Bangsar South? Where’s that? (in future?)

Some time ago, there was a proposal for Bangsar South not to continue to be Bangsar South; name that is.
Bangsar South back to Kerinchi, anybody?
 Well, it’s now official.
Article in TheMalayMail.com here.
 The name Bangsar South first appeared around 7 years ago. (Yes, I know because I used to go to my former company’s office once a month in Bangsar South). The article said that this was an attempt by some parties to rub off the prestige of an unrelated suburb to the north known for its affluence and hipness. MP for Lembah Pantai, Fahmi Fadzil said, “There is a mismatch between a place being sold and touted as Bangsar South with the reality that this was not Bangsar to begin with. Bangsar is north of the Federal Highway on the other side. This has never been Bangsar. This has always been Kampung Kerinchi.”

Fahmi said eventhough the name is now reverted to Kampung Kerinchi, it does not mean that everything that is Bangsar South will be obliterated but the re-emphasis that this area historically and culturally is Kampung Kerinchi. He said there is nothing to be embarrassed with the area being called “kampiung,” Malay word for “village.” He said, “We always have this negative connotation that ‘kampung’ means backwards. It does not necessarily mean backwards. The only thing backwards is our mentality. What is the point of having a first-rate city but having poor mentality?.” In the near future, there are plans to construct arches at three major entry points into the area ? the Universiti LRT station, the Petronas petrol station at the New Pantai Expressway, and Jalan Pantai Sentral. He said, “The arches would have a plaque that says ‘Selamat Datang ke Kampung Kerinchi, Kayo Di Hati Kamai’.” In the Kerinchi dialect, that phrase is a heart-warming embrace, meaning: “Welcome to Kampung Kerinchi, you are in our hearts.” Here’s that article in
TheMalayMail.com for reference.

I personally think there’s nothing wrong to rebrand an area because this is part of development. I am not sure how will this affect the many other areas which have also been rebranded too. Let’s be honest here. Developers would want to create the best value for their developments and for their potential buyers this is a good thing too. None of us would like to buy into an area which does not increase in value over the years right? However, we should not be erasing the historical part of the area. As this is now a certainty, let’s see what happens in the near future between Bangsar South and Kampung Kerinchi’s combination. It’s a nice area by the way and I have many friends staying / working there too. As for their comments, maybe we talk about it in an article in the near future.  Happy following.

written on 19 Jan 2019

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Why the bank did not approve my home loan application and what I could do about it

If you are a first-time home buyer looking to buy a property, chances are you are hoping for this:  The bank will approve my home loan application. You may have read that the bank would lend you 90 percent of the home price while you have to be prepared with the 10 percent downpayment for the home. Sounds simple but it’s not that straightforward these days. There are two potential reasons for this.

#1 – Banks need to be prudent.
When borrowers fail to pay for their loans for 6 months, these loans will be classified as Non-Performing Loan (NPL) In Malaysia, the NPL for the banks have been on an increasing trend even if the number remains under control. Many did say that when the moratorium is really over, then we could see a spike in the NPL. Latest numbers here for reference:
NPL Malaysia is on the way up. How up?
  This is why the banks are now doing their best to manage this and are more conservative than ever.

#2 – Those prices may just be too high
. In Malaysia, the valuation of homes are usually based on the recent transacted prices from the Valuation and Property Services Department (JPPH). The valuer would use this as a comparison for the valuation of the home we are about to buy. If the recent transactions showed that many transactions of the same type of home is lower, then the valuation for the home would now be lower. A calculation example:

The home we wanted to buy: RM500,000

The home loan we wanted is 90 percent: RM500,000 x 90% = RM450,000

Downpayment needed is thus RM500,000 (home price) – RM450,000 (loan amount) = RM50,000

Assuming the recently transacted property prices for the last 5 units is RM450,000

The valuation for the home we wanted to buy may become RM450,000

The home loan based on 90%: RM450,000 x 90% = RM405,000

Downpayment needed is thus RM500,000 (home price) – RM405,000 (loan amount) = RM95,000

In this case actual loan amount from the bank according to our calculation is no longer 90%. It’s closer to 80% instead. This means that the potential home buyer would now have to try doing either of these two things if they still want to proceed to buy that dream home.

Photo by fauxels on
Pexels.com

#1 – Negotiate until the home price becomes RM450,000 with the seller.
 If the seller is willing to sell it at this new price, then the buyer would not need to find the extra downpayment amount needed. This is usually very tough because not many sellers would want to sell lower than the price they bought. In fact if they sell lower, they may even have to fork out the difference if the home was still under a home loan and the amount they owed to the bank is equal or higher than RM450,000

#2 – Find that extra downpayment necessary.
 If this is indeed the dream home, the one and only home which you really want and you do not think there are any other better choices, then please go and find that extra RM45,000. What will happen is that with a lower loan amount (80% versus 90%), your monthly repayment is also lower too. Perhaps that is also a good thing as you may now have more money to invest too. Hopefully the money is not spent on something unnecessary every month.

There’s also that other CLEAR option too

Yes, the other option beyond just the loan amount part is to look for another property instead. In H1 2020, we had a total of 75,000 residential property transactions which meant that choices are indeed aplenty in Malaysia. Whether it’s primary or secondary market or even the auction market, there may be choices where the valuation has stayed the same and the price is what you could afford.
Secondary market needs not be a secondary choice yeah (article here).

This is why the bank may NOT approve your 90 percent home loan application

It’s not necessary to blame the bank. It’s just how the market goes. In fact, the valuation will do us a great favour. It’s not a clever decision to buy a home which is overpriced versus the market. Else, we may have to hold on to this property for a long time before we could sell it higher than price we bought.

Do note that if that home we are about to buy happened to be right next to the mother-in-law’s place and her cooking is exceptionally good, please find the extra downpayment and buy that home. There’s no other considerations necessary. Happy understanding.

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How’s your salary increment? These employees will get up to 18 pct salary adjustment!

Many friends would be happy with this news

There are many industries where it’s considered quite stable. Banks used to be categorised in this sector. Today, banks are also forced to transform. Retail branches are becoming fewer and the push for online banking has already reached tipping point. In fact, there are no banks which does not have a banking app today. It’s only a matter of whether it’s friendly enough or it’s not. However, those working in the banks would be happy with the below news. Imagine salary increment of up to 18 percent!

Article in themalaysianreserve.com
    National Union of Bank Employees (NUBE) has signed a collective agreement (CA) with the Malayan Commercial Banks’ Association (MCBA) for 2021 to 2023 in Kuala Lumpur today. This will give its members probably the best ever combined perks, including a 15% to 18% salary adjustment.

The agreement also provides the 15,000 clerical employees in Peninsular Malaysia a one month salary for their respective major festivals like Aidilfitri, Chinese New Year, Deepavali, Christmas and Vaisakhi.

The salary adjustment is the highest in the recent history of the National Union of Bank Employees (NUBE), with the exception of a 22% increase in the 1990s.

The minimum salary for the three categories of staff will increase to RM2,370 for the non-clerical staff, RM2,670 for clerical staff and RM3,130 for the special grade clerical employees.

The maximum salary for the three categories will see an uplift to RM4,002, RM6,054 and RM7,110, respectively. Do read the full article here:
Article in themalaysianreserve.com

Moving forward and future proofing one’s future

Salary increments are awesome. Remember to use it wisely. Save some, spend some and invest some.

One close friend who’s working in the bank told me that when she started, she had 25 peers. Today, she had just around 10. As you can see the banks are also changing tremendously. Online banking growth meant fewer people would be going to the bank. In other words, banks do not need so many people, they also do not need so many branches and last but not least, if they want to thrive, they have to go online and be inside everyone’s smartphone.

Not many people wants to drive to a bank, try to find parking space and wasting time taking a number and wait. The article below showed almost similar situation as what my close friend encountered. The National Union of Bank Employees (NUBE) used to have 60,000 members. Today, it has just 15,000 members as per the article above. This tells us that future-proofing our financial future cannot just be with the salary incremenet negotiations yeah. Happy understanding and taking the right actions.

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Banks’ exposure to property market increased

This is very important for the property market longevity. Imagine if all the banks that we know today have majority of their lending to only property related loans. Yes, only to commercial, residential or any type of property. Well, it’s great if the property market continues to increase in price. The bank’s profits increases tremendously and more people borrow to buy properties and the cycle continues. However, what happens if the property market faces a downturn? What would happen when these home owners start defaulting on their loans? Well, that’s the end of the banking system, together with everything else, including the economy. If you think this could not happen, think again, something similar happened in 2008 in US.

For Malaysia, the cooling measures were implemented to ensure the property market does not continue to rise indiscriminately. So, what’s the current percentage of Malaysia’s financial institutions to the property sector today? Based on Bank Negara’s Financial Stability and Payment Systems Report 2014 total exposures amounted to RM628.5bil or 23%. It was 21.9% in 2013. Financial institutions mentioned here includes every institution which lends money including banks, development and selected non-bank financial institutions and insurers as well as takaful players. Out of this total, banks have the lion’s share at 95.4%. Out of this, about 65% of bank exposures to property is concentrated in the residential property end-financing market. About 30% is for the end-financing for the purchase of land and commercial properties.

This 23% meant that the exposure to the property sector is increasing. Is this bad? I personally think this is ok. In Singapore, the banks need to follow a ceiling of 30% when lending to property related loans. This is required by Monetary Authority of Singapore. However, this was said to be in review to relax it further. If the percentage is too low, is it good? For a developing country like Malaysia and where the largest group are still below 30 years old, a low percentage is not good. However, there is a reason for setting a limit.

Due to this 23 percent which is already higher than previous year, some analysts in an article in a local English daily are saying that more cooling measures are coming, even if it is more selective ones. Malaysian Rating Corp Bhd (MARC) chief economist Nor Zahidi Alias said that agrees there is a possibility that macro prudential measures to curb speculation in the property sector could be unveiled in the near terms in view of the high total exposure of financial institutions to the property sector. Another reason for this selective measure is because property prices remain high and is currently 6.6 times of household median income.

So, when you borrow for your next home loan, remember to just get to know if the Malaysian banking sector is overexposed to property. It may be prudent not to buy when you learn that the current 23% has become 32%? Then again, this is unlikely to rise further as there are no signs that the cooling measures would be relaxed anytime soon.

written on 23 Mar 2015

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Bank Negara Malaysia’s OPR decision. Up, Down or Stay the same? OPR stands for Overnight Policy Rate. This guides the interest rates for all banks in Malaysia.

What happens when the interest rates go up?

Depositors will be happy. Their deposits in the bank will now get higher returns. They (including me) have been getting low returns as the OPR was just 1.75%. I remember long time ago when Fixed Deposit rates were even above 5%! Maybe higher, can’t remember if I was too young to know. However 5%, I am quite sure of it.

Property owners will be unhappy. Their monthly mortgage repayment will also be adjusted higher. As they cannot suddenly increase rental to cover for it, it means they will have to pay more by themselves. Potential property buyers would also be unhappy. Suddenly the chance for their loan application to be approved has gone down a little too.

What happens when the interest rates go down?

Depositors will be unhappy. This is especially to the ones who rely on their savings for interest. They will have lower returns and could even mean cutting a meal or two every other day because of this. With FD rate of just 1.8% for example, it meant that even a RM100,000 FD will only receive a paltry RM1,800 after 365 days! That’s just RM150 per month or around RM5 per day.  Seriously, it’s seriously low.

Property owners will be happy. They could pay less for their home. That little savings every month could mean an extra meal or trip to the cafe too. Potential property buyers will also be happy because they could now afford a slightly higher priced property for the same instalment. In fact if they opted for the same property price, their chance of getting the loan approved will be higher too.

Okay, so what happened to the OPR?

Bank Negara Malaysia (BNM) has announced that the rates will remain unchanged. Actual statement, “At its meeting today, the Monetary Policy Committee (MPC) of Bank Negara Malaysia decided to maintain the Overnight Policy Rate (OPR) at 1.75 percent.”

Here’s their full article (Bank Negara Malaysia) for everyone’s reading yeah.
Click here.

I am just happy with whatever Bank Negara Malaysia made because if they decided to keep it, it also meant that the economy is recovering and may not need the extra push from a lower rate. If they increased it, it also meant that the economy has started the recover and BNM may want to keep away speculative activities instead. I am grateful that the economists in BNM is crunching numbers to come up with this decision. Thank you.

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Bank Negara Malaysia maintains OPR despite increasing inflation

Economics 101 in less than 100 words

Briefly, if we are faced with threat from inflation, the interest rate will be raised to fight inflation. This monetary policy which deals with controlling the supply of money in order to ensure an orderly economic growth for the country. If the economy is unwell, the central bank may also reduce the interest rate in order to encourage more investments and consumption and thus help to push the economy to move.

Malaysia is at that stage where economic growth is more important than controlling inflation. Bank Negara Malaysia has thus decided that the Overnight Policy Rate (OPR) will be maintained to support the economy first. Dealing with inflation can be a little later. Good decision in my opinion.

Full press release from Bank Negara Malaysia

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

The global economy continues to recover, supported by manufacturing and trade activity. Labour market conditions have also improved in many countries. However, several countries reintroduced measures to curb ongoing COVID-19 resurgences, causing some moderation in the pace of recovery in domestic activity, especially services. Inflation remains elevated in a number of countries, driven by both supply and demand factors. Going forward, continued progress in vaccination coverage, advancements in vaccine efficacy, and the availability of anti-viral treatments will allow for better management of the pandemic, hence supporting global growth prospects. The global growth outlook will continue to be affected by uncertainties over the emergence of new variants of concern, risks of prolonged global supply disruptions, and risks of heightened financial market volatility amid adjustments in monetary policy in major economies.

For Malaysia, the latest high-frequency indicators show that economic activity rebounded in the fourth quarter, in line with the relaxation of containment measures. For 2021, growth will be within the projected range of 3% – 4%. Looking ahead, growth is expected to gain further momentum in 2022. This will be driven by the expansion in global demand and higher private sector expenditure amid improvements in the labour market and continued policy support. Risks to the growth outlook, however, remain tilted to the downside. Such risks may arise from a weaker-than-expected global growth, a worsening in supply chain disruptions, and the emergence of severe and vaccine-resistant COVID-19 variants of concern.

Headline inflation has averaged 2.3% for the period January-November 2021. For 2022, average headline inflation is likely to remain moderate as the base effect from fuel inflation dissipates. Underlying inflation, as measured by core inflation, is expected to edge upwards as economic activity normalises amid the environment of high input costs. Nevertheless, core inflation is expected to be modest, with upside risk contained by the continued slack in the economy and labour market. The outlook, however, continues to be subject to global commodity price developments amid risks from prolonged supply-related disruptions.

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

Bank Negara Malaysia
20 January 2022

— end of press release —

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Bank Negara Malaysia (BNM)’s Annual Report 2021, Economic and Monetary Review 2021 and Financial Stability Review for Second Half 2021

Bank Negara Malaysia (BNM) today published its Annual Report 2021 (AR 2021), Economic and Monetary Review 2021 (EMR 2021) and Financial Stability Review for Second Half 2021 (FSR 2H2021).

Source of all the charts below is from
Bank Negara Malaysia (BNM) site.

Economic & Monetary Review 2021

As per image above, BNM is expecting the GDP growth to be higher for 2022 versus 2021. The few key drivers include private consumption (me and you…), private investment, services and manufacturing. If all these four moves, the GDP will continue to move positively too.

As per image below, these will contribute to economic growth. Expansion in external demand supported by tech upcycle.
International borders reopening… (1st April 2022)
 (here’s latest article)
 Unemployment numbers continue to drop.
(here’s latest article)
  There are also targeted policy measures to push for more targeted growth as well.

There are challenges yeah. What if Covid-19 virus becomes more powerful. There are also the geopolitical conflicts. The most significantly reported one is Russia-Ukraine war. Last but not least would be
inflation… (Latest article here)

Below image shows our inflation numbers. it’s generally on an uptrend but I think we are also shielded because of the subsidy for petrol versus other countries where the petrol price is determined by the market instead. I am just not sure how long can subsidy lasts if oil price continue to be at elevated levels.

Financial Stability Review. This is about banking institutions. Based on the image below, we can safely conclude that the banking institutions are at a position of strength at the moment. Tier 1 capital ratio of 15.7% is considered a very high number even when compared to most countries in the world. (I have no idea if there are that many countries which has a higher number than 15.7%.  Singapore’s Monetary Authority asks the banks in Singapore to have a minimum of 9%)

The liquidity coverage ratio (LCR) refers to
the proportion of highly liquid assets held by financial institutions, to ensure their ongoing ability to meet short-term obligations
. (as per Investopedia).
  This meant that banks are able to continue lending to people.

The capital adequacy ratio (CAR) is
a measure of how much capital a bank has available, reported as a percentage of a bank’s risk-weighted credit exposures
. The purpose is to establish that banks have enough capital on reserve to handle a certain amount of losses, before being at risk for becoming insolvent. (as per investopedia)  This means banks do not suddenly have to stop its operations due to some sudden financial losses.

From the image above, we could see impairment ratio remains very low. This meant two things. People could repay their debts and very little goes into bad debts. Secondly, the banks are careful with their lending and only the ones would meet the requirements could borrow from the bank. I think this is also why people say it’s not easy to get a loan approved.

The above image showed that businesses are borrowing more versus households. This is good because businesses borrow to expand their business and this will create more jobs for the people. Loan loss coverage is more than enough to cover all the potential losses.

Image above shows a positive number yeah. It seems that the financial market stress is going lower versus when the pandemic started. Meanwhile image below shows that whether banks, general insurers and even life insurers, all are able to handle a sudden stress to them.

Happy learning that Malaysia is really doing fine at the moment. Here’s the BNM website link again.
Bank Negara Malaysia (BNM) site.

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Bank Negara’s 6 policy options. I like them all.

I think everyone has read that article about
RM500,000 property dropping to RM300,000 in the near future.

I did not write a response but I did write an article about a few potential trigger points when the news about the 40 percent rise in unsold units first popped up. Here’s that article:
Strategy with the 40 percent up in unsold units

Hopefully you have read an article where our Bank Negara Malaysia (BNM) outlined 6 policy options to everyone. I would think they are trying to influence everyone to think about it really seriously. Here’s that
article in TheStar if you have missed it.
It gave a warning that there is a supply-demand imbalance and that the oversupply of office space and shopping complexes in major states may worsen with incoming supply. This is their actual statement, “Supply-demand imbalances in the property market have increased since 2015. Unsold residential properties are at a decade high, with the majority of unsold units being in the above RM250,000 price category.”  (Please note that this is indeed a worrying statement.)

Property investments are now 25 percent of total investments versus 18 percent in 2005.

(Please borrow responsibly yeah)

Johor is poised to have the largest property market imbalances (highest number of unsold residential properties and potentially the largest excess supply of retail space). BNM’s 6 policy options are as follows:
(From TheStar article with my personalcomments in bracket and italic)

First
, there is a need to resolve the high level of residential properties for all price ranges. BNM said all parties should encourage the rental market. There is a need to develop a strong rental market by enacting the Residential Tenancy Act and establishing a Tenancy Tribunal to safeguard the rights of both tenants and landlords.
(I think if it is true that if we really did not find the right property, renting is a good option.Keep viewing and negotiating. Who knows, we may just strike a good deal.)

Second,
 as for affordable housing, there should be an increase in efficiency in  the provision of affordable homes. BNM suggested the setting up of a single entity for affordable housing to accelerate the rebalancing of supply towards the affordable range “Ensure that the development of new projects are in decent locations with good transport connectivity,” it said.
(This is the best policy to be considered. I always wonder why can’t we have just ONE main database with all the registered demand versus all the incoming supply. The programmes can be different lah. Since federal and state have their own programmes. However, all of the demand and supply for these affordable homes housed in the same system / database)

Third
, BNM said there should be greater efficiency in the allocation of affordable homes. It suggested that it should be ensured that applicant registries are regularly updated, verified and filtered to prioritise creditworthy households. Ineligible applicants should be directed to rental housing. For the offices and shopping complexes segment, BNM said there was a large incoming supply of commercial properties and a high vacancy rate and low rental rates in existing buildings.
(Directed to rental housing is good but supply of these need to be set-up properly as well)

Fourth
, there is a need to manage new incoming supply. Hence, the commercial viability of any new project must be thoroughly assessed before it is commissioned.  Developers should be  to be cognisant of current and future demand conditions:  Cannibalising effects on tenants and customers (from new malls and offices; high costs of living and rising e-commerce market.

Fifth
, BNM said the parties should look into the repurposing of vacant commercial buildings. Vacant commercial spaces in prime locations could be repurposed into economically meaningful assets – such as corporate housing, en-bloc rental accommodation, art centres and indoor parks.

Sixth,
 increase demand for existing space. This could be done by intensifying efforts to attract foreign companies to set up businesses and expand their footprint in Malaysia. Encourage  start-up occupancy by giving rental rebates.

Other details: 83 percent of all unsold units are above RM250,000. Johor has the largest share of unsold residential units (27% of total unsold properties in Malaysia), followed by Selangor (21%), Kuala Lumpur (14%) and Penang (8%). From 2016 to 1Q 2017, only 21% of new launches were for houses priced below RM250,000.
Here’s the full article again.

Perhaps now we should wait for all the concerned parties to outline their own policies on how best to implement these for their side? Perhaps even their side of the story like usual but frankly, it is best that all parties think along the lines of these 6 policy suggestions. They are really based on numbers and allow me to quote my ex-Professor for Decision Science. He said, ‘Policies MUST be based on decision science and not on political science.’ How true then, how true today. Happy following.

written on 20 Nov 2017

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Banking system Malaysia remains resilient. Numbers here.

I wrote this article not too long ago.
Malaysian economy overview from the banks’ results
 All these banks’ results help to answer the many questions about whether or not the economy is growing or it’s declining because of the effects from Covid-19. Banks could not report good results if the economy is faltering. Their customers need to do well for the banks to do well. Now we have even more numbers for us to understand about the state of the economy.

Article in themalaysianreserve.com
   Bursa Malaysia’s non-executive chairman Abdul Wahid Omar shared the following numbers.

Banking system’s core equity Tier 1 capital ratio of 15.2% as of Dec 31, 2021, was significantly higher than the 9.05% core capital ratio as of Dec 31, 1997, and 10.61% as of Dec 31, 2008.

Asset quality of the banks improved significantly with the net impaired loans ratio improving from a high of 13.59% in 1998 to 2.24% (2008) and 0.9% as of Dec 31, 2021.

“Similarly, the loan loss cover ratio improved from 39% to 75% and 129.2% as of June 30, 2021, respectively.

“The loan-to-fund ratio remained broadly stable at 82.3% as of Dec 31, 2021, and there is sufficient liquidity for the banks to fund future loans growth in order to expand the economy further.”

“On the back of these prospects, I am optimistic Malaysia’s GDP can rebound to pre-pandemic levels — and based on the economic recovery observed in 2021 and with the reopening of the borders from April 1 — Malaysia is poised to achieve its forecast GDP between 5.5% to 6.5% in 2022.

“This corresponds to International Monetary Fund and World Bank predictions of 5.7% and 5.8% respectively.” Do read the full article for your reference here:
Article in themalaysianreserve.com

What is Tier-1 Capital Ratio and why is this important?

Investopedia says
The tier 1 capital ratio is the ratio of a bank’s core
tier 1 capital
—that is, its equity capital and disclosed reserves—to its total risk-weighted assets. It is a key measure of a bank’s financial strength that has been adopted as part of the
Basel III Accord
 on bank regulation.

The tier 1 capital ratio is the basis for the Basel III international capital and liquidity standards devised after the financial crisis, in 2010. The crisis showed that many banks had too little capital to absorb losses or remain liquid, and were funded with too much debt and not enough equity.

To force banks to increase
capital buffers
, and ensure they can withstand financial distress before they become insolvent, Basel III rules would tighten both tier 1 capital and
risk-weighted assets
 (RWAs). The equity component of tier-1 capital has to have at least 4.5% of RWAs. The tier 1 capital ratio has to be at least 6%. Read here for more:
Investopedia says

Tier-1 Capital Ratio for Malaysian banks are alongside the best in the world

Please feel free to google for the tier-1 capital ratio for many of the advanced nations in the world to get some sense of where Malaysian banks stand yeah.

Secondly, our neighbour, Monetary Authority of Singapore wants all Singapore banks to adhere to the following: “For Common Equity Tier 1 capital, Singapore-incorporated banks will be required to maintain a ratio of
at least 9% by 1 January 2015
 (inclusive of a capital conservation buffer requirement of 2.5%) compared to the Basel III requirement of 7%.”
Info source.
 Singapore’s requirements are thus higher than what Basel III accord says yeah.

Meanwhile Malaysian banking system exceeds even this tougher requirement of at least 9%. (We are at 15%) By the way, no one knows how things could turn out in another global financial crisis but what’s sure is that if it happens, our banks are going to face it from a position of strength versus a weakened position. That is surely a good thing. Happy understanding.

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4th banknote auction: RM100 banknote won by RM50,000 bidder!

Last week I told a colleague who has one or two pieces of antique furnitures about the potential from banknotes, as long as they have special serial numbers. She did not know that even in Malaysia there is such an investment potential. I told her about the first banknote auction in Malaysia by Bank Negara Malaysia (BNM). It was auctioned by
MNP Auctioneers
, the official auctioneer for BNM. Read here:
Banknote Auction Malaysia, First one ended on a high note

She said, it does sound interesting but she missed the recent one just last weekend. It was

BNM’s 4th banknote auction.

Again, the event was a huge success judging from the interest from within and overseas. Some details as follows:

Total Registered Bidders – 145

Total On Ground – 113

Total Online – 32

Total Overseas – 11

Total Hammer Price – RM605,300

Total Banknotes – RM360,400

Total Coins – RM244,900

Highest Banknote – RM50,000 (Lot 64, rm100, AA3333333)

2nd Highest Banknote – RM21,000 (Lot 58, rm100, AR0000001-0000010)

3rd Highest Banknotes – RM20,000 (Lot 65, rm100, BB1111111)

4th Highest Banknotes – RM20,000 (Lot 66, rm100, AR10000000)

Highest Coin – RM2,400 (Lot 98, Mirror Proof Like)

2nd Highest Coin – RM2,400 (Lot 186, Mirror Proof Like)

Yes, you did not read wrongly. That special RM100 note was sold for RM50,000 to the highest bidder on the day. If you stashed some old notes somewhere, it’s the time to take them out now. Who knows, it may just provide a big holiday to the whole family. Special banknote or coins investment is huge in some developed markets. For example, London, Hong Kong and even our neighbour Singapore. I personally have one whole stack of old RM1. I think I will keep it for many more years. Who knows, my kids may be extremely happy when I pass it to them in the future? Happy investing. Do visit
MNP Auctioneers
 for more information on the next event.

reported on 9 Mar 2016

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BNM Fourth Auction of Malaysian Banknotes – 6th March 2016

Thinking of something else to invest? How about investing in MONEY? Well, investing in special banknotes may be something we may also think of doing. There’s an upcoming one just days later. The details as below. Oh yeah, do look through all your old notes and if you found anything special, bring it along to this banknote auction. Who knows, there may be hidden value in your old banknote! Oh yeah, banknote investment is about buying something which may appreciate in the future because there’s just ONE (1) piece in the whole world. Read on to understand more, directly from Bank Negara Malaysia’s appointed auctioneer, MNP Auctioneers (Central) Sdn Bhd.

— Start —

Once again, Bank Negara Malaysia will be organizing its Fourth Auction of Malaysian Banknotes with special serial numbers. This series of auction is by far the most successful auction event in Malaysia. The auction will be conducted by the Bank’s appointed auctioneer, MNP Auctioneers (Central) Sdn. Bhd. (MNP).

Event Details:

Date : 6th March 2016 (Sunday)

Venue : Auditorium, Sasana Kijang, Bank Negara Malaysia, Jalan Dato’ Onn, 50480 Kuala Lumpur

Registration : 8.30 a.m. onwards

Commencement : 10.30 a.m. onwards

The purpose of the auction is to provide equal opportunity to all members of the public to obtain these coveted banknotes with special serial numbers such as BB1111111 or AR10000000. These special serial number banknotes command premium in the collectors’ market. The auction will also serve one of the initiatives by BNM to promote interest and greater appreciation in numismatics amongst the general public. This fourth auction consists of only 66 lots of banknotes. As the lots are much lesser compared to the previous events, collectors and general public are encouraged to take this golden opportunity to own a piece of the highly sought-after Malaysian Banknotes with special serial numbers.

In particular, BNM will be auctioning copper commemorative coins in conjunction with the World Team Table Tennis Championships (WTTC) 2016 during the auction. The Bank is issuing large-sized copper commemorative coins for the first time for this event. The mintage quantity is 300 pieces but only 120 is for sale by public auction, therefore making it a highly limited collectible item.

Enclosed herewith the commemorative coins image and some snapshots of the previous BNM auction for your media reference. We would like to invite your esteem press to be presence during this upcoming auction to witness an exciting bidding atmosphere. More information can be sourced at
http://www.mnp.com.my
. The interested bidders will be presented with a dual-bidding portal that provided by
http://www.best2bid.com
, which accommodates floor and online bidding concurrently in the same event. Therefore, bidders are allow to register to bid the lots online if not participating personally during the live or floor auction.

Thank you.

Auction with Confidence!

Soon Chee Leng (Stephen)

Managing Director

MNP Auctioneers (Central) Co. Ltd.

Certified ISO 9001:2008 QMS

Malaysian Brand Award Winner

— END —

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Banknote Auction Malaysia, First One Ended on a High Note.

Instead of the usual article, I feel that a Q&A may do better justice and also easier to refer to. Let’s talk to Mr. Stephen Soon the Managing Director of MNP Auctioneers about the very first Banknote Auction in Malaysia. Personally, the results were way above my expectations. I did expect some of the notes to overhit RM10,000 but last weekend was a gathering of all prominent numismatists and the final results were way above everyone’s expectations. I think what happens after the below is that you will start noticing all the numbers on your banknotes and you would be keeping it if the numbers happen to be what is needed below. Crumpled banknotes may not work though.

1) Was this event considered a success, huge success or unbelievably successful? Why do you say so?

The event was a huge success, not from our mouth but the bidders! We had approximately 290 registered bidders which is by the highest attended banknote auction fair in Malaysia. According to some of the prominent numismatists, the selling prices are far beyond their forecast, they called it “unimaginable”. All the 231 lots were fully taken. Even the 11 Lots that encountered slight damage were also sold off like nobody business. One big time collector told us that public auction is indeed a true platform to uphold the value of the banknotes collection.

2) What was the top 3 highest bidded lots. What was the main reason(s) for them?

AA2222222 (RM100) sold at RM18,500

AA6666666 (RM100) sold at RM20,000

AA9999999 (RM100) sold at RM20,000

It was due to super solid number (solid number + same prefix). Apparently many Malaysian bidders preferred the prefix of AA. Maybe also because these lots are the final 3 lots before the auction calling to an end and collectors didn’t want to miss every opportunity. In addition, RM100 denomination has only 14 lots, the lowest volume among the other denominations)

3) List down the top 10 highest bidded lots and tell us if the winners are Malaysian or non-Malaysian.

Other than the 3 that listed in your question 2..

AB8888888 (RM20) sold at RM16,500

AA6666666 (RM5) sold at RM16,000

AA2222222 (RM20) sold at RM15,500

AC8888888 (RM20) sold at RM14,500

AB0000001 to AB0000010 (RM20) sold at RM14,000

AC8888888 (RM100) sold at RM13,500

AC0000001 to AC0000010 (RM5) sold at RM12,500

We have not sort out the final account yet but based on the information on hand, there is one Singaporean among the top 10 lots mentioned here, the rest are Malaysians.

4) When is the next event and would there be anything special that you will be doing for it.

We will inform the public upon receiving new instruction from BNM. We hope to enlarge our A&P activities to create more awareness to the first-time collectors.

interview conducted on 30th Sept 2014

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BANKNOTES from BNM. Understand from the expert on investing in one.

Today, in our Expert Series Q & A, we have Mr. Stephen Soon. He is Managing Director for MNP Auctioneers. Recently, MNP Auctioneers was appointed by Bank Negara Malaysia (BNM) to conduct an auction which has never been done before in Malaysia. In fact, I think it may be the start of a whole new Auction Industry where the interest may be built to levels like those of UK, Hong Kong or Singapore. Let’s learn from him on special banknotes.

1) I understand that MNP is the appointed Auctioneer by Bank Negara Malaysia for the first auction of its kind in Malaysia; banknotes. Why invest in banknotes?

If you have a chance to visit any numismatic trading shop or? do some google searches, you will be surprised that the banknote collector societies are very active in Malaysia. Trading activities for these banknotes are very lively, especially when I joined some of these related online sites. Malaysian banknotes have good investment market overseas. Singapore is considered a very mature market for this collection in South East Asia. When I attended one of the many banknote auction fairs over there in June this year, I saw many collectors bid for Malaysian banknotes!

The truth is, when there is demand, investment value comes concurrently. ?This was proven further during our promotional activities such as Open Days in KL and Penang and online marketing to promote our upcoming BNM banknote auction. We received massive enquiries even from outside of Malaysia, many have prepared themselve strongly to bid!

2) So far, how’s the response to this auction? Are Malaysians as interested as those from outside Malaysia?

Like what I have mentioned in the first reply, many have already registered their interest to attend and participate in the upcoming auction bidding?! Almost every enquiry that we received is genuine and wanted to explore further to ensure that they become winners in the bidding. Many, including new collectors are very excited about this inaugural auction by BNM in giving general public a level-playing platform to own a piece of a special banknote. Bidding openly at the special serial number banknotes was only a dream in the past, as many thought that it is only for private gains! They have to travel to Singapore to bid.

3) I understand the highest priced auction for ASIAN banknotes were for Malaysian banknotes and the auction was done outside Malaysia. How do you feel as a Malaysian based auctioneer for this to happen?

I feel that it was an honour that Malaysian banknotes were highly regarded and auctioned in an international ?platform. This ultimately bring the highest potential return to the seller as well as the buyer!. It also marked a good start to bring the glory back home to our country and give positive influence to the banknote auction development in Malaysia. Who knows the next most expensive auction bid for Malaysian banknotes may happen in Malaysia itself, bought by international buyers?

4) If I am interested and I am just a casual investor, how should I approach this first of its kind auction? I have no reference to refer to.

You can attend the auction fair to observe, not necessary banknote auction per se but to feel the excitement of an auction bidding to make yourself more prepared to enter into the game. ?We have conducted mock auction to guide potential bidder and investor to bid successfully. We have also our Specialists who will share with you about banknote market and its potential investment return. Do not just wait on the sidelines. Come view for yourself. More details here:
http://mnp.com.my/product-category/banknote/

I am not sure about you. However, I have filled up the form to bid in absentee because on the weekend of the first ever auction, I am not in KL. Let’s see whether I win. Will publish about my win in the next article on banknotes.

written on 22 Sept 2014

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Banknotes as an investment is real. Get to know about it, really.

If you have always been looking at diversifying your investment, this is something you can think about. Every collector I met thus far started years ago and usually they would concentrate on something they really like. Some would only look at banknotes and some would only be for coins. My own preference? Banknotes, especially the older ones and still in good condition. I was here at a function room in Hilton hotel, PJ. It was full of people. The event was Trigometric’s Malaysia and World Banknotes & Coins Auction. I was registered as bidder number 259. (Refer to the image). There were over 700 lots being put up for auction. From foreign banknotes to the pre-Malaysia and Malaysian banknotes. Bidding actions were continuous and there were quite a number of bidders for certain lots bidding against one another. The floor bidders were bidding against the online bidders too. Oh yeah, registering to come in and feel the actual atmosphere and to understand that this is not something for fun is FREE.

The auction event started with foreign banknotes but the focus was stronger when it came to Malaysian banknotes. The reason is simple. The historical significance which is often the reason to buy would be stronger here. Secondly the demand is bigger too. I asked a banknote specialist of an auction house if the bidders were collectors or retailers, Mr. Raymond Wong (016-4407740) He said, “This is one business where the person must love the banknotes too, not just the money part. Else, it is hard to stay long in the journey. The journey is an easy one to start with. Just need some interest, some readings and perhaps specialisation and soon one can reap some benefits from it. Raymond has been an investor and collector for a few years and he intends to continue growing stronger. Banknote investment is something that everyone can start with. Raymond is also a consignor too. So, if you happen to have some notes that you would like him to give some professional comment, feel free to WhatsApp him @ 016 4407740 (Quoting kopiandproperty.com may get you a faster reply. :P)

Rarity is one major reason coupled with the the quality of the notes. Do refer to the image for the grading of banknotes by PCGS.
Full reference? Here.
That piece of banknote you are currently holding in your hand may just be worth something more than its face value. One very good example. If the serial number starts with Z, these are replacement notes and they are usually worth more than its face value already. This is because they are rare. If you happen to have some notes with a solid serial number, say 1111111or 8888888, it’s time to jump for joy because it will definitely be worth much more than its face value currently. If your parents have one whole stack of notes which has the word ‘Sa Puloh’ instead of ‘Sepuluh’, it’s also worth more than keeping it inside your drawer. Well, I have lots more to learn. If you need some professional inputs, Raymond is your man. His number is above. The next Banknotes, Coins and Collectibles auction by
MNP Auctioneers
 is on 2nd December 2017. When I have more details, will share.
Else refer here.
Happy learning and loving.

written on 15 Oct 2017

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Bankruptcy before property, not after property, perhaps.

Youths aged 25 and below, 579 of them were declared bankrupt within the first 6 months of this year (2014). In many major dailies today,
bankruptcy was a popular topic.
 In fact majority of the online medias has it as well. There were some comments from the online readers that the cause of this was because of the high property prices. May I point out that the reasons for them being declared bankruptcy was also stated and none of them were due to housing loans?

The major reasons which majority of us can guess would be
vehicle loans, personal loans and credit card payments.
 Vehicle loan is dangerous because one friend told me that as soon as you drive the car out of the showroom, you have lost 30% of its value. Personal loans typically is dangerous because banks continue to push to you money that you do not have enabling to buy things you can ill afford. Credit card is suitable only for those who knows how to manage
their expenses prudently.
 For these youths of 25 years old and below, it’s hard to expect them to be financial savvy yet.

Remember the time when you wanted to
buy your first property
? Well, that is the time I feel that we have reached a certain time in our lives that we felt that settling down and owning an asset becomes a responsibility. The great thing about owning a property is this: It’s an asset no matter how you look at it, unless of course you really have to buy something which is totally useless or you happen to be very
unlucky to have bought
 just before a financial crisis. Otherwise, the money you paid would help you to start building your wealth. Even a RM250,000 property, increasing at a slow 2% every year meant that you would have more than doubled your wealth by the time you finished paying for it. Yeah, perhaps inflation has also eaten up a lot of your wealth but imagine if you never did buy in the first place, what would happen?

Youths of today are not all those mentioned above. Youths today, especially the smart ones are many times more
financial savvy than the older generation.
 Seriously, we always love to find reasons when we fail at certain tasks but truth is, majority of it was due to us anyway. Instead of using the time to watch Korean dramas, how many actually read business news online and invest in good stocks? How many saw the falling stock price for past few weeks as an opportunity to accumulate and be rewarded today? (Market up on 20 Oct 2014).

How many are able to think beyond just the usual,
‘spending on things we do not need to impress people we don’t need to care?’
 Think about it. Perhaps, just perhaps a property investment may have used up a huge portion of the available money for spending and the youths may not be declared bankrupt due to overspending via car, personal loan or credit card. Truth was, I struggled during the first year of my housing loan too because at the same time, I had to pay for my MBA, for my wedding, for my honeymoon and still give my mother some allowance. I did not even have enough for an usual cup of Starbucks at that time! That property I struggled with gave me enough when I sold it to buy my second one and third one and on and on…   🙂

written on 20 Oct 2014

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Bankruptcy in Malaysia. How much unpaid debt before one is declared a bankrupt?

Recently, I read this news article in
malaymail.com. “Tengku Razaleigh claims bankruptcy levels rising due to Covid-19 pandemic.”
 Former finance minister Tengku Razaleigh Hamzah today urged the government to take the socio-economic impact of the Covid-19 pandemic seriously. He said, “I have recently received news that the bankruptcy cases have increased from hundreds to 100,000.”
Do read the article for more of what he shared yeah.

Let’s run through some facts about bankruptcy yeah. The below information comes from
 Malaysia Department of Insolvency as at 29th June 2021. Click here to read a lot more from their website.

What is personal bankruptcy?

Bankruptcy is a process where a debtor is declared a bankrupt pursuant to an Adjudication Order made by the High Court against the debtor if he is unable to pay his debts of at least RM50,000.00.

Who is a debtor?

A debtor is a person subject to the bankruptcy jurisdiction of the court within the definition of section 3(3) of the Insolvency Act 1967, and at the time the act of bankruptcy is committed:

Was personally present in Malaysia; or
Ordinarily resided or had a place of residence in Malaysia; or
Was carrying on business in Malaysia either personally or by means of an agent; or
Was a member of a firm of partnership which was carrying on business in Malaysia.

How a person can be made bankrupt?

The High Court makes a Receiving Order and Adjudication Order after a bankruptcy petition has been presented. It is usually presented either:

By creditor’s petition.

A creditor’s petition may be presented only upon the commission of an act of insolvency (section 3(1) of the Insolvency Act 1967) by the debtor which must have taken place within six months prior to the presentation. No creditor can present a bankruptcy petition against him unless the debtor:

Is domiciled in Malaysia; or
Within one year before the date of the presentation of the petition has:
Ordinarily resided in Malaysia; or
Had a dwelling house in Malaysia; or
Had a place of business in Malaysia; or
Carried on business in Malaysia personally or by means of an agent; or
Is, or has been within one year before the date of the presentation of the petition, a member of a firm or partnership which has carried on business in Malaysia by means of a partner or partners or an agent or manager.

To present a creditor’s petition the debtor must be owing the petitioning creditor a debt of not less than RM50,000.00.

By debtor’s petition.

A debtor’s petition is by itself an act of bankruptcy. The debtor’s petition is presented by the debtor to make himself a bankrupt in order to protect himself from his creditors’ claim that he knows he cannot satisfy. Unlike the creditor’s petition, there is no requirement that a minimum amount of debt must be owed before a debtor’s petition can be presented. After its presentation, a debtor’s petition cannot be withdrawn without the leave of the court.

The petition (Form 3 of Insolvency Rules 1969) is to be filed at the court of the State in which the debtor resides. Prior to the filing of the debtor’s petition, the debtor must first deposit with the DGI a sum of RM1,500.00 to cover the costs of administering your bankruptcy. The court will not accept the petition for filing unless the receipt of the DGI for the deposit is produced. A sealed copy of the debtor’s petition must then be served on the DGI by post or otherwise. On the hearing of the debtor’s petition, the Court will make a Receiving Order as well as an Adjudication Order. However, if you are absent at the hearing, the petition may be dismissed.

Please note that bankruptcy is a serious matter and should be considered as a last resort. There are many restrictions imposed on bankrupts such as restriction to go abroad, acting as a director, carrying on business and requirement to contribute to your bankruptcy estate regularly for the benefit of the creditors. You will also have to give up your assets including your home and cars. There is no automatic discharge from bankruptcy in Malaysia. You may be discharged from bankruptcy by the Court or the DGI subject to any creditor’s objection.

— end of information from Department of Involvency, Malaysia —

RM50,000 debt is all it takes to become a bankrupt

For the business owners, this amount is not very significant because the amount they deal with may be much larger than RM50,000. This is why entrepreneur is not a route for everyone. However credit card debts may also be one probable cause too. Many may not have a RM50,000 credit limit for their credit card but when it comes to many credit cards, then it’s probable. Remember, once we overspend and it’s all on credit cards, climbing back up the debt hole is likely to be hard. Hopefully, the number of cases do not increase exponentially as reported. Need the actual reports to know if this is truly happening. This was why the article stated that the bankruptcy increase is a claim by Tengku Razaleigh.

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Bankruptcy in Malaysia during the MCO period. 10k declared bankrupt, high or low?

Bankruptcy in Malaysia: Over 10,000 declared bankrupt during MCO period.

This MCO period was stated to be between March 2020 to July 2021. This is around 17 months. If we divide this into a monthly basis, that’s 10,000 divided by 17 months and we come to 588 per month or slightly higher than 7,000 bankrupt declarations per year. Is this considered high or low?

Typical number of for bankruptcy in Malaysia?

To put this into context, during periods before MCO, the typical number of bankruptcy numbers are over
20,000 per year. (As per ex Minister of Finance YB Lim Guan Eng).  Please refer to this earlier article in kopiandproperty.com -“Lim said 100,610 Malaysians are declared bankrupt between 2013-2017”

If you are wondering now,
“how come the number of bankruptcy declarations went down during the MCO versus normal period?”
  The below is one major reason. It got harder to be declared a bankrupt.

RM50,000 owing increased to RM100,000

Usually, a creditor may file for bankruptcy action against the debtor if the debt owing is more than RM50,000. However, with the introduction of the Temporary Measures For Reducing The Impact of Coronavirus Disease 2019 (COVID-19) 2020 [Act 829] which has been enforced on 23.10.2020, the minimum amount has been increased from RM50,000 to RM100,000.
This provision is only in force until 31.8.2021. Source: Department of Insolvency, Malaysia.

Want to know the reason for bankruptcies? Property is not the top yeah (cannot simply buy a property too). Take a look.

Image source:
https://www.aseantoday.com/2019/03/financial-advice-for-young-malaysians-is-the-latest-effort-to-tackle-bankruptcy/

Header Photo Powered by
Cheston Choo

Article in malaymail.com
  Prime Minister Datuk Seri Ismail Sabri Yaakob said 10,317 individuals declared bankrupt throughout the movement control order (MCO) period between March 2020 and July. He said Selangor had the highest number of individuals declared bankrupt, at 2,555, followed by the Federal Territory (1,288 people) and Johor (792 people). Besides that, a total 1,246 businesses had closed down during the same period.

Ismail Sabri said that based on the input from the Ministry of Finance (MOF), the government did not provide any specific assistance to businesses that closed down and that it, instead, took the approach of giving aid and incentives to support the continuity of businesses.
Article in malaymail.com

Would you like to get some usual Q&A on how one could become a bankrupt?

This is the earlier article.
Click here to read in full yeah. Bankruptcy in Malaysia.
 One question about property?

Can a bankrupt transfer his property?
A bankrupt is not allowed to transfer his property to a third party once a Receiving and Adjudication Order has been entered against him. As soon as a person is declared bankrupt, any of his property shall be automatically vested upon the DGI.

Let’s hope with the economy reopening fully, businesses would thrive again and we would have less of these bankruptcy in Malaysia cases too. Remember to do due diligence in all our investments. The reason is because the amount involved is usually big and thus, there’s always the risk of bankruptcy if we are not careful or overlooked some details about what we are investing into.

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Not so easy for declaration of bankruptcy

If someone is unable to pay their debts, how much do they need to owe before the bankruptcy procedure against them could start? Did the bankruptcy case in Malaysia increase during the MCO period in Malaysia? By the way, property is NOT the main reason for bankruptcy cases yeah. It’s just one of the reasons. Here’s that comparison to understand more.
Malaysia bankruptcy cases during MCO period hit over 11,000 people. Is this high or is this low?

It seems that the government is again thinking of reviewing the Malaysia’s current bankruptcy threshold.

Article in nst.com.my
 Prime Minister Datuk Seri Ismail Sabri Yaakob said the government will review the country’s bankruptcy threshold because of rising bankruptcy cases among the youth. He said that it’s possible that the government will reintroduce the government’s previous action in 2020 during the Covid-19 pandemic, where the Malaysian Department of Insolvency (MDI) increased the bankruptcy threshold to RM100,000 from RM50,000.

He said, “Looking at how things are now, the threshold will be reviewed and God willing I will discuss this with the Minister in the Prime Minister’s Department (Parliament and Law) to look into the relevant Act.” He added, “I will also meet the Bank Negara Governor to see what can be done from the legal perspective.” Do refer here for all the numbers yeah. Full article here:
Article in nst.com.my

If inflation is the issue…

Inflation has often been said to be the reason for increase in cost of living. The cost of living is meanwhile said to be the reason for high debts. By the way, inflation does not affect just a small group of people. Meanwhile the increase of the cost of living also does not affect just a small group of people yeah. In other words, if due to these reasons, the bankruptcy cases do increase, then we need to get to the root of the issue and not just taking care of the symptoms. Perhaps financial management is the real issue.

Well, I think we just need to wait for the next update then.

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82,383 bankrupt Malaysians from 2013 – 2016

How much do we have to owe before anyone can go to the court and apply for us to be declared a bankrupt? Here’s an article about it in
Comparehero.
  It says “
It is a process where a debtor (a person who owes money to a creditor) is
declared bankrupt
 following a court order known as Adjudication Order from the High Court against him or her. The following criteria applies when
declaring
 a person
bankrupt
: Unable to pay debts which amount to at least RM30,000. published
May 20, 2016″  Many times, we do not suddenly owe so much but as soon as start to fall into the debt trap, it’s very hard to climb out of it.
According to the Minister in the Prime Minister’s department Datuk Seri Azalina Othman, the records from the Department of Insolvency for 2013-2016 showed that 82,383 Malaysians were declared bankrupt by the court. Full article in
NST here.
 Out of these Malaysians, 3,276 of them were civil servants.

In fact based on a year by year comparison, the number of civil servants declared bankrupt is rising. In 2015, a total of 960 were declared bankrupt and this rose to 1,093 in 2016. Selangor has the highest number of cases at 22,593. Perlis recorded the lowest with only 354 cases.  Some time back, I wrote about the reasons for bankruptcy here:
Bankruptcy before property, not after property, perhaps

There’s also an article in
cilisos
 which tells us the major reasons for all these bankruptcies. 25 percent of all bankruptcies were due to CAR LOANS. My friend who’s a marketing manager at a continental car brand told me that his bankers always share with him that there are buyers who are still taking car loans even though they are already at the borderline of ‘bankruptcy.’ What are these people trying to do with their lives he wonder.

Following close behind is actually PROPERTY loans at 21.36 percent, personal loans at 20.41 percent and business loans at 11.71 percent. I have a friend who was declared bankrupt many years ago for a business loan. When his business was doing extremely well, he did not really look at how he spent his money. Truth is, no business can sustain our luxurious lifestyle….  Before everyone start to tell everyone to stop buying property, let’s understand that buying the wrong property or buying a property beyond our comfortable affordability level is NOT an investment. It’s just a gamble or wrong decision. Both are fatal, usually. Here’s an article on not falling into the property bankruptcy category.
Stay safe, buy within affordability and stop bubble building

 Hopefully we have learnt that bankruptcy can affect anyone, even those who earns seemingly stable incomes. Happy avoiding it.

written on 8 Feb 2017

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Intriguing. Understanding bankruptcy, PTPTN borrowers and blacklisting.

If one borrows money, one MUST pay them. Especially when the repayment will help the future borrowers who may also need the assistance just like those before them. If you disagree with this thought, please skip this article. PTPTN borrowers who did not pay their loans are no longer blacklisted from travelling. In other words, they could SPEND MONEY to travel and need not pay their debts. If someone here wants to argue that but sometimes they are travelling for work, please skip this article now. If one is working, one should be paying. Else, it is ME who is paying through my tax money via the EPF’s never-ending loans to PTPTN. This cannot be lasting forever, right?

This is the reason I am writing this article today:
FreeMalaysiaToday: Deputy minister: Unfair to blacklist loan defaulters
 Deputy Education Minister Teo Nie Ching was saying that any labelling of National Higher Education Fund Corporation (PTPTN) loan defaulters as unfair. This is because every citizen has a right to freedom of movement. This was why the names of loan defaulters were removed from the Immigration Department’s blacklist. She said, “If you look at those who take bank loans, their names will not be placed on the Immigration Department’s blacklist if they stop paying or are inconsistent in their repayments. Their names will only be blacklisted after they are declared bankrupt.” Teo said in future, the government would first declare PTPTN loan defaulters as bankrupts before putting them on the Immigration blacklist.
The article again for reference.

One will be a bankrupt only if the amount is RM50,000 or higher. I am not SURE how much one would owe the PTPTN… One day in the future, when Malaysians are so mature that they know that debts must be paid, I think we do not need any ‘actions’ to recover the debts. As of now, with the way the things are going, I think PTPTN will either have to lend to fewer borrowers, limit the amount per borrower or go to the government to get more money which OUR EPF will then have to ‘help.’ There’s already a drop in
PTPTN repayments. Article in TheStar here.
 By the way, home loan defaulters do not eat up my tax money because this is the matter between the bank and the borrower. The banks will take appropriate actions. PTPTN does not have as much resources nor the flexibility as the banks. This is why it has to operate differently. When it concerns my tax money, I too have a right of expression. Hopefully, PTPTN would have more solutions soon on how to get people who could afford to pay, pay. Happy implementing it.

written on 23 July 2018

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Bankruptcy in Malaysia: The usual Questions and Answers

Do you know about bankruptcy in Malaysia? Many people asked me if auction properties are usually because the owner became a bankrupt. Simple answer is, NO. It is not necessary the case. In fact these days Public Auction for Owners (PAO) are slowly becoming common. We will visit this in future. Coming back to a bankrupt. How does one become a bankrupt in Malaysia? How soon that they could be declared a bankrupt by the court?

Could they ‘unbankrupt’ themselves after a certain number of years? Can creditors follow the bankrupt person everywhere so as to make his life very difficult? For example, to take any money he has on him since the bankrupt should not have any money or credit cards on him. After all, if he has money, it should be used to pay the creditor! Below would be actual answers from our Malaysian Department of Insolvency on the many questions we may have on bankruptcy in Malaysia. DGI is the Director General of Insolvency.

1. Is there a minimum amount owed for a person to be a bankrupt?

Yes, the creditor may file for bankruptcy action against you if the debt owing is more than RM 50,000.

2. Can a bankrupt continue using his existing credit card?

YES. A bankrupt can only use his existing credit card up to the amount of RM1000.00. Any higher amount and he has to notify the issuing bank or finance company as to the status of his bankruptcy. The decision is up to the bank or finance company. If the bankrupt fails to notify the issuing bank or finance company, he will be deemed to have committed an offence under the Insolvency Act 1967.

3. Can a bankrupt transfer his property?

A bankrupt is not allowed to transfer his property to a third party once a Receiving and Adjudication Order has been entered against him. As soon as a person is declared bankrupt, any of his property shall be automatically vested upon the DGI.

4.  Can a bankrupt travel overseas?

Generally, NO.   YES, he could IF he is approved to do so by the DGI or the court.  A bankrupt may not travel overseas unless with the written permission from the DGI or after obtaining a court order allowing him to do so.

5. Can a person declare himself/herself a bankrupt if he is unable to pay his debts?

YES! (Yes, I can think of a few reasons why a person would want to declare themselves a bankrupt. Sigh…)  A person can make an application in court to declare himself/herself a bankrupt as allowed under section 7, Bankruptcy Act 1967. The person is required to file a petition in a High Court stating his inability to pay his debt. The procedures required to be followed are stated specifically in the Bankruptcy Act 1967 and Rules, and one can consult a solicitor to take further actions. For further information, one can contact the nearest MdI’s branch for advice or MdI’s Complaints Unit directly.

6. How can a bankrupt be released from his bankruptcy status?

There are three main ways as to how a bankrupt can have his bankruptcy terminated:

(a) Making an application in court at any time for the bankruptcy order to be annulled on grounds ie debt has been paid in full or that he ought not to be made a bankrupt on some technical grounds;

(b) Making an application in court at any time for a court discharge. This is subject to a stringent requirement and the Insolvency Department has to put a report emphasizing among others the conduct and cooperation of the bankrupt with the department.

(c) Making an application to the DGI for a discharge under section 33A of Bankruptcy Act 1967. Such application can only be made only if 5 years has lapsed from the date order was made upon satisfying some criteria imposed by the DGI for the exercise of his discretion. Among the factors that the DGI will take into consideration are the conduct of the bankrupt, the extent of his cooperation with us, the cause for bankruptcy, old age and infirmities etc.

7. Could a bankrupt get a loan from financial institutions?

Technically, YES!

8. What are the risks taken by financial institutions if they decide to give loan to a person who has already been made a bankrupt?

If the lender is aware of the bankruptcy status of the borrower and decides to approve the loan nonetheless, the risk will be upon the lender. The lender must bear all risks in the event the borrower i.e. the bankrupt fails to service the loan.

9. Why are there instances where a person is unaware that he/she has been declared bankrupt by the Court?

There are few reasons why a bankrupt is unaware of his bankruptcy status, among others is when the service of Bankruptcy Notice and Creditor’s Petition was made by way of substituted service. Substituted service is made via an advertisement in local newspaper or posted on the notice board in court. A bankrupt may not be aware that a bankruptcy proceeding has been initiated against him. Substituted service is done when the bankrupt cannot be located mainly due to a change of address.

There are even more of these question and answers in mdi.gov.my
  Let’s hope everyone pays their debts instead of being served a bankruptcy notice yeah. (Including PTPTN borrowers since our Deputy Education Minister Teo Nie Ching said that all PTPTN borrowers who fail to pay will be made a bankrupt before they can be blacklisted under the No-Travel rule. As at today, any PTPTN borrowers, regardless of how much they owe could travel freely. It is their RIGHT… Oh yeah, earlier article here:
Intriguing. Understanding bankruptcy, PTPTN borrowers and blacklisting

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Written on 24 July 2018

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Banks are really still lending. Need some proofs?

Yes, there are differences between banks rejecting loan applications because they do not quality versus refusing to lend because they feel their own non-performing-loans (NPLs) are becoming too high. The former remains true. The latter is definitely untrue because our NPL is still very low even by international standards.
Image below for reference from ceicdata.com
 .

Article in edgeprop.my

  Bank Negara Malaysia (BNM) revealed that within the Jan – Sept (2019) period, banks approved housing loans worth RM119 billion for about 273,000 borrowers or which 42% were first time homeowners. Statistically, banks have been approving roughly three out of four housing loan applications which they received from households and businesses.

One major reason for rejections are due to the broader issue of home affordability, which becomes readily apparent when 72% of rejected applications were for the purchase of homes that are either seriously or severely unaffordable relative to the applicant’s income level.  From the small and medium enterprise (SME) segment, banks have been approving about seven to eight out of every ten loan applications received. This has benefited 76,000 SMEs.

BNM also said that banks have a natural incentive to lend because in the case of Malaysian banks, net interest income comprises 64.8% of their gross income. This incentive continues to grow because the banks’ profit margins have come under greater pressure from other banks for market share. Thus, the ability of banks to grow their lending will be important for them to maintain their profitability. Do read the full
Article in edgeprop.my

Hopefully more people understand that if banks stop lending, they will start ‘firing’ people. Profits are needed to continue hiring more people while losses or even lower profits may just meant that they have excess staffs. Just google for “bank retrenchments” and we will be able to read about all the negative news worldwide. In actual fact, this will continue because online will become every more powerful and people continue to change their banking habits. I was in a bank recently to close an account and there were NO OTHER customers in the bank except me! Happy understanding.

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Yes, Malaysian banks are still doing okay

Just a few weeks ago, a colleague said something which I replied him seriously. He said, ‘I think Malaysian banks are doing badly.’ I asked him why he said so and he said look at all the retrenchment schemes which are happening. I told him off then that from all the financial quarters of Malaysian banks, I have yet to read about any banks suffering losses. Astor the retrenchment schemes, it’s best for them to do from the position of strength and not when they are not healthy. By then, everything would be worst. Today, I read about Standard & Poor’s Ratings Services revising their rating outlook for AmBank (M) Bhd, RHB Bank Bhd and RHB Investment Bank Bhd to stable. All three were rated ‘negative’ previously.

It said the major reason for this revision is due to the moderating economic risks for banks operating in Malaysia. In brief, their operations in Malaysia should be just fine. The economic risk trend for Malaysia’s banking sector has also been revised to stable from negative previously. It has also reaffirmed the stable rating for four other banks — Public Bank Bhd, Malayan Banking Bhd, CIMB Bank Bhd and CIMB Investment Bank Bhd. The expectations for these banks would be that they would be able to maintain satisfactory financial performance even with the slowing economy.

Their actual comments, “Overall, we expect the credit risk of Malaysian banks to remain manageable. Malaysian banks have been building up capital and provisioning buffers in the good years, which will mitigate some downside risks. We revised the economic risk trend for Malaysia because successive government measures since 2010 to counteract the stimulatory effect of low interest rates on consumer borrowing and home prices have been effective, in our view. In particular, the more stringent measures introduced in 2014 to curb property speculation have reined in prices. In our base case, we expect these steps to help keep the year-on-year inflation-adjusted rise in property prices to 4% or less over the next 18-24 months.”

I guess it’s clear that where banks are concerned, everything is going to be fine. Perhaps none would be springing a huge upside surprise for the next 12 months. However, to equate trimming of staffs and controlling of expenditure as banks in trouble is definitely wrong idea. Happy reading.

written on 25Nov 2015

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When banks show better results, it’s a good sign.

It’s easy to know if the economy is doing badly. It has nothing to do with Facebook sharing. The banks should report lower profits or even losses. In Malaysia,  I have not yet read about any bank reporting a loss thus far. Looking at the top three,  Maybank announced that net profit for its latest quarter grew by 16 percent.
Report here.
 CIMB announced its latest quarter with
27 percent up in net profits.
and Public Bank
grew their annual net profits by 3 percent.
 Well, perhaps only these three are growing while the rest are not? Let’s look at the smaller ones; Affin Bank, MBSB and even Bank Islam. Affix Bank showed that it had a great quarter recently.
Net profits grew 76 percent compared to a year ago.
The latest quarter for MBSB compared to a year ago?
One year ago, it suffered a loss and this quarter, it has fully reversed that.
What about a niche bank called Bank Islam? It’s yearly net profit fell by 13.8 percent but is still
considered healthy, at RM139 million.
In conclusion, the banks whether the biggest few or the smaller ones are generally going okay. Would this trend be continuing?

According to an article in NST,
 this seems to be the case. The article quoted four good signs for the banks. They include steady net interest margins (NIM), stabilising credit costs, peaking non-performing loans (NPLs) and improving cost-to-income ratios (CIRs). Credit growth is also becoming more robust. Affin  Hwang Investment Bank Bhd expects banks’ earnings to grow 10.9 per cent this year followed by another 3.6 percent up in 2018. It said, “The Malaysian banks are currently riding on a new growth trajectory as the economy likely enters a new phase of protracted economic growth.” (VERY POSITIVE statement indeed) It’s top pick would be Public Bank Bhd and the following banks are rated “buy.” They include CIMB Group Holdings Bhd, Malayan Banking Bhd (Maybank), Alliance Financial Group Bhd and Hong Leong Bank Bhd. MIDF Research said, “We believe that the green shoots remain with a recent upturn in loans demand and approval. There was a positive turn in demand for loans, growing by 21.2 per cent year-on-year in February, compared with 8.4 per cent year-on-year decline in January, which marked the first growth in loans since July last year.” (Another very positive statement.
The only caution would be if this will continue. Need a firmer trend to be sure
)  MIDF gave
Affin Holdings Bhd a “Buy” as its turnaround programme shows results. It expects CIMB and Maybank to continue earnings recovery with its solid asset growth and regional exposure. (I think many do not realise that many Malaysian banks are very regionalised already which bodes well for the future as ASEAN is growing)

Remember. There are many things that we as investors should take note of. Every
investment guru would tell you to invest in whatever they are selling.

However, they cannot change the numbers. If the economy starts turning for the worse, banks’ profits would be the first to show this sign. Look at their quarter results for signs. Property transactions meanwhile would only tell the property side of the story. When people start to take lesser new loans, the profits would naturally drop too. When unemployment starts creeping up, the new savings into banks would also reduce causing the banks to have less money to lend out. This will also cause the profits to start deteriorating. Keep following all these profit numbers from the banks. It’s more accurate prediction of the near future compared to surveys or what our friend says. Cheers.

written on 12 April 2017

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Banks could extend the moratorium if they choose to. Two have responded.

Do you like the moratorium of 6 months? I think majority of Malaysians do. The moratorium of 6 months specifically for home loans until end September 2020 brought financial relief to many. It gave a breathing space to those who may have lost their job and is now struggling to find a new one. No salary meant no way to pay home loans. Reserves built up may be depleted very fast once we factor in the repayment for home loans or even rental especially if one is without a job.

The fact is, even as at today, not all businesses are restarting and not all have regained the business volume before the arrival of COVID-19. My friend said things will never be the same. I disagree but yeah, I have to agree that normalisation will take a long time more and will not be happening anytime soon. In fact, the GDP is likely to contract. These are the two latest predictions.
Read them yeah. From IMF and World Bank. (click to read)

Article in malaymail.com
  Finance Minister Tengku Datuk Seri Zafrul Abdul Aziz says that whether banks extend the moratorium or not depends on the banks directly. The moratorium could be a targeted one but banks will not be forced to do so. He said, “But in my personal view, we ought to help the people who need help.”

He also said that the targeted moratorium extension should be looked at by banks on a case-by-case basis. He said, “Going forward, I think the best (way) is we focus on the targeted groups who need help.” He also said that borrowers have to engage with their banks early if they feel they need to reschedule their loan repayments. Please do read more in the article yeah.
Article in malaymail.com

Two banks have since responded. Ambank Group chief executive Sulaiman Mohd Tahir said, “We should be looking at certain segments, and groups of people who require it. I am sure banks (are) in the position to also help out, in terms of people who are affected very much as the result (of the pandemic).”  He also said that there should not be a blanket kind of moratorium because during the MCO period, situation was quite critical then.
Read article in freemalaysiatoday here.

Article in theedgemarkets.com
  Maybank group president and chief executive officer Datuk Abdul Farid said this about the extension of moratorium. “The moratorium is basically to give us more time because the impact of COVID-19 is something that we never experienced before, so none of us knew how long and deep the impact would be. So we need to digest, need time to talk to customers to come out with a plan in order to help them repackage their (credit) facilities when they come out from moratorium in a strong position.”
Article in theedgemarkets.com

I think everyone needs to also understand that banks are not charitable organisations. They also needed to take care of their shareholders too. Focusing their resources on the ones who needed these the most seem to be a fair statement. Let’s understand that even banks do not wish to have a high number of loan defaulters. It will always be a balance of how much they could assist before proceeding to take actions to recover the debts. We will wait for a few more banks to also announce their intentions. I think these two have set the direction. Happy understanding and if you do need the moratorium extension, the advice is to start speaking to the banks now and not at the end of September.

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Room for rates to go lower when there are lots of liquidity

If we have a lot of spare cash, we will either save it in the banks as fixed deposit and gain 2% from it. Maybe more, maybe less. Look at the image below for latest rate as at 26th May 2020 from Maybank. Or we can choose to invest into dividend stocks for the potential dividend returns too. If we leave the spare cash untouched stored under our bed, the value will depreciate over time because of inflation…

When banks have a lot of excess funds, they will need to lend it out. Else the banks gain nothing from the money but still have to pay for the cost of funds. In this case, if the funds came from fixed depositors, they will need to pay the fixed depositors 2%. If the banks could lend it out to home loan borrowers at 3.5%, then they could gain profits from the funds instead. When the banks do not have a lot of funds to lend out, then they may either get more funds in or they limit the lending through higher interest rates.

Want to know what’s happening to most advanced economy in ASEAN?

Article in themalaysianreserve.com
  Singapore may potentially have negative interest rates soon. Singapore’s current overnight borrowing rate was less than two basis points above zero on 19th May 2020 and this was down from the highest point of 1.68% for the year in January 2020.   Monetary Authority of SIngapore promised to provide sufficient liquidity to the financial system to cope with COVID-19 induced crunch.

Vishnu Varathan, head of economics and strategy at Mizuho Bank Ltd. in Singapore said, “The rates effect is a possible by-product of MAS operations meant to ensure sufficient” liquidity, said But, it’s “certainly not an intent.”   Strategists at DBS Bank Ltd., including Eugene Leow wrote in a research note, “If Singapore dollar liquidity becomes too flush, relative to the U.S. dollar, the financial sector may be willing to swap Singapore dollars for U.S. dollars at very low Singapore dollar interest rates.”  Please refer to the full article for more reading here:
Article in themalaysianreserve.com

With nations slowly reopening their economies, perhaps we will see a better number where GDP growth is concerned. However, monetary policies as well as fiscal policies by the government wherever possible will be needed. Businesses are definitely not confident to invest even if the rates remain low.  They will need that extra boost and when the wheels of consumption turns, then the sentiment may return.

By the way, we will have to leave with the COVID-19 in our midst for some time more. The fastest COVID-19 vaccines is only at initial human trials currently.  There is still a long way to go before it can be certified to be effective and safe and then there’s the manufacturing bottleneck later on followed by logistical issues. Please practise social distancing and wear your masks.  Keep the numbers low and do not join the statistics.

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When banks refuse to lend you, or lends you less than what you wanted, what does that mean?

A banker friend said something which jolted me the other day. He said that many people say banks are not lending but the truth is, the borrowers must also play their part lah. If banks take too high risks, then what will happen to their shareholders? What about their employees? Please do not try to guess which banker friend. I only have around 78 banker friends ok. (maybe more) I share this in a story format and perhaps we see whether it makes sense yeah.

We do have people saying that the banks are not really lending or that they are too stringent. Actually, the banks are also saying that they are not to be blamed because they are still lending. Anyway, if banks do not lend, then what else do you want the banks to do? If they do not lend, their staffs would be worried… would the banks still need so many of them if they are not lending money at all…?  Okay, for the question of why must the banks lend ever higher to buyers?

Assuming there are 4 units up for sale in a certain location. Median price is RM500,000 for similar units.

Seller 1 sells his unit at RM500,000 and the buyer asked for 90 percent loan at RM450,000. Bank approved.

Seller 2 has some minor renovations and wanted RM520,000.  Buyer likes it, applied for 90 percent loan at RM468,000. Valuer agrees with the value of RM520,000 due to renovation. Bank approved.

Seller 3’s unit is not well maintained but he wants RM500,000.  Buyer thinks it’s ok and applied for 90 percent loan. Bank’s valuer thinks it’s ok. Bank approved because the median price in the area is RM500,000 anyway.

Seller 4 has EXTENSIVE renovation costing RM100,000. He wants RM550,000. Buyer think it’s value for money! RM500,000 is for units without renovation. This one extensive renovation, yet just priced at RM550,000. He applies for 90 percent loan. Bank approved but only for 85 percent loan. Buyer aborted the deal. Seller is furious that bank did not approve the loan even though valuation showed that the home is worth RM550,000.

If you are the bank, would you also approve the buyer for Seller 4’s unit? At 90% loan for RM550,000? Means buyer only needs to fork out RM55,000?  Or you think the bank was right in offering a 85% loan which meant that the buyer needs to fork out RM82,500 instead? By the way, even for the same property, every valuer would have their own expert opinion on the property value.

As for the banks, they may feel that want to err on the side of caution. If it’s RM550,000 valuation at 90% loan, the bank will be lending out RM495,000. If the buyer defaults in the future, the bank will have to put up the property for sale under auction.  Do we realistically think that the bank would be able to sell that property at the original price of RM550,000?

I am a licensed auctioneer and not a valuer. I can safely tell you the answer is ‘highly unlikely.’  This is why the banks would definitely try to manage their risks. As for the buyer, it’s good to note that when banks do this, it could actually benefit you as well. Else, you may be paying too much for the property from the banks eyes. That is not good for you nor the bank. Okay, the seller may have to take a cut but please understand that the money we pour into renovation does not mean the valuation of the property goes up by the same number. Happy understanding. (Yes, I bought a bank stock just recently.)

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