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Reviving Islamic endowment in its true spirit

Posted by Indian Muslim Observer | 29 August 2011 | Posted in

By Faisal Tahir Khan


At times one does not need to re-invent the wheel to solve certain burning issues faced by any nation.


Perhaps, one can solve those issues with tools that already exist in the eco-system. We could adopt organized structured thinking patterns to deal with such matters.


If we analyze Islamic history, particularly from the 10th to 15th centuries, one can witness that the Institution of Islamic Endowment (Waqf) played a crucial role in social progress and prosperity.


This was clearly reflected in educational and health infrastructure, research and development that paved the way for scientific invention and huge libraries. They in turn spawned scholars and thinkers who are considered specialists in many subjects.


It is quite evident from Islamic history that properly managed Waqf can play an important role in the growth and development of Islamic civilization.


There is a need to consolidate global Waqf’s efforts to build state-of-the-art educational and health facilities and research and development institutes in developing countries of the Muslim world to promote new technologies.


It is also essential to develop entrepreneurship as an eco-system to increase job opportunities and alleviate poverty.


This collective effort will also help certain weak economies, which cannot afford to achieve Millennium Development Goals because of budget limitations.


As the true purpose of Islam is to ensure equity, equality and justice, the Muslim world needs a common vision and unity to address the most burning issues so that the financial resources could be utilized in the most effective manner through the medium of Waqf.


From Casablanca to Jakarta, there are billions of dollars of Waqf properties which at times are not managed properly. Hence they lose their value, leading to depletion of revenues.


There is a crucial need for more legal reforms to regulate Waqf and develop cohesion between its legal and economical aspects to support those who are in need.


It is necessary to have modern laws and an effective regulatory system to gain trust and confidence from those who aim to establish Waqf. These structures could be similar to those we currently have for banking, investment or trade sectors. We should develop an effective mechanism to regulate Waqf similar to the ways we manage our personal investments through private equity, venture capital or mutual funds.


In today’s world, we cannot blame governments for all social ills. A meaningful private-public partnership is required to solve our issues in the current dynamic world.


According to the Ernst & Young Islamic Funds and Investment Report 2010, there are nearly around $105 billion worth of assets in Islamic endowment that need more intelligent ways of investing. These investments should be diversified into more sustainable financial products such as sukuk, as usually real estate has taken a larger share of Waqf funds.


There is a need not only to increase the value of Waqf assets but also to increase the revenue base for beneficiaries.


Warren Buffett and Bill Gates recently started a campaign to motivate worldwide billionaires to at least give half of their wealth before they die or in their will to the favorite causes they believe in.


The campaign received an amazing response as they target to raise $600 billion. Now, we can call it reformist and responsible capitalism.


[Faisal Tahir Khan is a Saudi-born entrepreneur and consultant. He can be reached at ftkhan@gmail.com]


(Courtesy: Arab News)

'Central Indian State Madhya Pradesh poised to emerge as economic force'

Posted by Indian Muslim Observer | | Posted in , ,

By Pervez Bari


Bhopal: Following committed efforts made over last six-seven years, Bharatiya Janata Party ruled Madhya Pradesh, the central Indian province, is now poised to emerge as an economic giant.


According to an American firm, Dun Bradstreet "India 2020", Madhya Pradesh will be contributing significantly to the economic growth of India.


An official Press release on Sunday said that in 2007, at the Global Investors' Summit at Indore, leading industrialists Mr. Anil Ambani had also said that Madhya Pradesh with immense natural wealth, central geographical location and a committed government, should be prepared to play a leading role in economic growth of the country.


Both these predictions seem to be prophetic, given the fact that Madhya Pradesh has been registering impressive economic growth rate over last six-seven years. The economic growth rate (GSDP) of the State was a negligible 3 per cent in year 2004-05. As per the assessment made using the available data through the method evolved by Government of India, the economic growth rate has been assured at 9 per cent in year 2010-11.


This achievement assumes added significance given the fact that the State witnessed heavy damage to Arhar, Gram and linseed crops due to frost in January and 26 per cent deficient rainfall in 2010-11. In the preceding year 2009-10, the State posted a remarkable 9.55 per cent economic growth rate defying a no less than 35 per cent deficient rainfall.


It may be mentioned here that the area under gram increased 3.3 per cent but the production was 16.6 per cent less. The area under Arhar crop increased by 48.3 per cent, but the fall in production was 36.1 percent. Similarly, linseed was sown in 16.4 per cent more area, but the production was 13.2 per cent less. All this thanks to frost.


It also deserves a special mention that in year 2009-10, the agriculture growth rate was 7.2 per cent while the national average agriculture growth rate was negligible. The industrial growth rate during the period was 10.1 per cent.


In comparison to large States with higher economic growth rate, in 2009-10 Madhya Pradesh was third after Orissa and Chhattisgarh and in 2010-11 also at third place after Bihar and Chhattisgarh.


As per an all India survey for poverty assessment, the per capital consumption in rural Madhya Pradesh is higher than five major States Bihar, Chhattisgarh, Orissa, Uttar Pradesh and Jharkhand.


In urban Madhya Pradesh, the per capita consumption is higher than six States. These include Rajasthan in addition to the above mentioned five States.


[Pervez Bari is a Journalist based at Bhopal, Madhya Pradesh. He can be contacted at pervezbari@eth.net]

New INCEIF chief outlines three key objectives

Posted by Indian Muslim Observer | | Posted in , ,

By Mushtak Parker


The new president and chief executive officer of the International Center for Education in Islamic Finance (INCEIF), the Islamic finance education arm of Bank Negara Malaysia (BNM), Daud Vicary Abdullah has called for a much closer alignment between the global Islamic finance industry and the providers of human capital development.


Vicary, who prior to this appointment was the global head of Islamic Finance at Deloittes, the international auditing and consulting firm, started his new position at the beginning of this month succeeding Agil Natt who retired at the end of July 2011 and who headed INCEIF since its establishment by the Malaysian central bank in 2005 to offer postgraduate Islamic Finance programs, namely the Chartered Islamic Finance Professional (CIFP), a Masters in Islamic Finance and a PhD in Islamic Finance.


As a market practitioner with over 12 years of experience in the Islamic finance industry, Vicary recognizes that INCEIF and its programs should have much greater interaction with and relevance to the Islamic finance industry.


In his personal blog, he confirmed that many of his former industry colleagues including senior executives based overseas have volunteered to give lunchtime lectures to the student body and are keen to make a contribution to the further development of the center.


“INCEIF is very much driven by and for the industry. This level of interest and commitment from practitioners is most encouraging and augurs well for the future as we strive to build depth and quality on a global basis. We have also recently conducted a series of focus groups in order to get feedback and further direction for our CIFP program,” he added.


He is also concerned about global standards in Islamic finance and strongly believes that the development of standards in many areas, are vital to the continuing growth of the industry.


“Markets like certainty and standards help to provide that. Over the past couple of years I have been encouraged by the level of focus and understanding on how important standards are to our growth. The challenge, of course, is the implementation. Once you have gone beyond the stage of determining that standards are required, you then need to start tackling the issues of how they will be implemented? What will be the governing body, how will global acceptance be achieved? How will changes and updates be made? Who will be responsible for updates and amendments? How do you ensure that there is a fair and balanced feedback mechanism? All of these issues need to be addressed as well and sometimes can be tougher to execute than the initial decision to establish a standard in the first place,” he maintained.


This applies equally to the implementation of certifications and standards in the field of education in Islamic Finance.


In one of his first interviews since starting office, Vicary advised that “the Islamic finance industry continues to grow and develop apace and a standard-setting body, such as ACIFP (Association of Chartered Islamic Finance Professional) which represents the industry, needs to move further into this space and create appropriate industry standards for human capital development. The delivery against these industry standards would need to be independently accredited. We are still in the early days of development as an industry, but would envisage ACIFP taking on a global role such as CIMA and ACCA have in the accounting profession, for example.”


He plans to build on the infrastructure already in place.


“I am delighted to have the opportunity to build on the success of my predecessor Dato’ Agil Natt. In particular I will be looking to build on the CIFP program to ensure that it becomes the most relevant and premier Islamic Finance professional qualification in the world.”


Going forward, his strategy for INCEIF is underpinned by three key objectives. The first is to maintain close relevance to the Islamic finance industry.


“We have and will continue to keep our channel of communication open with the industry players through, among others, focus group discussions and engaging the industry in enhancing our syllabus to keep it current with industry needs,” he explained.


The second is to build on and to enhance quality. This is important because although Malaysia is one of the global front runners in Islamic Finance, “we are aware that others are playing catch-up. Therefore, we are always striving to improve, benchmarking ourselves against international standards not just on Islamic finance, but other encompassing aspects that make an organization world class be it services and product offerings.”


The third is to develop a global reach from a strong base in Malaysia, whose brand of Islamic finance has already made its mark on the global scene.


“As an education provider,” he stressed, “we want to ride on this and where possible, team up with strong partners in their respective countries. It is still early days but a number of current partnerships are already showing results.”


A major criticism of INCEIF and Islamic finance education in general is the lack of connectivity between education and employment placement. Islamic finance education providers have perhaps unfairly been criticized for not focusing enough on getting employment placements for their graduates.


In this respect, INCEIF is already working on a number of new initiatives.


These include, the development of industry focus groups, more frequent use of industry-led lectures where prominent market players share their experience at monthly lectures, and a thorough review of our flagship Chartered Islamic Finance Professional (CIFP) program and content so as to continuously improve our industry relevance, through such things as case studies and simulations.


“We are also looking into the development of working partnerships with industry on research and placements for CIFP students. I also hope to leverage on my close personal ties with the industry around the world and a.m. already receiving a number of offers and suggestions on industry contribution to both CIFP and research programs,” he added.


INCEIF’s future development strategy will be a balance between capacity building and curriculum development on the one hand and forging academic synergies and tie-ups with other institutions worldwide on the other hand. Both need to be kept in balance in line with the three key objectives highlighted above, according to Vicary.


This will be challenging but INCEIF needs to move forward on both fronts in order to develop and reach the next level.


At the same time, the development of a research function and capability at INCEIF is a vital area for the new president of INCEIF. The importance of a good research function, he emphasized, is to draw more industry and public attention to the considerable work that has already been done; to enhance and develop the synergies with the center’s sister organization ISRA (International Shariah Research Academy for Islamic Finance); and to develop and collaborate further with industry, not only in the area of specific research as guided by them, but also in the broader field of Thought Leadership where INCEIF can play a significant role in helping to define the future of Islamic finance.


“Our public lectures and discourse series are held every quarter to invite discussions among academia, industry practitioners and regulators on current issues affecting Islamic finance,” he said.


As at June 2011, according to INCEIF, enrolment of students reached 1,930 - comprising 1,755 Chartered Islamic Finance Professional (CIFP) students, 67 Masters in Islamic finance and 108 PhD in Islamic finance candidates. To date, INCEIF has turned out 113 CIFP and Masters graduates, and hopes to award its first PhD’s at the end of the current academic year.


The figures do not give the breakdown in terms of distance learning programs or attendance-based courses.


The importance of the human capital challenge for the Islamic finance industry cannot be over-stated.


The International Monetary Fund (IMF) last September published a working paper titled “The Effects of the Global Crisis on Islamic and Conventional Banks: A Comparative Study” in which it warned that expertise in Islamic finance has not kept pace with the rapid growth of the industry. The human capital challenge is dire given that Islamic bankers need to be familiar with conventional finance and be versed on the different aspects of Shariah, particularly on the Islamic law of transactions.


Such a requirement is becoming essential given the increasing degree of sophistication of Islamic financial products. But as the IMF Paper points out, “professionals with this dual qualification are hard to find, although the number of newcomers in Islamic finance is steadily growing. Not surprisingly, the shortage of specialists also has an impact on product innovation, and could hinder the effective management of risks relevant to the industry, including the lack of instruments to hedge against the volatility in currency and commodity markets and the relatively higher liquidity, legal, and reputational risks.”


(Courtesy: Arab News)

HWF organises Iftar Party for Rickshaw pullers and Labourers of Okhla

Posted by Indian Muslim Observer | 27 August 2011 | Posted in

IMO News Service


New Delhi: Human Welfare Foundation (HWF), a national NGO which is working to uplift weaker sections of the society educationally, economically and socially, organised Iftar Party for rickshaw pullers and labourers. Under its vision 2016 programme, the HWF organised Iftar Party for 550 rickshaw pullers and labourers of Okhla at Milli Model School today. August 27, 2011.


Apart from inviting Iftar to rickshaw pullers and labourers, the other aim of the HWF is to give them some important message of Islam and promote them to practice upon and how to become more neat and clean and live hygienic life, which is the most important in Islam.


The HWF also distributed Kurta and Pajama on this occasion to these rickshaw pullers and labourers so that they can wear new clothes on Eid and enjoy the festival as common people.


According to a press release, the Human Welfare Trust (HWT) has reached an agreement with manager of Indian Bank to open zero balance saving accounts for rikshaw pullers with minimum documents along with ATM facilties. On this occasion one of the participants also got an ATM by Branch Manager Saeed Mohammad. The HWT is also preparing a data base of the rikshaw pullers in the area with essential details so as to use the same for further interventions like adult eduction, health insurance, medical check up and micro loan facilities.


Besides this, HWF also distributed rickshaw to rickshaw pullers in collaboration with its affiliate HWT, a Delhi-based NGO. The rickshaw distribution programme is under self employment scheme and the purpose is to make the rickshaw pullers self dependent and by this way they earn little extra money.


Abdus Salam Islahi of Jammat-e-Islami Hind delivered a speech. Convenor of model village project Habib Rahman, National Coordinator of Vision 2016 Salimullah Khan and many respected persons of the area broke their Iftar with Rikshawpullers and labourers present on the occasion.

The Muslim Dilemma on Anna Hazare

Posted by Indian Muslim Observer | | Posted in

By Abdul Rashid Agwan



By the fag end of the movement for Jan Lokpal bill, a communal debate emerged in media and society; whether Muslims should align with Anna Hazare and his indefinite fast or not. Perspectives took shapes, Arvind Kejriwal personally sought support of many Muslim leaders, media started floating stories of Muslim angst and anxiety on the backdrop forces and the counterviews, scholars raised points to make the discourse sour and sweet and various other issues were raised. It seems that the agitation will soon come to an end with a happy note on the acceptance of the three demands of Team Anna by the Parliament for consideration. However, one of the most interesting ends to the scenes of the fast unto death was the presence of Bollywood star Amir Khan on the stage and his breaking of Ramdan fast over there while wearing the skullcap popular among Muslims. More interestingly, for a few moments, Anna Hazre put on a similar skullcap in place of his famous Gandhi cap; thus almost closing the communal tone of the debate.


After a long silence, the ice melted ultimately. Muslims slowly started voicing their stand on the ongoing fast unto death of Anna Hazare against corruption. Their initial hesitation on the Jan Lokpal issue faded out. A couple of developments within the last week: All India Muslim Majlis-e-Mushawrat held a meeting of leading Muslim organizations which collectively resolved to support the agitation against corruption, Shahi Imam of the historic Jama Masjid of Delhi appealed Muslims to refrain from the Hazare movement due its Hindu overtones, another Shahi Imam of Fatehpuri Masjid of Delhi opined just the opposite on the plea of fighting corruption, Jamat-e-Islami Hind supports the cause but chose to remain away from participating in the agitation, Darul Uloom Deoband favored the cause but expressed its inability to join the movement being an educational institution, the Association of Indian Muslims of America expressed its solidarity with the anti-corruption stance of Anna Hazare, the Muslim member of Delhi Assembly from Okhla constituency Asif Mohamma Khan resigned from his party on the issue, and there is an increasing number of Muslims breaking their Ramadan fast and are seen offering their prayers on the site of the ongoing Anshan (fast unto death).

It will be unfair to say that Muslims have shown their first signs of popular support to Anna Hazare’s movement against corruption just now. There were a few Muslim faces on stage in the initial days of the campaign. Imam Ahmad Bukahri and Maulana Kalbe Javvad were seen among the leading campaigners of the India Against Corruption launched on 8th April 2011 from Jantar Mantar. Social Democratic Party of India, a Muslim-based political party, declared its support to the campaign for Jana Lokpal bill drafted by the Team Anna but with a rider that it will not be the sole panacea for the disease called corruption.

Several Muslim youths mingled with other campaigners at Jantar Mantar site. However, their romance with a new rising India remained short lived. The leaking stories of the RSS connection of Anna Hazare and the Hinduist overtones on the podium distracted the initial warmth of the community, which is still more or less confused regarding the motive behind the ongoing movement.

At the outset, the grand show of ‘Mother India’ on the background banner used during the Jantar Mantar phase of the campaign gave the signal that there was something fishy about it. The typical picture of Mother India, almost iconic of the RSS and its chauvinist organizations in the country, not only hinted of the mala fide motives behind the undertaken campaign but it was also seen by many as promoting idol worship in a tacit way. Such faces as that of Baba Ramdev, Ravi Shankar, Ram Madhav etc when constantly appeared on the stage of the campaign, reassured the public perception that the India Against Corruption was nothing but a proxy attack on the ruling front for political dividends. The appreciation of Gujarat chief minister Narendra Modi almost around the time by Anna Hazare for the latter’s efforts towards rural development amidst a peasant’s movement against the forced acquisition of agricultural land for industrial development by the state government, further confirmed these doubts. Active participation of the RSS cadre in organizing support rallies and demonstrations in most parts of the country reinforced the RSS-connection of the Anna movement in public perceptions. The enthusiasm of not only Muslims but also of the activists from other communities and secular sections slowly cooled down and there still remains a lot of hesitation in these sections in spite of the wider receptivity of Anna Hazare’s campaign among a variety of people.

There is no doubt that there have always been some comforting faces around Anna Hazare both during the first phase and the current one. The presence of leading human rights activists of known secular credentials like Prashant Bhushan, Kiran Bedi, Arvind Kejriwal, Swami Agnivesh, etc in the core group of the team Anna has been a strong practical rejoinder to the RSS-connection theories. Anna’s u-turnon Narendra Modi remark further strengthened the secular appeal of the movement. The stage at Ramlila Ground has a grand shining face of Gandhiji instead of the deity of Bharat Mata. And, now thes poradic public demonstrations against the MPs and MLAs of BJP, apart from those of the ruling parties, have brought back a lot of secular fervor for the Anna movement including that of the leading Muslims groups.

It is some innocent sections of youth, joined by some guided ones that are using slogans dear to the Hindutva organizations that are polarizing the campaigners on communal lines. When Muslims hear such chanting from the podium and even more from Anna Hazare as “…patitpavan sitaram sabko sanmati de bhagavan” they feel dejected since it would be the most heinous thing for a Muslim to mix ‘Sita Ram’ with Allah, a human temporal personality or personalities with a non-incarnate God. It is a matter of faith and belief for him. Imam Bukahri and Darul ullom Deoband vehemently raised this point. When Muslims hear the sloganeering of ‘Vande Mataram’ they can hardly forget that it is the most common device of the RSS groups for teasing Muslims and a strange pre-condition fixed by the Hinduists for allowing Muslims to stay in India (i. e. Bharat mein rahana hai to Vande Mataram kahna hoga). May be these feelings may not be there among the current sloganeering public but such slogans will be definitely interpreted even by many Hindus as the signs of RSS cadre around. What will happen if the Muslims sitting among the agitators raise the slogan of “Allahu Akbar” for invoking the Almighty to help the campaign succeed? Such an act will be taken by the campaigners as divisive and misplaced.

Then why not ‘Vande Mataram’ is treated so and be dropped from the agitation ground altogether? Perhaps the Congress would also like a communal divide on the issue for weakening it. The agitation for Jan Lokpal bill is in fact a secular cause and let it be so. Any religious overtone on the part of the majority campaigners would only result into the situation, something like the one the Muslim leadership is presently facing, i.e. forced to take a religious stand on it.

But the question arises why Muslims as a community should take some stand on the agitation at all? Are Christians taking any stand on it the way Muslims are? Are the Sikh organizations debating whether to support Anna Hazare or not? Are the Buddhists anxious to express their viewpoints on the issue? Is the religious leadership among Hindus perturbed to respond on the call? For that matter, no Shankracharya has so far expressed his support or dejection on the issue. No other social groups, their organizations or leadership are taking ‘yes’ or ‘no’ stand on the issue of Jan Lokpal bill. It is really a secular issue and must be kept as such. Corruption is an all pervading menace and all Indians must fight against it together. There is hardly any need to incite any communal overtones in that regard. A lot of youngsters and social activists hailing from a cross section of society are actively taking part in the agitation including Muslims, but not on the basis of their religious identities. They are rather seeing the issue from a secular angle and working with each other for saving the country from a monstrous problem. For them, it is a legal battle, not a sacred war cry. Then, why there should be the need of a ‘Muslim stand’? Why Darul Uloom Deoband or Jamat-e-Islami or Imam Bukhari should issue Fatwas favoring or disfavoring Jan Lokpal?

The Muslim response on the issue emanates basically from their apologetic mindset. By Hinduist overtones in the agitation, both in media and on the battleground, the RSS cadres or youth influenced by them have subtly created an impression as if only Hindus are fighting against corruption; and that means Muslims are refraining way from it, “as they are always on any larger national issue”. The Muslim leadership is innocently, or perhaps unwittingly, responding to such perceptions by either favoring the agitation in spite of their feeling that it may be perpetrated by the Hindutva organizations or it makes a call for non-cooperation while complaining for the same. There are Muslim leaders and organizations that may be inclined to take the opportunistic advantage of the hotly debated issue. For them this is a chance to express their noble stand and mobilize people on a popular upsurge. For many this is a time when media would be soft in giving coverage to their visibility on the issue and, therefore, they should come forward and take a stand on behalf of the community. This has been a persistent weakness of the Muslim leadership to unnecessarily communalize an issue and then take an unbecoming stand on it.

When the present outburst of ‘Muslim’ statements is compared with the ones expressed on the Tahrir Square awakening, it has already surpassed the latter one by many counts. This is nothing but a sheer imbalance of mind and character. Let Muslims support the cause not as Muslims, rather as Indians. The responsibility in this regard lies on the communal activists on both the sides of the fence.

Story of Colonial Loot: G8 to promote Neo-colonization of Mideast

Posted by Indian Muslim Observer | | Posted in , , ,

By Dr. Abdul Ruff


Joint Agenda of UNSC-NATO and G8


Multifaceted western terrocracies in many combinations and permutations are apparently making efforts to colonize the Arab nations and Africa. Growing demand for energy resources in the West has put the energy rich Mideast and Central Asia in spotlight for colonial wars by the West through the “uprisings”, as usual on alien soil by pitting Muslims against Muslims. Even as the dollar vs. Euro struggle continues at high levels, USA-EU are now focusing on genocides and terrorization of Muslims for containing any further growth of Islam.


Conspiracy is another name for democracy. Sept-11 terror operations, obviously engineered by the CIA and its Zionist and British allies, were the outcome of deep rooted USA-UK-Israel conspiracy executed in full perfection to set the stage for illegal invasions of Islamic world. The notorious NATO-UNSC combine, led by USA-UK terror twins, has been for over a decade conducting a growing number of open-ended colonial wars aimed at re-dividing the world along religious lines and looting its resources for themselves, to the advantage of the only super power, the USA. In the ongoing, but undeclared, WW-III, being unleashed exclusively on Islam and Muslim nations by western terrocracies also led by USA-UK terror twins, the prime target, therefore , has been oil rich Islamic world in Mideast to ensure energy security of the West.


Upon the disastrous fall of Iraq, Afghanistan and Iraq, the UNSC-NATO guided by CIA neocons hatched subsequent conspiracies to destabilize and control the Mideast region. The so-called uprisings in Mideast and Libya, therefore, are basically meant to protect and expand US and British commercial interests that are aimed at opening up the economies of major countries in North Africa and the Middle East. The major outcomes of the “uprisings” are destabilization of Tunisia, Egypt and Libya. Libya has been the key target of UNSC-NATO terror syndicates and, as per the CIA plans, its oil resources have been shipped to USA.


Apart from World Bank and IMF, the UNSC-5 and NATO employ G7, G8 and G20 to pursue the capitalist and imperialist objectives. Both G8 and G20 behave like economic handles of UNSC-5 and UNSC-15 respectively.


G8 is the extended version of UNSC-5 while G20 is the expanded gang of UNSC-15. G8 assumed the role of NATO and decided to pursue their ruthless campaign to force Libyan leader Muammar al-Gaddafi from office. Behind the backs of the American people, the Democratic and Republican parties are working out the precise mechanism for how these cuts will be achieved. G-8 was converted into G-20 when the UNSC-5 wanted to bring in all green gas emitters into resolving the climate change issue. Now the new thinking in Washington is to concentrate on G20 and leave alone G8 where Russia has a major say and stick to its earlier G7 without having to listen to what the Kremlin has to say.


The summit was expected to approve a multi-billion-dollar aid package for Tunisia and Egypt, after “Arab Spring” uprisings unleashed from far away Washington deposed their autocratic leaders, and to seal an agreement to back others in the region who wants “democracy”. The opening day’s focus on a major aid program ostensibly aimed at supporting the “Arab spring” and the growth of “democracy” in the Middle East and North Africa was just a gimmick.


Group of 8 wealthiest industrialized, but essentially corrupt, criminalized fascist nations that are the backbone of the notorious NATO-UNSC joint terror syndicate, have officially pledged on 26th May to send billions of dollars in aid to Egypt (and Tunisia), hoping to reduce the threat that economic stagnation could undermine the transition to democracy. G8 big leaders have promised to finance Middle East economies with financial efforts to win back investors’ confidence. America has pledged $2 billion and Saudi Arabia, another $4 billion to Egypt and some other small enterprises funds here and there. Discussions are on with the International Monetary Fund. The World Bank has committed $6 billion of aid to Egypt and Tunisia, focusing on reviving the private sector.


The two-day G8 meeting was being held under the shadow of the sharpening global crisis of capitalism, including the sovereign debt crisis in Europe and the ballooning US debt, which has now surpassed $14 trillion. On the sidelines, the G8 leaders could have debated many other questions of common concern. One of most important item but unspecified on the agenda is oil-arms relations with Arab world and future courses of action to colonize Mideast and Africa.


The G8 summit has called for austerity measures by world only to help the dollar get stabilized. Greece has become a testing ground for the type of austerity measures European governments are intent on implementing in their own countries. A large proportion of the debts of Greece, Ireland, Portugal and Spain total about $2 trillion, with a large proportion held by European banks.


The G8 summit also focused broadly on the internet’s impact on the global economy. Earlier, officials from the G8 held preparatory talks in the seaside resort of Deauville to hammer out common positions on issues ranging from the world economy to Libya’s civil war, Iran’s nuclear goals and unrest in Syria. President Ali Abdullah Saleh ordered all but essential diplomatic staff to leave the country as clashes intensified.


Soon, France, proud host of a summit in Deauville, hands the chair to the USA, which has been skeptical of the group’s utility. Russian Deputy Foreign Minister Sergey Ryabkov, whose country also sits in the BRICS group of emerging economies with China, India, Brazil and South Africa, made clear that Moscow sees all such summitry as important to pushing Kremlin policies.”G20 is not an alternative to the G8,” he said in Deauville. “We need to use the opportunities and formats we have, and hence multiply the channels to promote our national interests. So we will keep on playing on all of these chessboards.”


Last year Canada hosted both G8 and G20 summits on succeeding days. France hosted the first summit (G4) 36 years ago, when President Valery Giscard d’Estaing invited peers from the USA, Japan, Britain and West Germany to Rambouillet to seek consensus on surging global capital flows and soaring OPEC oil prices. The world has changed dramatically since the group began. Once Italy and Canada had joined by the next year, 1976, the G7 accounted for two thirds of the world’s economic output. Even with Russia, added in 1998 in hopes of fostering its post-Soviet democracy, the G8 now has only about 40 percent of world GDP. China’s economy has surpassed all but that of the USA.


Unkept Promises of West


In the emerging US unipolar scenario, USA-UK terror twins play destructive role in global affairs by illegal wars. The emergence of a US-British-French military axis as the leading force in the NATO campaign against Libya has shifted the balance of international forces. G8, like the UNSC, cannot but play the CIA role.


CIA efficiently unleashed “revolutions” in Mideast to destabilize and establish puppet regimes. Street demonstrations in Cairo and Tunis that thrilled and inspired the Arab world also drove away the tourists and investors on which these economies are heavily dependent. Both countries need quite a lot of money considering the hit to their economies and their revenues. The first thing they will be looking for is direct financial aid. The total needs of the economies are escalating with time. Egypt has funding gap of $12 billion until mid 2012 and Tunisia has an estimated fiscal deficit of 4.3 percent in 2011. A total fund of $15 billion is promised to Egypt and Tunisia on both government and private sectors over various time periods.


After creating instability and chaos in Mideast by igniting “uprisings” and “Arab spring”, the leaders of the Group of Eight or G8 comprising the USA, Canada, Britain, France, Germany, Italy, Japan and Russia – met in the French resort city of Deauville on 25-26th May to discuss a range of issues from the ‘Arab Spring’ to Europe’s debts and endorse aid to new Arab “democracies”. A slew of issues like agreeing on a new IMF chief to mediating war in Libya and Yemen crisis dominated the agenda. Nuclear safety was another topic, with Japanese PM Naoto Kan provided leaders with an update on the continuing crisis at the Fukushima Dai-ichi nuclear power plant. The future of the internet and its relevance for economy also figured in the G8 leaders’ talks.


The opening day’s focus on a major aid program ostensibly aimed at supporting the “Arab spring” and the growth of “democracy” in the Middle East and North Africa was just a gimmick. The principal aim of the so-called aid program is to utilize the upheavals in the Arab world to carry out an even greater penetration of their economies by Western capital and to prop up regimes that will support US and Western European interests while quelling the uprising of the masses.


US officials and G8 countries really did not want to reach a deal on dollar amounts for assistance. The heads of the World Bank and the UN were also be present and added their signatures to the partnership declaration. US foreign terror Secretary Hillary Clinton said they share a compelling interest in seeing the transitions in Egypt and Tunisia succeed and become models for the region. Maybe she was as usual joking. “Otherwise, we risk losing this moment of opportunity.” The gas deal has been an integral part of the US-Egyptian relations and President Obama recently offered Egypt $1 billion in loan guarantees and $1 billion in debt relief on the condition that it meets its commitments. The USA has told Egypt that its security obligations in the northern Sinai are among its commitments. Jewish French President N. Sarkozy, for whom such gatherings are welcome platforms as he campaigns for re-election, has set this year’s G20 for Cannes in November, six months after the G8. The IMF has promised a meritocratic process to replace Strauss-Kahn, a Socialist ex-finance minister who was favorite to defeat Sarkozy in a French presidential election next year. It has set a June 30 deadline to pick a successor to the post, which has been held by a European since 1945.


When the G8 member states have insisted on austerity measures by every other nation to promote capitalism, but at a cost of 200 million euros, the armies of police, soldiers and special agents deployed at Deauville had the task of shielding the summit participants from the outside world. Police have established one security cordon around the conference centre where the leaders are meeting, and another perimeter encompassing all of Deauville. Local ports, train stations and the airport was shut two days and a no-fly zone enforced over the town. The show of force may have discouraged radicals and other protesters from attempting to organize demonstrations close to the summit. Anti-G8 protesters planned symbolic demonstrations in the neighboring towns of Caen and Le Havre, but they do not plan to try to disrupt the event in Deauville itself.


China and Russia, both veto members of the notorious UNSC have secret deals with NATO rogues against Islam and Muslim nations and Moscow sells weapons to Muslim nations. Russia, which sees the US-NATO intervention as a direct threat to its own extensive interests in Libya’s oil and gas industry, has condemned the bombing as a violation of UN resolutions. It has stepped up its own diplomatic initiative, meeting with representatives of both the Libyan regime and the so-called rebels backed by Washington and NATO in an attempt to promote a cease-fire. Russian president Medvedev was to outline his concerns over Libya, where months of illegal NATO air strikes have failed to dislodge leader Muammar Gaddafi. Russia, a critic of the military intervention, wants to push its own ceasefire plan after welcoming envoys of both Qaddafi and the opposition to Moscow for talks.


Objectives of G8


The principal aim of the so-called aid program is to utilize the upheavals in the Arab world to carry out an even greater penetration of their economies by Western capital and to prop up regimes that will support US and Western European interests while quelling the uprising of the masses.


At the summit there were again the usual pledges from the Europeans to confront fiscal crises within the EU with “determination”. Behind the official tableau of smiles, kisses and handshakes were fierce conflicts over the international finance crisis. US delegates warned that the continuing European debt crisis was driving down the value of the euro against the dollar and threatening the American export industry. The fate of ordinary people in the face of rising prices did not figure as the top item either. Bulk of Africa nations is still expecting the western donors to fulfill their pledge to them.


A weakening Euro would be beneficial to the US dollar’s value and CIA expects the ongoing euro crisis would let dollar reassert itself as the dominant global currency the Arabs would choose. However, among the principal “concerns” expressed by the Obama regime was that the debt crisis gripping the weaker members of the EU is driving down the value of the euro, interfering with American capitalism’s attempt to increase its export earnings.


The Neocon nuts proclaiming capitalism and neo-colonialism as the cardinal force of world’s future progress also claim that the G-8 summit was “historic,” the moment for the great powers to rally their wealth and arms behind the Arab people and staunch a gap in the spread of “Western” values across the world.


G8, as expected, refused to work out contingency plans to alleviate poverty because anti-poverty is not their key agenda. After all, the advanced economies exist by extra profits and exploiting the poor to make them live the worst possible conditions.


Having failed to fulfill the promises made in previous G8 summits, the French G8 summit offered big credits with conditions attached to new Arab nations (“democracies”) and rallied Russia, an often awkward post-Cold War addition, to the cause of somehow – by hook or crook or war crimes – ousting Libya’s Col. Muammar Qaddafi. And there was also no joint statement on Libya, where the US and NATO are beginning their third month of a bombing campaign that has wreaked increasing destruction and loss of life in the Mideastern country.


In order to satisfy the interests of the domestic as well as international finance elite, the world’s leading imperialist powers are increasingly resorting to a policy of social counterrevolution at home and colonial war abroad. This was the message to emerge from the latest meeting of G8 countries.


Despite the bland language of G8 diplomacy and the pretense of common purpose, 2011 G8 summit only underscores the inability of the major Western capitalist powers to devise any coordinated response to the financial crisis that has shaken the world economy since September 2008 when the rapid outflow of this same foreign capital led to the collapse of national economies even in East European region. G8 leaders in the faded casino resort may have to fend off challenges to Western Europe’s grip on the post of managing director of the International Monetary Fund, the global lender.


The top imperialist state with monopoly goals, the USA is seeking to create in Tunisia, Egypt and Libya regimes that will continue upholding the interests of the US and its principal regional ally, Israel, while subordinating the countries’ economies to the profit interests of the US-based transnationals and systematically repressing the threat of social revolution.


Not just the USA, but entire G8 world seems to pursue imperialist goals in Mideast, while Arab states support this. The G8 remained silent on the violent repression unleashed by the ruling monarchy of Bahrain against the mass protest movement in that country. The Bahrain regime, which hosts the US Fifth Fleet, has received tacit US support for the clampdown and NATO does not want to destabilize it and asked Saudi monarchy to send troops to Bahrain to quell the protesting masses.


The job of the management of the global economy as its core business has been quite successful, but G-8 has also deformed itself into a vanity project for leaders of nations in decline, marginalized by the rise of China and other big, industrializing nations, for whom the forum founded in the 1970s is a neo-colonial throwback. G8 leaders, whose governments across the globe are beefing up their own military apparatus to deal with the increasing domestic opposition to their policies, demanded an intensification of austerity programs across the globe and reiterated their resolve to overthrow uncooperative regimes by means of war.


Many Arab and other Muslim nations promote the capitalist interests of their leaders who lead the corporate sectors and support neo-colonialist urges of the western terrocracies. The realization that Mideast must be brought under the control of western corporate regimes has led to Western terrocracies to see the “new democracies” emerging in Arab world to promote crony capitalism and seeks to offer loans/aid to make the regimes buy the western arms to be used against one another. Hence the G8 has introduced a phrase “emerging new Arab democracies” to directly enter their economies.


When Arab leaders, badly wanting the western bosses to protect their illegal wealth behave like stupid fools, the real aim of the US and the Western European powers in the Mideast uprisings and Libyan war being clearly the recolonization of the oil-rich regions of the Mideast and Africa as part of an attempt to offset the deepening crisis of their economies.


Era of GST (global state terrorism), dominated by military supremacy of USA-UK twins by using all economic,financial and judicial agnecies, has defamed Islam, slashed Islamic populations. But more disastrous has been the anti-Islamic policies of Muslim nations that refuse take joint stand on the impending threat from anti-Islamic forces. Arabs nations create obstacles in the efforts to formulate coherence policy to face the enemy threat.


[Dr. Abdul Ruff is Specialist on State Terrorism. He is Chancellor-Founder of Center for International Affairs (CIA). He is former university Teacher, Analyst in International Affairs and an Expert on Middle East. He can be contacted at abdulruff@gmail.com]

Undeterred by scams, Narendra Modi into poll mode now

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By Abdul Hafiz Lakhani


Ahmedabad: Gujarat Chief Minister Narendra Modi is in trouble over various land scams in his vibarant state but he does not loose his control over his government.Modi certainly is all set to play his political cards in due course of time.


The reason - Chief Minister Narendra Modi seems to have been on a poll alert for the past few months, driving party leaders and workers into poll mode.


But, BJP national president Nitin Gadkari announded that the BJP will not project anyone in particular or announce its prime ministerial candidate for the 2014 Lok Sabha elections.


CM Modi has consistently been ranked the best chief minister in the country. So, it’s obvious that he is the only prime ministerial choice that BJP can bank on to win 2014.


Probably, Gadkari’s aim is to keep all BJP leaders, including Modi baiters, working aggressively in the field. By keeping Modi’s name under wraps, he may also hurt the Congress which will not be able to woo minorities by using ‘Modi the Minority Hater’ card.


It seems that Modi is the only choice BJP has. If the BJP national chief protests against this, it will be he who leaves,a state leader promised. He revealed that few will vote for the BJP in 2014 if Modi is not its prime ministerial candidate.


His logic: Arun Jaitley is too sophisticated and does not have a finger on the public pulse; Varun Gandhi who copies Modi is too junior and naïve; and, Sushma Swaraj has a bright future as Chief Minister of Delhi but she evokes no emotion among Indian electorate. It is only Modi, he reasoned.


If sources are to be believed, Modi has been driving and closely monitoring BJP's political activities across state, keeping elections in mind. This, even as he juggles with a host of judicial issues and the usual tasks of governance.


Since early June, the chief minister seems to have gone into an overdrive. Party functionaries have also observed with surprise that the goings-on are "definitely unusual".
"Such activity by the BJP or, for that matter, any other party is witnessed about six months before elections — not 16 months earlier! We feel he (Modi) must have a reason for doing what he is doing. It seems he is preparing for unscheduled polls — either for the state assembly or the Lok Sabha. Something is definitely cooking," an observer of the political scene said.


What's more, the man whose actions perhaps attract the maximum attention in political circles of the country pretty much conceptualizes and drives these micro-level activities himself. "He (Modi) instructs people down the line, who execute his brief. But he is aware of every programme and gets a feedback on each one of them," a leader said requesting anonymity.


[Abdul Hafiz Lakhani is a senior Journalist based at Ahmedabad, Gujarat. He is associated with IndianMuslimObserver.com as Bureau Chief (Gujarat). He can be reached at lakhani63@yahoo.com or on his cell 09228746770]

30 districts achieve over 100 pc success in Ladli Laxmi Yojna in Madhya Pradesh

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By Pervez Bari


Bhopal: Thirty districts of Madhya Pradesh have achieved 100 per cent success in Ladli Laxmi Yojna launched with a view to developing a positive thinking among people about the birth of girl child. The districts have achieved 100 percent to 162 percent success against the target given to them in the year 2010-11. The rest of 20 districts have also been able to successfully implement the scheme by obtaining success rate ranging from 57.4 per cent to 99.1 per cent.


Chhindwara district took massive lead in achieving the target under the scheme by sanctioning 14,888 cases against the target of 9,172 cases. The success amounts to 162.3 per cent of the target. Similarly, 146.3 per cent success was achieved in Mandla district, 139 per cent in Jabalpur district, 128.6 per cent in Seoni district, 127.2 in Narsinghpur district, 125.7 percent in Katni district, 125.6 per cent in Ratlam district, 123.9 per cent in Balaghat district, 115.2 in Dindori district, 114.1 per cent in Betul district, 113.3 per cent in Shahdol district, 110.8 per cent in Jhabua district and 110.5 per cent in Sagar district.


Similarly, 108.8 per cent success was achieved in Khandwa district, 108.4 per cent in Bhind district, 106.8 per cent in Indore district, 106.6 per cent in Anuppur district, 104.1 per cent in Bhopal district, 101.8 percent in Datia and Chhatarpur districts, 100.8 per cent in Dhar district, 100.6 per cent in Ujjain district, 100.5 per cent in Shivpuri district, 100.2 per cent in Tikamgarh and Burhanpur districts, 100.1 per cent in Panna and Mandsaur districts and 100 per cent in Hoshangabad, Dewas and Neemuch districts.


Other districts have also been successful in achieving targets under the Ladli Laxmi Yojna. They are Raisen district (99.1 per cent), Shajapur district (97.9 per cent), Morena district (96.6 per cent), Sheopur district (95.2 per cent), Sidhi district (93.7 per cent), Umaria district (89.4 per cent), Rajgarh district (88.8 per cent), Satna district (87.8 per cent), Khargone district (83.4 per cent), Guna district (83 per cent), Gwalior district (82.2 per cent), Harda district (79.1 per cent), Alirajpur district (77.1 per cent), Barwani district (76.9 per cent), Singrauli district (76.4 per cent), Ashoknagar district (76.1 per cent), Sehore district (73.1 per cent), Vidisha district (70 per cent), Rewa district (62.9 per cent) and Damoh district (57.4 per cent).


[Pervez Bari is a Journalist based at Bhopal, Madhya Pradesh. He can be contacted at pervezbari@eth.net]

A Business Guide to Western China – Local Markets and Exotic Exports

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A complete overview of the trade dynamics and foreign investment opportunities from Xi’an to Xinjiang, and from Mongolia to Tibet.


By Chris Devonshire-Ellis


China’s western regions have long held a fascination for many. The route of the ancient Silk Road, the mysteries of the orient, huge deserts, enormous mountains, a collision of religious, language and numerous tribal cultures, creating an enigmatic region not short of romance, mystery and intrigue.


Investing in China’s Western regions has long been a feature of China Briefing and our firm, Dezan Shira & Associates. We have run several editions of China Briefing magazine specifically about the area over the years ever since China first unveiled its “Go West” policy well over a decade ago. Much of that policy was in truth an internal issue; the central government encouraging wealthy eastern provinces and cities to “adopt” a western location and provide funding, rather like twinning cities. A handful of projects aside, it never really got off the ground, and despite relatively attractive tax breaks on offer, it has to date been only a handful of hardy foreign investors that have taken the plunge.


The Northern Buddhist/Islamic Trade Route
But what are the western regions? To many, they epitomize the Silk Road. Yet to the Chinese government, for investment incentive purposes at least, they include areas not normally associated with camels, perfumes from Arabia or the Call to Prayer. China, pragmatic as always, defines the West in its recent tax policy as comprising: Sichuan Province, Guizhou Province, Yunnan Province, Shaanxi Province, Gansu Province, Ningxia Hui Autonomous Region, Xinjiang Uighur Autonomous Region, Inner Mongolia Autonomous Region, Tibet Autonomous Region, Guangxi Zhuang Autonomous Region, and the Chongqing municipality.


In fact we wrote about the updated tax policies affecting these areas in some detail at the beginning of this month.


Yet to the people that live in these areas, and crucial for investors to understand, is that each of these areas are fundamentally and culturally different. They have different languages, different religious sensibilities, different topography, and vastly different consumer patterns. What is lumped together in tax policy is rather different in the practical issues as concerns foreign investment. So let’s examine each of these areas in detail and try and separate them into a coherent and more understandable order. As mentioned, we have conducted a huge amount of research into the area, both for our clients and for our readers, and I provide many links to relevant and more detailed articles about the specifics. Please feel free to follow these through.


The Silk Road Route


If one were to follow the old Silk Road definition, the areas that would fit into this would include Shaanxi, Ningxia, Gansu, and Xinjiang.


This then, includes the provincial capitals of Xi’an, Yinchuan, Lanzhou and Urumqi, with special mention to the city of Kashgar. They are definable as from commencing in Xi’an, heading westwards and becoming increasingly Muslim-influenced, which dramatically affects the language, culture and consumables the further west one goes. Han Chinese influence begins to diminish. It’s hard, for example, to buy pork in Urumqi, and much of the edible produce is Halal. The Silk Road actually had two routes around Xinjiang, both skirting the Gobi and Taklimakan Deserts: one to the north, which exits China over the Pamir and Tianshan Mountains and heads off further West through Kazakhstan, taking in the fabled cities of Samarkand, Bishkek and Merv.


The other, southern route, skirts the Taklimakan to the south, loosely following the Shule River, with the mountains of Tibet to the immediate south, passing through Khotan on the way to Kashgar, down the Karakoram Valley to Taxkorgan, and out into what was then India. This was the route in fact taken by the Chinese Monk Xuanzang, immortalized by the Chinese literary epic “Journey to the West.” Marco Polo also travelled this route. Today the nearest border city south of Taxkorgan is Gilgit, in Pakistan. From there the old southern Silk Road headed west to Persia.


The dominant factor in this entire region is the increase in Islamic influences, and China has even moved as far as to introduce Islamic banking and financing facilities here, including Islamic finance through Hong Kong. Recent high profile FDI projects here include Moet opening a sparkling wine facility in Yinchuan, while regulatory changes to make foreign investments in Xinjiang easier were touched on by us here. Such moves are having an effect. Both Xinjiang and Ningxia are attracting FDI from the Middle East and Turkey especially has an interest. Meanwhile, Ningxia has gone as far as to host a China/Arab States Investment Forum.


Apart from local products going into the China supply chain, with the exception of Xi’an (and to some extent Lanzhou), most agricultural produce here is packaged and marketed for Central Asian and Middle eastern consumption. To illustrate this dynamic, China last year established a new Special Economic Zone at its border with Kazakhstan and the same is being applied to Kashgar.


All of the provinces within this category have a strong Islamic influence, which is why China incorporates a form of Arabic on its RMB banknotes. Signage in the more heavily populated Muslim areas is in bilingual format. Parts of Gansu meanwhile are Tibetan in origin, and Tibetan language and script are used to the southwest of the province.


China of course has a vested interest in maintaining stability in Central Asia – it does not want unrest in Xinjiang, and is keen to suppress any Muslim insurgency. As has been recently apparent with small scale attacks in Khotan, a degree of sensitivity needs to be maintained while rooting out extremists. But by and large, China’s policy towards Central Asia on its doorstep is to improve life through the promotion of regional trade. We set out the Chinese government’s policy concerning this in the article “Stability and Development Twin Concerns for China in Central Asia.”


The key issues for investment into the Western silk road then are products with Islamic sensibilities, sales into Mainland China’s own supply chain, and exports to the markets of Central Asia, Turkey, the Middle East, some of the Mediterranean countries and Islamic Northeast Africa. Xi’an and much of Gansu remains heavily Han dominated, and both provide heavy industrial manufacturing for the Chinese market. China’s nuclear and space industries are based from Gansu, while Xi’an is a center of much of China’s engineering excellence.


The Mongolian Plains


Another ancient route, actually a subsidiary of the main Silk Road, went a lot further north, through Mongolia, into the ancient kingdoms of Buryiana (around Lake Baikal in Siberia) and then headed west into northern Kazakhstan and beyond. This has long since been carved up by China (the Manchu’s especially), Russia and Mongolia, and while northern trade still exists between these areas, all that is really left of this route for the purposes of the Chinese government is the Inner Mongolia Autonomous Region. Carved out from the collapse of the Mongolian empire in the 1600s, the region still retains Mongolian sensitivities (Mongolian is an official language here) and nomadic herders, but is increasingly being settled, mainly by Han Chinese. The region, China’s third largest after Xinjiang and Tibet, runs along much of Northern China from east to west, bordering the Mongolian Gobi Desert to the north, the Chinese provinces of Heilongjiang, Jilin, Liaoning and Hebei to the east, and Shanxi, Shaanxi, Ningxia, Gansu and Xinjiang to the south and west. It too then takes in both Buddhist and Islamic sensitivities. These generally sit side-by-side quite comfortably – pigs are not an animal suitable for herding, so in dietary aspects there is little conflict between Mongolians and Muslims. In fact, some Mongolian herders, especially to the west where Kazak influences begin to rise, are also Muslim. Both Mongolian and Arabic scripts appear on Chinese banknotes, and road signs within the province are bilingual according to need.


Apart from possessing huge tracts of the Gobi Desert, Inner Mongolia is one gigantic pastureland and is one of China’s agricultural giants. Home to massive dairy operations, the province remains relatively sparsely populated, and with the border of Mongolia to the north, is keen to attract investment to further help settle the area. That has led to conflicts, and the differences between traditional Mongolian agricultural methods and Chinese settlement have not gone without mishap. I wrote about this issue very recently, explaining the differences between the two in the article “A Tale of Two Mongolias.”


Inner Mongolia as concerns the foreign investor is really about two functions: agriculture (the dairy industry in particular) and mining. The province is rich in coal and rare earth deposits, much of it destined for China’s internal consumption. There is tremendous growth and relative wealth creation occurring in the province however, and two of Inner Mongolia’s cities are among the top five fastest growing cities in China today. Meanwhile, to the east, cities such as Manzhouli bordering Russia are developing as huge processing centers for Siberian lumber.


For foreign investors then, Inner Mongolia represents mainly a market to develop for getting locally sourced products into China’s own supply chain and consumption. Exports from here to Mongolia, Russia and Kazakhstan are minimal.


The Tea Road Route


Less well-known than the Silk Road, the Tea Route was, as its name suggests, involved in the trading of tea – in addition to other botanical, medicinal and agricultural produce. Historically, it also acted as a trade bridge between China and India, and as such also serviced Burma, and to the south, Southeast Asia. The Chinese provinces and regions that come into this category are predominantly Buddhist strongholds, and have (with parts of Tibet and western Sichuan excepted) for the most part been well absorbed into the mainstream Chinese culture. This area includes Sichuan, Guizhou, Guangxi, Tibet and Yunnan. They are characterized by being mountainous, lush, and are influenced by cultures as diverse as ancient Khmer to the very strong presence of Tibetan Buddhism. Chinese RMB banknotes feature both Tibetan and the Zhuang script on them, the latter being derived from Khmer and the ancient kingdoms of Southeast Asia, especially that of ancient Angkor Wat, whose culture extends well into South Yunnan.


Sichuan, however, is an extremely diverse province, taking in the major cities of Chengdu, and for the sake of argument (it was actually split off from Sichuan and made a municipality in 1997), Chongqing. The province is in part highly mountainous, and to the west and south very Tibetan-influenced. Chongqing meanwhile is highly industrialized, whereas Chengdu has developed into a service center, not least for light engineering and aircraft manufacturing and service. The two principal cities thus retain entirely different characteristics, yet to some extent service the same region. That gives rise to the question of Chengdu or Chongqing and the need to conduct cost and business analysis of each. A regional economic powerhouse, we have conducted further research and examined the strength of Sichuan’s economy and compared it to nearby countries here. Chengdu remains a more favored destination for many expatriates, not least due to its pleasant weather and more laid back environment. It is also developing as a light industrial manufacturing base, and has a strong agricultural and textile industry. But for many, the large manufacturing opportunities are in Chongqing. Being on the Yangtze River, it is thus connected to Shanghai, but logistics and local favoritism have proven difficult obstacles in the past, yet not insurmountable. Separating the two is, to some extent, dependent more upon individual business specifics, and both should be compared as to the suitability for particular industries – and the applicable incentives, as these differ.


Yunnan, on the other hand, may be considered as a gateway to Southeast Asia. The province runs from the north, and a mountainous border with Tibet, to the south and a border with Vietnam. Consequently it is the latter geographical feature that is creating the most impact on Yunnan today, as major reinvestment in Southeast Asia, and the development of road-rail links from Yunnan’s capital of Kunming south to Singapore, while taking in much of Indochina, dictate that this area can be expected to boom, not least due to China’s new Free Trade Agreement with ASEAN. The agreement links up 7,000 duty-free goods between China and ASEAN members Brunei, Indonesia, Malaysia, the Philippines, Thailand, and Singapore, with the other group members – Vietnam, Cambodia, Laos, and Burma – are planning to be included in the deal by 2015. Beijing has already advised Chinese companies to be ready to take advantage of this, as strong a hint as any that South Yunnan, Kunming and Nanning are great places for foreign investors to be.


Southeast Asia currently only accounts for 8 percent of China’s exports, but Beijing sees great opportunity for growth within their neighbors to the south. The free trade block has brought together the region’s approximately 1.9 billion people along with a combined GDP of US$6 trillion and a total trade volume nearing US$4.5 trillion. Just this year, China-ASEAN trade jumped 47 percent and as China continues to boost economic ties with ASEAN countries, Yunnan can be expected to boom. We also discussed and described the Southeast Asian rail network that will link Yunnan to the region, and have further explored the opportunities this will bring Yunnan. This also includes observations about how development on Yunnan’s western border will affect trade with Burma, Bangladesh, and India.


The knock-on effect of China’s ASEAN FTA will also spill over into Guangxi, which is also included as part of China’s western regions and applicable tax incentives. Situated between Yunnan to the immediate west, and China’s wealthiest province of Guangdong to the east, lower costs in cities such as Nanning are likely to hasten Guangxi’s development as a processing hub for goods from Southeast Asia destined for Hong Kong, Shanghai and wealthy Southeast Chinese cities. This is likely to be further boosted following Guangdong’s cross-provincial high-speed rail network linking both sides of the Province together for the first time across the Pearl River. Canny investors seeking lower costs will take advantage of Guangdong’s infrastructure to get Guangxi processed products into more lucrative markets.


Guizhou, meanwhile, suffers from being inland, in addition to very mountainous, and it remains China’s poorest region. That said, it is highly forested, and is very eco-minded; its capital, Guiyang was the first city in China to issue a recycling law. It has both a vibrant aquatic and textiles industry, yet remains a market that is relatively difficult to export from. This of course has not helped investment, but Guiyang is relatively prosperous, competition is lower than in other cities, and green industries may find a welcome home there. It is also an exceptionally beautiful area of China – the nation’s largest waterfall is here and there is a strong domestic tourist attraction to the province.


Finally, Tibet is also part of the western regional tax incentive plan, and remains as enigmatic as ever. Traditionally a major trading hub between China and India, it is gradually reclaiming that position, but problems remain with difficult terrain, not to mention political considerations regarding a nervous India that is not especially keen to have well-developed Chinese infrastructure right on its northern border – and particularly so as China also claims the Indian state of Arunachal Pradesh as being “South Tibet.”


Another contentious point is China’s damming of the Brahmaputra River, part of which denotes the border between Tibet and India south of Nyingtri, and all of which eventually flows south into India itself. These are likely to defer any meaningful further development of the Nathu La Pass, the traditional trade route, anytime soon.


That said, Indian-Chinese trade is booming and grew by some 50 percent in 2010. However, it seems unlikely that Tibet will share in any of that commerce. Although what is happening is that the development of the Qinghai Rail into Lhasa is allowing better access to Mainland Chinese markets for Tibetan manufactured goods. This is now being further extended via Xigaze to Nepal linking Kathmandu directly to Lhasa and then on to China’s national rail network.


Tibet is also seeing new airports being developed and recently acquired its own airline, its first expressway, and has just opened its first commercial bank. This appears to have been enough to see the St. Regis Hotel chain, the luxury brand of Starwood, open a five star hotel in Lhasa recently.


Yet occasional unrest still surfaces, and issues with the Dalai Lama mean that politics and religion still need to be factored in as risk elements for foreign investors. But as I said many years ago, if foreign investors, who tend to be more culturally appreciative than Chinese investors, do not invest in Tibet, then China will. And that is likely to result in an increase in white tiled blandness, exactly the sort of development Tibet does not need. We discussed opportunities and developments in Tibet in this recent article.


Summary


Foreign investment in China’s western regions remains something of a mixed bag, although some tremendous opportunities have recently evolved. For Tibet and Xinjiang, in addition to the more remote areas of northern Yunnan, western Sichuan and southwest Gansu, attention to the regional political and religious stresses, many of them hundreds of years old, needs to be part of any risk assessment. However, for other areas, including the dynamics of Xi’an and its excellent engineering capabilities, Chengdu and Chongqing’s favorable central China positions, and the integration of Yunnan and Guangxi into the Free Trade Agreement with ASEAN, exciting potential remains, and will continue to develop.


Taking advantage of China’s tax and investment incentives therefore makes great sense while these areas are still on the upward trend. They will, of course, disappear when the central government considers them no longer necessary in order to attract FDI.


These then are my personal tips as far as the western region’s FDI hotspots by major city: Kunming (Yunnan), Nanning (Guangxi), Hohhot and Baotou (Inner Mongolia), Xi’an (Shaanxi), Chengdu and Chongqing (Sichuan). Others, especially in Xinjiang, I expect to catch up fast. Real estate in Kashgar, for example, has risen faster in value than any other city in China this year – all due to the new Free Trade Zone. Opportunities it seems, are available in all shapes and sizes, depending upon industry specifics.


Dezan Shira & Associates, in conjunction with China Briefing, has produced a series of guides to all of the regions, cities and provinces featured in this article, including demographics, regional GDP data, business and industrial overviews, addresses of free trade and development zones and details of available incentives. These are available, with descriptive links, below. Each of these cities of course are inland. This changes the investment dynamics in terms of logistics costs, which are fundamentally different from those on China’s coastal cities. China Briefing has written about this in some detail, and explains cost differences between coastal cities and inland locations in this recent issue of China Briefing magazine: Operational Costs of Doing Business in China’s Inland Cities.


Additional useful information may also be gleaned from the following articles: China’s Fastest Growing Provinces (five provinces, including Shaanxi and Inner Mongolia) and Heading for the Borders – Opportunities along China’s Frontiers, while a previous recent executive summary as to why foreign investors should consider West China is located here.


Available Incentives


As was spelled out in the recent tax circular, the tax incentives applicable to foreign investors interested in the Western regions are mainly within the encouraged industry sector, and are not, as some other sources have reported, a blanket 15 percent on corporate income tax. Accordingly, within all of these regions, the standard income tax rates apply (25 percent) – it is only when your business is involved in encouraged industries that the benefits kick in. We understand that the “Catalogue of Encouraged Industries in the Western Region” is still being created and will be issued shortly. As soon as it is, we will feature it here on China Briefing news. Investors with urgent requirements may contact us now for advice in order for us to take matters up directly as appropriate.


Other incentives also apply, namely an exemption of import duties on machinery for self use, and tax breaks for businesses investing in transportation, electric power, and water conservancy. We have also found in the past that local governments may also grant preferential rates for land use, and within the agricultural sector in particular.


Dezan Shira & Associates meanwhile continues to advise foreign clients on investments into China’s western regions, and as can be ascertained, have a great deal of experience and expertise in doing so. The firm can be reached for foreign investment tax, business advisory, establishment, and legal advice at info@dezshira.com.


[Chris Devonshire-Ellis is the founding partner and principal of Dezan Shira & Associates. The firm specializes in handling foreign direct investment into China, and maintains 12 fully staffed and licensed offices across the country. He may be reached directly at chris@dezshira.com.]


(Courtesy: China Briefing)

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