Thursday, September 27, 2007

Mauritius Africa's best governed country

Mauritius does look like the best governed country in Africa if you've traveled throughout Africa. What keeps the government in check? A highly literate and engaging public compared to other African countries. In addition Mauritius has a vibrant democracy which I haven't seen having lived and traveled throughout Africa. However, Mauritian's will tell you that there appears to be an alarmingly increasing level of corruption from little guys such as custom officials to the bigwigs such as ministers and politicians. One reason for this is that the social fabric and values of Mauritians has weakened considerably from that of our forefathers. From a structural point of view, many Mauritians complain about the merry go round of the political elite - it's as if they just agree to take turns in government.

Sithanen has done a courageous job at reducing bureaucracy and getting rid of the largesse of many government institutions, however in a country where nearly 60% of employment is through the government there remains a long a way to go. Secondly those in government, throughout the whole system need to be held to higher standard of professionalism and competence.

Wednesday, September 5, 2007

Mauritius the Hong Kong of Africa

"Mauritius is the new rising economic freedom star, not only in the African region, but also in the world. Mauritius is rated at 7.5 and ranked 22nd – up from 7.0 and 39th. This island state is likely to move even higher up the rankings as it is in the process of introducing further reforms such as reducing tax rates, removing price controls, cutting back tariffs, improving the ease of doing business, and relaxing regulations. Mauritius appears set to become Africa’s Hong Kong. Hong Kong has been first in the economic freedom rankings for many years. In order to make its citizens more prosperous, the government of Mauritius is intent on attracting to its shores people with capital, skills and spending money. With the declared intention of being in the top 10 of the World Bank’s Ease of Doing Business index, Mauritius is creating an attractive business, working and consumer environment."

According to Eustace Davie Freemarket Foundation SA

Saturday, September 1, 2007

Lee Kuan Yew

Modern Singapore’s Creator Is Alert to Perils
By SETH MYDANS and WAYNE ARNOLD

SINGAPORE, Sept. 1 — Lee Kuan Yew, who turned a malarial island into a modern financial center with a first-world skyline, is peering ahead again into this city-state’s future, this time with an idea to seal it off with dikes against the rising tides of global warming.

“Let’s start thinking about it now,” he said during an interview in late August, in what could be the motto for a lifetime of nation building. Ever since Singapore’s difficult birth in 1965, when it was expelled from Malaysia, he said, the country has struggled to stay alive in a sea of economic and political forces beyond its control.

“If the water goes up by three, four, five meters, what will happen to us?” he said, laughing. “Half of Singapore will disappear.”

For all his success, Mr. Lee, 83, remains on the alert for perils that may exist only on the distant horizon: the rising role of China in the region as the United States looks the other way, the buffeting of the world economy, even climate change.

A British-educated lawyer who led Singapore for 31 years, Mr. Lee is one of Asia’s remarkable personalities, a world figure whose guest book is filled with the names of international political and financial leaders.

His creation, modern Singapore, is an economic powerhouse with one of the world’s highest per capita incomes and high-quality schools, health care and public services that have made it a magnet for global labor. Foreigners make up roughly a fifth of its 4.5 million residents.

In his office in the former headquarters of the island’s British colonial rulers, Mr. Lee sat back in a zippered blue jacket, sipping small cups of hot water and laughing often, seemingly as different as could be from the bare-knuckled political infighter he has described himself as.

“I’ve done my bit,” said Mr. Lee, who stepped down as prime minister in 1990 and now watches over the country — and occasionally takes part in political disputes — with a seat in the cabinet and the title of minister mentor. His eldest son, Lee Hsien Loong, is prime minister.

“To understand Singapore,” he said, “you’ve got to start off with an improbable story: It should not exist.”

It is a nation with almost no natural resources, without a common culture — a fractured mix of Chinese, Malays and Indians, relying on wits to stay afloat and prosper.

“We have survived so far, 42 years,” he said. “Will we survive for another 42? It depends upon world conditions. It doesn’t depend on us alone.”

This sense of vulnerability is Mr. Lee’s answer to all his critics, to those who say Singapore is too tightly controlled, that it leashes the press, suppresses free speech, curtails democracy, tramples on dissidents and stunts entrepreneurship and creativity in its citizens.

“The answer lies in our genesis,” he said. “To survive, we have to do these things. And although what you see today — the superstructure of a modern city — the base is a very narrow one and could easily disintegrate.”

Asked whether, looking back, he felt he might have gone too far in crushing his opponents, sometimes with ruinous lawsuits, sometimes with long jail terms, he answered: “No, I don’t think so. I never killed them. I never destroyed them. Politically, they destroyed themselves.”

One of his concerns now, Mr. Lee said, is that the United States has become so preoccupied with the Middle East that it is failing to look ahead and plan in this part of the world.

“I think it’s a real drag slowing down adjusting to the new situation,” he said, describing what he called a lapse that worries Southeast Asian countries that count on Washington to balance the rising economic and diplomatic power of China.

“Without this draining of energy, attention and resources for Iraq, Iran, Lebanon, Israel, Palestine, there would have been deep thinking about the long-term trends — working out possible options that the U.S. could exercise to change the direction of long-term trends more in its favor,” Mr. Lee said.

As the United States focuses on the Middle East, Mr. Lee said, the Chinese are busy refining their policies and building the foundations of more cooperative long-term relationships in Asia. “They are making strategic decisions on their relations with the region,” he said.

And this is where tiny Singapore sees itself as a model for China, the world’s most-populous country. “They’ve got to be like us,” Mr. Lee said, “with a very keen sense of what is possible, and what is not.”

Every year, he said, Chinese ministers meet twice with Singaporean ministers to learn from their experience. Fifty mayors of Chinese cities visit every three months for courses in city management.

Singapore’s secret, Mr. Lee said, is that it is “ideology free.” It possesses an unsentimental pragmatism that infuses the workings of the country as if it were in itself an ideology, he said. When considering an approach to an issue, he says, the question is: “Does it work? Let’s try it, and if it does work, fine, let’s continue it. If it doesn’t work, toss it out, try another one.”

The yardstick, he said, is: “Is this necessary for survival and progress? If it is, let’s do it.”

Hoping to attract more tourists, for example, Singapore is building two huge casinos, despite Mr. Lee’s expressed distaste for them.

“I don’t like casinos,” he said, “but the world has changed and if we don’t have an integrated resort like the ones in Las Vegas — Las Vegas Sands — we’ll lose.

“So, let’s go,” he said. “Let’s try and still keep it safe and mafia-free and prostitution-free and money-laundering-free. Can we do it? I’m not sure, but we’re going to give it a good try.”

Even on social issues on which he has tended to seem inflexible, Mr. Lee sounded almost mellow.

“I think we have to go in whatever direction world conditions dictate if we are to survive and to be part of this modern world,” he said. “If we are not connected to this modern world, we are dead. We’ll go back to the fishing village we once were.”

For example, on the issue of homosexuality, he said, “we take an ambiguous position. We say, O.K., leave them alone, but let’s leave the law as it is for the time being, and let’s have no gay parades.”

Although gay sex remains technically illegal in Singapore, the government has indicated it will not actively enforce the law.

China, Hong Kong and Taiwan already have more liberal policies regarding gays, he noted. “It’s a matter of time,” he said. “But we have a part Muslim population, another part conservative older Chinese and Indians. So, let’s go slowly. It’s a pragmatic approach to maintain social cohesion.”

As for people’s adherence to the “Asian values” — hierarchy, respect and order — that Singapore is founded on, he said: “It’s already diluted, and we can see it in the difference between the generations. It’s inevitable.”

In his own family, generational values are changing. From father to children to grandchildren, he said, command of the Chinese language has weakened, along with the culture it embodies.

“They had a basic set of traditional Confucian values,” he said of his children, two sons and a daughter. “Not my grandchildren.”

One grandson has just begun studies at M.I.T., he said; the other is heading to the Wharton School of the University of Pennsylvania.

This well-educated younger generation reflects the social dichotomy of Singapore, Mr. Lee said, in which the top 20 percent of the population is as cosmopolitan as any, surfing the Internet and traveling the world without constraint. “This is not a closed society,” he insisted.

But at the same time, he said, the government must protect the less affluent, less educated people from information that might upset or confuse them. These are people “who are not finding it so comfortable to suddenly find the world changed, their world, their sense of place, their sense of position in society.”

They are the ones who he said had to be pulled into the future as he seeks to make Singapore “a first-world oasis in a third-world region.”

“We built up the infrastructure,” he said. “The difficult part was getting the people to change their habits so that they behaved more like first-world citizens, not like third-world citizens spitting and littering all over the place.”

So Singapore embarked on what Mr. Lee called “campaigns to do this, campaigns to do that.”

Do not chew gum. Do not throw garbage from rooftops. Speak good English. Smile. Perform spontaneous acts of kindness.

Paradoxically, he said, if Singapore had not been so poor it might never have transformed itself and prospered as it has. His warnings about vulnerability and collapse are a constant theme to persuade his people to accept limits on their freedoms.

“Supposing we had oil and gas, do you think I could get the people to do this?” Mr. Lee said. “No. If I had oil and gas, I’d have a different people, with different motivations and expectations.

“It’s because we don’t have oil and gas and they know that we don’t have, and they know that this progress comes from their efforts,” he said. “So please do it and do it well.”

Copyright The New York Times Company

Friday, June 8, 2007

Financial Globalization & Emerging Markets | Prof. Mishkin

Why is financial globalization so important for emerging market economies?

It’s critical for emerging market countries to have an institutional framework that allows their financial systems to work well. For an economy to grow, you need money channeled to productive investments. [Mauritius has low productivity] If that doesn’t happen, a country will never make it. One of the serious problems in emerging market countries is their financial systems don’t work well: they don’t have good property rights, and they don’t have a legal system that allows enforcement of contracts — things that we take for granted in places like the United States. As a result, businesses and households often can’t get the funds they need.

Mauritius does have a good legal system and respect for property rights - however it's access to those which are somewhat out of reach to the participants that need it the most. The bigger question is does Mauritius have an innovation problem? Since access to capital either from the government through it's various lending schemes for small entrepreneurs and businesses seems to suggest the financial system is working. Although there are complaints though from those working in the banking industry that the system of loans [non transparence, onerous terms, lack of financial knowledge by those getting loans] has stunted the growth of SME's. The legal and financial system appear on the face of it to work from a institutional sense - all the institutions are there, the laws are on the books - numerous banks - government programs, yet it doesn't seem to working that well.

Financial globalization is an important part of helping financial systems develop. First, there is the direct effect: access to foreign capital, which lowers the cost of capital and makes it easier to do investment. Then there are all of the secondary benefits for a country’s institutional framework. Financial globalization, like globalization in general, increases competition. If you bring in foreign capital, domestic financial institutions have to do a better job in order to survive. And with competition, these institutions will realize that they have to have a better legal system, with property rights and so forth.

What are the risks of this influx of foreign capital?

Frequently, when a country begins to open up to financial globalization, it is done in a way that benefits the same elites that have been repressing the financial system. And this can be dangerous for their countries.

Precisely what is happening en Maurice!
For example, when Mexico privatized its banks and opened its financial system to the outside world, the business elites took over the banks, putting very little money of their own into them. In addition, they made sure the system allowed the banks to take on huge risk. If the banks got in trouble, the taxpayers would bail them out. The result was the banks blew up and the financial system faced a devastating crisis. Similar problems happened in Korea. Banking institutions were essentially lending machines for the businesses that owned them.
This pattern is a very common one. Although financial globalization is critical to growth, it’s frequently mismanaged. There are many examples where it has been successful and many examples of when it has been a disaster.
How is Mauritius managing this transition - economically and more importantly also socially?

What about income inequality? Some say that globalization will increase the gap between the rich and the poor.

There’s always been a concern that globalization might increase income inequality. But for poor countries, globalization tends to be one of the most important ways of eradicating poverty. Look at what’s happened in India and China. They entered the global trading system, and as a result a huge number of people have been lifted out of extreme poverty.

In advanced countries like the United States, globalization may have led to increased income inequality in recent years. There’s a lot of debate about this, and there is no clear-cut answer. It’s one reason why some people are opposed to globalization, because they feel that some elements of society may not do as well.


How can these countries get it right?

One of the key issues is that a country must supervise its financial sector to make sure it doesn’t take on excessive risk. This is something that is done very actively in advanced countries, though not always well. We’ve had our crises too. The United States had a savings-and-loan crisis because regulators weren’t doing a good job. But when an advanced country makes a mistake, it usually fixes it.

Another important issue is what’s called currency mismatch. Frequently, businesses in emerging market countries borrow money in foreign-denominated currencies because it’s easier. But their revenue and the value of their assets are denominated in domestic currency. If the value of the domestic currency declines, it blows up the value of their debt and blows up the companies, and that blows up the country. So one issue is how to limit currency mismatch.

Also, trade liberalization actually helps prevent financial crises. If an economy is open to trade, many companies are exporting and a lot of their revenue will be in foreign currency. When they then borrow in foreign currency, it doesn’t create a problem.

Frederic Mishkin is the Alfred Lerner Professor of Banking and Financial Institutions at Columbia Business School. His new book, The Next Globalization, will be published by Princeton University Press in September 2006

Ideas at Work

Friday, April 27, 2007

Mauritius Qatar discuss Investment | Landing rights

Ministers from both countries were in discussion over the past few days on several issues. Qatar appears to be interested in investing in Mauritius especially in an IRS most likely through its investment arm the Qatar Investment Authority which has just invested a sizable stake in J. Sainsbury's. As we feel the pinch at the pumps we know the member of the GCC's coffers are overflowing at the moment. Qatar the highest GDP per capita in the world at around $50k (7xMauritius). Hopefully the discussions haven't just been about tourism, there are many other sectors in which Mauritius could serve Qatar as gateway to Africa for. On the tourism front Qatar has been knocking on the door for several years, they already land in Seychelles. However Air Mauritius' monopoly (as usual :S) - codeshare with Emirates wouldn't allow. When Qatar's new world class International Airport opens up it will be serving all of Asia, Europe, Africa, and the North America. Not to mention something the MPTA has really neglected is the Middle Eastern tourism market. ME tourists spend tons of money on tourism, many have pads in London or Switzerland and they travel extensively especially during the summer months. Qatar Airways, not to mention they are a 5 star airline, is a necessary addition to Mauritian skies.

Mauritius clearly needs more flights and higher quality flights. For flights which a major part of tourist's budget - a tourist has the option of going to South East Asia or other Indian Ocean Islands for much cheaper because there are more airlines going there. The quality of airlines needs to also be better. Currently the only quality airline serving Mauritius is Emirates, Virgin Atlantic's arrival in October will add to that especially with it's upper class service. Tourism is the sector which creates the most related jobs in the economy more than any other sector. Mauritius seriously needs to exploit the tourism industry. Tourists in Mauritius need to move around more, this is starting to happen with the increase in eco tourism activities. But Mauritius needs more other forms of entertainment, much better shopping, cultural attractions, and entertainment options. By moving around high net worth tourists who come to Mauritius will be able to engage with our offshore services and businesses.

Tuesday, April 17, 2007

PL: 77th most livable city

According to Mercer Human Resource Consulting, which provides advice to multinational companies on international assignments, PL has been ranked as the 77th most livable city in the world based on 39 key quality-of-life issues. They include political stability, currency-exchange regulations, political and media censorship, school quality, housing, the environment and public safety. Mercer collected the data between September and November of 2006 and considered 215 cities around the globe. Switzerland's main commercial and cultural center, Zurich, topped the list this year, followed by Geneva, and Vancouver and Vienna, which tied for third.

Apparently the biggest factors were stunning physical beauty hence the large number of Australian and New Zealand cities, and the safe streets and excellent public transportation found in Japanese cities such as Tokyo, Yokohama, and Osaka make these highly desirable places to live.

PL definitely has the beauty factor especially if it can develop high density luxury properties to the north and south of the waterfront (like in Miami). The streets are relatively safe although a better police presence would help. The transport system in PL is atrocious and needs to be dramatically improved. Other major factors in addition to infrastructure and property are good restaurants, shopping, and entertainment which in Mauritius is spread out all over the place.

If anything Dubai has showed build it and they will come. Look at Anahita sold out almost instantaneously; people are obsessed with Mauritius. Many of the people who bought at Anahita have never even been to that part of the island before.

Saturday, April 14, 2007

Mauritius metro rail

Mauritius has approached DMRC for assistance in its maiden metro project to connect the cities of Curepipe and Port Louis.