Open sex couple: pay back scholarship, marry or get thrown out of family?

After a week’s euphoria of being in the limelight, the sex blog couple is now facing the hard reality. Alvin Tan has been summoned by National University of Singapore to a disciplinary hearing on Oct 31 and may have to pay back his scholarship while Vivian Lee has been given an ultimatum – marry Alvin or get thrown out of the family house.



PETALING JAYA: They have become outrageously famous in a week but the consequences of having a scandalous sex blog are starting to set in for Alvin Tan and Vivian Lee.

Lee, 23, may be kicked out of her family home after “Sumptuous Erotica”, the blog she shared with Tan, 24, made the headlines in several newspapers here and in Singapore.

“My mother gave me an ultimatum marry him or move out within a month,” she said, adding that she was “a little scared” about the prospect.

She had just graduated with a marketing degree from Multimedia University and is living in Johor Baru with her mother and elder brother.

Tan has been spending leave of absence from the National University of Singapore (NUS) by being with his parents here and his rented apartment in Kuala Lumpur. This leave is unrelated to the sex blog.

Lee said with the slim probability of marrying Tan, as both considered themselves young and not committed to each other monogamously, she might just end up moving in with him.

“I think she can depend on me. I think I can provide financially,” said Tan during a lengthy interview with The Star Media Group here yesterday.

Both said that Lee's distraught and widowed mother had been trying to contact Tan to rebuke him but he did not answer her calls.

“My mother also scolded me and pleaded with me to not give any more press interviews,” said Lee. “But I guess I'm going against that, too.”

As for Tan, an Asean scholar reading law, he faces possible expulsion from NUS besides having his expensive scholarship revoked after his and Lee's nude pictures and sex videos hogged the headlines in the republic.

But he said he did not see it as a “big thing” if the university sacked him and instead, appears to have set his sights on gaining more infamy.

Both Tan and Lee want to break into show business and did not rule out the possibility of becoming actors.

They also revealed that sharing the intimate photos and videos on the Internet were “a mutual idea”. It was Lee who coaxed Tan into capturing the nude clips of each other.

“We started taking the nude shots the second time we met up,” said Tan. “We were fooling around in a hotel in Penang while on holiday and she was totally naked.

“She asked me if I wanted to take her picture and I was game for it,” said Tan, who said he had not gone as far in sexual experimentation with his past girlfriends.

“Most are cowards. OK, I take that back. They are unadventurous,” he said, adding that calling oneself “adventurous” was self-serving.

“Doing things like bungee-jumping or skydiving is pretty standard stuff,” he said. “I want to hang out with people who have done things that are unprecedented.”

Catch the pre-recorded interview with the couple on Red FM (104.9) and Capital FM (88.9) at 2pm today.
Listeners in the Klang Valley can also tune in to Chinese station 988 FM (98.8) at 7.30am on Tuesday.

The Star media group's radio stations Red FM, Capital FM and 988 FM grilled sex bloggers Alvin Tan and Vivian Lee. Some of the topics include:


- How they met and his obsession with women named “Vivian”.
“Alvin has a fetish for the name Vivian. We met through a mutual friend on Facebook, and Alvin just added me.” - Vivian
-
- On recording sex videos.

“It is actually a lot more rehearsed. The more passionate sex that we have is not recorded. It is actually like work.” - Alvin

- What if it were their kids putting up sex videos?

“I wouldn't encourage them directly, but I will encourage them to develop whatever that they are talented or interested in.” - Alvin

- Does he regret any of this?

“We will only regret the things that we don't do. Twenty years from now, I will look back to my 20s and think that I was so awesome.” - Alvin

By REGINA LEE The Star/Asia News Network

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Japan ministers visit Tokyo war shrine amid anger from China, S Korea

Japan's transport minister Yuichiro Hata (centre) and other lawmakers visit the Yasukuni Shrine in Tokyo on Thursday. Photo: AFP



67 Japanese lawmakers, including two cabinet ministers, have visited the controversial Yasukuni Shrine in Tokyo.

The two cabinet members were Japanese Transport Minister, Yuichiro Hata, and Postal Minister, Mikio Shimoji. Their visit came a day after opposition leader Shinzo Abe’s visit to the shrine. The Yasukuni Shrine honours 2.5 million Japanese war dead, including 14 leading World War Two war criminals.

The shrine is seen as a symbol of Japan’s past militarism by its Asian neighbours including China and South Korea, who have condemned the Japanese politicians’ visit. China’s Foreign Ministry called on Japan to face up to the international community.

Hong Lei, Spokesman of Chinese Foreign Ministry, said, "China’s position on this issue has been clear-cut and consistent: we urge the Japanese side to reflect upon history and strictly abide by its solemn statements and pledges regarding historical issues, and face the international community in a responsible manner."

Two Japanese ministers were part of a cross-party group of lawmakers who visited a controversial Tokyo war shrine on Thursday, the day after opposition leader Shinzo Abe angered China and South Korea by paying homage there.

Dozens of parliamentarians were at Yasukuni Shrine as part of celebrations for Japan’s autumn festival.

Among the lawmakers were transport minister Yuichiro Hata of the ruling Democratic Party (DPJ) and postal reform minister Mikio Shimoji of DPJ’s junior coalition partner, People’s New Party, local media said.

Prime Minister Yoshihiko Noda has stayed away from the shrine and previously told his cabinet to do the same.

Opposition leader Shinzo Abe, a man well-placed to become Japan’s next prime minister, was at the Shinto shrine Wednesday, prompting criticism from China and South Korea.

China’s state media there said Abe’s visit would “further poison bilateral ties”.

“At such a delicate moment, Abe’s visit... has added insult to injury and dealt another blow to the already fragile Sino-Japanese relations,” the Xinhua news agency said.

“Provocative and short-sighted actions would harm the interests of Japan and its people,” it said, noting that already the “strained political ties have produced serious economic fallout for both sides”.

A South Korean foreign ministry spokesman expressed “deep regret and concern” that such a senior political leader and former prime minister saw fit to visit “a symbol of the Japanese war of aggression and militarism”.

Japan has spent the last few months at loggerheads with China over a group of islands in the East China Sea, and it is engaged in a propaganda war with South Korea over a long-standing territorial dispute involving a set of isolated islands.

Japan’s colonial rule over Korea from 1910 to 1945 is still a source of bitter resentment among older generations and Abe, who was elected president of the opposition Liberal Democratic Party last month, is already an unpopular figure here.

As prime minister in 2007, he enraged South Koreans by denying the Japanese military’s direct involvement in forcing women, many from the Korean peninsula, into sexual slavery during World War II.

The Shinto shrine in central Tokyo honours 2.5 million war dead, including 14 convicted Class A war criminals from World War II.

Visits to the shrine by government ministers and high-profile figures spark outrage in China and on the Korean peninsula, where many feel Japan has failed to atone for its brutal aggression in the first half of the 20th century.

Yasukuni Shrine

Yasukuni Shrine, located in Tokyo, Japan, is dedicted to over 2,466,000 Japanese soldiers and servicemen who died fighting on behalf of the Emperor of Japan in the last 150 years. It also houses one of the few Japanese war museums dedicated to World War II.The shrine is at the center of an international  controversy by honoring war criminals convicted by a post World War II court including 14 'Class A' war criminals. Japanese politicans, including prime ministers and cabinet members have paid visits to Yasukuni Shrine in recent years which caused criticism and protests from China, Korea, and Taiwan.

On August 15, the anniversary of Japan’s surrender in the second world war, two ministers – Hata and Jin Matsubara, the minister in charge of the issue of Japanese kidnapped by North Korea – visited Yasukuni.

By Agence France-Presse in Tokyo

No shame, just fame!

For most, what happens in the bedroom should stay right there. But for younger ones today, there’s no problem in proclaiming their most secret of trysts. What’s more, they can find fame – or infamy.



THERE are certain bodily functions and activities you keep private. You know, those functions that usually occur in privies and the bedroom.

But of late, the attitude is you don’t need to close and lock the door on such activities any more; rather, you invite an audience in.

For example, when South Korean rapper Psy sat on the loo with his pants down in his Gangnam Style video, early audiences gasped and giggled in embarrassment at the sight.

Subsequently, that scene has been repeated in countless parodies ad nauseam and the shock value is no more.

Similarly, while pornography has been around a long time, it was stuff that professional actors did for show but “normal” people didn’t. If you filmed it, it was strictly for private consumption.

Well, along came Facebook, which really should have been called Openbook because it provides space for people to share all sorts of things, including sexually explicit material.

The most disturbing aspect about Facebook, blogs and YouTube is the easy access they provide to an audience and therefore instant fame.

Narcissistic self-glorification without justification is almost the norm. That “I’m famous for being famous” mantra that is most identified with the Kardashians has infected millions around the world. It doesn’t matter what you do as long as it gets you noticed.

Which was what that National University of Singapore law student and his girlfriend did.

According to reports, the couple started innocuously enough. They met on Facebook and, like million of others, started posting photos of themselves.

Then they started taking nude shots of themselves and “After taking more and more photos, we started to want some sort of recognition for our work so we uploaded them on Facebook,” said Alvin Tan Jye Yee.

When those photos got flagged and removed by site administrators, Tan, 24, and Vivian Lee, 23, started an erotic blog last month showing photographs and videos of themselves having sex. Suddenly, they are famous and they seem mighty proud of it.

What has taken many aback is that, in the onslaught of publicity, they have responded with icy-cool insouciance that is as brazen as their postings.

It is this completely unrepentant attitude that stuns many – it’s so un-Asian, un-Malaysian.

Lee was quoted as saying that she was not worried whether her parents and family were upset – even though she said she got the “mother of scoldings” from them – nor what others thought of them. In fact, they would carry on as they enjoyed what they did.

Now these two young people are not aimless school dropouts with no future nor purpose in life: she is a business studies graduate and he is an Asean scholar which is no mean feat. One can assume these are bright young adults who knew exactly what they were doing when they did what they did.

Yet, one cannot help wonder: What the blazes were they thinking?

Did they really think it was all right to “star” in their own porn and make it public? Did they not think it was shameful and inappropriate behaviour? Did they believe that there was no stigma attached to their actions nor consequences to their actions?

From their responses, it appears that they really do think so: yes, it’s all right and dandy. And they could be right, as disturbing as the thought is to older folk.

Really, it is the older generation who are most flustered and shocked by the duo’s actions. The younger ones are generally blasé to it; after all, they have grown up on a diet of overt eroticism and sexuality that is all over MTV, the Internet, movies, graphic novels and manga.

For them, as old restrictions, mores and morals become increasingly ambiguous, the line between the sacred and the profane has blurred.

What’s more, to Netizens, what Tan and Lee did is nothing new. At most, there’s a bit of a novelty factor because they are Malaysians.

There is talk that the couple may be charged for breaking Singapore’s Films Act for producing and uploading porn and Tan might be expelled for breaching NUS’s students code of conduct.

Again, the couple have responded with indifference. Tan, a final year student, is reportedly on leave from NUS and has started his own firm which he said was “doing pretty well, so that’s actually my career plan anyway”.

Not only that, thanks to their erotic antics, Tan claimed they have been asked to endorse sex toys and lingerie by Singapore companies!

Indeed, Tan’s clearly articulated intention to leverage on their new-found fame – “We want Alvin and Vivian to become a household name, ... known for being a sexually open duo” – makes you wonder whether it was all carefully orchestrated by two wily people who know that this is the kind of publicity that can lead to quick and good money.

And because there is always the next scandal, the next shocking antic coming up on Facebook or YouTube, they will go from infamy back to anonymity by, say, next Monday.

So why worry, what was good for a Kardashian can be good for a Tan and Lee. Or put it another way: what is one person’s shame is another’s fame.

Comment by JUNE H.L. WONG

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A couple sex & private affairs make public, cheap show to no way!

A couple sex & private affairs make public, cheap show to no way!

Raunchy duo:

 

A Malaysian scholar in Singapore created cyber furore after he posted nude erotic pictures of himself and his girlfriend in his blog called Sumptuous Erotica.

Alvin Tan Jye Yee, 24, a National University of Singapore (NUS) law student, and his 23-year-old girlfriend Vivian Lee, also a Malaysian, had uploaded photos and videos of themselves in suggestive posts as well as having sex.

The blog has since been deactivated after both Tan and Lee came under heavy fire over their photos and videos, which have been deemed obscene.

However, both do not regret their actions.

The couple is said to be currently back in Malaysia and Tan has plans to go back to NUS in January to finish his law degree.

Tan had received an Asean scholarship in 2004 and attended Xinmin Secondary School and Raffles Junior College before entering NUS on an Asean undergraduate scholarship.

Tan and Lee had apparently met on Facebook and started their erotic blog after initially uploading their photos there.

“One day, we were fooling around and my girlfriend had the idea of taking nude photos.

“After taking more and more photos, we started to want some sort of recognition for our work so we uploaded them on Facebook but we blurred out the critical parts,” he said when interviewed by Yahoo! Singapore.

He added that they started the blog in September when their photos in Facebook were continuously being flagged and taken down by site administrators.

Tan also told Yahoo! Singapore that both he and Lee have been approached to endorse sex toys and lingerie by companies in Singapore.

The Singapore Straits Times reported that Tan might get into trouble when he returned to Singapore.

Quoting lawyer Bryan Tan of Keystone Law Corp, the daily said Tan might be hauled up for breaching the Films Act for producing and uploading the raunchy videos.

The lawyer also said Tan might have breached NUS rules and code of student conduct.

A NUS spokesman said it could not disclose if Tan was a student because the information was confidential.

The Straits Times also quoted Tan as saying: “What can (NUS) do? Terminate my scholarship or expel me? I can't say I will be fine with it, but if it happens, I can accept it.''

Meanwhile, Guang Ming Daily reported that Lee was unperturbed by the controversy she and Tan had created.

She said she was not worried the matter would upset her family and or about what her parents would think.

Lee said she and Tan did not care what others thought about them and would continue with their “activity” as they both enjoyed it. - The Star/Asia News Network

Vivian Lee defends postings of her erotic pictures and videos with boyfriend

By EDDIE CHUA  The Star/Asia News Network

Lee: ‘I cannot understand why people have to make so much fuss about this. It is our private affair’

 

PETALING JAYA: Vivian Lee, the woman who posted nude and erotic pictures and videos of herself and her boyfriend on their blog, has no regrets making her sexual life an open book.

“I see nothing wrong in posting the nude pictures and videos of our sexual relationship on the Internet. It was intended for the world to see how much we love each other. I cannot understand why people have to make so much fuss about this. It is our private affair,” she said.

Lee, 23, and her boyfriend of six months Alvin Tan Jye Yee, 24, caused a cyber furore when their postings on their blog Sumptuous Erotica became viral and was caught on by the Singapore media.

“To us, the pictures on the blog were a work of art. We are open-minded people and we just want to share this with the world. We want them to see how pretty it was.”

Lee said she failed to understand why people had different perceptions on Asians when they posted such images in cyberspace.

“It is all right for Westerners to do this but not Asians. This is double standard. I cannot understand why people have to judge us.”

She said Asians should not be too conservative but be open about their sex life.

“There is nothing wrong talking about or having sex. It is a normal thing between two consenting adults. There should not be any stigma when a couple wants to talk or be frank about this. I cannot understand why this has to be blown out of proportion and sensationalised.”

Lee, who is staying with her parents in Johor Baru, said they never anticipated their blog to become so prominent overnight.

“It was not done for commercial purposes. It was simply for fun and love. When we started the blog in September, we got a small following, mostly from Westerners. But three weeks into the postings and after more pictures and videos were uploaded, Singaporean and Malaysian Internet users got wind of it, and in less than two days, the site went viral, followed by exposure by the Singapore media.”

Lee said they had no choice but to shut down the blog due to pressure from their parents.

“My parents were upset when they found out about it in the newspapers. I got the mother of all scoldings.

“However, they are calmer now and have fully accepted my actions.”

Lee appealed to the media to leave her parents and family alone and stop harassing them.

“They have nothing to do with this. Please don't haunt them.”

Lee said she was unafraid to face the consequences of her actions.

She would continue to live life “as though nothing had happened”, she said.

“I don't care about what people think or say about me or their perception of who I am. I don't care if men stare or ogle when I am out in public. Neither am I embarrassed for being the girl in the erotic pictures and videos.”

Lee, who just finished her business studies and is now looking for a job, said the uproar would not stop her from continuing her relationship with Tan.

“Instead, this would make our relationship stronger,” said Lee, who planned to visit her boyfriend in Kuala Lumpur soon.

‘Porn’ blogger says he wants to keep doing it

By TASHNY SUKUMARAN, The Star/Asia News Network

PETALING JAYA: Erotic blogger Alvin Tan Jye Yee wants to continue having “a lot of sex” with partner Vivian Lee and he intends to keep recording the trysts.

He has absolutely no regrets about the furore the sex blog he shared with Lee has caused.

“We're going to stick together and have a lot of sex, and record it too,” he told The Star yesterday.

The Asean scholarship holder is currently under the spotlight for his raunchy images on the Internet, but neither he nor his girlfriend are frightened by the attention.

“My parents aren't really saying much about the morality of it they are more concerned I will be in trouble with the law or my university (National University of Singapore). They aren't saying, oh my gosh, this is so morally shameful,” said Tan.

The Malaysian couple also said they were keen to leverage off their fame and had set up a function on their now-blocked blog where fans can send them e-mail and be kept abreast of their lives.

“This is a critical period, and we intend to use this time to build a following. Perhaps we won't do videos and such anymore for public consumption, but we could be bloggers or endorsers. We want Alvin and Vivian to become a household name, a pair known for being a sexually open duo,” said Tan.

The couple revealed that they had received masses of fan mail, including propositions for sex from men and women.

Tan also brushed off the threat of legal action, saying he didn't believe they were “in much trouble legally”.

“People are advising us to lie low, to focus on getting lawyers or dealing with the National University of Singapore (NUS).

“But we are focusing on leveraging on this for more lasting fame,” said the NUS law student, adding that on Monday his blog had received over 100,000 visitors.

Tan, who is expected to face a disciplinary hearing by a National University of Singapore (NUS) board later in the month, said he was currently preparing for the encounter and would decide what to do afterwards.

“I'm surprised they gave me so much time to prepare. I'm just going to stand my ground. Everything I want to say, I've already said to the media.”

He admitted that although his life “did not depend” on staying at NUS, he would rather not face expulsion.

Tan said the couple intended to stay together for the foreseeable future, although they admitted

Porn blogger to face disciplinary inquiry

 Malaysian undergraduate Alvin Tan Jye Yee, who posted sexually explicit photos and videos of himself and his girlfriend on his tumblr blog, is facing a disciplinary inquiry.

A spokesman for National University of Singapore (NUS), where 24-year-old Jye Yee is pursuing a law degree under the Asean scholarship, reportedly said he had been served notice to appear before a board that will take appropriate action against him.

Jye Yee is not receiving scholarship funding as he is on leave of absence and has been advised to take down the offensive posts, the spokesman said.

Jye Yee and his 23-year-old girlfriend, Vivian Lee, who graduated from the Multimedia University (MMU) Malacca campus, have since removed their Sumptuous Erotica blog after coming under fire for posting erotic pictures and videos, including one titled Rape Play, and inviting public comment.

Faced with the prospect of losing his scholarship or even expulsion, Jye Yee told Malaysian media on Tuesday that he wanted to challenge social boundaries and test the limits, Sin Chew Daily reported today.

Said Jye Yee: "What can NUS do to me? Withdraw the scholarship or expel me?"

"I'm not saying I can't be bothered. If it happens (losing the scholarship or getting expelled), I can accept it. I have set up my own company. I have savings," he said, adding that he will return to NUS in January to finish his course.

Vivian, who told the media that she likes to go topless and aspires to become an "AV (adult video) star", said it was her idea to expose their sex life to the public.

She said unlike Jye Yee, none of her previous boyfriends dared to accept her idea -The Sundaily

Malaysia taps into the growing importance of the redback:Yuan

The Society for Worldwide Interbank Financial Telecommunication says yuan usage worldwide grew 15.6% between July and August this year.

MALAYSIA’S love affair with the yuan or renminbi is growing, and it is easy to see why.

For one thing, China’s economic clout is rising. It is now the second largest economy in the world, and with ongoing financial reforms by the Chinese government, the yuan is expected to eventually rise to match the country’s economic stature.

For another - and more importantly - China has, in recent years, been growing to be an increasingly significant trading partner to many economies in the world, especially in Asia, including Malaysia.

Bilateral trade between Malaysia and China, for instance, is now seven times higher than it was 20 years ago.
And China has emerged as Malaysia’s largest global trading partner since 2009.

Last year, Malaysia’s total trade with China was valued at RM167bil, up 14% from the preceding year, and accounting for 14% of the country’s total trade.

The Government expects the value of Malaysia’s total trade with China to double in the next five years.

China’s rising prominence, in Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz’s words, presents “a new operating environment” that requires “dynamic response”.

At a recent seminar entitled “Renminbi Trade Settlement and Investment”, Zeti said one of the changes that would shape the international financial system in the years to come was the wider role of the yuan in trade and finance.

As it is, such trend is already taking shape, with yuan usage across the world increasing progressively.

Wider yuan usage 

According to Society for Worldwide Interbank Financial Telecommunication (SWIFT), yuan usage worldwide grew 15.6% between July and August this year, compared with an average decrease of 0.9% across all other currencies. SWIFT further noted the yuan has moved up one position to be the 14th mostly used world currency, with a market share of 0.53%, up from 0.45% in July 2012.

Standard Chartered plc’s report supports claims that the global use of yuan is on the rise, for trade settlement, in particular.

The international bank notes that Asian and European firms, led by those from Singapore and London, are increasingly open to using yuan.

“We see many European and Asian clients shifting away from settlement in US dollars,” Standard Chartered’s Hong Kong-based foreign exchange analyst Eddie Cheung wrote in his report.

Reports by foreign media suggest that yuan trade settlement could run between US$350bil and US$450bil this year, up from US$300bil last year.

It is understood that China is also quietly working on developing new yuan financial centres around the world to expand the international use of the currency.

At present, Singapore and London are the only cities outside Hong Kong that have been allowed to serve as yuan trading centre. China is reportedly planning for the next regional hubs for settling trade deals in yuan to be set up in Latin America and the Middle East.

As part of an initiative to encourage a wider use of its currency and to manage volatility in uncertain economic times, China has been actively seeking to establish ilateral swap agreements with foreign central banks since the onslaught of the global financial crisis in 2008.

To date, China has managed to set up 20 bilateral local currency swap agreements, worth a total of 1.6 trillion yuan (RM780bil), with central banks of countries within and outside of Asia.

This list includes Malaysia, South Korea, Iceland, Argentina, Pakistan, the United Arab Emirates, Turkey and Australia.

China’s bilateral swap agreement with Malaysia is worth 180 billion yuan.

Zeti notes that Malaysia’s trade settlement in yuan is still at a paltry 1% of the country’s bilateral trade with China. “There is, therefore, a significant potential for this to increase,” she says.

Bank Negara is currently on a mission to promote a wider use of yuan for trade settlement and investment among Malaysian corporations as a way to generate cost savings and minimise exchange rate risks.

“A wider use of yuan is only a natural progression, led by China’s rapidly expanding trade volume and its increasing role as the driver of global economic growth,” explains RAM Holdings Bhd group chief economist Dr Yeah Kim Leng.

“For Malaysian businesses with yuan obligations, the shift to the use of yuan will provide a natural hedge and help them reduce risk and lower cost,” he adds.

According to Zeti, Malaysia’s interest in yuan is also notable in the investment option, with yuan deposits in the country’s banking system having tripled within the first seven months of this year.

Focus on Dim Sum bonds

Meanwhile, there is also an ambition to promote Malaysia as the next hub for yuan-denominated debt (or popularly known as “Dim Sum bonds”) in Asean after Singapore. This is led by the growing interest in raising financing in yuan to meet funding requirements.

“Malaysia is well-positioned to realise this growth potential in yuan-denominated bond and sukuk, given our market size and supporting infrastructure,” Zeti argues.

She, however, says the number and timing of yuan-denominated bond and sukuk issuances will depend on the approvals of Bank Negara and the Securities Commission.

To date, there are only two issuances of offshore yuan-denominated sukuk out of Malaysia and a yuan-denominated bond issuance by Malaysian corporations.

“Ultimately, the potential of Malaysia of becoming a regional yuan debt hub will have to be led by natural market forces, that is, supply and demand,” Yeah points out.

At present, Europe, led by Luxembourg, outstrips Asia (excluding Hong Kong) in terms of both the number of issues and the number of issuance locations.

Analysts, however, believe Asia (excluding Hong Kong) will soon catch up.

Anchor currency

According to the Asian Development Bank (ADB), the yuan will eventually become the “anchor currency” for Asia.

This destiny is cemented by the growing use of the currency in the region’s trade and financial markets.

This, however, does not necessarily mean that the yuan will become part of the foreign exchange reserves of Asian countries, most of which still hold US dollar, euro and the Japanese yen, says ADB. Rather, it means that countries that use yuan widely will manage their currencies according to the yuan’s movement.

The consensus view is that there is still some way to go before the yuan can become a reserve currency. That will involve further openness of China’s own financial markets.

At present, the yuan has yet to qualify as a reserve currency due to its lacks of full convertibility as defined by the International Monetary Fund.

Nevertheless, many central banks have already started to diversify their reserves into the yuan. One of these is Bank Negara, which became the first central bank in the world to announce the inclusion of yuan in its foreign reserves in 2010.

It has been five years since China embarked on a plan to internationalise its currency.

Analysts argue that the process of internationalising the yuan is already progressing smoothly, but gradually in a managed way.

In their working paper entitled “Will the renminbi rule?” authors Eswar Prasad and Lei Ye argue that although China still has extensive capital controls in place, they are being “selectively and cautiously dismantled”.

“China’s capital account is becoming increasingly open in actual terms even though by this measure it remains less open than those of the reserve currency economies – the euro area, Japan, Switzerland, the UK and the United States,” they argue.

According to CIMB Research chief economist Lee Heng Guei, China has taken small yet quite successful steps in its quest for internationalisation of the yuan.

However, he says, full-fledged internationsation of the yuan is a still a distant goal.

“China is clearly more influential than in the past and the internationalisation of the yuan has sped up. But it will take many more years, perhaps another five to ten, for the yuan to be fully global and convertible,” Lee argues.

Undervalued or not?

Now, China’s currency policy has for long been a contentious issue with many western developed nations, especially the United States. There has been growing political pressure on China, led mainly by the United States, to increase the value of the yuan.

The United States has been arguing that the yuan is significantly undervalued, hence giving China’s exporters an unfair price advantage over US manufacturers.

The undervaluation of yuan, which, to some, warrants China being tagged a currency manipulator, has even become an important scoring point in the current US presidential campaign between Republican candidate Mitt Romney and incumbent Barack Obama.

A semi-annual report on the yuan by the US Treasury is due to be released on Monday.

It remains to be seen whether the release of the report will be delayed until after the Nov 6 US presidential election, given the political sensitiveness of the issue.

To be fair, since the yuan’s depeg from the US dollar in July 2005, the Chinese currency has appreciated more than 30% against the greenback.

And reaffirming its policy stance of further exchange rate flexibility, the Chinese government in April widened the trading band from +/-0.5% to +/-1% for the yuan against the US dollar.

Peterson Institute for International Economics estimated the yuan four years ago was undervalued by 31.5% against the US dollar. The latest estimate by the Washington think tank in May indicates that the yuan is now undervalued by only 7.7% against the greenback.

CIMB’s Lee contends that the yuan’s appreciation has to be a gradual and longer-term affair to avoid disrupting China’s economic development.

“The gradual and consistent yuan appreciation can be considered a stabilising factor for the (Chinese) economy, especially its export-oriented sector,” he explains.

According to the Royal Bank of Scotland, the yuan’s value is unlikely to change much in the short term, but further medium-term appreciation on account of productivity catch up remains a possibility.

“If the global economic outlook improves in 2013, the yuan is likely to see further medium-term strengthening, with the pace depending on current account developments,” RBS’ Hong Kong-based analyst Louis Kuijs notes.

By CECILIA KOK
cecilia_kok@thestar.com.my


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