SINGAPORE (July 8): “Large organisations respond to leadership, not administrative heads and not managers but leaders, and Iacocca was a brilliant leader.” — Long-time car industry executive Bob Lutz, describing his mentor Lee Iacocca, who led Ford, then Chrysler. Iacocca died on July 2 aged 94.
Boeing pledges US$100 mil for 737 Max victims’ families
Boeing has pledged to commit US$100 million ($135.6 million) to families affected by the two fatal 737 Max aircraft crashes in which 346 people died. The money, to be given out over several years, is meant to support education, hardship and living expenses for families affected by the two tragedies. It will also be put towards economic development initiatives in affected communities. The company is facing several lawsuits from victims’ families. Robert Clifford, a lawyer representing families of some of the Ethiopian crash victims, said Boeing, by making this offer, “appears to be disingenuous”. He says the company does not understand that families at this point in time are not interested in the money, but in speeding up the slow recovery and identification of human remains from the crash site. A Boeing spokesman stresses that the company’s pledge was “absolutely independent of the lawsuits” filed by the families of those on board both flights. In the wake of the two crashes, all 737 Max aircraft have been grounded and yet more possible software flaws have been discovered.
China raises warning level for shipping in Strait of Malacca
China has raised the security level for its flagged vessels sailing through the Strait of Malacca, a key trade route and major oil choke point, according to a Bloomberg report that cited people who received notice from the government. The nation’s transport ministry warned Chinese ships to take increased security steps and raised its threat warning to three, the highest level, according to a July 2 notice. At level three, that is one level higher than the warning issued after recent attacks on tankers in the Strait of Hormuz. No reason was given for the heightened alert. Last year, there were eight reported piracy and armed robbery incidents in the Strait of Malacca and near Singapore, according to ReCAAP Information Sharing Centre, which tracks attacks against ships in Asia.
Separately, on July 3, the US described Chinese anti-ship missile tests in the disputed South China Sea as “coercive acts” and a “truly disturbing” flouting of President Xi Jinping’s 2015 statement that China has no plans to “pursue militarisation” in the area. The missile tests came just days after US President Donald Trump and Xi agreed to resume trade negotiations on the sidelines of the G20 summit in Osaka.
US slaps duties on Vietnam steel
The US Commerce Department has slapped duties of more than 400% on steel imports from Vietnam, which has been used as a re-routing location by other companies based in South Korea and Taiwan before exporting to the US. In three preliminary circumvention rulings on Vietnamese steel, the Commerce Department said certain products made in South Korea and Taiwan were shipped to Vietnam for minor processing before being exported to the US as corrosion-resistant steel products and cold-rolled steel. The US is hardening its rhetoric against Vietnam, one of its major trading partners and an economy that is benefiting from the trade war with China. US President Donald Trump described Vietnam as “almost the single-worst abuser of everybody” when asked whether he wanted to impose tariffs on the country. On its end, Vietnam says it is working to reduce its trade surplus with the US, and is already cracking down on Chinese manufacturers that are rerouting their goods via the Southeast Asian nation for export to the US in order to bypass higher tariffs.
Trump picks supporters as Fed nominees
US President Donald Trump has nominated two economists to the board of the US Federal Reserve. While their backgrounds differ, they have something in common: supporting Trump’s call for lower interest rates. For the past year, Trump has urged the Fed, chaired by Jerome Powell, to cut rates, which he has resisted until recently. The first nominee, Christopher Waller, is director of research of the St Louis Federal Reserve Bank. Waller was an economics professor at the University of Notre Dame before joining the St Louis Fed in 2009. His key research focus has been on monetary and macroeconomic theory and the political economy.
The other, Judy Shelton, has been an informal adviser to Trump and has publicly said before that the Fed should cut rates. She has a doctorate in business administration from the University of Utah with an emphasis on finance and international economics. She previously worked for the Sound Money Project, founded to promote awareness about monetary stability and financial privacy. In an interview with Bloomberg in May, Shelton questioned the use of the Fed’s basic interest-rate tool to adjust the price of money, and thereby guide an economy towards a sustainable level of growth. These two nominees have to be confirmed by the US Senate.
Japan’s GPIF casts doubts over green bonds
Hiro Mizuno, chief investment officer of Japan’s Government Pension Investment Fund, has cast doubts over green bonds. In an interview with the Financial Times, he says that, without fundamental changes, the asset class risks becoming a “passing fad”. Global green bond issuance, which was almost non-existent a decade ago, reached US$47 billion in the first quarter of 2019, according to Moody’s credit rating agency. Total global issuance of the bonds — issued to support specific environmental projects — is expected to hit US$200 billion by year-end, from US$167 billion in 2018. Japan’s GPIF, one of the world’s largest pension funds, is demanding that its asset managers weave environmental, social and governance parameters into their investments. Buying green bonds is a “direct” way to achieve similar aims, the US$1.4 trillion-in-assets fund said in late June. Currently, green bonds are “more costly and complicated and cumbersome” to arrange, deterring more issuers from doing so. Yet, investors are buying bonds with the same credit rating and interest rate, but with less liquidity, said Mizuno.
Rahul Gandhi no longer leader of India’s Congress
Rahul Gandhi has quit as leader of India’s opposition Congress party, taking responsibility for its dismal results in the recent national election that saw Prime Minister Narendra Modi return for a second term with an increased majority. “Rebuilding the party requires hard decisions, and numerous people have to be made accountable for the failure of 2019,” Gandhi wrote in a letter released on July 3. “It would be unjust to hold others accountable but ignore my own responsibility as president of the party.” The grandson of the late Indira Gandhi — and great-grandson of India’s first prime minister Jawaharlal Nehru — lost one of the two seats he contested. Congress won only a few more seats than it took in 2014, which was its worst performance since India’s independence.
Malaysian government slaps Najib with RM1.69 bil tax bill
Malaysia’s Inland Revenue Board (IRB) is seeking RM1.69 billion ($554.6 million) in additional tax assessments from former prime minister Najib Razak from 2011 to 2017, court documents sighted by the edgemarkets.com showed. This was after Najib failed to respond to an initial inquiry by IRB of additional tax assessments of RM1.47 billion in March this year, resulting in a 10% hike of RM147 million in April and another compounded 5% hike of RM80 million in May, confirming an April 1 report in The Edge Financial Daily. “The additional assessment notice was sent via registered postage to the defendant on March 25, 2019 to his last known address by the plaintiff [government] at the time. The additional assessment notice was never returned to the plaintiff,” the writ stated.
