Kia’s expansion challenges Hyundai

With popular new models, Kia Motors Corp. is continuing to expand its share in the domestic market posing a major challenge to its sister firm Hyundai Motor Co.

Hyundai’s mid-sized sedan Sonata has slipped yet further in the country’s bestselling car list in July, marking the second consecutive month of downward movement. 

In July, 8,469 Sonatas were sold on the local market, down 14.9 percent from the previous month. In addition, July was first time the current model’s sales have fallen under the 9,000 line since its launch last year.

With the changes, the Sonata was ranked as the third bestselling vehicle in the local market behind Kia Motors Corp.’s new mid-sized sedan K5 and the city car Morning. 

For the Sonata, last month’s fall in the rankings marks the second slip in as many months. In June, the first full month with the K5 available, the Sonata was knocked off the top spot to second place. 

Hyundai’s decline in the local market is not limited to the Sonata. 

Hyundai’s share of the local market stood at 50.8 percent for the first half of last year, but fell to 45.2 percent during the same period last year.

In contrast, that of Kia rose from the 31.1 percent recorded for the first six months of last year to 32.1 percent for the same period this year. 

U.S. urges int'l community to join forces in sanctioning N. Korea, Iran

The United States Tuesday called on the international community to join forces in sanctioning North Korea and Iran under U.N. resolutions banning arms sales and other illegal transactions, a news report said.

"It can't be just one part of the world but not another part of the world," State Department spokesman Philip Crowley was quoted by Yonhap News as saying.

"This has to be done effectively across the international community to have the effect that we want to and convince the leaders of Iran or North Korea to change course."

The news wire said Crowley's remarks came soon after the U.S. Treasury Department announced a new list of 21 Iranian companies and several Iranian officials for their alleged support of terror groups and transfer of weapons banned by U.N. resolution. 

The resolution was adopted in June in light of Tehran's failure to get rid of its uranium fuel, suspected of being used for making nuclear bombs, the news report said.

Robert Einhorn, the State Department's special adviser for nonproliferation and arms control who oversees U.S. sanctions on North Korea and Iran, said Monday Washington will soon list North Korean entities and individuals involved in trading weapons, luxury goods, counterfeit money, cigarettes, drugs and other illegal activities prohibited by U.N. resolutions adopted after the North's nuclear and missile tests early last year.

The U.S. currently blacklists more than 20 North Korean entities and individuals.

Washington has said it will establish "new executive authorities" to that effect and try to persuade the international community to voluntarily cut off ties with listed North Korean entities and individuals.

Barcelona creates confusion over Messi

Spanish La Liga champion Barcelona pulled a u-turn under pressure from promoters on Wednesday saying that Argentinean superstar Lionel Messi would play in a friendly against the K-league All-star team tonight.

The decision came just hours after Barcelona manager Pep Guardiola had revealed that Messi would not feature as he was fit enough to play.

However, following a meeting with Sport and Story, the local promoter, Barcelona sporting vice-president Josep Maria Bartolomeu issued a statement saying that Messi would after all play a role on tonight.
 

Oh vows to lead Seoul into world’s top 5 cities

A dream pursued aggressively, such as making Seoul one of the top five cities in the world, is a positive driving, said recently reelected Seoul Mayor Oh Se-hoon.

“Very few believed in me when I pledged four years ago to bring Seoul within the top 20 ranking, but our city nevertheless made it beyond expectations and even made it near to the top 10,” Oh said last week. “Now that we have laid down the city’s foundation as an advanced metropolitan capital and a sophisticated design city, the dream of attaining the top five ranking may not be that far off.”

The steps taken by Seoul City in recent years have won the heart of foreigners and will eventually influence the city’s reputation internationally, said Oh, who began his second four-year mayoral term on July 1.

“My strength as a reelected mayor is that I may effectively carry on with the policies of the previous administration and develop them even further,” he said.

“I pledged four years ago to realize a dream and acted upon it, so now I shall in my second term, only with a higher goal.”

Another challenging task which the mayor has to face is the G20 summit to take place here in November.

“There is no doubt that we need to deliver to the foreign visitors, especially the global opinion leaders, an impressive image of our city,” Oh said.

“However, unlike in the past, Seoul is fully ready to respond to this kind of international event and no longer needs to make a fuss about it.”

All the city and its citizens are to do is maintain and clean up existing facilities, and then add a touch of heartwarming hospitality, the mayor said.

What counts even more than the summit itself is how Seoul will upgrade itself into a truly global city afterwards, he said.

“In order to be recognized by its foreign visitors and residents, a city is to offer three major factors -- education, medical care and residence,” he said.

“The core in all of them is that the city’s guests should feel as respected as its domestic citizens.”

In his previous term, Oh suggested as the city’s theme “a clean and attractive city.”

For his second term, the motto was altered to “a city which feels like an old friend,” focusing on making newcomers feel at home.

“Under the former motto, we have greatly upgraded our capital into a clean and attractive city, which we may take pride in,” Oh said.

“Now that we have laid down the foundation, it is now time to take further steps and embrace the global society.”

Military struggles to curb sex crimes among soldiers

Soldiers receive CBR training.

The military is stepping up moves against sex crimes among soldiers following a series of recent sexual harassment cases involving ranking military officials.

It has set a special period from July 30-Aug. 31 to “stamp out” sex crimes in the military. It is also striving to enhance military discipline and educational programs against sex crimes, a military official said.



“Sex crimes are things that seriously damage the moral fiber of the military. We have stringently dealt with those involved in the sex crimes and have alerted (military units) against them to prevent the repeat of such cases,” the official said under condition of anonymity.

IMF and Asia: What’s next after G20?

As the global economy recovers, at the head of the pack with stronger than anticipated growth are the “emerging” countries in Asia. These countries have managed to withstand tough global economic conditions that nearly led to depression elsewhere, thanks to their resilient aggregate demand, sound policy fundamentals, and swift reaction to the crisis.

Much has changed since the Asian financial crisis in the late 1990s, which was characterized by sharp contractions in economic activity and even some social and political turmoil. While the IMF intervened at the time, its programs were later found to be too limited in scope, excessive in their conditionality, and inadequately designed to address immediate challenges.

This time around, the IMF has acted more forcefully, with institutional vigor that it previously never displayed. Specifically, it has established a new facility — the Flexible Credit Line — which provides countries with a sound track record potentially unlimited access to Fund resources. It has also upgraded its lending framework and has promised to better safeguard its members’ interests. The IMF has become the central international organization providing high-level advice to the G20 leadership. Through critical analysis and recommendations, the IMF has served as the foundation for collaborative official actions essential for containing the potentially devastating effects of the recent crisis. 

While the IMF’s new-and-improved responsiveness has appealed to several countries, almost no Asian nation has called on it for assistance. Singapore and Korea have preferred to seek support from the U.S. Federal Reserve in the form of bilateral currency swaps. In fact, Korea has proposed a new global swap regime that would allow countries to reduce their reliance on exports and thus reduce the need for precautionary reserves as well.

For their part, East Asian nations have launched the Chiang Mai Initiative Multilateralization — a $120 billion regional currency swap agreement between Korea, China, Japan and the 10 ASEAN members — which will establish an operational surveillance unit in Singapore by the spring of 2011. In other words, they have created an embryonic Asian Monetary Fund. The fact that the IMF is not more preeminent in Asia is symptomatic of regional preferences to pursue structural reforms of the international monetary system rather than incremental changes at the IMF’s institutional level. 

Increasing financial openness in Asia has brought considerable advantages in terms of additional funding opportunities for local companies. But it has also created new sources of vulnerabilities due to the pro-cyclical nature of international capital flows and contagion from financial crises experienced in other, often neighboring, economies. Korea and other Asian countries experienced this firsthand in the late 1990s and since then have embarked on the large-scale accumulation of foreign reserve assets to use as a buffer against sudden stops in international capital flows. Yet, because such reserve assets are mainly denominated in U.S. dollars, euro or other national currencies, their external value is exposed to unilateral policy adjustments that the respective issuing countries may want or need to make. This risk would be considerably reduced if countries could hold larger quantities of Special Drawing Rights as foreign reserves. As “synthetic” reserve assets consisting of a basket of major world currencies, they are typically less volatile than any given reserve currency issued by a particular country or area.

Any attempt to strengthen the role of SDRs in the international monetary system should first reinforce the link between SDRs and their issuing institution, the IMF, which, by virtue of its global regulatory role, should control the provision of SDRs based on global liquidity needs. Although theoretically this appeals to many analysts, it is not currently politically feasible since it presupposes stronger global governance. At the moment, any decisions on the issuance of SDRs, including the recent allocations endorsed by the G20, are in the hands of member countries. Since some of them are reserve-issuers, they do not feel the urgency in moving forward this agenda.

Another needed structural reform is the establishment of a multilateral forum for global surveillance where advanced and “emerging” economies could examine mutual economic policy spillovers on an equal or peer basis. This is where the most progress has been witnessed over the past couple years with the establishment of the G20 leader summits as the premier forum for international economic cooperation. The fact that the G20 has been elevated to this status undoubtedly reflects the desire of the U.S. and others to integrate the world’s most dynamic economies into a global framework. 

The forthcoming G20 summits in Toronto in June and in Seoul in November will feature a major discussion on the coordinated policy responses needed to put the global economy on a path toward “strong, sustainable and balanced growth.” What is historically significant with these forthcoming discussions is that they include all the systemically-important economies of the world, many of which are in Asia. Indeed, the very fact that these summits will unfold under the Korean chairmanship of the G20 is emblematic in itself.

However, the emergence of the G20 as the global surveillance forum competes directly with the IMF’s role as a forum for international monetary cooperation, which is set forth in the IMF charter. This leads to another much-needed structural reform in IMF governance. If the Fund hopes to boost its role in the international monetary system, it must modernize its governance and fill the void created by the current asymmetry between the role that rapidly-growing countries have in the world economy and the weight they are given in IMF decision-making, which still favors Europe and North America. 

Since many Asian countries are underrepresented at the IMF and feel little ownership in the institution, they hesitate to submit their economic policies to IMF scrutiny. Should they find themselves in need of international liquidity buffers to counter potential sudden shifts in global capital flows, the state of affairs at the IMF may incentivize these countries to directly approach the issuer of the main reserve assets, or the U.S. Federal Reserve. 

IMF reforms that represent enhancements at the institutional level but do not also take into account needed structural reforms of the international monetary system will not truly enhance the Fund’s position in Asia or improve its level of engagement in the region. Such reforms should hopefully feature on the agenda of world leaders soon.


By Domenico Lombardi

Domenico Lombardi is a nonresident senior fellow at the Brookings Institution and president of the Oxford Institute for Economic Policy. 

Lombardi serves as a managing editor of the World Economics Journal and sits on the Advisory Boards of the Bretton Woods Committee, the G20 Research Group, the G8 Research Group and the Institute for International Affairs. He is a member of the Board of Directors of New Rules for Global Finance and was previously a member of the Executive Boards of the International Monetary Fund and the World Bank.

Dr. Lombardi’s academic interests focus on the global economy and currencies, global governance, the G20, the G8, and the reform of the international financial and monetary system. His research has been published in several peer-reviewed journals and has been referred to in Congressional hearings and government reports. He is editor, with Kemal Derviş and Masahiro Kawai, of the volume “Asia and Policymaking for the Global Economy,” forthcoming from the Brookings Institution Press.

Governments resist BlackBerry’s spread

Research In Motion Ltd., maker of the BlackBerry smartphone, faces challenges to overseas expansion as developing countries tighten restrictions on mobile e-mail. 

The United Arab Emirates, home to Middle East business hub Dubai, said Sunday it may suspend BlackBerry e-mail services in October because of concern the devices could be used in crimes. The move comes days after an official in India said that country may ban BlackBerry e-mail use and reports that Saudi Arabia could take similar steps. 

“It’s a reflection of fears of cyber security and espionage that now extend to mobile phones,” said Ron Deibert, director of the University of Toronto’s Citizen Lab, who helped colleagues uncover a plot against the Indian government that involved computers in China. “It’s the type of thing that will become more common for RIM as they grapple with public policy and ethical issues in emerging markets.”

RIM, based in Waterloo, Ontario, is focusing on countries including India, the U.A.E., Indonesia and Brazil as a decade of North American expansion slows. Revenue from outside North America and the U.K. nearly doubled last quarter as U.S. sales, which account for a quarter of revenue, dropped 7 percent. 

For RIM, the pioneer in handheld e-mail devices, security is one of the main advantages it touts over competitors. All BlackBerry e-mails are handled by the company’s own enterprise servers, making the devices popular with companies and government officials including Barack Obama, who kept his BlackBerry after becoming U.S. president. 

Security concern 

Bianca Limwatana, a spokeswoman for RIM based in the U.A.E., said the company did not have any immediate comment and is working on a statement. Tenille Kennedy and Marisa Conway, spokeswomen for RIM in Canada and the U.S., didn’t return messages seeking comment. 

Encryption is an issue for some countries looking to beef up rules on information sharing in cyberspace amid concern BlackBerry devices could be used to coordinate a terrorist attack or try to bring down a government. 

In the U.A.E., where customers can buy Swarovski-crystal encrusted BlackBerry phones and leather Montblanc carrying cases, the government said it will suspend services it can’t monitor because of the potential for illegal use, according to a statement. BlackBerry’s Messenger, e-mail and Web browsing services will be halted from Oct. 11, the Telecommunications Regulatory Authority said. 

“Security concerns trumped commercial considerations,” Eckart Woertz, who manages the economics program at the Dubai- based Gulf Research Center, said of the U.A.E. decision. “They want to control ongoing telecommunications but can’t because of the way BlackBerry manages its data offshore.” 

‘Indispensable tool’ 

The decision means a “few hundred thousand” BlackBerry users in the U.A.E.’s 30 billion-dirham ($8.2 billion) telecommunications market may have to look for alternative services, Shuaa Capital PSC’s Simon Simonian said. 

“The BlackBerry has become an indispensable tool,” telecommunications analyst Simonian said. “Corporate users will have to migrate and find another data plan.”