Inflation is 3.4% in June. Exports? Ringgit? More updates from BNM

Inflation is 3.4% in June. Exports grew 27%. More updates from BNM

Please note that inflation is just a measurement. It is not necessary bad unless it’s too high and kept moving up too fast. When it’s very low, it also does not mean that it’s good because when it’s low, it may also be a signal that demand for goods and services are weak and this will definitely be a drag on the economy. So, what’s happening to the Malaysian economy since inflation is now back to our typical 3%?

Happy referring to BNM’s latest announcements below.
The full report can also be obtained here.

Monetary and Financial Developments in June 2021

Headline inflation declined to 3.4% in June

Headline inflation declined to 3.4% in June (May: 4.4%), due mainly to lower inflation in the transport and food and non-alcoholic beverages categories.
The lower transport inflation (June y-o-y: 16.6%; May: 26%) reflected the dissipating base effect, which is expected to further subside in the near term.
Underlying inflation, as measured by core inflation, declined slightly to 0.7% (May: 0.8%).

Robust export growth in June

Export growth moderated but remained robust at 27.2% (May: 47.0%), reflecting broad-based strength across products and markets.
Moving forward, exports performance will continue to be underpinned by the rebound in external demand and continued upcycle in global technology.
In addition, strong demand for non-E&E manufactured products and higher commodity prices will provide further impetus to export growth. Nonetheless, the trade outlook remains contingent on the path of the COVID-19 pandemic.

Net financing growth moderated in June

Net financing growth moderated to 4.3% in June (May: 4.8%), reflecting the decline in both outstanding loan growth (June: 3.4%, May: 3.9%) and outstanding corporate bond growth (June: 6.9%, May: 7.2%).
Outstanding household loan growth moderated to 5.2% (May: 6.1%) as loan disbursements declined, mainly for the purchase of passenger cars, residential property and credit cards.
However, outstanding business loan growth increased to 0.9% (May: 0.4%) reflecting stronger working capital loan growth (June: 1.6%,     May: 0.4%).

Domestic financial markets were affected by domestic and external factors in June

In June, domestic financial markets were affected by both domestic and external factors. Investor sentiments were affected by uncertainties surrounding the course of the pandemic in the region. The extension of stricter containment measures amid rising COVID-19 cases domestically led to further concerns over the economic outlook and increased risk aversion towards domestic financial assets.
Consequently, the FBM KLCI declined by 3.2% and the ringgit depreciated by 0.4% against the US dollar. Increased expectations of monetary policy tightening in the US also led to a broad strengthening of the US dollar.
The 10-year MGS yield increased by 4.7 basis points partly due to expectations of higher bond issuances following the announcement of additional fiscal support as domestic COVID-19 cases rose in the second quarter of 2021.

Banking system liquidity position remained strong to support financial intermediation

The banking system continued to record a healthy liquidity coverage ratio (LCR) level.
Banks’ funding profile also remained stable amid sustained growth in deposits.

Sound risk management practices by banks will support asset quality in the period ahead

Overall gross and net impaired loans ratios remain broadly unchanged at 1.6% and 1.0%, respectively, amid a marginal monthly increase in impairments.
The impaired loans ratio is expected to remain broadly stable in the immediate term as banks continue to facilitate repayment assistance for viable borrowers facing temporary financial difficulties.
Despite this, banks continue to set aside additional provisions against potential credit losses, which currently stand at 1.8% of total banking system loans.

— end of report —

Still
 okay, Malaysia

Generally, Malaysia is doing fine. There’s still demand within and there’s now a much more robust demand from overseas market. As you may have noted, many countries with lots of vaccines have indeed reopened their economy and thus, they needed to order more goods and this meant Malaysia needed to export more to fulfill their needs. By the way, Malaysia’s economy is much more diversified than some commodity exporting nation yeah.

Need
 faster, Malaysia

What we must do in order to do better than fine is to speed up the vaccinations without fail. Plus to end the drama in Parliament currently. Whichever side wins, please just ensure one has a much larger majority so that no changes can suddenly happen, again and again. Both sides are really ‘killing’ the country with all these uncertainties. Just go google for news ‘Malaysia’ and you would get my idea. Happy reading.

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Inflation is a worry. Economic growth is compulsory.

With the Russia-Ukraine war, oil price has been increasing. As oil is a basic input for everything, the prices of everything else are also on an uptrend. Inflation continues to be worrying for many countries and of course, Malaysia too. Everything is in speculative mode. Everyone is expecting the worst to happen.

However, as much as inflation is a worry, GDP growth is even more important. Thus supporting this current fragile economic recovery is compulsory. Our Bank Nagara Malaysia has decided. Read their latest Monetary Statement as below. My comments right after.

— Bank Negara Malaysia Monetary Statement —
(Source: bnm.gov.my)

At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 1.75 percent.

The global economy continues to recover. Despite the recent moderation in economic activity due to the Omicron-driven COVID-19 resurgences, the overall recovery trajectory remains on track. Inflation in many economies remain elevated, due to both demand and supply factors. Going forward, more countries will transition to endemic management of COVID-19, hence supporting global growth prospects. The unfolding developments surrounding the military conflict in Ukraine, however, have emerged as a key risk to global growth and trade prospects, commodity prices and financial market conditions. The global growth outlook will also continue to be affected by developments surrounding COVID-19, risks of prolonged global supply disruptions, and heightened financial market volatility amid adjustments in monetary policy in major economies.

Despite the challenging environment, the Malaysian economy expanded by 3.1% in 2021. Looking ahead, the growth recovery will strengthen in 2022, driven by the expansion in global demand and higher private sector expenditure, amid improvements in the labour market and continued targeted policy support. The expected reopening of international borders would also provide further support to economic recovery. The economic impact from the recent increase in COVID-19 cases due to the Omicron variant is expected to be considerably less severe than previous waves in the absence of stringent restrictions. Risks to the growth outlook remain tilted to the downside due to external and domestic factors. These include a weaker-than-expected global growth, ongoing geopolitical conflicts, worsening supply chain disruptions, and developments surrounding COVID-19.

Headline inflation in 2022 is projected to remain moderate as the base effect from fuel inflation continues to dissipate. Underlying inflation, as measured by core inflation, is expected to normalise to around its long-term average as economic activity continues to pick up amid the environment of high input costs. Nevertheless, core inflation is expected to be modest, with the upside risk partly contained by the continued slack in the economy and labour market. The inflation outlook continues to be subject to global commodity price developments amid risks from prolonged supply-related disruptions.

The MPC considers the current stance of monetary policy to be appropriate and accommodative. Fiscal and financial measures will continue to provide support to economic activity. Amid the prevailing uncertainties, the stance of monetary policy will continue to be determined by new data and their implications on the overall outlook for domestic inflation and growth.

Bank Negara Malaysia
03 March 2022

— end of BNM’s monetary statement —

Interest rate to continue to be accommodative

In H2 2022, many analysts are predicting a rise in interest rate. The current rate is very, very low. I think they may be right as long as the current Russia – Ukrain war is over soon and confidence on growth comes back.  Here’s that prediction for your reading:
Interest rates will rise in H2 2022. Let’s be ready and be happy too.
 What’s even more important is to continue to support the current recovery by ensuring more people invest their money versus putting it in the bank to earn a paltry return after 12 months.

Just remember that if interest rates are too low for too long, then many speculative activities will happen and this is not healthy for the economy too. 1997/98 ASEAN financial crisis is certainly a history we do not wish to repeat yeah. For now, continue to be cautiously optimistic. This is not the time to be negative and forget opportunities are everywhere yeah. Cheers.

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Inflation Malaysia hits a new high! How high?

No one can run away from inflation

Everyone is worried about inflation, right? Well, nearly everyone except for those whose earnings are running faster than the inflation rate as well as those whose personal inflation is just lower than the national average. By the way, it’s possible yeah. If the price of a typical fish is expensive and you switch to a cheaper fish type, the inflation can be negative yeah. Anyway, that’s another story. Now, it’s been announced that inflation Malaysia is up and it’s a new record high!

Article in nst.com.my
 MIDF Research said that Malaysia’s core inflation, which excludes more volatile food and fuel price data, surges to a new record high again, but headline inflation continues on moderating trend.

Reflecting underlying domestic demand, the core inflation rate hit a new peak point at 4.2 year-on-year (y-o-y) in November (October: 4.1 per cent y-o-y).

Non-food inflation edged up slightly to 2.5 per cent y-o-y while food inflation rose to a new record high at 7.3 per cent last month.

MIDF Research expects headline inflation to moderate next year backed by domestic demand firming.

The firm expects food price growth to hit 5.5 per cent this year, which is also attributable to the depreciation of the ringgit.

“With domestic demand firming, we project headline inflation to average 3.2 in 2022,” MIDF Research said today.

“We opine the strong inflation trend in Malaysia is highly driven by robust consumer demand while indicators for cost inflation have eased in recent months.

“With this upbeat momentum, we believe Bank Negara Malaysia is likely to raise the Overnight Policy Rate by another 25 basis point to 3.00 per cent in the first Monetary Policy Committee meeting next year in January,” it said.

Read the full article here:
Article in nst.com.my

Inflation as a reflection of the domestic demand

In the article, it said that the ringgit was depreciating, thus this pushed the inflation up. If we read just this one line, we think the ringgit is the worst in the world. By the way, it is definitely not! Whether it’s versus AUD, Japanese Yen, British Pound or even Euro, we are NOT. Here’s the earlier article:
Ringgit versus major currencies
 However, please note that MOST trades are done using US$.  Thus, if Ringgit depreciates against USD, then it will cause inflation.

Just need to remember that in the same article, MIDF mentioned that the strong consumer demand is also driving up the inflation trend yeah. This is a good reflection that people have money and could still spend it.

Inflation as a reflection of the supply side

When there is robust demand, the supply side will have to keep up soon. With prices increasing, many would want to quickly supply those goods and services demanded. Thus, this meant more hirings and thus more economic activities. This augurs well for the economy too yeah. This is why when inflation is not due to some financial crisis or any crisis, inflation will reflect demand and soon, inflation will drive supply side too. Let’s hope this continues on a manageable scale. Yes, it does seem that Bank Negara Malaysia will increase the rates again.

Happy understanding and hoping that all are able to stay above the inflation rate.

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Inflation Malaysia is up because of fuel and raw food materials.

According to Reserve Bank of Australia, “Inflation is
an increase in the level of prices of the goods and services that households buy
. It is measured as the rate of change of those prices. Typically, prices rise over time, but prices can also fall (a situation called deflation).”
Read here.

Briefly, the higher the inflation number is, the lower our purchasing power is unless we earn a higher income to compensate for this rise. This is also the reason why we need higher salaries every year. Else, our livelihood may become worse every year.

Malaysia’s inflation a.k.a consumer price index is up 3.3% in November. Briefly, it has always been close to zero because of the pressure from the covid-19 lockdowns which reduced the demand for goods and services. Now that lockdowns are lifted, it does seem the prices are inching upwards. Let’s look at more details as per Malaysia’s Chief Statistician  Datuk Seri Dr Mohd Uzir Mahidin.

Article in themalaysianreserve.com
  Chief Statistician Datuk Seri Dr Mohd Uzir Mahidin said the main contributor to the rise in CPI was mainly due to the hike in prices for raw food materials.

He shared that prices for chicken has risen by 16.7% due to increase in feed prices from imported sources. This is the largest component for meat items and the main choice of protein for Malaysians.

He said, “Besides that, fuel prices remain high at 27.6% and electricity cost rose 34.6% after rebate on electricity bills ended in September.”

Not all items saw price increase. Communication services, education fees and toll payments remained the same while price of clothes and vitamins decreased.

He also shared that the rise in inflation is unavoidable and even the US recorded an inflation of 6.8% which is highest since June 1982.  He added, “Inflation is expected to increase as a result of global fuel and food prices as well as construction related materials such as metal.” Please do read the full article here with more details:
Article in themalaysianreserve.com

Global fuel prices and construction related materials such as metal

For the construction industry, when the prices of fuel and construction materials move upwards, it will also lead to higher cost of construction. When this happens in the real estate industry, the property developer can choose to do a few things.  One is to cut the quality of materials which they are using. This is very bad and hopefully they will avoid doing this.

Second is to reduce the profit margins and keeping the prices they offer to the property buyers. By the way, this is not easy to do or even an attractive option because when profit margin is too low, there is no point in becoming a property developer.

The third and the usual way to approach would be to increase the prices for existing developments. If most other developers also take the same approach, then they will not affected negatively. If the project is still in planning stage, then it’s also possible to change the type and size of properties to mange the property prices too.

For example, they may keep to the entry price of RM500,000 but size may be changed. Instead of a 20 x 75 sq ft double storey landed, it may now become 18 x 65 sq ft. For high-rise, the unit size may also become smaller too so that more units could be built to average down the prices.

Conclusion

What’s important to note that when inflation is up, it will most likely affect the property prices too. The only question is when and by how much.  Happy understanding.

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Inflation. Manufacturing. Loans Growth. Liquidity. NPLs.  Update March 2021.

I personally believe we should always stay updated about what’s happening in the market instead of just listening to what our friend says. Unless of course our friend is also a top economist who’s reading and updating herself daily. Else, better for us to read because many times, the comments from these friends may be biased based on what she wants to achieve. So, best for us to read and be biased the way we want to be biased. 😛

The below news are taken from
Bank Negara Malaysia (BNM). If you prefer to read in full do click here.
 The below are the ones which are more related to the real estate market.
My comments are highlighted in my favourite colour.

Headline inflation increased to 1.7% in March

Headline inflation increased to 1.7% in March (February: 0.1%).
The main contribution to the higher headline inflation was the base effect from low domestic retail fuel prices in the corresponding period last year
(RON95 petrol prices: March 2021: RM 2.05/ litre; March 2020: RM 1.74/litre). This base effect is expected to remain in the second quarter of 2021 and dissipate thereafter.
Underlying inflation, as measured by core inflation, remained stable at 0.7%.

Contrary to what we believe, inflation is not always bad. High inflation is definitely bad. It’s not necessary a good news if the inflation is always zero or even negative. It simply meant demand is falling versus available supply.

Higher IPI in February driven by manufacturing

Overall IPI improved slightly in February to 1.5% (January: 1.2%), as higher manufacturing production more than offset further contraction in the mining production and electricity generation.
The E&E industry recorded double-digit growth of 10.3% (January: 7.9%) driven by global demand from the tech-upcycle. Manufacturing activity was also supported by the healthcare segment, namely from rubber-based and pharmaceutical products.

Malaysia’s manufacturing sector employs 2.55 million. Maybe more if manufacturing numbers continue increasing. Thus this is an important number because this also tells whether it will help to reduce unemployment numbers or contribute to the number instead. Currently, the unemployment number as at February 2021 is 4.8 percent.

Continued growth in net financing

Net financing expanded at 4.5% reflecting the increase in outstanding corporate bond growth (March: 5.9%, February: 4.5%) and outstanding loan growth (March: 3.9%, February: 3.7%).
Outstanding household loan growth increased to 5.7% (February: 5.1%). Higher loan disbursements were recorded for the purchase of cars and residential properties.
For businesses, outstanding loans grew at 1.1% (February: 1.0%). During the month, higher loan disbursements and repayments were observed across most sectors and purposes.

Corporate bonds increasing means they are borrowing. It may be to pay debts but it could also be for expansion. Household loan growth is showing an increase and this also reflect confidence too. No one is going to buy a new car or a new home if they fear losing their job within the next few months.

Ample liquidity in the banking system amid stable funding conditions

Banking system continued to maintain healthy liquidity buffers with the liquidity coverage ratio (LCR) remaining strong in March 2021 (February: 147.1%).
Banks’ funding profile also remained stable amid sustained strong growth in retail deposits.

Liquidity in the banking system is positive because this meant that if one wants to borrow, the banks have the funds to lend. Retail deposits meant savings from the people and an increasing number just mean an increasing number. If people save more, it may show they have less confidence with what to invest or they may be earning more, thus have more savings. Look at both sides but growing number is generally good.

Sound risk management practices by banks will support asset quality in the period ahead

Overall gross and net impaired loans ratios were broadly sustained at 1.6% and 1.0%, respectively.
Banks continued to set aside additional provisions against potential credit losses, which currently stand at 1.8% of total banking system loans.

Impaired Loans means Non-Performing Loans (NPLs). This number of 1.6% (gross) and 1.0% (net) remains on a low level and even if some say this is because of moratorium and that it may go worse but do note that banks have set aside provisions for it. As per BNM’s report, this is 1.8% of total banking system loans.

You can also continue to keep yourself updated by reading BNM’s publications periodically too.
This is their website.

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No inflation. No need to raise interest rates?

No inflation means no need to raise interest rates?

Inflation is NOT necessarily bad, in case we think inflation is always bad. High inflation is bad because it meant that people’s purchasing power is reduced. The reason is because our salary is adjusted every year (12 months) while inflation increase can happen every month. Briefly, too much money chasing too few goods and services. Thus, the goods and services will increase its price to weed out the demand from poorer consumers. Sad case but true. This is why inflation has to be there but should not be high. Let’s look at why negative inflation is not good too.

Negative inflation (deflation) which has happened in some countries is not positive yeah. Especially if prolonged. Briefly, when inflation is negative, prices are dropping.  When prices are dropping, there is less incentive for any producer to increase the supply of goods and services. I mean if you are a property developer and the property prices are dropping, would you build more? So, is Malaysia having inflation or deflation then?  Well, we have the latter.

Image below shows a basket of fruits. Imagine if the fruits kept getting cheaper every year. The growers would soon unable to cover their costs unless they also reduce the salary of their workers. When their workers have lower pay, they also could not buy other goods and services or demand a lower price instead….

Photo by Trang Doan on
Pexels.com

Article in theedgemarkets.com
   Department of Statistics Malaysia (DOSM) says that Malaysia’s inflation, as measured by the Consumer Price Index (CPI), declined 1.5% in October 2020 from a year earlier. This was (ALREADY) the ninth consecutive month that the country experienced a deflation. On a year to date basis, the CPI for the period of January to October 2020 decreased 1% when compared to the same period last year.

In a statement today, DOSM chief statistician Datuk Seri Dr Mohd Uzir Mahidin attributed the decrease in the overall index to a decline in transport (-10.2%), housing, water, electricity, gas and other fuels (-3%), and clothing and footwear (-0.4%). He said, “Out of 552 items covered in the CPI, 337 items showed an increase in October 2020 against October 2019. On the contrary, 150 items declined, while 65 items were unchanged.” Do read the full article here:
Article in theedgemarkets.com

Do we want salary increments?

Photo by Breakingpic on
Pexels.com

Part of the reason why we get salary increments is also to ensure we are not worse off versus a year ago. Inflation will eat into our purchasing power, so the amount of money we receive should increase in-tandem too. So, if inflation is always negative and our salary stays the same, it also meant that with the same salary, we could buy more goods from the CPI basket. Maybe even property prices could start dropping more. In this case, no need to raise interest rates.

Let’s just have normal inflation

What is normal?  Well, here’s that earlier article:
Malaysia’s inflation expected to normalise in 2021
.  Let’s not be too concerned about the actual %. This can be very different from everyone. Let’s just say inflation rate of increase should always be lower than the salary increment % increase and that inflation rate of increase should always be around the same as the property price increase. If lower than property price increase, the owners will be sad. If higher than the property price increase, the buyers will be sad. So, just follow inflation rate lah.

Interest rates then?

With a low inflation, the interest rate faces less pressure and may be maintained as it is currently unless we truly needed to adjust this due to some unforeseen circumstances from overseas. So, it is not usual to raise interest rates if the inflation rate is dropping continuously. Of course if we have a good GDP growth in 2021, inflation will rise and the interest rate decision will likely be maintain or increase. We will see what happens.

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Inflation – it’s really inflating at the moment. What about yours?

No one can escape inflation

I was speaking the other day under the invite from OCR Group Bhd and I said that inflation is something we could not escape from. Sorry, somehow I heard someone saying that the government should do something about it or along the lines of surely a better government can do something about it because the election was coming. Sorry to break the bubble but nope, anyone promising you they can keep the inflation low is really lying…

At best, they can keep inflation lower than most countries in the world but to do that, they would need to control the market and that is not the role of a government. It should just be let the market decide. Meanwhole, keeping it low means zero or 1 or 2 percent per year?

Let’s just see some of the more advanced economies and their inflation numbers yeah.

First up, Australia.

As we can see clearly from the below inflation numbers, it’s inflating continuously. We just need to compare it to previous numbers and we will see how inflated it has become versus previously.

Source: tradingeconomics.com

Second up, the UK.

Maybe they have managed to contain it at 10%? Since for 3 months,it’s around 10%? Let’s hope by the end of the year everything got very low and their yearly number is below double digits?

Source: tradingeconomics.com

Third one has to be Singapore

Somehow I think they are managing to stop it at 7.5%. Is this low? Meanwhile typical salary increment for year 2022 was 3.8%.
Report here.
  Inflation is thus twice the increment. Not an easy year indeed because the increment surely cannot cover the inflation yeah.

Source: tradingeconomics.com

High Inflation means good economy or bad economy?

Well, look at those countries above and decide then.  Actually, we should look at the consumption of goods and services instead. If people have a stable job, they will spend their money continuosly. If they have a good idea that they will most probably keep their job, then they will look forward to buying something which needs commitment. For example, a property or a car…  This is why it’s much more accurate to look at whether people are spending money or not as a measure of a bad or good economy versus just the inflation number alone.

In case you like to know Malaysia’s inflation too. Please refer below:

Meanwhile… Perodua has over
200,000 orders which has yet to be fulfilled. (Report here)
Erm… if salary is not stable, does anyone buy a new car?

Happy understanding.

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More information before property decision

Should I buy? Should I sell? This has been a question for first-time buyers and home owners respectively. It’s not an easy question to answer but these days, there are more reference points that we can access online. For example, property related forums, property portals and even news portals. Long time ago, these were not available and thus everything depended more on ‘hunch’ instead. A few months ago, I started referring to
Propsocial.my
 on and off. I personally find the site to be clean in design, simple to use and quite comprehensive, for Klang Valley.

Today during lunch, my colleague and I were talking about Menara Avenue and I showed her the information that we can easily find online. She was impressed with the layout of the information and felt that
Propsocial.my
 was designed with user in mind. It has an adaptive design which meant smartphone users can use it easily too. As an example, when we search via a notebook or desktop, the screen appears as follows:

It gives all the information that we would normally need and if these appeal to us, we can then search for some of the listings on
Propsocial.my
 In fact if we are only starting and would want to focus on a certain area, we can begin immediately by typing in just the area itself. Information about the area would be made available by PropSocial writers.

As an example, let’s look at Kepong. We can immediately see that within Kepong, there are 102 projects, 10 convenience stores and even CRIME RATE. Currently this is a generic crime level based on PropSocial’s own research. Magdelin, the GM for PropSocial said that eventually this would be based on actual statistics from the police. We also know the three areas nearby to Kepong include Dutamas, Mont Kiara and Segambut. This helps a lot, especially for buyers who are not from KL. Yes, that includes me too.

Once you found what you like, you can also search for properties for sale or for rent in that particular area. There are also photos of the Of course, on top of all this information, the portal also shows users properties that are for sale or rent in the area. Magdelin further explained that, “We believe that when home buyers are looking for property, they will also be looking for information related to the neighbourhood, so what we are trying to do is to provide users with all this vital information under one platform.”

In the near future,
Propsocial.my
 will expand their research coverage to areas outside the Klang Valley too, for example Penang and Johor. I personally believe that only online media would remain in the future, especially for property information. Frankly, how many of us would rush to buy a newspaper if we suddenly thought of buying one? I think the smartphone would be our best friend. Any property portal with good information as well as lots of real listings of properties would be the most successful one in the future. I wish all property portals the best as they continue to take over the traditional media for which the number of readers continue to shrink year after year. More property information?
Propsocial.my
 may be a good place to start.

written on 26 June 2015

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RM445,000 cheque every month and future of our kids

What would I do if I get US$100,000 (RM445,000) every month? Well, I would imagine myself viewing properties every other day. Haha. Okay, perhaps I would become full-time househusband. Sending my kids everywhere they needed to go to. Seriously, if we do get such payments every month, it’s going to be hard to be broke. This is the reason why the gap between the
 richer and the poorer will always be widening.

As long as we hit such a level, our children or anyone we love should continue to live well even after we are gone. Well, they need to keep investing that money instead of spending it all the time lah. I know we can buy handbags worth a few hundred thousand ringgit but it’s not good to do it monthly right. 🙂

This brings us to a court case of Lisa Marie Presley. She’s the only daughter of Elvis Presley. She’s also the ex-wife for Michael Jackson and Nicholas Cage. The full
article in NST here.
 We will skip the court case part as it’s a family issue. Let’s look at some other numbers from the case. Presley gets a US$100,000 (RM445,000) monthly inheritance check and is paid US$4,300 a month and gets health insurance through her father’s estate. She also has a 15 per cent stake in Elvis Presley Enterprises that is held in a trust; Elvis’ estate earns millions of dollars a year. Her husband meanwhile wanted the court to order Presley to pay him US$40,000 (RM178,000) a month in spousal support and US$100,000 (RM445,000) in attorneys’ fees. This is what Presley said about her state of financial health, ‘I’m broke.’ She shared that her funds were mishandled by a business manager and she currently owes millions of dollars in back taxes and credit card bills.

Just a few weeks ago, I was talking to a friend about the second generation of family businesses. Many times, the son is no longer as good as the father. More often than not, it’s because they no longer work as hard, spend as little and invest as much. All are ingredients for disaster when the father could no longer lead the business. As a working professional, I think it’s tough for me to give a lot to my kids. I think the aim is pretty simple, do our best to give them education. Plus, give them more of my time instead of always busy, busy and busy. Warren Buffet said, “I believe in giving my kids enough so they can do anything, but not so much that they can do nothing.” For me, my hope is that my kids would learn enough and lead good lives in future. Happy working and investing.

written on 19 Feb 2017

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Anyone here likes the idea of inheritance tax?

Nobody likes to be taxed again and again. I mean everyone already pays income tax. For those who qualify to pay tax yeah. Businesses pay corporate tax. Inheritance tax is thus an ‘extra’ tax and this is not like GST which is prevalent in most countries in the world. Malaysia does not have inheritance tax.

In other words, if we happened to have lots of properties and we are no longer around, those properties could be gifted to our children in the future and they do not actually lose some of it due to tax. These following countries have inheritance tax. The United Kingdom. The United States of America (some states). Japan. Germany. Hong Kong (if the value of the estate is less than HK$7.5 million)

Not all advanced countries have inheritance tax yeah. Singapore does not. Australia does not. Canada does not. There has been some rumours everything we are near to the budget session but as at Budget 2020, Malaysia has no plans to introduce inheritance tax. With regard to this rumour, our Finance Minister Lim Guan Eng said, “It is unlikely. If there are, it is just a follow up of what we have announced in
Budget 2019.” (full article here)
Thus, let’s just understand what is inheritance tax today.

Article in investopedia.com
 An inheritance tax is a tax imposed by certain states on those who inherit assets from the estate of a deceased person. Its tax rate depends on the state of residence, the value of the inheritance, and the beneficiary’s relationship to the decedent. Inheritance tax is known in some countries as a “death duty” and is occasionally called “the last twist of the taxman’s knife.”

Article in wikipedia.com
 An inheritance tax is a tax paid by a person who inherits money or property of a person who has died whereas an estate tax is a levy on the estate (money and property) of a person who has died.
(Briefly, inheritance tax is what we pay if we receive some assets from our loved ones who have passed away. Estate tax is meanwhile a tax levied on those assets before it’s distributed. Yes, it’s possible to be taxed twice on the same assets yeah)

This is what Consumers Association of Penang (CAP) acting president Mohideen Abdul Kader said with regards to inheritance tax. He said this is the best solution to tackle problems related to wealth inequality among people in the country. He said that if implemented properly, inheritance tax would not affect those from the lower income segment.

He also shared that prior to 1991, Malaysia had estate duty and it’s applicable if the networth of the estate exceeded RM2 million. The rates were 5 percent on estates worth RM2.4million and 10 percent on everything above that. He said, “If the government wants to reintroduce inheritance tax, based on the present situation, it should be imposed on estates worth more than RM3 million to protect the people in the lower income group.”
Full article here.

Personal thoughts

Personally, I would not like inheritance tax. Who would? However, if we are looking at it from the point of redistributing some wealth to the lower income (not give them directly lah but government has more funds to provide subsidies or even housing), then perhaps the effects will be positive.

The first thing which should happen first before any other taxes is however to reintroduce the GST yeah. That would help tremendously instead of trying to expand the coverage of SST. There are certainly reasons why GST has been implemented in most countries in the world. Hopefully we do not hear too much about inheritance tax again even for Budget 2021 yeah. Happy understanding.

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Innovations with small spaces, great BUT

I love those videos which people forwarded tome showing how innovative people could be with small spaces. A tiny flat which can fit double of what it should usually fit and more. However, if you ask about these innovations, I would seriously tell you that for Malaysia, this is not going to be something which is very important within the next ten years. Greater KL is a huge plan for a huge area and there are still huge opportunities to build much bigger units than to concentrate on just the small ones lie what is happening in Hong Kong today.

Hong Kong has around 7.2 million population today for an island. The total size is 1104 square km. Greater KL meanwhile has around 6 million population and the overall size is 2,793.27 square km. Look at the numbers again. We definitely do not yet need to be so awesome with these innovations with small spaces yet. One day, I am very sure we would. Perhaps during my children’s time. That should be earliest. If we are a parent today, do we really want our children to stay in a small unit? How would they get a partner, get married and have kids? Sorry, I remain a traditionalist for this. I look forward to the day when I hold my grandson in my arms with tears flowing down my cheek. Haha. VERY far away still.

Recently, a colleague bought a SOHO unit recently and asked me about my thoughts. I told him that SOHO would be easy to rent out especially to office professionals which are ‘storming’ into KL after their graduation. However, please do not think all SOHOs would be worth over RM500,000. There are lots of secondary choices below RM500,000 and bigger too. If the prices kept going up non-stop, I think it’s more of speculation rather than anything else because Greater KL is definitely not a small island with a huge population density like Hong Kong. Sorry, not even for a so called great location.

Be reminded that the number of desirable areas are going to increase with more MRT and LRT stations and not less. Due to the high demand for the few hotspots, the prices would keep going up and it will just start a bubble awaiting to burst. To those who kept believing that prices for these hotspots would not just hit the clouds but also the sky or even the moon, I wish you all the best. I still hope that you would gain from your property investment. Happy ‘innovating’ with small units if you only love these small homes.

written on 24 Nov 2015

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What must be inside a good property fair?

Property fairs are still happening pretty often. Every now and then we would see property fairs being launched and these days, it does seem that the number of people dropping by these fairs are dropping. It’s not that hard to see why. The number of events by the developers themselves are rising. At this moment, there are 50 SMSes that is unread in my smartphone. Most of them from property developers. If you ask me whether times are bad however, my answer would be for everyone to look at the profit / loss numbers for listed developers. The market has been slow since 2013, not last month. If times are truly bad, then many of these listed developers would start to show the effects soon, when publish their annual reports. If you ask me whether the property developers are now putting more effort to attract better, then the answer is a firm YES.

It’s no longer advertise once, everyone comes during the launching and the sales and marketing team can relax after one weekend of frenzy. People were even paid to queue up just a few years ago. Today, it’s more like keep thinking of different marketing activities, continue engaging and smiling every customer that walk in and continue to sell one unit after another over weeks or months before the developer could sell enough units to start the construction. Of course there are still developers who start their construction earlier if they have a deeper pocket. Many developments are also completed with developers still having unsold units. So, should developers still join property fairs? It’s important to see if the property fair is an essential affair for the buyers or not. In other words, are there benefits for the home buyers or the potential home buyers?

I am still
visiting property fairs

but I think it’s important for developers to do lots of homework before and after the fair. Direct advertisements push a wide coverage while indirect ones, especially those with more objective reviews would help them to target the right buyers. Unfortunately, if the buyers do not know enough, then of course they would not decide fast enough. Property fairs should have non-stop property related talks. Nope, not those talks from the developer spokespersons. For those kind of talks, the developers could just do a video and put it online in their website. If they launch a project without even having a proper website, then all the best to them. This is 2017… no longer 2007. The talks should cover different property related topics because this will help buyers understand what is really happening.

The reason why people are still asking, ‘Should I buy?’ or
‘
When is the best time to buy,’

simply meant that they have no knowledge about the market at all. By the way, should I buy is not answered with a YES. It’s answered with real numbers, with historical numbers, with references to property markets elsewhere for example. When people learn, they are more comfortable. If there are no other gains than just to view the property developer’s booth, actually, that could also be gained by visiting the developers’ websites too. Do continue to visit property fairs but I think it’s worth looking at all the happenings in the property fair before deciding whether or not to drop by. Of course that advantage of having all different projects under one same roof is the most attractive point of all. Just note that this final point is usually only for the serious buyers. Should we not cater to those who are 50-50 or even those who may buy in the future as well? Cheers.

written on 1 Oct 2017

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      or
Safe to buy why not. Challenging time, sure too.

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Insider tips, why must it be insider tips?

There are lots of ‘secrets’ in the property market today, am I right to assume so? If there are not a lot of ‘secrets’, why are there so many “insider tips?” I love it when people say more transparency is better than hush-hush behind the bush. I also trust everyone was serious when they say Malaysia must improve on its corruption perception index. Well, if everyone wants transparency as in equality in information and wants others to be transparent, why are there still so many interested with INSIDER TIPS? Secondly, what’s so ‘INSIDER TIPS’ when a Facebook invitation or WhatsAPP invite is sent to everyone who can see it and share it? Third and more importantly, if it’s so INSIDER TIPS, why not just give to the internal staffs because just the internal staffs alone plus their friends and relatives etc would already be enough to sell basically every unit?

Property investment is no different from many other types of investment. The key is learning and understanding. Information is easily available these days. Why not put in more effort to read more about the areas we want to buy? Have we ever driven to areas which we find still cheap but people kept saying it’s jammed? What if those saying it simply has never visited the area before? Are there proposed new MRT stations? Are there new land acquisition deals by prominent developers together with an integrated plan? The more we know about a certain area, the better equipped we are in deciding whether or not to buy. This brings everything down to calculated risk instead of buying into the unknown, like many.

Seriously, if there are real insider information for a certain property development, it should not reach us, the general Malaysian public. There are way too many property gurus in the market out there and if I am a developer, I would give “insider information” only to them because they can easily help me sell majority of all my units. Okay, perhaps the developer is your relative or your close uncle, then perhaps that insider tips or information can be trusted. Please do ask them this question though, ‘How many units are you buying yourself, since it is SO GOOD?’ Their answer would tell you what you should do. Otherwise, understanding what we intend to buy is far better than listening to insider tips which is open to the public. Happy investing or waiting.

written on 5 Feb 2016

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The TO-DO list for inspecting your new home.

About to get the keys to your new home sweet home? Well, it pays to comprehensively check all the potential defects and get them fixed before your dream renovation starts. Remember, if the defects are found later after your renovation has been completed, the developer’s contractor may blame your contractor instead for the defects. Plus imagine the hassle of moving out of your home sweet home while the contractor fixes the issue. Here are some things that will definitely help in identifying those defects and getting the developer to quickly fix them.

Usually, an established developer would provide you with a standard Defect Rectification form. Developers who did not, well… Anyway, let’s move on to preparation before the inspection.

#1 – Be prepared.
 Please do carry some items along such as pen, paper, market pen, making tape, measuring tape, broom stick and even a good digital camera. (5x zoom would be cool). Of course having a ladder would be a great plus because sometimes the crack line on the ceiling may not be that clear to the eyes. Bringing along a friend who’s usually very attentive would be worth that free cup of coffee afterwards.

#2 – Walls / Ceilings.
 Look for cracks and uneven surfaces.  Cracks are easier to be fixed but uneven surfaces would take some time.  Look for holes or even missing plaster. One major thing we must look for would be fungus or watermarks. These usually may mean the piping has issues or the layer of water-proof seal on the unit above may have been shoddily done. Any imperfections such as lumps, bubbles, peeling paint or even nails or loose wiring is a cause for concern.

NOTE:  WRITE down these into the form and use the pen / marker to write on the masking tape and tape it at the area with defect. This will help the developer’s contractor to easily identify the location for the defects. Remember, if you only write it on the form, even you may not remember the actual place when you revisit your unit in the near future.

#3 – Tiles.
 There is nothing wrong with a GENTLE TAP on every tile in the house. A broom stick would come in handy for this job. Listen for hollow sound. If you do not know what’s a hollow sound, please ask any good real estate negotiators. They should know! Remember, when one tile breaks in the future, it’s a pretty complicated issue and very dirty to fix too!

#4 – Floor.
Look for gaps in the wall skirting. Usually these are easy to fix. Uneven floors would be much harder. Hopefully the developers’ contractors are not that sloppy yeah.

#5 – Doors and Windows.
 These include poor workmanship and is easy to identify. Look for gaps when you shut the window. One of my condo’s window had gaps and when it rained heavily, the water seeped in. Fortunately can still be fixed easily in future but then again if you can see the gap or some water marks, better get the developer to fix it one round. Opening and shutting the window allows us to know if there’s anything wrong with it too. Can the door be easily opened? Sometimes, it’s not smooth. For example, you needed to push in order to open, these must be fixed before you move in.

#6. Anything missing?
If there are fixtures and accessories that was promised by the developer (in writing), then please check if all of them are already fixed or provided. Some items would include electrical points, broadband points, water-heater or even taps, sinks etc. If a kitchen cabinet was part of the package, then make sure all the doors, drawers could be open and shut easily without issues.

#7. Working Electrical points.
 Usually, the developer would already check this one by one for you during the keys handover. If it was not, something must be wrong with the developer. To check this however, better get your electrician friend.

#8. Pipes.
 There should not be any protruding pipes yeah.

Usually, the checking would take anywhere from half an hour (awesome developer) or more than an hour (once you found a few, more would usually appear.) In my experience thus far, the best condo that I bought was one where there were hardly any defects. Maybe because I am not that picky or lucky? The worst was a condo where even the tiles (Master-Bedroom) have ‘exploded’ which meant a major defect. So, things to happen. We just need to be prepared for it. Happy inspecting and enjoying your new home. Yeah, the feeling’s good because we have finally bought a property we could call as our own. In future, it will become an asset which helps us hedge against inflation.

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written on 6 July 2018

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New Intake by INSPEN for 2018/2019 session. Success awaits.

I think this is good news for real estate industry aspirants. Whether it’s to become a valuer or a property manager or even a real estate agency, these courses from INSPEN is good because one can start with minimal qualifications, low fees of just RM365 / semester and upon graduating, the graduates may proceed to Diploma and Degree courses not just in Malaysia but also in Queensland University of Technology and Western Sydney University from Australia. Please read on to understand more.  Interested to apply?
Please download the brochure here.

Press Release from Institut Penilaian Negara (INSPEN) – NEW INTAKE for Courses.

 *TAWARAN MENGIKUTI PROGRAM SIJIL HARTA TANAH INSTITUT PENILAIAN NEGARA (INSPEN)*

==============================
=

Sukacita dimaklumkan bahawa permohonan kemasukan pelajar bagi program:

 ? *Sijil Penilaian Harta Tanah (SPHT)*

? *Sijil Pengurusan Harta Tanah (SPGT)*

? *Sijil Agensi Harta Tanah (CEA)*

di INSPEN bagi sesi pengambilan 2018/2019 telah dibuka di laman web *
www.inspen.gov.my
* sehingga 15/9/2018.

Berminat untuk memohon?
Klik sini untuk brosur

——————————
—

?
 *Kenapa pilih INSPEN?*
?

 Syarat kelayakan yang minima (SPM 3 kredit sahaja)

 Yuran serendah RM365/semester

 Kemudahan tempat tinggal disediakan percuma sepanjang tempoh pengajian

 Bantuan makan RM17/hari termasuk hujung minggu

 Graduan boleh bekerja di sektor kerajaan dan swasta

 Graduan berpeluang menyambung pengajian: ?peringkat *Diploma & Ijazah* di Universiti Awam Malaysia

? peringka *Ijazah* di Queensland University of Technology, Australia & Western Sydney University, Australia dengan pengecualian kredit.

——————————
————-

?Untuk maklumat lanjut, sila hubungi :

?Mokhtar bin Omar (03 89118888 ext 1178 / 019-8121448 /
mokhtar@inspen.gov.my

?Asmahani bt Mohd Napiah (03 89118613 /
asmahani@inspen.gov.my

Interested to apply?
Please download the brochure here.

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INSPEN’s two Certificate programmes are now OPEN!

[Sponsored] For school leavers who are looking for the potential to earn a good income within the real estate industry, here’s that opportunity. The closing date is however within the next 2 weeks so please take immediate action. INSPEN’s second intake for Real Estate Certificates are now open. Certificate in Real Estate Valuation (CREV) and Certificate in Property Management (CPM). INSPEN provides allowance for food, an extremely low programme fees, accommodations are provided and students could even continue their study in Australia. Note that all these are subject to Terms & Conditions. Contact them to find out more. Please call: 03 – 8911 8800 and enquire. Our future depends on what we do today.

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Instead of property,  why not property stocks? – Part 1

Since property investment requires so much time,  effort and also many risks,  why not we buy stocks instead.  Specifically we buy property related stocks. That is not a bad idea actually.  However just make sure you have looked through the company in three areas below.

Cash position. Does it have cash in the bank? Cash is very important because with cash even if the company does not have land bank,  it can buy land banks.  Especially during crisis, it can buy lands from distressed parties.  It can use the money to cover lull periods. Cash meant the risk to your investment in the stocks becomes lower compared to a high debt / gearing company. If a company is in high debts, it may mean it has used up too much money to buy landbanks or it is inefficient because for efficient companies, they would start developing the land within one year of buying it.

Land banks. Imagine a developer with no landbanks. Hmm… how does it intend to build? If their landbank is huge, look at the location. are the landbanks at places which are hot? if yes, even if they have no.cash, they can offer joint venture to those with money. There are a lot of examples of these type of property developers. Huge landbanks but cash position is weak. Especially when you see projects where there are so many joint venture partners!

Third is,  are they already building what they intend to build or are still saying it? Property stocks cannot suddenly rise because they need typically 3-4 years for planning, approval, building dn handing over keys. Thus if you intend to speculate,  property sticks are not for you. Then, again recently, a small counter in Johor which was taken over by a high profile team of management went shooting for the sky. 🙂

At this point in time,  I do not own any property stocks.  Perhaps I should diversify if the stock passes my own requirements above.  There are other reasons such as brand, history,  management etc but frankly without the three important factors above I will not buy that stock.

Written on 18 Dec 2013

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Integrated developments with education element is always a plus

Even before I moved to KL, I love malls. Buying a property with a mall or nearby malls was always something on my mind. However, these days there are way too many malls which does not have anything special from other nearby malls. Due to competition, many malls are struggling to gain traffic and for some which are not backed by wealthy owners, it could only get worse. It’s a vicious cycle. Lesser shop varieties mean lower number of visitors and this would then cause even more shops to close shop. That’s why some of the current huge and
established malls continue

to do well. Some malls within an integrated transportation hub would do well too. Refer to the image of Nu Sentral mall on the left. If we do not look at malls, what else could we take as a good sign that the development would continue to grow? Think education.

Any integrated developments with a good private university is definitely a plus point.  Assuming a growing student population of 10 percent per year and a final enrolment of 5,000 – 10,000 student population, this would mean a need for lots of residential units. Most of the time, high-rise residential units. With the large population of students, lecturers and even staffs, it would provide support for shops and
potentially a neighbourhood mall
. This could be enhanced further if there are offices or commercial buildings nearby which meant demand for housing from the working population too.

Looking back at the basics, many good primary and secondary schools would help tremendously too. Even for a newer areas, a SJK (C) would sway many decisions to its direction. I have more than a few friends who moved so that they could be near to a SJK (C). One friend moved to within few minutes away from a Chinese school and paid RM1 million for
her new terrace home.

Another good friend has yet decide but she said she moved to her area a few years ago so that she could have the choices, whether a good national school or even a SJK (C). Her double-storey home is today worth RM1.1 million.

When we buy our next home or property in the near future, perhaps this can be something we could consider as well. Just look at the number of new nurseries, kindergartens and even day-care centres and I think you would understand why I would favour educational institutions over shopping malls. This should ring true for many more years, perhaps enough to last us till we retire. Just last weekend, my wife swiped my credit card for a Grolier English programme for my daughter. Yes, the
programme was very expensive
 but I think it is clear that for many parents, education is a must-have and certainly worth investing on. I just hope this investment can last and my son could use it too. Happy investing.

written on 1 Aug 2016

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Withdrawing money via inter-bank ATMs? RM1 may be charged yeah.

This was a viral news. A good friend who stays in a RM1.2 million landed property and spent RM350,000 for renovations was the one who sent this to me. Remember ‘long time’ ago before Covid-19 arrived, every time we withdraw money from a different bank from our ATM card, we get charged RM1 per withdrawal? Yes, this is the latest news. It is now back and will again be charged from 1st February 2022.

Article in says.com
 Banks will be reinstating the RM1 interbank ATM withdrawal charge starting 1st February 2022. A statement on Maybank’s
Facebook page
 published today, 15 December, reads: “Kindly be informed that effective 1 February 2022, the ATM interbank cash withdrawal fee of RM1 will be reinstated by banks.” Checks show that
CIMB
,
Citibank
,
HSBC
, and several other banks have also made similar announcements on their respective social media channels. Do read here for the full article:
Article in says.com

What are the things we could do before this RM1 charge is back?

#1 We quickly withdraw as much as we could before 1st February 2022.

#2 We open bank accounts in most banks and transfer the money here and there depending on which ATM we see. (Just remember, ATM card is RM8 per year)

#3 We do not withdraw money lah. Just use all the e-wallets instead.

#4 Just RM1 right… if really needed, what to do? Pay lah.

Anyway, this WAS once a normal thing. So, with normalisation, things would just go back to normal. The bigger banks with more branches will prefer to charge yeah since the ATM machines and the maintenance do cost money too. The banks with fewer ATMs would also prefer to charge since if everyone withdraws money from their ATMs, it meant that they have to send in the security companies to refill and that’s a cost too.

Happy withdrawing cash even as e-wallets become ever more common in our daily lives.

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Header Image by
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Inter-state travel is possible, few days more. Less than 7 days. Are you ready?

Inter-state travel is possible, few days more. Are you ready?

Actually, I still do not feel comfortable with inter-state travel being lifted so soon. Just note these important numbers in an earlier article yeah.
 (click to read) ICU utilisation still so high!
  plus second fact is that some states are still VERY FAR from 90% vaccinations target.
We are only hitting 90% ON AVERAGE yeah. Read here for all the numbers.

However, inter-state travel seems to be coming within a few days time whether or no I feel comfortable enough yet.

Article in nst.com.my
   Health director-general Tan Sri Dr Noor Hisham Abdullah says that interstate travel restrictions will be lifted within the next few days. He tweeted “In next couple of days interstate travel restrictions will be lifted. It’s important to take all precautions like wearing a mask, washing your hands and physical distancing even for those vaccinated. In keeping your loved ones and family safe, please do periodic saliva RTK Ag self-testing.”

It was previously reported that inter-state travel will be allowed once vaccinations for adult population hits 90 percent. As of 11.59pm yesterday, 88.8 per cent of the adult population had received both doses of the Covid-19 vaccine.

Yesterday, Health Minister Khairy Jamaluddin said, “1.6 per cent before interstate borders open. While @KKMPutrajaya has transitioned to symptomatic testing, we encourage people who are in high contact and mobility settings to test regularly. If you want to balik kampung to see elderly parents, do a RTK saliva test. Keep them safe.” Do read the full article here:
Article in nst.com.my

My decision is not to travel immediately

It’s my decision not to travel inter-state immediately. Let’s just have a gap of 7 days and see what happens first. My parents are senior citizens (both fully vaccinated) while my kids (both are not vaccinated because too young). It has been so many months, another week will not be too much to bear.

For those who’s travelling as soon as it’s lifted, just remember, follow all SOPs and stop thinking that Covid-19 has left us. It’s merely a move from pandemic response to endemic response. The numbers remain high and the ICU utilisation remains high and not within the usual normal or comfortable levels.  The below shows latest ICU usage. It’s really not as low as you think yet.

All the best to all of us here in Malaysia.  Please do report anyone who’s not following SOP.  Thank you.

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Inter-state travel starts 11th October yeah. More details.

PM says inter-state travel starts 11th October yeah.

It’s just been announced and the inter-state travel is only for the FULLY VACCINATED yeah. Means you have received both shots (AZ, Pfizer, Sinovac) and it’s past 14 days from the second jab.
 Personally, this is my view in an earlier article. (click here to read)

This was what PM Datuk Seri Ismail Sabri Yaakob said, “With the achievement of 90% of the population being fully vaccinated, therefore I would like to announce that interstate travel will be allowed. This will begin on Monday (Oct 11).”

Nope, there will not be roadblocks because this will be like finding a needle in a haystack. Well, just need to hope that all these business establishments would be very strict and ensure only the fully vaccinated could enter their premise. As for the ones who ‘sneaked’ through to other states, hopefully somehow they got caught and fined. Not high probability but at least they will be stopped from going to the places only the vaccinated are allowed.

More news about this here: thestar.com.my
  Please stay safe and inter-state travel is for visit to loved ones whom we have not met for a very long time. It’s really not about going for a holiday and start forgetting everything about SOPs. Masks are necessary, always. Do not give excuse that no one was around, so I did not wear and then blame everyone else when caught by the authorities. You deserve to be fined!

I hope all will be just fine. The only worry remains the Melaka state election. Read about it here.
Melaka state election is really an amazing decision

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Why are there interest with Bandar Malaysia?

When I was out for lunch the other day with a group of friends, we passed by Tun Razak Exchange site. One mentioned that this project may fail as 1MDB is going bankrupt. I did not bother to reply. Everyone is entitled to say whatever they wanted to say based on whatever they read or hear. I only do what I am supposed to do. Well, if 1MDB goes bankrupt, surely the Bandar Malaysia project would also fail? Then, the following was reported in a local English daily.

CH Williams Talhar and Wong (WTW) announced recently that the call for expression of interest (EOI) for Bandar Malaysia development has received interest from 40 parties. It includes a few consortiums and these parties include government linked companies (GLCs), top Malaysian developers, world class property brands and foreign state investment corporations. The foreign ones came from Singapore, China, Japan, Korea and Australia. The total size of the project is 196.67 hectare and it is situated on the site of the old Sungai Besi airport.

Bandar Malaysia will be the central transport hub for the high speed rail (HSR) KL – Singapore as well as MRT Lines 2 and 3, KTM Commuter and Express Rail Link (ERL). Future major highway networks would also be running through it as well. The whole development is envisioned to be a mixed-use urban development serving as an impetus of change for Greater Kuala Lumpur. The site is only 7 kilometres away from the Kuala Lumpur City Centre (KLCC).

As long as whatever planned goes ahead, Bandar Malaysia is sure to have lots of interest. This will happen because the companies which are interested have little interest in the political drama. Yes, I am very sure everyone wanted to say that all these companies, including the foreign ones were ‘forced’ to take part, somehow. Well, my opinion is, they are interested because of the potential profits from the project. Note: 196.67 hectares is equivalent to 486 acres. Go and check out how much gross development value can happen from 486 acres. 🙂   There is no need to debate. I have no shares in the development anyway. However, I would also like to say that I personally have interest with the development too. Happy believing.

written on 16 July 2015

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Worried. I paid more but it’s mostly for interest. Did I lose money?

Did I lose money from my property investment? Many say property price went up by 5%, so the return is 5%? Paid so much for interest, surely everyone buying a home is suffering losses?
*Header image source is propsocial.my

Photo by Oleg Magni on
Pexels.com

My story

of my first home
 (Name of apartment is Villa Kejora)

I bought a property and I believe I will earn some money (not lose money) after 5 years. In the mean time, I stay there and after 5 years, I realised that the price has only moved very slightly every year. Then, I look at the mortgage calculator and I realised that the monthly repayment I paid mostly went to interest. Then, when I compared the interest amount to the property price increase and minus all the other costs, I lost money! Oh dear, I have been fooled to buy a property by someone… Should have bought some dividend stocks instead… Let’s be sure about this, shall we?

How much?

Referring to the first image would show that the first property I bought in 2002 was RM123,000. Downpayment of 10% and interest rate of around 5%. (so that our calculation is even more conservative).  Monthly repayment is around RM594.

Image 1

Source: Calculator.com.my

How much is the interest?

Now, if we look at image 2, this will show the payment schedule divided into principal and interest payments every year. This showed very clearly that as we pay, we are only paying a little of the principal but a lot of the interest. In fact by the end of Year 10, we have only paid RM20,654 for principal payment but we have already paid RM50,657 for interest alone! Oh dear, already losing so much money…

Image 2

Source: calculator.com.my

I stayed there many years before moving on to a condo which was much bigger in size. Let’s assume I stayed there for 10 years. That meant that I have saved on RENTAL for 10 years. Rental at the time was RM500 per month.  Staying there 10 years meant RM500 x 12 months x 10 years = RM60,000 of paying rental. As everyone knows, with rental, the one getting richer would be the landlord yeah.

Calculations wise, we can also look at image 3 below.

Image 3

We would see from image 3 that the interest payment of RM50,657 which seems a lot is actually just RM422 per month over 10 years. In other words, we did not lose money yeah. Our rental amount which we saved is still bigger than the interest amount we paid to the bank over the 10-year period.

What was the price I sold it?

I sold it at RM215,000. That’s RM215,000 (selling price) minus RM123,000 (buying price) = a gross profit of RM92,000. What is the Return on Investment (ROI) then? Since the interest amount is already covered by the savings from rental, we can use the downpayment as our only investment. That’s RM12,300 in the beginning.

Gross ROI = RM92,000 (total returns) divided by RM12,300 (initial investment) = 7.47% per annum. It’s not something amazing but okay lah. You get to stay for free… You get to earn a return which is healthy over 10 years and you get to be called a homeowner too.

Maintenance fee? Lawyer’s Fee? Stamp Duties?

If… after reading all these and one still wishes to argue that it’s better to rent, then you rent lah. It’s a choice and I do not gain anything from it. I did not lose money if no one buys property yeah. I do not have any property to sell you anyway and am not from the developer, not a real estate agent and not from the banks who hopes that you take up a loan with them yeah. Haha.  Happy reading and if you also started small like me, do share this with your friends.

Oh yeah… how much is that property I sold in 2012 today? Latest asking prices as per propertyguru.com.my site as below:

Info Source: propertyguru.com.my

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Interest rates ‘accommodative’ and single currency thought

I am happy to read this piece of news from an article today. It quoted the Bank Negara Malaysia’s Governor Tan Sri Zeti Akhtar Aziz as saying that, “Right now, our interest rates are accommodative, and very supportive of the economy. We will review conditions but right now our economy is on a steady growth path and the interest rates support that growth trajectory.” It simply meant that the growth is still steady. Not awesome, not negative but still growing. Expectations from majority of analysts in terms of Malaysia’s GDP? Around 5 percent for 2015.

Today (23 March), Ringgit suddenly ‘appreciated.’ Okay, the two major reasons were stated. First one, US Federal Reserve gave indication for a less aggressive rate hike path. In other words, the momentum of US$ has been halted slightly.
Second reason was due to “short-covering and expected technical pullback.” In brief this simply meant that the Ringgit was oversold previously and perhaps went down a little too much a day before. Yesterday, it was US$1 to RM3.72 and today it closed at US$1 to RM3.69  Ringgit was also up against many other major currencies except for Euro. I think Euro has also fallen a lot and perhaps should not fall further. Every expectation of Greece’s economic problem should have already been priced into the Euro’s decline thus far.

What about the potential for ASEAN’s single currency? Actually, I do not like single currency because all ASEAN countries are very diverse and I am not sure if Singapore would love to take the lead like what Germany has been doing for Euro. Perhaps one day when Indonesia really becomes a top economic superpower, we have a chance. Zeti said Asean region would not pursue a single currency. “We are going for financial integration to achieve the same objectives of greater collective growth,” she added. Her views were echoed by former Indonesian Finance Minister Dr Mohamad Chatib Basri who said that, “A single currency is probably the issue we really have to think carefully over. You can still have the integration and your own currencies.”

With a single currency, member countries may not even be able to decide the best interest rate adjustment that it could pursue for its own growth. Anyway, when we talk about accommodative interest rate, it also meant that this continue to be pro property as well. When the rates go up a lot, the house buying would go down a lot. So, for those who may be thinking of mortgage these days, suddenly fixed rates may be a potential choice too. Interest rates today is considered low as far as I can remember, based on my age. Ahem. Happy deciding.

written on 23 Mar 2015

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Interest rate to affect property demand in Penang

I have moved out of Penang for the past 5 years. My son was even born in KL. However, I like Penang property market because the island side remains just an island while the mainland side has the second bridge as a new connection to the Bayan Lepas industrial parks. It meant that it is now possible to stay in Batu Kawan and travel to and fro if Penangites wanted to. At the moment, the bridge toll is what they kept thinking about even though they actually save a few hundred thousand ringgit for similar type of properties in mainland versus island. There’s nothing wrong to use the first bridge but do ask the Penangites who use it in the morning rush hour and you will get some great stories. Perhaps we listen to expert’s opinion about the Penang property market? A good friend
was quoted in TheStar recently.

Rain& Horne Malaysia senior partner Michael Geh says that the Penang property market will be affected by the 25 basis point rise in overnight policy rate (OPR). He said, “You can argue that it is not a lot. If wages increase correspondingly and the cost of doing business remains the same, there won’t be much impact.” He added, “The median household income in the country is currently RM5,228 compared to RM4,585. But (even at that level) of the income, it would be very hard for them to get a bank loan.” This would mean that the, “The absorption of the excess supply would slow down.”
Full article in The Star here.
 Michael also shared that it may take three to four years for the incoming supply of residential properties in Penang to be fully absorbed.

Then he mentioned something that every Penangite I know would always be telling me. They do not like to buy properties near hill slopes and flood-prone areas. They (Penangite friends) would then usually show me some of the photos about the landslide or even the flood situation. Due to this preference for Penangites, Michael shared, “The pricing of properties near hill slopes and in flood-prone areas could drop below market price.”  He also shared that in the sub-sale market, the price of high-rise properties on the island has either stayed stagnant or contracted slightly since 2014. At present, the selling prices for a detached landed property is from RM2mil to RM2.7mil, depending on the size and location. The number of sub-sale transactions for Penang is dropping slightly from 5,200 to 5,000 while the value stays flat at RM2.13 billion. (This meant that prices wise, it’s going up. Let’s wait for the actual results to confirm later on)

Michael said that with prices remaining flat, the rental yield would be the same too. In fact the returns should stay above 5% in order for residential properties to be attractive. He shared that the rental yield for condominiums on the island is still around 3.3% to 4.2% per annum for North-East district, while for South-West district, the yield is between 3.2% and 4.6%. He also shared, “With the high pricing of residential properties on the island, we can expect more young people to rent rather than buy. This is why we are seeing serviced condominiums being developed nowadays.”
Here’s that full article with all Michael’s views in TheStar.

Actually the rental yields in Penang has never been attractive if we are to base it on 5 percent. Even when the property is RM600,000 the typical rental would not be higher than RM2,000. Of course, the owner could have bought the condo earlier for RM400,000 and that would help in the rental yield. Moving forward, I think we will see a lot of the 800-850 sq ft affordable apartments coming into the market now and many more years into the future. Developers are building them feverishly and pricing them within the more comfortable level of the middle income buyers. For all potential buyers, it’s better to buy for own stay and not trying to buy and rent out. The rental yield cannot be attractive when there are thousands of other similar units all around our unit. Happy investing.

written on 20 March 2018

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That CUT is most probably coming to HELP

In March, our Bank Negara Malaysia (BNM) reduced the Overnight Policy Rate (OPR) by 25 bps. The reason was because BNM expected the economy to be affected by COVID-19 in the first quarter. Thus, in order to help the growth in subsequent quarters, this cut is necessary. The industries such as tourism-related and manufacturing have been affected badly. BNM also said that the agriculture sector will also be weak in Q1 as well.

BNM said, “The reduction in the OPR is intended to provide a more accommodative monetary environment to support the projected improvement in economic growth amid price stability. The MPC will continue to monitor and assess the balance of risks surrounding the outlook for domestic growth and inflation.”

Article in theedgemarkets.com
 .  CGS-CIMB Securities Sdn Bhd said it expects Bank Negara Malaysia (BNM) to cut the overnight policy rate (OPR) by another 75 basis points (bps) in anticipation of a contraction in the country’s economy in 2020 and subdued inflation during the year.  CGS-CIMB economists Michelle Chia and Lim Yee Ping wrote in a note that BNM’s monetary policy will become more accommodative. They predicted a cut of 50bps this May and another 25 bps in second half of 2020.

In the note:  “We expect the sharp projected GDP contraction in 2020F (CGS-CIMB: – 4.3%) to keep Malaysia’s economy below potential for the next 12-18 months, resulting in an extended period of subdued inflation (CGS-CIMB: -1.1% in 2020F).  Do read the full article here yeah.
Article in theedgemarkets.com

Okay, for the potential property investors, the rates at this level would already be a very low one if we look historically.  The below would be the interest rate in Malaysia from 2004 till today.  The lowest point as we could see clearly was in 2010. 10 years ago. The highest was at 3.5% yeah.

Source: tradingeconomics.com

Unfortunately for the Fixed Depositors, the rates you will be getting will be coming down lower once your current deposit reaches maturity yeah. Happy understanding.

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Interest rate is up yeah. PAY higher and EARN higher. Good or bad?

Interest rate is up yeah. PAY higher and EARN higher.

There are two sides to a coin. Well, it’s the same as interest rate too. When it goes up, people who has fixed deposits will rejoice because they will earn a higher return on their savings. Well, at the same time, these same people will also have to pay higher loan repayments because the interest rate has risen. Perhaps the worst would be people without savings who could not earn a higher return but has to start paying higher monthly repayments every month. That’s not too good.

Recently, Bank Negara Malaysia has decided that the Overnight Policy Rate (OPR) should rise by another 25 basis points. Now, it’s 2.25 percent. Do read their statement in full below. Source:
Bank Negara Malaysia website

Monetary Policy Statement

Embargo :
Not for publication or broadcast before 1500 on Wednesday, 6 July 2022
06 Jul 2022

At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to increase the Overnight Policy Rate (OPR) by 25 basis points to 2.25 percent. The ceiling and floor rates of the corridor of the OPR are correspondingly increased to 2.50 percent and 2.00 percent, respectively.

The reopening of the global economy and the improvement in labour market conditions continue to support the recovery of economic activity. However, these have been partly offset by the impact from rising cost pressures, the military conflict in Ukraine and strict containment measures in China. Inflationary pressures have continued to increase mainly due to elevated commodity prices and strong demand conditions, despite some easing in global supply chain conditions. Consequently, central banks are expected to continue adjusting their monetary policy settings, some at a faster pace, to reduce inflationary pressures. Going forward, the pace of global growth is expected to moderate, and will continue to be affected by the elevated cost pressures, conflict in Ukraine, global supply chain conditions, and financial market volatility.

For the Malaysian economy, economic activity continued to strengthen in recent months. Exports and retail spending indicators affirm the positive growth momentum, supported by the transition to endemicity. In the labour market, the unemployment rate declined further, with higher labour participation and improving income prospects. Looking ahead, while external demand is expected to moderate, weighed by headwinds to global growth, economic growth will be supported by firm domestic demand. Additionally, the reopening of international borders since 1 April 2022 would facilitate the recovery in tourism-related sectors. Investment activity and prospects continue to be supported by the realisation of multi-year projects. However, downside risks to growth continue to stem from a weaker-than-expected global growth, further escalation of geopolitical conflicts, and worsening supply chain disruptions.

Year-to-date, headline inflation has averaged 2.4%. While it is projected to remain within the 2.2% – 3.2% forecast range for the year, headline inflation may be higher in some months due mainly to the base effect from electricity prices. Underlying inflation, as measured by core inflation, is expected to average between 2.0% – 3.0% in 2022 as demand continues to improve amid the high-cost environment. Nevertheless, the extent of upward pressures on inflation will remain partly contained by existing price controls, fuel subsidies and the continued spare capacity in the economy. The inflation outlook continues to be subject to global commodity price developments, arising mainly from the ongoing military conflict in Ukraine and prolonged supply-related disruptions, as well as domestic policy measures.

Amid the positive growth prospects for the Malaysian economy, the MPC decided to further adjust the degree of monetary accommodation. This is consistent with the MPC’s view that the unprecedented conditions that necessitated a historically low OPR have continued to recede. At the current OPR level, the stance of monetary policy remains accommodative and supportive of economic growth. The MPC will continue to assess evolving conditions and their implications on the overall outlook to domestic inflation and growth. Any adjustments to the monetary policy settings going forward would be done in a measured and gradual manner, ensuring that monetary policy remains accommodative to support a sustainable economic growth in an environment of price stability.

Bank Negara Malaysia
06 July 2022

Interest rate up also shows confidence yeah

We can read all the bad news and we can believe all of them. Just remember to take appropriate actions yeah, not just read, comment and then do nothing. I give you an example. People say economy will collapse… but they did not save all their money and be prepared but instead continued to spend their money buying things they do not need. Don’t believe me? Look at those comments and then look at the car sales numbers in Malaysia.

At the same time, we can also understand why BNM has increased the rates and we can also take appropriate actions too. This was what was mentioned in the article below. “Amid the positive growth prospects for the Malaysian economy…” Yes, one reason why BNM is able to continue increasing the rate is also because they believe the Malaysian economy is on the right track; growth track.

Happy deciding. No right no wrong. Just take the action based on what you believe. My belief? It’s in this article.

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Interest rate will go up further in Jan 2023

Maybank IB says that it’s possible for Bank Negara Malaysia (BNM) to increase the rate by another 25 basis points. It’s 0.25%.  If we are thinking of buying a home or even paying for a mortgage currently, what’s the impact of this potential 0.25% rate increase? For a RM500,000 home and a 10% deposit, a change in 0.25% rate would mean a change of monthly repayment by roughly RM61.

Take a look at the two screenshots from a very informational site. We see the difference between a 3% home loan rate versus a 3.25% home loan rate. You may visit them too.
 www.calculator.com.my

If you like to refer to the full article quoting what Maybank Investment Bank Bhd said, it’s here:
Article in nst.com.my

Maybank Investment Bank Bhd (Maybank IB) expects another 25 basis points (bps) hike in the overnight policy rate (OPR) to 3.00 per cent at the first Bank Negara Malaysia (BNM) monetary policy committee (MPC) meeting on Jan 18-19, 2023. It said, “The monetary policy statement (MPS) reiterated that the monetary policy stance is still accommodative, not on any pre-set course, data-dependent and monetary policy adjustment will remain measured and gradual.”

“To note, BNM has tolerated periods of negative real OPR and negative differentials between OPR and the US Federal Reserve’s (Fed) funds rate in the past.”

The research house said in the current context of BNM’s current OPR hike cycle – the fourth successive 25 bps hike in the OPR at the final MPC meeting of this year – and a little over two weeks before the polling date of the 15th General Election (GE15) – underscored BNM’s independence in its monetary policy decisions.
Article in nst.com.my

Is extra RM61 per month considered a high amount?

Actually, if we really look at it from the number perspective, it’s just RM2 per day. In fact, RM61 can be saved by one less dinner at some fancy restaurant easily. However… the 0.25% was not the first and is not expected to be the last. In fact, BNM has hiked 1% thus far and 1% is actually equivalent to around RM230 per month. Depending on how tight someone was with the home repayment, an extra RM230 may be very heavy indeed. Plus the fact that there may be another increase in January 2023…

Decision will depend mostly on sentiment though

If people do not feel secure, they will be more inclined to save the money instead of spending it. Property purchase wise, it’s such a big decision that if there are uncertainties, the tendency is to delay the purchase and only buy when the whole world seems to be buying. Of course that may not be the best time but majority would only feel secure if the majority are doing it. So, frankly, whether it’s RM61 or RM230, the transactions will increase if the sentiment is positive. One of the cause would be the election results. Happy voting and all the best.

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Interest rate will definitely affect property price movement yeah

Prediction not necessary. It may have happened elsewhere.

Today, I spoke to 2 friends about the property market. I told them that no one can predict the property market movements but if we are looking at the world, then we could use the advanced property markets as a comparison. It will also allow us to be able to see ahead on the potential happenings. For example, city centres will become very expensive and that’s when people start to buy further away from the city centre. This is also why the term called suburb becomes common.

Interest rates are not friendly to property price

What has happened recently is that interest rates are rising everywhere in the world. Every central bank is putting a priority into fighting against inflation. Generally, they do not want prices to move upwards. No matter what products, services or even home prices. Stop it from rising any further even if cannot push it downwards. Here’s one such movement and how the interest rate has stopped the property price from moving up further.

Article in smh.com.au
   With the interest rate rise, it has halted the increase in Perth property prices. Based on the new data from Proptrack Home Price Index, home prices across Australia has shown a decrease for the first time since the start of the pandemic. It dropped 0.11 percent in May. (Yes, this is one-tenth of 1 percent…)

Meanwhile, Perth house prices grew marginally in May. Median value growing just 0.24 per cent while unit prices have continued to fall across the city, dropping 0.2 per cent. For more information, please refer here:
Article in smh.com.au

It’s not solely due to the interest rate

If we think logically, an interest rate increase is not likely to cause a huge dent in a monthly home repayment. Unless of course the increase is like 5 percent… In Australia, the increase was 25 basis points. (Yes, this is lower than 0.5 percent). Here was the earlier article and it includes news of many other countries too.
The War Between Interest Rate and Inflation
  However, this increase would have dampened the sentiment and when sentiment is dampened, then it will take time for it to recover. It’s like confidence. Once lost, it does take some time to rebuild. What’s more important is that it does not descend into a confidence crisis.

Good learning for all of us on how interest rate will interact with property price.

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