Spending money after retirement is a serious affair. Do we have enough?

This article was published a few days ago.
“Let’s aim at EPF savings of close to RM900,000 ok?”  (click here to read)
 A number of good friends commented and the below image would be some of the comments yeah. Clement said that RM900,000 could hardly buy a landed property in KL. Depending on the area, he is right. I think even RM1,000,000 will not be enough to buy a landed terrace in a mature neighbourhood. We are not even going into semi-detached or a popular neighbourhood yet. Take a look at the image below:

EPF savings only for us after we retire.

I would just like to add though that in some lesser known neighbourhoods, RM500,000 or thereabouts is still enough for a landed terrace home. Just do not expect too much yeah. By the way, RM900,000 which we are talking about here is just the savings inside the EPF and this savings, you cannot touch until after you retire or reaches 55. If you continue working, then you may withdraw all the amount by 60. So, the RM900,000 is not for buying a home but more for our expenditure after we retire and no longer earning a stable monthly income.

RM900,000 can last for how long?

Leon Sarah says that the RM900,000 may not be enough because as soon as one retires, they will buy a retirement car, go vacation and spends probably RM50,000 per year. In other words, by the time one reaches 72 years old, this RM900,000 would have all been gone. Then he added this very realistic and objective comment. He said, “need to treat 900k as a bonus instead.”  Yes,  I think we need to treat the EPF savings as a pleasant surprise. At the same time, just keep saving and investing yeah.  Hopefully even before we retire, we have 2 properties? One to stay, one for rental income. 🙂

It’s not about the amount of money, it’s just about me.

My parents would be the best example of how most of us should be spending our money. They do not spend unnecessary like me (or most of everyone) which meant that their daily expenses are very manageable. Two Lattes at a cafe? They could drink coffee for 7 days in the nearby kopitiam. A value for money set lunch for one pax for RM19.90? RM19.90 is definitely enough for their daily meal. They only cook a lot of EXTRAs when their sons and daughters are home. Haha. That’s when they have to fork out extra money. 😛

I am from a different generation.
 I have to admit first. I do not think I will skip all the trips to a cafe. I also do not think I will be able to eat almost the same food on a daily basis. Just watching the TV and chit-chatting with neighbours may not be enough for me as well. I also do not subscribe to the usual argument that men hates shopping. I have over 30 pairs of shoes…   Because of this, I have to read more, understand more and continue investing.

Take Advantage of the connected world today.
With this in mind, I will also continue writing and sharing too. If we look at the world today, we would realise that a great idea could be turned into a product and in a short period of time, wealth could be built because the world is today super connected. We should also know the a pandemic like COVID-19 could wreck havoc to all businesses. Happy building beyond just one stream of income because this is the only way forward. Cheers.

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This year, I spent more for Chinese New Year. I would think perhaps 10-15% more. Somehow my wife and I found more good deals. When you find good deals, you have to buy them right? We also had to buy for my son who was less than 1 year old last year. (Lots of people gave clothes as gifts previously). New shoes for my wife and two kids. (Yes, I am wearing my old shoes as new shoes, haha) This is also the year that we kept the shopping till the final two weeks.
 Is this a better strategy?
 Well, to be frank not really. There were just too many people and long queues at cashier counters. This year, my mother told me that the prices of prawns went up. She did not buy as many. I told her that it’s ok. It’s a high cholesterol food anyway. (Think positive!) We had lots of fish. All are bigger sized than last year too. So yes, even my mother is spending more for Chinese New Year this year. What about you, my dear fellow Malaysians?

According to an annual survey by
United Overseas Bank (Malaysia) reported in TheStar
, Malaysians are willing to fork out an additional 9 percent more for this Chinese New Year. This is in comparison to last year when Malaysians used to spend RM3,846 and this year, their average budget is RM4,201 (9 percent higher). Out of this, RM1,008 would be spent on food alone. According to UOB Malaysia economist Julia Goh, the reason for the increase is because consumers are not not compromising on CNY traditions despite higher cost of living pressures. She shared that
feasting on food
 and travelling to visit friends and family are central to the way Malaysians bond with one another. Thus, these would continue to be a priority even in a tough economic environment. As for angpows that we receive, 73 percent of the respondents said they will save it while 25 percent said they will invest it. The survey was conducted by Ipsos and it involved interviewing 500 people in Malaysia aged between 18 and 55 on the behaviours and attitudes for the 2017 CNY. The survey was conducted from November to December 2016.

I think the 73 percent of respondents saying that they will save the angpow money can be seen as a good sign or a bad sign. Good sign is because they do not need to use the angpow money even though everyone is saying that the
 cost of living is up
, the economy is not doing well etc. Main reason is because the unemployment rate remain low, slightly over 3 percent. Not a good sign because 73 percent is a huge number. Perhaps they are also not spending it because they are afraid of a bleaker future where the economy is concerned. Personally for me, I will also be saving all the angpow money as they are mostly for my kids. In terms of investment, I remain committed to save more ‘bullets’ while waiting for opportunities. I think the economy is still moving along just fine and for the past few years, China has become a major investor. However, I would like to see Mr. Trump intends to carry out in the near future. Happy buying.

written on 28 Jan 2017

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Spending more money online? Yes for me. Stop mall visits? No…

I had a funny exchange of conversations with two good friends recently. Both are in their mid-30s. I learnt that both of them do not like to buy things online. One said he got cheated the very first time he bought something online. He said he saw a deal which was too good to resist, thus he paid for it and the thing never arrived. Frankly, if it’s too good to be true, it’s usually fake.

The second one said he has been browsing but not sure if he should trust the seller and going ahead. He said maybe if it’s not too expensive, he will try it. I told him that I buy things online on a weekly basis and my experience thus far has been good. Both of them did say that they may follow my advice. I told them it’s okay. Malls need more people like them too, not just those who shop online. So what’s happening to the online shopping scene here in Malaysia?

Article in themalaysianreserve.com
    ShopBack Malaysia country GM Eddy Han says that MALAYSIA’S top three e-commerce players, Lazada, Shopee, and Taobao experienced strong traffic growth within the first hour of one-day online shopping craze, the 12.12 sale. He said that if the comparison was for the same hour on an average day in December, then the growth was 800% higher!

He said, “The traffic and sales were 400% higher than the first hour recorded on Dec 12 last year. In terms of transactions, 95% of the buyers did via an app, while the remaining 5% used web transaction in the first hour of this year’s sale. The first-hour popular categories for shoppers were marketplace, e-wallet and travel.”  More details in
Article in themalaysianreserve.com

By the way, if I were to calculate, I think online shopping will comprise just 10-20 percent versus the shopping I do at malls. Perhaps I am one of those who still believe in speaking to someone, touching the thing I am about to spend money on as well as the trust I have for shops which have been around for sometime. Is it because I am a Gen-X? This one I am not so sure. Perhaps some of my readers could also respond?

Anyway, shopping is the best way to relax ourselves and money earned is also to reward ourselves too. If we keep saving, that saving will be spent by the next generation. Earlier article here:
They will spend what you did not spend.
 Will I be buying more stuffs online? This is a foregone conclusion. Every time my daughter or my wife tells me about some stuffs  they like, I will search online for it too. My son is still too young to tell me but soon he will also be telling me too. Happy shopping.

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Spending more than earning – first half of 2014

As reported in a business weekly, according to Department of Statistics Malaysia’s Housing Income and Expenditure Survey 2014, the average monthly total household expenditure is increasing faster than the household income. The survey covers a total of 42,000 households within the first half of 2014 and will eventually cover a total of 83,456 households by the end of the year. The median monthly household income rose 8% yearly to RM4,258. This is considered a healthy growth but the average monthly household expenditure increased by 8.8% yearly to RM3,496. Note that I quoted MEDIAN numbers for income and Average numbers for expenditure. The reason is because the average income may not correctly reflect the average family due to the huge numbers for the higher income households.

The main contribution to expenditure include housing, water, electricity, gas and other fuel categories (22.8%), followed by food and non-alcoholic beverages (18.1%), transport (15.4%) and restaurants and hotels (12.3%). All states also recorded incidences of poverty below 2% except for Sabah at 6.4%. These numbers are hardly surprising because subsidy is gradually being reduced, especially that of petrol. Typically for an average household, this takes up the biggest portion. On a normal month, a driver of Viva driving around 1,500km per month would already incur a minimum of RM200 – RM250 easily. Drivers of higher capacity cars would definitely be paying more. I am also driving around 1,500km per month and my monthly petrol expenditure comes to RM350 – RM400.

Now you know why help is needed especially for the lower income households because otherwise, it would be extremely tough to even get by on a monthly basis. I feel that BR1M which was given needs to be targeted at the actual item, for example, food and non-alcoholic beverages. There are plans to change the BR1M from cash to actual vouchers for food etc by 2016. I welcome this. As for petrol subsidy, somehow it has to reach those who need them until public transportation is convenient and affordable enough. As for housing, I think the Budget 2015 was everything about affordability for first time buyers. The only concern is how soon can these low cost housing be made available. It should also be a minimum of 850sf and above and not those 650sf flats like previously. The standard of living is just not there for these extremely small units, especially for families with small kids.

The above is mostly about households but I think if we look at the youths of today, the expenditure would be even higher. Smartphones, gourmet coffee, fancy restaurants and expensive clothing and accessories would form the biggest percentage of their monthly expenditure. Most of the time, this is financed by their credit cards and thus not sustainable. After a few years, when they wanted to buy their first home, they suddenly found out that they do not have sufficient downpayment and prices are a little too high for them. This is where all these affordable housing schemes come in. To help them manage their finance, ‘force’ them to use it for their mortgage payments. At  least, these become continue to appreciate and would turn into an asset instead of liabilities in the future. In short, good debts.

written on 13 Oct 2014

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KL – SG High Speed Rail, still many things to talk.

Reported in many media today. I think it’s pretty official now that the High Speed Rail between Kuala Lumpur – Singapore will definitely be ready only in 2022, earliest. According to Land Public Transport Commission’s chief development officer Prodyut Dutt, details for contracts for the construction would be known in two years. This takes into account the five years development timeline and an targeted completion date of 2022. Please do not use this as major reason to buy Iskandar. The game changer is definitely whether all the promised investments in Iskandar happens or even more links between both sides.

I personally do not see HSR having much effects or even be used as a primary reason yet until everything is finalised, tender is called, awarded and construction starts. Let’s be very real and objective about this. The road to that day is still very long away. There are many things which can derail this rail project. Also, success in Iskandar depends on many other factors including how successful Singapore is in growing its economy too.

In fact the hardest part which is HOW the costs would be shared has yet to be finalised. I seriously do not think the costs should be based on the length of the land that it was built. If this is the case, better not do it. Some are arguing that Singapore would get more benefit but I think both sides would benefit. This is especially because the number of Singaporeans or residents in Singapore may now treat Kuala Lumpur like just another short trip. It can be every weekend!

Dutt said, “Our preliminary studies show that the returns are positive. If you look at the experiences abroad where there is HSR, whether it is China, Japan or France, you will find that the benefits would not just be in the terminus cities, but also the cities in between, as it helps to regenerate those in between as well.” I would like to say that I like the HSR project and hope that it would come to fruition. Closer integration between both countries which are considered small in terms of population but currently leading in ASEAN must continue. Happy deciding and building!

written on 3 Sept 2015

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Sports as a career for financial rewards is real. The only catch is…

Another very interesting visual from a site I love to visit a lot.
visualcapitalist.com (click to view all their stuffs)
 Today, we look at how much athletes earn when they play and when they do not play. Do not be surprised that for some sports, the earnings can be higher when the athlete is not playing!

The top 10 paid athletes

Now for the top 10, we have a MMA athlete Conor McGregor as 1st place, followed by footballers Messi and Ronaldo, American football player Prescott, basketball player Le Bron James, footballer Neymar, tennis player Roger Federer, F1 driver Lewis Hamilton, American football player Tom Brady and rounding up the top 10 would be another basketball player Kevin Durant.

More earnings on-field or off-field?

Look very closely and you would realise that many of these elite athletes earn a lot more money when they are not playing. Means when they are walking around the mall… when they are in some talkshows… when they are relaxing by the poolside and well even when they are sleeping. These are  the endorsements which they get as brand ambassadors or payments they get from non-playing times

Image source:
https://www.visualcapitalist.com/highest-paid-athletes-2021/

It’s the same for most of the top 50 earners

Yes, most of these athletes earn more money from off the field versus on the field (when they play).  If we look at the world we live in today, most money is earned by the owner of the brand and not the manufacturer of the product for the brand. Apple earns by far higher profit margin than the manufacturers who are manufacturing iPhones or Macbooks.

By the way, the football teams earn a lot of money when they sell jerseys of their star players yeah. This is the reason why they kept signing up players for ever higher amount. It’s not solely because these players are the best.

Play a sports where the attention is huge

Beyond just earning more by becoming the best in the scene, we need to realise that not all sports are made equal. Sports with a lot more attention or even attention from a wealthier group tend to give a higher earning to the athlete. Oh yeah, no athletes can be playing forever. However, their titles won, that is with them and that’s the valuable part after they stop playing.

As a parent, I do not intend to discourage my children if they really prefer to play sports for a living. I would encourage and is willing to spend money, time and effort to be with them along the way too.  What I would do different however is to give them support in the sport which could eventually become a career and not just one where they give all their time, effort and I spend all my money and in the end, the only get a scholarship to study sports science in a university.

Income is needed even if they played for the love of the game

Unfortunately, I could not be with them forever and they definitely still need to have sufficient money to sustain their life too. Well, happy understanding that the best athletes in the world (for some sports) do have a career which is by far better than even the top 20% income earners in most countries yeah. Just need to aim at the right one.

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Sports car? Property? Nope, better buy a small football club

Too many people own a sports car. Too many people own properties. There are not that many who actually own a football club yeah. There are certainly some rich football club owners in Malaysia but that league which most of us usually watch is English Premier League. It’s said to be the most expensive league in the world. When I look at how much they pay for ONE player, it does seem to be very true.  To own a football club, at least we should know how much it’s worth first right?

How much is a football club worth?  You could ask your friends who support Manchester United or Liverpool on the value of their football club.  They may not be able to tell you but actually, they are the reason(s) why football clubs are so rich… As for how much the club is actually worth today, based on
the value of the squad, we refer to transfermrkt.com
. Okay, that most expensive squad is NOT Manchester United, ok? It’s Manchester City at  €1.02bn (RM5.44 billion) So, the value of one football club is higher than most listed companies in BURSA Malaysia today.  Take a look at below for the actual value for the rest.

One of these may soon be sold by its current owner to a new owner.  The club is Newcastle United.
According to reports (click here to read in channelnewsasia.com),
the club was offered £300 million (RM1.6 Billion) .  The new owner is speculated to be from Saudi Arabia. The current owner is British businessman Mike Ashley.  His current networth is
US$2.7 billion as per FORBES (read here)

What will happen to Newcastle United with a new owner then?  Well, one thing is for sure.  There will be injection of new funds and the club will be able to buy very good players who could well help the club climb up to the typical top 6 in order to play in Europe’s Champions’ League or Europe League. Both are more prestigious than just becoming a champion football club in Britain. Unfortunately for me, the new investor did not buy AFC Bournemouth instead. That’s the club I support! Haha…

Anyway, just wanted to let everyone know that buying the new sports car or that new property is actually considered a small purchase, still.  If you really want to tell the world that you have arrived, aim at a football club instead.  For example, if you could pay £270 million to buy AFC Bournemouth, then I will know who you are as well.  Perhaps then we could have a cup of coffee and talk football too. Haha…  Happy aiming and buying.

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I went from ‘somebody’ to ‘nobody’. Yeah, not easy actually.

One month ago, an awesome ex team-mate who’s now a good friend
wrote an article in her blog here. “I knew very little besides volleyball.”
 She is part of a not-for-profit volleyball club, City Rangers Volleyball Club, set up by ex-national players to share their experience and play a part in nurturing the next set of young players and to eventually elevate the standard of volleyball in Malaysia. It is a noble goal and one that requires lots of commitment. The members of City Rangers Club Volleyballs would have to be successful in the corporate world so that they could also continue to fund their own fun with volleyball. I assume very few of them have billionaire parents who can continue to fund their adventure. Perhaps better still, all sportsmen or sportswomen should also spend a little time to be ready for the world after sports.

Forever does not happen.

No one could play competitive sports forever. Some may have to stop before 30 because of younger and faster competitors. Some may extend their career into coaching but usually, these are the minority. For nearly everyone else, they have to work. This is where a job starts and perhaps a career to follow. My good friend said this when she graduated. “I went from somebody to nobody.” She was a team leader who could motivate the team even when they were facing tougher opponents. Yet, in the corporate world, she felt so lost because suddenly, she lacked the necessary skills to become a new ‘somebody.’

Knowledge matters, especially the financial side.
 For players who won a lot of prize money during their competitive period, it is very easy to lose them all without a good understanding of investment. Seriously, it is a perilous journey for a sportsmen with lots of money because it can provide them with huge returns or huge losses! To start right, kopiandproperty.com is a free resource but beyond that, keep learning and reading about financial management. This is one good site to follow.
KCLAU.com
For stocks, we can focus on dividend ones. Here’s one such resource.

Dividendmagic.com.my

Refer to our good friend google for even more.

Diligence matters, especially if we are starting from the beginning, again.

For those who did not win a lot of prize money during their sports career life, it’s even more important to work extra hard during their second adventure in the corporate world.

Stop doing the same thing every year.

Even when you were playing sports, you were improving every week! A very real example. Most employees would never receive above average salaries and increments. Only the top 20 percent would and should. The awesome thing about sportsmen? I echo my good friend’s concluding statement in her article.

” The thing about being an athlete is that you are trained to take up challenges, you work hard, you are coachable, you are good with people, you don’t crack under pressure, and you’ve definitely experienced failures and bounced back from them.

You may not know what you want to do in live right now, but I trust that you will be brave to take the next step and face the challenges ahead. It may not be easy and it will take time. I’ve seen so many friends go through this phase and thrive! Many are successful in their own ways. ”
Take this seriously. It came from a manager who’sdoing very well today, after her volleyball career with the national team ended.

Financial matters, the MOST.

Okay, assuming we are not that lucky. No matter what we do,
somehow the boss did not see it
.

When we want to apply for another job, somehow the next organisation does not see fit to promote us. Well, if we did not spend all our money on some stuffs to impress others, we should have saved enough for some investments. Want to know how saving can transform our future?
Earning higher is great. Saving it to earn even more is vital

In fact, we should lose a little today to have something huge in the future.
Losing a bit now to have a winning surprise in future

Yes, even a RM200 per month will have a huge snowballing effect….  By the way, it is really possible to be richer than the manager who hired you.  🙂

If you are still reading this, I think you realised that sports have given all you awesome people a lot of learnings. It has given you that ‘never-say-die’ attitude even when the opponents are far stronger than you or your team. It has taught you that hard work means continuous improvements. You have made so many friends and even your ‘enemies’ from the other side / court / field are your friends today. Now, start learning things that will make you successful in the future. Working harder would usually elevate you to be within the top 20 percent. If your current boss fails to see that, your next boss would.
Last but not least, FINANCIAL AWARENESS

is a foundation to something great. This includes even providing the funds necessary to help even more of your juniors in their sports journey.
Here’s the great volleyball club again.

All the best.

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written on 3 Dec 2017

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An answer for Penang Transport Master Plan (PTMP) LRT by end 2015

This is something which I have written many times and I wish that it would come true as soon as possible. With further delay, Penang would soon be gridlocked and growth would stall. Read here:
What’s up Penang? Jam has worsened.
 I am talking about the Penang Transport Master Plan (PTMP) which was awarded to Gamuda Bhd-;ed SRS Consortium. The Penang state government has set 31st December 2015 as the deadline for the submission of its application to build the light rail transit (LRT). Thus far, the consortium has not yet submitted its initial proposal which is supposed to include alignment and the sites for the stations.

SRS Consortium has to obtain the state’s approval before it can submit its proposal the the Land Public Transport Commission (SPAD). SRS Consortium was appointed in August 2015 and currently has 30 engineers working on the details of the project. The SRS Consortium is a joint-venture company which includes Gamuda, Ideal Property Development Sdn Bhd and Loh Phoy Yen Holdings Sdn Bhd. It is the Project Delivery Partner for the Penang Transport Master Plan (PTMP) projects. Read here:
Penang’s catalyst for higher growth, awarded

Total value of the PTMP which is RM27 Billion includes a 6.5 kilometre undersea tunnel, three highways and Penang Sky Cab. The undersea tunnel has been awarded to another consortium
Penang tunnel and related highways, a hiccup with Astral Supreme’s pull out
 while the Penang Sky Cab is still under a viability study stage.

It’s always good to have continuous news announcements for PTMP. I regard this as the single most important project beside the usual Foreign Direct Investments (FDI). Without ensuring a viable transportation master plan of the state, future FDIs would definitely be tougher. Of course, it can always be based in mainland, on the Batu Kawan side but do note that the airport is in the island and it is not uncommon for a few kilometres from Bayan Lepas to the airport to take up to an hour. Coupled that with the crossing of the bridge meant a logistical nightmare when there are deadlines to be met. Best wishes PTMP.

written on 4th Oct 2015

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Oh… SST is supposed to benefit property buyers MORE.

Good and service tax (GST) has been zerorised since 1st June 2018. This meant that from 6 percent previously, it has been zero for the past 2 months. This will be in place for one more month since our new or rather reintroduction of sales and services tax (SST) will be in place from 1st September 2018. Due to this tax holiday (no tax whatsoever) as well as the ‘threat’ from the upcoming SST, we could see the car sales hit the roof. Earlier article here:
People are simply buying! Not everyone needs new cars right?

In fact, just a few days ago, it was reported that the cars under the zero GST have all been sold off. New stocks will come with SST. As for how much it will affect the car prices, no one has any firm idea yet. However, it is now said that the SST may benefit potential property buyers! Here’s that report in
TheStar dated today, 30th July 2018: SST to benefit house buyers more, say Penang contractors

In the report, the President of Penang Electrical Merchants Association Khaw Tatt Siew says that SST may benefit house buyers more compared to the GST. This is because the 10% SST is a one-off charge which only applies to the manufacturer, supplier or contractor. However, GST used to be applied at all stages, from the raw materials to the manufacturer, supplier and contractor. He said, “An example is the price of a RM100,000 property, which would cost RM106,000 with the addition of GST for buyers, but the 10% SST does not apply to the RM100,000 price tag.”  Thus Khaw said the SST is unlikely to affect the end user much. He added, “The developers will possibly absorb the increase to boost their sales in view of the slow property market.” Earlier, on July 16, Finance Minister Lim Guan Eng announced that the provision of services would be taxed at 6% while the sales of goods would incur a 10% tax under the SST.
Here’s that full article in TheStar for reference.

By the way, if we read closely, what is also being implied here by Khaw is that for many property developers, in order not to scare away buyers with ever higher prices, they will not pass the SST to the end buyers. This is because the effect to the property price is likely to be much lower than 10 percent anyway. With the current market sentiment, competition is tight. Potential buyers do have more considerations. As for whether it’s GST or SST or TTT (tax, tax, tax), it matters not. What’s most important is whether the project we are buying has that potential to give us higher returns that the one time GST or SST yeah. As for thoughts that ALL developers in ALL locations are having a tough time, please rethink yeah. Just today, someone forwarded a queue of buyers since the day before for a project in Johor. Yes, you know that state where everyone who has NOT been there kept saying that nothing is happening there? Here’s an update not too long ago.
Recent updates: Iskandar, Johor. Ferry, RTS and flights

Happy believing, no matter what you may believe yeah. Just need to invest in places you love wherever it may be.

written on 30 July 2018

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WOW. SST collection in 2019 surpasses target. This shows economy is strong. (not said by me yeah…)

Do read an article on Goods and Services Tax (GST) and Sales and Services Tax (SST) if you would like to know why SST has a gap versus GST and why SST is good or why GST is better.
Article: SST: For better or worse.
 The only thing we do not need to do is debate further because the SST is already back and has been reaffirmed to be unchanged even when there were debates last year. More importantly, how is SST performing for the government? Is it giving the government more money or lesser? Below is one latest update.

Article in thestar.com.my
   Finance Minister Lim Guan Eng shared that the SST has helped the government to collect RM27.5 billion and this surpassed the targeted RM22 billion. This is a proof of the country’s resilient economy. He said, “It shows that indeed, the economy is still strong although the shortfall compared to the previous Goods and Services Tax (GST) collection of RM44 billion, leaves a gap of RM17 billion.”

As for 2020, the SST revenue target will remain the same at RM27.5 billion. He said, “Everything is planned fiscally and according to fund managers and foreign investors, they are quite confident that we can achieve our target. Market watchers are probably more concerned about other factors such as the trade war and Iran-US conflict which is now being de-escalated.” Do read the full
Article in thestar.com.my

When I started working way back in 1998, I paid income tax within my first full year of working. In my second year, the tax amount went up and I complained to my mother that I was charged a higher tax. My mother replied that higher tax meant higher income. Thus, the actual question is do I want a higher income or for my income to continue to remain almost the same and thus I could pay a lower tax.

So, perhaps in this sense, we could also say that the country is doing better because SST collection is up. However, if this the case, then I hope that the collection target for 2020 which is RM27.5 billion will be HIGHER so that again it reflects the economy’s strength. Let’s keep this in mind and revisit this. Happy understanding and please continue spending and investing yeah. Cheers.

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SST exemption may not be permanent, IF…

I was at REHDA Institute’s CEO Series 2018 yesterday and the guest of honour was our Finance Minister Lim Guan Eng. After officiating the event, he stayed back for a press conference. One major issue got everyone talking right after his press conference. He warned developers that they need to reduce house prices on a national level. This was because the government has gave exemptions forsales and service tax (SST) on construction services. Else, he said, “If this does not happen, then the government may have to rethink the exemption given and find new ways to make houses affordable, especially to first-time buyers.” He said that the government has exempted the  and thus the prices should be reduced. Otherwise, the SST will be reimposed if developers do not pass the savings to buyers. He added that he hopes to see some positive outcome of the exemption before Budget 2019 on Nov 2.

According to Lim, the SST exemption was aimed at reducing cost for developers in the hope that those savings would be passed on to buyers. Lim’s call is something which was announced by
REHDA Penang just 10 days ago.

I
t’s chairman Datuk Toh Chin Leong had urged developers to reduce prices as a result of the SST exemption. He had said the association would talk to members about reducing prices for all new developments, if not immediately.
According to an article in theedgemarkets.com
 our statistics Department data showed that Malaysian workers on average received a salary of only 35% of gross domestic product in 2016. This includes wages, bonuses and other income. Workers in China, Singapore and the United States enjoyed a higher share of 57%, 42% and 43%, respectively. These are benchmarks the new government is targeting, but it will take time.

Lim also said that the government is also working with Bank Negara to reassess its lending guidelines, while at the same time remaining sensitive to concerns over rising household debt. He added, “Debts backed by a decent house priced right should make home-related debt sustainable.”
The article in Edgemarkets.com here.
  Personally, I think it’s important to understand that SST is at most a few percent of the home prices and if the developers really do cut their prices at 6 percent, this is NOT solely because of SST. It’s even more important to understand IF the property we are buying is overvalued versus an additional 6 percent reduction. That would determine if the property purchase is a sound one. Happy understanding and buying Greater KL properties yeah.

written on 25 Sept 2018

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Savings from SST waiver, definitely. Plus rebates and discounts too.

Property prices, always a popular topic. Are there savings from the Sales and Service Tax (SST) which will be passed on to buyers of properties? At least future buyers of new properties for which the developer will start to enjoy the waiver by the Finance Ministry? After speaking to many property related people, I think the answer is a definite yes. As for the % that will be reduced, it differs tremendously. Some tells me that the the % is actually not significant so buyers may not actually feel it. Some say that the rebates being offered today is already higher than the SST waiver because of the market situation of today; uncertainty for the property market.
Earlier article here.

Now we have a formal reply published in an
Article in Edgeprop.my here.
 The Real Estate and Housing Developers’ Association Malaysia (Rehda) President Datuk Ir Soam Heng Choon says it expects some savings in development cost following the government’s move to exempt basic construction materials and construction services from the Sales and Services Tax (SST) in the effort to reduce house prices. As for the actual percentage, he said, “We are expecting between 2.5% to 5.0% savings depending on the type of development, but this will be applicable to new projects only as prices for those projects during the Goods and Services Tax (GST) era would have been agreed upon by the contractor and are in various stages of completion.” Beyond just the SST he also mentioned that there are also other discounts and rebates that most developers are currently offering. Thus house buyers could look forward to at least 5 percent lower prices depending on the location and type of product.
Here’s that article for reference again.

Courtesy reminder. Property buyers may want to take a slightly more positive mindset in getting that home that meets all our expectations because the developers are currently more negative in their actions; rebates and discounts. We should also bear in mind that this percentage of savings, however low or high does not compensate for buying the wrong property yeah. For example, we hate a certain area but we still buy because of high discounts offered or that our friend happened to be buying. There has been a never-ending of these cases. For now though, happy enjoying all the extra perks and benefits as well as the many events organised by developers.

written on 30 Oct 2018

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SST has pushed down prices for 291 items in Malaysia.

Did you know that prices of goods have been dropping after the GST was abolished? Frankly, I did not feel it (especially with all those latest tech stuffs launched but then again, they said for those items, prices went up because the ringgit dropped.) Coming back to today’s article, if you are smiling and wanting to know what are the items, just compare the items you have been buying for a long time from the supermarket. As for the actual items, do read the below.

Sales and Service Tax (SST) has pushed down prices of 291 items. Deputy Finance Minister Datuk Amiruddin Hamzah said a study by the Ministry of Domestic Trade and Consumer Affairs (KPDNHEP) showed that the prices 70 per cent of the 417 items comprising six categories had gone down. “A study was carried out by KPDNHEP on the implementation of SST on price points of 417 items consisting of six categories, namely fresh goods (136), dry goods (25), packaged goods, cans, packs and bottles (59), beverages (25) food and baby items (49) and hygiene items (23).

He also said that even though the decline is for more items but it was not highlighted while the price increase of 27 percent of the items were highlighted and thus creating a perception that prices of all items have increased. Amiruddin said the government aims to collect RM22 billion from SST for 2019. (GST’s collection is about double of this number if it’s still around)
Article in Thestar.com.my here.

Let’s be open about this. Assuming the grocery bill was RM500 previously and the GST was applied to EVERY ITEM, the total is RM30. Per year, that’s RM360. Assuming it’s now down to ZERO due to SST for EVERY item, then we have saved RM30 per month. Since 70 percent of the item reduced in price, we may have saved around RM21. Perhaps GST / SST may not be the deal clincher. Perhaps it’s more of increasing the number of higher paying jobs, increasing the Foreign Direct Investment (FDI) numbers as well as enhancing our exports much further, especially Palm Oil based products. Hopefully we hear even more good news about all these other items too, beyond just the debate of why SST is better for the rakyat.  Happy following.

written on 19 Dec 2018

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GDP growth, deficits and A- ratings as per Fitch Ratings

Ringgit is weak. Singaporeans are enjoying themselves in Johor while Malaysians are feeling the pinch whenever we travel, well except if we travel to the UK for which Brexit has wrecked havoc. So, what’s really happening to the economic fundamentals? This is Fitch Ratings’s statement as reported in many major medias. “Malaysia is better placed than many net commodity exporters to cope with the lingering effects of the negative shift in its terms of trade.” Yes, this is also one of the international rating agency which is still rating Malaysia at A-(lowest investment grade). Malaysia has kept its ‘A-‘ rating, which has been on Stable Outlook since mid-2015. The following were also shared. In 2014, the revenue from oil (Petronas) was 30% of Malaysia’s total revenue. Any fall in oil price is thus a very big thing. By the end of 2016, oil revenue would only account for around 14.6% of total revenue.

With continuous economy diversification, expect this to fall further and yes, Malaysia is not going bankrupt anytime soon based on all the analyst reports whether internal or external. A fact which has already happened was that dividends from Petronas has fallen from RM29 billion in 2014 to just RM16 billion in 2016 and should only be RM13 billion in 2017. Since GDP growth is expected to be positive, the contribution from oil in percentage will likely be even lower in 2017. Who wants to bet one cup of kopi-O against me that it may even be possibly near 10 percent of GDP by end of 2017? Haha. I have confidence with our
BNM governor too.

Fitch Ratings also sees the Malaysian Federal Government debt under 54% of gross domestic product (GDP) by year end as achievable. Bloomberg also reported recently that the recent weakness in Ringgit is not supported by fundamentals. On the fiscal deficit,
Fitch said reasonably strong GDP growth has helped to stabilise Malaysia’s federal government deficit
 and debt levels. Good Services Tax (GST) introduced in April 2015 has also lent support to non-oil revenue. “Fitch expects the 2016 deficit to come in at 3.2% of GDP, but views the 2017 target as achievable.” The targeted deficit for 2017 is 3 percent while the government expects 2016 to end at 3.1 percent deficit. Happy following.

written on 25 Oct 2016

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Stable bank performance expected in 2018. Positive.

Healthy banks in Malaysia are crucial to the our property market. Imagine if the banks are fighting fires daily, there’s no way they will be encouraged to lend to people who want to buy property. I know some wants to say that even now getting a
loan is extremely tough.

However, bankssay they are still lending and I think they are telling the truth.
Here’s that proof.

In fact if their (the banks) non performing loans (NPLs) start to increase, their lending requirements will definitely get stricter. This is to prevent any further deterioration of their NPLs. Fortunately for us, our banks are in good shape and will remain stable even in 2018 due to quality strong capital base, healthy funding and liquidity positions. Nope, not as per me but by Standard & Poor’s Global Ratings.
Here’s that full article in NST. Malaysian banks to remain stable in 2018: Standard & Poor’s

As per the article, not all are extremely positive.
Credit analyst Geeta Chugh said that credit demand is expected to be muted. She said,
“The Malaysian economy faces a number of headwinds, including higher domestic indebtedness at the corporate and household lever, weak energy sector and tighter domestic spending following the Goods and Services Tax (GST).”
(Hopefully she has her stats right because I do not agree with her assessment. Higher domestic
indebtness is supported by appreciating assets too

and energy sector has lesser and lesser influence on the domestic economy plus GST is not stopping spending but has enabled the government to be more selective on who should be taxed. Negative sentiment is the one stopping spending. As for demand, just look at the queue as soon as there are properties at awesome locations and super attractive prices….)  She however concluded that for NPLs,
Malaysia is among the best performing banking systems in Asean along with Singapore.
(Yes, ALONG with Singapore. Good enough for me.)
Here’s that full article in NST again.

If we would like to know the direction of the economy, then banks’ performance is a very good sign. If it’s getting bad, the NPLs would usually start accelerating followed by banks tightening their lending and interest rates raised which
may then pressure the market further

when some start to skip servicing their debts. Well, when it is good and seriously, very good, Bank Negara Malaysia (BNM) may still choose to increase the interest rates too. Haha. It’s a move towards normalisation, fight inflation as well as to stop over-investments or sometimes known as reckless buying of assets which may push up asset prices way too fast compared to the salary growth. Remember,
when prices go up, it’s hard for it to come down.
It’s always a delicate balancing act. Happy investing yeah since it’s expected to be another slow year ahead. I mean, a good year ahead… for investors.

written on 7 Dec 2017

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Stability is very important for a currency – NOT for speculation

Today (18th january 2017), I read an article about Bank Negara Malaysia’s (BNM) comments about the ringgit. I think it helps everyone to understand the measures taken by BNM. The measures were meant to ensure that ringgit is used for trade purposes. Before these measures, the ringgit transactions for non-trade purposes was by far higher than the transactions because of export-import trades. To explain in brief, if we have trade SURPLUS (Exports higher than Imports) , the international currency reserves level should naturally RISE and followed by strengthening of the ringgit. If we have trade DEFICITS (Exports lower than Imports), then the international currency reserves level should reduce and the ringgit should naturally depreciate as well. Important BNM’s statements as below:

BNM’s statement: “The exchange rate volatility declined with the average ringgit intraday movement narrowing to around 61 points from an average of 82 points in December last year.”  (Volatility is reducing which is best for businesses, right?)

Bank Negara pointed out that the difference between the buying and selling rates had also narrowed noticeably to 20 points in January, reducing the forex transaction cost. (Currency is a trade facilitator, nothing more.)

BNM shared: “The ringgit level could further stabilise with the continued rebalancing of the demand and supply of the ringgit and the adverse influences from the NDF market being further reduced.”

Of course, when there are expectations, then the currency would also move as well, just like when everyone is expecting some rate increase for US$, the demand would naturally increase and its value increasing. Yes, is is expected that there would be three rate rises for the U.S. this year by Federal Reserve. We will just have to wait and see how much it will affect the ringgit versus the current measures introduced by BNM. Full article in
TheStar with BNM’s explanation here.
Happy following and may ringgit continue to be stable.

written on 18 Jan 2017

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Double digit increase in prices even with the current slowdown?

It’s not easy to convince those who has yet to buy a property that prices are not likely to drop as much as it has risen. It’s far easier to convince those who already own more than 2 properties to stop and think a bit more before buying. Haha. Well, except for another financial crisis, prices will not be singing
‘if only I could turn back, time.’
(Song by Aqua) This is regardless of the current market sentiment, which is negative and likely to remain the same for 2017 or beyond. Some predictions?
Luxury high rise? Rising higher next year

Perhaps just show them some numbers reported by a major property site, with actual numbers? Actual transaction prices versus prices being offered today? Here’s one in
theedgemarkets.com KL condos that defied the slowdown in 2016.

What the article shared was a list of some properties that has defied the current slowdown and is still going up in price. In fact all are growing by double digits within the past 12 months. Prices per sq ft? Except for one which was over RM1,200 per sq ft, the rest are the normal ones, ranging from around RM400 to slightly over RM500 per sq ft. These are from the secondary market. It’s not all positive though. There were also a total of 78 condos which suffered a drop in sale prices between 2.2% to 11.7% y-o-y. Some of those projects include the Platinum Lake PV10 in Setapak, Abadi Indah Apartment in Taman Desa, G Residence in Desa Pandan, Seringin Residences in Kuchai Lama and Idaman Residence @ KLCC. It quoted PA International managing director Jerome Hong who observed that properties that registered high growth were all below RM500,000. A good property according to Hong would have three aspects: the education catalyst, transit-oriented developments (TOD) and integrated developments with various components. The full article is pretty long and comprehensive.
Do read it here.

As for new launches today, the typical price would already be around RM500 per sq ft, depending on the size. Usually, smaller sized condos would have a higher price per sq ft.
The reason is because of affordability.

Not all condos are offering two car parks yet though but RM500 per sq ft today is already higher than some older secondary units. When it’s completed 4 years later, with the usual inflation rate, the prices should inch up further. I personally think the double digit growth days will not happen anymore. The salaries are not rising fast enough to accommodate any sudden increase anymore.
Dangerous, when property turns affordable

Here’s that article again.
 Note though that buying secondary units would also mean one has to take care of the usual wear and tear too.
Here are some tips on inspecting secondary condos.

Not all condos are the same. This is the reason why we need to evaluate before we buy. Happy viewing.

written on 14 Aug 2017

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Stable sentiment in property market Malaysia. Positive?

I think trend analysis has been around for a very long time. It helps us to understand what has happened may happen in the future. It helps us to predict what may happen in future. Note: Past performance is NO indicator of future performance. 🙂  PropertyGuru.com.my shared some weeks back that there is a potential for the property market Malaysia bottoming out. They came to the conclusion via some surveys. Here’s that earlier article:
 PropertyGuru: Property prices bottoming out already… probably

They have also just shared the latest consumer sentiment for the property market of Malaysia. Do read and understand their press release below.

— start —

Consumer Sentiment for Property Sector is Stable in 2017

PropertyGuru, Malaysia’s leading property portal, reveals consumer sentiment staying stable despite deep seated concerns regarding overall economic conditions and other macro-factors

Steady and sustainable capital appreciation cited as primary reason for continued stable perception of the property market

Malaysians looking further from the city centre for their property purchases

KUALA LUMPUR, 25JULY 2017
 – PropertyGuru Malaysia’s recent
Consumer Sentiment Survey
 revealed that confidence towards the Malaysian property sector remains stable with 36 percent of respondents expressing overall satisfaction with market conditions in the first half of 2017 (H1 2017). Another 24 percent expressed neutral views with negative perceptions declining to 39 percent from a high of 53 percent in Q1 2015.

The sentiment is further supported by stable price perception for all property types in Malaysia.

Stable and steady capital appreciation preferred

The key factor cited by consumers for overall satisfaction was the gradual but stable appreciation of property prices in 2017, particularly for landed residential properties in the key urban epicentres of Kuala Lumpur, Penang and Johor. This is a marked contrast to the price hikes of previous years where flipping activity by speculators contributed to market over-heating and over-supply for certain property classes.

“The property market now primarily consists of owner-occupiers or longer-term investors. Landed properties purchased largely by families or newly-weds using joint income affordability are providing the momentum for sales and purchase transactions. Homes are being bought further away from the city centre and this has emerged as a trend for 2016 and 2017.  These factors are driving the development of a more stable property market where price appreciation may be smaller compared to recent years, but is also more stable and sustainable. Malaysians feel more secure and comfortable with this emerging scenario,” shared PropertyGuru Malaysia Country Manager, Sheldon Fernandez.

“This possibly could be the beginning of a healthier property market, which will further bolster confidence among Malaysians to transact. Furthermore, we see in the PropertyGuru Market Index (PMI) indicating a bottoming out for real estate prices in the first quarter of 2017, a recovery could be on the cards. However, given rising living cost, the weakened ringgit, low oil price and other factors, the real estate sector could still see slow growth for the second half of 2017,” he added.

With regards to the impact of possible elections in 2017, Fernandez mentioned that Malaysians generally tend to adopt a wait and watch approach and transactions usually taper off before elections. However, momentum is likely to pick up once elections, if any, are concluded.

Concerns and dissatisfaction amidst market stability

Despite consumer sentiment showing overall stability, dissatisfaction still remains a considerable factor. The top two concerns impacting their overall property decisions in 2017 are Malaysians cited expensive prices of properties and 69 percent felt that the country’s economy is underperforming.

“Malaysians have accepted the market reality and are more willing to transact but their efforts are potentially being hampered by rising living costs, concerns on job security and more. Yet they remain resilient. Many are opting for joint loan applications to finance purchases,” added Fernandez.

Suburbia – The new urban utopia

On a separate note the
Consumer Sentiment Survey
 continues to show a trend of buyers flocking to the suburbs in search of property.  This indicates the emergence of new property hotspots in the suburban areas of Selangor, which is between 20 to 40km from the city centre. 27 percent of buyers expressed their desire to buy in these outskirts areas.

Location, safety and unit size remain the top three considerations for property purchase. 52 percent of Malaysians would like to buy a home within the next six months either for their own stay or for investment purposes. Of which, 39 percent (38 percent in H2 2016) will choose to buy brand new homes while 13 percent (15 percent in H2 2016) would opt for the secondary market.  With regards to budget, conditions remain relatively unchanged with the majority of respondents – 36 percent intending to buy indicating a budget of RM300,001-RM500,000.

Home loans remain vital for the property market with 93 percent of respondents indicating they will need a bank loan to finance their property purchase. 45 percent (47 percent in 2H 2016) said they will need 90 percent financing while 25 percent (22 percent in 2H 2016) would opt for 70-80 percent financing. 18 percent (19 percent in 2H 2016) would require 100 percent financing.

— end —

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RM100 per stall per day, property is pushing up price of our meals.

This is a general article but the examples used are all for Penang yeah. Anyone from KL, please comment on KL’s hawker rental prices. Are we paying ever higher prices for our meals? The answer in short is, yes. The reasons include cost of raw materials, cost of labour and cost of living. Yes, usually the best reason quoted in order to increase the prices would be due to the higher cost of living. In brief, since everything else is increasing in prices, I have to increase as well. Else, I would suffer while all the rest are okay. Actually, one major component which is adding into the cost of our meals would be the property price itself. For example, a shop based within a mall has to charge higher because of the rental he has to pay when compared to a hawker stall beside the road. Well, what about hawker stalls in different kopitiams? (restaurants?)

Long time ago, when I was younger than today (Yes, I am past 40 now. Haha), I came to know that the rental per day for one char koay teow stall was RM7 per evening session. My close friend’s father would fry the char koay teow beginning 6pm and closes towards midnight. Assuming he is able to serve 100 plates on average per day, the rental cost included into each plate is 7 cents. Actually, not too bad. If he sells one plate for RM2.50 the actual cost of rental is less than 4 percent.  Hey, what happens if the rental for ONE hawker stall is RM27 per half day? This was informed to me by a friend who has a hawker stall in a kopitiam somewhere in a popular neighbourhood in Penang. His working time is from 8am till 2pm. Assuming this same hawker sells 100 plates at RM2.50, the cost per plate is now 27 cents or 11 percent of the total cost of one plate!  Okay, assuming he wants to maintain his rental cost per plate at the same 4 percent and selling the same number of plates, he can do two things. Reduce the quality of the inputs. (Bad idea…) or Increase the price of a plate of char koay teow. I think the latter is more likely and that is why we see one plate of char koay teow becoming RM5 or higher in many places in Penang. Okay, the hawker can also choose to sell more plates of char koay teow too!

How about if I tell you that the rental per stall for some of them is now RM100 per day!  This was revealed in an article by Henry Butcher in NST recently.
Please do read here for that full article.
The article says that there is one popular cafe where the owner demolished and rebuilt the facilities and is now charging the hawkers RM100 per day instead of RM30 previously. It says that the hawkers were still smiling with the increase!  The reason for the higher hawker stall rental per day is also because the property price for that particular cafe has done up. Plus the renovation costs and all other costs loh.  Looking ahead, would Penang be like Singapore where all the hawker stalls operate within food courts instead? Perhaps not during my lifetime but every time we eat at our favourite hawker stalls and the prices go up, perhaps it’s because of property prices too. So, ready to buy a shop and start a kopitiam business? Haha. Happy eating.

written on 14 Jan 2018

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Stamp Duty Exemption. When buying subsale property for first-time home buyer. Subsale means from the secondary market yeah. If you are buying a new property from the developer, that’s primary. Your exemptions could be under the Home Ownership Campaign (HOC). Just need to google for them too.

Reasons to buy property and reasons not to buy

If you do not own a property today, there are many reasons to buy a property. Investment is one of them. Long term yeah. First-time exemptions could be another great reason. Speculation wise, there are other faster types, just NOT property.

There are also many other reasons a property is not necessary even if you are a first-time home buyer. First, just rent and move anytime you like. Second, continue staying with your parents. Third and most important one, earning exceptional income is usually one of the reasons.

Property Investment is all about the 4Ps
(read more on 4Ps if you like)

When we talk about property investment, there are usually the 4Ps (yes, this 4Ps is by Charles Tan). 4Ps include Price, Place, Preference and Policy. For this article, we will look at one latest of such policy to also help the property buyers, especially first-time home buyers;
Stamp Duty.
 It’s for both primary and sub-sale properties. No more helping just the property developers.

Stamp Duty is a HUGE CHUNK of the money we need to prepare when we are buying a property. How huge? Typical numbers as follows:

If we are to buy a property of RM500,000 for example, then we need to pay the following amount as stamp duty.

RM100,000 x 1% = RM1,000

Remaining RM400,000 x 2% = RM8,000

Total amount we have to pay for stamp duty is RM9,000 (yes, to the government) and yes, the amount is a WOW because RM9,000 could have paid for an all expenses trip to an overseas destination somewhere in ASEAN.
Now, for the good news, this is now waived for first-time home buyers!

Budget 2021 Stamp Duty Exemption for First-time Home Buyers

This full stamp duty exemption will be given for properties which are priced at a maximum of RM500,000. If the property is priced ANY higher than RM500,000, then this stamp duty exemption is no longer applicable.

I repeat, if you buy a RM500,000 property from the subsale market and you are a first time home buyer, then you get full exemption of RM9,000 (calculation shown above) and if you bought a property of RM500,001, then this RM9,000 is NOT applicable to you. Probably the logic behind is that if you are a first-time home buyer, it’s better to buy something really affordable; RM500,000 or below instead.

Exemption of stamp duty and property prices are too different things

This exemption will be applicable for Sale and Purchase Agreement completed between January 2021 to 31 December 2025. So, yes, you actually do have time but if it’s a RM500,000 property it may just be a good time to take this offer up sooner than later because exemptions may be till 2025 but it does not mean the property price can also stay stagnant till then.

First-Time Home buyer, if only there was such an offer during my first property

I was struggling with my first property way back in 2002. There were no stamp duty exemptions by the way. So, I would wish to have it too. However, buying that first property has sparked a property investment journey which has been very rewarding thus far. I would encourage all to have at least one property to our name. That does nothing to make us a millionaire but it stops us from losing a lot of money to inflation. Happy deciding.

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You also need to pay for stamp duty too, okay?

It’s hard to save the first 10 percent downpayment for that first property. Somehow, everything seemed attractive at the shopping mall right? Actually, that’s not all we need to save. I think people buying their first property do realise that besides just the downpayment and lawyers’ fee, we have to also pay the stamp duty. The higher the property price, the higher the stamp duty. It is however not on a corresponding manner as the percentage to be paid would be come higher with the higher property prices. Nope, this is not just in Malaysia. It applies to the usual property markets of the world including our friendly neighbour Singapore too. In Malaysia For example, the below is the current percentage applicable.

COMPUTATION OF STAMP DUTY FOR TRANSFER OF REAL ESTATE (Sample calculation for a RM500,000 property as per image on left)

First RM100,000 – 1%

RM100,001 to RM500,000 – 2%

RM500,001 and higher – 3%

What happens when we buy a RM1,000,000 property instead? Refer to the image on your right. Instead of 1% throughout which would have meant just RM10,000 stamp duty or even a 2 percent throughout which would be just RM20,000 it will be RM24,000 when we buy a RM1,000,000 property here in Malaysia. I believe majority of Malaysians are buying the affordable properties priced below RM400,000. Thus the applicable stamp duty would only be up till 2 percent. There was a proposal in the Budget 2018 to have another tier. RM1,000,001 and above to have a 4 percent stamp duty.
 Well, this proposal is not going ahead.
 Perhaps the government is worried that people buying luxury properties would stop buying. When the market is slower than usual, together with some oversupply numbers, usually rationality wins.
Here’s that link in TheStar that tell us about it.

Conclusion, the richer a property buyer is (assumption that all those who could buy higher priced properties are richer than those who could not), the more tax is applicable. Frankly, I do not mind, if I am the one able to buy a RM1 million property, paying an extra few thousand ringgit is perfectly okay! As for now, my most expensive condominium is nowhere near the RM1 million tag. So, the debate of an additional percent does not apply to me. 🙂  Happy buying soon because if a proposal is to earn extra tax revenue for the government, it may just be delayed. Sooner or later, it should be coming back. By the way, the property stamp duty for buyers in Singapore is at 1% for first S$180,000 (RM544,000) and 2% for S$180,001 to S$360,000 (RM1.09 million) 3% applies for S$360,001 and above.
 Link to the calculation is here.
Happy buying and well, paying the applicable stamp duties.

written on 20 Dec 2017

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Stamp Duty and other costs to buy a home of RM500,000. So much?

Budget 2021 seems to be focused on first-time home buyers. Now, they have stamp duty exemption until 2025. When we buy a property, it is not just the property price which we need to worry about. A RM500,000 home is not just the RM50,000 downpayment which we needed to save like crazy to achieve. As renovation costs are quite personal, let’s look at the other costs which everyone would need to also prepare in advance as well.

We focus on a RM500,000 home because I think this is considered within the affordability of M40 household (M3 / M4) or higher who are careful with their spending.  If you like to know who’s in the M40 household and how much is the monthly median income, here’s the chart for reference. General idea is that banks would be willing to lend if the housing loan is just 30% of the median monthly income. I repeat, general idea. It depends on the credit card debts and other debts too.

Now that we are clear, let’s look at all other costs to buy a home of RM500,000. We will start with stamp duty which is usually many thousands of ringgit and this would also have to be paid when we purchase any property.

Stamp Duty on MOT (first-time home buyers in Malaysia do not need to pay this until after 2025)

Next would be the
Sale and Purchase Agreement (SPA) fees
.

We do need lawyer’s assistance. So the next one is the
Loan Agreement Legal Fees

What’s the typical total cost of purchase for a RM500,000 home?

By the way, down payment is not a cost because this is our money and it goes into the payment of the house price. The others are all considered costs because there are paid to someone else and will no longer be our money…

RM9,000 + RM5,000 + RM5,000 = RM19,000 ADDITIONAL on top of our RM50,000 downpayment which we have gotten ready earlier. So, do we have this extra RM19,000? if the answer is not yet, then the RM500,000 property will have to wait while we do our best to save another RM19,000.

Should we buy then since so much cost, why not just rent?

To those who are adamant in renting, I will not stop you yeah. From the perspective of a one time payment of down payment and all these costs, renting is by far a cheaper option. From the monthly repayment perspective, renting may still make more sense and saves us money! Just remember there’s also that long-term perspective where the owner will enjoy the potential capital appreciation while the tenant basically loses everything he paid no matter how many years he pays the rental.

Choice is yours, everyone has their own opinion and we just need to be happy and responsible for what we decide today which will affect our tomorrow. Happy deciding.

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Press Release: Standard Chartered Partners with Juwai IQI to Redefine the Client Experience

Standard Chartered and Juwai IQI have announced a partnership across their networks to redefine the client experience of banking and property investment. Juwai IQI’s real estate agent network IQI Global has 10,000 agents across offices in 15 countries, while Standard Chartered has a presence in 59 countries.

Abrar A. Anwar, Managing Director and CEO of Standard Chartered Malaysia said: “Real estate is a vital asset class for our clients as a means to diversify their investments. This collaboration offers Juwai IQI’s clients access to Standard Chartered’s comprehensive range of property loans and mortgage solutions to help them achieve their property ownership dreams.”

Juwai IQI Executive Director Kashif Ansari said: “The majority of property investors use finance to leverage their returns. Investors also have many other financial needs, from private banking to personal loans and credit cards. Standard Chartered is one of the world’s leading banking groups. Together, we can improve both the banking and property investment experience for our mutual clients, and even save them money.

“Both Standard Chartered and Juwai IQI are leaders in the application of data for business growth. By combining our knowledge, we expect to be able to improve existing services and offer new opportunities to our clients.

“The partnership between Standard Chartered Malaysia and Juwai IQI will help to provide our mutual clients with the resources and opportunities they need to be successful.”

— End Of Press Release —

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Standard Chartered reducing 15,000 headcount

Earlier, some Malaysian banks started ‘right-sizing’ which will help the bank to have better cost efficiency. For example, read about RHB’s one here:
RHB offering voluntary exit option to permanent staffs
  Reported in many medias, Standard Chartered said it would be reducing its headcount after it’s third-quarter loss. Total number of the affected staffs number 15,000. It will also be undertaking an exercise to raise US$5.1 billion (RM21.9 bill) in capital. More than half of those who would be losing their job would be from the potential losses from liquidating assets and businesses. The remaining charges would be from ““potential redundancy costs” and goodwill write-downs.

I have yet to read of any Malaysian banks reporting losses but in a signal that it’s a tough time, Standard Chartered has reported an unexpected pre-tax quarterly loss of US$139mil (RM596mil). This is a total reversal of last year’s US$1.53bil (RM6.56bil) profit. It’s revenue was down 18.4% to US$3.68bil (RM15.78bil) and impairment losses increased from US$536mil (RM2.3bil) to US$1.23bil (RM5.27bil) for the quarter. It’s CEO said, “The business environment in our markets remains challenging and our recent performance is disappointing.” Fortunately, the top management also shared this loss. For this, I give them a thumbs up. They gave up their bonuses after profits fell more than a third in 2014.

Seriously, with the economies slowing down throughout the world and Citibank predicting even a global recession next year, this may not be the last.   Read here:
Getting ready for the next global recession?

However, one major reason for this loss is also due to competitiveness or even the wrong focus. For long-term growth, no banks should continue to operate without any thought for efficiency. For banks, the more they become more online centric and as people continue to do more of their bankings online, they need even fewer headcounts. I seriously do not think banks will offer job securities like the days of yesterday. Let’s keep adjusting to the world changes.

written on 3 Nov 2015

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Standard & Poor’s rating for Malaysia, subsidy and competitiveness

There are only a few international rating agencies in the world. These rating agencies help investors decided where to invest their money and understand the risks in certain countries with weaker economic fundamentals. Today, we look Standard & Poor’s (S&P) Ratings Services which has recently given their assessment about Malaysia. This report was released end July and was reported in many major dailies in Malaysia. This would be the report card of Malaysia currently as well as a prediction of what the future may hold for Malaysia.

S&P has affirmed Malaysia’s foreign currency sovereign credit rating at “A-” for long-term and “A-2” for short-term based on the country’s strong external balance sheet and considerable monetary flexibility. Besides that, it has also affirmed its “A” for long-term and “A-1” for short-term local currency sovereign rating credit rating. These are supported by the moderate fiscal deficits and government debt burden. It is also positive on the policymaking in Malaysia saying that it has been generally effective and institutions have remained stable since the 2013 elections. It also like the GST introduction in 2015 saying that it will help fiscal consolidation. Overall, S&P said many positive things about Malaysia and said that if the Malaysian government continues to rein in expenditures, particularly subsidies as well as stronger economic growth, then the ratings may be raised.

However, the following will cause ratings to drop. They are the slowing down of reforms, such as delaying the GST and failure to reduce subsidies, reducing private investments or failure to diversify the economy further. I think these are very clear explanations. The government has to continue doing the right things and manage the fallout, for example the continuous reduction of petrol subsidies or the increase in electricity tariffs which are unavoidable.

Personally, I do not believe in everyone getting the same subsidy. The poorer ones needing help should be assisted more while the richer ones who can afford should get less. For example, petrol subsidy, there’s just no reason why someone driving a much bigger engine capacity car than me should enjoy more of the subsidy while I enjoy less. Please do not tell me that drivers of bigger cars deserve bigger subsidies. I disagree. If you indeed could not afford to pay for the petrol, then you should buy a smaller car instead. I think every financial guru in the world would teach about ‘living within your means’. Yes, I do realise that lesser subsidies may also affect me but just like the cooling measures which has cooled down the market tremendously making it harder to build bubbles, I think competitiveness of a nation does not come from subsidies but how best limited resources can be utilised.

written on 20 Aug 2014

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The aging newspaper and the gaining online

When you want to browse for properties to buy, which site would you go to? If you want to know what’s the latest transacted prices for a certain area or property, where do you go to? If you would like to read about property news, which would be your main site? How about property blogs, which would normally provide you with some original ideas which are not based on who pays the blogs but more of neutral and on the ground opinions? Well, most of the time, majority would choose to go to the most famous one, followed by the second ranked but seldom do we go to the third, fourth or even fifth ranked ones. Thus, everyone within this space must always jostle for the top spot or at least second most visited. True?

An article in The Star caught my attention. I think they are now acknowledging publicly that to rely just on prints alone would be suicidal in the long run. Thus, they are looking at integrating all its advertising businesses. They call it advertising business verticalisation which simply meant they have many different medias to help you whether its print, digital, classifieds and even exhibitions.

While this seems powerful, it does not always mean you get the best if you splash your advertising dollars across all medias. Some developers even use just the price to attract buyers. Most of the time, if their price is 10-15 percent lower than everyone else in the industry and they just put it up in their Facebook page, this would be enough to generate lots of sharing. When I wrote about an affordable project in Penang last year, within hours, the sharing has already hit a few hundred. No one can do that with a print copy of whatever newspaper but of course people who read the advertisement in newspaper may choose to call or visit the property developer’s site to know more. Today, hardly anyone who thought of buying a new property would rush to the nearest 7-11 store to buy the newspaper. I am not joking. The first media and the last media that we use when it comes to property would definitely be something online.

I am not an owner of a big publishing company or a commercial online property site. However, I am one of the many millions of people who uses online everyday for everything that I do. Searching for better deals, comparing between new property launches and even reading the comments about a certain property. In fact I recently used an online calculator to know what’s my potential return but I could never do that with a newspaper, not then, not now, not forever.

This was mentioned in the article as well. “Print remains the cash cow of Star, but its revenue contribution to the group has been declining over the years.” Star is a huge media group. Total pre-tax profit last year was RM153.4 million. Note that this is net profit. For many of the listed companies, this amount might be just their yearly revenue.

Of course, I hope they (Star) take their own words very seriously and stop selling print advertisement for top dollars and then give free or sell their online portion with extremely huge discounts. I think this applies to many other print media companies who are now transitioning into an online company. Happy changing from print to online.

written on 19 May 2015

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Starbucks latte

I go to Starbucks every week, without fail. Perhaps just once per week but it is every week. Since I love Plan B or even Espresso Lab if we are to compare to Starbucks, then why do I go Starbucks every week? I have three reasons. Convenience. There’s one Starbucks everywhere I go. Near my office. Inside the departmental stores I go to. There’s one which all my friends can gather together even if all of us are staying at different places.

Clever marketing. I have their Starbucks Card for which every 10 drinks I buy, I get one free. Everytime I bring my Starbucks mug, I get RM2 off. Now, if you calculate closely, after saving RM20 every 10 drinks, you get a free drink which if you order a Caramel Macchiato, you are saving up to RM35! Yeah yeah, you might have been paying around RM90 if you have been buying their latte. RM90 – RM35 = RM55. Divided by 11 Drinks, it’s just RM5 per drink. Hey, it’s not that expensive anymore right? Haha.

Quality. Oklar, to be honest. If their latte is really way below what we expect, they would not be successful. I still think their latte is good enough for me to like it. Not the best for me but certainly good enough for me and of course all my buddies who continues to frequent it. Oh yeah, I ONLY have THREE Starbucks tumbler……

Starbucks, anyone? 🙂

written on 18th dec 2013.

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Starhub Ipoh, SOVO, Iconic development and 25 cents psf maintenance

Personally, I do not like developers who launches project without a proper website. Come on, how much would a proper website cost these days? Please do not tell me the MD does not believe in online. Anyone who says so can forget about selling well or even growing to be a big developer. I saw an announcement by PTLM in Facebook and I googled a new SOVO project in the city centre of Ipoh. The name of the project is Starhub. The project said that it will be an iconic development and will transform Ipoh’s skyline. I hope that the developer can at least set up one in the near future. Market it correctly. The reason why people can know about your project is definitely through online and not the leaflets you printed today. It’s 2014.

For the details. Early bird price is RM400osf for the first 60 units and I think it is sold exclusively by an agency. Minimum selling price starts from RM241,200 and sizes ranges from 603 sf to 1206 sf. It is a leasehold 999 years. No mention of what’s the total units. The project would be the usual infinity pool cum wading pool with poolside barbecue for fun and relaxation. There’s also a gym and reflexology path, multipurpose hall and also a poolside cafeteria serving snacks and refreshments while your family is having fun in the pool. I know where the site is. The actual site is a piece of land nearby Kinta Medical Centre and Methodist Girl School. Maintenance is 25 cents psf which meant that that the smallest unit would set you back RM151.

I think this project would have to target the Ipoh people entirely and perhaps the people staying in the neighbourhood. Perhaps those who want a place to stay for a night or two during weekends while enjoying the facility. Personally, if I buy I would be buying the 1,206sf but the price may be a bit too steep for me if I am only going to stay during weekends. Perhaps I can turn it into home stay. I am really not so sure. There has not been a great rental market in Ipoh. There’s just not enough information to be found online beyond just calling a mobile phone and the agent listed.

I have never been very sure if Ipoh folks would love condos even though I like what The Haven has done for Ipoh. Perhaps Starhub is really an iconic development waiting to be discovered. Since this project has just been launched, only time would tell if Ipoh folks are ready for SOVO units. Pictures can be found here:  http://pemerintahberani.blogspot.com/2014/08/ipoh-news-starhub-ipoh-city-centre-sovo.html

written on 2 Sep 2014

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StarProperty Awards 2022 – New Year New Home Property Talks

Dear friends, drop by and say Hi, okay? I looked through the list, I know majority of the speakers and I have heard them speak before or even bought and read their books! A few of them I have had lunches and dinners and coffee sessions where I learn a lot from them too. I will speak on a controversial topic in a property show! Haha.

“8 Reasons Why property Investment is NOT for You.” Nope, I am serious. There are certaintly advantages to property investment which is why I love it so much. However, for some people, property investment is seriously not so great for them. Let me share all these and more during the talk and perhaps could also answer some of your questions if we have time. See you yeah. The full list of all the distinguished speakers are as below. Register here:
https://bit.ly/3V88wNa

My friends include Sr Adzman Shah, Dr. Peter Yee, Miichael Yeoh, Elane Goh. (oh, I know half of all the speakers and I am sure I will get to know the rest too.) I think many may be looking forward to some Feng Shui tips too. So, drop by for Stephen’s talk too which is right after mine.  Register here:
https://bit.ly/3V88wNa

Happy Investing, whether property or non-property. 2023 will be another amazing year for all of us.

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Start as young as you can

The best time to plant a tree was 20 years ago. The second best time is today. Time is the only thing that we could not buy back once it is lost. Irregardless of what kind of investment that you do, it is best to start as early as you can. What’s the age that you should start? My opinion is, start as young as you can. The assumption here is that you have done your homework and identified the property worth buying. It will most probably be for your own stay since you are a recent graduate and has worked for just a few years and have just enough savings for 10% downpayment for a small secondary 700 sf apartment in Penang of RM250,000. Yes, as at today, they are still available.

By starting early, it meant that you have started to force yourself to buy something which is an INVESTMENT instead of the ‘showing off’ stuff like new handbags, RM700 sports shoes or even a Japanese branded car. I know, it’s tough when you have to face your friends  but believe me, if you purchase your property when you are 26, by the age of 31, you would have saved enough for another small 700 sf apartment which you can then rent out. By age 36, you may have sold your first apartment with some profits to upgrade to a condo and bought the third property in your life.

Suddenly your friends would say to you, ‘aiya, I should have followed you’. We always miss a lot of things in our lives because we did not think objectively or read more to know more. When you really are successful and have a lot to spare, fine, get that European branded car. Anyway, I am quite sure by then, even if you are driving just a Persona, chances are, your friends would look up to you in a different way; if you have started as young as you can in property. Time is also on your side should you commit a mistake during your property investment journey.

Written on 30 november 2013

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Starting young is better than starting later.

The best time to plant a tree was 20 years ago. The second best time is today. Time is the only thing that we could not buy back once it is lost. Irregardless of what kind of investment that you do, it is best to start as early as you can. What’s the age that you should start? My opinion is, start as young as you can. The assumption here is that you have done your homework and identified the property worth buying. It will most probably be for your own stay since you are a recent graduate and has worked for just a few years and have just enough savings for 10% downpayment for a small secondary 700 sf apartment in Penang of RM300,000. It’s even lower in Klang Valley. My friend bought one for just RM250,000. Read here:
Buying for glamour or buying for value?
Yes, as at today, they are still available.

By starting early, it meant that you have started to force yourself to buy something which is an INVESTMENT instead of the ‘showing off’ stuff like a new RM4,000 handbag, RM700 sports shoes or even a Japanese branded car. I know, it’s tough when you have to face your friends. If you drive a second-hand car, they look at you differently and if you drive a Proton, they may even laugh at your choice. Well, actually if you purchase your property when you are 26, by the age of 31, you would have saved enough for another small 700 sf apartment which you can then rent out. By age 36, you may have sold your first apartment with some profits to upgrade to a condo and bought the third property in your life.

Suddenly your friends would say to you, ‘aiya, I should have followed you’. We always miss a lot of things in our lives because we did not think objectively or read more to know more. When you really are successful and have a lot to spare, fine, get that European branded car. Anyway, when you are successful, even if you are driving just a Persona, not many would be laughing at you. In fact if they did, who cares? It’s your life, not theirs. Remember, it’s investment and not speculating. Thus buy objectively and not simply. Happy starting young.

Edited on 1 May 2015

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5 Steps to Start your Property Investment adventure

This article will outline 5 steps to start your property investment adventure.

Buying that first property is always the hardest. I bought my first apartment of 700 sq ft in 2003. Then, I decided to upgrade into a 80% bigger sized place; 1,258 sq ft. This was when I decided to buy my first condo in 2005 and later on moved to my new home which was an upgrade in 2007. Before I moved into my first condo, I bought my first condo in Kelana Jaya and also my first apartment in Kota Kinabalu.

My property investment journey has continued as a working professional and thus, I could NOT buy 10 properties at once… or advise anyone to buy 10 at one go to get cashbacks… Today, I still own properties in six cities / towns in Malaysia. Want to start your property investment journey as well? Here are the 5 steps for your reference to start your property investment. If you are looking for quick profits, you may now skip this article.

Photo by Andrea Piacquadio on
Pexels.com

#1 Goal / Objective:

Understand why we want to buy in the first place. There are so many different objectives that we may have. For example, we just want a roof over your head and wanted to stop paying rental. Maybe we want to buy because our new baby looks very cute and we like to give our baby a better home. Perhaps it could even be a forced saving so that when our baby needs money in future for education that house could be turned into cash.

#2 Decide on a strategy

Focus on property rental income every month or potential capital appreciation many years later? If it’s rental income, then the secondary market will be a better choice because it’s what we see what we get and we are also able to understand how’s the rental market like. If we are thinking of potential capital appreciation, then it’s quite important to look at the price we buy versus the prices of similar properties. This should give us an idea about that potential price when the property is completed in the future. Of course, if we are looking at a longer term, then even that rental income property can still yield capital appreciation yeah.

#3 Homework Time

If it’s our first time in a swimming pool, would we jump into the pool directly? This is why we should start reading more about the property market. Understand all the potential developments which are being offered so that we could compare the choices we have. Read property magazines, property sites, buy
property books (including this one)
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Please do not think of quick profits from property investments yeah. It is supposed to be a stable and strong investment but not a quick one.
Earlier article here about investment here.

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#4  View, View, View

Once you are familiar with how property investment works, start to view units. The more the better as you learn a lot during these viewings. Note the surrounding, the route leading to the property, types of properties, what are nearby, what about the traffic condition, is it nearby MRT, etc. My personal opinion, view 20 before deciding when you first started. If you viewed enough, you should be able to decide objectively.
If it’s a high rise, then here are some tips on inspecting it.

#5 Offer and Negotiate

If you think you have viewed enough and have decided on a very attractive one from the secondary market, do call the agent and tell the agent to negotiate for the best for you. Tell him specifically that if it hits your target price you would buy. If it’s a new property, then perhaps can also tell developer sales person that you have interest and would like to know everything extra which they could provide. (This is the time where the extra is still possible. In a hot market, maybe it’s harder for this to happen)

What would the future be like?

The best part about property investment is this. We get better in this journey and studies have always shown that the ones who bought their first property usually move on to the next one. It may be an upgrade many years later. It may be the money from capital appreciation which is enough for downpayment to two properties in the future. Just remember that property investment is not a gamble. It has been a rewarding journey for me since I bought my first property in 2002. Happy joining me in this rewarding journey.

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