Towards ‘Green’ flow – Beijing’s strategies

Beijing – A city filled with historical tales and architecture, is also known for being one of the world’s most congested urban agglomerations. A supposedly forty minutes drive between the airport and downtown on a Sunday evening  lasted in reality ninety minutes – one cannot imagine what rush hour traffic is like. Beijing city recorded a car population of 4.2 million at the start of 2013, a number expected to hit 5 million by the end of the year.  Daily, this means an additional 2,214 vehicles on the capital’s roads. That certainly raises an alarm!

Striking the same chord with the government, easing traffic congestion tops Beijing’s work agenda. According to a news report, one of the goals of the local Transport Commission is to ensure the traffic congestion index within 5th Ring Road, Beijing’s main urban area, does not rise beyond level 5. The index measures the severity of congestion on the road and ranges from 0 (no congestion) to 10 (heavily congested). To do so, firm measures have been introduced to curb the traffic increase: an odd-even license plate system where driving your car within the 5^th Ring Road is prohibited on certain days if the tail number of your license plate ends with a certain number, and a license quota system that requires those who want to purchase a car to register by the first eight days of every month (only 17,600 quotas are issued monthly).

Another strategy to alleviate the number of cars on roads is an affordable public transport system. Besides the existing bus and metro services, the municipal government is also launching a customised bus service at the end of August 2013. The new offering seeks to replace an estimated number of 30 private cars on a single bus. The service aims to connect dense residential areas such the CBD and the Financial Street.

Individuals have taken it up to themselves to make the government and population act on the traffic.  Wang Yong started to give strangers free rides thirteen years ago and has helped over ten thousand people – he has become Beijing’s campaigner of carpooling. His main objective is to convince the government to run carpooling campaigns across the city, and in June 2013, he helped launch a new campaign on the outskirts of Beijing where nearly 2,000 people joined.

The severity of the situation is growing on a daily basis – a recent headline in June read ‘Beijing Zombie Apocalypse Traffic Jam: Commuters leave behind vehicles in rush hour traffic’. Having government intervention is insufficient; the battle to ease congestion in Beijing is a long one which requires the concerted effort of every citizen in Beijing.

Expecto PETRONAS!

Expecto PETRONAS!

A few months ago, in one of our posts, we highlighted that Malaysia could be facing a credit downgrade due to poor fiscal discipline on the part of the government, which still does not have the political gumption to cut back on a raft of populist policies that helped it win the last general elections (held in May 2013) with an unconvincing margin.

Ratings agency Fitch did not mince its words when it stated flatly that 'Malaysia's public finances are its key rating weakness', while revising the outlook for Malaysia to Negative from Stable a few days ago.

Is this the beginning of the slippery slide down to a credit downgrade?

While we certainly do not have a crystal ball, we can try to make a few predictions and informed guesses based on current global trends and directions.

Malaysia's over-reliance on oil-and-gas (O&G) revenues to finance expansionary budgets will most certainly come under pressure from the new developments in shale extraction techniques, which will have a profound impact on global energy dynamics. It certainly will not be business as usual for the OPEC and other petroleum-producing countries - even Saudi Arabia is feeling the heat; what more for Malaysia?

From this perspective, it is worrying to note that Malaysia still sees conventional oil-and-gas and vast PETRONAS (Malaysia's state-owned O&G company; incidentally also its only Fortune 500 firm) capital expenditure as the key driver of the economy and supplier of government funds, under the ambitious Economic Transformation Programme which aims to break the country out of the middle-income trap. To this point, there is a joke that goes - Malaysia is like a Harry Potter tale - when the going gets tough, there is always the PETRONAS (Patronus for Harry) spell. However, with the shale revolution, there may come a day when even the all powerful PETRONAS may not be able to save the day for Malaysia.

A lot, thus, will have to hinge on the government having the political will to cut subsidies and widen its tax base through implementing the long-delayed Goods and Services Tax, besides charting new growth trajectories for the economy beyond a reliance on natural resources, and spending prudently to build capacity and competitiveness for the future instead of on ever-ballooning operational expenditures. As it is, the Malaysian economy is facing significant headwinds from increased competition, falling exports, low crude palm oil prices, and a massive brain drain.

The PETRONAS spell won't be able to fix this mess in an instant - only a return to good and accountable governance, and a focus on building long-term competitiveness will. It is also not wise to rely on one spell alone, as any Harry Potter fan will tell you.