away from matching BMW’s sales either, thanks in a large part to Audi’s phenomenal success in China. In fact, all the indications are that Audi’s audacious goal of becoming the world’s leading premium car manufacturer by 2015 is now within striking distance.

In the first 11 months of 2011, Audi sold 1,193,110 cars worldwide, which is an 18% increase on the corresponding 11 months of 2010. By comparison, Mercedes-Benz sold 1,136,525 units in that time, which was a 7% increase on the previous year. That means that Audi is now leading Mercedes for the first time ever, and by more than 56,500 vehicles.

For the time being, Audi still trails the world’s dominant premium carmaking brand BMW, though not by much. BMW sold 1,252,205 cars in the first 11 months of the year, which is a 13% sales increase on last year. So Audi is trailing BMW by less than 60,000 units with just one month of the year to go.

For the full-year 2011, all three are on track to report record sales – and that is largely thanks to China. German-engineered cars carry huge cachet among Chinese consumers, and wealthy Chinese buyers also tend to be prepared to pay highly for top-of-the range vehicles. Both of these factors, combined with China’s economic growth, makes this a very profitable market for Audi, BMW and Mercedes.

Particularly for Audi. In 2010, Audi’s Chinese sales surged by 43.4% to 227,900 units in a car market that grew by 32%. So far in 2011, Audi’s Chinese sales have grown by another 30% compared to 2010. Although sales growth for BMW and Mercedes-Benz was nearly as impressive, it is Audi that has emerged as China’s leading premium brand by sales volume.

Seeing the bigger picture

With momentum behind it, Audi is within sight of its goal of becoming the world’s largest premium car manufacturer by 2015, when it wants annual sales to total 1.5m units. With the building of a second joint venture factory, Audi plans to more than double its Chinese car production to 700,000 cars per year in coming years. It is also investing heavily in its sales network in order to reach the fast-growing second- and third-tier cities.

At the same time, it also has ambitious plans to roll out new products, having pledged to spend 7.3bn (US$10bn) on vehicle research and development (R&D) by the end of 2012. Some 80% of this will be invested directly in new model development, allowing Audi’s model count to grow from 22 variants in 2010 to 40 by 2015. Many of the key models in this plan including its Mercedes CLS-competitor, the A7, and the A1 which is a competitor to BMW’s Mini have already been launched. The A1 alone could add as many as 100,000 units a year to Audi’s annual sales volumes.

Audi is also taking steps to address its relatively weak position in the US market, where BMW and Mercedes are far more established thanks to their US manufacturing facilities. Audi is now planning to use VW’s new Chattanooga, Tennessee factory to build some of its models, as renews its assault on the market. In 2010, Audi sold more than 100,000 units in the US for the first time, a figure it hopes to double by 2018 with the help of its many new model launches.

Audi’s plan is not without imitators, or risks. All three German premium carmakers are investing heavily in China, investing in capacity and new model launches to capitalise on continued strong demand for their products. Yet the market is slowing rapidly for all carmakers. In the US, an economic downturn on the back of the euro crisis could impede Audi’s plans. Europe’s problems, meanwhile, are legion. But these factors will affect Audi’s rivals too, suggesting that even if Audi fails to meet its unit sales target it could still meet its goal of becoming the world’s biggest premium carmaker.

Reference: EIU

4G mobile broadband: Network and pricing strategies

December 28, 2011 by · No Comments · Business, News

LTE (Long Term Evolution) or 4G, has become a top priority for many mobile network operators. Promising much faster speeds and greater capacity than their current crop of network technologies, LTE could well be the shot in the arm that MNOs need. And a boost is urgently required.

The arrival of new technology, however, entails risks as well as opportunities. Not every operator will gain in equal measure, and some may even lose out. To understand this better, the Economist Intelligence Unit has analysed the ‘4G’ positioning of eight operators, spread across three continents, that have already launched commercial services: two from North America (AT&T and Verizon Wireless); two from Asia (CSL in Hong Kong and South Korea’s SK Telecom); and four from Europe (A1 in Austria, Tele2 Sweden, Telekom Deutschland and Telia Sweden).

Reference: EIU

World politics: Democracy under stress

December 28, 2011 by · No Comments · Business, News

Thanks to the revolutions in the Arab world, 2011 will be remembered as a year of extraordinary political change, in which popular resistance to authoritarian rule scored some notable successes. However, for democracy worldwide developments in the past year have been decidedly mixed. Indeed, the results of the Economist Intelligence Unit’s Democracy Index 2011 show that democracy has been under stress in many parts of the world. Economic crisis has contributed to a backsliding in democracy in many countries particularly in Europe.

The Democracy Index provides a snapshot of the state of democracy worldwide for 165 independent states and two territories. It ranks each country on criteria such as whether elections are free and fair, whether civil liberties are respected, and whether the political culture allows democracy in the fullest sense to flourish. Depending on its ranking, each country is placed into one of four categories: full democracy, flawed democracy, hybrid regime or authoritarian regime.

In 2011 there has been little change at the top of the rankings, which unsurprisingly are dominated by Scandinavian countries and other affluent liberal democracies such as New Zealand and Canada. Equally, the countries bringing up the very bottom of the list that is, those we consider to be the world’s most repressive and authoritarian regimes still include the usual suspects. North Korea is bottom, in 167th position, with Chad, Turkmenistan and Uzbekistan just above it.

But the 2011 index also sees significant changes, both for better and for worse. The biggest gainer is Tunisia, which not only initiated the Arab Spring but which has had the most success so far in translating revolution into democratic progress. Its score (out of 10) has risen by a massive 2.74 points, and it has jumped 53 places up the rankings to 92nd. It has also moved from an authoritarian to a hybrid regime. Underscoring the historic nature of the Arab revolutions, Libya and Egypt are the two countries with the next-greatest gains in this year’s index. But consolidating newfound freedoms remains fraught with difficulty. Libya’s National Transitional Council faces a monumental task in building new state structures virtually from scratch, while in Egypt continuing turbulence attests to dissatisfaction with the course of post-revolution events and profound disagreement over the country’s future political direction.

Despite such problems, the Democracy Index 2011 is positive overall for the Middle East and North Africa (MENA). It is one of only two regions in the world to record an improvement in its average score since last year; the other is Sub-Saharan Africa, where Mauritania and Niger have moved from authoritarian to hybrid regimes and where Zambia has moved up to the flawed-democracy category. Along with MENA, Sub-Saharan Africa contains the biggest gainers in this year’s index. The region seems to be benefiting gradually from a secular improvement in politics that has seen the number of coups fall sharply since the late 1990s, and the number of elections increase. But it should not be forgotten that progress has come from a low base. Only one state in the region, the island of Mauritius, is a full democracy. Authoritarian regimes still predominate, and armed conflict, human-rights abuses and failed governments remain widespread.

European reversals

Elsewhere, the general picture is of a decline in democracy in 2011, most notably in Europe. Seven countries in western Europe now have lower democracy scores compared with last year; none has a higher score. The main reason has been the erosion of sovereignty associated with the effects of, and responses to, the euro zone crisis. Most dramatically, in two countries (Italy and Greece) democratically elected leaders have been replaced by technocrats. Policy in some countries is no longer being set by national legislatures and elected politicians, but in effect by official creditors, the European Central Bank, the European Commission and the IMF. Moreover, there is growing distrust of politicians and public institutions, accompanied in some cases by a worrying degree of political apathy.

Eastern Europe also provides abundant cause for concern. More than a third of the 28 countries in the region recorded lower democracy scores in 2011, and this on the back of large declines between 2008 and 2010. The most high-profile offender this year is Russia. We have lowered our democracy score for Russia, to reflect the chilling impact on the country’s political health of the decision by Vladimir Putin, the prime minister, to return to the presidency in 2012. The December 4th parliamentary election was also deeply flawed. As a result, Russia descends from the hybrid-regime category into the ranks of authoritarian regimes. Ukraine has also fallen sharply down our rankings. The regime’s harassment of opposition figures is exemplified by the jailing of former prime minister Yuliya Tymoshenko on what most believe are politically motivated charges.

Democracy in 2012

Will the Arab Spring bear further fruit, or even inspire movements for political renewal in other regions? Or will the backsliding witnessed in Europe, the US and elsewhere continue? Inevitably a high degree of uncertainty surrounds any attempt to predict specific regimes’ survival or demise. But certain broad points are worth stressing.

One of the more worrying developments of the past five years has been an erosion of previously attained democratisation. The financial crisis in 2008 exacerbated this trend, causing governments to become more inward-looking and prompting rises in populism and anti-immigrant sentiment. In this context, the near-term political prospects for Europe look disturbing. Austerity, recession and increased strains on the structural integrity of the EU as a result of the euro crisis could present challenges for democracy in the year ahead. That said, economic crisis is not inevitably associated with political stasis or regression towards authoritarianism; it can also be a catalyst for change. The Arab uprisings were provoked in part by economic hardships, compounding resentment of corruption and nepotism.

The vulnerability of authoritarian states varies greatly, and is affected by factors such as electoral fraud, ill-planned leadership successions, and “neighbourhood effects” (without Tunisia, in other words, there would have been no revolution in Egypt). Hopes that the Arab Spring might unleash a wave of democratization have yet to be fully realized, and in some cases calls for political reform have prompted brutal responses Syria being a conspicuous example. But even the most apparently “stable” regime is secure only in comparison with other autocracies. China, for instance, which rates as one of the least vulnerable authoritarian states, faces a slowing economy and a leadership transition in late 2012 and early 2013 a potentially dangerous combination.

With global economic pressures certain to intensify next year, lower oil prices likely to reduce resource-rich authoritarian states’ ability to buy off dissent, and ongoing protest movements in MENA, Russia and elsewhere likely to remain highly visible, who would bet against further dramatic changes?

Democracy Index 2011
Country 2011 rank 2011 score 2010 rank 2010 score 2011 regime type
Norway 1 9.80 1 9.80 Full democracy
Iceland 2 9.65 2 9.65 Full democracy
Denmark 3 9.52 3 9.52 Full democracy
Sweden 4 9.50 4 9.50 Full democracy
New Zealand 5 9.26 5 9.26 Full democracy
Australia 6 9.22 6 9.22 Full democracy
Switzerland 7 9.09 8 9.09 Full democracy
Canada 8 9.08 9 9.08 Full democracy
Finland 9 9.06 7 9.19 Full democracy
Netherlands 10 8.99 10 8.99 Full democracy
Luxembourg 11 8.88 11 8.88 Full democracy
Ireland 12 8.56 12 8.79 Full democracy
Austria 13 8.49 13 8.49 Full democracy
Germany 14 8.34 14 8.38 Full democracy
Malta 15 8.28 15 8.28 Full democracy
Czech Republic 16 8.19 16 8.19 Full democracy
Uruguay 17 8.17 21 8.10 Full democracy
United Kingdom 18 8.16 19 8.16 Full democracy
United States 19 8.11 17 8.18 Full democracy
Costa Rica 20 8.10 25 8.04 Full democracy
Japan 21 8.08 22 8.08 Full democracy
South Korea 22 8.06 20 8.11 Full democracy
Belgium 23 8.05 23 8.05 Full democracy
Mauritius 24 8.04 24 8.04 Full democracy
Spain 25 8.02 18 8.16 Full democracy
Cape Verde 26 7.92 27 7.94 Flawed democracy
Portugal 27 7.81 26 8.02 Flawed democracy
South Africa 28 7.79 30 7.79 Flawed democracy
France 29 7.77 31 7.77 Flawed democracy
Slovenia 30 7.76 32 7.69 Flawed democracy
Italy 31 7.74 29 7.83 Flawed democracy
Greece 32 7.65 28 7.92 Flawed democracy
Botswana 33 7.63 35 7.63 Flawed democracy
Estonia 34 7.61 33 7.68 Flawed democracy
Chile 35 7.54 34 7.67 Flawed democracy
Israel 36 7.53 37 7.48 Flawed democracy
Taiwan 37 7.46 36 7.52 Flawed democracy
Slovakia 38 7.35 38 7.35 Flawed democracy
India 39 7.30 40 7.28 Flawed democracy
Cyprus 40 7.29 39 7.29 Flawed democracy
Lithuania 41 7.24 41 7.24 Flawed democracy
Timor-Leste 42 7.22 42 7.22 Flawed democracy
Trinidad and Tobago 43 7.16 45 7.16 Flawed democracy
Jamaica 44 7.13 44 7.21 Flawed democracy
Poland 45 7.12 48 7.05 Flawed democracy
Brazil =45 7.12 47 7.12 Flawed democracy
Panama 47 7.08 46 7.15 Flawed democracy
Latvia 48 7.05 49 7.05 Flawed democracy
Hungary 49 7.04 43 7.21 Flawed democracy
Mexico 50 6.93 50 6.93 Flawed democracy
Argentina 51 6.84 51 6.84 Flawed democracy
Bulgaria 52 6.78 52 6.84 Flawed democracy
Croatia 53 6.73 53 6.81 Flawed democracy
Suriname 54 6.65 54 6.65 Flawed democracy
Colombia 55 6.63 57 6.55 Flawed democracy
Peru 56 6.59 63 6.40 Flawed democracy
Sri Lanka 57 6.58 55 6.64 Flawed democracy
Thailand 58 6.55 58 6.55 Flawed democracy
Romania 59 6.54 56 6.60 Flawed democracy
Indonesia 60 6.53 60 6.53 Flawed democracy
El Salvador 61 6.47 61 6.47 Flawed democracy
Paraguay 62 6.40 62 6.40 Flawed democracy
Mali 63 6.36 79 6.01 Flawed democracy
Serbia 64 6.33 65 6.33 Flawed democracy
Lesotho =64 6.33 77 6.02 Flawed democracy
Moldova =64 6.33 66 6.33 Flawed democracy
Papua New Guinea 67 6.32 59 6.54 Flawed democracy
Namibia 68 6.24 69 6.23 Flawed democracy
Mongolia 69 6.23 64 6.36 Flawed democracy
Dominican Republic 70 6.20 70 6.20 Flawed democracy
Malaysia 71 6.19 71 6.19 Flawed democracy
Zambia =71 6.19 91 5.68 Flawed democracy
Macedonia 73 6.16 73 6.16 Flawed democracy
Montenegro 74 6.15 68 6.27 Flawed democracy
Philippines 75 6.12 74 6.12 Flawed democracy
Benin 76 6.06 72 6.17 Flawed democracy
Guyana 77 6.05 75 6.05 Flawed democracy
Ghana 78 6.02 78 6.02 Flawed democracy
Ukraine 79 5.94 67 6.30 Hybrid regime
Hong Kong 80 5.92 80 5.92 Hybrid regime
Singapore 81 5.89 82 5.89 Hybrid regime
Guatemala 82 5.88 76 6.05 Hybrid regime
Bangladesh 83 5.86 83 5.87 Hybrid regime
Bolivia 84 5.84 81 5.92 Hybrid regime
Honduras =84 5.84 88 5.76 Hybrid regime
Malawi =84 5.84 85 5.84 Hybrid regime
Albania 87 5.81 84 5.86 Hybrid regime
Turkey 88 5.73 89 5.73 Hybrid regime
Ecuador 89 5.72 87 5.77 Hybrid regime
Tanzania 90 5.64 92 5.64 Hybrid regime
Nicaragua 91 5.56 90 5.73 Hybrid regime
Tunisia 92 5.53 145 2.79 Hybrid regime
Senegal 93 5.51 95 5.27 Hybrid regime
Lebanon 94 5.32 86 5.82 Hybrid regime
Bosnia and Hercegovina 95 5.24 94 5.32 Hybrid regime
Uganda 96 5.13 98 5.05 Hybrid regime
Venezuela 97 5.08 96 5.18 Hybrid regime
Liberia 98 5.07 97 5.07 Hybrid regime
Palestine 99 4.97 93 5.44 Hybrid regime
Mozambique 100 4.90 99 4.90 Hybrid regime
Cambodia 101 4.87 100 4.87 Hybrid regime
Georgia 102 4.74 103 4.59 Hybrid regime
Kenya 103 4.71 101 4.71 Hybrid regime
Bhutan 104 4.57 102 4.68 Hybrid regime
Pakistan 105 4.55 104 4.55 Hybrid regime
Sierra Leone 106 4.51 105 4.51 Hybrid regime
Kyrgyz Republic 107 4.34 106 4.31 Hybrid regime
Nepal 108 4.24 108 4.24 Hybrid regime
Mauritania 109 4.17 115 3.86 Hybrid regime
Niger 110 4.16 128 3.38 Hybrid regime
Armenia 111 4.09 109 4.09 Hybrid regime
Iraq 112 4.03 112 4.00 Hybrid regime
Burundi 113 4.01 110 4.01 Hybrid regime
Haiti 114 4.00 111 4.00 Hybrid regime
Egypt 115 3.95 138 3.07 Authoritarian
Madagascar 116 3.93 113 3.94 Authoritarian
Russia 117 3.92 107 4.26 Authoritarian
Jordan 118 3.89 117 3.74 Authoritarian
Nigeria 119 3.83 123 3.47 Authoritarian
Morocco =119 3.83 116 3.79 Authoritarian
Ethiopia 121 3.79 118 3.68 Authoritarian
Kuwait 122 3.74 114 3.88 Authoritarian
Fiji 123 3.67 119 3.62 Authoritarian
Burkina Faso 124 3.59 120 3.59 Authoritarian
Libya 125 3.55 158 1.94 Authoritarian
Cuba 126 3.52 121 3.52 Authoritarian
Comoros =126 3.52 127 3.41 Authoritarian
Gabon 128 3.48 133 3.29 Authoritarian
Togo 129 3.45 124 3.45 Authoritarian
Algeria 130 3.44 125 3.44 Authoritarian
Cameroon 131 3.41 126 3.41 Authoritarian
Gambia 132 3.38 129 3.38 Authoritarian
Angola 133 3.32 131 3.32 Authoritarian
Oman 134 3.26 143 2.86 Authoritarian
Swaziland =134 3.26 141 2.90 Authoritarian
Rwanda 136 3.25 134 3.25 Authoritarian
Kazakhstan 137 3.24 132 3.30 Authoritarian
Qatar 138 3.18 137 3.09 Authoritarian
Belarus 139 3.16 130 3.34 Authoritarian
Azerbaijan 140 3.15 135 3.15 Authoritarian
China 141 3.14 136 3.14 Authoritarian
Cote de Ivoire 142 3.08 139 3.02 Authoritarian
Vietnam 143 2.96 140 2.94 Authoritarian
Bahrain 144 2.92 122 3.49 Authoritarian
Congo (Brazzaville) 145 2.89 142 2.89 Authoritarian
Guinea 146 2.79 144 2.79 Authoritarian
Zimbabwe 147 2.68 146 2.64 Authoritarian
Djibouti =147 2.68 154 2.20 Authoritarian
United Arab Emirates 149 2.58 148 2.52 Authoritarian
Yemen 150 2.57 147 2.64 Authoritarian
Tajikistan 151 2.51 149 2.51 Authoritarian
Afghanistan 152 2.48 150 2.48 Authoritarian
Sudan 153 2.38 151 2.42 Authoritarian
Eritrea 154 2.34 152 2.31 Authoritarian
Democratic Republic of Congo 155 2.15 155 2.15 Authoritarian
Laos 156 2.10 156 2.10 Authoritarian
Guinea-Bissau 157 1.99 157 1.99 Authoritarian
Syria =157 1.99 153 2.31 Authoritarian
Iran 159 1.98 159 1.94 Authoritarian
Central African Republic 160 1.82 162 1.82 Authoritarian
Saudi Arabia 161 1.77 161 1.84 Authoritarian
Equatorial Guinea =161 1.77 160 1.84 Authoritarian
Myanmar =161 1.77 163 1.77 Authoritarian
Uzbekistan 164 1.74 164 1.74 Authoritarian
Turkmenistan 165 1.72 165 1.72 Authoritarian
Chad 166 1.62 166 1.52 Authoritarian
North Korea 167 1.08 167 1.08 Authoritarian
Source: Economist Intelligence Unit.

 

Methodology: Democracy Index

The Economist Intelligence Unit’s Democracy Index is based on five categories: electoral process and pluralism; civil liberties; the functioning of government; political participation; and political culture. The overall index of democracy, on a 0 to 10 scale, is based on the ratings for 60 indicators grouped in the five categories. The overall index is the simple average of the five category indexes. A three-point scoring system for the 60 indicators is used. The category indexes are based on the sum of the indicator scores in the category, converted to a 0 to 10 scale. Countries are placed within one of four types of regimes: “full democracies” (scores of 8 to 10); “flawed democracies” scores of 6 to 7.9; “hybrid regimes” scores of 4 to 5.9; “authoritarian regimes” scores below 4.

 

 Reference: EIU

The US economy retains reasonable momentum

December 27, 2011 by · No Comments · Business, News

December 1st 2011

US economic activity is more buoyant than seemed likely a few months ago, helped by an improvement in the stockmarket, lower petrol prices and somewhat brighter job prospects. A consumer sentiment index published by Reuters and the University of Michigan climbed to a five-month high in November. The brighter mood was confirmed by data for retail sales, which, according to the Commerce Department, rose by 0.5% month on month in October, following a robust 1.1% advance in September. Demand for electronic goods and online purchases were especially strong, with the advance driven by the widely heralded launch of the new Apple iPhone 4S. The stampede for new iPhones may even have cannibalised demand for other consumer goods—while the 3.7% spurt in sales at electronics stores in October was the strongest since November 2009, department and clothing stores saw a sharp decline. Elsewhere, industrial output surged by an unexpectedly strong 0.7% month on month in October, led by oil and gas drilling and the automotive sector. Manufacturing grew by 0.5%; even excluding motor vehicles, manufacturing posted a respectable 0.3% gain. The Commerce Department reported that, based on revised estimates, real GDP grew at an annualised rate of 2% in the third quarter, up from 1.3% in the previous three months. However, the revised figure was significantly lower than the initial 2.5% estimate. The improvement from the second quarter was primarily attributable to a surprising 2.3% advance in consumer spending, up from 0.7% in the second quarter. The impetus came mainly from durable goods, centred on motor vehicles.

New claims for unemployment insurance, as measured by a four-week moving average, fell in mid-November to their lowest level since April. Especially encouraging is that the number of claims dropped below 400,000, typically considered the tipping point between shrinking and growing employment. Meanwhile, housing starts and building permits have shown signs of recovery in recent months. The number of building permits granted, normally a reliable indicator of future construction activity, jumped by a seasonally adjusted 10.9% month on month in October. In other hopeful signs, the mortgage delinquency rate fell in the third quarter to its lowest level in almost three years, and the National Association of Home Builders reported a modest improvement in its members’ mood. However, the economy still faces stern headwinds, including the deadlock on fiscal policy in Washington, slowing growth and financial uncertainty in the euro zone, and an extremely volatile stockmarket.

Reference: EIU

North Korea politics: Dear departed

December 27, 2011 by · No Comments · Business, News

December 19th 2011

Kim Jong-il has died, according to a December 19th announcement on North Korean state television. The dictator’s demise will send ripples of shock through the country, severely testing the succession arrangements Kim Jong-il belatedly began to put in place last year. If North Korea’s ruling elite and armed forces unite behind the twenty-something heir, Kim Jong-un, the regime may well survive. But there is also the spectre that internal power struggles will unhinge the impoverished, nuclear-armed state, triggering a refugee crisis or even a regional conflict. As difficult as it has been for North Korea’s neighbours to deal with Kim Jong-il’s belligerence and misrule, his death could trigger even more destabilising developments.

The news of Kim Jong-il’s death will have immediate ripple effects across North Korea and internationally. When Kim Jong-il’s father died in 1994, the country was gripped by a paroxysm of mass grief. The popular reaction may be more subdued this time around, given the mass starvation and economic decline that characterised Kim Jong-il’s 17-year rule as well as growing awareness that people in China and South Korea live much better lives. Still, the Kim dynasty has assiduously cultivated one of the world’s most extreme personality cults; for decades North Koreans have been taught to revere Kim Jong-il as a god-like figure responsible for the country’s every economic and political achievement. In a society where a personality cult has become part of the official ideology, the Dear Leader’s death will be experienced by many as a frightening, disorienting, even apocalyptic event.

Few outsiders are likely to shed tears over the deceased despot, but the foreign reaction will also be tinged with trepidation. Kim Jong-il dominated a highly opaque regime, and his sudden absence creates major uncertainties. After the news broke, South Korea placed its military on an emergency footing, and Japan convened a meeting of top-level security officials. Regional stockmarkets and the South Korean currency fell.

Will the “Great Successor” succeed?

Looking ahead, the key question is whether Kim Jong-il’s hastily implemented succession plan will hold. In a paradox that has doomed many dynasties in the past, the same factors that make for stability in a personalised dictatorship also generate instability when the supreme leader dies. Because the political system has no institutionalised way of transferring power, stability depends on the ruler’s established dominance and political acumen. The leader’s death removes the keystone of the entire political edifice, setting off a potentially destabilising jostle for influence between factions within the ruling elite.

From this perspective, the problems facing Kim Jong-un and his presumed regent, his uncle Jang Song-taek, are formidable. Although they inherit a broken, isolated economy and the enmity of several powerful states, their greatest challenge will be to solidify Kim Jong-un’s succession. The details of this process will be difficult for foreign observers to monitor, but there are several factors that could affect its prospects of success.

First, the process of engineering Kim Jong-un’s succession has been hurried and remains incomplete. Kim Jong-il appears to have begun serious preparations only after falling seriously ill in 2008. His first public step to prepare his son came in late 2010, when the then 27-year-old was made a four-star general. In the ensuing weeks the presumed heir was also handed high-ranking posts in the government and the ruling Workers’ Party of Korea (WPK). By the standards of hereditary succession, these changes amount to a last-minute scramble. Kim Jong-il’s own takeover was set in train years in advance, giving him sufficient time to develop political connections and experience.

Second, Kim Jong-un may lack the skills and stature to fill the political void left by his father’s death. Some South Korean commentators posit that Kim Jong-un possesses his father’s political intelligence and ruthlessness, and the young heir has many powerful supporters. But he is also a political neophyte and a general with no military experience. The gap between Kim Jong-un’s personality cult and his actual fitness to rule are likely to appear egregious even by the standards of a propaganda machine that regularly lauded his father’s ability to change the weather or sink multiple consecutive holes-in-one on the golf course. This gap will be especially apparent to the ruling elite, increasing the likelihood that destabilising factional struggles will erupt amid competition to fill the power vacuum.

This leads to a third worrying factor, which is that several potential fissures lie behind North Korea’s well-choreographed displays of unity. In addition to the long-running rivalry between the WPK and the military, there is the possibility that the cabinet’s civilian technocrats may form a third competing force. North Korea has become so militarised that in any power struggle a military regime is the likeliest outcome, probably under the National Defence Commission, which outranks the cabinet as the highest executive organ of the state. Meanwhile, moderates in Pyongyang who yearn to adopt market reforms could also seize on Kim Jong-il’s death as their moment to act. Should they do so, they could have the support of China, which is growing tired of propping up a failing and unreconstructed regime.

A greater threat?

These considerations suggest that North Korea’s neighbours are right to brace for a period of potentially serious instability. In the near term, the best-case scenario from a stability perspective may be for Kim Jong-un and his supporters to gradually consolidate power while heading off internal threats to the new regime. Even in this scenario, however, North Korea’s foreign relations could deteriorate significantly. If Kim Jong-un lacks the personal power and prestige to impose his will on the ruling elite, he may need to win support by offering policy concessions. In the case of the armed forces, this could create a powerful incentive to engage in further military brinksmanship and nuclear blackmail. The fact that many analysts interpreted North Korea’s shelling of the South Korean island of Yeonpyeong in November 2010 as part of Kim Jong-il’s efforts to secure the military’s support for Kim Jong-un does not augur well in this regard.

If regime continuity is the least destabilising scenario in the near term, nearly every possible scenario following an implosion of the regime would lead to a period of extreme instability. Regime collapse would almost certainly trigger a massive humanitarian and refugee crisis. There would be ample room for conflict and strategic miscalculation as China, South Korea and the US tried to protect their interests, impose order and account for North Korea’s nuclear arsenal. In short, the challenges North Korea now faces are greater than at any time in its recent history. Kim Jong-il may have presided over an escalation in regional tensions and the collapse of the North Korean economy, but there is a possibility that his departure will set in train even more frightening developments.

Reference: EIU

Thailand: The economy is devastated by the floods

December 27, 2011 by · No Comments · Business, News

December 6th 2011

Although the clean-up operation has commenced in some parts, and factories are restarting (or at least setting a date to restart) production lines, the extent to which the floods have devastated lives and livelihoods is becoming much clearer. The death toll has risen above 600 and, according to the latest official estimate, the economy is likely to contract by 3.7% quarter on quarter in the fourth quarter of this year.

Assessments of the financial costs for the floods vary, but the World Bank recently estimated that the costs amounted to Bt1.3trn, with Bt640bn being in the form of damage to property and Bt716bn in the loss of business opportunities. The National Economic and Social Development Board (NESDB), meanwhile, has stated that the damage from the floods could amount to Bt300bn (around US$10bn), while the Federation of Thai Industries (FTI) put the total “economic losses” at Bt1.12trn, citing that export revenue would drop by 10% year on year in both November and December.

Around 10,000 factories and 660,000 workers have been affected, with seven large industrial estates housing 2,500 or so factories being shut down for weeks. The automotive and high-technology sectors have been hardest hit, and the consequences have been felt globally, with reported shortages of hard-disk drives (HDDs), for example—Thailand accounts for at least 40% of the world’s supply of HDDs. Disruptions to supplies of automotive parts and components have severely affected some of the biggest carmakers in the world. Data from the Office of Industrial Economics show that the manufacturing production index plummeted by 35.8% year on year and by 35% month on month (seasonally adjusted) in October. The year-on-year contraction in output of motor vehicles was severe, at 62%; fewer than 50,000 units were produced in October compared with a monthly average of nearly 124,000 units in the first nine months of the year. Production of office, accounting and computing machinery also plummeted by 52% year on year in October. HDD output was down by 52%, while the production of integrated circuits plunged by 75%.

Thailand’s services sectors have also been hit. Although the main tourist resorts in the southern provinces have been unaffected by the floods, a number of foreign governments have issued temporary warnings against travel to Bangkok, and arrivals into the main international airport were down by 7% year on year in the last week of October. The floods, which coincided with the main rice harvest, have also destroyed around 15% of the country’s main rice crop

 Reference: EIU