Rightways to Success

Wednesday, 21 February 2018

Singapore budget 2018: hiking its sales tax, but not until 2021 or later

https://youtu.be/QbytAqqXiCk

http://www.singaporebudget.gov.sg/budget_2018/
https://twitter.com/MOFsg

Higher GST: A file picture showing people walking along busy Orchard Road in Singapore. The country says its sales tax will rise to 9% but the change will come sometimes between 2021 and 2025

Singapore is hiking its sales tax, but not until 2021 or later

SINGAPORE (Reuters) - Singapore said its sales tax will rise to 9 percent from 7 percent, but the change will only come “sometime” between 2021 and 2025, making it likely that the increase would kick in after the city-state’s next general election.

Instead of getting a GST hike soon, Singaporeans aged 21 and above will get a “hong bao”, or Lunar New Year red packet, as Finance Minister Heng Swee Keat announced a “one-off” bonus in 2018 of up to S$300 ($228.50), depending on their income.

The bonus comes after Singapore’s trade-reliant economy grew 3.6 percent in 2017, its best pace in three years.

Global economic growth, plus comments by policymakers on the importance of raising revenue to meet future spending needs for Singapore’s ageing population, led many analysts to expect that the Goods and Services Tax, kept at 7 percent since 2007, would increase as early as the coming fiscal year.

“The surprise for us was that the planned increase was for a much later period,” said Jeff Ng, chief economist Asia for Continuum Economics.

“This eases the need for a future government or administration to announce the GST,” Ng said.

Singapore’s next general election is due to be held by January 2021. In the last one in 2015, the ruling People’s Action Party won 70 percent of the vote, a strong improvement from the 60 percent garnered in 2011.

After announcing the planned GST hike, the finance minister said “the exact timing will depend on the state of the economy, how much our expenditures grow, and how buoyant our existing taxes are. But I expect that we will need to do so earlier rather than later in the period.”

Singapore introduced a GST in 1994, with a 3 percent rate. This was raised to 4 percent in 2003 and 5 percent in 2004, then to 7 percent in 2007. The current rate is among the world’s lowest for a consumption tax.

CARBON TAX COMING

Besides the plan for raising GST, Heng unveiled other tax measures.

These include increasing the top marginal buyer’s stamp duty on residential property worth more than S$1 million effective from Tuesday, raising the excise duty on tobacco products and introducing GST on imported services from 2020.

Coming in 2019 is a carbon tax, which will be S$5 per tonne of greenhouse gas emissions until 2023. The plan is to increase it to between S$10-S$15 per tonne by 2030.

Heng said spending needs will rise across various sectors in coming years, including in healthcare, infrastructure and security.

The government expects average annual healthcare spending to rise from 2.2 percent of GDP currently, to almost 3 percent of GDP over the next decade, he added.

“With an ageing population and an increasing chronic disease burden, the demands on families and Government will rise,” the finance minister said. “We will need to spend even more on healthcare.”

Heng, one of several cabinet ministers considered a possible successor to Prime Minister Lee Hsien Loong, said in the speech “We must anchor Singapore as a Global-Asia node of technology, innovation and enterprise.”

Song Seng Wun, an economist for CIMB private banking, said the one-off “hong bao” bonus was a product of Singapore’s economy having a “better than expected outcome” in the last year.

(For a graphic on Singapore's ageing demographics click reut.rs/2BzapNH)

($1 = 1.3125 Singapore dollars)

By Masayuki Kitano, John Geddie

Additional reporting by Aradhana Aravindan and Fathin Ungku; Editing by Richard Borsuk

Our Standards:The Thomson Reuters Trust Principles.

Singapore announces one-time bonus of S$100-S$300 for adult Singaporeans - ASEAN/East Asia

Budget 2018:
Singaporeans to
get 'hongbao' SG
Bonus of up to S$300 following 2017 Budget surplus

Channel NewsAsia

Singapore Matches
More Problems
With More Money
in Budget

Bloomberg

Singapore Budget
2018: 'Well-
calibrated', will
help lift wages, say Money FM 89.3 panellists

The Straits Times

Sunday, 18 February 2018

Pooch and prejudice: years of the Dog 2018 and Pig 2019

No puppy love: To immortalise Hachiko’s loyalty, a shiny bronze sculpture stands near the Shibuya train station.

I decided to celebrate Chinese New Year away from Malaysia this year, so my wife and I chose Tokyo as our destination.

We wanted somewhere that was a short flight’s distance for a brief getaway to celebrate our 28th wedding anniversary, an occasion marked auspiciously by Valentine’s Day and of course, this time around, the Chinese New Year holidays too.

Now, the problem with Tokyo is the absence of any form of Chinese New Year mood there since it is not observed by the Japanese. But the cool weather was a refreshing change from the stifling heat currently enveloping Malaysia.

That said, the Year of the Dog would not be complete without tipping the hat to Japan’s most revered dog at Tokyo’s Shibuya metro station.

There, a statue of the faithful and fabled canine Hachiko has been erected as a homage, where selfie opportunities are mandatory for anyone visiting Tokyo to realise their trip.

The dog, from the Akita prefecture, has long become a symbol of faithfulness, a trait familiar with dog lovers.

This legendary canine was born in the city of Odate but ended up being owned by university professor Hidesaburo Ueno, who lived in the Shiba neighbourhood.

Hachiko would wait patiently at the same spot in the train station for his owner to return on the 4pm train from his workplace, the Tokyo Imperial University.

But one day in May 1925, the professor never returned to greet his loyal friend after suffering a fatal cerebral haemorrhage on campus.

A forlorn Hachiko would return to that same spot for the next 10 years, hoping to be reunited with his master.

“It is said that the dog would wait outside the station every evening – a model of fidelity and patience,” the Japan Times reported.

To immortalise the canine’s loyalty, a shiny bronze sculpture stands at the Shibuya station. The art fixture was put up in 1934 and has since become one of the area’s main tourist attractions.

The story inspired the 2009 film Hachi: A Dog’s Tale, starring Richard Gere. And less known, perhaps, is Hachiko Monogatari from 1987, which relates the same tale.

The body of golden-brown Hachiko, which has been described as the most faithful dog in history, was found in a Tokyo street in 1935. He had died of old age. To keep his memory alive, he was preserved and placed on display at the National Science Museum.

He also has his own memorial beside his master’s grave at the Aoyam cemetery.

In 2015, a new statue was installed at the University of Tokyo, the new name of the imperial university, to mark the 90th anniversary of Ueno’s death and the 80th of his dog’s.

“The statue depicts a joyous image of the professor and his loyal dog being reunited. It tells a happy tale of master and dog reunited forever at last,” a news article reported.

As we celebrate the Year of the Dog, the Malaysian Islamic Development Department must be applauded for assuring Muslims that using images of dogs for Chinese New Year celebrations “is something that must be respected by all” and “according to the Islamic concept of co-existence, as well as Malaysia’s practice of moderate Islam”.

Jakim director-general Tan Sri Othman Mustapha’s statement was certainly welcome and was even a pleasant surprise for many non-Muslims, who often view the authority as conservative.

After all, this is the same agency that insisted popular pretzel chain Auntie Anne change the name of its “Pretzel Dog” to “Pretzel Sausage”.

Non-Muslims have always been respectful of how Muslims consider dogs unclean under Islamic tradition.

Some have gone to ridiculous lengths to ensure that such sensitivity is observed – even leaving out the likeness of two animals, the dog and pig, from the Chinese zodiac!

Believe it or not, a T-shirt maker printed tops like these to represent the 12 zodiac animals for the Chinese New Year recently.

And some malls even chose not to use image of dogs in their Chinese New Year decorations.

Not surprisingly, the over-reaction of these business entities have irked their Chinese customers, judging from the response on social media.

It may seem surprising that Universiti Putra Malaysia (UPM) has produced some of the best veterinary doctors in this country, the majority of them Muslim.

My late dog Jezz, a gorgeous white Spitz, lived for 16 years and endured that long because of the loving affection of a Muslim vet at UPM.

She showed her care, not just as an animal doctor, but as someone who consistently reminded her students and visiting pet owners that dogs are also God’s creations.

A young tudung-clad Muslim vet from a clinic in Aman Suria, Petaling Jaya, has also been doing a wonderful job of looking after the health of my poodle, Paris.

In all my visits to consult these two doctors, neither has ever displayed any apprehension or disdain in handling my pets. They have always been professional and are true animal lovers, even graciously accepting dogs.

Next year, the Chinese will celebrate the Year of the Pig. For whatever reason, we have become more afraid these days, a situation far different from the past.

Well, the last time we celebrated the Year of the Pig in 2008, nothing untoward happened and the chubby animal didn’t disappear into thin air then either.

I have always had complete faith in the sense of reasoning and maturity of our people, and I believe no one will lose their head over a zodiac sign.

By Wong Chun Wai

Wong Chun Wai began his career as a journalist in Penang, and has served The Star for over 27 years in various capacities and roles. He is now the group's managing director/chief executive officer and formerly the group chief editor.

On The Beat made its debut on Feb 23 1997 and Chun Wai has penned the column weekly without a break, except for the occasional press holiday when the paper was not published. In May 2011, a compilation of selected articles of On The Beat was published as a book and launched in conjunction with his 50th birthday. Chun Wai also comments on current issues in The Star.

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Friday, 16 February 2018

When tongues wag and tales grow: be aware of politicians gone to the dogs!

With the GE imminent, politicians are already snarling at each other, hoping to score points early.

I love dogs. I’ve always had one, from since I was a child, and now, I have three – two Siberian huskies and a poodle.

Despite their differences – in age and breed – they truly love each other, and it’s a real blessing to have this trio of girls in our family.

But I can’t echo that sentiment for some of our politicians. Politics in Malaysia has gone to the dogs. The concerned players are already in dog fights and the general election hasn’t even been called yet.

It’s still early days, although everyone reckons polling is on the horizon. And we’re all too familiar with the dog-eat-dog nature of politics.

Politicians are already snarling, slobbering and barking at each other. Everyone seems to be calling each other liars and running dogs daily.

Therefore, this has left many of us confused. Who is telling the truth? The incessant snapping doesn’t seem to be seeing an end. There is no light at the end of the tunnel, so to speak.

Well, it was the Penang undersea tunnel that got the ball of nastiness rolling. There’s no resolution in sight, for sure, and if you think we should only cross the bridge when we get there, forget it. It’s under-utilised, at least one of them, anyway.

Well, as the saying goes, every dog has its day, but at some point, it’s going to be dog-gone for any politician who can’t stick to the truth or remember the lies he told. For certain, it will be one hell of a dog day afternoon when that happens.

Meanwhile, opposition leader Tun Dr Mahathir Mohamad has been criss-crossing the country telling his audience that Malaysia will go to the dogs if Datuk Seri Najib Tun Razak remains Prime Minister. Yes, those are his exact words – go to the dogs.

There’s still plenty of fire in his belly, like a dog with a bone on issues, although he called off a few functions last week, presumably because of health reasons.

On Friday night, he was admitted to the National Heart Institute. Guess he must be dog tired. He’s still a crowd puller and has the knack of explaining issues in simple language and in a low, calm voice, as opposed to the thunder and lightning approach favoured by his DAP partners.

His deadpan expressions and trademark sarcasm are enough to draw laughter and keep the crowds entertained. But he has been continuously dogged by the ghosts of his past. The palaces are in an unforgiving mood for what he has done previously, when he was at the helm for 22 years.

It was Dr Mahathir who launched the campaign to amend the Federal Constitution to remove the Sultans’ immunity in the 1990s.

Dr Mahathir has also been asked to return his DK (Darjah Kerabat Yang Amat Dihormati) title, the highest award in the state, which was conferred on him in 2002. The move by the Kelantan palace to revoke the Datukships of two top Parti Amanah Negara leaders from the state has sent ripples through political circles.

Amanah vice-president Husam Musa and his state chief, Wan Abdul Rahim Wan Abdullah, returned their titles to the palace several days ago after being instructed by the State Secretary’s office to do so.

In December, Dr Mahathir returned the two awards he received from the Selangor Sultan, a move believed to be related to the palace’s outrage over his remark on the Bugis, whom he describes as pirates, irking many, including several Sultans.

The chairman of Parti Pribumi Bersatu Malaysia (Pribumi) was the recipient of two medals of honour from then Selangor Sultan in 1978 and 2003. One of them was the Darjah Kebesaran Seri Paduka Mahkota Selangor (SPMS) (First Class).

Dr Mahathir reportedly told a Pakatan Harapan rally that Malaysia was being led by a prime minister who is a descendant of “Bugis pirates”.

That comment triggered outrage from the Johor Palace, Bugis community and associations in Malaysia, and even from some parts of Indonesia.

Selangor Ruler Sultan Sharafuddin Idris Shah was also incensed by Dr Mahathir’s remarks in an interview with The Star.

Last January, the Sultan of Johor said he was “deeply offended and hurt” by the political spin used by certain politicians against mainland Chinese investments in the state, saying if left unchecked, would drive away investors. A visibly upset Sultan Ibrahim Ibni Almarhum Sultan Iskandar singled out the nonagenarian for “putting political interests above Malaysian interests, particularly Johor”.

To put it simply, it appears that Dr Mahathir has run into serious problems with the powerful Rulers, and anyone who understands Malay politics will surely appreciate the relationship between the executive and the Rulers.

The Pakatan Harapan may feel that they should unleash our former PM since he was their top dog to best reach the Malay audience, but plans have run aground somewhat.

Politicians come and go, but Rulers remain, at least for longer than politicians. Rulers determine the laws, in many ways, and it would be foolish for a politician to take on these highly-respected royalty.

It will be hard for Dr Mahathir’s younger party colleagues to communicate with him – he comes from another generation all together. And as the adage goes, it’s hard to teach old dogs new tricks. He’s known to be stubborn and one who will doggedly talk about the issues of his choice.

The odd situation is that it is unlikely that any of the Pakatan Harapan leaders will come out openly to defend him. It’s a classic case of tucking their tails between their legs, with the whining kept private.

It’s truly the Year of The Dog. Let’s hope the GE will be called soon because most Malaysians just want to get it over and done with. We have already let the dogs out, and we hope to bring them home soon!

A happy Chinese New Year to all Malaysians celebrating. Gong Xi Fa Cai.

Wong Chun Wai

Wong Chun Wai began his career as a journalist in Penang, and has served The Star for over 27 years in various capacities and roles. He is now the group's managing director/chief executive officer and formerly the group chief editor.

On The Beat made its debut on Feb 23 1997 and Chun Wai has penned the column weekly without a break, except for the occasional press holiday when the paper was not published. In May 2011, a compilation of selected articles of On The Beat was published as a book and launched in conjunction with his 50th birthday. Chun Wai also comments on current issues in The Star.

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Tuesday, 13 February 2018

Malaysia needs structural reforms says global investor

Middle-income trap, brain drain and high public service spending among Malaysia’s risks

Cheah(pic) thinks the local stock market could go up by between 5% to 10% this year while the ringgit, which has mostly been on an uptrend in recent times, is “still down quite a lot”, against the US dollar.

Middle-income trap, brain drain and high public service spending among Malaysia’s risks

KUALA LUMPUR: A renowned global investor has called for structural reforms in Malaysia, saying that the country faces “very real” structural issues.

Penang-born Datuk Seri Cheah Cheng Hye (pic) who left Malaysia decades ago counts the middle-income trap, brain drain and high public service spending as current risks to the country.

Based in Hong Kong as the chairman and co-chief investment officer of fund and asset management group Value Partners Group for over two decades now, Cheah who helps manage over US$16bil in funds, however concedes that Malaysia remains a country with huge potential and opportunities.

“I don’t think we should underestimate the importance and attractiveness of Malaysia but what I am saying is that if we don’t want to be stuck forever (being) a so-called middle-income country, we need structural reforms,” he told StarBiz in a recent interview.

“Or maybe... we do want to be stuck because it is a comfortable position and because then, we can make a lot of compromises.”

“ (If that’s the case), we should be frank and say it, don’t pretend that we want to be an advanced country because that requires certain sacrifices.”

“The reality is that we are getting less and less competitive, we ranked number 23 in the latest Global Competitiveness report ,behind France and Australia which are developed countries. (Number 23) is not good enough for a developing country,” said Cheah, who recently made it to the top 40 richest Malaysians list.

Emphasising the issue of brain drain, Cheah, a former financial journalist and equities analyst said Malaysia could perhaps emulate India in this area where the concept of an Indian national overseas card has been introduced.

“I am told there are more than one million Malaysians overseas – (people like) entrepreneurs, these are exactly the type of people we want to stay here but they are not.

“We could introduce a new type of card called the Malaysian national overseas card for Malaysians who have chosen to leave the country and become citizens elsewhere.”

This card will give these Malaysian-born individuals no voting rights but will allow them to come back to work and invest here like everyone else, he said.

Cheah said this could help re-attract talent and there will be no political price to pay, because these people cannot vote here nor transfer this card to their children who would likely be foreigners.

“Some may actually come back, because it is not always greener on the other side... but you must make it easy enough (for them to come back).”

Cheah also pointed out that the amount Malaysia spends on public service is “very high” by any standards.

“Quoting from memory, about 30% of government spending is on civil service salaries and 16.5% of all employment in this country comprise civil servant jobs.

“No matter how you explain it, this is abnormally high ; something that I have learnt from my stay in Hong Kong is, keep the government as small as possible.”

He said although the civil service segment here appears to be bloated, it would be “unrealistic” to fire civil servants.

“Instead, maybe we can consider freezing and redeploying resources.

“Like any corporation, if you have too high a headcount, you freeze hiring and you redeploy people to where they are needed,” Cheah said.

Separately, Cheah, whose investments are mostly China-centric believes that Myanmar could be the next big thing.

“Nowadays, I like Myanmar because it is still cheap.

“It has about 55 million people but its gross domestic product (GDP) is only about US$65bil, Malaysia’s GDP is probably about US$320bil.

“Myanmar has enormous potential, at last they are emerging , gradually reconnecting with the world, they have (a lot of ) raw materials and are in a good position as one of the significant Belt and Road countries, China will go out of its way to invest there.”

Cheah said he would like to set up a Myanmar fund to invest in the country and is in the process of studying this possibility.

Among markets in Asia, Malaysia to Cheah, is “moderately attractive”.

He said consumer sentiment here was finally improving after it took a beating largely due to the implementation of the Goods and Services Tax (GST) back in 2015 plus there are some “interesting corporate restructuring taking place.”

Also, it is General Election year which going by history, tends to send the market higher, he said.

“I think there are good arguments why the Malaysian market is good this year but the arguments are not strong enough to result in a very strong market - and there’s also a global environment that’s not as good as last year.”

“I think the US administration is now focusing on globalisation and world trade and it seems to be moving in the direction of conflict with China over trade.

“If there is a China-US trade war, Malaysia will suffer collateral damage because we are a medium-sized player in a global supply chain, so it will be very disruptive,” Cheah said.

Upside for the Malaysian market could also be limited this year, he said, because its current valuation is relatively high at over 16 times price to earnings.

Cheah thinks the local stock market could go up by between 5% to 10% this year while the ringgit, which has mostly been on an uptrend in recent times, is “still down quite a lot”, against the US dollar.

The local unit appreciated by 8.6% against the dollar last year after losing some 4.5%, a year earlier.

At last look, it was traded at 3.9395 against the greenback.

By Yvonne Tan The Staronline

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Monday, 12 February 2018

Restructuring our household debt

NEW Year always come with new resolutions. Finance is an important aspect of most people’s checklists when it comes to planning new goals.

While it is good to set new financial targets, it is also vital to re-look at our debt portfolio to ascertain if it is at a healthy state.

At a national level, our country also has its financial targets matched against its debt portfolio.

According to the latest Risk Developments and Assessment of Financial Stability 2016 Report by Bank Negara, the country’s household debt was at RM1.086 trillion or 88.4% of gross domestic product (GDP) as at end 2016.

Residential housing loan accounted for 50.3% (RM546.3bil) of total household debts, motor vehicles at 14.6%, personal financing at 14.9%, non-residential loan was 7.4%, securities at 5.7%, followed by credit cards at 3.5% and other items at 3.6%.

Evidently, residential housing loan is the highest among all types of household debt. However, a McKinsey Global Institute Report on “Debt and (Not Much) Deleveraging” in 2015 highlighted that in advanced countries, mortgage or housing loan comprises 74% of total household debt on average.

As a country that aspires to be a developed nation, a housing loan ratio of 50.3% to total household debt would be considered low, compared to 74% for the advanced countries. In other words, we are spending too much on items that depreciate in value immediately – such as car loans, credit card loans and personal loans – compared to assets that appreciate in value in the long run, such as houses.

Advanced economies, which are usually consumer nations, have only 26% debts on non-housing loan as compared to ours at 49.7%.

In order to adopt the household debt ratio of advanced economies, our housing loan of RM546.3bil should be at 74% of total household debt. This means that if we were to keep our housing loan of RM546.3bil constant, our total household debt should be reduced from the current RM1.086 trillion to a more manageable RM738bil. This would require other non-housing loans (car loans, credit card loans and personal loans etc) to reduce from 49.7% of total household debt to only 26%. To achieve this ratio, the non-housing loan debt must collapse from the current RM539.7bil to only RM192bil.

Reducing total household debt from the current RM1.086 trillion to a more manageable RM738bil would also have the added benefit of reducing our total household debt-to-GDP ratio from the high 88.4% to only 60%, making us one of the top countries globally for financial health.

Malaysia’s household debt at present ranked as one of the highest in Asia. Based on the same 2015 McKinsey Report, our household debt-to-income ratio was 146% in 2014 (the ratio of other developing countries was about 42%) compared to the average of 110% in advanced economies.

Adjusting the debt ratio by reducing car loans, personal loans and credit card loans will make our nation stay financially healthy.

Car values depreciate at about 10% to 20% per year based on insurance calculations, accounting standards and actual market prices. Assets financed by personal and credit card loans typically depreciate immediately and aggressively.

The easy access to credit cards and personal loan facilities tend to encourage people to spend excessively, especially when there is no maximum credit limit imposed on credit cards for those earning more than RM36,000 per year.

If we maximised the credit limit given without considering our financial ability, we will need a long time to repay due to the high interest rates, which ranged from 15% to 18% per annum.

Based on a report in The Star recently, Malaysia’s youth are seeing a worrying trend with those aged between 25 and 44 forming the biggest group classified as bankrupt.

The top four reasons for bankruptcy were car loans (26.63%), personal loans (25.48%), housing loans (16.87%) and business loans (10.24%).

It is time for the Government to introduce more drastic cooling-off measures for non-housing loans in order to curb debt that is not backed by assets. This will protect the rakyat from further impoverishment that they are voicing and feeling today.

As we kick start the new year, it is good to relook into our debt portfolio. When we are able to identify where we make up most of our debts, and start to reallocate our financial resources more effectively, we will be heading towards a sound and healthier financial status as a nation.

By Alan Tong - Food for thought

Datuk Alan Tong has over 50 years of experience in property development. He was the world president of FIABCI International for 2005/2006 and awarded the Property Man of the Year 2010 at FIABCI Malaysia Property Award. He is also the group chairman of Bukit Kiara Properties. For feedback, please e-mail feedback@fiabci-asiapacific.com.

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