Malaysia GDP grew by 5% in Q3 2013, Economy and Growth Outlook projections

KUALA LUMPUR: Malaysia’s gross domestic product (GDP) grew by 5% in the third quarter, faster than the 4.7% expansion most economists had predicted, as the economy benefited from strong domestic demand and a rebound in exports.

Bank Negara yesterday also revised the country’s second-quarter growth to 4.4% from 4.3% previously. The central bank is maintaining its full-year growth forecast at 4.5% to 5%.

The GDP is one of the primary indicators used to gauge the health of a country’s economy. It represents the total dollar value of all goods and services produced over a specific timeframe.

“Domestic demand remained the key driver of growth, expanding by 8.3%, while exports turned around to grow by 1.7%,” Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz said at a press conference.

She noted that emerging signs of a recovery in the major advanced economies are expected to support overall growth.

“For the Malaysian economy, the gradual recovery in the external sector would support growth. Domestic demand from the private sector would remain supportive of economic activity amid the continued consolidation of the public sector,” she said. “Going forward, economic growth is expected to be sustained although risks continue to remain.”

She said the global economic recovery was under way, but with downside risks from uncertainties over the fiscal and monetary adjustments in several of the major advanced economies.

“The other main contributor to GDP is investment, which is even more important as investment activity leads to capacity expansion, and allows our economy to experience future growth,” she said.

Malaysia’s current account surplus for the third quarter jumped to RM9.8bil, equivalent to 4.1% of the gross national income (GNI), from RM1.5bil in the second quarter.

This was mainly due to a higher surplus in the goods account. The GNI comprises the GDP together with income received from other countries less similar payments made to other countries.

She said net exports turned around and posted a positive growth of 1.6% after seven consecutive quarters of declines, driven by external demand, high commodity prices and strong investment activities.

The ringgit also experienced volatility in the third quarter, as expectations for a scale back in the US Federal Reserve’s asset purchase programme prompted a reversal of capital flows from most regional financial markets.

“The volatility was to a lesser extent than what we had seen previously at the height of the global financial crisis. The movement is similar to other currencies,” Zeti said.

She said the foreign exchange market was significantly larger and liberalised now and market players were, therefore, doing the intervention. However, she said Bank Negara would intervene if there were any severe volatility or market disorder.

“The region is in a better position to cope with more volatile conditions, as the financial markets are now larger, better developed and more mature.

“We believe there will not be an exodus out of this region, as our region remains an important growth centre in the global economy and, therefore, we will still be the destination for investment activities,” Zeti said.

The consumer price index was also higher at 2.2% due to higher inflation in the transport and food and non-alcoholic beverages categories.

Speaking on the subsidy rationalisation plans the Government has embarked on, she said the opportunity still existed for these price adjustments to be made gradually.

“We are on a steady growth path, and we have not experienced strong demand that would result in strong inflationary pressures. Therefore, it is a good time to make such adjustments,” Zeti said.

-Bernama/The Star/Asia News Network

Malaysia Economy Outlook 2013

KUALA LUMPUR (Nov 18, 2013): The Malaysian economy is expected to see between 4.6% and 4.7% growth in gross domestic product (GDP) for 2013, according to economists, in line with Bank Negara Malaysia's (BNM) projection of a 4.5% to 5% growth this year.

Alliance Research revised its full-year GDP forecast marginally upwards to 4.6% from 4.5% previously, after BNM released the third quarter (Q3) GDP data on friday which saw a stronger growth of 5% for the quarter on the back of a strong recovery in the external sector, as well as expansion in domestic demand. The research house anticipates a 4.8% growth in Q4.

"While growth may be affected by the recent announcements on the sequencing of certain Economic Transformation Projects and policy reforms such as the subsidy rationalisation programmes, we remain positive that the improving external environment would likely offset the weakness and support growth in the coming quarters," said Alliance Research economists Manokaran Mottain and Khairul Anwar Nor Md in a note.

For 2014, it expects growth to pick up to 5%, underpinned by robust domestic demand and improving external conditions.

RHB Research Institute estimated real GDP to grow at 4.7% in 2013, at a slower pace than the 5.6% growth recorded in 2012.

"Growth, however, will likely bounce back and register a faster pace of 5.4% in 2014, as domestic demand will remain a key driver of growth along side with a further improvement in exports," said its economist Peck Boon Soon.

The central bank said going forward, the gradual recovery in the external sector will support growth. Domestic demand from the private sector will remain supportive of economic activity amid the continued consolidation of the public sector. The economy is therefore expected to remain on its steady growth trajectory.

Meanwhile, BNM Governor Tan Sri Dr Zeti Akhtar Aziz stressed that the current volatility in the financial market is comparatively lesser than that experienced during the global financial crisis.

"We're in a position to cope. We've significant reserves of US$137 billion (RM446.2 billion) and we've many swap arrangements with other banks around the region. The region can come together to respond collectively if there's any crisis.

"Previously (under harsher conditions), we'll probably have a 1% to 2% growth. Now we've rebalanced our economy where domestic demand is an important driver, so it'll allow a 4% to 5% growth," said Zeti.

She said Malaysia's financial markets are larger, better developed and more mature now, adding that financial intermediaries are stronger and more importantly, there is greater diversification of portfolios.

"We believe there's not going to be an exodus out of our region (Asia) and it remains an important growth centre in the global economy. Therefore we'll still be a destination for investment activities," said Zeti.

On the ringgit, she said its volatility is similar to the movements of other currencies.

"We've liberalised the market to allow for unlimited hedging for an unlimited time period to hold a foreign currency account. Our corporate sector is in a better position to better manage their foreign exchange exposure, given that we've seen significant two-way flows. "In the event when the market has a risk of becoming disorderly, the central bank will step in to smooth out that volatility."

However, she said in the medium term, the ringgit should reflect the economy's underlying fundamentals.

"If all remains positive, (ringgit) should see an appreciating trend… but as fundamentals change drastically over a short period of time, then the appreciating should remain in a gradual trend."

Contributed by  Ee Ann Nee The Sundaily

Malaysia's 2013 forecast growth revised by IMF

THE International Monetary Fund (IMF) has revised its growth forecast for Malaysia to five per cent for 2013 from its previous projection of 4.7 per cent.

Growth will be underpinned by the domestic demand, with low unemployment and subdued inflation.

In its latest medium-term outlook, which was released following its Article IV Consultation recently, IMF projected growth until 2017 to be between 5.1 per cent and 5.2 per cent.

"Although the domestic demand growth pace is lower than that recorded in 2012, it is still sizeable at over six per cent from 11.6 per cent last year," IMF resident representative Dr Ravi Balakrishnan told the Business Times from Singapore yesterday.

Higher spending by households, firms and the government on consumer and capital goods has offset weak exports to Europe and the rest of the world.

Consumption has been supported by low interest rates, a strong labour market and fiscal transfers to households.

Balakrishnan said Malaysia has done remarkably well and displayed resilience like its neighbours in the face of the global crisis, chalking a 5.6 per cent growth for 2012.

The rebalancing of Malaysia's economy towards greater domestic demand - from its dependence on trade - has led to a significant deterioration in Malaysia's external current account balance, to a surplus of about six per cent of gross domestic product (GDP) last year, compared to 11 per cent in 2011.

The IMF released the details of its annual assessment last Friday together with its first financial sector assessment programme for Malaysia, which endorsed the resilience of the well-capitalised financial sector.

Malaysia's growth story was better than what the IMF expected.

"We are happy with the developments for the near term but there are challenges on the fiscal front for the economy to realise the growth level of 2020."

The government's revenue base needs to shift from the oil and gas receipts, which account for about a third of the total.

The planned goods and services tax would help broaden the revenue base, while the gradual rationalisation of the subsidies programme would help reduce spending pressures while staggering the impact on inflation and incomes.

In the case of investments, he said to sustain the current levels, there must be concerted efforts towards structural reforms, including education to help reduce its skills gap and increase the contribution of human capital.

The report said the Fund welcomed the introduction of a minimum wage this year, which should support the incomes of poorer workers, and recommends considering the introduction over time of unemployment insurance and reforms to the pension system to further strengthen social protection.

Government debt is expected to decline gradually relative to GDP over the next five years, reaching about 51 per cent of GDP by 2017.

The Fund has recommended that there be more "front-loaded" consolidation efforts to reduce the probability of breaching the debt ceiling and ensure the government's goal of reducing debt to 40 per cent of GDP by 2020.

Balakrishnan said while the target to reduce debt is lauded, it is also important that there be more transparency in the concrete measures that Malaysia plans to undertake.

Contributed by Rupa Damodaran Business Times

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Bank Negara revises downwards Malaysia's GDP to 4.5 ... 

China on road to depeen reforms

The Communist Party of China (CPC) has to acknowledge the market's decisive role in allocating resources as it is proven to be the most effective, said President Xi Jinping when explaining a key document about reforms.

China will deepen its economic reform to ensure that the market will play a "decisive" role in allocating resources, according to a decision on major issues concerning comprehensively deepening reforms, approved by the Third Plenary Session of the 18th CPC Central Committee on November 12.

Entrusted by the Political Bureau of CPC Central Committee, Xi, also general secretary of CPC Central Committee, explained the decision at the session. His explanation was published in full on Friday.

Xi considered the definition of the market's role a major theoretical achievement of the decision.

A proper relationship between the market and government remains the core of China's economic reform, Xi said.

To build such a relationship is to settle whether the market or government plays a decisive role, he said, adding that the market is proven to be the most effective.

Over the past some 20 years, China has established a socialist market economy but there are lots of problems, Xi admitted.

The market is not orderly and many seek profits through illegal means. The market for key production factors, such as labor, capital and land, are lagging behind, he said.

Market rules are not unified and there are prevailing departmental and regional protectionism, he warned, adding that a lack of full competition stops the inferior from being eliminated.

China has to follow the basic law of the market economy and work on the problems of an underdeveloped market system, excessive government intervention and weak supervision of the market, he said.

Accepting the market's decisive role will help the Party and society develop a correct idea about market-government relations, help the country transform the economic growth pattern, help the government change its functions and help curb corruption, he said.

However, Xi noted that to let the market decide does not mean to let it decide all.

"The socialist market economy needs both the market and government but they play different roles," he said.

The government will maintain a stable macro-economy, provide public services, safeguard fair competition, supervise the market, keep market order, promote sustainable development and step in when the market fails, he said.

The market had been defined as a "basic" role in allocating resources since the country decided to build a socialist market economy in 1992.

For a long period of time after 1949, the idea of market had been a taboo associated with capitalism.

Even after the reform and opening up in 1978, the country had

struggled to define the market and some dogmatists still questioned whether socialism could accommodate the market economy.

It was not until the 14th CPC National Congress held in 1992 that a socialist market economy became a consensus.

At the 15th CPC National Congress in 1997, the Party noted that the market, under state macroeconomic control, should be the basic means of allocating resources.

At the 16th CPC National Congress in 2002, the Party said it should leverage to a greater extent the basic role of the market in allocating resources.

At the 17th CPC National Congress in 2007, the Party decided that it should introduce institutions to give better play to the basic role of market forces in allocating resources.

At the 18th CPC National Congress in 2012, the Party said it should leverage to a greater extent and in a wider scope the basic role of the market in allocating resources.

"Now, the CPC Central Committee believes that the condition is ready to bring up a new theoretical expression of this issue," Xi said. - Xinhua

China stays on road to reform 

Staying on course: A souvenir with an image of President Xi Jinping (left) and the late leader Mao Zedong on sale at Tiananmen Square in Beijing, during the meeting of the Central Committee of China’s ruling Communist Party, at which major reforms were discussed. — EPA

THE business of China-watching intensified lately for the Third Plenary Session of the 18th Central Committee of the Communist Party of China.

This was a special occasion in also doubling as the first anniversary of President Xi Jinping’s leadership of the party and of China’s Central Military Commission.

It is a measure of China’s rising global status that such domestic occasions should attract serious worldwide attention. The same does not apply for other countries.

Some analysts believe that the world’s second-biggest economy will, by the end of Xi’s term in a decade, become the world’s biggest – and continue to outpace the US and other economies thereafter.

Since economics remains the prime determinant of a nation’s various attributes, China’s economic achievements are closely watched because they indicate its prowess in other spheres as well.

For this particular occasion, there is another reason for Beijing as the world’s centre of attention – Third Plenums are traditionally the stamping ground for new priorities and directions. That it coincides with a new leadership makes for a packed global gallery.

Speculation about Xi’s leadership peaked in the lead-up to this occasion. Opinion was divided over whether China would lean towards reform and further opening up, or veer towards Maoist conservatism.

Xi’s personal style was no help to the betting classes. In keeping his cards close to his chest, he was not one to telegraph his intentions and preferences ahead of time.

Then there was the complication of the Bo Xilai affair. The fall of the former rising star was said to be a sideshow obscuring internal party politicking.

Bo’s supporters tended to look past his controversial hardline tactics, corruption allegations, his wife’s involvement in murder and his Maoist-inspired opposition to Beijing’s reforms. In his defence, they instead questioned Xi’s commitment to reform.

However, any antipathy Beijing had to Bo would also be averse to a Maoist resurgence and therefore be pro-reform. There was also no question of Xi’s priority in targeting corruption and promoting the rule of law.

Nonetheless, for many the doubts about China’s leadership direction persisted. And the question would be settled by the Third Plenary Session of the 18th Central Committee.

Now those who were never in any doubt about Xi’s reform drive feel vindicated. Fence-sitters are also more convinced than ever that Xi and Prime Minister Li Keqiang will take China further along the road of reform.

Doubters are now puzzling over the general nature of official public statements from the plenum. They are stumped by an apparent shortage of specifics.

However, generalities indicate only a lack of details, not a reversal of direction. And given the presence of conservatives like Bo still in the party hierarchy, reformist leaders would do well to avoid advertising their plans to prevent obstruction and sabotage.

Xi is certainly not one to telegraph his intentions and preferences ahead of time. Former Singapore premier Lee Kuan Yew has observed that Xi is not demonstrative while still retaining his affable style.

Besides, Third Plenums of the 21st century have also been less hortatory and more cool and businesslike. A modern China headed by state functionaries rather than ideological patriarchs is where the Xis and Lis are at.

Over the long term, it has been a process of evolution for China’s leadership. In comparisons between Xi-Li and their immediate predecessors Hu-Wen, Xi is said to be more open and approachable.

Xi and Li are also regarded as more purposeful and cosmopolitan, a style that matches the contemporary demeanour of their international counterparts. And style still accounts for much, notwithstanding the weight of official policies and procedures.

Several views from Hong Kong, as expressed through the South China Morning Post newspaper for example, regard Xi’s leadership as clearly Dengist rather than Maoist. That effectively reaffirms the reformist road.

To that extent, this Third Plenum produced no surprises. Continuity and consistency are key to China’s development, and Xi is tasked with ensuring that trajectory in particular.

The polar opposites of Mao and Deng remain a bifurcation – and an ironic one at that. Their differences are strategic and ultimately ideological rather than personal.

Deng the Establishment rebel, the last Long March veteran, the final Paramount Leader and the Other Helmsman who turned China around is still deeply revered, including by the younger generation.

Young professionals and bureaucrats in their 30s, whether in official Beijing, bustling Shanghai or rural Hubei province today have no hesitation to say they are Dengist. They do not denigrate Mao, not even for his excesses and horrors, they just admire his party alter ego.

This is the political status quo of China today. It should therefore be no surprise that the party and state machinery, in carefully reviewing and sifting through contending candidates, has produced leaders that exemplify this bearing.

Thus Xi is no closet Maoist for prescribing self-criticism and attempts at censorship. Some tactics may appear conservative, but the overall strategy is still reformist.

The Third Plenum was clear in promoting the status of the market from “basic” to “decisive.” For this and similar moves, Xi and Li are considered pragmatists in moving modern China forward another notch.

In Beijing today, much of this pragmatism amounts to letting the market determine the economy, allowing the economy to inform governance, and ensuring that good governance safeguards society’s interests through due public regulation.

That also approximates to the “socialist market economy” Deng introduced 35 years ago. Since then, the concept has resulted in moves like cutting red tape, cleaning up a messy credit market and establishing a free trade zone in Shanghai.

Many suspect the best days of Xi’s presidency are at hand. His father is cited as a hero of progressive social development in his time.

Besides the current drive against graft, there is also a campaign against pollution. It is serious enough to require productive heavy industries like steel to cut capacity, with larger plans to move away from polluting sectors in favour of cleaner and more modern industries.

The home-grown company BYD for example not only designs, builds and markets its range of electric vehicles, but also plans to produce vehicle batteries for automobile companies around the world.

China is not only a large and rapidly growing economy, but one focused on the cutting edge of several technologies: ICT, high-speed trains and renewable energies among them.

Earlier this month, a skeptical BBC asked whether this latest Third Plenum will prove as decisive as the ones in 1978 and 1998. The short answer is that it can, depending on the prevailing national interest.

China today differs from the China of Mao’s era in one fundamental respect. The state will now do all it can to meet the nation’s current and future needs while delivering what the government wants, more than simply what the party prefers.

This basic distinction may still escape the understanding of many. The recent Third Plenum has gone some way to rectify that, but proof of it is already evident in recent years.

The rest will come soon enough. The point is that a transforming China with an eye to its future progress has opted for reform not only because it wants to, but more because it has to.

Behind The Headlines by Bunn Nagara

Bunn Nagara is a Senior Fellow at the Institute of Strategic and International Studies (Isis) Malaysia. The views expressed are entirely the writer’s own.

ABC Network's kids say the darndest things

During a children’s segment in a late night talk show in the United States, a child proposed to wipe out the Chinese as a solution to the US$1.3 trillion (RM4.17 trillion) debt to China. The Chinese were not amused.

 

At the network's office in Houston (top left), Washington and Los Angeles (right).

A POPULAR Chinese idiom, Tong yan wu ji, loosely translated means that one should not take offence at what a child says.

The phrase is used to show that a child should not be taken seriously when he or she utters something improper or inauspicious, especially in an unacceptable manner.

It implies that kids say the darndest things, which are candid and laughable at times.

But when a child proposed to wipe out the Chinese during the Jimmy Kimmel Live show as a solution to the US$1.3 trillion (RM4.17 trillion) debt to China, the Chinese were not amused.

During the ABC Network’s late-night programme that was aired on Oct 16, a segment was dedicated to a group of young children having a light-hearted roundtable discussion.

When host Jimmy Kimmel asked for suggestions on how to pay China back, a blond boy answered, “Shoot cannons all the way over and kill everyone in China,” slamming his hands on the table.

“Kill everyone in China? Okay that’s an interesting idea,” Kimmel responded with a laugh.

Another child suggested building a huge wall to prevent the Chinese from coming after them, to which Kimmel replied, “That will never happen.”

Kimmel later asked the panel of four, “Should we allow the Chinese to live?”

The kids had mixed opinions – the screen showed a girl raising her clenched fist, shouting “Yes!” while the blond boy stood by his earlier answer.

“But if we don’t allow them to live, then they will try to kill us,” said another girl who tried to talk some sense into the boy.

“But they’re all going to be killed (first),” two kids, including the blond boy and the girl who had earlier shouted “yes” out loud, argued.

Kimmel wrapped up the segment, noting that it was an “interesting edition of the Kids Talk – the Lord of the Flies edition”.

(Lord of the Flies, a novel by William Golding, tells the story of how a group of boys govern themselves on a deserted island after a plane crash.)

This particular segment has sparked a backlash with viewers commenting that the skit was racially insensitive.

Protests were staged outside ABC studios, prompting ABC and Kimmel to apologise, but the controversy has not died down.

As of Thursday morning, more than 104,000 online signatures were collected on the White House petitions page, urging the Obama administration to investigate the show.

Since the petition had reached the 100,000-signature threshold in 30 days, the White House was compelled to issue a formal response.

Meanwhile, in China, Foreign Ministry spokesperson Qin Gang told a press conference that ABC should reflect on its mistake and respond to the Chinese Americans with a sincere attitude.

On Wednesday, China’s state broadcaster CCTV reported that it had received a response from White House National Security Council spokesperson Caitlin Hayden.

“As the President has stated publicly, the United States welcomes the continuing peaceful rise of China. He believes it is in the United States’ interest that China continues on the path of success, because we believe that a peaceful, stable, and pros­perous China is good for the United States, China, and the world.

“The comments reported on the Jimmy Kimmel show do not reflect mainstream views in the United States on China,” she said.

The controversy has also ignited discussions on the Internet as well.

Nick Zhang Xu, who made waves in cyberspace last year with a video of him speaking English in 10 dif­ferent accents, responded with a video titled “Jimmy Kimmel, you owe us an apology”.

Since it was uploaded to Youku – the Chinese equivalent of YouTube – about 20 days ago, it has been viewed more than 35,000 times.

“What kind of education do the kids have in America? They can just shout out loud ‘kill everyone?’” Zhang asked.

“‘This is an interesting idea.’ You find it amusing. You don’t call it wrong in the first place. What’s the matter with you?”

While sending a strong message across, it was hard not to note that Zhang had attempted to inject some humour into the video as well.

“You know what? We can make shows (to defame you) too. We are really good at remaking things.”

Some Youku users threw their support behind Zhang and agreed that the Kimmel’s skit had painted a larger picture on the culture of violence and hatred.

But there were also people who believed that the kids’ comments were harmless and called for fellow Chinese to be less sensitive.

“We place too much emphasis on “saving face” and cannot afford to have others making fun of us. This is just an entertainment programme,” a user said.

Contributed by Check In China Tho Xin Yi 
The Star/Asia News Network 

Chinese Americans protest across US over Jimmy Kimmel's 'kill Chinese' skit

Thousands of protesters, mostly Chinese, rallied in 27 US cities over a perceived anti-Chinese skit that aired last month in a talk show hosted by comedian Jimmy Kimmel.

A rally in New York, one of 27 cities that saw a protest over the ABC talk show, which aired last month. Photo: SCMP 

Chinese state media reported that protests swept across the United States on Saturday. One was staged at the Los Angeles headquarters of broadcaster ABC, which aired the programme. Participants argued that ABC and Kimmel had not taken full responsibility for what they perceived as an insult to their heritage.

The protesters called for Kimmel to be fired over a segment of his talk show called "Kids' Table" that aired on October 16. Both ABC and Kimmel have since apologised for the episode, in which a six-year-old boy said "kill everyone in China" when asked by Kimmel how the US should pay back the country's US$1.3 trillion debt to China. Kimmel responded: "That's an interesting idea."



However, Chinese-American groups were not impressed. While some accepted the apologies that were offered after the subsequent uproar, others viewed them as insincere and demanded more. Charles Lu, chairman of the Roundtable of Chinese American Organisations, told the Los Angeles Times last week that they wanted a formal apology from ABC not just to the groups protesting, but to all Chinese people around the world.

Online pictures of Saturday's protests showed demonstrators, including college students, parents and children, dressed in red T-shirts with logos reading "Teach kids to love, not to kill", and chanting slogans such as "Kimmel must go" and "Shame on you, ABC".

Chinese Americans express their anger in San Jose, California. Photo: SCMPProtest organisers distributed free posters to demonstrators. One featured Kimmel with a swastika just above his head.
"The protest plays an important role in improving our prestige and national cohesiveness," a Chinese demonstrator in New Jersey said on internet chat room Mitbbs. "The parade is intended to raise the social status of Chinese Americans in the US."

The segment also prompted the submission of a petition to the White House to investigate the Jimmy Kimmel Live! show on the grounds of offensive content. The petition garnered more than 100,000 signatures.

Xinhua said 800 people attended a rally in Washington, where a letter of protest to ABC was read out. The letter urged the broadcaster to fire Kimmel and hold a press conference to officially apologise to Chinese communities. It called on ABC to make sure that such "rhetoric of racial discrimination" was prevented by stepping up regulation of its televised content.

No one from ABC attended the event in Washington to accept the protest letter, reports said. Police were mobilised to maintain order, but the day ended without incident.

The demonstrations are believed to have been the largest held by the Chinese community in the US since those just before the Beijing Olympics in 2008 in response to CNN commentator Jack Cafferty labelling Chinese leaders "goons" and "thugs".

Video: Animators in China to Jimmy Kimmel: Why you shouldn't 'Kill the Chinese'



Contributed By  Keith Zhai keith.zhai@scmp.com

Malaysian Crime Awareness Campaign

 

The woman kneeing the ‘robber’ in the stomach as seen from a video grab.

Video :- http://tinyurl.com/k9c434g

 PETALING JAYA: Many would be disappointed to find out that the viral video of a woman putting up a brave fight against snatch thieves in her house compound was, in fact, a mere re-enactment.

The video, which was shared on the Malaysian Crime Awareness Campaign’s Facebook page, clearly states that the video was a re-enactment for educational purposes.

The one-minute video showed a woman parking her car in her house porch, while a motorcycle is seen observing the car as she drives in.

As the woman gets out of her car, the pillion rider gets off the motorcycle and slips into the house compound just before the gate shuts.

He then proceeds to snatch her handbag, but the woman tries to cling on to it. Unable to do so, she retaliates and springs into action, kneeing the robber in the stomach and kicking him to the ground.

She then starts pounding on the man until his accomplice comes to his aid by threatening her with a knife.

She flees into the safety of her house as the crooks left after their failed attempt to rob the woman.

Several users commented on the video which was uploaded on YouTube, including Suraya Khan, who posted: “I salute this girl and wish to react like her in the same situation!”

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2 Malaysian Crime Awareness Campaign | Facebook

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MyDistress application

MyDistress application

MyDistress app has been very useful 

I STRONGLY feel that the police should reintroduce the MyDistress application.

At about 4.30pm on Nov 4, my daughter and her friend had an encounter with a road bully in Shah Alam.

She has the MyDistress application on her phone but she was unable to use it as the application was discontinued by the police.

The man was very aggressive and began kicking her friend’s car when they stopped. He even spat at the lady driver’s face. This was over a lane-cutting incident.

She called me and I advised her to proceed to the nearest police station.

I then dialled 999 and got the operator who asked me too many questions about the incident. Where was the exact location of my daughter, etc?

How would I know their location when they were driving towards a police station?

If my daughter could trigger her MyDistress app, the police would have known her location.

I had on three occasions used MyDistress.

In the first instance, my neighbour, a senior police officer, called to tell me that he had cornered a burglar. I pressed the button on my phone for MyDistress which sent a signal that I had an emergency in my house. The police called and I told them it was my neighbour’s house. Within minutes two patrol cars arrived.

In the second incident, I was on my way to KL Sentral in a Komuter train at around 2pm when my wife, a teacher, called to say she saw a man jumping over our fence.

The train was near Bangsar. I triggered MyDistress. The police called and informed that they had despatched men. On reaching home there were two patrol cars and the police were taking a statement from my wife. What a relief!

In the third occasion, I was praying in a surau at a petrol station in Puchong when I saw a man with a bag and an axe.

I triggered MyDistress. Again the police called to know my whereabouts. Within minutes they arrived and questioned the man.

Kudos for the police with MyDistress.

Contributed by SAMAD RAHIM Shah Alam The Star/Asia News Network

Read more: 

1. MyDistress | MyDistress 
MyDistress is a personal safety application designed based on smart technologies ... the use of MyDistress application and how it works quickly and accurately.

2.Application Guideline | MyDistress

3.How To Download | MyDistress

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Property gain tax won't hurt genuine buyers

Banning DIBS is the right move

FOR many years, the National House Buyers Association (HBA) has been urging the Government to take measures to stem the steep rise in property prices to avoid a “homeless generation” as current property prices are far beyond the reach of many low and middle-income families in urban and suburban areas.This is a ticking time bomb that will result in many social problems if left unchecked.

Real Property Gains Tax (RPGT)

The announcement of the revised rate of tax on gains made in the disposal of properties, namely, the Real Property Gains Tax (RPGT), formerly known as the Anti Speculation Act, under Budget 2014 is far more superior to what had been proposed under Budget 2013 (See table above)

This is because, typically, if the property is purchased directly from the developer, it takes two years (for landed properties) and three years (for strata properties) to be completed.

Hence, under the previous RPGT, speculators could purchase properties from property developers upon their launch and then flip these properties on completion (after two years) and having to pay 10% (i.e. within the 3rd to 5th year).

It is hoped that the revised RPGT rate will deter speculators and, at the same time, not punish genuine house buyers who buy for their own stay or long-term investment. It is worth noting that buyers of residential property could seek a once-in-a-lifetime exemption from the tax.

Budget 2014 is best described as an “excellent mathematical formula” to curb the unbridled escalation of house prices, which has in the last three years skyrocketed. The Government has taken a step in the right direction with measures to slow down the steep rise in property prices due to false demand caused by excessive speculation fuelled by easy housing loans and the previously low RPGT.

Foreign purchasers to pay more

HBA applauds the move to increase the minimum price of property that can be purchased by foreigners from RM500,000 to RM1mil. Foreigners must be prevented from “snapping up” property meant for the lower and middle income.

This artificially inflates prices and creates a domino effect which can result in higher property prices across the industry. This is especially true for development corridors such as Iskandar Malaysia which has seen foreign purchasers arriving in droves and scooping up properties with their advantageous exchange rate.

Banning the Developer Interest-Bearing Scheme (DIBS) 

DIBS is popular with speculators as they pay nothing to make a profit. Their initial down-payments and deposits are sometimes factored into the purchase price by the collusive developers, and some unethical financial institutions do not even require that the developer collect the deposit that has to be paid by the so-called purchaser.

This is one of the factors which induces “bogus” house buyers (which I have written about in this column on Aug 31 entitled: Of Speculators and bogus house buyers) who merely flip the property at the right time.

Kudos to Bank Negara for heeding our call and banning DIBS. It may be worth noting that Singapore banned DIBS in 2009.

Considering the deep pockets of property speculators, the effectiveness of these measures remain to be seen. However, they are expected to make speculation unworthwhile. HBA praises the Prime Minister for putting a stop to DIBS, which is one of the reasons attributed to the steep increase in property prices for three reasons:

1. DIBS encourages speculation as the house buyer does not need to “service” any interest/instalment during the construction stage. This will “lure” and tempt many house buyers to speculate and buy into DIBS projects hoping to flip on completion and make a quick profit with little or no capital upfront. Connivingly, the interest element is “serviced” by the participating developers.

2. DIBS artificially inflates prices as all interests borne by the developer are ultimately imputed into the property price. This in turn creates a domino effect which pulls up property prices in surrounding locations.

3. Bank and financial institution staff conniving with developers using the DIBS model should be investigated on their “modus operandi” in financing those artificially inflated prices (DIBS + sales price) and ignoring guidelines on prudent lending.

Banks and financial institutions are to be prudent and only provide mortgage financing up to the fair value/market value of the property. In this respect, a benchmark of fair value or market value is the current properties available. Somehow, properties sold under DIBS are always priced much higher; 15% to 20% higher compared with those without DIBS.

For standard condominiums costing RM500,000 without DIBS, should the developer market such properties under DIBS, the selling price could be as high as RM650,000. This creates a potential property bubble should the developer default in “servicing” the interest and the borrower/purchaser also defaults. The bank would only be able to recover up to RM500,000 if the said property is auctioned at market value.

In the event of an economic downturn, banks saddled with too much DIBS end-financing could collapse as the losses from such DIBS end-financing will erode the banks’ capital.

The collapse of just one bank/financial institution could cause a systemic collapse of the entire financial industry.

Bank Negara should take action against such bank and financial institution staff who have provided both project financing and end-financing to DIBS projects under the newly-minted Financial Services Act, 2013.

With the RPGT increase, banning of the DIBS and the Government’s aspiration to supply more ‘ownership housing schemes’ at affordable pricing, it is hoped that speculative demand for properties will stabilise to a more realistic level. I have heard that many businessmen do not do business anymore but indulge in property speculation as a livelihood and for income.

It is akin to the stock market dealings that were rampant during a ‘bull run’. Certain things have to be stopped before they become worse like the sub-prime crisis in the US.

If readers were to take a drive around completed projects, they will find signboards advertising units for sale upon the delivery of keys. If the purchaser is purchasing for his own occupation, why is there this need to put up these signboards or appoint estate agents to dispose of the units? It goes to show that some purchasers are merely speculators (not investors) from day one and the banks and financial institutions choose to “close one eye” despite knowing this.

Have the banks ever gone to the ground to check whether the units purchased and financed are actually “owner occupied”? If the property is “owner occupied”, the risk rating is lower and thus, he enjoys a lower interest rate. But if it is non-owner occupied, it should have higher interest rates. Borrowers of “owner occupied” properties are normally required to make a declaration to that effect to enjoy a lower interest rate.

But does the bank participate in this booking of credit risk?

If the property is non-owner occupied, the lending will fall under ‘real estate classification’ and not ‘housing’.

So, there may even be misreporting to Bank Negara and subsequent national statistics.

This column continues next week.

- Contributed by Chang Kim Loong

CHANG KIM LOONG is the honorary secretary-general of the National House Buyers Association (www.hba.org.my), a non-profit, non-governmental organisation (NGO) manned by volunteers. He is also an NGO Councillor at the Subang Jaya Municipality Council.

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Anonymous hackers has begun the cyber war on Singapore

 

Singapore's internet and phone regulator said it was investigating the hack

Anonymous hackers have declared war on Singapore with a pledge to hit at official infrastructure. This has left Singaporeans with a sense of foreboding about what is to come.

AN aura of uncertainty, even fear, has crept into this intelligent island where the computer widely affects every home, office and school.

Since an anonymous network of hackers threatened war on the government and its infrastructure, many official websites – including the Prime Minister’s Office – became inaccessible for a long period.

Others included the police force and internal security department and ministries like finance, home affairs and national development as well as Parliament and the Cabinet.

Many citizens are not sure whether there had been a cyber-attack or, as officially explained, the outage was due to a planned maintenance that hit “routing and hardware”.

“At no point were these websites the target of cyber-attacks,” insisted the authorities.

But an e-mail purportedly from “The Messiah”, an alleged hacker who is part of an international network, said several members had worked together to put them down.

The declaration of war with a pledge to hit at official infrastructure last Saturday has placed Singapo-reans with a sense of foreboding about what is to come.

Singapore – its economy and education system – has been heavily dependent on the Internet for two decades.

After four days of silence, a defiant Prime Minister vowed to track down the anonymous hackers and bring them to justice.

Lee Hsien Loong told reporters: “Our IT (information technology) network, the Internet, our communications have become an essential part of our business and our lives now.

“...When somebody threatens to do harm to it ... we will spare no effort to try and track down the culprits and if we can find him, we will bring him to justice and he will be dealt with severely.”

The response is not surprising. Few people had really expected the authorities to give in.

A day later, the PM Office website was mockingly hacked by Anony-mous, saying “It’s great to be Singaporean today”.

Singapore may be entering a new era of IT threats where unidentified foreign predators – for good or bad reasons – can wreak chaos to their lives.

“These may be the good guys. What if they were followed by the really bad ones with destructive ideas?” asked a political analyst.

Since the harm of computer warfare is unimaginable, most people tend to oppose its use to achieve social and human rights, the declared aim of the anonymous group.

Even within the Internet community, which is traditionally anti-government, the reaction has been mixed.

“I love these guys for fighting on our behalf but am afraid they may actually inflict harm on Singapore,” a netizen said. “We will have to fight the government our way, through elections.”

Therein lies the government’s dilemma. It is facing a dangerous new threat with some younger Singaporeans less than supportive of it.

The anonymous group is not without problems, too. It can only win if it gets the Singapore public on its side.

This is unlikely to happen if its hacking activities are stepped up to a level where people’s welfare is harmed.

This could swing Singaporeans behind the government and turn against them – which is not what they want.

Observers notice that of all the closures, the Central Provident Fund website was unaffected.

The trouble began last Saturday when an anonymous hacker wearing a Guy Fawkes mask demanded the Singapore government, over YouTube, to withdraw its recent laws to licence online news.

Economists fear that a prolonged digital war may undermine business confidence and affect the economy, particularly e-commerce here and in the region.

Singaporeans are by nature not aggressive. Some see it as Hobson’s choice, between supporting the anonymous group’s “noble objective” and their own jobs and careers.

The public stayed largely away from the hackers’ call for a general protest on Nov 5. So did most bloggers, although some Facebook users had blacked out their profile pictures as a sign of support.

Since many Singaporeans are not tech-savvy, they tend to worry about the worst of a cyber-war – chaotic roads and airports, missing bank accounts, etc.

The government, however, has insisted the websites were closed for a pre-planned maintenance which was aggravated by “routing and hardware glitches”.

The episode showed the government was apparently unprepared to meet a major hacking threat.

It signifies that defence of Singapore now goes beyond the need for national service and a people’s army, missiles and jet-fighters.

Recently, the government announced a new S$130mil (RM332mil) budget to be spent in the next five years for research in countering cyber-warfare.

The hacking began last December, when the websites of the government People’s Association and 16 related bodies were hacked and closed.

A number of assaults followed, including the town council of PM Lee’s constituency.

The hackers putting pressure on the People’s Action Party (PAP) government will likely see some long-term impact.

The ever presence of a global group of high-powered hackers, and their threat, will likely make the policy-makers a lot more cautious in the future.

 By Seah Chiang Nee
> The views expressed are entirely the writer’s own.

Youth addicted to computer games died in front of his computer!

 

Ong Yee Haw, 23, (pic) was found slumped over the keyboard in front of his computer monitor in a room by his uncle at about 4pm.

 GEORGE TOWN: A youth addicted to computer games died of a heart attack at his home in Bandar Baru Air Hitam here after apparently playing continuously for over 15 hours at a cybercafe nearby. 

He was said to have been at the cybercafe from 10pm on Sunday until 1pm the next day before returning home to his own computer.

However, it was not known which computer game Ong had been playing before his death.

His mother Chew Qun Juan, 62, said her only son had been addicted to computer games ever since he stopped working at a restaurant five months ago following a motorcycle accident.

“He injured his right hand and had to stop working. I constantly told him not to spend too much time on computer games but he never listened.

“I single-handedly raised him after my husband died of cardiac arrest 15 years ago. Words cannot describe my sadness now. I only hope that others, who are also addicted to computer games, will learn something from this.

“I hope this will not happen to anyone else. My son was still so young,” she said in between tears when met at the Penang Hospital mortuary yesterday.

A post-mortem report, she said, confirmed that Ong died of a heart attack.

Ong was cremated at the Batu Gantung crematorium yesterday afternoon. The case has been classified as sudden death.

On Dec 27 last year, a 35-year-old broker was found dead inside his home, supposedly after playing video games.

A video game console was found in front of Liu Peng Han’s body. When his body was discovered by his uncle, Liu was lying on the sofa in the living room.

There had also been several media reports of deaths due to computer addiction in China, South Korea, Vietnam and the United States.

It was reported that in 2005, a man in South Korea went into cardiac arrest and died after playing StarCraft almost continuously for 50 hours. Two years later, a 30-year-old man in Guangzhou died after playing video games continuously for three days.

Contributed by Winnie Yeoh The Star/Asia News Network

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Dubious qualifications, Will the real doctor please stand up?

 Many resort to buying academic qualifications and degree or diploma mills

SEVERAL years ago, I met a Penang businessman who had a ‘Dr’ title to his name. When I asked him in English about his field of study, he hesitated.

Pressed for an answer, he gestured with his hands and made drilling sounds to depict the act of digging a road. I then realised he was trying to tell me that his doctoral degree was in civil engineering.

Later, I heard about another Penang businessman who was asked by an air hostess to assist in a medical situation on board a plane because of his ‘Dr’ title.

The businessman hastily clarified in Hokkien to the air hostess, who was also from Penang: “Wah si kim siew eh loh koon. Beh heow kuah lang.” (“I am an animal doctor. I can’t treat humans.”)

The public must be getting used to reading about individuals whom they know did not attend a single day of tertiary education — and can hardly string together a sentence in English — being awarded doctoral degrees.

Instead of gaining respect from their peers, those who pay for their doctorates from degree (or diploma) mills become the object of scorn when they flash their ‘Dr’ titles.

As Penangites become more affluent, they seem to think they can buy anything including educational qualifications.

But no genuine institution of higher learning will confer degrees on ineligible individuals, no matter how much money is given.

So people turn to degree mills, those unaccredited education institutions that offer academic degrees and diplomas for a fee.

Degree mills look impressive and genuine because they often claim to be recognised by Unesco, an agency of the United Nations that promotes education and communication. However, the Unesco website states clearly that it does not have the mandate to accredit or recognise higher education institutions.

People who buy from diploma/degree mills know exactly what they are paying for and probably think they are not committing any crime. But they should be aware that the authorities will not hesitate to act.

Last July, it was reported that the police were tracking 525 people who allegedly bought fake degrees and certificates from non-existent international universities.

Some 40 individuals, including a Tan Sri and several politicians, had their statements recorded as part of the police investigation into fake academic degrees bought from an education institute in Selangor.

If Penang is serious about developing itself into an educational hub, the state government should ensure that it does not appoint individuals who have dubious doctoral degrees to sit in the various bodies set up to look into improving aspects of the economy, education, transport and tourism.

It may be customary for institutions of higher learning to confer honorary degrees on individuals for their contributions to society. It is equally customary for the recipients to refrain from using the ‘Dr’ title.

Some of these people think it is fashionable to use the ‘Dr’ prefix, but in reality it can be misleading.

Universities are concerned that the public may be confused by an honorary doctorate and the doctorate awarded to those who meet the academic requirements.

Therefore, some universities have begun awarding such honorary degrees as LittD (Doctor of Letters), LHD (Doctor of Humane Letters) and ScD (Doctor of Science) instead of the usual PhD to avoid further confusion.

- Contributed by David Tan, Pinang Points

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You are being snooped on, Malaysia views US-NSA spying seriously!

Asia being snooped on, too 

Spying by foreign intelligence agencies is also prevalent in Malaysia and other regional countries via the Internet or spying equipment located in embassies.

SO last week it was the turn of Asians to learn that their region was also the subject of foreign spying.

This was no surprise. If American intelligence is spying on Americans, on Latin Americans, and on Europeans (including its top political leader, Angela Merkel of Germany), it is a foregone conclusion that Asia would not be left out.

There is no revelation yet that Asian prime ministers and presidents have had their personal mobile phones and e-mails tapped.

But it is also a foregone conclusion that these things are happening. Be prepared, therefore, to read in the coming weeks about famous Asian leaders, opposition stalwarts, journalists and celebrities being the subjects of snooping.

Nevertheless, the news that American and Australian embassies are being used to snoop on Asian countries justifiably caused outrage in our region. The Australian surveillance is reportedly in cooperation with the United States.

Malaysia is one of the places where Australian intelligence operates to spy, according to reports in the Der Spiegel and Sydney Morning Herald. They revealed that the spying takes place from the Australian High Commission in Kuala Lumpur.

Other Asian countries where the intelligence collection is conducted is the Australian embassies in China, Thailand, Indonesia, Vietnam, Timor Leste and Papua New Guinea.

The news reports also revealed that the US embassies have also been conducting surveillance activities in many Asian countries including Malaysia, Indonesia, China, Thailand, Cambodia and Myanmar.

Malaysia last Friday registered its protests in official notes handed to the Australian High Commissioner and the US Deputy Chief of Mission who were summoned to Wisma Putra. The notes warned that surveillance of close friends could severely damage relations.

Indonesia warned the United States and Australia that the continuation of surveillance facilities inside their embassies threatened to derail years of trust built up between countries.

China also responded to the report that the American embassy in Beijing and consulates in Shanghai and Chengdu operated special spying facilities.

Its Foreign Ministry has demanded an explanation from the United States, saying that “foreign entities must not in any form engage in activities that are incompatible with their status and that are harmful to China’s national security and interest”.

Also last Friday, Brazil and Germany introduced a draft resolution to a United Nations General Assembly committee calling for an end to excessive surveillance.

The press reports on spying in Asian countries are based on information leaked by Edward Snowden, a former contractor with the US National Security Agency.

Newspapers and magazines had previously revealed that the personal phones of the German chancellor and the Brazilian president had been tapped. Both leaders have registered protests directly to US President Barack Obama.

Last week also saw revelations by the Washington Post that the US and British intelligence agencies had found a way of intercepting communications from Google as well as Yahoo as the data were being passed between their data centres.

“We are outraged at the lengths to which the government seems to have gone,” said Google’s chief legal officer.

The Internet giant companies have found that their encryptment system protecting e-mail and other information flowing through its data centres is not secure after all.

The technology companies are worried that their millions of customers will no longer trust that their privacy will be protected.

How will this affect the use of browsing, e-mail, Facebook and other facets of the Internet technology?

US companies and entities currently dominate the global Internet business. Much of the world’s flow of data go through Internet companies based in the United States.

The US administration had projected itself as an honest host of the Internet centres, respecting the rights and privacy of the world’s Internet and e-mail users, and a champion of Internet freedom.

That image has been shattered by the series of revelations emerging from Snowden’s leaked files. The opposite image has replaced it, of a government that has used high technology to gather billions of bits of data on practically all Internet users.

If counter-terrorism was the official reason, this now seems to be only a pretext for also spying on any important person, including one’s closest allies.

Now that they have lost confidence that the United States or other countries will respect privacy of the politicians, companies and citizens of their countries, some governments are now planning to limit the reach of American-based Internet companies.

The Financial Times reported that Brazil is planning regulations that would force technology companies to retain information on the Internet about its citizens and institutions within Brazil itself.

It also said that European officials are discussing the need to have stronger cloud computing capabilities in Europe to protect their citizens’ privacy.

Brazil is also planning to bring up in various UN agencies and fora the need for a global framework to respect and protect privacy on the Internet.

Contributed by Global Trends Martiin Khor
The views expressed are entirely the writer’s own.

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Malaysia views spying seriously

KLUANG: Spying activities on Malaysia by its allies is a serious matter, says Defence Minister Datuk Seri Hishammuddin Hussein.

This is because it can cause relations between Malaysia and these countries, long established based on trust and sincerity, to be tense.

“I believe if this (spying) is not fully explained, our long-established good relations can be adversely affected. Therefore, we need a full explanation on the extent of the spying activities and for what purpose.

“Tensions can be avoided if the allies involved uphold the trust and sincerity in their relations with Malaysia,” he said.

Hishammuddin said this to reporters after attending a Deepavali open house hosted by Johor Unity and Human Resources Committee chairman R.Vidyanathan here yesterday.

The spying issue arose following media reports on the claim made by intelligence informant Edward Snowden that the United States had 90 electronic surveillance facilities throughout the world, including at its embassy in Kuala Lumpur.

In light of this, Hishammuddin wanted a detailed explanation on the matter as such activities could threaten Malaysia’s security and its other interests.

The US ambassador to Malaysia, Joseph Y. Yun, was reported to have explained on the spying claim to Wisma Putra.

Foreign Minister Datuk Seri Anifah Aman said Yun had stated that all surveillance activities by the United States throughout the world were specifically for security, to detect threats of terrorism and weapons of mass destruction.

On his trip to China last month, Hishammuddin said it was aimed at enhancing cooperation in the area of defence, especially through joint exercises, exchange programmes involving navy and other military officers, establishing cooperation between the defence industries of both countries, and efforts to combat terrorism and transnational crime.

Meanwhile in Yan, Inspector-General of Police Tan Sri Khalid Abu Bakar said they would arrest any foreign diplomat found to be involved in spying activities.

“We will not hesitate because spying is a threat to the country’s sovereignty. In the 1980s, we have arrested foreign diplomats involved in spying activities.

“We will do the same again if there is proof of such activities,” he told newsmen after a briefing on the Sungai Limau by-election at the Yan police headquarters yesterday.

- The Star/Asia News Network Monday Nov 4, 2013

New tax rate on property to keep away flippers

 

Profiteering nipped: Flip-happy property ‘investors’ – or rather, speculators – are not laughing now with the new stringent government measures to rein in excessive speculation.

Property prices have been spiralling and Budget 2014 introduced tough measures to cool prices down.

AHYAT Ishak was in the midst of selling off a property when Budget 2014 was tabled which saw hikes in the Real Property Gains Tax (RPGT).

It was higher and tighter than he expected. “Because of this announcement, I would have to make several different decisions. I bought that house less than three years ago.

“Previously, I would have been taxed 10% as RPGT, but with the recent announcement, I would need to fork out 30% of my profits for the RPGT.

“So right now, I am thinking that I should not sell it,” says the 30-something Ahyat, who has been investing in properties for the past 10 years and also runs workshops for wannabe property investors.

“If you have been strategic about investment, you would have known that the RPGT can go up anytime and you would have taken that into account in your investment plan. The worst strategy is when you have only one strategy,” he stresses.

Change of strategy: Property investor Ahyat is having second thoughts about selling a property he bought less than three years ago because of the higher RPGT. >

So he is not worried about hanging on a bit longer to the property that he had originally wanted to sell, because one of the rules he goes by is to make sure what he buys is an “investment-great asset”.

For him, this means two things – that the property is “tenant-able” and that it has good potential for capital appreciation.

As a player, he also makes sure he has the holding power to hang on to a property and service the loan.

“But it’s seen as uncool and yucky to talk to young investors about tenant-ability and capital appreciation. ‘Buying for rent’ is so old school to them. I’ve had people calling me a ‘sissy investor’ .

“Everyone was talking about ‘I buy, I get the keys, I flip’. How can that be sustainable?

“When I advocate responsible and sustainable investment, it is like a joke,” he says.

But those flip-happy property “investors” – or rather, speculators – are not laughing now with the new stringent government measures to rein in excessive speculation.

Other than the higher RPGT, the government is also prohibiting the developers interest-bearing scheme (DIBS), making developers spell out details of the house price and all the so-called “freebies” included, as well as making it a regulation that foreigners are only allowed to purchase properties that cost RM1mil and above.

Viewing the budget announcement as “very positive”, marketing and strategic consultant for developers Dr Daniele Gambero thinks this is what the market has been looking for.

“It is necessary to curb completely the investment of investors or speculators who are using property as if it is a forex or stock exchange market (where there is massive buying and selling in a short period).

“Property is not an asset for the short term. It is for the medium or long term, otherwise it becomes unhealthy and the market blows up,” he warns.

Gambero, who has been in the business for 15 years in Malaysia, says the kind of packaging housing developers have been offering over the past five years has been “ridiculous”.

“They are offering renovation packages, ‘free’ trips to, say, China and some even had a lucky draw for a Mercedez Benz.

“It’s ridiculous because these are actually not free. It is factored into the pricing and this is what has been pushing house prices up by a good 20%,” he says, stressing that developers are not angels and are merely responding to what the market is asking for.

He also takes to task the buyers for their “short-sightedness” in following their “emotions” instead of using practical and logical consideration when they buy property.

“If the value of the house is RM400,000 and these ‘free, free, not-so-free’ things bring the house price up to RM500,000, do they calculate how much this extra RM100,000 will cost them at the end of the loan tenure?

“At the end of the 35-year period, they might end up having paid RM180,000 extra in loan for these ‘free-free, not-so-free’ things the developer has thrown in to sweeten the deal. Don’t look at how much you are paying today but how much it will cost you in 20 to 30 years’ time,” he advises.

Besides, Gambero’s personal feeling is that most of the renovation offers built into the house price in fact ends up going down the drain, because about 40% to 50% of buyers end up having to renovate again because they want something that suits their personal taste.

One other thing that people should really sit up and take notice of is that with developers having to come clean with all the pricing, how will this impact on the amount of loan they can get to buy a property.

Both Ahyat and Gambero talk about the repercussions from banks.

“How is the banking industry going to react to this?

“When it is stripped bare and developers have to be transparent with details of the pricing, such as club membership, aircon, renovation and so on, the banks are going to be looking at that RM600,000 house and saying ‘Hey, this property’s value is actually RM500,000’ and that extra RM100,000 is just ‘fluff and whip cream’.

“Valuers from banks would give ‘zero’ value to those elaborate plaster ceilings, aircon and chandeliers. In the world of valuers, it is a big sin adding on all these add-ons.

“You can’t give loans on something that is inflated. You give loans based on the fundamental value,” says Ahyat, warning that the repercussions could be massive.

Concurring, Gambero says, the purchaser is at a “double losing end”.

“Say you bought the property for RM600,000 and a few years down the line you want to sell it for RM800,000, and find someone willing to pay that price.

“But when that person goes to the bank to ask for financing, the bank will look at the sales and purchase agreement and get their valuer to do a valuation and the valuer will give a value for the bricks but ‘not the plus, plus free-not-so-free’ package added in by the developer.

“And that real value of the house might only be RM700,000, so the bank will slash the margin of financing. So you might not be able to sell the house at RM800,000,” he says.

But will these new measures bring down the price of property?

Adrian Un, the founder and CEO of a property education arm, says the Budget announcement brought in the first wave and caught new young investors, aged 25 to 35, who came into the market with minimum downpayment, by shock.

The second wave, he believes, will come in when the details of the actual guidelines are spelt out.

“What has been announced is very general and the tip of the iceberg. Investors want to know in detail ‘if I do this or that, do I get a waiver’,” he says.

He thinks seasoned players will wait for a while and that after the Chinese New Year, when the news sinks in, they will continue to buy.

Un notes that developers with new launches planned will have to launch “no matter what” and they will now strategise on how to innovate and find new ways to entice people to buy.

“When they do away with the DIBS (a scheme where the developer bears the interest during the construction period and buyer pays nothing because that interest had already been factored into the price of the house), people might now be asking if it is worthwhile to buy the property.

“Developers might find a way to reimburse the buyer on the interest in a different way. For example, they may ask the customer to pay it first and then give a rebate or reimbursement every quarterly,” he says.

Un says it’s hard for house prices to come down.

“The cost of raw material has gone up, developers are going to have to pay GST from April 2015 (on supplies and material), the cost of labour has gone up, inflation is going to creep up with the introduction of GST and land cost is not getting any cheaper.”

Coming back to Ahyat, he says he doesn’t disagree that the property market is overvalued and that DIBS, among other things, had helped fuel speculation.

And he wonders too if other fiscal policies might be in the offing, like a hike in interest rates.

“We are in a low-interest environment right now and cheap credit fuels speculation.

“If there is a rise in interest rate, some say it would signal the bursting of the bubble because more people would die standing as their holding power would reduce significantly. And people can’t get loans or buy too if interest rates are too high.

“My question is, can Malaysia afford to let the development and construction industry contract and cool down? This is a very scary question to ask,” Ahyat notes.

Contributed by Shahanaaz Habib The Star

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