Editorial Notes

China's moves in stock market, Jokowi must speed up reforms, Japan's anti-cancer steps

Editorial Notes is a selection of editorials from newspapers in the Asia News Network (ANN).

1. China's stock market interference is a necessary move

China Daily/ANN

Chinese investors sit in front of a big screen showing stock market movements in a securities brokerage house in Beijing, China. PHOTO: EPA

The central government has made a series of new decisions to help arrest the recent speculative sell-off in domestic stock exchanges.

To the surprise of many, in the absence of any clear and present shock to the world's second-largest economy, the sell-off has already chopped the total market value of Chinese shares by about 30 per cent since its more than 10 trillion-yuan peak in early June.

Unavoidably, painful losses have been seen by some investors, especially those highly leveraged funds that used to be the most daring players in the market.

Too wild fluctuations are both unwarranted and unwanted, because they hurt small investors and may cause a panic and other complications that affect the state of the real economy.

Freezing new share offers and setting up a market-stabilisation fund are among the latest moves the government has taken to interfere with the market. Additional moves may still come along if they are deemed necessary.

Necessary as interference is, it will have to be temporary. It should not constitute a reversion in the market-oriented reform that China has maintained for the past 30 some years.

The stock market has a healthy role to play. Only, rules have to be clear and effective to prevent irresponsible risk-taking - under a more capable industry regulator.

In the long run, investors will need more, rather than fewer and more limited, investment instruments, to diversify their risks and the risk of the whole market. The reform plan that the Chinese leaders adopted, in all solemnity, in their Third Plenum in 2013, must be adhered to.

The current intervention can only serve to help the nation steer clear of a self-inflicted financial crisis and grow more mature in managing its financial market.

From its experience in dealing with the stormy fluctuations in the last few weeks, China can learn useful lessons and develop a better mix of government regulation and market incentives for its inevitable opening up to the global financial market in the coming years. The trillion-yuan losses in the value of Chinese shares is a price too dear for the country to pay twice.

After all, the mini-crisis in the domestic stock market is not a system failure. It is far from a failure of the Chinese economy. As the benchmark index remains 80 percent higher than a year ago, there is a good reason to believe that most investors will still see some encouraging returns in the end of the year.

2. Move before pessimism sets in the Indonesian economy

The Jakarta Post/ANN

Indonesia's President Joko Widodo, dressed in a military uniform, shakes hand with Din Syamsuddin, the chairman of Muhammadiyah at presidential palace in Jakarta. PHOTO: REUTERS

President Joko "Jokowi" Widodo consulted 11 economists this week, seeking their opinions on the nation's economic challenges and prospects as public pressure mounts for sweeping changes within his Cabinet's economic team.

The economic record of the Jokowi administration in his eight months in office has indeed been poor, with growth falling to an all-time low of 4.7 per cent (year-on-year) in the first quarter and the rupiah collapsing to as low as 13,500 per US dollar, the lowest since the 1998 economic crisis.

As the global economy remains sluggish, with Europe likely to suffer another bout of contraction and China - Indonesia's largest trading partner and largest source of investment - slumping to growth rates of less than 7 percent from the decade average of 10 percent, widespread pessimism seems imminent.

Most foreign analysts revised their projection of Indonesia's economy last month down to less than 5 percent , as the global economic outlook worsened and inter-ministerial cooperation within the Jokowi Cabinet falls into disarray.

Jokowi took over the government in late October with very high expectations and immediately demonstrated his political courage by raising fuel prices, slashing subsidies and redirecting the bulk of the expected savings into infrastructure investment.

However, his bold move turned out to be ill-timed; international oil prices declined, forcing him to lower domestic fuel prices later in February at the expense of the his government's credibility.

Given his popularity and impeccable integrity, the public has tended to give the Cabinet the benefit of the doubt, although the competence and managerial capability of most of the ministers nominated by parties of his coalition government are questionable.

But the public has increasingly seen the weaknesses of his leadership, rather than its strengths. As was clear from the outset Jokowi does not have a penchant for political grandstanding and he lacks public-speaking ability.

However, his desire to expedite public service delivery, especially to the poor, was greatly appreciated. We had hoped he would learn on the job.

But he has done virtually nothing to improve the communication of his political vision, and he still appears uncomfortable talking to the public, especially the media. This turned out to be one of the most glaring weaknesses of his administration, because effective political communication and reaching out directly to the people is vital to Jokowi, to cope with the legislative limits to his presidential power.

Worse, as most of his ministers seem to have been preoccupied with their own political agendas, they have not been able to offset the frailty of his leadership.

The President's promise of a big fiscal stimulus to accelerate infrastructure development has remained bogged down in bureaucratic inertia and incompetence. The disbursement of the investment budget during his first six months has remained at less than 10 percent of the total.

The President should show stronger leadership to speed up reform, improve the coherence of his policies and strengthen his economic team by assigning it a more capable leader.

Jokowi should draw more on his sources of legitimacy - his popularity, personal network of supporters, massive following on social media, support among many liberal opinion leaders .

 The coming six months will be crucial for Jokowi to show the people and international markets that he can manage Southeast Asia's largest economy. Failure to improve market confidence in his government will see the economy deteriorate further, risking political instability.

Our challenges are even more pressing, especially with the upcoming tightening of the US Federal Reserve's monetary policy.

A rise in US interest rates could trigger capital flight out of emerging markets, including Indonesia. The protection against these risks of reverse capital flow is to make the country more attractive to investment, and to re-energise stalled high-profile infrastructure projects to regain market confidence in the government's economic management credentials.

3. Japan's anti-cancer steps likely to miss goal for reducing death rate of patients

Yomiuri Shimbun/ANN

A nurse talks to a patient in a bed at Jukoukai Hospital in Tokyo, Japan. PHOTO: BLOOMBERG

One in every two people in Japan develops cancer. Measures must be bolstered to reduce deaths from the disease and alleviate the anxiety and pain of patients.

A council of the Health, LaboUr and Welfare Ministry has released a progress report on the five-year basic plan for promoting anticancer measures up to fiscal 2016.

The government has set a target of "reducing the death rate for cancer patients aged less than 75 by 20 percentage points over 10 years up to 2015." But the decrease will be held to 17 percentage points, according to an estimate in the panel report.

As a reason for this, the report cited the fact that the smoking rate has not decreased as expected and the medical examination rates for cancer have not risen as expected.

To reach the target, the smoking rate must be lowered to 12 per cent. This represents a big decrease from the 19.3 per cent rate recorded as of 2013.

Meanwhile, the medical examination rates for the top five cancers, including stomach cancer, have stalled at around 30 per cent to 40 per cent, falling short of the targeted rate of 50 per cent.

The survival rate five years after the onset of cancer has improved, but the disease remains the No. 1 cause of death.

Prevention and early discovery are the most effective measures against cancer. The government must follow through with efforts to educate the people on the need to quit smoking and have medical examinations.

In addition to efforts by municipalities and workplaces, education on the matter should be strengthened at school.

The report reveals that standard medical treatment has not prevailed sufficiently at medical institutions.

The health ministry has tried to enhance medical treatment levels and dissolve regional gaps by expanding core hospitals for cancer treatment.

But it has been found that even at such hospitals anticancer drugs were not administered after surgery for colorectal cancer in half of the cases in which they should have been used.

It was also found that anti-nausea drugs were not administered in 40 per cent of cases in which they should have been used along with anti-cancer therapy.

The National Cancer Centre - which is the core for cancer treatment - and cancer-related academic societies should develop more effective treatment methods and disseminate them through such programs as seminars for doctors.

Enhancement of palliative care, which is provided to relieve cancer patients from mental and physical stress, is a priority goal in the basic plan to promote anticancer measures.

The report points out that 30 per cent to 40 per cent of cancer patients have not been able to eliminate physical and mental stress sufficiently.

It is necessary to establish a system to support patients and their family members psychologically and in other ways even from the initial stage of treatment.

And it is essential to foster doctors and nurses who have expertise in palliative care and promote the assignment of such personnel to core hospitals.

Dealing with the increase in the number of elderly patients is also imperative. General medical treatments tend to impose an excessive burden on elderly patients who have chronic diseases and reduced physical strength.

For example, it is feared that hospital care worsens dementia. Establishment of treatment suitable for the elderly is called for.

4. IMF's review of Pakistan: Accurate or not?


A worker digs a hole for a high speed telecommunications line in Karachi, Pakistan. PHOTO: BLOOMBERG

The latest review of progress under the Extended Fund Facility Pakistan signed in 2013 tells us more about the International Monetary Fund than it does about Pakistan.

Despite serious weaknesses in the economy, the fund is content to pronounce that progress is "encouraging, thanks to strong performance under the programme".

Performance has indeed been strong - but only when viewed with one eye. Reserves have gone up, and the fiscal deficit is being brought down to manageable proportions.

At this point, though, the good news ends, even if the Fund has found plenty to spin out of this. Macroeconomic indicators are only the headline items in a country's economic performance; the real story lies in how these have been achieved, at what cost, and how things are faring beneath the headlines.

Falling exports, industry shutting down, collapsing investment, spiralling consumer spending, rising bank profitability even as advances to the private sector shrivel up, are all unhealthy signs for the real stakeholders in Pakistan's economic health.

But for external creditors, the only points of interest are the country's creditworthiness and its capacity to meet debt-service obligations.

And that is the only area in which the Fund has given the government's economic performance a clean bill of health, because that is the only area that the Fund really cares about.

Pakistan's case illustrates the dangers of an economic management philosophy whose number one priority is to keep foreign creditors satisfied.

Governments, when guided by such a philosophy, will produce absurd actions, such as basking in the approval of international credit rating agencies and multilateral lenders while gnashing their teeth at international NGOs and being suspicious of their motives.

The former are pampered stakeholders for our economic managers, and the government serves to please them, while the latter serve only the poor and vulnerable segments of the population who have little voice in policy circles.

Pakistan deserves better economic management than this, but looking to the IMF for support in bringing about any meaningful reform is increasingly appearing as an exercise in futility.

There is little evidence that the government has successfully increased recoveries in the power sector or broadened the base of taxation, but the fiscal house can be declared to be in order simply because the deficit is marginally within control.

Likewise with the quality of the growth, which is centred heavily on fly-by-night industries such as services and construction, while employment-generating industries continue to languish.

But the real challenge - an economy increasingly geared to serve the rich and offload the costs onto the poor - is the product of Pakistan's own political leadership over the years.

The present government is no exception.

The Fund review makes clear what to expect in the forthcoming fiscal year: more tariff increases to pay for the inefficiencies of the power sector, heavier taxation on those already within the net, and an anaemic attempt to expand the tax base.