Let the Will and Kate show begin!

Admittedly, they are a winsome twosome who brought back excitement and glamour to the British royal family. But why the blazes are we so dazzled by the likes of them? 

TOMORROW, the most famous and glamorous royal pair in the world comes to town: Prince William and Princess Catherine a.k.a. the Duke and Duchess of Cam­bridge.

What a mouthful but, boy, don’t we just love the sound of it – so posh, so noble and yes, sooooo romantic.

It’s a tad ironic that many nations in the last couple of centuries dumped their monarchs in revulsion over their feudalistic, despotic ways, yet royalty’s power to excite the imagination has not dimmed.

For example, South Korea is stoutly republic but that hasn’t stopped its TV stations producing many popular K-dramas based on a fictional royal family set in modern times.

The ones I’ve seen usually have storylines of a long-lost princess or prince being discovered or the royal family battling conspiracies and winning the love and support of the Korean citizenry.

British royalty, however, has lasted – “as old as the hills”, as one wit described it on an online site – and is arguably “first among equals” where royal houses are concerned.

Despite its lineage, by the latter half of the 20th century, Queen Elizabeth II and her family had settled into stodgy respectability and were admired in a rather detached way.

After all, it was hard to go gaga over them when they were rather dull and not particularly good-looking or trendy. Princess Margaret was slightly scandalous but she seemed more desperate than daring.

Enter Diana and British royalty was turned on its head.

No one could and still can’t beat her combination of beauty, glamour, charity and blue blood.

I was in London the day she died on Aug 31, 1997. When I came back, I lamented her passing in a long column in the Sept 11, 1997, issue of Clove.

In it, I mentioned how I missed the opportunity to see her in person because she died a few weeks before she was due to attend an AIDS charity gala in Singapore.

If I had met Diana, I would be able to boast of a hattrick of sorts – seeing in the flesh three generations of British royalty. That’s because I had tea with Queen E when she came to KL for the Commonwealth Heads of Government Meeting in 1989 and I am attending the British-Malaysian Chamber of Commerce lunch on Friday where William will give a speech with Kate in tow.

Queen Elizabeth in person looked exactly like her photos and she spoke in a tinkly, girlish voice. And what did we talk about? The weather. The Malaysian weather, to be exact.

And she was funny. During her 1989 visit, she made a trip to Ipoh at the invitation of Sultan Azlan Shah. It had rained before her plane touched down.

As I recall, Queen E shared that when Sultan Azlan escorted her from the plane, he wanted to guide her down the red carpet that had been rolled out. But the rain had soaked the carpet and she said she didn’t want to walk on it, probably because she didn’t want to ruin her shoes.

She painted an amusing picture of two royal persons ever so courteously jostling each other on the red carpet without batting a protocol eyelid.

I have kept the invitation card embossed with her crest which states: The Master of the Household is commanded by Her Majesty to invite Ms June H.L. Wong to a Reception to be given by The Queen and The Duke of Edinburgh at Carcosa Seri Negara on Tuesday, 17th October, 1989, at 5.00p.m.

I never found out who the Master of the Household was and why I was invited but I am eternally grateful for the experience.

But why should this piece of cardboard be precious enough for me to keep?

After all, as a Malaysian, I have royals aplenty of my own, all nine households. So why am I quite thrilled by Will and Kate’s visit? I am not the only one: all the 1,100 seats at the BMCC lunch were snapped up a month ago.

That’s a question a UK TV station wants to ask The Star editors – Why are Malaysians interested in British royals so removed from their life? – as part of its coverage of the visit. I am still mulling over my answers to that and other questions.

I can say it’s because we were a former colony and/or protectorate and being part of the Commonwealth, we never completely severed our ties with Old Blighty.

My 85-year-old dad can still sing God Save The King which he learnt as a schoolboy!

I can say it’s because many Malaysians speak English as a first language, earned their degrees in the UK and there is such a familiarity with Britain that London is sardonically described as a second home to rich Malaysians.

And yes, I must add that Malaysians are crazy English football fans.

I should point out we aren’t interested in all British royals though – just the queen, these two and Harry.

And that possibly because we were so enamoured of Diana that we are merely continuing that obsession through her sons and daughter-in-law who are – fortunately or unfortunately – young, good-looking and trendy, vital factors in today’s visual-fuelled world.

And who doesn’t love a real-life story of a commoner who wins the heart of a prince and becomes a nation’s future queen?

But I honestly believe that if Kate was plain, we wouldn’t be so interested. That’s why Sarah Ferguson and Sophie (Prince Edward’s wife lah!) never wowed us the way Diana did.

In time to come when William loses more hair, he may also lose his shine, the way his dad did. How Kate holds up and evolves in her role as princess remains to be seen and, therefore, her longevity on the popularity scale.

But for now, they are the It Royal Couple. Welcome to Malaysia, Your Highnesses.

> If you can offer other reasons why we are interested in British royals and what it is you like to read about the Duke and Duchess, let the writer know so that the better she can answer the UK TV station people. Ta and toodle pip!

So Aunty, So What? By JUNE H.L. WONG 

China defense ministry acts as Japan buys its Diaoyu Islands

(Reuters) - Japan brushed off stern warnings by China on Tuesday and bought a group of islands that both sides claim in a growing dispute that threatens to deepen strains between Asia's two biggest economies.

A territorial dispute between China and Japan has intensified with Beijing sending patrol ships near disputed East China Sea islands in a show of anger over Tokyo's purchase of the largely barren outcroppings from their private owners.

The arrival on Tuesday of the two patrol ships of the China Marine Surveillance off the islands was meant to assert China's claims, said the Chinese government's official news agency, Xinhua.

The marine agency is a paramilitary force whose ships are often lightly armed, and Xinhua said it had drawn up a plan to safeguard China's sovereignty of the islands.



BEIJING, Sept. 11 (Xinhua) -- The armed forces of China are completely opposed to the Japanese government's move to "purchase" the Diaoyu Island and two of its adjacent islands, Chinese Defense Ministry Spokesman Geng Yansheng said Tuesday.

Xinhua said two marine surveillance ships had reached the waters near the islands to "assert the country's sovereignty" (AFP/JIJI PRESS/File, Jiji Press)

Geng issued a statement on the Japanese government's implementation of so-called "nationalization" of the Diaoyu Islands.

Despite strong opposition from the Chinese side, the Japanese government blatantly announced on Sept. 10 to "purchase" the Diaoyu Island and its affiliated Nan Xiaodao and Bei Xiaodao. This act is a severe infringment of Chinese territorial sovereignty, Geng said.

Geng said the Diaoyu Island and its affiliated islands are China's inherent territory. China has sufficient historical and jurisprudential evidence surrounding this.

Geng said the Japanese government's action and the so-called "island purchase" was totally illegal and invalid.

In the statement, Geng said since the start of the year, the Japanese government has endorsed right wing forces to clamor for the "island purchase" and even move in to "purchasing the islands" by itself. He said this severely harmed the general situation of the development in China-Japan relations.

Geng said in recent years, Japan has expanded armament under various excuses, frequently incurred tension in regional situations and repeatedly stirred up troubles on the issue of the Diaoyu islands. Such moves are worthy of high vigilance by its Asian neighbors and the international community.

"The Chinese government and armed forces stand firm and are unshakeable in its determination and will safeguard sovereignty over the nation's territories," Geng said.

"We are watching closely the evolution of the situation and reserve the right to take reciprocal measures," Geng said.

Related:

Japanese gov't signs purchase contract on Diaoyu Islands: media

TOKYO, Sept. 11 (Xinhua) -- The Japanese government has exchanged the official contract on the purchase of Diaoyu Islands with Kurihara family whom the Japanese side called "the private owner", NHK reported Tuesday morning.

Japanese Cabinet on Tuesday morning decided to disburse reserve funds to purchase part of China's Diaoyu Islands, before signing a sales contract with whom the Japanese side called "the private owner" of the islands scheduled later Tuesday, it said.  Full story

Two Chinese patrol ships reach waters around Diaoyu Islands

BEIJING, Sept. 11 (Xinhua) -- Two ships of the China Marine Surveillance (CMS) have reached the waters around the Diaoyu Islands Tuesday morning to assert the country's sovereignty.

The CMS has drafted an action plan for safeguarding the sovereignty and would take actions pending the development of the situation, the CMS sources said.  Full story

Hu states China's stance on Japan ties, Diaoyu Islands

VLADIVOSTOK, Russia, Sept. 9 (Xinhua) -- Chinese President Hu Jintao met with Japanese Prime Minister Yoshihiko Noda here on Sunday and made clear China's position on its relations with Japan and the Diaoyu Islands issue.

The two leaders met on the sidelines of the 20th informal economic leaders' meeting of the Asia-Pacific Economic Cooperation forum.  Full story

Top legislator reiterates China's stance on Diaoyu Islands

TEHRAN, Sept. 10 (Xinhua) -- China's top legislator Wu Bangguo said here Monday that Japan's decision to "buy" the Diaoyu Islands is illegal and invalid.

Wu, chairman of the Standing Committee of the National People's Congress, briefed Iranian parliament speaker Ali Larijani on the latest development concerning the Diaoyu Islands.   Full story

"Absolutely no concession" on Diaoyu Islands, says Chinese premier

BEIJING, Sept. 10 (Xinhua) -- Premier Wen Jiabao said Monday the Diaoyu Islands are an inalienable part of China's territory and China will "absolutely make no concession" on issues concerning its sovereignty and territorial integrity.

Despite repeated solemn representations of China, the Japanese government announced Monday it would "purchase" part of China's Diaoyu Islands from "private Japanese owners" and bring the islands under "state control."   Full story

Full text of Statement of the Ministry of Foreign Affairs of the People's Republic of China

BEIJING, Sept. 10 (Xinhua) -- Following is the full text of the Statement of the Ministry of Foreign Affairs of the People's Republic of China issued on Monday.

Statement of the Ministry of Foreign Affairs of the People's Republic of China

10 September 2012

Regardless of repeated strong representations of the Chinese side, the Japanese government announced on 10 September 2012 the "purchase" of the Diaoyu Island and its affiliated Nan Xiaodao and Bei Xiaodao and the implementation of the so-called nationalization" of the islands. This constitutes a gross violation of China's sovereignty over its own territory and is highly offensive to the 1.3 billion Chinese people. It seriously tramples on historical facts and international jurisprudence. The Chinese government and people express firm opposition to and strong protest against the Japanese move.  Full story

Related post:


Japan's buying Diaoyu Islands provokes China to strike back 

Managing strata properties in Malaysia

I LIKE to highlight the rather difficult and controversial issue of the management (and maintenance) of stratified properties, particularly flats, apartments and condominiums, in the context of the proposed Strata Management Act, 2012 which is expected to be tabled during the upcoming session of Parliament.

The Building Management Association of Malaysia (BMAM) is the only multi-stakeholder organisation (established in 2009) representing the collective interests of chambers of commerce, developers, engineers, architects, shopping and high-rise complex managers, management corporations (MCs), joint management bodies (JMBs) and managing agents.

However, BMAM was not nvited to participate in the workshops and discussions held by the National Land Council and the Housing and Local Government Ministry when the draft Bill was deliberated, although the implementation of the Act will have consequences that will directly affect BMAM stakeholder-member organisations.

According to the information available to us, the Bill states that only licenced valuers who have been admitted as Property Managers pursuant to Section 21(1)(a) of the Valuers, Appraisers and Estate Agents Act, 1981 (VAEA Act) to manage and maintain stratified (or subdivided) buildings as managing agents.

No such restrictions exist in the current laws that regulate building management, namely the Strata Titles Act, 1985 (ST Act) and the Building and Common Property (Maintenance and Management) Act, 2007 (BCPMM Act).

Building management is a multi-disciplinary occupation and cannot be exclusive to the valuers alone.

The JMBs and MCs want to have the independence and opportunity to appoint any fit and proper person, or appropriate entity, as managing agent on a “willing seller-willing buyer” basis on mutually agreed terms and conditions.

The Bill, by restricting building management and maintenance to valuers, would create a monopoly, and is inconsistent with the spirit of the Competition Act, 2010, which clearly discourages the creation of monopolies.

Though building owners (JMBs and MCs) and Real Estate Investment Trusts (REITs) have been exempted from this ruling, most JMBs and MCs, led by volunteers, do not have the time, skill, expertise or experience to manage and maintain their buildings, and neither can they afford to appoint a registered property manager as a managing agent.

JMBs and MCs would be required to pay a management fee in compliance with their Fee Schedule, excluding other operating costs such as staff salaries, electricity, water, cleaning, security, etc.

We will soon see the mushrooming of more urban stratified slums and ghettos, thereby defeating the objectives of the Government’s squatter resettlement programmes and public housing projects.

The fiduciary responsibilities of the MCs and JMBs have been clearly stated in the ST Act and the BCPMM Act on the management of the Building Maintenance Fund and the Sinking Fund.

The managing agent appointed by the JMB or MC to manage and maintain the subject properties is only required to perform these functions for and on behalf of the JMB or MC. A registered property manager is therefore not required.

The MCs and JMBs only need building and facilities management for their common properties.

Since common properties and facilities cannot be sold, and most residential building owners do not lease their common properties to third parties as they would need them for their own use.

Many non-valuer managing agents have several years of experience in building and facilities management.

They have also been admitted as members and registered building managers by BMAM upon satisfying the required admission criteria.

They are qualified and skilled in building management, operations and facilities maintenance, and have also subscribed to a professional building management liability insurance policy entered into between a local insurance company and BMAM.

Any attempt by the ST Act to split managing agents as valuers and non-valuers will be detrimental to the growth and development of the building management industry in Malaysia.

It will result in the loss of valuable management talent in the industry. It will also have serious social implications on the upward career mobility of qualified and experienced local building managers, many of whom are bumiputras.

The Commissioner of Buildings (COB) should be the sole regulatory body to
supervise and oversee the management and maintenance of stratified buildings in Malaysia.

The involvement of third parties, who have no ownership interests in the properties, will not only erode the COB’s authority but may also result in unnecessary layering, additional costs (with no proportionate increase in service quality), corruption, rent seeking and abuse of power.

PROF S. VENKATESWARAN
Secretary-general
Building Management Association of Malaysia

Time to reform Malaysia's tax system?

Comprehensive review timely as Malaysia is driving its transformation programme

RECENT developments in parts of Europe have sparked a debate in the eurozone on austerity and growth. Those who argue for austerity or “fiscal prudence” claim that debt management is key to restoring investor confidence and, therefore, long-term prosperity.

Borrowing more is not an acceptable response to a crisis caused by over-borrowing and over-spending. In contrast, those who prefer greater stimulus claim that, without further investment, growth will simply not return, and without some Government stimulus, no economy can pull itself out of recession to achieve long-term stability and growth.

Whilst there is no clear “right” answer, there is one aspect of Government policy that is absolutely central to this taxation. Governments must ensure a balanced system of taxation that provides the right incentives to business and citizens, while enabling the Government to meet its debt and spending obligations. Getting this balance right can drive increased confidence among the investor community and stimulate economic activity, international competitiveness and long-term growth.

A new approach

In the past, many countries have relied on the support of international bodies and other inter-governmental assistance to begin the process of tax reform in respect of designing the tax system itself and in improving the ability to collect taxes. In the post “credit-crunch” world, it has become apparent that the operational ability to increase tax revenues is somewhat limited. A new hands-on approach is required to assist the public sector, generating increased tax revenues and driving corporate activity without raising taxes or damaging international competitiveness.

Malaysia has never had a comprehensive review of its tax system

 

Like any business, a Government has costs and it has revenues. A framework is required to help Governments optimise their tax revenue and balancing this need with the creation of the right incentives for citizens and businesses to stimulate the economy. To achieve this, our experience in working with Governments is typically structured around three core work streams:

● Tax reform design - Modeling the economy and designing a new system of taxation appropriate for the jurisdiction, with the emphasis on simplicity, fairness, participation and economic stimulus;

● Tax compliance - Building the taxpayer base to ensure all taxpayers have paid the correct amount of tax under the law and will continue to do so and;

● Tax operational improvements - underpinning both streams, identifying and delivering detailed operational improvements, ensuring transparency of data and processes within the tax administration, across Government departments and with taxpayers.

Malaysia has never had a comprehensive review of its tax system. The setting up of a Tax Review Panel a few years ago basically focussed on the proposed Goods & Services Tax and has done some good work in this area but the focus on income taxes was limited and too restrictive. A comprehensive review is now timely given that Malaysia is aggressively driving its transformation programme towards achieving developed nation status by 2020.

Tax reform design

A tax system is at its best when it is at its simplest, levying the minimal number of taxes, thus making compliance easy for taxpayers and the tax authorities. Headline rates should be minimised, often in exchange for the removal of reliefs or deductions. In addition, it is essential to improve the quality of the taxpayer base. Finally, international trends are to shift the burden of taxation towards indirect taxes to ensure participation in the tax system, improve the reliability of collections and increase fairness.

An effective communications strategy is critical to the success of any tax reform project. To succeed, these projects require a proactive approach to ensure that stakeholders are aware of their progress.

Tax reform projects should have four key phases:

Understand - Work closely with the Government and external bodies to gather and verify data. Quickly establish a detailed understanding of the current tax system and understand the issues from a number of different perspectives. At the same time, model the economy and current tax collections, benchmarking them against other jurisdictions.

Model - Develop an outline model for the proposed tax system, meeting regularly with stakeholders to develop and test ideas and model alternative taxation methods. Produce a detailed proposal for the new tax system, including clear legislative and operational proposals, for political approval.

Implement - Bring the approved model to life. This can include taking a lead drafting new legislation and guidance. A highly operational approach, working to ensure systems, processes and controls are best-in-class and fit-for-purpose is essential at this stage.

Roll-out - Roll out the new system to the various groups of taxpayers and stakeholders and train the Tax Administration teams, including training on tax technical and operational / systems issues.

Tax compliance

In many developing economies, the incidence of tax evasion is certainly not small. Broadening the taxpayer base and ensuring current taxpayers are paying the correct amount of tax under the law helps keep taxes low. Economic and forensic analysis must be applied to identify areas of the economy requiring particular attention. A range of techniques is typically required to provide a complete picture of the tax-paying community.

To deliver real change for the tax administration, forming a single team to identify taxpayers, initiating assessments, managing taxpayer responses and building IT databases is key. Enhancements to processes and systems also drive improved service levels to taxpayers (whether this be speed or quality), which is vital to gain support for the tax system and for improving participation.

Tax operational improvements

Real operational improvements are essential to the successful delivery of any tax reform project. This may include improvements to existing IT systems to automate processes and controls and improve the way data is managed. This applies both to the tax administration's systems and the way it interacts with other Government departments. For example, the tax administration should automatically be informed whenever a new business registers with the Companies Commission.

On a practical basis, it is essential to ensure new tax documents and forms are produced where required, both in paper and electronic form. It makes sense to consider these as part of a wider programme of improving taxpayer interaction, for example, with the implementation of a new website or the ability to file tax returns online. Key to the success of any new document is simplicity both for the tax administration to review and process and for the taxpayer to understand.

Conclusion

The post credit-crunch world has generated a renewed focus on how a Government raises its revenue the right balance of fiscal prudence and stimulus is difficult to achieve. However, with a clear view on what taxes are levied, who pays them and how they are administrated, jurisdictions can drive real improvements in tax collections, real efficiency gains and, in doing so, drive the participation of the taxpaying community. This, in turn, can provide assurance for the investor community, enable the Government to meet its obligations and drive long-term growth for the wider economy, its businesses and citizens.

It is timely that Malaysia announces a comprehensive fiscal reform which is wide-based and wide-ranging and puts into place a long-term plan to mould a world class tax system that will be comparable to the leading developed nations in the world. It is time to let go of the ad-hoc approach of tinkering with the tax system let us get on with it!

By Dr Veerinderjeet Singh and Andrew Burman

● Dr Veerinderjeet is chairman of Taxand Malaysia and Andrew Burman is senior director at Alvarez and Marsal Taxand in the United Kingdom. Both entities are part of the Taxand Global Organisation. They can be contacted at vs@taxand.com.my and aburman@alvarezandmarsal.com respectively.

World Competitive Rankings defy logic

The WEF may have its own method of measuring the competitiveness of each country but its rankings defy the stark reality of what is going on in the world.

BANGKOK: The World Economic Forum (WEF) has just issued its Global Competitiveness Index 2012-2013 rankings.

Thailand’s competitiveness ranking has improved slightly to 38th spot this year, while Switzerland has edged out Singapore to become the most competitive nation on earth.

The WEF has its own formula in ranking the competitiveness of each country. However, the WEF’s ranking does raise some eyebrows.

According to the WEF, Spain is more competitive than Thailand because its overall ranking is 36th. This ranking is questionable.

Spain is planning to seek a full bailout from the European Union. The European Central Bank is about to monetise its debt. It has received €100bil (RM393.7bil) in bailout funds already. Some €75bil (RM295.3bil) in deposits have fled the Spanish banking system.

Spain is in a similar situation to Thailand in the first part of 1997 before Thailand sought a bailout from the International Monetary Fund. By this measure, Spain should not get a ranking higher than Thailand.

Switzerland, ranked No.1, will not enjoy its position as an oasis of peace and prosperity in Europe for too long in the event of a euro implosion. Swiss banks’ assets, which are tied to the European banking crisis, are more than 300% of the country’s GDP.

The United States has slipped to 7th in the rankings. The US economy is in big trouble. Some 46 million Americans are on food stamps. There are 10 million Americans unemployed, including another 12 million who are doing odd jobs.

Some 18 million American households are having a tough time making ends meet. The banking system is in shambles. The US national debt has hit US$16tril (RM49.7tril), or about 100% of the GDP. The budget deficit is chronic. The country is years away, if ever, from being able to balance its budget.

Most important, the Federal Open Market Committee will meet on Sept 12 to determine whether it will go ahead with a bond-buying programme, or QE3, to further prop up the financial system. US finances are in very bad shape indeed.

Japan is ranked in 10th spot. Does it deserve this position? The whole world knows that Japan has the world’s largest public debt at more than US$12tril (RM37.3tril), or 230% of its GDP. Japan’s debt is largely financed by domestic bonds. But with an ageing society, Japan will face higher interest costs from its borrowing, which will put the health of its finances into further question.

The Japanese economy is far from recovering from its crisis of the 1990s. Japan is facing sluggish growth and also high energy costs in the aftermath of the Fukushima nuclear plant disaster.

Its export sector is feeling the pinch from the strong yen. If the consumer markets in Europe or US were to slacken even more, Japan’s export machines will wobble. Foreign exchange earnings will plunge, while domestic demand has been in a weak state all along.

Saudi Arabia, ranked at 18th, is the world’s largest oil exporter. But a Citibank report issued last week said Saudi Arabia might have to import energy by 2030 if the current pace of domestic consumption and exports continues.

Israel is ranked 26th, though it is facing off against Iran in the Middle East. A war could break out between the two countries at any time, given the tensions between their leaders.

China is ranked 29th, although it is the richest country in terms of foreign exchange reserves. Its reserves stand at US$3tril (RM9.3tril). China is the world’s production factory. Its economy is the world’s second largest after the United States. It is improving fast in technology and innovations.

Moreover, China is also building up its military and has nuclear weapons in store. Apparently, China does not deserve this relatively low ranking.

This also applies to other Brics countries such as Russia (67th), Brazil (48th) and India (59th). How is it possible that the Philippines musters at 65th, two notches higher than Russia, which is still a superpower, rich with resources? The Philippines is vulnerable to food price increases and also to natural disasters.

The WEF may have its own method of measuring the competitiveness of each country. But its rankings defy common sense and the stark reality of what is going on in the world.

From a group of leading Asian newspapers working towards improving coverage of Asian affairs
http://www.asianewsnet.net/

Making all housing more affordable in Malaysia

WHEN I watched Usain Bolt cross the 100m line in an Olympic record of 9.63 seconds during the recent concluded Olympic Games, I saw a young focused sprinter with only one objective in mind; to cross the finish line in the shortest possible time. He amazed the world with his stunning performance again.

This reminds me of our journey in making all Malaysian housing more affordable. It is a race that requires the same amount of focus from all relevant stakeholders including public sector which is the Government, and private sectors, i.e. the property developers, home buyers and NGOs. Furthermore, like in a race where the sprinters have a sight on the direction and goal, all stakeholders in the housing industry should be aligned to the same goal before starting the race.

To understand what exactly drives up property prices, we need to analyse the various factors that influence the price of a housing development in Malaysia. This may help us identify the root cause and provide us with the correct remedies to make Malaysian housing more affordable and sustainable.

Let's begin by looking at what are the major cost components of a property project. Twenty or 30 years ago, land acquisition was only about 5% to 10% of a project cost, but nowadays, it can take up to a sizable 20% to 30% of the whole development budget before any value-added works are carried out on the land itself.

Land prices are ever rising due to scarcity of urban land especially in the major cities. For example, a piece of land that used to cost RM10 per sq ft in Mont' Kiara during the late 80's now can cost up to RM300 per sq ft. With rising land cost “eating” up a significant portion of the development budget, house prices automatically increase as a result.

The next major cost is the holding cost and construction financing cost of the project. The longer it takes to complete a project, the higher the financing costs of the project which will then increase the price of a home.

I mentioned this before in my earlier articles that property projects are sometimes subjected to one, two or more years of gestation period to obtain all the necessary approvals from the relevant authorities before they can be launched. The lengthy approval period will definitely affect the holding costs, and slow down the supply of housing units. If this approval time is not shortened, the rising demand will only further push the prices up. This is the basic market influence of supply and demand.

Another factor that influences the cost of housing, as highlighted by developers surveyed during the recent Real Estate and Housing Developers' Association (Rehda) media briefing, is the unsold and unreleased Bumiputra units.

According to the latest half-yearly property industry survey by Rehda, the number one reason for unsold properties comes from unreleased bumiputra units and has been so for the past two years.

With the requirement to hold on to the unsold bumiputra units, the additional holding cost is inevitably spread out to all the other house buyers in the form of higher priced units. Unreleased bumiputra units may also create a false impression of supply shortage in the market, and these can cause the prices to increase again. While we recognise the need for a bumiputra housing policy, the various states should agree on a transparent, auto-release mechanism to release bumiputra units if unsold beyond 18 months of launch, to make houses more affordable for everyone.

Apart from land cost, holding, and construction financing costs, another cost component that adds to the price of properties is utilities costs. In the past, utility companies would be expected to build substations and water storage towers as well as lay electrical cables and water pipes. Today, all these are required to be completed by developers themselves.

In a roundtable discussion on housing affordability, Housing Buyers Association secretary-general, Chang Kim Loong highlighted that the privatisation of utility companies have turned them into profit-oriented companies. Taxpayers' monies are no longer utilised to provide the basic necessities that they have paid for. This ends up making houses cost more because home owners end up bearing the cost of the infrastructure for these utility services.

In the illustration mentioned at the start of this article, a sprinter must stay focused on the targeted goal of winning the race without mental and physical disadvantages before and during the sprint. Imagine if Bolt needed to run against a headwind and carried a few pounds on his back all along the race. Would he still able to break the Olympic record and become a legend?

In the race to make the price of all housing units more affordable, the issues of high land cost, lengthy approval period, additional utilities expenditure and unreleased bumiputra lots are the burdens that are holding houses back from becoming more affordable. Solve these dilemmas and we will begin to break records.

● FIABCI Asia-Pacific Regional Secretariat chairman Datuk Alan Tong has over 50 years of experience in property development. He is also the group chairman of Bukit Kiara Properties. For feedback, please email feedback@fiabci-asiapacific.com. 

Related post:

Our cars are costing us our homes!

How to avoid future complications when buying a house?

Malaysian property market remains resilient: housing robust but commerical glutted 

Singapore moves to discourage shoebox apartments

China, Russia sound alarm on world economy at APEC summit

By Timothy Heritage

VLADIVOSTOK, Russia

(Reuters) - China and Russia sounded the alarm about the state of the global economy and urged Asian-Pacific countries at a summit on Saturday to protect themselves by forging deeper regional economic ties.

Chinese President Hu Jintao said Beijing would do all it could to strengthen the 21-member Asia-Pacific Economic Cooperation (APEC) by rebalancing its economy, Asia's biggest, to improve the chances of a global economic recovery.

Russian President Vladimir Putin said trade barriers must be smashed down as he opened the APEC summit which he is hosting on a small island linked to the Pacific port of Vladivostok by a spectacular new bridge that symbolizes Moscow's pivotal turn to Asia away from debt-stricken Europe.

"It's important to build bridges, not walls. We must continue striving for greater integration," Putin told the APEC leaders, seated at a round table in a room with a view of the $1 billion cable-stayed bridge, the largest of its kind.

"The global economic recovery is faltering. We can overcome the negative trends only by increasing the volume of trade in goods and services and enhancing the flow of capital."

Hu told business leaders before the summit the world economy was being hampered by "destabilizing factors and uncertainties" and the crisis that hit in 2008-09 was far from over. China would play its role, he said, in strengthening the recovery.

"We will work to maintain the balance between keeping steady and robust growth, adjusting the economic structure and managing inflation expectations. We will boost domestic demand and maintain steady and robust growth as well as basic price stability," he said.

Hu spelled out plans for China, whose economic growth has slowed as Europe's debt crisis worsened, to pump $157 billion into infrastructure investment in agriculture, energy, railways and roads.

Hu steps down as China's leader in the autumn after a Communist Party congress, but he promised continuity and stability for the economy.

Putin, who has just begun a new six-year term as president, said on Friday Russia would be a stable energy supplier and a gateway to Europe for Asian countries, and also pledged to develop his country's transport network.

RUSSIA LOOKS EAST

The relative strength of China's economy, by far the largest in Asia and second in the world to the United States, is key to Russia's decision to look eastwards as it seeks to develop its economy and Europe battles economic problems.

APEC, which includes the United States, Japan, South Korea, Indonesia and Canada, groups countries around the Pacific Rim which account for 40 percent of the world's population, 54 percent of its economic output and 44 percent of trade.

APEC members are broadly showing relatively strong growth, but boosting trade and growth is vital for the group as it tries to remove the trade barriers that hinder investment.

The European Union has been at odds with both China and Russia over trade practices it regards as limiting free competition. Cooperation in APEC is also hindered by territorial and other disputes among some of the members.

Putin, 59, limped slightly as he greeted leaders at the summit. Aides said he had merely pulled a muscle. Underlining Putin's good health, a spokesman said he had a "very active lifestyle."

Discussions at the two-day meeting will focus on food security and trade liberalization. An agreement was reached before the summit to slash import duties on technologies that can promote economic growth without endangering the environment.

Breakthroughs are not expected on other trade issues at the meeting, which U.S. President Barack Obama is missing. He has been attending the Democratic Party convention and Washington is being represented by Secretary of State Hillary Clinton.

U.S. officials say Clinton's trip is partly intended to assess Russia's push to expand engagement in Asia, which parallels Washington's own turn towards the Asia-Pacific region.

Also missing the summit was Australian Prime Minister Julia Gillard. Putin said she had dropped out because her father had died.

(Additional reporting by Gleb Bryanski, Andrew Quinn, Katya Golubkova, Douglas Busvine, Denis Pinchuk and Andrey Ostroukh; Editing by Janet Lawrence)

 Newscribe : get free news in real time