Leading in the new world

” Real leaders, I have found, exhibit an enthusiasm for selecting people who are better than they are. ” ~ Dr. Ram Charan ~

On 30 March 2010, I had attended the lecture series organized by Sime Darby at Sime Darby Convention Centre, Kuala Lumpur. The speaker was Dr. Ram Charan on “leading in the new world”.

It been an interesting talk and I have list down some of the key points as below:

1) Expanding runway of opportunity
2) The winners in the new game
3) Linking strategy to executive
– competent advice
– right people in the right jobs
– business acument
4) Leadership habits
– Practice, Practice, Practice
Practice number 1 is accountability, practice number 2 is follow through and final practice number 3 is courage to confront when the follow through not going through.

The new world being told was the clear shift to the southern hemisphere. Business are also advise to hire the foremost people.

Tip: Low Margin x High Velocity = GROWTH
Note: Velocity means asset turnover.

Dr. Ram Charan on Sime Darby Lecture Series


What is fractional-reserve banking?

Banks create money by practising fractional-reserve banking in which banks keep only a fraction of their deposits in required reserve (normally 10% of the deposits) and lend out the remainder, while maintaining the simultaneous obligation to redeem all these deposits upon demand. Example, for every amount of deposit, the bank will loan out 90% of the deposit as excess reserve and keeping the remaining 10% as required reserve. This process is called multiple deposit creation or chequebook money. Each of the process of money multiplier ended when all excess reserve have been absorbed into required reserve.

Fractional reserve banking benefits the economy by providing regulators with powerful tools for manipulating the money supply and interest rates, which many see as essential to a healthy economy. It also can help the government to finance its debt.

A case study on the non-Muslims perception on Islamic finance

It has been a hectic year 2009 for me but somehow it gonna finish in 3 more days. Anyhow, I have finally completed my thesis title “The non-Muslims perception on Islamic financial products: A case study in Taman Tun Dr. Ismail, Kuala Lumpur,Malaysia.”

Below is the abstract of my research:

This study is about the non-Muslims perception on Islamic financial products. These products have shown tremendous growth in the past 20 years. Islamic financial products are based on Shariah and Islamic accounting principles unlike conventional financial products that based on interest. Shariah applicable principles are Mudharabah, Musyarakah, Murabahah, Al-Bai Bithaman Ajil, Al-Ijrah etc.

Finding the non-Muslim perceptions are important in order to strategise effective solutions like marketing, services quality, finance returns etc. The main objective is to find out the non-Muslims opinions towards Islamic financial products. This study also tries to determine the non-Muslims preferences between Islamic and conventional financial products. The other element is to study the factors could influence the non-Muslims selection criteria about Islamic financial products in dual banking banks.

This study could benefit the non-Muslims customers as knowledge on Islamic finance and the banks to understand the non-Muslims customers’ perception; hence to improve on the areas needed and eventually lead to effective marketing.

This study had been conducted by choosing 100 customers of Maybank and CIMB Bank as the respondents. However, the limitation of this study is only concern to a small number of respondents. Personal interviews have taken place to get the primary data.

Findings show that the non-Muslims have moderate awareness about Islamic financial products. Many do believe that there is some benefit to use Islamic financial products but not doing so yet due to unfamiliarity. Generally, the non-Muslims have positive perceptions towards Islamic financial products but still lacking confidence at the moment.

What banks do?

Banks accept deposit from individuals and businesses and makes loan to individual and businesses for consumption and investments. The process begins when savers who have surplus spending decide to deposit their money into the banks. Then, the banks transfer those savings to the borrowers (deficit spending) as a form of individual or business loans. Hence, the borrowers can use the money for consumers spending like buying houses, cars, education, etc.

A high level of consumption market will eventually increase the standard of living of the population. These loans can also be used for investment purposes like investing in stocks, new projects, start up companies etc. More jobs will be created out from these new investments. It also could spur the economic growth of the country. Businesses and manufacturers will produce more of their goods.

However, the borrowers need to pay back the principal loan amounts plus interest to the banks. Interest rate is fluctuating and determined by the central bank. The consumers and government have inelastic demand towards the changes to interest rate. But, foreigners and business operators (local, foreign owned) have elastic demand in relations to interest rate changes.

When the economic is strong, more people will become savers and the process of banks giving loans continue to progress.

Customers leave a branch of Malaysia's Maybank in Putrajaya October 9, 2009. ~ Reuters/Bazuki Muhammad

Farmers will be very well off

“Many times, you have said that the sectors with potential are farming and mining. How do ordinary people take advantage of such opportunities, apart from marrying a farmer? – Ng Shi Ping

It is a good idea to go into the farming business. You don’t have to marry a farmer to do that. There are other ways to do that. You can go into a business which sells to farmers, like selling seeds, tractors or farm equipment. You can even move into a farm area and open a shop. Farmers will be very well off in the next few years. You can be an accountant, a hairdresser, a lawyer but you offer your services to a farming community. The best way is to be a farmer. – Jim Rogers ” ~ Your 10 questions, The Star 12 September 2009

I think he might be right, farmers will be very well off when the economic crisis start at full force. Food will be in huge demand.

There are opportunities in farming. But many ordinary people may think of how to start? Where to get funding? How to get the land to do farming?

You may visit Agrobank website to find out how to kick start your new career as a farmer.

Good luck everyone!

If United States In Hyperinflation And The One Who Get Cough Too

~In the 1930s, we had a huge stock market bubble which popped. And then politicians started making many mistakes. They became protectionist. They made solvent banks take over insolvent banks and then both banks failed in the end. They are making many of the same mistakes now. What’s different this time is that we are printing huge amounts of money which they did not print at that time. So, we are going to have inflation this time. ~ Jim Rogers, 20 June 2009.

Emhhh, how do I need to evaluate this situation to China and Malaysia?

Jim Rogers had predicted that inflation could set in. I guess he was mentioning to United States,,,,or maybe the whole world. I am interest to study the impact of the inflation in United States to the rest of the world.My prediction is that if inflation really to be taking place in United States in near future; China and Malaysia could be severely effected as well.

My analysis is based on the study of currency movement between US dollar and these 2 countries. When US dollar was strengthening against the Euro, British Pound and Australia Dollar in late 2008 and early 2009, the Yuan and Ringgit Malaysia were following the US dollar pattern to strengthen. Now, we are seeing the same happenning to Yuan and Ringgit when the US dollar weakening.

The summarize that US dollar, Yuan, Ringgit are moving in the same basket versus the basket that consist of Euro, British Pound, Brazil Real and Australian dollar.

So, if United States will go into inflation, I need not to tell the answer about China and Malaysia.

You can figure it out.

Will Asia be the next economics centre?

~ Well, again, throughout history, the center of the world has shifted to where the capital is, where the assets are. You don’t see any period in history where things are shifting to the debtors, and America’s the largest debtor nation in the history of the world. Unless something’s different this time, unless the world’s changed very very dramatically, the center of the influence, the center of power, the center of the earth, the center of the globe, is going to be shifting towards Asia, because that’s where all the money is. Have you ever heard of anybody saying, “Let’s go to where all of the debtors are”? It just doesn’t happen that way. ~ Jim Rogers, Time, 28 April 2009.

Jim Rogers, author, commodities investor and co-founder Quantum Funds, speaks at an event in New York. ~ Eric Thayer / Reuters

Jim Rogers, author, commodities investor and co-founder Quantum Funds, speaks at an event in New York. ~ Eric Thayer / Reuters

WOW, I was amazed that he said Asia is the future economic centre will be.

Southeast Asia :- Malaysia, Indonesia, Singapore, Thailand, The Philippines, Brunei, Vietnam, Laos, Cambodia and Myanmar.

These countries which have diversity of cultures and religions would be the next economics powerhouse.

I am studying the potential economics strength of these countries briefly:

Singapore : Currently is the richest country in Southeast Asia holding US$166Billion as at March 2009. Strong and stable currency.

Malaysia : Pioneer and the largest Islamic finance market. Kuala Lumpur could be the next financial hub for the world like London and New York.

Petronas Twin Towers, Kuala Lumpur

Petronas Twin Towers, Kuala Lumpur

Indonesia : Abundance of resources; oil, sugar, rice, tin, palm oil, vegetable oil, copper, etc

Thailand : Strong and advanced manufacturing backbone.

Vietnam : Cheaper manufacturing costing. Strike a competitive advantage.

Brunei : Rank no. 27 in Human Development Index.

This is looking to be great!!

KL Tower, Kuala Lumpur

KL Tower, Kuala Lumpur

Welcome to Southeast Asia !!!

Heavy rainy days in 2011

Santiago Niño Becerra, professor of Economic Structure in Barcelona had predicted already by July 2007 that was going to happen was that by mid 2010 there is going to be a crisis only comparable to the one in 1929. 2010 is not yet here, but we are seeing the crisis already in the stock market. Or maybe we are not. To Niño Becerra what is happening since september 2007 to date, even the huge losses of the past month, is just a prelude to the much bigger crisis that is coming by mid 2010, and that according to his predictions it might last 10 years, with the period of 2010-2012 being the worst of all. He describes year by year how the crisis is going to happen (even giving exact months for certain events), here is a quick summary of his predictions.

September 2007 to October 2009: Prelude to the crisis. Governments would take measures to avoid “things going worse”.

October 2009 to May 2010: The believe that “things are not working the way they should” starts to spread out.

May 2010: The Crisis starts with all its force.

2011: The worst and hardest year of the crisis.

2012-2015: Governments regulate the economy and people accept it because they are in shock after what happened.

2015-2018: Slowly and not without problems the economy starts to pick up and improve slightly.

End of 2018: End of the crisis.

It is of course only a prediction of what might happen, but for some reason seems to be based on solid ground.

Looking at the positive side, the world economy will start to slowly recover in year 2015. However, we must save enough for the heavy rainy days to come in 2011.

Be prepared!!!

Save Malaysian Ringgit From Depreciating


Monday, March 2, 2009

1 US Dollar = 3.76577 Malaysian Ringgit

1 Malaysian Ringgit (MYR) = 0.26555 US Dollar (USD)

Interbank rate +/- 0%

Monday, March 2, 1998

1 US Dollar = 3.64000 Malaysian Ringgit

1 Malaysian Ringgit (MYR) = 0.27473 US Dollar (USD)

Interbank rate +/- 0%

Oh my, I could not help but shaking my head analyzing the currency between Ringgit Malaysia and US Dollar.

It indicated that our economy situation right now is much more in deep trouble than during the Asian Financial Crisis 1997.

If the Ringgit trend of depreciating continues, very soon we will see the Ringgit breaking the benchmark of 1 US Dollar = 3.80020 Malaysian Ringgit that being pegged from September 1998 until July 2005. When it break the benchmark, it could run wild and this could spell disaster.

Lower Ringgit will counter the deflation while maintaining a certain degree of inflation and this could burden the people during this recession.

Save the Ringgit now! The Ringgit must move along the same value of Thai Baht, Taiwan Dollar, Russian Rouble, Polish Zloty and Argentine Peso. Any major depreciation from the above mentioned currencies will bury the Ringgit deeper.


~ Global Economic Meltdown:Its Implications and How To Cope? ~

I just received this flyer in my inbox. There is going to be a talk by a corporate leader on the current economic crisis that the world is facing. How will it affect us in Malaysia. Are we prepared? What we need to do to survive the coming economic storm that will reach our shores very soon?

Tittle : Global Economic Meltdown: Its Implications and How To Cope?
Speaker : Tan Sri Dato’ Dr. Lau Ban Tin
Date : 18 February 2009 (Wednesday)
Time: 7.30pm ­ 9.30pm
Venue: Auditorium,
Dewan San Choon
Wisma MCA
163 Jalan Ampang
Kuala Lumpur

Admission : Free (First-Registered-First-Served Basis)

For enquires and registration, please contact Ms Rajes / Ms Yong at 03 79572818 / 03-79555181 ext 8212 / 8611 / 016 2233 563, Fax: 79573818.
Email: cee@utar.edu.my. In view of limited seats, kindly register before 3 February 2009.

Its Implications & How to Cope?