KUALA LUMPUR: All companies engaging in digital assets will have to make themselves known to the Securities Commission (SC) by Friday, even if they have decided not to carry on once the regulatory framework comes into force.
This includes operators who are not registered with Bank Negara under the anti-money laundering and counter financing of terrorism – digital currencies (sector six) and those operating “underground”.
The SC will reserve the right to take action against those who fail to identify themselves by Friday on grounds of breaching the securities law.
SC innovation, digital and strategy executive director Chin Wei Min said those who have identified themselves to the commission can operate up to March 1.
“Even if they don’t want to be in this business anymore, whatever they are holding, whether it’s money, crypto assets or digital assets, should be returned to their clients. Otherwise, we will take action.
“The reason we also allow people to continue with their withdrawals and sell down is to ensure that there is an orderly market.
“The last thing we want is to cause confusion, and hopefully, there are no untoward fraudulent activities that people will capitalise on in this transition period and take advantage of investors,” he told a media briefing here yesterday.
While the regulation does not affect operators who are not incorporated in Malaysia, the SC can still take action against them under the Capital Markets and Services Act 2007 if the products are marketed, sold, or its operations exist in Malaysia.
Operators who identify themselves to the SC must state their intent, whether they want to resume their activities, of which certain obligations have to be met, or whether they want to wind down their business.
The SC will put up a list of operators and companies that have registered and received a letter from the commission for investors to check if their monies are with legitimate sources.
Chin also reiterated that operators are not allowed to accept new investors, list new products or conduct any sales and marketing activities during this period.
A statement by the SC last Thursday said platform operators would not be allowed to accept new investors and are only allowed to facilitate the withdrawal or transfer of client assets with the written instruction of investors.
They are also not allowed to conduct any initial coin offerings (ICOs) without prior authorisation.
Chin called on all ongoing ICOs to cease activities and the monies or digital assets to be returned to investors until the operators apply for authorisation and after they understand the SC requirements.
The guidelines are expected to be released by the end of the first quarter this year.
“If you are looking at the ones that are out there currently, the standards of the white paper are of low quality. It is important that this falls under regulated activity.
“We recognise that this is an alternative fundraising avenue. The idea here is to allow us to take out all the scams and fraudulent activities and at the same time, provide a platform for our early stage entrepreneurs to raise money,” said Chin, adding that the SC did not want people to take advantage of this as investors are pumping in money on the other end.
This is a high-risk investment and Chin also hinted that there could be a certain threshold for investors.
The Capital Markets and Services (prescription of securities) (digital currency and digital token) order 2019, which kicked in last Tuesday, will see those operating unauthorised ICOs or digital asset exchanges facing up to a 10-year jail term and up to a RM10mil fine.
The Finance Ministry said it viewed digital assets as well as its underlying blockchain technologies as having the potential to bring about innovation in both old and new industries.
Malaysian Securities Commission to weed out virtual scams
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Why Huawei’s 5G technology is seen as a threat by the US
The term 5G stands for a fifth generation — to succeed the current fourth generation of mobile connectivity that has made video sharing and movie streaming commonplace.
The new technology will require an overhaul of telecommunication infrastructure.
The 5G will do more than make mobile phones faster — it will link billions of devices, revolutionising transportation, manufacturing and even medicine. It will also create a multitude of potential openings for bad actors to exploit.
The vulnerability helps explain the rising tension between the US and Huawei Technologies Co, China’s largest technology company.
Huawei is pushing for a global leadership role in 5G, but American officials suspect that could help Beijing spy on Western governments and companies.
“Huawei’s significant presence in 5G creates a new vector for possible cyber-espionage and malware,” Michael Wessel, a commissioner on the US-China Economic and Security Review Commission that advises Congress, said in an interview.
By connecting whole new classes of products, 5G “creates new vulnerabilities”.
The technology holds great promise. Forests of gadgets will communicate instantly via millions of antennas. Cars will talk to each other to avert lethal crashes, factory foremen will monitor parts supplies and doctors can perform remote surgery as video, sound and data flow without delay.
Connections will be 10 to 100 times faster than current standards — quick enough to download an entire movie in seconds.
Yet, US national security officials see billions of opportunities for spies, hackers and cyber-thieves to steal trade secrets, sabotage machinery and even order cars to crash.
Citing security threats, the US has been pushing allies to block Huawei from telecommunication networks. The US Congress has banned government agencies from buying the company’s gear.
Why is the United States intent on killing Huawei? Look at the data below:
Huawei employs more than 10,000 Phd degree holders as well as many talented Russian mathematicians.
Do you know how many Huawei employees earn more than 1 million yuan (RM603,280) a year? More than 10,000 people.
Do you know how many Huawei employees earn more than five million yuan a year? More than 1,000 people!
In China alone, Huawei’s research and development expenditure is 89.6 billion yuan.
Among the Big Three, Alibaba employs 30,000 people, Baidu 50,000, Tencent about 30,000, leading to a total of 110,000; but Huawei’s global employees total 170,000.
Alibaba’s profit is 23.4 billion yuan, Tencent’s 24.2 billion yuan, Baidu’s 10.5 billion yuan, and their profits total 58 billion yuan, but 70% is taken away by foreigners. Since 2000, Huawei has earned 1.39 trillion yuan from abroad.
In taxes, Tencent pays more than seven billion yuan a year, Alibaba 10.9 billion yuan, and Baidu 2.2 billion. Huawei pays 33.7 billion yuan, which is more than the total of the earlier three firms.
Huawei is a high-tech company, and technology represents the true strength of a country.
In China, many companies can’t last long because there are always other companies ready to replace them, but Huawei is irreplaceable.
Huawei is a 100% Chinese company that has not been listed and does not intend to go public because of the susceptibility to be controlled by capital (which the United States can simply print money to do).
Huawei is the first private technology company in China ever to join the league of the world’s top 100. The Chinese should be proud of Huawei.
FMT News
Koon Yew Yin is a retired chartered civil engineer and one of the founders of IJM Corporation Bhd and Gamuda Bhd.
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China’s private companies reaching for the stars
SATELLITES have become the latest gold mine or private companies in China as they rush to reach for the stars in the space sector.
The country’s satellite industry, which used to be dominated by state-owned enterprises, is gradually changing and opening to private players.
More than 90 Chinese start-ups, mostly focused on satellites or rockets, have taken their first steps in the space industry in the past four years, a senior industry expert from a Beijing-based satellite startup, who wished to remain anonymous, told China Daily based on the start-up’s internal research.
“It means that on average, nearly two startups were founded every month in the past four years in China. It is significant if China is to grab a slice of the cake from the global competition in the budding space industry,” he said.
According to The Space Report 2018 issued by The Space Foundation, the total market of the global space economy was US$384bil in 2017, a year-on-year increase of 7.4%. Of that, commercial activities accounted for more than 80%.
Industry experts pointed out that China only accounts for 3%-5% of the space economy globally, but the country is gaining ground fast in terms of both scale and technology.
Since 2014, Chinese authorities have launched policies and called for private players to actively participate in the country’s space industry.
Earlier, the National Development and Reform Commission, along with the Ministry of Finance and the State Administration of Science, Technology and Industry for National Defence, also unveiled a 10-year blueprint to promote the commercial space sector.
LinkSure Network, a Chinese free internet access provider, announced a plan in November last year to launch China’s first Wi-Fi satellite in 2019.
It aims to send 272 satellites into space to provide free Wi-Fi globally by 2026. The first batch of investment will hit 3 billion yuan (US$447mil).
Similar to Elon Musk’s Starlink plan, the satellites will be used to expand internet coverage and boost internet speeds, the Shanghai-based internet firm said.
“The starting point of such a plan is to offer free internet connections to people around the world, especially those in underdeveloped areas or rough terrain,” said Wang Xiaoshu, rotating president of LinkSure Network.
The company, founded in 2013, became a unicorn – a startup valued at more than US$1bil – in 2015 by raising US$52mil in its A-round of financing.
“Satellite connection will be a great supplement to the ground network. The ground network, which relies on stations, has limitations due to, for example, weather and land form,” said An Yang, chief scientist of LinkSure’s satellite project.
“On a global scale, the number of satellites is far from meeting the huge demand for communication. The future of the communication sector must be a combination of space and ground,” he said.
Under the plan, revenue will come from services to high-end users as well as those provided to areas that the ground network is unable to reach, An said.
The space era: In this undated photo, An Yang, chief scientist of the satellite project at LinkSure Network, introduces the company’s satellite system at a news conference in Beijing. — China Daily
LinkSure is not the first. A string of startups have sent satellites into space for different purposes.
For instance, Guoxing Yuhang Co Ltd, or ADA Space, a private firm based in Chengdu, Sichuan province, launched two artificial intelligence satellites at the end of last year.
Though the country’s internet giants have not directly announced plans to develop, produce or launch satellites, they are showing a desire to do so.
Tech conglomerate Alibaba Group launched a communication satellite to support its online shopping gala last year while Baidu chief executive officer Robin Li said earlier that he hoped more support could be given to private companies in the civilian space segment.
Another tech giant Tencent Holdings Ltd has also jumped on the bandwagon by investing in US startup Moon Express, which was founded in 2013 by a group of space entrepreneurs.
The US startup is looking to profit from the commercial space sector through leveraging core technologies including using drones to mine asteroids.
Compared with state-owned companies, private firms are better at commercialisation including attracting and using money and resources, which will greatly improve efficiency, said Yang Feng, chief executive officer of Spacety, a commercial aerospace company specialising in developing commercial micro and nano satellites.
“It is also a promising area that state-owned and private space companies can supplement and co-operate with each other,” he added.
Notably, some private players have also entered the overseas market. China Communication Technology Co Ltd in Shenzhen, a satellite-based communication services provider, has been beefing up its overseas presence to exploit foreign opportunities.
“We aim to extend our business to Africa this year and will tap into one or two Belt and Road economies each year,” said Wu Guangsheng, president of CCT.
CCT is currently offering services and products in the US, Europe, the Middle East and nine other countries and regions that are participating in the Belt and Road Initiative.
In 2017, its overseas revenue was about 9 billion yuan, which made up more than 60% of the total.
It also plans to further explore South-East Asian markets including Indonesia, Malaysia and the Philippines, and promote its products in Central Asian economies such as Kazakhstan.
Last year, the company entered the Philippines by acquiring G Telecoms Inc, the third-biggest telecom operator in the local market.
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Bytedance, World’s Most Valuable Startup Is Home to a Complex Fortune
Ownership structure used by Zhang Yiming is popular in tech
Chinese authorities will soon allow so-called VIEs to list
The 35-year-old founder of Bytedance Ltd. is worth about $13 billion, according to the Bloomberg Billionaires Index, making him China’s 9th-richest person and one of the fastest in modern times to amass a mega-fortune.
The business, founded in 2012, has more than 1 billion active monthly users across eight mobile apps, including a news aggregator powered by artificial intelligence and a video-sharing platform.
Zhang is the youngest self-made billionaire in Asia on the Bloomberg index, which tracks the world’s 500 richest people. His rapid wealth accumulation is a sign that China hasn’t lost its knack for creating mega-rich company founders despite a slowing economy.
His rapid wealth accumulation -- he’s now the world’s 98th-richest person -- is a sign that China hasn’t lost its knack for creating mega-rich company founders despite a slowing economy. It also helps explain why authorities seem to be taking a more tolerant stance toward a corporate structure favored by the country’s technology tycoons, most of whom have chosen to list their businesses overseas.
Zhang’s fortune is harder to calculate than the founders of Baidu Inc. and Tencent Holdings Ltd. in part because his company isn’t yet public. It’s also difficult because Bytedance is structured in the same way as the two tech behemoths -- a complicated ownership system known as a variable interest entity (VIE).
Of the 44 Chinese tycoons on Bloomberg’s wealth index, eight are tech moguls with VIEs listed outside China. The billionaires’ combined net worth exceeded $150 billion as of March 21, and their stakes weren’t publicly known until the companies filed with regulators ahead of going public in New York or Hong Kong.
VIEs have never been formally endorsed by the Chinese government. But in an acknowledgment of their importance, officials will soon permit VIEs to go public in the country, allowing them to list on a new technology-focused exchange set to launch in coming months.
Complex Structure
Bytedance is, for now, a closely held VIE with a complex structure that involves layers of holding companies.
Its main business, Jinri Toutiao, is ultimately owned by Zhang and Bytedance Senior Vice President Zhang Lidong through a Beijing-registered holding firm, according to China’s National Enterprise Credit Information Publicity System.
Zhang pledged his 98.8 percent stake to another Beijing company, which in turn is owned by a Hong Kong-registered firm. That entity, where Zhang is a director, is owned by a company registered in the Cayman Islands. The principals won’t be disclosed unless there’s an IPO prospectus.
The Bloomberg Billionaires Index calculated Zhang’s net worth by pegging his stake at 65 percent and using the company’s valuation of $20 billion, a figure provided in 2017 by people with knowledge of the matter. The analysis assumes his stake has been diluted through funding rounds.
Bytedance is said to have secured a $75 billion valuation in late 2018, making it the world’s most valuable startup -- though the figure isn’t used in the net worth calculation because the details haven’t been confirmed.
Yin Ai, a Bytedance spokeswoman, declined to comment on Zhang’s wealth or the ownership structure.
Zhang uses a VIE because Chinese regulations limit foreign investment across more than 30 sectors including the internet, telecommunications and education. The VIE structure -- which allows offshore companies to control domestic Chinese businesses through contractual agreements -- circumvents the rules and allows, for example, Baidu’s holding company to be based offshore (and list in the U.S.) while still being a dominant force in China.
Internet giant Sina Corp. pioneered the VIE model so that it could transfer income from onshore operating businesses to an offshore holding company, an arrangement that meant the Cayman Islands entity could list on the Nasdaq Stock Market in 2000.
There are risks to the structure for foreign investors, said Donald Clarke, a specialist in Chinese law at George Washington University.
“A contract entered into for an unlawful purpose is invalid under Chinese law,” he said. “Any time the government wants to pull the plug, it can.”
Still, that hasn’t stopped more than 100 companies using VIEs in offshore IPOs, according to research by Zhou Fang, a Beijing-based partner at law firm JunHe LLP, who predicts that more companies will follow.
That growth helps explain why authorities are slowly embracing VIEs. Earlier this month, China enacted a foreign-investment law that allayed investor concerns about the future of such companies, while unicorn VIEs will be able to list on the new exchange in Shanghai, known as the Tech Board.
“To some extent, it shows the government easing concerns over VIEs -- but they still care about who’s the ultimate controller of the company,” said Zhang Biwang, a partner at Allbright Law Offices. As long as the controller of the company remains a Chinese citizen, “the government won’t shut their eyes and ignore reality to make the companies give up VIEs.”
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Steep learning curve
Unfazed, this mass comm graduate overcame all kinds of challenges to make it in business.
SAMANTHA Mah did well on her first business venture but suffered a loss on her second. However, failure did not deter her and her two partners from moving on. They gave it another go until they could see the fruits of their labour.
Mah worked as a company administrator and voice talent for radio commercials before she decided to venture into business.— aNis aBdullah/The star
Mah’s first business received an investment of RM10,000 from her sister, Natasha, 37. She and two investor-partners started an online boutique targeted at young women. After one-and-a-half years, business picked up and was quite good.
Mah, 30, is the youngest in her family. She has two elder sisters and a brother.
Mah, Natasha and a friend Jason Leong, 31, started their trading company on March 8, 2011. Just four months later, it incurred a big loss, prompting them to change the products they were selling – from peanuts and sesame seeds to edible organic products.
A mass communication graduate from Universiti Tunku Abdul Rahman (UTAR) in Selangor, Mah had worked part-time as a company administrator and voice talent for radio commercials before she venturing into business. She is now the marketing manager/managing director of her company.
After starting Wide Tropism Trading, she passed her online boutique business to a friend.
One of the biggest challenges for Mah, at the beginning, was that neither she nor her partners had a corporate background.
“We handled matters based on our experiences. Sometimes we had to ask friends for advice.
“In the first few years, there were lots of arguments,” she said.
Mah is glad that her relationship with Natasha survived those trying times.
As part of the company’s costcutting measures, each of them had to take on more responsibilities in various departments.
“There were too many things on my plate – human resource, accounts, design and marketing – and I was suffocating. But we did not have enough (finances) to hire staff,” said Mah.
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华为不惧美国封杀 美式霸凌失道寡助！Huawei’s goodwill gesture being treated unscrupulously by the US !
Huawei is a commercial company, and the use of its products is a choice for consumers based on their likes and should not be linked to politics, said Ren Zhengfei, founder and president of Huawei Technologies Co. Ltd. on Tuesday.
Ren made the remarks after the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce put Huawei and its affiliates on an "Entity List," which would restrict the sale or transfer of U.S. technologies to the company. The ban has triggered opposition from markets worldwide.
Huawei maintains mass production capacities for specific key components, including chips, and the U.S. ban will not result in negative business growth, Ren told reporters.
The telecommunications giant projected slower but positive growth this year.
Huawei posted a 39 percent year-on-year revenue growth in the first quarter of the year. The growth has slowed slightly in the second quarter, but the slowing will not hurt the company, Ren said.
"Huawei had made preparations for the extreme situations even before the Chinese Lunar New Year," he said.
He noted, however, that it would not reject the U.S. supply chain, citing Huawei's announced purchase of 50 million chips from Qualcomm in 2018.
"As long as the U.S. government allows U.S. companies to export the components, Huawei will continue to buy while sticking to its own research and development," he said.
Ren said he appreciated the support of a large number of U.S. components suppliers over the years, and they are also lobbying for the easing of U.S. government-imposed restrictions.
He said Huawei is also in talks with companies like Google for potential remedy solutions, he said.
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Jack Ma Ends 20-Year Reign Over Alibaba Wealth Creation Empire
Jack Ma ends 20-year reign over Alibaba wealth creation empire
Tearful Jack Ma bids Alibaba farewell with rock star show
Alibaba set for ‘big challenge’ as flamboyant chairman Jack Ma departs
Alibaba set for ‘big challenge’ as flamboyant chairman Jack Ma departs
New era at Alibaba as Jack Ma rides into the sunset
New era at Alibaba as Jack Ma rides into the sunset
Alibaba co-founder Jack Ma retires as CEO on 55th birthday
https://youtu.be/jzYqD2-GRWU
As Alibaba founder Jack Ma retires, a look at how he built the $460 bn ecommerce empire in China
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Why China can take a lead in 5G and AI technology application
China is among the world’s first countries to apply 5G to business services. China’s telecommunications guides the global 5G-technology trend. An open China is becoming the “playground” for global AI businesses and a key landmark for a joint exploration of AI’s direction of end development. Check out this video and have a look at why China can take a lead in 5G and AI technology application.
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China’s new digital currency
With internet technologies advancing and cryptocurrencies flourishing amid a broad digital transformation, individual countries are starting to issue legal tender in digital form, and the People's Bank of China (PBC), the country's central bank, is also accelerating its pace in this area.
As of Sunday, the PBC had applied for 74 patents involved with digital currencies to the National Intellectual Property Administration, according to a report by the Economic Information Daily on Monday.
The PBC said it will speed up the development of legal digital currency on Friday.
Wang Xin, director of the PBC Research Bureau, said in July that the authority is organizing market-oriented institutions to jointly research and develop a central bank digital currency and the program has been approved by the State Council, China's Cabinet.
"China is beefing up efforts in digital currency innovation, a trend driven by emerging technologies that is spreading worldwide," said Huang Zhen, a professor at the Central University of Finance and Economics.
Rather than letting cryptocurrencies challenge the position of sovereign currencies, it is wiser for countries to roll out their own digital currencies, Huang told the Global Times on Monday.
Chinese authorities ordered a ban on initial coin offerings in 2017 and stopped direct bitcoin-yuan trading as the rapidly expanding market spawned concerns over financial risks.
The PBC, one of the earliest central banks in the world to start the process of digital currency innovation, launched its program in 2014 during the tenure of former governor Zhou Xiaochuan. In 2017, the PBC established a research institution for the digital currency.
"China is among the leading countries in terms of its research into a government-backed currency," said Huang.
Favorable conditions
The basic conditions favorable for China's implementation of a digital currency include comprehensive and fast networks, broad digitalization in the financial sector, and advanced financial technologies - particularly blockchain, a digital, public ledger that records online transactions, according to Huang.
In recent years, Chinese internet companies have made huge achievements in the mobile payment and e-commerce sectors, helping create a digital economy of more than 30 trillion yuan ($4.36 trillion), according to media reports.
In June, US social media giant Facebook released an official white paper for its cryptocurrency project Libra, a blockchain-powered stablecoin expected to arrive in 2020.
The move stepped up the global race for digital currencies, with China's central bank paying close attention.
The central bank is closely working with market participants on creating a central bank digital currency, PBC official Wang said.
"China's private market players have accumulated some experience in the digital currency sector. Their participation in the government's work will effectively help promote the project," Cao Yin, an expert in the blockchain sector, told the Global Times on Monday.
It is likely that the sovereign digital currency will be issued within two or three years at the soonest, although the authority tends to take a prudent attitude, Cao said.
Once it is broadly implemented, the new currency will have a big impact on Alibaba's Alipay and Tencent's WeChat Pay, the two dominant mobile digital payment tools in China, as the PBC's digital currency is featured by decentralization, unlike the former two.
Challenges ahead
There are still some bumps on the road to promoting the digital currency.
"For this new kind of currency, its nature actually poses challenges to existing policies in such aspects as foreign exchange control, so it takes time to balance benefits with potential risks," said Cao.
A flexible and open mechanism is needed by the PBC to attract more talent, he added.
Digital currencies can help strengthen regulation as transaction data can be tracked and analyzed, including illegal money laundering, according to Huang. But laws and rules should be formulated in a timely fashion to protect individual information. "Safety is the biggest issue," he added.
"Use of the digital currency to better serve the real economy also requires policy guidance," said Huang.
Newspaper headline: PBC accelerates digital currency drive.
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Tech Titans of China
Tweet How China’s Tech Sector is challenging the world by innovating faster, working harder, and going global The rise of China’s tech companies and intense competition from the sector is just beginning. This will present an ongoing management and strategy challenge for companies for many years to come. Tech Titans of China is the go-to-guide […]
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