How to be a Billionaire

Want to be a Billionaire?
.....Migrate to Zimbabwe.....
Everybody here is a billionaire....

500 million dollar bills were being printed in May 2008.
Everybody can have it.... it is just enough for breakfast/lunch (equal to about USD 2)

To buy tidbits in a plastic packet......you'll have to spend at least 10 million

To buy vegetables.....5 million

To buy Eggs.........6000 million

To buy chicken......how many millions???

If you want to eat in a restaurant, have your money ready........

For a beer after office hours........

Your monthly salary.........you need to hire a taxi or lorry to bring the money home.....

This young boy is already a multi- millionaire......

If you don't want to carry a lot of money.....just change it to USD

Nobody wants to count the money, just weigh it......

Otherwise, this is what you have to do
every time you go to the shops, market, bus station, etc.....

Malaysia Puts Ratings at Risk on Politics, Ballooning Deficit

Malaysia Puts Ratings at Risk on Politics, Ballooning Deficit
30 Aug, 2008

By Stephanie Phang and Soraya Permatasari

(Bloomberg) -- Malaysia's government said it will post its biggest deficit since 2003 as it cuts taxes and boosts spending to stymie an opposition challenge, putting its credit ratings and currency at risk.

The budget gap will widen to 4.8 percent of gross domestic product this year from 3.2 percent in 2007, Prime Minister Abdullah Ahmad Badawi told parliament yesterday. The top income tax rate will be cut to 27 percent from 28 percent and 1.1 million households will benefit from free electricity, he added.

Abdullah is fighting off opposition leader Anwar Ibrahim, who returned to parliament in a by-election this week and has pledged to topple the government by mid-September. The wider deficit may prompt a downgrade in Malaysia's credit rating, reducing investment coming into the country and making it more expensive for local companies to borrow.

``It's a fairly political budget and very much focused on alleviating the hits to incomes from inflation,'' said Robert Prior-Wandesforde, senior Asia economist at HSBC Holdings Plc in Singapore. The size of the deficit may ``lead the rating agencies to have a closer look at their ratings'' for Malaysia.

Malaysia's credit rating outlook was changed to ``stable'' from ``positive'' by Standard & Poor's in May after Abdullah's ruling coalition lost ground in March elections. S&P said the country's credit standing was ``constrained by its fiscal position.''

`Some Pressure'

S&P rates Malaysia's foreign currency debt A-, the fourth- lowest investment grade, and hasn't changed that stance since 2003. Moody's Investors Service has kept Malaysia's foreign currency debt rating at A3, the same investment level as S&P, since 2004.

``There could be some pressure on the currency,'' said Aninda Mitra, a sovereign analyst at Moody's Investors Service in Singapore. ``You have a much higher fiscal deficit than expected. Higher borrowing needs and unexpected inflation may not be very good for fixed income holdings of foreign residents, so that could put some pressure on the currency.''

The ringgit has lost 2.6 percent against the U.S. dollar this year. The Malaysian currency today completed its biggest monthly loss since the end of a peg against the dollar in 2005.

Announcing a 5.1 percent increase in next year's spending, Abdullah yesterday pledged bonuses to civil servants, promised free electricity for the poor, lowered duty on home purchases and doubled the number of households on state welfare. Higher spending in 2008 will reverse five years of shrinking budget deficits.

Leadership Challenge

Abdullah, 68, is facing renewed calls from his own ruling National Front coalition to resign after leading the government in March to its worst election performance in half a century. The handouts may soften the impact of the fastest inflation in 26 years and stall a campaign by opposition leader Anwar Ibrahim to oust the government.

``These are populist measures,'' said Singapore-based Kelvin Miranda, an investment strategist at Blufire Asset Management Sdn., which manages $110 million in assets. ``He's trying to buy time.''

Abdullah increased by 20 percent the tax on cigarettes sold by companies including British American Tobacco (Malaysia) Bhd. to help offset the widening gap between spending and revenue.

Voter anger over rising prices contributed to opposition gains in the March vote that deprived Abdullah's coalition of its two-thirds majority in parliament. Malaysia's inflation accelerated to 8.5 percent last month after the government raised fuel prices to lower subsidies as crude surged.

Shares Advance

Malaysian stocks jumped the most in more than five months yesterday on speculation that the first cut to the personal income tax rate in seven years will spur consumer spending. Abdullah proposed a range of tax exemptions for employers, from medical costs to maternity expenses.

Abdullah needs Malaysians to spend more as exports slow to the U.S., Malaysia's largest trading partner. The Asian nation's economy expanded at the slowest pace in a year in the second quarter as manufacturing eased amid a global slowdown and faster inflation hurt consumer spending.

Southeast Asia's third-largest economy grew 6.3 percent in the three months ended June from a year earlier, down from a 7.1 percent gain in the first quarter, the central bank said yesterday. Economic growth is forecast to ease to 5.7 percent this year and 5.4 percent in 2009, the weakest pace since 2005.

`Seize Power'

Anwar, who won a parliamentary by-election this week, has said he plans to lure enough lawmakers from the ruling coalition to form a new government next month. The former deputy premier has promised to reduce fuel prices should he seize power.

``The government is responsive to the concerns of the people and has taken measures to lighten the burden of all Malaysians,'' Abdullah said in his speech. ``Efforts by certain parties to destabilize the country by attempting to seize power through illegitimate means, and without the mandate of the people, must be rejected.''

Governments across Asia are spending more on subsidies to help the poor cope with higher oil and food costs. Inflation that the Asian Development Bank estimates may reach the highest in a decade in 2008 has stoked voter unrest in the region.

Malaysia's government subsidies on bread, cooking oil, fuel and programs to enhance food security will jump to 34.1 billion ringgit this year and total 33.8 billion ringgit in 2009, according to the finance ministry. Still, the ministry expects the budget deficit to narrow to 3.6 percent of GDP next year.

Malaysia cuts fuel prices to curb inflation

Malaysia cuts fuel prices to curb inflation

The Associated Press

Friday, August 22, 2008

KUALA LUMPUR, Malaysia: Malaysia's government on Friday said it will cut retail gasoline prices 5.6 percent to help curb inflation, which soared to 8.5 percent in July, the highest level in decades.

The pump price of gasoline will come down to 2.55 ringgit a liter (US$2.92 a gallon) from 2.70 ringgit (US$3.12 a gallon) from Saturday, Prime Minister Abdullah Ahmad Badawi announced. Diesel price will be reduced to 2.50 ringgit a liter (US$2.89 a gallon) from 2.58 ringgit (US$2.96 a gallon).

The announcement came as a surprise since Abdullah had said earlier that pump prices will be reduced only at the end of the month, and only if global crude oil prices continue to fall.

"The government hopes that the reduction in gasoline and diesel prices will help to ease consumers' burden as well as ease inflationary pressure," Abdullah said in a statement.

This is the first price cut since the government hiked gasoline prices a stunning 41 percent and diesel by 63 percent in early June to curb a runaway subsidy bill. The price cut is aimed partly at curbing public frustrations over soaring inflation and will relieve pressure on the central bank from having to raise interest rates.

With the reduction, the government is giving a public subsidy of 30 sen (9 cents) per liter on gasoline and 50 cents (15 cents) on diesel, he said in a statement.

The Statistics Department said consumer prices in July rose 8.5 percent compared to the same month in 2007, up from 7.7 percent in July, due largely to higher electricity tariffs and the knock-on effect from June's fuel price hike.

Subsidies have kept the price of fuel in Malaysia a net exporter of oil among the lowest in Southeast Asia. But the government has said it cannot afford to fund overly high subsidies.

Friday's decision comes ahead of a parliamentary by-election on Tuesday in which Abdullah's ruling coalition is facing a tough battle from opposition leader Anwar Ibrahim, who is expected to win easily.

Anwar's three-party alliance won an unprecedented 82 of Parliament's 222 seats in March general elections. Anwar has vowed to topple the government by Sept. 16.

Inflation hits 27-year high of 8.5pc in July

Inflation hits 27-year high of 8.5pc in July

KUALA LUMPUR, Aug 22 — The annual inflation soared to 8.5 per cent in July, sharply up from 7.7 per cent in June.

The July data was the steepest rise since 8.5 per cent in December 1981 and the government also today announced that the price of petrol will be cut to RM2.50 per litre from RM2.70 effective tomorrow, a move which will dampen inflation.

It was unpopular petrol price hikes in June and electricity price rises in July that catapulted inflation from 3.8 per cent in May.

The cuts in fuel prices were brought forward from Sept 1.

Despite the surge in inflation, Bank Negara, alone in Southeast Asia, has kept interest rates unchanged for over two years at 3.5 per cent.

Bank Negara governor Tan Sri Zeti Akhtar Aziz has said slower economic growth and weakening commodity prices would help reduce price pressures ahead, especially next year.

It meets again on Monday to decide on rates after it surprised markets in July by leaving rates unchanged.

Petrol Ceiling Price Will Remain At RM2.70 A Litre Until Year-end, Says Shahrir

Petrol Ceiling Price Will Remain At RM2.70 A Litre Until Year-end, Says Shahrir

KUALA LUMPUR, Aug 21 (Bernama) -- The ceiling price of petrol will remain at RM2.70 a litre until year-end, Domestic Trade and Consumer Affairs Minister Datuk Shahrir Abdul Samad said Thursday.

He said the ceiling price would be reviewed after Dec 31 depending on the current global fuel price at year-end.

"If the fuel price spirals (this year), the people need not worry about bearing the high cost as the government will absorb the additional cost.

"I cannot say now as our fuel price depends on the price of a barrel of oil in the world market which constantly fluctuates," he told a media conference.

Shahrir however did not discount the prospect of the oil price dwindling to below RM2 before Dec 31 given the current uncertainties in the global oil price.

Prime Minister Datuk Seri Abdullah Ahmad Badawi said Wednesday the government will announce the new fuel prices on Aug 31 which will take effect on Sept 1.

The new price would be based on the average fuel prices throughout the month of August and after deducting the 30 sen subsidy for a litre.

On the possibility of a fare hike for public transport vehicles and an increase in the cost of transporting goods, Shahrir said it would not happen until year-end though there were calls from bus and lorry operators.

He said the government had other mechanism to help public transport operators who had to tide over with higher diesel prices.

"We are aware when diesel price increases, it will take a toll on public transport and lorry operators. Nevertheless, they cannot raise fares to their whims," he said.

Shahrir also said the government would re-visit in March next year the cash rebate paid to car and motorcycle owners.

He said the form of rebate would be re-determined including the maximum amount that can be claimed by car and motorcycle owners.

"What's happening now is that individuals having five vehicles including those using 2000cc cars are given rebate, it's not fair.

"We give rebate to lighten vehicle owners' burden but if they have more vehicles than they should, there is no need to give rebate anymore," he added.

Earlier, Shahrir launched two books on two Malaysian prime ministers entitled "Datuk Seri Abdullah Ahmad Badawi - A New Breeze In Malaysia's Politics" and "Tun Abdul Razak - A Phenomenon In Malaysian Politics" authored by Dr Paridah Abdul Samad.

Present at the launch were Abdullah's wife Datin Seri Jeanne Abdullah and Tun Razak's wife Toh Puan Rahah Noah."

-- BERNAMA

Saving gas isn't just for tree-huggers anymore

Saving gas isn't just for tree-huggers anymore

By Trystan L. Bass Posted Tue Jul 22, 2008 9:51am PDT

Greenies aren't the only ones looking to limit their car usage these days. High gas prices are fueling inflation for everyone across America.

No matter if you drive a Prius or a Hummer, you can probably stand to save a few bucks on gas right now. Here is our collection of tips for getting the most out of each gallon...

• Use the cruise, clean the car: Forecast Earth covers the classic tricks, such as using cruise control and maintaining your car. This is a great list to begin with.


• Hypermile your way to better mpg: Pulse-and-glide driving is how those ultra-efficient hypermilers get great mileage, even without a hybrid car.


• Carpool at least once a week: Ask around your office and see whose route meets up with yours. Parents can also arrange carpools for driving kids to school. Alternate who drives, and you'll automatically cut gas costs.


• Drive slower: Driving just 10 miles slower can reduce fuel consumption by 20 percent. And no, you won't burn more gas because it takes a tiny bit longer to get to your destination.


• Don't sit idle: When you let your car idle, you might as well light a dollar bill on fire and toss it out the window. It's been proven that stopping and restarting a car uses the same gas as leaving a car idling for 6 seconds with the air conditioner on. Today's fuel-injected cars don't need to warm up in cold weather either.


• Reduce air drag: The Rocky Mountain Institute estimates you can save 15 to 30 gallons of gas per year if you take off a roof rack just half the time. Besides, you only need it for skis when there's actually snow on the ground.


• Ditch the drive-thru: One test in Toronto found that you can get a fast-food breakfast faster and burn less gas in your car if you park and go into the restaurant. Considering how much idling cars do in drive-thru lanes, this isn't surprising.


• Think big, and light: Some of EcoGeek's gas-saving tips are government-based (like intelligent traffic lights and minimum fuel economy; feel free to suggest these to your local and federal representatives!). But everyone can carry less junk in the trunk.

Gas prices may not drop dramatically any time soon. So perhaps you're thinking about a new car -- like a hybrid. They've lost the tree-hugger status and are pretty mainstream. Certainly, SUVs aren't selling very well these days. Need some car advice?

• Rethinking the cost of hybrid cars: The Rocky Mountain Institute compares the Prius to the non-hybrid Accord and Civic and shows how the hybrid comes out ahead.


• Comparing hybrid to hybrid: EcoGeek summarizes the latest findings.


• Getting to know your Prius: A few handy resources for the new owner.


• Finding the best green cars: Yahoo! Autos Green Center is fully loaded with specs on current models, from hybrid to ethanol to ultra-efficient gasoline.

If you have an older car with great mpg and you're wondering if your ride could be even more eco-friendly, check out EcoGeek's analysis of the greenest cars coming in 2010. Just don't fall for a ZAP car or that bunk about running cars with water.

Malaysia Says It May Subsidize Fuel for 10 More Years (Update1)

Malaysia Says It May Subsidize Fuel for 10 More Years (Update1)

By Ranjeetha Pakiam and Angus Whitley

July 30 (Bloomberg) -- Malaysia's government may subsidize gasoline at the pumps for another decade in an attempt to regain public support, limiting its ability to cut the budget deficit.

``If we can fix the economy and make the turn, then 10 years is reasonable,'' Domestic Trade and Consumer Affairs Minister Shahrir Samad said in an interview yesterday. Before that, the Southeast Asian nation may reduce gasoline prices after raising them in June as crude falls from records, he said.

Asian countries from India to Indonesia have raised fuel prices as crude oil rose 63 percent over the past year, swelling subsidies. Malaysia's Prime Minister Abdullah Ahmad Badawi, whose ruling coalition had its worst electoral performance in March, has backed off from a plan to allow local fuel prices to track international market rates since announcing a 41 percent increase in gasoline costs in June.

``The 10 years is maybe just to soothe public sentiment,'' said Joanna Tan, an economist at Forecast Singapore Pte. ``They're trying to get a grip on their support. It's up to the government whether they have the political capital'' to increase prices, Tan said.

Abdullah has promised to avoid another fuel-price increase this year after the June move, which pushed inflation to a 26- year high of 7.7 percent last month. The premier's ruling coalition lost five states to the opposition alliance in the March 8 elections.

May Cut Prices

The government may cut gasoline prices should crude oil drop below $125 a barrel for at least three weeks, said Shahrir, who tracks the crude price daily. Such a reduction may come as early as this year to enable the government to keep its pledge of maintaining a 30 sen (9 cents) subsidy on every liter of gasoline, he said.

``Why not?'' the minister said. ``It would be good news, right?'' He declined to provide a specific oil price that might trigger a cut in domestic fuel prices, though he said crude oil price stability must be ``sustained.''

Additional years of subsidies, after a decade of budget deficits, would force the government to seek funds from the bond market, said Tan at Forecast Singapore.

The government may revise its target of cutting the budget deficit to 3.1 percent of gross domestic product in 2008, Second Finance Minister Nor Mohamed Yakcop said June 30. Malaysia has posted a budget shortfall every year since 1998 and reduced the figure to 3.2 percent of GDP last year.

Higher Bill

Malaysia spent 8.8 billion ringgit keeping gasoline, diesel and liquefied petroleum gas, which is used by many taxies, below market prices in 2007, Shahrir said. Assuming crude oil averages $140 a barrel this year, the subsidy would balloon to 29 billion ringgit, he said. At $125, the government would have to part with 26 billion ringgit, he said.

The government was unable to set gasoline prices closer to market rates in June because it didn't have a system to deliver cheaper fuel to the poor, Shahrir said.

``If you're going to subsidize anything, or control anything, ensure it goes to the right people, rather than subsidize and leave it to distribution,'' he said.

The minister, who started his job in March, also rejected calls by some manufacturers to scrap food subsidies. Nestle SA, the world's largest food producer, on June 15 said subsidies are causing price increases and heightening a global supply crisis.

``When you have a choice, it's quite good for food producers like Nestle to say no subsidies,'' Shahrir said. ``But what about those who don't have a choice? If they are faced with declining disposable incomes, an alternative way may be soup kitchens, but is that an effective way?''

The government caps the price of a range of foods such as flour and cooking oil. Shahrir said most Malaysians need food and fuel subsidies because 70 percent of the working population earns 3,000 ringgit or less a month.

Malaysia's June inflation hits 7.7 pct, 27-yr high

Thomson Financial News
Malaysia's June inflation hits 7.7 pct, 27-yr high
07.23.08

KUALA LUMPUR, July 23 (Reuters) - Malaysian annual inflation leapt to more than a 27-year high of 7.7 percent in June, the government said on Wednesday.

The rise in consumer prices was sharply higher than the 6.8 percent forecast by economists and marked the quickest pace since April 1981.

The country's domestic trade minister said inflation was set to stay above 7 percent in July.

Malaysian food prices keep rising

Malaysian food prices keep rising

Wed Jul 23 2008
Stephen Then
The Star
Cost of foodstuff have gone up after the fuel price increase in Malaysia 2 months ago, but there is no valid reason for it.

Malaysia, Miri, July 23, 2008: There has been a multi-fold increase in prices of foodstuff and drinks in Sarawak after the fuel price increase two months ago.

A random check showed that iced milo and iced lemon tea is now sold at RM2.30 a glass in some outlets compared to the previous price of RM1.50.

The price of a bowl of wantan mee had also shot up. In some outlets, dry wanton mee is sold at RM4 compared to RM2.50 previously.

A bowl of plain kolok mee is priced between RM2.50 to RM3 compared to RM1.70 before.

A plate of economy rice (with two vegetables and one meat) now costs between RM4 and RM5.

Only a handful of outlets are selling economy rice at RM3 to RM3.50, which is the old price.

Prices of wet market products have also shot up.

Pork costs RM15 per kg, an increase of RM3.

Restaurants and high-class coffeeshops selling food with pork as its main ingredient have raised prices as well.

A plate of char siew rice at a renowned coffeeshop near the city has increased from RM3.50 to RM5.

Flour and rice prices went up last month, and traders are passing on the increases to consumers.

Ministry of Domestic Trade and Consumer Affairs Miri division chief Zakaria Awang said some price increases did not make sense.

“The price of fuel has stabilised. There are no more increases in petrol or diesel prices, so transportation charges have stabilised.

“Therefore, prices of foodstuff should not keep increasing. However, it seems that some meat sellers, coffeeshops and restaurant operators continue to raise prices at will.

“They have no valid reason to keep charging higher and higher. This increase will encourage other businesses and service providers to raise charges,” he said in an interview.

Zakaria said the ministry did not have the power to stop price increases at food outlets unless it involved controlled items.

He urged consumers to stop patronising shops and restaurants that continued to impose higher charges without reason.

UMNO: Smell of corrosion

UMNO: Smell of corrosion
Vineeth Menon
11 July, 2008

ARAB NEWS

The announcement that Malaysia's Prime Minister Abdullah Badawi will resign in two years' time and hand over to his deputy, Najib Razak, was not wholly unexpected. After the drubbing of his United Malay National Organization (UMNO) in the March elections, the knives were out for him in certain sections of the party. A significant number of UMNO stalwarts, most prominently former Prime Minister Dr. Mahathir Mohamad, held him personally responsible for what was the party's worst performance ever.

The power struggle came to a head two months ago with Dr. Mahathir dramatically resigning his party membership and saying that he would only return once Badawi goes. The aim was to turn shocked party members against the prime minister. It seems to have worked, albeit in a compromise. By announcing that he will go in two years' time, the prime minister has ensured that he retires gracefully rather than being seen to be hounded out of office.

Ostensibly that should give his successor three years at the helm in which to revive UMNO's fortunes before the next election. It also permits Dr. Mahathir to return to the party fold to support Najib. However, events are unlikely to be straightforward.

Malaysian politics is in a frenzy at present - and the deputy prime minister is very much part of it. Allegations made in a court trial that he is linked to the gruesome murder last year of a Mongolian translator with whom, it is claimed, he had an affair are unlikely to go away. Moreover, neither he nor UMNO is helped by accusations from senior UMNO figures that the allegations were instigated by Badawi; the UMNO youth leader openly accuses the prime minister of "lies, accusations and nonsense" while Dr. Mahathir has said that there is a concerted campaign against Najib and that as well as Badawi someone else is behind it. It creates an image of a party that is not only deeply split but a nest of conspirators. The latter is made worse with the fresh sodomy accusation against opposition leader and former Deputy Prime Minister Anwar Ibrahim; polls show the overwhelming majority of Malaysians believe them to be conspiracy - and one that has political credentials.

Harold Wilson, the UK's prime minister in the 1960s and 1970s, famously said that a week is a long time in politics. On that score, two years is an eternity. Anything could happen. Najib could be disgraced, cleared with his honor unimpeached or, perhaps worst, left with a cloud hanging over him, the allegations neither repudiated nor confirmed. If the latter were the case, he probably would not be in any position to become prime minister in 2010, having been sacked long before by Badawi - just as Anwar Ibrahim was sacked as deputy prime minister by Dr. Mahathir Muhamad when his supposed sex scandal surfaced.

But even if everything goes to plan, and Najib becomes prime minister in 2010, it is no guarantee that he will be able to turn UMNO's fortunes around.

The party's poor performance in the March elections was not down to Badawi alone. Inflation and rising oil prices were and remain global issues, beyond Malaysia's control; party corruption and ethnic tensions predated his premiership. Changing leaders is not going to plaster over the cracks in the party that the present set of scandals only makes worse. After decades of rule, there is a definite smell of corrosion in UMNO. Where it goes from here is anyone's guess. But on present reckoning, the guess has to be down even more.

Malaysia inflation may hit 26-year high

Malaysia inflation may hit 26-year high
10 July, 2008

By EILEEN NG, Associated Press

Malaysia's central bank chief said Wednesday that recent fuel price hikes may push inflation above 6 percent in June, nearly double May's rate and the highest in 26 years.

"This adjustment (in fuel prices) would be reflected in the consumer price inflation in June, which is expected to exceed 6 percent," Bank Negara Malaysia Gov. Zeti Akhtar Aziz told a banking seminar.

Inflation is expected to remain elevated until early next year due to higher fuel prices and electricity tariffs, before moderating in the second half of 2009, she said.

The central bank will assess the risks to growth at its policy meeting on July 25 to determine if a monetary response is necessary, she added.

Inflation reached a 22-month high of 3.8 percent in May. The last time inflation crossed 6 percent was in May 1982 when it touched 6.1 percent.

The government raised gasoline prices by 41 percent and diesel by 63 percent last month to curb a runaway subsidy bill. It also raised electricity tariffs from July by 18 percent for households and an average 26 percent for commercial and industry users.

Economists are mixed whether a sharper-than-expected rise in inflation will prompt Bank Negara to raise its key overnight policy rate - used by banks to set lending rates - which has been unchanged at 3.5 percent since 2006.

Song Seng Wun, an economist with CIMB-GK Research in Singapore, said Malaysia's inflation rate remains among the lowest in Asia and there is no risk to economic growth just yet.

"Although inflation is up, it's not running away. The central bank is likely to take the middle ground because the economy is not at risk at this juncture from rising inflationary expectations," he said.

Gundy Cahyadi, economist with research firm IDEAGlobal in Singapore, argued that the central bank is likely to raise rates now rather than later while credit growth in the country is still strong.

"It's quite certain that pressure on inflation is going to be sustained well into 2009," he said. "There is still room for them to tighten up the monetary system to curb inflation expectations going forward."

Such a move will also help ease pressure on the ringgit, which has appreciated by 1.8 percent so far this year but is lagging behind other regional currencies, Cahyadi said.

The ringgit is currently hovering at 3.25 to the U.S. dollar.

The government says inflation may cross 5 percent this year, which has fueled public anger. It has promised not to further raise fuel prices this year. Inflation was around 2 percent last year.

Inflation crisis could spark political unrest: M'sia

Inflation crisis could spark political unrest: M'sia

Jul 08, 2008
AFP

KUALA LUMPUR - SOARING prices of food and fuel could spark widespread political unrest, Malaysia's Prime Minister Abdullah Ahmad Badawi said on Tuesday at a summit of developing nations.

Datuk Seri Abdullah said the inflation crisis had erupted as a global recession looms, spelling trouble for the D8 group meeting here - Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, Pakistan and Turkey.

And he called on member nations to boost food production in a bid to avert conflict.

'The price of oil has skyrocketed to levels never anticipated ... the price of food has increased beyond the normal abilities to pay by the poor, which form the majority of the world's people,' he said in an opening speech.

'Our people in the D8 group of countries will be among those feeling the greatest pains arising out of the current international economic downturn,' Mr Abdullah said.

'There is also the danger of the food crisis creating political unrest in many societies.' Iranian President Mahmoud Ahmedinijad, Indonesian President Susilo Bambang Yudhoyono and Pakistani Prime Minister Yousuf Raza Gilani are attending Tuesday's gathering. The other members are represented by ministers.

Mr Abdullah, who is the new chairman for the D8, singled out the food shortages which have caused commodity prices to spike as the most urgent challenge facing its members.

'It is estimated that global food prices have risen by more than 75 per cent since 2000,' he said.

He urged the D8 nations to modernise their agriculture sectors, in an effort to avert conflict by reversing the drop in food production caused by climate change and natural disasters.

He also urged major oil producers to adopt Saudi Arabia's move to increase oil production, to try to moderate the inexorable rise of the cost of crude which has roughly doubled over the past year.

However, he cautioned leaders against converting agricultural land to the production of biofuels, saying it will worsen the global food shortage and drive up prices.

'We must not allow the zeal for energy security to come into direct conflict with the basic need for food production,' he said.

Mr Abdullah also recommended the group take 'bold measures' to ensure their economic growth remains on track to combat the 'looming recession in the global economy.'

Malaysia last month slashed its fuel subsidies, sending pump prices up 41 per cent in a decision that has sparked public anger and reinforced calls for Mr Abdullah to step down.

Spiking oil and food prices are being increasingly felt around the globe and surging commodity prices could worsen poverty in many poor countries, the International Monetary Fund warned last week.

It said said many poor and developing countries would likely have to change their economic policies in response to soaring commodity prices. -- AFP

HSBC Private Bank Favors the Yuan, Ringgit, Rupiah

HSBC Private Bank Favors the Yuan, Ringgit, Rupiah (Update1)

By Lilian Karunungan

July 7 (Bloomberg) -- HSBC Private Bank, which manages $494 billion of client's assets, favors the Chinese yuan, the Malaysian ringgit and the Indonesian rupiah as rising export revenue bolsters their economies and attracts foreign investment.

The yuan will advance 8.4 percent to 6.33 per dollar in the next 12 months as the central bank seeks a stronger currency to curb inflation, Arjuna Mahendran, head of Asia investment strategy at HSBC Private Bank in Singapore, said in an interview. His forecast is more bullish than the median in a Bloomberg survey of analysts. The Malaysian and Indonesian currencies may gain 2 to 3 percent because price gains for commodities including palm oil will boost export revenue, he said.

``I'm fairly confident that they'll keep moving up against the dollar because of capital flows,'' he said. ``Stronger countries, like China, Singapore, Malaysia and eventually Indonesia, if they can control inflation, will surge ahead.''

The yuan and the rupiah are the best-performing in the past month among Asia's 10 most-active currencies outside of Japan. The yuan traded at 6.856 per dollar at 11:34 p.m. in Shanghai and has gained 21 percent since the central bank ended a dollar peg two years ago as increased exports drove the trade surplus to a record. The ringgit was at 3.2655 and the rupiah at 9,213.

The median estimate of 25 economists is for the yuan to reach 6.46 in the second quarter of 2009. The ringgit is expected to gain about 4 percent and the rupiah to advance more than 2 percent, according to separate surveys of 22 economists.

Interest, Exchange Rates

China's foreign-exchange reserves have swelled to $1.68 trillion, a quarter of the amount held by central banks worldwide, as investors bought Chinese stocks and property.

China's central bank will seek currency appreciation to curb import prices and ``will raise rates at some point,'' Mahendran said July 3. China and Indonesia increased fuel prices in the past two months to reduce subsidies that have become costlier because of soaring international crude oil prices.

Central banks around the region are boosting borrowing costs or bolstering exchange rates to cool consumer price growth that's accelerating after oil and food prices jumped to records. China's inflation probably slowed in June for a second month, after reaching the fastest in almost 12 years in April.

Indonesia on July 3 boosted borrowing costs for the third month in a row as inflation reached 11 percent in June, the most in 21 months. Malaysia's Bank Negara has kept its overnight policy rate at 3.5 percent, spurring speculation the central bank has been buying ringgit to stem consumer price gains.

Malaysia, Southeast Asia's largest oil and gas exporter and the world's No. 2 palm oil seller, is benefiting from surging commodity prices. Crude oil in New York reached a record $145.85 a barrel on July 3 and palm oil has climbed 19 percent this year.

Export Growth

Indonesia is the world's biggest producer of palm oil and the largest thermal coal exporter. Its total sales abroad increased 31 percent in May from a year earlier, swelling the trade balance to $3.2 billion, double the amount in April, the government said last week.

Malaysia's overseas sales rose 22 percent in May from a year earlier to 60.6 billion ringgit ($18.6 billion), the Trade Ministry said last week. Malaysia had a current-account surplus of $23.8 billion in March, near the widest since 1999.

The ringgit dropped to a five-month low last week amid calls for Prime Minister Abdullah Ahmad Badawi to resign. Malaysian police in the past week confirmed investigations of Deputy Prime Minister Najib Razak and former Deputy Prime Minister Anwar Ibrahim. Both have called claims against them fabrications intended to destroy their political careers.

Political Risks

``You will have to wait for next year to see the upside'' in the ringgit, Mahendran said. ``Malaysia has a current account surplus. Despite the political uncertainties, the basic structure of the economy is quite strong.''

Indonesia's currency posted its first monthly gain since February in June as the central bank sold dollars and raised its benchmark rate three times this year, boosting investor confidence. Foreign-exchange reserves were at a record $59.5 billion in June.

``They have very adequate foreign currency reserves so they can defend the rupiah,'' Mahendran said. ``And I think Bank Indonesia has to raise rates again in the second half of this year.''

He forecast Indonesia will increase its borrowing benchmark by another half a percentage point by year's end to 9.25 percent.

The rupiah will also gain as oil prices may soon reach their peak, Mahendran said. Indonesia's aging oil fields and declining production have forced Southeast Asia's largest economy to import about a third of its oil needs. Its government subsidizes the fuel to make it affordable to many consumers.

``I see oil prices peaking at $150 in the next three months and then I think they'll move down to just above $100 because of demand destruction,'' Mahendran said.

Zen and the art of fuel efficiency

Zen and the art of fuel efficiency

July 5, 2008

After the fuel crisis of a fortnight ago many people will be looking for more economical ways to remain on the road. Here are our Top Ten tips:

UNLESS you live in one of Andalucia’s big cities or along the narrow coastal strip better served by public transport, it is difficult to avoid using your car.

Sadly the car in rural Andalucia is anything but a luxury. It’s a basic essential of everyday life that can’t be wished away despite the surging price of fuel and the recent crisis that saw hundreds of petrol stations closing around the region.

There is however plenty you can do right now to reduce the cost of your motoring and to improve the fuel-efficiency of your vehicle.

Scouring the Internet and referring to some of the major motoring and environmental organisations, we’ve come up with ten handy tips to help you get the most out of your wheels and reduce the impact on your family budget as fuel prices soar.

Get a more fuel-efficient car

While you don’t need to be Mastermind to work this out, it’s worth putting at Number One because, according to What Car? magazine, people still make their decisions on the kind of car to buy on a surprisingly irrational basis. Although fuel consumption is increasing in importance to drivers, in a survey of new car buyers acceleration from 0 to 100kmh and the number of extra features included in a package had more importance than the fuel consumption.

Many people believe that given the often less-than-perfect state of rural roads, the best bet is to buy a 4×4, all-terrain vehicle.

There seems a certain logic to this but it’s false logic. In the UK’s Motoring Watchdog Group’s survey of the most and least fuel-efficient vehicles, nine out of the ten worst performing vehicles were 4×4s.

BMW’s X5, the Land Rover Defender and Mitsubishi Shoguns cost a fortune to keep topped-up. Do you really need one? How many times a week do you really need to drive off-road?

For day-to-day running a Citroen C1, for example, wll give you 83MPG against 29MPG for a Land Rover Defender.

If you drive an average of 16,000km a year that’s a difference of over a 1,000? in fuel alone, not to mention vastly higher maintenance, insurance and depreciation costs.

Drive differently

Like half the male drivers in Andalucia you don’t need to zoom up to and away from junctions as if you have a woman about to give birth on the back seat. There are certain ways of driving that can radically improve your vehicle’s efficiency. Drive in the highest gear possible, don’t over-rev your engine, drive more smoothly and at a more even speed and your fuel will last longer.

Use your AirCon less

If you can do without it, do without it. AirCon systems, although more efficient than they used to be, still have a big impact on your car’s consumption. It is true that driving with the windows down has a negative effect on a vehicle’s aerodynamics but experts agree that below 70km/hr it is more fuel friendly to do this than to have your passenger space cooled like the inside of a Zanussi.

Make sure your car is properly maintained

There are several easy ways to make sure your car doesn’t use more fuel needlessly. Make sure the tyres are inflated to the correct pressure; make sure the wheels are properly aligned; make sure the filters and oil are changed regularly. On their own, each of these measures makes a very small difference but put together they can improve your fuel consumption by up to 20 per cent.

Lose weight

Cut out sweets and fatty foods and your car will love you more. No, not really dumbo! You need to reduce the weight of your car to improve its efficiency. Don’t carry around gear in your car that you don’t need. Some people’s boots are used as extra home-storage capacity. If you don’t need that tent/toy box/tool kit every day, keep it at home. Every 50kg of extra weight reduces your car’s fuel efficiency by an incredible two per cent!

Cut out the drag

If you don’t need to use your roof rack regularly, take it off. Extra drag has a big effect on fuel consumption. Also, do you really need to be flying that flag from your radio aerial? Okay, it’s not the worst thing you could do in fuel efficiency terms, but lose it anyway, it’s really very chavvy!

Multi-task

Combine trips and reduce the number of times you do the same route. Obvious perhaps, but the point of an article like this is to make everyone think a little about the blasé way we use our cars in the modern era. There are consequences to the environment and to the family budget that can be avoided by eliminating thoughtless reliance on motor vehicles. Think of it as Zen and the Art of Fuel Efficiency!

Offer lifts, ask for lifts

Talk to friends who often do similar journeys to the ones you do every day and see if you can’t coordinate and take one car instead of two. There is a downside, of course. Busy people want to go shopping when they want and at a moment’s notice and you can’t do that if Conchi’s never ready before 11.30am. The compensations are worth considering too, however. Not only are you acting responsibly, you might get to know your neighbours better and enjoy some social interaction and learn a bit of Spanish while carrying out your regular chores.

Don’t overfill your tank

This is especially relevant to life in an Andalucian summer. Your fuel expands as the temperature rises. If you fill your tank right up to the brim, not only are you carrying the extra fuel load but the petrol or diesel has no way of expanding and you could damage the tank

Think when you fill

When you get to the end of filling your tank, make sure you give the pump time to drain into your tank. Don’t take the hose straight out of the filler cap. You’ll get a few decilitres extra and you won’t leave a trail of fuel dribbling down your paintwork. Also, fill in the morning or evening, not in the midday sun. You are charged by the volume of fuel your buy but when fuel is hot it is less dense and hence you get less of it in your litre. Always try to refuel when it’s cool. Now that’s a top tip!

Obviously, one or two of these measures only make a tiny improvement to the fuel efficiency of your vehicle but taken together your could improve your consumption by 20 to 30 per cent and save yourself a lot of money. The knock-on is that you are also doing the environment a favour too, and that can’t be bad.

So, anyone interested in a 15-year-old Defender with roof rack, dodgy steering, dirty filters and flat tyres? No, thought not.

Strategies for inflationary times

Strategies for inflationary times
Jul 04, 2008
The Business Times

By Elke Speidel-Walz

In recent weeks, inflation has become the most decisive factor in capital markets and expected asset-class returns.

How quick and to what extent inflation will rise will determine the future path of interest rates and asset-market performance.

What is our outlook for global inflation and what consequences do we draw for asset allocation?

The short-term outlook is rough, but in the medium term, inflation rates are expected to decline from current high levels.

Inflation will be higher and more persistent in the next few years than in the past. In the last five years, inflation was low due to the disinflationary effect of globalisation.

World trade and global competition (labour and goods prices) became more intense, while deregulation and strong productivity growth had a dampening effect on prices.

In the next few years, this positive effect will gradually run out.

The dampening effect of inflation from globalisation is fading as wages rise, particularly in emerging markets; the risk of new regulations and protectionism emerges; commodity price pressure continues (an inflationary effect of globalisation and strong Emerging Markets growth); and productivity growth declines.

While inflation will be higher than in the recent past, we consider a return to the levels of the 1970s unlikely.

The main reason is that global competition and open economies will continue to prevent price-wage spirals, at least in major countries.

Central bank credibility has increased substantially and no further inflation pressure stems from fiscal policy, as was the case in the 1970s.

Last but not least, an important reason we see inflation coming down eventually is the growth outlook.

Weak internal demand in the US and the Eurozone, falling capacity utilisation and rising unemployment do not create an environment in which higher input prices can easily be passed on.

Nevertheless, in the short term, uncertainty about the inflation outlook will weigh on financial markets.

The reaction of inflation to the cyclical situation has always occurred with a significant time lag - 4-6 quarters from the cycle's peak in the past.

Why this lag?

Prices are 'sticky' due to implicit and explicit contracts that are expensive to renegotiate.

Consideration of competitors' price actions and information costs are other reasons.

The most recent peaks in the output gap - the US, UK, Eurozone, Canada and Australia - happened around Q3 2007. Consequently, from early 2009 we should see the cyclical dampening effect of inflation.

As from spring 2009, the base effects from energy prices should also work in this direction, assuming oil prices will at least not be visibly higher than US$130 a barrel.

While rising inflation is not necessarily bad for stock markets, the transition phase described above used to be uncomfortable for equities.

How do different asset classes perform under the outlined inflation scenario?

The straightforward effect of inflation on asset- class return, as suggested by theory, has to be seen in the context of the current cyclical situation (overheating or growth slowdown) and structural trends that might enforce or counteract the straightforward impact (global competition and price-setting behaviour for goods and labour markets).

The value of adding an asset class to a portfolio stems either from the fact that it directly hedges against inflation or is able to yield attractive returns in times of rising inflation.

We summarise the evaluation of the individual asset classes in the accompanying table. The best inflation hedge is inflation-linked government bonds.

The return outlook depends on the extent to which inflation expectations are already priced in and the benchmark inflation index is implemented in the linker (that is, Eurozone-harmonised CPI versus national headline inflation and core rates).

Asset classes that are able to yield attractive returns in the current inflation environment are commodities, hedge funds and real estate.

The latter is currently suffering, however, from the ongoing adjustment process in many countries.

While stock markets can perform positively in an inflationary environment (assuming central bank credibility), they suffer in the intermediate phase (the tug- of-war between the inflation-dampening effect of declining growth and inflationary effects of ongoing commodity price strength).

Infrastructure investments can also offer a partial inflation hedge, depending on the underlying cashflow structure (inflation-linked payments).

The writer is deputy head of investment strategy group, Deutsche Bank Private Wealth Management.

This article was first published in The Business Times on 2 July 2008.

Save, M'sian civil servants told

Save, M'sian civil servants told
Jul 01, 2008
The Star

KUCHING, MALAYSIA - Civil servants must be financially prudent at all times and not just when cost-cutting measures are needed, Chief Secretary to the Government Tan Sri Mohd Sidek Hassan said.

He said although the Treasury had recently issued a circular outlining various measures to save costs, frugal habits should already be ingrained in the civil service.

'What's important is for government officers to lead a prudent lifestyle all the time, for example switching off the lights when you go out of a room.

'Everyone should have the attitude of not wanting to waste and of managing expenses prudently,' he told a press conference after a meeting with Sarawak's mayors and council chairmen at Wisma Bapa Malaysia recently.

On the need to cut costs in the current economic climate, he said that government departments and agencies could do their part through various measures such as reducing their utility bills and doing away with goodie bags when organising seminars or workshops.

On another matter, Sidek said that government employees should get the green light from their department heads first before applying for permits to set up small businesses to supplement their incomes.

'The only consideration is that doing business will not affect their office work. If the department head feels that it will not disrupt their work, permission will be given,' he said.

He added that local authorities would do their best to issue the permits as quickly as possible.

Biofuels cause food prices hikes by 75%

Biofuels behind food price hikes: World Bank report

Jul 04, 2008
AFP

LONDON - BIOFUELS have caused world food prices to increase by 75 per cent, according to the findings of an unpublished World Bank report published in The Guardian newspaper on Friday.

The daily said the report was finished in April but was not published to avoid embarrassing the US government, which has claimed plant-derived fuels have pushed up prices by only three percent.

Biofuels, which supporters claim are a 'greener' alternative to using fossil fuel and cut greenhouse gas emissions, and rising food prices will be on the agenda when G8 leaders meet in Japan next week for their annual summit.

The report's author, a senior World Bank economist, assessed that contrary to claims by US President George W. Bush, increased demand from India and China has not been the cause of rising food prices.

'Rapid income growth in developing countries has not led to large increases in global grain consumption and was not a major factor responsible for the large price increases,' the report said.

Droughts in Australia have also not had a significant impact, it added.

Instead, European and US drives for greater use of biofuels has had the biggest effect.

The European Union has mooted using biofuels for up to 10 percent of all transport fuels by 2020 as part of an increase in use of renewable energy.

All petrol and diesel in Britain has had to include a biofuels component of at least 2.5 per cent since April this year.

'Without the increase in biofuels, global wheat and maize stocks would not have declined appreciably and price increases due to other factors would have been moderate,' the report said.

It added that the drive for biofuels has distorted food markets by diverting grain away from food for fuel, encouraging farmers to set aside land for its production, and sparked financial speculation on grains.

But Brazil's transformation of sugar cane into fuel has not had such a dramatic impact, the report said.

'The basket of food prices examined in the study rose by 140 per cent between 2002 and this February,' The Guardian said.

'The report estimates that higher energy and fertiliser prices accounted for an increase of only 15 per cent, while biofuels have been responsible for a 75 percent jump over that period.' -- AFP

New electricity tariff takes effect today

KUALA LUMPUR, July 1 ─ Consumers in Peninsular Malaysia will have to be more prudent than ever when the new electricity tariff takes effect today.

Under the new tariff, Tenaga Nasional Berhad (TNB) decided that domestic users would still be eligible for the existing tariff of 21.8 sen/kWh if their monthly usage does not exceed 200 kilowatt hour (kWh).

However, for electricity usage between 201kWh and 400kWh, they will have to pay 34.5 sen per kWh unit.

The rate will increase on subsequent 100kWh of usage ─ 30 sen for 401-500kWh, 39 sen (501-600kWh), 40 sen (601-700kWh), 41 sen (701-800kWh) and 43 sen (801-900kWh).

A maximum rate of 46 sen will be charged for each kWh when the usage reaches 901kWh and above.

Assoc Prof Dr Mohd Wazir Mustafa of Universiti Teknologi Malaysia (UTM)'s Faculty of Electrical Engineering said a majority of households would be affected by the new tariff.

"I think more than 50 per cent households in the country use over 200kWh of electricity monthly, and the effect would be felt by most of them.

"Most of us live in terrace houses with few windows, and we need the lamps and fans switched on for 24 hours a day. If there is no one in the house during the day, maybe the electricity usage will not reach 200kWh per month," he said.

On the use of solar energy as an alternative, he said, it could help in long-term energy-saving, but it would costly to install such devices.

"If we want to depend 100 per cent on solar energy, our house will need more panels, space and, of course, money," he said.

That was why, he said, currently solar energy devices were only used by the well-to-do and in island resorts where there were no sources of electricity.

On several gadgets in the market which claimed to be able to save on consumption, Mohd Wazir said he was not sure of their effectiveness.

In fact, he said, apart from solar energy, the consumer was left with no choice other than to be more prudent and not to depend too much on electrical appliances in their daily chores.

He said ironing, for example, should be done on a large scale, because the iron needs more electricity and time before it could really heat up.

The amount of items placed in the refrigerator could also help in saving electricity, he said.

"Reduce the items in your fridge. The more items you placed in it, the more power it needs to keep them cool.

"And if you are on vacation, empty the fridge, switch it off, but leave the door ajar so it won't smell," he said.

Better still, Mohd Wazir said, electric rice cookers could be replaced with conventional pots and stoves.

His view was shared by his colleague, Professor Dr Shah Rizam Mohd Shah Baki, who said that the key in energy-saving was actually public awareness and not on technology only.

She said, however, that there were several energy-saving approaches that could be used, especially in lighting aspects.

As such, she said, the T5 fluorescent tube, compact fluorescent and light emitting diode (LED) bulbs would definitely help because they only use minimum power.

Although the bulbs might be a little expensive, they usually last longer and are more environmentally-friendly, she added.

Federation of Malaysian Consumer's Associations (Fomca) communication director Yusof Abdul Rahman said the public should change their lifestyle to cope with the new tariff.

He said the tariff was unavoidable as the government had to bear the rising cost of gas and coal which were the main fuels for power generation in the country.

"The public must be willing to buy and use efficient electrical appliances even though they might cost a little higher, but they can save energy in the long run," he said.

The Malaysian Muslim Consumer Association (PPIM) however asked the TNB to explain thoroughly how the new tariff would be determined so the public could be prudent in their power usage.

"A clear guide to count the new tariff should be attached in the monthly bill to enable consumers to count and monitor their household usage," PPIM project coordinator Noor Nirwandy Mat Noordin said.

Meanwhile, Malaysian Bumiputera Manufacturers and Services Industry Association president Datuk Raja Nong Chik said the new tariff would definitely affect the industrial businesses, especially the small and medium enterprises.

He estimated that about 50 per cent of small and medium entrepreneurs would have to adjust to the new tariff, a process which he said would take up to two years to complete.

The new tariff would also increase their operational costs and they would be left with no choice but to pass them to the consumers in the form of higher prices of goods, he.said. ─ Bernama

Latest figure on Zimbabwe's Annual Inflation

Zimbabwe's Annual Inflation 9 Million Percent, Independent Says

By Brian Latham

June 27 (Bloomberg) -- Zimbabwe's annual inflation rate surged to 9 million percent by June 20 and is set to end the month at more than 10.5 million percent, the Independent reported, citing the Central Statistical Office.

Inflation accelerated from 1.69 million percent in May, the Harare-based newspaper said. Prices rose 862 percent in the month, it said.

Moffat Nyoni, acting director of the statistics office, wouldn't confirm the data, saying the agency doesn't have sufficient information to provide a definite inflation estimate, the newspaper said.

Asian nations need 'clearer resolve' to tackle inflation

Asian nations need 'clearer resolve' to tackle inflation
Jun 28, 2008
The Straits Times
Gabriel Chen

ASIAN nations need a 'clearer resolve' about taming inflation, whether by hiking interest rates or strengthening currencies, said Finance Minister Tharman Shanmugaratnam last night.

He warned that not doing enough could result in stagflation - slowing economic growth and rising inflation.

'Stagflation is not a foregone conclusion. How policies respond will very likely determine if we do enter a period of stagflation,' said Mr Tharman in the keynote address at the Association of Banks in Singapore's (ABS) annual general meeting at Shangri-La Hotel last night.

The key challenge for Asian economies, he added, is to prevent a second round of inflation in which workers demand a higher wage to compensate for the higher cost of living.

'To put the matter pointedly, a rapidly growing Asia cannot continue to import US monetary policy if it is to check inflationary pressures,' he warned.

Interest rates in Asia have been coming down in tandem with rates in the United States because Asian foreign exchange rates have 'limited flexibility', he explained.

He said the US Federal Reserve had made the mistake in the 1970s of allowing inflationary expectations to set in, leading to a dramatic period of stagflation.

Mr Tharman also said that Singapore's inflation rate this year is now expected to average 5 per cent to 6 per cent with a tapering off towards the end of the year.

'However, the strong run-up in global oil prices means that there is more risk of inflation on the upside,' Mr Tharman warned.

He said the Monetary Authority of Singapore's policy of a gradual appreciation of the Singdollar is 'succeeding in mitigating inflationary pressures'.

Since April 2004, the Singdollar has appreciated by 12 per cent against its trade-weighted basket of currencies - or by 23 per cent against the US dollar.

A stronger Singdollar means cheaper imports, which in turn keeps imported inflation down. But it makes Singapore's exports dearer, which can hurt businesses.

But Mr Tharman cautioned that while most Asian economies need to take action, it should not be too dramatic, whether by raising interest rates or engineering a sharp appreciation of currencies.

He said many Asian economies lack liquid derivative markets in which businesses and banks can hedge their risks, while several also lack 'modern systems' of risk management.

'Sudden, large moves in monetary policy pose real risks of financial instability, and if subsequently reversed, will lead to a loss of credibility for central banks,' he added.

ABS chairman David Conner, who also addressed the gathering about the economic slowdown and inflation woes, said the banking industry in Singapore has largely avoided the excesses of its peers in North America and Europe.