The 5 Possible Outcomes Of The OPEC Meeting

The highly-anticipated OPEC meeting will take place this week, but unlike the last few meetings, the hype and excitement is much less palpable. That is largely because the end result is thought to be a foregone conclusion. Last week, Saudi Arabia and Russia telegraphed the events of the May 25 meeting, announcing support for a nine-month extension of the existing production cuts – 1.2 million barrels per day (mb/d) from OPEC plus 558,000 barrels per day (bpd) from a group of non-OPEC countries. With the two most important oil producers in agreement, the meeting should be quick and easy.

"The decision seems to be almost a done deal," said Bjarne Schieldrop, chief commodities analyst at SEB Markets. "There seems to be a very high harmony in the group."

But if we have learned anything from the OPEC meetings over the last several years, it is that nothing should be taken for granted. Time and again the cartel seems to surprise the markets. Saudi Arabia’s energy minister hinted over the weekend that the OPEC meeting could have more drama than many analysts currently expect. "Everybody I talked to... expressed support and enthusiasm to join in this direction, but of course it doesn’t preempt any creative suggestions that may come about," Saudi energy minister Khalid al-Falih said at a news conference in Riyadh.

So even as a consensus has formed on one particular outcome, here are several possible “surprise scenarios” that could come out of the OPEC meeting this week, ordered by least to most bullish for oil prices.



1. No extension. This would be the most disastrous for oil prices, as OPEC abandons its collective action and returns to full production. With the oil market still suffering from oversupply, a return to higher output would cause WTI and Brent to meltdown, crashing into the $40s or quite possibly lower. However, this most extreme bearish scenario is also probably the least likely outcome.

2. 6-month extension. A rollover of the existing cuts for another six months. This had been the most widely-assumed scenario until only recently. Global inventories remain elevated, and extending the cuts through the end of the year probably won’t be enough to bring inventories back into the five-year average range. With the markets wanting more, a six-month extension would, at this point, be seen as a disappointment and would likely push oil prices down.

3. 9-month extension. Extending the cuts through the end of the first quarter of 2018 is now the market’s working assumption, and will be met with a sigh of relief. But since it has become the new baseline, a strong rally in prices is probably unlikely.


4. 9-month extension plus more countries join in. Khalid al-Falih hinted that new additions to the pact could be forthcoming. "We believe that continuation with the same level of cuts, plus eventually adding one or two small producers,” he said over the weekend. The addition of a couple marginal producers would add a little bit of a psychological punch to the agreement, but probably wouldn’t alter the supply/demand balance in any fundamental way. This outcome probably would be met with a rise in oil prices by a few dollars per barrel.

5. 9-month extension with deeper cuts. This scenario is the one to watch out for, as many analysts see the odds of much more aggressive cuts growing. An OPEC source recently told Reuters that the group was considering making deeper output reductions. "All options are open," the source said. Deeper cuts could come in several different forms. The collective output quota of 32.5 mb/d could be lowered, with country-specific limits tightened. This would be a heavy lift, but if agreed to, would lead to a much stronger price impact, immediately pushing up crude benchmarks substantially. Another way to make deeper cuts would be to remove the exemptions given to Libya and Nigeria. Both countries were not subject to any limits in the initial six-months, and both have added output and signaled more production growth in the near future. It is not clear that they would agree to limits, given their serious economic and security troubles.

OPEC has a tendency to surprise, so any of these outcomes – or others – are possible. Still, an extension of the existing cuts for nine months appears to be the most likely scenario. At the same time, OPEC has sort of backed itself into a corner – it has raised expectations to such a degree that anything less would be considered a major disappointment.

By Nick Cunningham of Oilprice.com

Saudi Finance Minister: “I Wouldn't Care If The Oil Price Is Zero"

The Saudi Deputy Crown Prince Mohammed bin Salman unveiled the nation’s ambitious “Vision 2030” in an interview with Al-Arabiya in April. The roadmap lays out a wide variety of economic reforms that will transition Saudi Arabia away from oil and into a broader array of investments.

While Saudi Arabia’s economy is currently suffering from an 18-month decline in oil prices and soaring unemployment rates, they are planning for a future in which they won’t have to worry about the price of oil at all. Speaking of the plans outlined in Vision 2030, Saudi finance minister Mohammed Al Jadaan told CNN, "We will not really care much whether the price is 40, 45, 50, 55 at that time because we have gone significantly out of our way to be independent of the oil price...We are planning to totally [end] that dependency that we have been living for the last 40, 50 years. Hopefully by 2030, I wouldn't care if the oil price is zero."

Vision 2030 proposes an economic restructuring that would in theory add 6 million non-oil jobs by 2030 and generate $100 billion per year in additional non-oil revenue by 2020 by reducing subsidies for gasoline, electricity and water and introducing a new value-added tax as well as initiatives to foster more non-oil industries like mining and military hardware. They have also suggested grandiose ideas to create the world’s biggest IPO for Aramco (the world’s biggest oil company) and to establish the world’s biggest sovereign-wealth fund worth over $2 trillion to invest in a wide variety of assets.
Related: Kuwait: Deeper Cuts Are On The Table

These proposals, groundbreaking in their extent, are especially radical in a country relying on oil for 90 percent of its GDP. Whether these ambitious goals are realistic for Saudi Arabia, whose national deficit is expected to reach 13.5 percent of GDP this year after over a year of decreasing oil prices, remains to be seen.


The 30-year-old Prince bin Salman also announced that he believed the plan could be realized even sooner, eliminating Saudi Arabia’s oil dependency by 2020, in a statement that the Economist referred to as “manic optimism among the youthful new policy-setters of the royal court.”

While the Vision 2030 roadmap is full of general policy suggestions and enterprising statements of intent, it lacks clear directives and detailed strategies. Saudi policy-makers have been promising logistics for months, but have yet to release anything of the sort.

For decades, any efforts to wean the Saudi economy off of oil has been met with opposition ranging from disinterest to disdain. If Vision 2030 is to have any success, it will rely upon bin Salman’s ability to mobilize Saudi youth and instill a desire to work within new fields. As the youngest defense secretary in the world with a youthful outlook and a strong presence in social media, bin Salman may just have the sway it takes to realize this endeavor.

Diversifying Saudi Arabia’s economy could also be the answer to the nation’s growing youth unemployment. Timothy Callen, the assistant director for the Middle East and Central Asia department at the IMF, says that reducing unemployment among young Saudis will be one of the economy’s biggest challenges this year, with the rate already at 12 percent for nationals and 33.5 percent for youth and climbing steadily in conjunction with more and more young people entering employment age.


Saudi authorities have said that they hope the reforms proposed in Vision 2030 will decrease unemployment just 7 percent, with the amount of women in the workforce increasing from just 22 percent to 30 percent stemming from increased education and employment opportunities. The Al-Bayan Center for Planning & Studies has criticized the modesty of these goals in comparison to the brash ambition of Vision 2030 as a whole, arguing that “the hesitancy to establish the requisite social and political reforms that will inevitably support economic reform questions Saudi Arabia’s ability to diversify the economy and attract necessary foreign investment.”

By 2030, the same year that bin Salman claims that Saudi Arabia will have broken up with oil, some experts predict that youth unemployment will increase to over 42 percent as the population continues to boom. These are two vastly different foresights for Saudi Arabia, but one thing is certain: the country will need more than just a vision to secure a brighter future.

By Haley Zaremba for Oilprice.com

Iraq Could Make Or Break The OPEC Deal

The markets are betting that the OPEC extension is all but guaranteed after Saudi Arabia and Russia announced their intention to support a nine-month extension. Saudi energy minister Khalid al-Falih tried to put to rest any possibility of dissention. “We think we have everybody on board,” al-Falih said on Bloomberg TV. “Everybody I’ve talked to indicated that nine months was a wise decision.”

Rumors have surfaced that OPEC might even be considering deeper cuts, perhaps on the order of 2.5 million barrels per day (mb/d), which is twice as much as the current reductions. Because inventories have declined slowly, there is a greater recognition that more aggressive action might be needed to bring the oil market back into balance.

But even as oil bulls – and U.S. shale drillers, no doubt – salivate at the possibility of steeper cuts from OPEC, there is at least one country that could derail those efforts: Iraq. OPEC’s second largest producer was one of the last holdouts in the lead up to the original six-month deal. Iraqi officials hesitated at cooperating with OPEC to reduce output because it argued that its multi-year war with the Islamic State should exempt it from any production limits, just as security problems in Nigeria and Libya were cited as justification for allowing an exemption for those two countries.

In addition, Iraq disputed the data OPEC used in calculating the production limits, which it said underestimated Iraq’s actual production levels. Iraqi officials argued they were being asked to cut too deep based on disputed data.


Even though were able to move past those disagreements, Iraq became a straggler when it came time for implementation. In the first quarter, Iraq produced 80,000 bpd more than the agreed upon production limit of 4.351, according to Reuters. As of April, Iraq was still above its cap by some 20,000 bpd, based on OPEC’s secondary sources data. Moreover, because the agreement is a six-month average, even if Iraq brought its output down to the target level for May and June, that would not mean it will have achieved compliance – Iraq would have to cut significantly below that level in order to bring its six-month average down sufficiently. So, it is safe to say Iraq will not meet its commitment.

But that issue is rather minor compared to the task at hand for al-Falih in trying to keep Iraq on board going forward. The reason is that Iraq has new production capacity set to come online in the third and fourth quarter of 2017. The bulk of Iraq’s production comes from its southern oil fields in and around Basra, where several major international companies operate, including BP, Royal Dutch Shell, ExxonMobil, Lukoil and CNPC. Production from these southern oil fields could actually increase as companies' complete maintenance and bring some new projects online. "We achieved this great achievement of 4 million barrels per day ... middle of 2016, and now we have climbed up and we are reaching about 5 million barrels per day beginning of second half of this year," Iraq’s oil minister Jabbar Al-Luaibi said in March at the CERAWeek Conference in Houston.


“Leaving that productive capacity idle will come with an opportunity cost that Iraq may prove reluctant to bear,” Harry Tchilinguirian, head of commodity-markets strategy at BNP Paribas SA, told Bloomberg.

Reports surfaced this week that Iraq was insisting that it would not agree to anything more than a six-month extension, resisting Saudi Arabia’s pleas for an extension through the first quarter of 2018. However, Saudi energy minister al-Falih flew to Baghdad to do some arm-twisting, and as of May 22, he seems to have convinced his Iraqi counterpart to sign on. On the eve of the OPEC summit, there now appears to be few barriers to an official endorsement of a nine-month extension.
Related: Saudi Arabia Signs $50 Billion Worth Of Oil Deals With The U.S.

But that does not mean that Iraq will comply. So far it has fallen short of 100 percent compliance, a fact that Saudi Arabia is willing to overlook in order to keep the deal from falling apart. Indeed, Saudi Arabia has made up for Iraq’s foot-dragging, cutting deeper than required. “This is OPEC’s problem: There is no punishment mechanism,” independent oil analyst Anas Alhajji told Bloomberg. “A deal is one thing, implementation is another.” Recent data shows that even as Iraq appears ready to sign on to a nine-month extension, its exports are on the verge of setting a record for the month of May.

Moreover, the Iraqi oil minister has long felt that it received the short end of the stick form the original agreement in November. Fellow OPEC members Nigeria and Libya were given exemptions and Iran was allowed to increase production. Iraq, meanwhile, was forced to make the second largest cut. This, plus the oil minister’s past comments about ramping up production this year, should make oil watchers skeptical about Iraq’s willingness to keep production in line with the agreement for the next nine months.

By Nick Cunningham of Oilprice.com

Trying to make sense of the mindless suicide bombing in Manchester concert

A group of Malaysians all over the world from different racial divide having their say on the mindless suicide bombing in Manchester UK in a Whattsapp group and Malaysia with the religious bigots having a field day running amok every day with the government blessing , this probability happening here is very close to reality . 90% of the concert goers are Malays and when it happens, they will hold the people who allowed this carnage to happen ultimately responsible. If you dare make you bed (hole) then be prepared to sleep in it also forever

Ali  : Heard it was a lone wolf suicide bomber. I have state around West-Midlands area in U.K and the Asians from Pakistan Indian and Bangladesh live in closely knitted Neighborhoods and even they know somebody is going to commit a crime they look the other way. Not only the suicide bomber is at fault but the Indian sub-continent communities are at greater fault because of their diligence. You would not belief what these criminals. I Guess only thing can be done to save humanity is start jailing the snake heads who enslave the minds of the young innocents to do their bidding. Need to send SOS to Philippines president Durete to expand his war to the religious freaks out Philippines also as he will kick the arse of ISIS MNILF and Abu Sayafad with No mercy or no prisoners taken alive

Ramli :  Peter it's not this people who migrated to U.K. It's ISIS the fanatics. This ISIS was created by the British & the American in the Middle East. To fight against the regime in the Middle East. Libya, Iraq, has been destroyed. They try destroying Egypt 🇪🇬, but failed. Isis is now in Syria 🇸🇾. The civil war is going on. The weapons were provided by the Americans. Many westerners Muslim participate in the war in the Middle East and they have returned home .UK. This influencers group is very active in U.K. They are now recruiting the youngster in U.K. Using Islam as the base. The bomber in Manchester was a 23 years old, race yet to be determined. So you see they are using Islam to influence these youngsters. Islam does not tell anyone to kill mankind. The leaders of ISIS are working towards their own benefit. They preach and interpret by their fancy. This is what's happening. The majority of the Pakistanis, Bangla, Sikh, and Indians are peace loving people. May they be blessed?

Peter: Ramli you are only 1/2 correct as the ISIS are the ones now waging the terror in U.K. And Europe and the 1/2 is the community who are sheltering them and not turning these terrorist to the authorities. I have been there and they are very secretive in nature and will not snitch on these terrorist who is one of their community. 1/2 the problem is ISIS and 1/2 is the silence from the community. They live and segregated themselves from other communities and do not live in mix Neighborhoods and if they live in mix Neighborhoods like us it will be difficult for a terrorist to go unnoticed. The silence the segregation the attitude of not wanting to be the one who turn these terrorist in to the authorities and playing the victim does no good for the community as today they terrorist the others tomorrow they will terrorize their own community . I bet my bottom dollar the suicide will be identified as one from the Indian sub-continent. They have been radicalized a long time ago and ISIS was the spark. This is nothing to do with religion but more on power an individual can hold sway over the general population of U.K.

Ramli: Peter you said it correctly. I only mentioned ISIS but you added staying in seclusion and this community does not mix with other races to accept Tolerances.. That's the real problem in U.K. . . . We in Malaysia still have other races as friends and we accept them for what they are. The political masters are trying to slit and rule but I don't think they will succeed. So long as the residential area is of mix community’s, MALAYSIA will be safe from this fanatic.

Samy : Bro' these ungrateful people have no conscience, they run away from their own country "seek" asylum on the pretext of war, ethnic cleansing, torture n when they are comfortable they want their way in a foreign land, sadly they also eat n shit at the same place..!!

Samy: Bro' it's only a small minority like ISIS that influences the majority for their own convoluted ideas n gain but some innocent people get caught up and openly support them even over here in Malaysia we hear general workers, engineers, mechanics, professionals and even students getting involved and to add fuel to fire we have stupid NGO "leaders" plus government officials supporting known terrorist like Zakir Naik n other such criminals..!!

Syed: All in all we r radicalizing all over the world bros...Sad. Quite obvious even among our own friends.....elsewhere not here.

Modi: ISIS has taken responsibility for the MEN Arena bombing. There were kids as young as 8 and 16 years so far on identification. Indeed it is a sad day, not only here all over and I can see you guys are upset too from your messages.

Syed: Libyan descent from Manchester it seems

Peter: Sad very sad young life snuffs of for whose glory

Samy : Bro' like I said they have their own convoluted ideology to rape, plunder, maim, kill, bomb n murder in the name of religion even those of the same faith are killed what more the 'infidels'

Samy : The problem here I think are the half-baked politicians who thrive on dividing the people for their own political mileage n the government are either in cahoots or seem to be condoning such actions or are hapless in reigning in those who shoot their mouths without thinking. This is evidenced on an almost daily basis with even books written by a parliamentarian is deemed offensive by moronic bigots..!!

Peter: Bro Samy also we have pockets of resistance to civilized life style. Go to a 100 or 99% Neighborhood of Chinese and is anything criminal happens or even an accident there will be no witnesses or if there is one and answer will be Tak tau and infested with gangsters same goes for Indian and Malay Neighborhoods, they went live segregated will protect their own kind however they can be mass murders robbers gangsters rapist and so on. Segregation stifles the brain and diminishes the reasoning across racial divides. This is practice by the animals in the jungle and they will protect their own kind and species against others and other species. This is the missing link the scientist are looking for as can appear to be human in physical form but the brain have or still trying to leap from an animal brain which instinct or survival please an important part of their survival compared with human being which do not live by instinct but by reasoning . This is the difference between a human and an ape. Do not deceive by their physical form and clothing that they are humans but these are still in a transition from an ape or human. The giveaway is their lack of reasoning and barbaric survival instincts. They are mammals and neither apes nor humans but a new (old) discover sub species of the great apes which highly physically evolved species austroricanrabmemangbodoh and their natural habitat is the sub-Sahara Middle East Central Asia Indian sub-continent and South East Asia. When they speak too fast their brain goes in reverse and they start getting excited and start having seizures and foaming in the month. In Malaysia the species are breeding at an alarming rate and they are in the news Everyday

Peter: That is why amok is a word coined here and have no racial or religious boundaries and some called them Gila Babi. Look at Muammar the suppose Buddhist, India the suppose Indians , Middle East the suppose Arabs , Malaysia the suppose UMNO PAS members the kampung Medan and kampung Datuk Harun our very own Najib are only examples and more of these species to be exposed .possibly offspring’s of the alien animals mating with the humans. Okay guys only a theory only and will conduct more research by going undercover to their meeting places and Neighborhood to learn more about their social fabric , eating habits their ritual mating habits

Peter: Today is Wednesday just going bonkers and possible maybe one of them. Have to find out fast and only way to infiltrate them is to hook up with a female from their species and mix with them

THIS GUY WOULD BE WORTH US$22 MIL IF HE HADN’T BOUGHT 2 PAPA JOHN’S PIZZAS: THE RISE OF BITCOIN

Do you know that May 22 is also known as “Bitcoin Pizza Day”? It was the date where Laszlo Hanyecz, a programmer, successfully traded his 10,000 units of digital currency bitcoin (BTC) for 2 Papa John’s pizzas. He posted on a bitcoin forum page – “I just want to report that I successfully traded 10,000 bitcoins for pizza. Thanks Jercos!”

It was the first documented purchase of goods with bitcoin back in 2010. Had Mr. Laszlo kept his 10,000 BTC until today, he would be sitting on a mountain of US$22.5 million, based on today’s value. But 7 years ago, Laszlo’s 2 pizzas were worth only US$30, meaning, if you bought US$100 of bitcoin on May 22, 2010 and keep it, you’re looking at US$75 million today.

Laszlo Hanyecz - Bitcoin - Papa John's Pizzas

Bitcoin, the crypto-currency frowned upon as a currency of the underworld by most of the people, is going ballistic, with each unit skyrockets to US$2,238. A year ago today, a unit of bitcoin was trading at US$445. Over the weekend, the crypto-currency climbed past US$2,000 for the firs time, and hasn’t looked back yet.

Very few have confidence about bitcoin – from former Federal Reserve Chairman Ben Bernanke to J.P. Morgan Chase CEO Jamie Dimon. And it’s not hard to understand why. Three years ago, bitcoin exchange Mt. Gox filed for bankruptcy protection after the virtual currency firm claimed 750,000 bitcoins from users and 100,000 of the company’s own bitcoins were lost due to hacking.

Mt. Gox Bitcoin Exchange Bankruptcy - Protesters

It may sound like a scam by the Tokyo-based Mt. Gox Bitcoin exchange. After all, that’s precisely the excuse used by a latest scam by Penang-based financial scheme operator JJPTR. Johnson Lee, the founder of JJPTR conveniently blamed hacking for his forex trading losses amounting to US$400 million (RM1.75 billion).

Kyodo News said debts at Mt. Gox totalled more than 6.5 billion yen (US$65 million), surpassing its assets. Based on the bitcoin market price when Mt. Gox filed for bankruptcy protection in Feb, 2014, the 850,000 bitcoins was worth about US$425 million. At today’s price, those same amounts of bitcoins would be worth a staggering US$1.9 billion.



Of course, even if Mt. Gox had lied about its bitcoins lost to hackers, it’s hard to believe anyone would pay US$1.9 billion today for the original 850,000 bitcoins, of which 600,000 Americans were the owners. Back then, Japan’s Finance Minister Taro Aso told reporters in Tokyo – “No one recognizes them as a real currency. I expected such a thing to collapse.”

Interestingly, it was the same Japanese regulators who introduced new law last month that recognize bitcoin as a legal method of payment. The recognition of bitcoin as a legal payment option within Japan went into effect on April 1, 2017. The news drove the demand for bitcoin with the expectation that the crypto-currency usage in Japan will be over US$9 billion in the next three years (2020).

Virus or Worm - Ransomware WannaCryptor 2 Red Screen On Windows XP

Bitcoin is particularly attractive to users, including criminals, because it’s easy to transfer overseas without high surcharges and offers simple, anonymous transactions online. That’s the reason hackers in the recent cyber attack which hit roughly 200,000 computers in at least 150 countries – WannaCry – demanded ransom payment in the form of bitcoin.

How bitcoins are being created is itself a black-box. It’s claimed that bitcoins are mined based on a set of mathematical formulas. People (such as Laszlo Hanyecz) compete to “mine” bitcoins using computers to solve complex math puzzles. A winner is rewarded with 25 bitcoins roughly every 10 minutes. This is how bitcoins are created.

Bitcoin - Mining Coins

Bitcoins are stored in a “digital wallet,” which exists either in the cloud or on a user’s computer. But the mining is like trying to guess a lottery number. The network’s protocol, designed by an anonymous programmer – Satoshi Nakamoto – was designed to release a new block of bitcoins every 10 minutes until all 21 million were released.

The blocks get smaller over time. If the miners in the network take more than 10 minutes to guess the correct code, the bitcoin program adapts to make it easier. If it takes less than 10 minutes, the code becomes harder. In the early days of bitcoin, anyone could find a new block using their computer’s CPU. Not anymore.

Bitcoin - Mathematic Problem - Puzzle

By 2013, all of the machines around the world used to bitcoin mining have a computing power that is at least 4,500 times the capacity of the U.S. government’s best supercomputer, the IBM Sequoia, according to Michael B. Taylor, a professor at the University of California, San Diego. Though each bitcoin transaction is recorded in a public log, names of buyers and sellers are never revealed – only their wallet IDs.

– http://www.financetwitter.com

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WHAT NAJIB DOESN’T TELL YOU: EXPOSED! WEAKNESSES IN MALAYSIA’S ECONOMY

The first quarter GDP expanded by a robust rate of 5.6%, the fastest in two years. But, what is more important is whether such impressive growth could be sustained in the second and third quarters and further into the future.

The sterling performance of Q1 GDP has been largely established upon the strong showing in the export and agriculture sectors. The country’s exports grew by 24.1% y-o-y in March, breaching the RM80 billion threshold for the first time, while the plantation industry expanded by 8.3%, well above all other sectors.

One of the advantages of the national economy has been diversification. Even though crude oil prices may fall, we still have other sectors to bolster the economy. Fortunately, the external environment has shown signs of improvement while the weak local currency helps stimulate exports. As for the agriculture, improved weather from last year’s El Niño phenomenon has contributed to the sector’s strong growth.

As such, the 5.6% growth could be largely attributed to recovering external demands, not a rebound in the domestic market.

For instance, exports have also been strong for many other countries. In China, the sector grew 16.4% in March, Japan 12%, South Korea 13.7% and Singapore 16.5%. This proves that the Malaysian economy has benefited from stronger overall global prospects.

Firmer commodity prices, including those of palm oil and rubber, have also helped lift the first quarter GDP.

Owing to robust exports, the manufacturing industry needs to acquire more raw materials for production, and this has in turn stimulated private sector investment and prevented the domestic demands from sliding further.

If the momentum of the export sector could be sustained, employment prospects will brighten up.

Nevertheless, economists are concerned that after the quantitative easing policy is lifted, the asset bubble could burst while protectionism could hurt the frail economic recovery. In other words, downside risks for the global economy remain.

In addition, positive factors for the plantation industry are beginning to fade. Palm oil prices have retreated from their highs.

While major construction projects could boost private and public expenditures, consumer sentiment remains suppressed. And the mega projects will not last forever, either.



As such, reliance on external demands will not be the optimal solution to deliver the country out of the middle income trap. We need to address our internal problems before the national economy would take off.

Structural problems of Malaysia’s economy are no strangers to us: over-dependence on foreign workforce, lack of new growth engine, innovation and competitiveness.

The day-to-day living of ordinary citizens needs to be addressed. Against the backdrop of a 4.3% expansion in first quarter CPI, many simply do not feel the joy despite the impressive economic figures, thanks to skyrocketing goods prices. Meanwhile, negative interest rates have shrunk our bank deposits, further dampening our purchasing power.

Poverty is another issue. The government received a total of 8,277,391 applications for BR1M and has approved 5,153,238 of them. This shows that many Malaysians have indeed been excluded from the country’s economic prosperity.

DPM Ahmad Zahid Hamidi said after officiating a high-level committee meeting on urban poverty that the government would initiate a food assistance program, supplying frozen foods to the urban poor. What the impoverished urban families need more from the government is social safety net.

A family of ten from Sabah, for example, was evicted by the landlord for owing two months of rents, and has been overnighting for more than two weeks now under a flyover along the city’s MRR2.

What holds for the country’s economic future? Not Bandar Malaysia, TRX, KL 118 or other gigantic real estate projects. These projects will neither produce the multiplier effect nor be sustainable.

It looks like PM Najib has a passion for digital economy and has pinned his hopes on Alibaba’s Jack Ma to help set up the first digital free trade area outside China, to take the country’s economy off ground.

But, there are prerequisites that need to be met before we develop digital economy. Take China for instance, the country has built the world’s most extensive broadband network with a penetration rate of some 470 million households as of June 2016, covering all cities and towns and 95% of villages across the country.

China also boasts some of the world’s top IT and networking companies, while innovative technologies of big data, cloud computing and Internet of Things have been extensively employed in all core areas of the country’s manufacturing sector.

Like any other economic models, digital economy could only grow if we put in some real effort, not just big talks!

– Mysinchew

The real threat to S'pore – construction of Thai's Kra Canal financed by China

The Kra Canal or the Thai Canal refers to a proposal for a canal to cut through the southern isthmus of Thailand, connecting the Gulf of Thailand with the Andaman Sea. It would provide an alternative to transit through the Strait of Malacca and shorten transit for shipments of oil to East Asian countries like Japan and China by 1,200 km, saving much time. China refers to it as part of its 21st century maritime Silk Road.

China is keen on the Kra Canal project partly for strategic reasons. Presently, 80% of China’s oil from the Middle East and Africa passes through the Straits of Malacca. China has long recognized that in a potential conflict with other rivals, particularly with the US, the Strait of Malacca could easily be blockaded, cutting-off its oil lifeline. Former Chinese President Hu Jintao even coined a term for this, calling it China’s “Malacca Dilemma”.

History of Kra Canal

The idea to shorten shipping time and distance through the proposed Kra Canal is not new. It was proposed as early as in 1677 when Thai King Narai asked the French engineer de Lamar to survey the possibility of building a waterway to connect Songkhla with Marid (now Myanmar), but the idea was discarded as impractical with the technology of that time.

In 1793, the idea resurfaced. The younger brother of King Chakri suggested it would make it easier to protect the west coast with military ships. In the early 19th century, the British East India Company became interested in a canal. After Burma became a British colony in 1863, an exploration was undertaken with Victoria Point (Kawthaung) opposite the Kra estuary as its southernmost point, again with negative result. In 1882, the constructor of the Suez canal, Ferdinand de Lesseps, visited the area, but the Thai king did not allow him to investigate in detail.

In 1897, Thailand and the British empire agreed not to build a canal so as to maintain the importance of Singapore as a shipping hub, since by that time, Singapore was already prospering as an international hub with great importance to the British.

In the 20th century the idea resurfaced with various proposals to build the canal but did not go far due to various constraints including technology and cost constraints as well as indecisive political leadership of Thailand.

China shows Thailand the money

In the last decade, China has now become the potential game changer who can possibly turn Kra Canal proposal into reality in the 21st century. It has the money, technology and strong political leadership and will to support the project if it wants to.

Last year, news emerged that China and Thailand have signed an MOU to advance the Kra Canal project. On 15 May 2015, the MOU was signed by the China-Thailand Kra Infrastructure Investment and Development company (中泰克拉基礎設施投資開發有限公司) and Asia Union Group in Guangzhou. According to the news reports, the Kra Canal project will take a decade to complete and incur a cost of US$28 billion.

But 4 days later on 19 May, it was reported that both Chinese and Thai governments denied there was any official agreement between the 2 governments to build the canal.

A statement by the Chinese embassy in Thailand said that China has not taken part in any study or cooperation on the matter. It later clarified that the organisations who signed the MOU have no links to the Chinese government. Separately, Xinhua news agency traced the announcement of the canal project to another Chinese firm Longhao, which declined comment when contacted.

Dr Zhao Hong, an expert on China-Asean relations from the Institute of Southeast Asian Studies, told the media that China would not embark on such a project lightly, given the political and bilateral implications.

“China will have to consider the feedback from countries such as Singapore, which it has friendly ties with, given the impact that the Kra canal might have,” he said at the time when news of the MOU emerged. But Dr Zhao added that China might be open to private companies studying the feasibility of such a project, but will not directly back it for now.

It was said that the the chairman of Asia Union Group, the Thai party which signed the MOU, is former Thai premier Chavalit Yongchaiyudh, a long-time supporter of the Kra Canal.

Thai PM: Kra Canal project should be looked into by future democratic governments
In Jan this year, the Thai PM reiterated again that the Kra Canal project is not on his government agenda. His announcement came after a member of the King’s Privy Council, Thanin Kraivichien, wrote an open letter to the government advocating for the canal’s construction.Thanin was the 14th PM of Thailand between October 1976 and October 1977. His call is part of a growing chorus of Kra Canal proponents in Thailand’s political and business communities that started talking openly last year after several Chinese firms expressed interest in funding and constructing the canal.

Responding to Thanin’s call for the project, the Thai PM said the Kra Canal project should be looked into by democratic governments in the future, meaning to say Thailand has not ruled out the construction of Kra Canal completely. And in the case of Thailand, changes to its government occur frequently like the changing of clothes.

China getting angry with Singapore

In the last couple of months, China is increasingly angered by PM Lee’s move to side with the US over the South China Seas issue, even though Singapore has no claims over any of the territories there.

It all started 2 months ago when PM Lee was invited to the White House and was hosted to a rare White House state dinner on 2 Aug(http://theindependent.sg/pm-lees-speech-at-white-house-state-dinner-angers-china). During his toast, PM Lee welcomed the US to adopt a strategy to “rebalance” the Asia Pacific and went on to call President Obama as the “America’s first Pacific President”.
China immediately responded through their Global Times. “Lee Hsien Loong addressed Obama as the American ‘first Pacific President’. Such flattery (‘戴高帽’) given to Obama directly does not concern us (‘倒也没啥’),” the Global Times’ article said. “The key is he praised the American strategy to ‘re-balance Asia-Pacific’ and publicised that all Southeast Asian countries welcome such American ‘balancing’. Because the ‘rebalance Asia-Pacific’ strategy is pointed at China to a large extent, Lee Hsien Loong is clearly taking side already.”

Thai Canal

The Thai Canal, also known as Kra Canal or Kra Isthmus Canal, refers to proposals for a canal that would connect the Gulf of Thailand with the Andaman Sea across southern Thailand.

Kra Isthmus

The Kra Isthmus is the narrowest part of the Malay Peninsula, in southern Thailand and Myanmar

“If Singapore completely becomes an American ‘pawn’ (‘马前卒’) and loses any of its resilience to move between US and China, its influence will be considerably reduced. Its value to the US will also be greatly discounted,” it added.

The article went on to say that China has its limit in tolerance. It said, “Singapore should not push it (‘新加坡不能太过分’). It cannot play the role of taking the initiative to help US and South East Asian countries to go against China over South China Sea matters. It cannot help American ‘rebalancing Asia-Pacific’ strategy, which is directed at China’s internal affairs, by ‘adding oil and vinegar’ (‘添油加醋’), thereby enabling US to provide an excuse to suppress China’s strategic space as well as providing support to US.”

“Singapore can go and please the Americans, but it needs to do their utmost to avoid harming China’s interests. It needs to be clear and open about its latter attitude,” it cautioned. Singapore’s balancing act should be to help China and US to avoid confrontation as its main objective, and not taking side so as to increase the mistrust between China and US, it said..

The article gave the example of Singapore allowing US to deploy its P-8 reconnaissance aircraft to Singapore, which from the view of the Chinese, increases the tension in South China Sea, and thereby, increasing the mistrust between the 2 big countries.

“Singapore needs more wisdom (‘新加坡需要更多的智慧’),” the article concluded.

PLA General: We must strike back at Singapore

And yesterday, SCMP reported that a PLA General had called for Beijing to impose sanctions and to retaliate against Singapore so as to “pay the price for seriously damaging China’s interests” (http://theindependent.sg/pla-general-we-must-strike-back-at-singapore).

Kra Canal 

The General’s remarks came after a recent spat between Global Times and Singapore Ambassador Loh. On 21 Sep, Global Times carried an article saying that Singapore had raised the issue of the disputed South China Sea at the Non-Aligned Movement (NAM) Summit held in Venezuela on 18 Sep. It added that Singapore had “insisted” to include an international tribunal’s ruling on the waterway, which was in favour of the Philippines, in the summit’s final document.

Singapore’s ambassador to China, Stanley Loh, rejected this and wrote an open letter stating that the news report was “false and unfounded”. Mr Loh said the move to include the international ruling in NAM’s final document was a collective act by the members of the ASEAN. But the editor-in-chief of Global Times came out to stand by his paper’s report.

Then, the Chinese government also came out in support of Global Times, not buying Ambassador Loh’s arguments. When a Chinese foreign ministry spokesman was asked about the tiff between Global Times and Singapore, he blamed an unspecified “individual nation” for insisting on including South China Sea issues in the NAM document.

Kra Canal Present

Xu Liping, senior researcher on Southeast Asia studies at the Chinese Academy of Social Sciences, said China expected Singapore to be a neutral mediator between China and the countries of Asean, and did not want to see disputes over the South China Sea raised in a multilateral platform like the NAM Summit. And that was why China was so angry over Singapore’s active moves in broaching such a sensitive topic, he said.

“If Singapore does not adjust its policies, I am afraid the bilateral relations will deteriorate,” Xu added. “Singapore should think twice about its security cooperation especially with the United States, and strike a better balance between China and US.”

Singapore no need to worry about the Kra Canal

“2-headed snake”

On Thursday, the overseas edition of People’s Daily also published an online commentary, saying Singapore “has obviously taken sides over South China Sea issues, while emphasising it does not”. In other words, China is accusing the Singapore government of saying one thing but doing another – a hypocrite.

Online, the Chinese netizens condemned Singapore as a “2-headed snake”. One of them wrote:

(Translation: China should quickly embark on the Kra Canal project and turn Singapore back into a third world country. This is the best present to give to a “2-headed snake”.)

If the Kra Canal truly becomes a reality, ships would certainly consider by-passing the Strait of Malacca and Singapore altogether, making the Singapore’s all-important geographical location redundant. We may truly become a third world country after all.