Express (September 04, 2011)
The most striking thing about information and communication technology is how pervasive it is. ICT devices have diffused across all aspects of modern life - from our social lives to the daily routine of working life - in Indonesia and around the world. This diffusive nature of ICT has led to the rise of the information society, which has created major changes in public expectations, organizational structures and working processes.
The spread of ICT devices has been remarkable. Given that the Internet did not came into public use until the 1990s, it has totally changed the rules of the game as the corporate world knew it. It has been the most vigorous catalyst of change and has been totally instrumental in creating deep social and organizational changes in a way that is nothing short of a paradigm shift.
The private sector, for instance, which initially championed ICT, delivered the efficiency and value to both the business and the customer. Businesses such as Amazon, eBay and AirAsia are all companies that we or our friends use on a regular basis to buy or sell goods and services online.
There are also many old traditional companies such as Marks & Spencer, British Airways and Walmart that have felt the need to change their business model by making the Internet a core part of their growth strategy. The changes include online shopping or having an integrated supply chain with automated stock inventory.
Other sophisticated business changes that need a mention relate to outsourcing of certain activities. The United States and some European countries have outsourced certain business functions to create efficiency and improve financial value. Variations of the outsourcing ideas have also found a take-up by small professional businesses.
For example, in the United States a doctor might see a patient in the evening and carry out some medical tests that are then sent electronically to a company in a country where it is still a working day. The receiving doctor interprets the results, writes a report and sends it back to the doctor in the United States. In the past, it would have taken days to complete this kind of activity, but now it's over in a few hours. Further, the outsourcing cost and benefit of interpreting the results and typing it up as a finished report within tight deadlines is a lot cheaper and simpler than getting those activities completed in-house. The Indian multinationals Infosys and Wipro have created huge businesses out of leveraging technology, time zone differences and human capital.
The US government, while a late entrant in the utilization of ICT, has become a major user of ICT. Having noticed and learned from the private sector about the value and customer satisfaction that technology can generate it is not difficult to see why the government would have stirred activity surrounding the online provision of government services, sometimes dubbed e-Government.
The key reason for e-Government is the government's need to modernize itself. The e-Government initiatives that most are now pursuing are driven by a desire to reduce transaction costs, raise tax revenue, improve efficiency in service delivery, create an environment of trust and transparency, encourage economic growth and advance any public reform agenda it might have.
Some of the most relevant examples of e-Government initiatives include Bhoomi, a program in the Indian state of Karnataka that is designed to computerize land ownership records. It has proved fairly successful in reducing the corruption inherent in the land acquisition process. Administrative corruption was reduced by taking away the discretion to delay or deny by automating the process, keeping a traceable electronic record of transactions and increasing the accountability of public officials.
Online income tax is being carried out by many countries, including in Asia. Singapore started its program in 1992 by introducing an imaging system to electronically process the paper-based income tax returns filed by the citizens. Over the years, the system has been improved to allow tax returns to be completed over the phone and now over the Internet, the ultimate aim being to link the information in various government agencies related to earnings, deductions and so forth.
E-Procurement generates value by increasing transparency and probity by keeping a traceable electronic record of government transactions online. It contains three key components: information and registration, e-purchasing and e-tendering. The e-procurement initiatives across various countries vary in the extent of computerisation of processes depending upon the need and requirement of governments. The Chilean and Philippine e-procurement systems focus on the first component of adequate public notification and oversight and provide complete information on procurement operations. The Mexican e-procurement system goes one step further and allows bid submission by vendors and reverse auctions. The Korean government has incorporated a comprehensive e-procurement system as one of the pillars of e-government in the country.
The efficiency gains through e-government projects are impressive in terms of cutting the number of steps involved, shrinking the time required, and reducing the number of agencies that need to be consulted.
It is, however, a little odd that, despite so many benefits of e-government, many developing countries do not yet have a comprehensive set of well functioning e-government programs. Of those that do exist, they seem to focus and gyrate around tax collection and procuring goods and services. That is not to say that other types of e-government do not exist; they do, but the emphasis always seems to be on financial benefits.
There is also the problem of access to technology. Information is determined by connectivity, capability and content, with connectivity being the biggest challenge to the development of the information society. The digital divide - the gap between those who have access to technology and those who do not - is growing. Further, the digital divide is no longer merely about the count of haves and have-nots; it is now also about the quality of the access to technology.
Other external factors that impede the development and uptake of e-government are legislative, regulatory, technological and access barriers to name a few.
Regardless of the hurdles and challenges, it is time for Asian countries, including Indonesia, to go beyond basic e-government offerings, where simply publishing basic but perhaps adequate information on the Internet is the norm. Indonesia has now moved into a higher economic gear, where it will be scrutinized for its record on corruption, its business development environment, its regional progress, its existence of robust regulatory frameworks, as well as its citizen inclusion in the process of governance.
Sunday, September 4
US regulator sues major banks over subprime bonds
Express (September 04, 2011)
A US regulator sued 17 large banks and financial institutions Friday over losses on about $200 billion of subprime bonds, which may hamper a broader government settlement of the mortgage mess left over from the housing crisis.
The lawsuits by the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, surprised investors, dragging down bank shares and could add billions of dollars of legal costs at perhaps the worst possible time for the industry.
Friday's lawsuits reflects how different parties, including investors, banks and different government groups are fighting over who should bear losses from a housing crisis that in 2008 drove the economy into its worst recession in decades.
The FHFA accused Bank of America Corp and its Countrywide and Merrill Lynch units, Barclays Plc, Citigroup Inc, Goldman Sachs Group Inc, JPMorgan Chase & Co, Royal Bank of Scotland Group Plc and others of misrepresenting the checks they had done on mortgages before bundling them into securities.
According to the lawsuits, the securities should have never been sold because the underlying mortgages did not meet investors' criteria. As more borrowers fell behind or went into foreclosure, the securities' value fell, causing losses.
Nearly all the banks that were sued declined to comment or were not immediately available for comment. Others called the charges unfounded.
"Fannie Mae and Freddie Mac are the epitome of a sophisticated investor, having issued trillions of dollars of mortgage-backed securities and purchased hundreds of billions of dollars more," said Mayura Hooper, a spokeswoman for defendant Deutsche Bank AG, in a statement.
A Bank of America spokesman said Fannie Mae and Freddie Mac are trying to shift responsibility to banks after earlier blaming losses on other factors. A spokesman for Ally Financial Inc, once known as GMAC, called the FHFA claims "meritless."
Bank of America faces three FHFA lawsuits, covering losses on more than $57 billion of securities. JPMorgan faces claims related to $33 billion of securities and Royal Bank of Scotland was sued over $30.4 billion of securities.
Several large banks are also negotiating with all 50 US state attorneys general on a comprehensive settlement to address mortgage abuses and limit future mortgage litigation.
"This new litigation could disrupt the AG settlement," said Anthony Sanders, finance professor at George Mason University and a former mortgage bond strategist.
Banks might resist settling if they knew litigation from other regulators could deplete capital, he said.
Before the FHFA lawsuits had even hit a court docket, financial experts offered blunt expectations for the outcome.
"The lawsuits will be settled," said Sean Egan, managing director of Egan-Jones Ratings Co, an independent credit ratings firm. "The end result will be a further outflow of cash from the banks, and more importantly an additional black eye."
FHFA director Edward DeMarco is looking to minimize future losses for Fannie Mae and Freddie Mac, which are owned by the government after being seized on Sept 7, 2008.
The FHFA filed the suits before a three-year statute of limitations expired. Fannie Mae and Freddie Mac are pillars of US mortgage finance.
Wells Fargo & Co, the largest US bank not sued by the FHFA, entered a "tolling" agreement waiving its right to claim the FHFA waited too long to sue, a person with knowledge of the matter said.
The bank said Wells Fargo might have done this to give it time negotiate its own settlement, the person added.
FHFA spokeswoman Corinne Russell and Wells Fargo spokeswoman Mary Eshet declined to comment.
The KBW Bank Index closed down 4.5 per cent Friday, nearly doubling the losses of the broader market. Bank of America led the index lower, dropping 8.3 per cent.
Bank shares also came under pressure from signs the Federal Reserve could start selling short-term debt on its books and buy long-dated bonds to push longer-term yields lower.
Such a move, known as "operation twist," would hurt banks whose profit margin is tied to the short-term rates at which they fund and the longer-term rates at which they invest.
Major banks already face potential payouts of tens of billions of dollars to settle regulatory charges of abusive mortgage lending and foreclosure practices, and other investor lawsuits over mortgage debt losses.
Such payouts would reduce earnings and weaken capital levels, perhaps harming the ability of banks to lend money and provide much-needed life to a stalled housing market and weakened economy.
Whether to take action for mortgage bond problems had been under discussion since Fannie Mae and Freddie Mac were placed in conservatorship, a person familiar with the matter said.
While the ultimate amount FHFA will seek is still unclear, that person said it could top the $20 billion settlement being discussed by the banks and the state attorneys general
A US regulator sued 17 large banks and financial institutions Friday over losses on about $200 billion of subprime bonds, which may hamper a broader government settlement of the mortgage mess left over from the housing crisis.
The lawsuits by the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, surprised investors, dragging down bank shares and could add billions of dollars of legal costs at perhaps the worst possible time for the industry.
Friday's lawsuits reflects how different parties, including investors, banks and different government groups are fighting over who should bear losses from a housing crisis that in 2008 drove the economy into its worst recession in decades.
The FHFA accused Bank of America Corp and its Countrywide and Merrill Lynch units, Barclays Plc, Citigroup Inc, Goldman Sachs Group Inc, JPMorgan Chase & Co, Royal Bank of Scotland Group Plc and others of misrepresenting the checks they had done on mortgages before bundling them into securities.
According to the lawsuits, the securities should have never been sold because the underlying mortgages did not meet investors' criteria. As more borrowers fell behind or went into foreclosure, the securities' value fell, causing losses.
Nearly all the banks that were sued declined to comment or were not immediately available for comment. Others called the charges unfounded.
"Fannie Mae and Freddie Mac are the epitome of a sophisticated investor, having issued trillions of dollars of mortgage-backed securities and purchased hundreds of billions of dollars more," said Mayura Hooper, a spokeswoman for defendant Deutsche Bank AG, in a statement.
A Bank of America spokesman said Fannie Mae and Freddie Mac are trying to shift responsibility to banks after earlier blaming losses on other factors. A spokesman for Ally Financial Inc, once known as GMAC, called the FHFA claims "meritless."
Bank of America faces three FHFA lawsuits, covering losses on more than $57 billion of securities. JPMorgan faces claims related to $33 billion of securities and Royal Bank of Scotland was sued over $30.4 billion of securities.
Several large banks are also negotiating with all 50 US state attorneys general on a comprehensive settlement to address mortgage abuses and limit future mortgage litigation.
"This new litigation could disrupt the AG settlement," said Anthony Sanders, finance professor at George Mason University and a former mortgage bond strategist.
Banks might resist settling if they knew litigation from other regulators could deplete capital, he said.
Before the FHFA lawsuits had even hit a court docket, financial experts offered blunt expectations for the outcome.
"The lawsuits will be settled," said Sean Egan, managing director of Egan-Jones Ratings Co, an independent credit ratings firm. "The end result will be a further outflow of cash from the banks, and more importantly an additional black eye."
FHFA director Edward DeMarco is looking to minimize future losses for Fannie Mae and Freddie Mac, which are owned by the government after being seized on Sept 7, 2008.
The FHFA filed the suits before a three-year statute of limitations expired. Fannie Mae and Freddie Mac are pillars of US mortgage finance.
Wells Fargo & Co, the largest US bank not sued by the FHFA, entered a "tolling" agreement waiving its right to claim the FHFA waited too long to sue, a person with knowledge of the matter said.
The bank said Wells Fargo might have done this to give it time negotiate its own settlement, the person added.
FHFA spokeswoman Corinne Russell and Wells Fargo spokeswoman Mary Eshet declined to comment.
The KBW Bank Index closed down 4.5 per cent Friday, nearly doubling the losses of the broader market. Bank of America led the index lower, dropping 8.3 per cent.
Bank shares also came under pressure from signs the Federal Reserve could start selling short-term debt on its books and buy long-dated bonds to push longer-term yields lower.
Such a move, known as "operation twist," would hurt banks whose profit margin is tied to the short-term rates at which they fund and the longer-term rates at which they invest.
Major banks already face potential payouts of tens of billions of dollars to settle regulatory charges of abusive mortgage lending and foreclosure practices, and other investor lawsuits over mortgage debt losses.
Such payouts would reduce earnings and weaken capital levels, perhaps harming the ability of banks to lend money and provide much-needed life to a stalled housing market and weakened economy.
Whether to take action for mortgage bond problems had been under discussion since Fannie Mae and Freddie Mac were placed in conservatorship, a person familiar with the matter said.
While the ultimate amount FHFA will seek is still unclear, that person said it could top the $20 billion settlement being discussed by the banks and the state attorneys general
Bangladesh-China direct shipping link from Sept 9
Express (September 04, 2011)
A Singapore-based carrier will launch a direct shipping link between Bangladesh and China this month, opening up a new vista for trade between the two economies.
The link will cut freight for Bangladeshi traders who import US$7 billion merchandise from the world's second largest economy and help boost export opportunities for local manufacturers seeking new avenues for shipment, experts said.
Pacific International Lines (PIL) starts the "landmark' shipping link on September 9, when its vessel, Kota Wista, will make the first voyage for Chittagong from Chinese commercial capital of Shanghai.
"We're introducing the new route to serve the country's businesses efficiently," said Mohammad Rafiqul Islam, country director of PIL.
"This will save a week for local traders who import most of the country's electronics from China and garment makers who source yarn and fabrics. It will ensure hassle-free cargo movement," he said.
The carrier plans to connect Chittagong with two other southern Chinese ports, Ningbo of Zhejiang province and Nansha of Guangdong -- the global textile, electronics and footwear hub.
Initially, the shipping company will operate two round trips on the route but it plans to launch weekly voyages in a couple of months, its executives said.
"Vessel from China will arrive Chittagong
port each Sunday and leave for China each Wednesday." Mr Rafique said.
Presently, Bangladesh can't ship directly to China or any of its major trade partners such as the European Union nations and the United States.
Vessels carrying goods destined for Bangladesh first disembark in Singapore, Port Klang of Malaysia and Colombo before heading to Chittagong or Mongla.
Similarly, cargoes loaded with Bangladeshi exports have to be reloaded in main line vessels in the three major ports before being shipped to EU, the US and other top markets.
Shipping executives said this process is cumbersome and adds extra-cost to Bangladeshi merchandise. The shipment is delayed for weeks when feeder vessels are in short supply in the three transshipment ports.
In many cases, goods and foodgrains remained stockpiled at the ports for weeks, fuelling inflation at home and spiking freight costs for export cargoes.
Traders and manufacturers now need at least 22-25 days to import goods from China. The direct shipping linkage will cut at least six-seven days and the round trip will take 35 days.
The main line operator will arrive Chittagong via Singapore. It will reach China via Singapore and Thailand as empty containers and Europe-America bound will be unloaded there.
Mr Rafique said the direct link will save at least $120 in freight cost per container for Bangladeshi traders. "There will be no hassles or delays in Singapore or at Port Klang," he said.
China has recent years emerged as the country largest import partner. It accounted for some 21 per cent of the Bangladesh's $33 billion import trade in the year to June 2011.
Bangladesh's major imports from China include electronics, fabrics, non-cotton yarn and accessories, machinery, chemicals, intermediary raw-material, fertilizers, food grains and fruits.
With its economy booming at the breckneck speed, the world's most populous country has also grown to Asia's top shopper. Last year it bought $400 million worth of merchandise from Bangladesh.
China last year overtook India as the biggest buyer of Bangladeshi raw jute and jute yarn. China also imports leather, dehydrated sea fish and apparel from Bangladesh.
A Singapore-based carrier will launch a direct shipping link between Bangladesh and China this month, opening up a new vista for trade between the two economies.
The link will cut freight for Bangladeshi traders who import US$7 billion merchandise from the world's second largest economy and help boost export opportunities for local manufacturers seeking new avenues for shipment, experts said.
Pacific International Lines (PIL) starts the "landmark' shipping link on September 9, when its vessel, Kota Wista, will make the first voyage for Chittagong from Chinese commercial capital of Shanghai.
"We're introducing the new route to serve the country's businesses efficiently," said Mohammad Rafiqul Islam, country director of PIL.
"This will save a week for local traders who import most of the country's electronics from China and garment makers who source yarn and fabrics. It will ensure hassle-free cargo movement," he said.
The carrier plans to connect Chittagong with two other southern Chinese ports, Ningbo of Zhejiang province and Nansha of Guangdong -- the global textile, electronics and footwear hub.
Initially, the shipping company will operate two round trips on the route but it plans to launch weekly voyages in a couple of months, its executives said.
"Vessel from China will arrive Chittagong
port each Sunday and leave for China each Wednesday." Mr Rafique said.
Presently, Bangladesh can't ship directly to China or any of its major trade partners such as the European Union nations and the United States.
Vessels carrying goods destined for Bangladesh first disembark in Singapore, Port Klang of Malaysia and Colombo before heading to Chittagong or Mongla.
Similarly, cargoes loaded with Bangladeshi exports have to be reloaded in main line vessels in the three major ports before being shipped to EU, the US and other top markets.
Shipping executives said this process is cumbersome and adds extra-cost to Bangladeshi merchandise. The shipment is delayed for weeks when feeder vessels are in short supply in the three transshipment ports.
In many cases, goods and foodgrains remained stockpiled at the ports for weeks, fuelling inflation at home and spiking freight costs for export cargoes.
Traders and manufacturers now need at least 22-25 days to import goods from China. The direct shipping linkage will cut at least six-seven days and the round trip will take 35 days.
The main line operator will arrive Chittagong via Singapore. It will reach China via Singapore and Thailand as empty containers and Europe-America bound will be unloaded there.
Mr Rafique said the direct link will save at least $120 in freight cost per container for Bangladeshi traders. "There will be no hassles or delays in Singapore or at Port Klang," he said.
China has recent years emerged as the country largest import partner. It accounted for some 21 per cent of the Bangladesh's $33 billion import trade in the year to June 2011.
Bangladesh's major imports from China include electronics, fabrics, non-cotton yarn and accessories, machinery, chemicals, intermediary raw-material, fertilizers, food grains and fruits.
With its economy booming at the breckneck speed, the world's most populous country has also grown to Asia's top shopper. Last year it bought $400 million worth of merchandise from Bangladesh.
China last year overtook India as the biggest buyer of Bangladeshi raw jute and jute yarn. China also imports leather, dehydrated sea fish and apparel from Bangladesh.
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