What Does it Mean to Be a Guarantor?

When
we talked about being ‘blacklisted’ by Bank Negara
, we were of course sent questions about the issue. One that struck us as a common problem seemed to be: what happens if a person is ‘blacklisted’ not through his own fault, but through that of a borrower whom he provided a guarantee for in a loan agreement?

Today, we tell you exactly what it means to be a guarantor but be warned; if you didn’t know before, you may not like what you will read.

What is a Guarantor?

A guarantor is someone who provides a bank or lending institution with a guarantee that the person borrowing money will repay. But this isn’t just a guarantee in words alone: it means, you are responsible for making sure the bank gets paid, even if it means you have to pay for the loan yourself!

In a nutshell,
the guarantor is liable to repay the loan if the bank is unable to collect the amount from the borrower
. The exact details of the guarantee document which a guarantor signs may differ from bank to bank but the responsibility remains the same.

So, I Have to Pay for a Loan I Didn’t Take?

The simple answer is yes. But, you will usually only be liable for the amount when you receive a a letter of demand from the bank. Unfortunately, the bank has the right to demand repayment from you at the same time they demand payment from the borrower. There is, at the moment no law that forces them to go after the borrower first, unless in
select cases of personal loans or if they want to institute bankruptcy proceedings
. Even in such instances, the bank only need show that they did do everything they can to contact the borrower and failed.

This sadly also means that if the borrower has defaulted; this record will show up on your credit rating and the only way to clear it is to get the borrower or yourself to pay up the owed amount.

Can I Get Out of It Now?

Depending on the terms of your agreement of guarantee with the bank; they may or may not let you get out of being a guarantor. The norm is that most banks will not allow it unless the loan is paid off in full. The only other way is if the bank acted in a way that contravenes the agreement (which they wouldn’t do!).

But do try talking to the bank if you are concerned that you won’t be able to make the repayment. It’s unlikely but always worth a shot. Some banks may agree with some conditions.

The other step you can attempt is to get the borrower to sign a letter of indemnity for you (if you have not already done this), to ensure that if he/she should default; you will be able to take legal action against them. If the borrower is sincere, getting a letter of indemnity should not be a problem even at a later stage, though it is always advisable to get it before you sign the guarantee agreement.

For the Would-Be Guarantor

If you are thinking of becoming a guarantor for someone, hold up! You’ll want to know the following things first. Here’s a list of to-do’s before you sign the dotted line.

Read the contract word for word and if you are unable to understand the legalspeak; hire a personal lawyer to explain to you exactly what your liabilities are within the guarantee agreement. Do not sign anything you do not fully understand.

Ask yourself if you will be able to repay the amount (and if you’re willing to repay the amount) should the borrower default.

Sign a letter of indemnity with the borrower to ensure that if they miss a payment, you will be able to institute legal proceedings against them.

Make sure the document contains clear details on your liability and the amount you will be liable for including interest charges. If anything is missing, don’t sign. Never, ever sign a half-finished document!

Being a
guarantor means being liable for someone else’s loan repayments
 if they don’t pay it, so don’t take the request lightly. Unfortunately, there isn’t much leeway to get out of a guarantee agreement once you’ve given it so think wisely before committing!

Disclaimer: The above is meant as a general view on the liabilities of a guarantor and should not be construed as a replacement for professional legal advice. Do consult your lawyer on the specifics of your guarantee agreement should you have further concerns.

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    Kath

    2 years ago

If someone agrees to take over as guarantor is it possible to change guarantor along the way?

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MTUC: Let Employees Decide On EPF Contribution Rate Until Year-End

(Image: The Star/Faihan Ghani)

The Malaysian Trades Union Congress (MTUC) has urged the government to allow employees the flexibility to choose whether they wish to maintain their Employees Provident Fund (EPF) contribution rate at 9% until the end of 2022, or revert back to 11%. This is as many are still struggling financially amidst the rising cost of living and higher loan interest rates.

The call by the MTUC came after the EPF contribution rate for employees was recently restored from 9% back to 11%. To clarify, the government had
lowered the EPF rate to 9%
 throughout the whole of 2021 to increase the disposable income of members during the height of the Covid-19 pandemic.
Extended until mid-2022
, the rate was eventually restored back to the original 11% in July.

According to the president of MTUC, Effendy Ghani, allowing EPF members to retain the 9% EPF contribution rate until the end of 2022 will give them some space to revise their financial plans. He added that the extra take-home pay will also help them cope with the increasing cost of living.

Effendy also proposed that those who wish to retain the 9% contribution rate should be made to apply for it. This is in order to prevent any potential abuse.

(Image: Utusan Malaysia)

With regard to concerns that a lower EPF contribution rate will affect members’ retirement funds, Effendy commented that employees in the private sector are typically entitled to annual increments. This, he said, could help them cover for the reduction in their retirement savings.

“Private sector employees usually get a raise at the start of every year, so if they can postpone (increasing their [EPF] contribution to 11%) until December, their financial situation will stabilise from January,” Effendy explained.

Meanwhile, several economists have recently applauded the return of the EPF contribution rate to 11%, saying that the
government should not lower the EPF contribution rate
 again. This is to ensure that the members will be able to have adequate savings for their retirement and to cope with higher expenses in the future.

(Source:
Free Malaysia Today
)

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10 Realistic Financial Goals to Hit by 30

Like us, you’ve probably read one, or 25 generic personal finance goal lists on the web or in print. They tell you what you should be achieving by the time you’re thirty; forty; fifty; sometimes even when you’re dead. We thought it was about time someone wrote some advice from the real world; on ground with the average, non-trust-fund inheriting, hardworking, wage-earning Malaysian youth in mind.

Some Sobering Malaysian Real World Math

The average Malaysian fresh graduate earns RM2,500. This has been highlighted in the press many times and
we’ve discussed the issue of fresh graduate salaries
 in length just last year. Most graduates come out to work at 22-25 depending on the number of years required to finish their course. This gives them between 5-8 years before they reach the social adulthood milestone of 30. According to a
news report in 2013; average wage increases
 were expected to be 5.7% in 2014; higher than the rate of 5.3% in 2013. Taking a round figure of 5%; assuming a fresh grad is lucky enough to nab a 5% increase every year he works and he works for 5 years diligently; he will receive a pay of approximately RM3,200. This is the reason many employees rarely stay at a job long. Switching gives them a much better wage in less time, but that’s a separate issue. Why are we telling you all this? Read on.

Let’s, as an example, assume the average youth is able to earn RM3,500 by the time he is 28. According to many generic personal finance milestone lists; he is expected to not only have a 6 months worth of salary saved up as a contingency (RM21,000) – he is also supposed to own a home requiring approximately RM35,000 in downpayment (10% of RM350,000 purchase price) as well by 30. In total, this youth is expected to save RM51,000 in less than 10 years to hit two milestones. If he started working at 23; he needs to save RM7,286 per year for 7 years; RM607 per month. Sounds reasonable? Possibly, until you realise the following:

He started off probably earning RM2,500;

The costs of home buying include other miscellaneous fees than run into the thousands;

He still needs a mode of transport, possibly a car;

There are probably 8 – 10 other money milestones he needs to hit including paying insurance premiums (RM150); making investments and possibly paying off student loans (RM250 – RM350).

Prices of everything today. A meal in a
mamak
 is no less than RM6; clinic visits a minimum of RM30 per consultation; and the average transit pass for public transport being RM150.

In 7 years of saving; there’s no guarantee that RM350,000 will buy him a house considering the level of property price inflation.

We’re not saying these milestones are impossible. If you’ve been blessed enough with a good salary and supportive conditions to hit these – that’s absolutely awesome. But if you haven’t; it’s easy to assume you’ve failed at your finances and this feeling doesn’t help spur you in the right direction.

The Realistic Financial Goal List

If you’re feeling less than motivated about your money situation upon your 30th year; please don’t fret! You’re definitely not alone in your imperfect bottom line. Here are some realistic milestones you can check off (and be a winner) when the big 3-0 hits!

1. Give Your Money the Value it Deserves

You work hard for your money. The Ringgit may be falling but it didn’t take any less of your effort to earn it so give it the value it deserves. How can you do this? By being a
smarter, more informed and empowered consumer
. No more accepting bad service, bad quality or putting up with unscrupulous businesses trying to devalue the money in your pocket. This doesn’t equate being difficult or trying to haggle everything; but if you’re truly being given a bum deal, speak up and be counted.

2. Take Terms and Conditions Seriously

We all do it. We check off the ‘read’ box and we sign the pages never really scrutinising what we’re signing up for. Making big financial decisions like signing up for a 30 year home loan or investing in stocks means taking risks with your money so you want to make sure you know exactly what you’re getting into. Signing off without knowing the full terms can leave you with a dud financial product, a bad deal or worse; losing lots of money.

3. Know Your Rights

Closely linked to item 2; knowing your rights be it as a consumer, tenant, investor or property purchaser means it’s more difficult for anyone to ‘relieve’ you of your hard-earned money. If you cannot afford a lawyer; check out resources on the internet or ask your friends/family who’ve gone before you in similar deals/transactions. Of course, the basic rule of thumb applies: do you know exactly what has been agreed on and if so, are the terms fair to both parties?

4. Take Control of Your Money

Letting your money control you or other people to control your money is surefire way to find yourself in a deal you’re uncomfortable with; with a huge purchase you don’t really want at all; or worse; with an empty bank account for no good reason. It is your money and it’s value and use should be tailored to you: not your parents, friends, internet resources nor even your personal financial advisor. He/She is an advisor; not a dictator. In the end, the decision on what to do with your money needs to be yours. The other way to lose control is when you don’t control your money at all. Uncontrolled spending won’t do your budget any good, either! The Mall shouldn’t be controlling your money.

5. Understand Your Financial Profile

The first step to making better financial decisions is in knowing your financial profile. Even personal finance advisors will draw up a risk profile of their clients before writing up a financial plan so similarly, you should know yourself. Here are some questions to get you going:

Are you keen to take big investment risks or do you you prefer lower yield investment modes?

Are you careful with some spending but not others?

Do you tend to forget to pay your loans on time?

How much money do you really have to spend and what can you afford?

Do you truly want to own property?

How many insurance plans are your comfortable having?

These are all important questions to ask yourself when getting to know your financial side better. Knowing your money habits and personality will help you draw up plans that cater to your personal needs and requirements.

6. Have a Solid Budget and Plan

Once you understand your financial profile, it is a lot easier to budget and make plans for the future catering to your individual needs. Once you know your profile and have answered the questions above; you’ll be in a better position to make plans for the future – near and far. Your
personalised
 budget and plan will also allow you to save and spend based on what
you
 can afford – not what someone else thinks you should be able to afford.

Make your plan and budget line up with your lifestyle wants and goals. Not everyone wants to own property because they may prefer a nomadic lifestyle – traveling and working abroad. Some may prefer to wait til the marry and buy a home together. Some may be uncomfortable with life insurance or maybe you simply do not like investing in stocks. It’s not anyone’s place to make these big decisions for you. As long as you know the risks, pros and cons involved; these decisions should be yours alone. There is no single way to live your life and the existence of revolutionary, successful businesses, start-ups and entrepreneurs prove everyday that innovation and individuality work.

7. Don’t Beat Yourself Up Over Missteps

We all make mistakes. Maybe you got yourself in a bit of credit card debt. Missed a few payments and spotted up your credit report or maybe you simply lived a good full 3 years of your youth spending money on trading cards off Amazon. It happens sometimes and it doesn’t mean you failed. It does sometimes mean starting over and trying harder but not giving up is more important than beating yourself up for not being perfect.

8. Obliterate ‘Keeping-up-with-the-Joneses-Based’ Financial Decisions

So your college mates have landed five figure salaries in a line of work you know nothing about and you’re thinking of jumping ship. Or maybe your childhood sweetheart just married and bought a home so you think it’s time you bought a house. Or maybe you read somewhere that a 30 year old should be holding a massive stock portfolio. Making these big financial decisions because the people around you are doing it (or you
think
 they’re doing it) is the worst thing you can do for your finances. Do what is right for you and your available pot of money.

9. Save as Much as You Can

We can’t argue with the importance of saving. Be it for retirement, emergencies or just saving for bigger and better experiences in future. We’re not going to set an exact number. You know how much you can afford to save – do your best to increase it as often as you can. Saving money is beyond a doubt important but you don’t to set unrealistic expectations of savings that only force you to endanger your health, fall off the bandwagon frequently or make you use your credit card! That fixed deposit interest is nowhere near as high as credit card charges! Save. As much as you possibly can.

10. Remember: It’s Only Money

That probably sounds rich coming from a list that just gave you 9 other completely money related goals but bear with us. Money is no doubt important and underpins everything we do. We need it to trade for food; shelter and other needs. But it’s also just that – an item of trade. If your thoughts about money are turning obsessive or causing harm to your health and personal relationships as well as stunting your personal growth; it’s time to take a step back. We’re not saying throw all your money away and join an ashram (although you’re perfectly welcome to do that if you wish) – but don’t let it become your only motivator. Money is great – when it isn’t the one holding the whip at your back.

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Malaysia Unemployment Rate Creeps Back Up To 4.8% In June 2021

(Image: The Star)

Malaysia’s unemployment rate in June 2021 has deteriorated again after four consecutive months of improvement, said the latest labour report by the Department of Statistics Malaysia (DOSM). In June 2021, the unemployment rate saw a 0.3% increase from the previous month, putting it at 4.8% as comparison to
4.5% in May 2021
.

With this, DOSM reported that there was a total of 768,700 unemployed persons in the country in June 2021, as compared to the previous month’s number of 728,100 persons. Chief statistician Datuk Seri Dr Mohd Uzir Mahiddin attributed this increase to the government’s continued effort in flattening the surge of Covid-19 cases.

“The rise of new daily cases has resulted in the implementation of the full movement control order (FMCO) during the month, whereby only essential economy and services sectors were permitted to operate, encompassing business activities related to food & beverage, utilities, security, health & medical care, transportation, banking, communications, and essential construction activities. Small businesses such as food or beverage stalls or hawkers were also allowed to operate during this period,” explained Datuk Seri Uzir.

Accordingly, the number of unemployed persons in June 2021 showed a decline of 0.5% to 15.3 million persons. This is in comparison with a total of 15.37 million employed persons in the previous month. The employment-to-population ratio also fell by 0.4 percentage points to 65%.

DOSM’s report further highlighted that some of the labour force had moved into inactivity, which subsequently led to a decline in the number of labour force, from 16.10 million persons in May 2021 to 16.07 million persons in June 2021. It said that this was the first decrease of labour force recorded since April 2020, when the pandemic hit Malaysian shores. Consequently, this decline also caused the labour force participation rate to drop from 68.5% in May to 68.3% in June.

Aside from that, DOSM also noted that there was a significant hike of 661,400 person in the number of employed persons who were temporarily not working since May. This brought the total to 801,100 persons. Curiously, a similar trend was observed during the first implementation of MCO back in 2020 as well.

Aside from the monthly unemployment rate, DOSM also released data on the labour force with relation to the second quarter of 2021 (2Q21). Overall, the labour force fell by 36,100 persons to 15.97 million persons from the previous quarter, amid declines in both employed and unemployed persons.

“During this quarter, the number of employed persons decreased by 0.2% to 15.21 million persons, particularly in services, agriculture, and mining and quarrying sectors. The unemployment rate of the second quarter stood at 4.8%, registering 764,900 unemployed persons,” the report noted. Meanwhile, the labour force participation rate for 2Q21 stood at 68.3%.

As for the unemployment rate by state, DOSM observed that the highest unemployment rate for 2Q21 occurred in Labuan (8.8%), Sabah (8.7%), Perlis (5.3%), Kelantan (4.8%), and Selangor (4.4%).

Finally, Datuk Seri Uzir reiterated that herd immunity is essential in speeding up the country’s economic recovery, enabling businesses to resume their operations. Along with the National Covid-19 Vaccination Programme, the various stimulus packages from the government may help the economy and labour market economies to rebound. However, this is not taking into account the new and more lethal Covid-19 variants.

(Source: DOSM [
1
,
2
,
3
])

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Alex Cheong Pui Yin

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Previously covered recruitment-related stories and had a short stint as a copywriter for the property industry. She subsequently developed an interest in investment and robo-advisors.

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Are Motor Insurance Add-Ons Worth The Extra Ringgit?

With every niggling little expense piling on and eating away at your income, it’s only natural that you’ll want to spend as little as possible, wherever possible! But does that mean you should skimp on your car insurance add-ons? Let’s find out if these extras are worth the money:

1. Car Windshield

Even a tiny pebble can cause a major crack in your car’s windscreen and depending on the amount of damage, can be an expensive fix. The premium for windshield coverage is calculated as 15% of the windscreen value. Thus, if yours is valued at RM1,000, your premium for the add-on would be RM150. This is definitely a smaller price to pay in the event your windscreen
does
 get damaged.

Note also that your add-on will typically cover the cost to replace any
tinting or security film
 that you have applied. In addition, making a claim for windscreen repair or replacement will not affect your No-Claim Discount (discount given when you don’t make any claims).

Verdict:
 Get it if you drive for long distances often or in areas with frequent construction work.

2. Car Accessories

If you’ve equipped your car with expensive speakers, gadgets, rims or other non-standard additions, you might want to protect it by adding on special coverage for your car’s accessories. You can choose the amount you wish to cover and your premium will be 15% of the coverage amount. For instance, if you wish to insure your accessories for RM5,000, you’d have to top up a premium of RM750, which might be a little steep for some.

If you haven’t upgraded your vehicle with non-standard equipment and are using factory-issued accessories, then this premium might not be necessary for you to purchase. If you do plan on getting this insurance add-on, check with your provider about possible exclusions.

Verdict:
 Don’t get this one unless you really
really
 care about your accessories.

3. Strike, Riot or Civil Commotion

While you might think that this is already covered in your basic plan, repairing damage to your vehicle arising from such acts will come out of your own pockets. This premium add-on typically costs 0.3% of the total sum insured for your car. Thus, a car insured for RM50, 000 will have to pay an additional premium of RM150.

Is it a necessary add-on? Since it’s hard to predict the likelihood of strikes, riots and civil commotions, the historical occurrences of such events in Malaysia are
relatively low
. However, if you are attending a rally or sports event, it may be best to leave your car at home. Furthermore, if you aren’t planning to buy the add-on, use your best judgement and avoid parking on dark streets or open areas where your vehicle might be susceptible.

Verdict:
 You don’t need this about 99.9% of the time. Don’t bother unless RM150 a month means very little to you.

4. Special Perils : Flood, Typhoon or Landslide

The effects of these extreme weather conditions can be particularly damaging to your car – even to the point of total loss. A case of flash floods in Puchong last year saw
severe damage
 to cars parked in a local shopping mall. To overhaul and repair your engine after it has sustained damage from water submersion can cost thousands of Ringgit.

On the other hand, a special perils add-on only costs 0.5% of the sum insured, which is a lot lower than the cost to repair. For instance, if your car is insured for RM50,000, the premium for the add-on coverage is RM250 only.

Verdict:
 Do consider this add-on especially if you live in and travel to areas prone to floods and landslides.

5. Personal Accident Insurance

Your policy may offer an add-on that covers you, your passengers and other authorised drivers in case of accidents in the insured car.

This type of coverage provides benefits such as medical expense reimbursements, permanent disabilities and accidental loss of life.
AXA Drivers’ and Passengers’ Personal Accident
 policy costs start from RM0.13 per day which works out to RM47.45 per year. Whereas, the coverage provided for medical reimbursement alone is RM500.

Verdict:
 Might be a worthy add-on to consider if you haven’t purchased other medical or personal accident insurances. Skip this if you already have those.

The best way to save more on your car insurance premium of course is to shop around and compare prices. Go ahead and use our
car insurance comparison
 page to find the most affordable plan for your needs. Don’t forget to share your thoughts and ideas with us in the comments section below!

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Life Hack For Concert-goers: Buy JBL Products And Win Tickets To Alan Walker And More

For many of us, music is more than just sound – it’s an integral part of our lives. Modern audiophiles today, not only seek superior audio quality but also value the relationships fostered by the brands they support, expecting them to exceed the conventional offerings. Thus, in the interest of all the modern audiophiles in mind, we’ve discovered a fascinating hack that links music enthusiasts to live concert experiences, all while elevating their audio lifestyle through JBL.

Dare To Dream: Connecting With Live Music

As such, JBL has recently launched the Dare To Dream campaign, where JBL customers are given a chance to win 2 tickets of their choice to LIVE performances of renowned artists like
Alan Walker, Power Station, and more from Star Planet!
 Every week from 1st to 31st August 2023, opportunities arise for 14 winners in two categories: The Top Spenders Winners and Lucky Draw Winners.

How to participate? All you need to do is:

Spend a minimum of RM99 on any JBL products during August 2023 from participating dealers or official stores listed below to become eligible.
Participating dealers:
– All IT
– Harvey Norman
– TMT
– PC Image
– Urban Republic
Official Stores:
– JBL MY Online Store
– JBL Lazada Official Store
– JBL Shopee Official Store
– JBL TikTok Official Shop
– JBL Zalora Official Store

Submit your receipt
here
 to join the campaign.

Weekly Top Spenders and Lucky Draw Winners will be announced on JBL TikTok Livestream every Friday at 8 PM.

Concert tickets are subject to availability.

Elevating Your Music Experience With JBL

Recognising the varying needs of each listener, JBL offers an extensive array of products that cater to your unique preferences. In harmony with the Dare To Dream campaign, JBL invites you to consider elevating your listening experience through JBL Live Pro 2 and JBL Bar 1300.

JBL Live Pro 2:

Designed for people who are always on-the-go, the JBL Live Pro 2 offers deep bass, a comfortable listening experience with Oval TubesTM, and comes equipped with a remarkable 40-hour battery life (10 hours on earbuds + 30 in the case). They’re also water-resistant, making them a durable option for music lovers.

JBL Bar 1300:

Elevate your home entertainment with the JBL Bar 1300. It boasts True Dolby Atmos® for lifelike audio, detachable speakers for flexible set-up, and MultiBeam™ Surround Sound for immersive listening, transforming any room into a cinematic experience.

***

A More Rewarding And Engaging Music Journey With JBL

Understanding the evolving needs of modern music enthusiasts, JBL sets out to deliver top-notch audio quality while offering a more memorable experience for its customers. The Dare To Dream campaign is an example of what an elevated music experience can be.

With JBL, every purchase is a step towards a rewarding audio journey, whether you’re enhancing your current setup or gearing up for every listening scenario. So,
shop online today
 for a chance to win tickets to the concert of renowned artists of your choice!

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Hong Leong Bank To Help SMEs Obtain Financing Via PENJANA SME Financing Scheme

Hong Leong Bank (HLB) is offering help to its small and medium enterprise (SME) customers to obtain financial aid via the PENJANA SME Financing Scheme (PSF Scheme), having been approved as one of the scheme’s participating banks.

Through the PSF Scheme, eligible SMEs can apply for working capital loans of up to RM500,000 each, at a financing rate of 3.50% p.a. with no collaterals required. They are also allowed a term loan of up to 5 years, and are only required to pay for the interest during the first six months of the loan.

According to the bank, the scheme is open to all SMEs impacted by the Covid-19 pandemic and the movement control order (MCO), including emerging SMEs. In other words, SMEs that have been operating for a minimum of 12 months or have no credit/borrowing history are welcome to apply to the scheme as well.

The group managing director and chief executive officer of HLB, Domenic Fuda, said that cash flow remains a serious concern for SMEs even as Malaysia enters a recovery phase and businesses start to reopen. He added that economic recovery will take time, and SMEs will still need to contend with a low consumer sentiment post-MCO after suffering from a heavy blow to their finances.

Fuda further highlighted the struggles of new and emerging SMEs, stating that only 50% of such SMEs are able to sustain their businesses within the first five years of their establishment. “As a bank with a strong entrepreneurship heritage, we are here to facilitate them in rebooting their businesses with this financing scheme aimed at providing short-term financial buffers as a way to protect the business continuity plans,” he said.

Aside from resolving cash flow problems, Fuda also hoped that SMEs will use the scheme to enhance their resilience and help their businesses grow once the economy has recovered. “We have seen some SMEs pivoting to digitalisation and for goods and services borne out of this crisis. This drive for innovation and adapting to our new normal is essential for survival as well as future growth,” he emphasised.

The PSF Scheme was announced as part of the
PENJANA recovery economic plan
, and will see the banking sector offering RM2 billion of funding to affected SMEs. HLB will provide its PSF Scheme until 31 March 2021 or until the allocated RM2 billion shared by participating banks is depleted.

For more information, head on over to
HLB’s PSF Scheme
 landing page. Alternatively, you can reach out to HLB’s SME relationship managers.

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Alex Cheong Pui Yin

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Previously covered recruitment-related stories and had a short stint as a copywriter for the property industry. She subsequently developed an interest in investment and robo-advisors.

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How Minimalism Can Improve Your Finances

Minimalism is now hitting the mainstream crowd pretty hard. The term minimalist is no longer associated with artwork or how you arrange your furniture; it is currently a lifestyle that anyone, regardless of age, income or responsibility can be partake in.

For the most part, proponents of the lifestyle will be quick to claim its benefits and one that is usually touted is the money saving element of taking the minimalism route. But can minimalism really improve your finances? We found three ways in which it does.

However before we get into the ways, let’s
correct some misconceptions and learn about what being a minimalist really means
.

The Basic Tenets of Minimalism

First of all, it is not about getting rid of everything you own. It is about eliminating things from your life that does not have a purpose or that does not bring you happiness. Simple concept isn’t it? By having a minimalist attitude you will be putting focus on things that really matter in your life.

Minimalists usually focus on three key areas in life: experiences, engaging in meaningful work and investing in people. This means spending more on experiences as compared to things; doing work that is fulfilling to you personally as compared to simply working; and finally, being around more for your loved ones.

Looking at the backbone tenets of minimalism, it can easily be followed that it is a lifestyle wherein which you will be encouraged to save and at the same time improve your financial future. Here are the three outcomes from going minimalist that will help you with your finances.

Outcome 1: You Will Buy Less Stuff

Being a minimalist means paring down the clutter and only keeping/buying what you really use and what really adds value to your life. This means at the very beginning of this lifestyle overhaul, you will get rid of stuff in your home.

Discarding, donating or simply selling your unused things will earn you a bit of cash too but it’s the ultimate change in the way you spend, which will help you save in the long run.

Opting for a minimalist lifestyle will see change in your purchasing focus. You will need to re-evaluate everything you buy according to the tenets: will this purchase be useful? Will it enhance the quality of my life? If not; you don’t buy.

It’s the difference between buying a few extra chairs just so that you may fill some empty space in the living room versus having an empty room and just a few chairs that you really use.

Outcome 2: You Will Be Able to Keep Focused on Goals

It’s not to say that by owning a wardrobe that can dress-up 90 people at a time will hinder your goal of being a travel writer but, it is the act of de-cluttering and the evaluation of your need to own so many clothes that will help rid you of that selfsame need and hence, help you save money.

Having a lot of stuff means taking care of a lot of stuff through cleaning, maintenance and sorting. That gigantic wardrobe isn’t going to launder and fold itself!

Now how about channeling that time and energy spent on folding, laundering and earning more money to buy more clothes into reaching an important goal?

This doesn’t mean that you decide to have no clothes and walk about looking like a bum. It means having a wardrobe that maximises utility and functionality. This helps you to focus the bulk of your efforts elsewhere, into more important things.

Mark Zuckerberg famously admitted to this practice
 but if you thought it was only for men,
Art Director of Saatchi & Saatchi in New York, Matilda Kohl does the same
.

But clothes is just one example. The less stuff in general you have to care for; the more time and energy you have for more important things.

That is, simply focusing you energy towards improving yourself, gaining more experience and have more confidence in order to achieve your goals.

Outcome 3: You Will Budget Better

Minimalists are usually as of rule already better at spending decisions but because they are also able to reduce their needs to the minimum in order to further more important goals, they are also better at making budgets.

A
minimalist budget cuts out the excess
 and focuses on what you truly need to live and thrive but because you cut out so much extras; there is ample room to re-prioritise your money where it brings you the most fulfillment.

By having better budgets, you are able to cut out debt and funnel your funds into your passions. If that isn’t the ultimate push for better finances!

As a recap, being a minimalist does not stop you from buying anything or live without running water and electricity. For those who want to embark on this lifestyle, I say congratulations and good luck! There are an
abundance of resources online to get you started
. Happy de-cluttering!

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Yasier Mahayudin

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Restaurants May Soon Reduce Serving Size Of Food Due To Rising Expenses

(Image: The Star/Chan Boon Kai)

The Pan Malaysia Koo Soo Restaurants and Chefs Association has commented that some restaurants may soon begin reducing the portion of food served to their customers. This comes as some eateries are struggling to cope with the price increase of ingredients and other materials or goods.

According to the vice president of the association, Datuk Ringo Kaw, some operators could opt to lessen the use of ingredients and its portion, while others may decrease the volume of food to be sold. “Essentially, reducing food portions is an increase of food price because even with smaller portions, consumers still have to pay the same (price),” he said.

Datuk Ringo also went on to explain that the economic impact of Covid-19 has caused these price hikes to be unavoidable, especially as businesses are still recovering from the losses incurred during the early lockdowns. Not only that, restaurant owners are also required to bear 35% additional cost of non-food materials, such as plastic bags, sanitising equipment, and other overhead costs.

(Image: Bernama)

The recent unpredictable weather and devastating floods across the country, too, have wreaked havoc with the production of raw ingredients, thereby forcing restaurant owners to spend more in procuring raw food materials. To illustrate, Datuk Ringo said that the price of poultry had recently increased by a whole 20%.

“Both operators and consumers are struggling and need to survive during these difficult times. I just hope everyone, including the consumers, understands the situation restaurant owners are facing,” said Datuk Ringo.

Meanwhile, the president of the Malaysian Indian Muslim Restaurant Owners Association, Datuk Jawahar Ali Taib Khan shared that its members will strive to maintain the affordability of their food, even in the event of a necessary price increase. He said that they will try to keep the price hike minimal to avoid burdening consumers, especially those in the lower income bracket.

That said, Datuk Jawahar pointed out that some restaurants may charge higher prices for their food and services compared to other eateries. “Those restaurant operators are probably doing so because the operating costs are higher compared to others,” he said, adding that another contributing factor could be the higher rentals that some eateries need to pay due to their location.

(Image: Malay Mail/Yusof Mat Isa)

“The price of a piece of roti canai might be RM1.50 in the suburbs but it could be more (expensive) in the cities,” Datuk Jawahar shared. He also reminded consumers that they have the right to lodge complaints with the Domestic Trade and Consumer Affairs Ministry if they feel that some restaurants are charging too exorbitantly for their services.

Datuk Ringo’s and Datuk Jawahar’s remarks both echo earlier comments from a few coffee shop associations as well. Specifically, in December 2021, the president of Malaysia-Singapore Coffee Shop Proprietors General Association, Wong Teu Hoon had said that some kopitiams may consider
increasing the price of their beverages
 to help cope with rising expenses.

(Source:
The Star
)

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About THE AUTHOR

Alex Cheong Pui Yin

Alex Cheong Pui Yin

Previously covered recruitment-related stories and had a short stint as a copywriter for the property industry. She subsequently developed an interest in investment and robo-advisors.

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Confirmed: RM1 Interbank ATM Cash Withdrawal Fee Will Be Reinstated From 1 February 2022

Various banks in Malaysia have confirmed that the MEPS RM1 ATM withdrawal fee will be reinstated from 1 February next year.

As per
our report on Monday
, Citibank was the first (and only) bank to make the announcement, but other banks have now followed suit with a similar message: the banking industry will reinstate the RM1 transaction fee for interbank ATM withdrawals starting 1 February 2022.

(Image: New Straits Times)

The fee was waived to
encourage people to move only within nearby areas during the MCO and utilise any bank’s ATM
 to withdraw cash. When it was announced by then-Defence Minister and current Prime Minister Dato’ Sri Ismail Sabri bin Yaakob, he stated that this waiver
will continue until the end of the MCO period
. To date, the RM1 waiver has been in effect since 6 April 2020.

The MCO was effectively lifted in August as the government progressively switched to the National Recovery Plan to help ease the country back onto its feet.

Several banks in Malaysia have made similar announcements on their social media pages today as well as on their respective online banking pages. Other banks are expected to follow suit as it is an industry-wide announcement.

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Pang Tun Yau

Pang Tun Yau

A seasoned tech journalist who now focuses on his other passion, Pang is a firm believer in old-school DCA and optimised spending.

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Kenanga Updates KDI Save Interest Rates, Now Up To 4% p.a

Kenanga Investment Bank has announced an update to the promotional interest rates of its savings product KDI Save, now offering up to 4% p.a. effective annual rate (EAR) on customers’ funds. This update takes effect immediately.

According to Kenanga, this updated promo will apply to both existing investments as well as any new deposits made into KDI Save. Note that the 4% p.a. rate is not applicable to
all
 your funds in KDI Save. Instead, it is only valid for your funds of between RM100 to RM50,000 in the platform; subsequent investment amounts, meanwhile, will earn you either 3.0% p.a. or 3.5% p.a. EAR, as indicated in the table below:

Tier
Investment amount (RM)
Effective Annual Rate (%)
Tier 1
RM100 – RM50,000
4
Tier 2
RM50,000.01 – RM200,000
3.5
Base tier
RM200,000.01 and above
3.0

Kenanga has also once again made this promotion an open-ended one; while the investment bank clarified that these rates will take effect starting from 14 June 2023, it did not mention an end date to the promo, so savvy investors may want to move fast and take advantage of it for as long as they can. If you’re interested in tapping into KDI Save’s promotional rate, you can deposit funds into the platform via a direct deposit or by transferring existing investments from
KDI Invest – KDI’s investment platform/robo-advisor that complements KDI Save
 (if you have).

Prior to this latest update, the
promotional rate for KDI Save had been set at 3.5% p.a. EAR
 since October 2022. This revision is likely made as an update following Bank Negara Malaysia’s (BNM) recent move in increasing the overnight policy rate (OPR) –  now
at 3.00%
 – which, in turn, has also boosted the interest rate of savings instruments and products in Malaysia in general.

(Source:
Kenanga Digital Investing
)

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Alex Cheong Pui Yin

Alex Cheong Pui Yin

Previously covered recruitment-related stories and had a short stint as a copywriter for the property industry. She subsequently developed an interest in investment and robo-advisors.

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How Do Robo Advisors Determine Your Risk Appetite?

All prudent investors recognise that each investment instrument comes with a degree of risk, from even the safest low-risk bonds and money markets to volatile stock markets. The key to a successful investing experience, essentially, is to build a portfolio that matches your risk appetite while reaping the best returns possible.

As such, it is critical to begin by determining your risk appetite; in other words, how much are you willing to lose for the potential to earn higher returns? Typically, a financial planner or advisor (if you have them) will help you establish this by getting you to answer some questions, and then making their own evaluations. With the rise of robo advisors, however, this process has been automated, allowing for a faster and more straightforward onboarding experience.

In this article, we will look at how robo advisors determine your risk appetite, as well as how it contributes to the building of your investment portfolio.

Robo Advisors: Determining Risk Profiles With Algorithms

Robo advisors employ the use of proprietary algorithms –  usually developed via artificial intelligence (AI) and Big Data – to help them effectively determine a client’s unique risk profile before matching it with a suitable portfolio. To do so, each investor will be required to fill in a questionnaire that obtains information regarding their degree of risk aversion, financial status, as well as goals and desired return on investment (ROI) – among others.

Of these key topics, a big chunk of these questionnaires will focus significantly on sussing out the degree of risk that you are willing to take as an investor, either through qualitative or quantitative methods. In fact,
a global study about the process of risk profiling by robo advisors
 highlighted that up to 32.6% of questions asked are related to the investor’s risk appetite (19.3% via qualitative or literal questions, 13.3% via quantitative questions).

Meanwhile, 24% of the questionnaires sought to gather information on their investment time horizon, goals, and ROI, whereas the remaining 43.4% focused on details such as the investor’s financial health, net worth, and employment background.

Among some common questions that you can expect to encounter include:

What is your total monthly income?
When do you expect to start withdrawing your investment?
What are the composition of your existing investment portfolio?
What are your priorities when investing?
If your investment portfolio loses 10% of its value, what would you do?

Based on your responses to these questions, robo advisors will then run its algorithm and recommend one of the following risk profiles to you. In general, these can be the following (ranging from a continuum of low risk to high risk):

Conservative
Moderately conservative
Moderately aggressive
Aggressive
Very aggressive

From there, the robo advisor will then recommend a portfolio suited to your risk profile, using the instruments and portfolios that are available to them.

Building Your Tailored Portfolio

Once they’ve assessed your risk tolerance and investment goals, robo advisors will build your portfolio, usually using exchange-traded funds (ETFs) which may cover a wide range of asset classes including government and corporate bonds, fixed income, equities, as well as commodities.

Most of the time, investors will be shoe-horned into a precise portfolio that matches their respective risk profiles. Those with a higher risk profile will have portfolios containing a higher percentage of equities (which carries higher risk) instead of bonds and fixed income (instruments with lower risk), whereas investors with lower risk appetite will have a higher allocation of government bonds and money market funds.

Meanwhile, there are also other robo advisors that offer the ability to structure an investor’s portfolio in a more customised manner. A good example of this is MYTHEO, which bases its investment approach on the “Omakase” concept and helps investors to personalise their portfolios by allocating a weightage from three functional portfolios that it manages, namely Growth, Income, and Inflation Hedge:

Pillars of investment
Investment instruments
Target investors
Growth
– Diversified equity traded funds (ETFs)
– Higher yield returns
Suited to investors who have a higher risk appetite and the willingness to invest for longer periods of time
Income
– Investments that offer dividends and/or interest payments
– Lower returns, but more stable
Suited to risk-averse investors
Inflation hedge
– Assets that yield returns regardless of currency fluctuation
– Examples include gold and properties
Suited to risk-averse investors

MYTHEO starts by utilising a first-stage algorithm based on a set of profiling questions to determine the overall weightage of the three pillars in your tailored portfolio; for instance, someone who can tolerate more risk could have a portfolio with 87% Growth, 9% Income, and 4% Inflation Hedge allocation. From there, another set of algorithms will be used to construct the specific distribution of the asset classes under each pillar. With this distinctive two-stage portfolio construction process, you can expect a more meticulous vetting of investment products, offering access to more than 60 ETFs that cover diverse asset classes across multiple global regions.

In fact, MYTHEO itself shared that an investor’s portfolio could “indirectly own more than 10,000 securities globally. This diversification, in effect, allows for a better distribution of risk as adverse events impacting individual stocks – whether in certain industries or regions – will have limited impact on the overall portfolio – even in the higher-risk portfolios.

On the other hand, MYTHEO also caters to the needs of seasoned investors who prefer to have a little more control and flexibility over their portfolios. If you are comfortable with making your own investment decisions, you have the freedom to tweak the weightage of the three functional portfolios as you tap into MYTHEO’s expansive regional diversification. MYTHEO’s ETF universe spans five geographical regions, namely Asia Pacific, Africa, North America, South America, and Europe, providing plenty of geographical coverage.

As with other robo advisors, MYTHEO’s algorithms can rebalance and reallocate assets in your portfolio automatically to ensure that the investor’s portfolio is always optimised and suited to their risk profile while performing as ideally as possible regardless of market conditions.

***

Now that you have a better idea as to how robo advisors assess your risk appetite and build your personalised portfolio around it, you may want to consider checking out MYTHEO if you’re keen to begin investing on such platforms. Born from a joint venture between Japanese investment management and advisory services provider Money Design, and local enterprise Silverlake Digital INX, the Group has a proven track record of more than US$1.5 billion worth of asset under management (AUM) and 160,000 Japanese investors.

As an investor with MYTHEO, you can begin investing globally with a low entry amount of RM100, with subsequent top-ups also capped to a similar minimum amount. As for charges, its management fees ranges between 0.5% to 1% p.a., depending on your investment amount. MYTHEO promises that there are no trading, exchange, and redemption fees, as well as any other surprise charges.

If you’re ready to take the next step in your investment journey with MYTHEO, you can tap into an
exclusive RinggitPlus offer
 that is ongoing until 31 December 2021 due to our
partnership with MYTHEO
. New customers who sign up with MYTHEO using our promo code (“
MYTHEORP
”) via
this link
 will be entitled to a three-month management fee waiver from the approved initial deposit. Don’t miss out!

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Alex Cheong Pui Yin

Alex Cheong Pui Yin

Previously covered recruitment-related stories and had a short stint as a copywriter for the property industry. She subsequently developed an interest in investment and robo-advisors.

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PRS Funds Now Allowed To Invest In Foreign Markets And Alternative Investment

(Image: FintechNews Malaysia)

The Securities Commission (SC) has announced that it is now allowing conservative funds under the Private Retirement Schemes (PRS) to invest in foreign markets. PRS funds are also permitted to invest in exchange-traded funds based on physical gold.

Prior to this, conservative funds were allowed to invest only in local equities and fixed income securities. Additionally, PRS funds could only trade in specific investment options, namely equities; fixed income and transferable securities; cash, deposits and money market instruments; derivatives; collective investment schemes; and real estate.

According to the SC, the decision to liberalise the regulation on PRS was made to enhance the competitiveness of the industry, as well as to provide more flexibility in asset allocation.

(Image: The Star)

“These liberalisation measures were adopted after a robust review process undertaken by the SC, in consultation with the industry and Private Pension Administration Malaysia, to encourage PRS members to grow their investments. Meanwhile, PRS also enables its members to access funds to ease their financial burden in times of need,” said the chairman of the Securities Commission, Datuk Syed Zaid Albar.

The SC further commented that PRS providers are required to gradually move their members to less risky core funds so as to match their age range to their risk tolerance. This is especially so given the longer lifespan of the Malaysian population.

“This will help to reduce the market risk exposure for members who opt for default funds (growth, moderate, and conservative) that are matched against their age,” said the SC. By default, those who are aged below 40 years old will be parked under growth funds, whereas those between 40 to 50 years of age are parked under moderate funds. Lastly, those who are 50 years of age and above will be placed under conservative funds.

Established in 2012,
PRS
 is a long-term savings and investment scheme that helps Malaysians save for their retirement. As of now, there are eight PRS providers serving more than 455,000 members across the country. The industry is valued at RM3.5 billion at the end of 2019.

(Source:
The Edge Markets
)

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Malaysia GST to SST - How Will This Affect You?

UPDATE 17 July:
 The government has confirmed that the SST tax rate will be set at 10% for sales and 6% for services. Our new article breaks down the
facts and figures behind the switch from GST to SST
.

It’s been a week since the GE14 elections and what a time it is indeed to be alive. One of the things that have been widely discussed is the return of the SST after a 3-year implementation of GST. First mentioned in the Pakatan Harapan (PH) manifesto, it was one of most memorable PH promises to voters, in which they will sought to replace the GST with SST within 100 days of winning the 14th General Election.

But in truth, what does this spell for consumers once the Goods Service Tax is rendered zero-rated and that the Sales and Service Tax has returned to the fore?

Will The Prices Of Goods Increase / Decrease After The Removal Of GST?

Perhaps one of the most commonly discussed worries among the people of Malaysia is whether the directive of making the Goods Service Tax zero-rated to pave away for the return of GST would play a role in increasing the price of goods.

This concern was raised by Edaran Tan Chong Motor (distributor and assembler of Malaysian Nissan vehicles) in which Christopher Tan, the company’s marketing director, stated that cars may be more expensive when the Sales and Services Tax (SST) is reintroduced. He also added that the industry could see higher car prices if the return of SST is based on the previous calculation formula in the Service Tax Regulations 1975.

Having said that, one needs to keep in mind that the original goal of the GST is that it is a value-added added tax that is used to replace all the indirect taxes levied on goods and services by the government. This aim of having a single, unified tax is to strengthen the economy while lowering the costs of business owners. More reasons for the implementation of the GST can be read at the
official GST website
 and right now, you may be wondering, what has happened since the implementation of GST in Malaysia?

According to the Edge, the introduction of the goods-and-services tax in April 2015 caused a spike in inflation to 4.2 percent in early 2016, even after the allocation of handouts by the government for low- and middle-income residents to help offset the bigger tax bills. So yes, in theory it is expected that GST will be beneficial for consumers as the manufacturing costs is supposed to be absorbed by the producers.

Moving forward to 2018, with the Goods Service Tax nullified, Bank Negara Malaysia expects the prices of goods and services to drop. Bank Negara governor Muhammad Ibrahim said that it was important for the relevant authorities to ensure that businesses passed the benefits to the public at large. Aside from that, he also commented that the move will have an impact on inflation but it is too early to calculate the inflation rate at the moment.

“The inflation rate for the first quarter is set between 2% and 3%, but with the information coming in, we will look at it again. If need be, we will revise the rate”

To Conclude

So yes, while there are multiple opinions as to how rendering the GST zero-rated would affect the price of goods and services in general in Malaysia, what’s for certain is that The Malaysian economy, measured by the indicator gross domestic product (GDP), has grown by 5.4% year-on-year in the first quarter (1Q) of 2018, owing to the continued expansion in private sector activity and strong support from net exports, according to
BNM
.

With a stronger ringgit exchange rate in 2018, this translates to a possibility for increase in purchasing power among Malaysians. Still, it remains heavily debated in different social circles as to whether this zero-GST move would be able to support the Malaysia’s debt-to-GDP ratio of 50.8 % although the
Finance Ministry has assured that the higher oil prices now will provide a buffer for the immediate future
.

Still, it has only been one week since the change of governance took place. With new policies and the return of subsidies in place, it is only a matter of time before we start to witness the fascinating changes and transformation that the new Malaysia is experiencing. Need a crash course on what is Sales and Service Tax all about and how did it all happen? Don’t forget to check out our blog for all things related to GST, tax and of course, top financial tips that will help you get more for your money.

Have anything to say about the return of the Sales and Service Tax? Let us know in the comment section below.

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Tax Exemptions: What Part Of Your Income Is Taxable?

When you file your personal income taxes, a main section of your form will be devoted to declaring the income you earn. This can be as simple as simply checking the figure on your EA form and filling it in. But when things like additional allowances and benefits come into play, it may seem a little more complicated.

What counts as “income from employment?”

Statutory income from employment refers to not only your monthly salary, but also any commission, bonus, allowances, perquisites, benefits-in-kind, and even accommodation. Of course, there are certain types of income within this list that does
not
have to be included in your income for tax purposes – in other words, income that is exempted from tax. If you are given a tax exemption up to a certain value, you don’t have to include that amount in your declaration of income.

Perquisites, benefits-in-kind, and tax exemptions

A perquisite is a perk or benefit given to you by your employer, like travel and medical allowances. Benefits-in-kind are also a type of benefit received by employees which are not included in their salary, such as cars, furniture, and personal drivers. Regardless of what they’re called, you have to keep track of the additional benefits given to you because they may either be taxable or tax exempt. Here is a list of
perquisites
 and
benefits-in-kind
 that you can exclude from your employment income.

Perquisite/Benefit-in-kind
Tax Exemption Limit (per year)
Petrol, travel, toll allowances
Up to RM6,000. If the amount exceeds RM6,000, further deductions can be made in respect of amount spent for official duties.
Parking allowance, including parking rate paid by employer directly
Fully exempted
Meal allowance received on a regular basis
Fully exempted
Medical benefits (including traditional medicine and maternity expenses)
Fully exempted
Child care allowance for children up to 12 years old
Up to RM2,400
Benefit, whether in money or otherwise, for past achievements, service excellence, or long service award, etc
Up to RM2,000
Gift of fixed line telephone, mobile phone, etc registered in employee’s name
Limited to 1 unit for each asset
Monthly bills for phone or broadband line registered in employee’s name
Limited to 1 line for each category of asset
Company goods provided free or at a discount to employee, spouse, or unmarried children
Up to RM1,000
Company goods provided free or at a discount to employee, spouse, or unmarried children
Amount of discount or amount of services provided free
Subsidised interest for housing, education, or car loan
Fully exempted if total loan amount does not exceed RM300,000. For exceeding amounts, there is a calculation formula that you can find in the
public ruling for this allowance
.
Leave passage (vacation time paid for by employer)
Exempted up to 3x in a year for leave passage within Malaysia (fares, meals, accommodation) and 1x outside Malaysia (up to RM3,000 for fares only)
Income tax borne by employer
Total amount paid by employer

*These tax exemptions are not applicable for directors of controlled companies, sole proprietors, and partnerships.

What happens if you need to declare a benefit-in-kind as part of your employment income? You can’t exactly put down “one car and one driver” on your form as part of your income, so you’ll have to prescribe it a monetary value in order to be taxed. This can be done through the formula method or the prescribed method. If you would like to know more about these methods of calculation, PwC offers a good explanation in its
Malaysian Tax Booklet
.

Other tax exemptions and sources of income

You are required to pay taxes for your income arising from any
rent
 received. However, under previous Covid-related economic stimulus packages and subsequently Budget 2022,
property owners who rent their properties are entitled to a special tax exemption (for SME and non-SME tenants)
 if they provide a rental reduction of at least 30% to their tenants. This exemption is applicable for the period until June 2022.

Interest
 earned from the following institutions are tax exempt: licensed banks, Islamic banks, or finance companies, developed financial institutions, Lembaga Tabung Haji, the Malaysia Building Society Berhad (MBSB), and the Borneo Housing Finance Berhad. Dividends received from exempt accounts of companies, cooperative societies, and approved unit trusts are also exempt from tax.

Women returning from the workforce
are eligible for income tax exemption under
TalentCorp’s Career Comeback Programme
 if they were away from the workforce for at least two years. This is applicable until 2023, as announced in Budget 2020.

Other tax exemptions you may take advantage of are:

Compensation for loss of employment

Death gratuities

Income derived from research findings (50% exemption)

Pensions after the age of retirement or ill health

Retirement gratuity after the compulsory age of retirement after 10 years of continuous service or ill health

Scholarships

Don’t overpay your taxes

Malaysia operates on a self-assessment system when it comes to income tax, so the taxpayer is responsible for calculating their own chargeable income and payable tax. That’s why you need to be aware of which parts of your income is taxable or exempt. Hopefully, this article has helped highlight some tax exemptions you weren’t aware of before so you can file your taxes more accurately.

If you have any questions, do let us know in the comments! You can also check out our
annual income tax guide for 2023 (YA 2022)
, and other tax-related articles, such as:

Everything You Should Claim As Income Tax Relief Malaysia 2023 (YA 2022)

Income Tax Malaysia: What’s New For YA 2022?

MyTax: One-Stop Portal To Make Tax Filing More Convenient

Malaysia Income Tax: An A-Z Glossary

How To File Your Taxes For The First Time

Income Tax Malaysia: Quick Guide To Tax Deductions For Donations & Gifts

How To File Your Taxes As A Freelancer

How To File Income Tax For Your Side Business

How To File Your Taxes If You Changed Or Lost Your Job Last Year

Find more income tax related content in our
Income Tax
 page.

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    Calvin

    3 years ago

If my EA form total income includes travel allowances, can i deduct my travel allowances out from that total income in my income tax form?

264

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    Norasyikin Abas

    3 years ago

hi i would to know whether or not i should do my tax filing for YA2020 as i just returned to workforce after 5 yrs of not working. I am a woman and was an accountant and just resumed working as a chartered accpuntant starting from Dec2019.On a related note, should I pay the MTD as well?Thanks in advance for your valuable advice as I need to know what should be done.

30

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    Vignesh M

    3 years ago

Any tax benefits / relief applicable for foreign workers in malaysia (Expats) ?

-1

Reply

    jack

    2 years ago

hi, if my employer gives me an allowance for my car loan and housing, is it tax exempt?

10

Reply

    Yap Kim Yeong

    2 years ago

Bought a vehicle under staff’s purchase, is the discounted amount taxable?

My employer has lump this amount to car allowance in the EA form

-1

Reply

    Anonymous

    1 year ago

If my salary is pay by cash how to submit?

-1

Reply

    Gina

    1 year ago

Hi, may i know can i deduct the benefits in kind (B3)(company car)from my total employment income  ?

-1

Reply

    Hilda Vandermeulen

    9 months ago

Im an ex pat… Under M2H programme.. Is interest earned from islamic dividend tax exempt

0

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    Pang Tun Yau

    9 months ago

    Reply to

        Hilda Vandermeulen

Dividends are tax exempt in Malaysia.

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Economists: Govt Should Consider Providing Financial Assistance For M40 Group Too

(Image: Malay Mail/Choo Choy May)

Several economists and consumer groups have urged the government to also provide assistance for the M40 income group as they, too, are feeling the pinch from the rising cost of living. Among others, these financial aids could include tax breaks and cash aids.

Economist Nungsari Ahmad Radhi suggested more tax breaks for the M40 group – including tax deductions and exemptions – as these individuals make up a big percentage of the taxpayers in the country. In contrast, the government can consider imposing higher taxes on the top tier income bracket to counter the potential loss of revenue from lowering taxes on the M40 group.

“Our government is well aware of the severe fiscal constraints, and they should look at both revenue and expenditure in determining priorities when all citizens face the rising costs of living,” said Nungsari, adding that the government should also prioritise its financial resources for current needs instead of other less urgent expenses.

(Image: Malay Mail/Yusof Mat Isa)

Meanwhile, economic analyst Mohd Yusof Saari proposed for the government to reintroduce budget shops, and to offer cash aids as temporary reliefs – among other suggestions. “This is a critical time for the lower income groups, especially the B40 and a majority of the M40. The soaring prices of goods is impacting them significantly,” he said.

Also adding to the conversation is the president of the Federation of Malaysian Consumers Association (FOMCA), Datuk Dr Marimuthu Nadason, who urged the government to provide cash aids until the situation improves. On top of that, he called for some form of educational and health assistance as well. “Right now, there is a lot of medicine that is unavailable in the market. This is a dangerous situation for the B40 and also the M40,” he said.

(Image: New Straits Times)

Finally, Datuk Dr Marimuthu stated that the government should hold off on abolishing subsidies in the current economic downturn. Instead, this step should be taken only when prices of goods have stabilised within the country, ensuring that the people are not burdened by it. This comment came following the government’s move to
reverse its decision to remove the ceiling price for chickens
, just days after saying
it will do so
.

Aside from that, the government also announced a provision of
additional Bantuan Keluarga Malaysia (BKM) cash aids of up to RM100
 for the B40 income group last week, in hopes that it will help them cope with the rising cost of living. This assistance is set to be disbursed in stages starting from today, along with the second BKM payment (Phase 2), and eligible individuals can check their payment status via the
dedicated BKM website
.

(Source:
Malay Mail
)

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About THE AUTHOR

Alex Cheong Pui Yin

Alex Cheong Pui Yin

Previously covered recruitment-related stories and had a short stint as a copywriter for the property industry. She subsequently developed an interest in investment and robo-advisors.

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6 Obvious Signs That You're About to Get Fired

Good companies often let employees know when they are on thin ice but not all do. In fact, in some industries, there simply isn’t enough time or capacity for compassion.

If you’ve received official warnings or reprimands, you might expect that your company is none too pleased with you. Still, it’s not impossible for unsuspecting employees to be given the boot as well, especially if the company is in a downturn.

So if you’ve been feeling a little insecure at your post, it’s time for a bit of reflection. Have you experienced two or more of these 6 tell-tale signs? If the answer is yes, don’t stress yourself just yet; instead, use this list to shape up before it comes time for you to ship out.

1. You’ve Seen a Job Posting for Your Current Job

This is probably the most telling sign of all. You don’t have to be Sherlock Holmes to figure out that something is amiss, particularly if yours is a small company and there isn’t room for more than one in your position.

Rather than throwing in the towel, request for time with your superiors to discuss and find out if you are indeed part of their plans for the future.

2. Your Co-Workers Are Treating You Differently

Although meant to be confidential, bad news travels fast and perhaps with lighting speed in small-to-medium-sized firms. Your co-workers may know what’s coming for you, especially the ones in HR.

Colleagues being extra nice or
unnecessarily mean
 might have you scratching your head and of course this could mean nothing at all. But if it persists, take the time to find out if there are any issues that need to be resolved and do your best to quickly get in front of them.

3. Your Responsibilities Are Being Diminished

Everyday there’s less for you to do, and you’re feeling redundant. This may happen while the company reshuffles duties so your departure will leave a minimal impact.

Initially, it may feel good to have your responsibilities ease up but at the end of the day, your progress is being impeded. Having little to do means that your skills aren’t being sharpened and your growth potential is going to waste.

It’s important to seek out work if none is being handed to you; it’s possible that your supervisor is just too busy to notice you haven’t much on your roster.

Be helpful, supportive and suggest ways in which you may be of service. Demonstrate your talents and give yourself the opportunity to shine.

4. You’re Being Left out of Most Meetings

If the end is nigh, then there isn’t much reason to keep you updated on the company’s current issues, now is there? Moreover, confidential information is not customarily revealed to employees without clearance and that includes those about to be let go.

If you were regularly included in discussions and conferences but are now being shut out, it could be a foreboding sign. Speak with your colleagues or immediate bosses to unearth the reasons why your presence is not needed. If no one can give you an explanation for the abrupt exclusion, it might be time to talk to HR about your concerns.

5. Your Performance Reviews Are Getting Worse

Bad reviews mean that your company isn’t seeing you in the best light. So when it’s time for tough cuts, guess who will most likely end up on the chopping board?

If these reviews are true reflections of how you have been conducting yourself at work, then you’ll need to upgrade your performance before you find fault with your company.

As you discuss the review, try to identify specific areas that require improvement and seek advice on how you can fix it. Ask if there are courses you can attend to upgrade your skill set or if a mentor is available to work with you. Do whatever it takes and show your company that you are worth every Ringgit they pay you, if not more!

6. Your Work Environment Has Become Hostile

Your boss is being difficult, your leave is always denied, and your suggestions are never considered. For some this is the norm, but if this is new for you, then do consider the reasons. Some companies will go on the offensive by
subtly forcing you to quit
 rather than firing. This way, they avoid having to deal with the fallout of a costly termination, especially if the employee has rights to a severance package.

Employees who dispute their termination or aren’t entitled to severance money may seek out legal action which causes even more trouble for the employer who has to expend resources to deal with litigation and possible damages. Sadly, it’s just easier for them to get you to leave voluntarily.

Look On the Bright Side

Even if you do notice these signs, don’t immediately assume the worst. It could merely reflect on-going changes within the company.

But if your suspicions on an imminent dumping turn out to be true, stay focused on the positive! A bright new career prospect may be on the horizon just waiting for you to grab it by the horns.

You also need to keep your resume ready and in top form, so if opportunity knocks, you’ll be prepared to seize it. Be sure to seek out friends and professional contacts for referrals as this is one of the
most effective ways to get hired
. And if you know of someone who is facing a similar issue, you can help out (and earn a nice reward too) by referring them to
any of Malaysia’s top job search sites
 out there.

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Desiree Nair

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EPF Releases Belanjawanku, An Expenditure Guide for Malaysians

The Employees Provident Fund (EPF), in collaboration with the University of Malaya and the Social Wellbeing Research Centre (SWRC), has launched Belanjawanku, a comprehensive expenditure guide for different Malaysian households. It is one of the Government’s efforts to improve the people’s knowledge in financial literacy, allowing them to make informed and effective financial decisions.

Commenting on the launch, Finance Minister Lim Guan Eng said that
a low financial literacy rate
 is one of the reasons why a lot of Malaysians end up in bankruptcy. This claim is based on research by S&P Global Literacy Financial (2014) which estimated that Malaysia’s financial literacy rate stands at 36% compared to 59% in developed countries.

Belanjawanku is an expenditure guide for Malaysian households on how much they should spend a month to have an acceptable living standard. It was created based on actual spending patterns by urban households in Klang Valley. An acceptable standard of living is defined as having enough for your basic needs while being actively involved in activities with your family and community. Basically, it is the amount of money needed each month to allow people a happy and meaningful life.

Basic Assumptions of Belanjawanku Households

The Belanjawanku spending guide is created based on several basic assumptions, including that the people are generally healthy, are fully using the public healthcare services provided by the government, and their average travel distance to work is 30KM.

Belanjawanku Monthly Estimated Budget

Single (Public Transport User)

The guide estimates that you need a minimum of RM1,870 if you are single, using public transportation, and renting a room. A good chunk of the budget estimate covers food and housing – a similar pattern across the different household types in this guide. Unlike car owners that need to allocate more on Transportation and Annual Expenses (vehicle maintenance, road tax, and insurance) in their budget, a single public transport user (who is using LRT, monorail, KTM, or bus) can save quite a lot in that area.

Single (Car Owner)

If you are a single car owner, your estimated monthly budget jumps by a good RM620 to RM2,490 due to owning a car. Most of the other categories remain the same but the budget estimate that covers
Annual Expenses
 will increase from RM50 to RM140 as a car owner.

Married Couple (Without Children)

For married couples without children, the monthly recommended budget is RM4,420 which translates to RM2,210 per person. Thanks to the assumed shared responsibilities, this budget sees a RM280 decrease from that of a single car owner. The decrease also comes assumptions like married couples would prefer cooking to eating out.

That said, their transportation and housing costs is quite high based on this guide, which translates to an overall higher budget per month.

Married Couple (With One Child)

For married couples with one child, the total household expenses goes up by RM1,310 compared to married couples without children. Most of the increase comes from additional expenses on childcare and food, with smaller additions from other categories.

Married Couple (With Two Children)

Having a second child will cost another RM890 a month, increasing the budget to RM6,620. Similar to the previous household, the biggest chunk of the increase comes from childcare spending.

Elderly Couple

Meanwhile, the minimum monthly budget estimate for elderly couple is RM3,090, which means each person needs RM1,545. This amount is higher than the RM1,000 per month savings that EPF suggested for basic savings requirement for every retiree. This huge difference signals a pressing need to put more attention into retirement planning – the EPF itself has stated that more than half of Malaysians near withdrawal age do not even get to save RM1,000 per month to use in their retirement.

Discussions And Future Plans

The EPF and University of Malaya said this spending guide will act as a reference to measure the effectiveness of policy changes and assess the impact of outside events on Malaysian living standards. Meanwhile, the general public can use it as a budgeting or planning guide, and companies can use it as a salary benchmark.

However, the figures shared in Belanjawan wasn’t well received from all parties, with some claiming that the budgets are not indicative of actual expenditures – especially in housing and transport. Datuk Abdul Halim Mansor, Malaysian Trade Unions Congress (MTUC) president
disputes the figures
 and said that Bank Negara Malaysia’s living wage estimation (RM2,700) is more representative of the people’s needs compared to what Belanjawanku states (RM1,870). He added that the EPF did not take many things into consideration such as cash allowance for parents and Grab and taxi expenditure.

Meanwhile,
other economists said
 that the RM1,870 budget for singles with no car falls short from the correct figure, suggesting instead the figure to be at least RM2,300 a month. However, RM1,870 per month should be enough for a person living outside Klang Valley.

Moving forward, the EPF and University of Malaya will periodically publish revised estimates of this spending guide. The full guide in PDF can be downloaded
here
.

(Source:
EPF
)

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RHB Offers Up To RM40 Cashback Daily For Dining, Grocery Expenses

RHB is currently rewarding its credit cardholders with up to RM40 daily cashback for dining and grocery expenses, as well as another RM20 daily cashback for online food and grocery deliveries – provided they meet the minimum spend requirement specified. Available from today until 30 December 2022, these rewards are offered to all RHB cardholders.

Here are the key details of the offers:

Deal 1: Up to RM40 daily cashback on dining and grocery expenses

Credit cardholders can earn 20% cashback on both their dining and grocery expenses each day by meeting the following minimum spend requirement:

Dining
: RM10 cashback each day with a minimum spend of RM50

Groceries
: RM40 cashback each day with a minimum spend of RM200

In other words, you can earn a total cashback reward of RM50 per day if you perform both qualifying transactions – which is quite generous. As always, the rewards will be provided on a first-come first-served basis, with RHB allocating RM800 and RM1,000 each day to be disbursed as cashback for dining/food and grocery, respectively. This translates to 80 cashback winners per day for dining, and 25 winners for groceries.

If you do win, you will receive your cashback reward within two to four weeks after the end of the campaign period.

Deal 2: RM20 daily cashback for food or grocery deliveries

Simply spend a minimum of RM200 in a single receipt for food and grocery deliveries using your RHB credit cards, and you’ll earn RM20 cashback (equivalent to 10% cashback). Unlike the first deal, however, you do not get to earn separate cashback on each spend category.

Accordingly, each cardholder will be able to win a maximum cashback reward of RM20 every day – all the way until 30 December 2022. This means you can technically earn a maximum cashback reward of RM1,820 if you fully tap into the benefits of this deal. Meanwhile, RHB has earmarked a total of RM1,500 to be awarded to winners each campaign day (75 winners per day).

The rewards earned will also be credited into your account within two to four weeks after the end of the campaign, if you do manage to win.

***

RHB credit cardholders will be automatically enrolled for these promos as long as their accounts are in good standing, with no need to register. For those with multiple cards, all your qualified spending/entries will be automatically tracked for the campaign as well.

Finally, note that the food and grocery cashback deals above are actually part of two larger campaigns, namely the
Everyday Deals campaign
 and the
E-Commerce campaign
. Depending on which campaign you’re looking at, you can further tap into them to earn cashback for various other eligible transactions too, such as petrol and travel expenses, utilities and government payments, as well as e-wallet reloads.

(Source:
RHB
)

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Alex Cheong Pui Yin

Alex Cheong Pui Yin

Previously covered recruitment-related stories and had a short stint as a copywriter for the property industry. She subsequently developed an interest in investment and robo-advisors.

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PeKa B40 Healthcare Protection Scheme Begins Today

(Source: The Star
)

The PeKa B40 healthcare protection scheme is commencing today, as announced by the Deputy Health Minister Dr Lee Boon Chye.

A healthcare protection scheme designed for the lower-income B40 group, PeKa B40 covers a wide range of common medical treatments. “The benefits include medical examinations for hypertension, diabetes, kidney problems and cholesterol; medical aid such as artificial lenses for cataract, wheelchairs and hearing aids; and incentive to complete cancer treatment,” Dr Lee said.

Bantuan Sara Hidup (BSH) recipients and their registered spouse aged 50 years old and above are automatically eligible for PeKa B40. There is no registration required for them to benefit from this scheme

On top of the medical coverage, there will be a transportation incentive of RM500 for patients in the peninsula and RM1,000 for those in Sabah and Sarawak to seek treatment at public hospitals or clinics.

For this initial phase, the scheme is estimated to benefit 800,000 of the low-income group. The government has allocated RM100 million for this scheme this year, and Dr Lee is confident that the scheme would benefit more people in the future.

For a list of participating clinics, you can go to
PeKa B40 official site
.

(Source:
The Star
)

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    john pengiran

    3 years ago

How to apply PeKa B40? I am 64 yrs old and my spouse is 61. retired and no more income other than ad hoc jobs and as a freelance Trainer (nowadays after COVID-19 no more new request/ jobs) and bantuan.

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PayPal To Enable The Use Of Bitcoin And Cryptocurrencies On Its Network

(Image: Bloomberg/David Paul Morris)

PayPal customers will soon be able to carry bitcoin and other virtual coins in their online wallet, as well as purchase from 26 million PayPal merchants with cryptocurrencies. This comes as the online financial service provider has now enabled the use of cryptocurrencies on its network.

According to PayPal, the new service will first be rolled out for US accountholders, allowing them to buy, sell, and hold selected cryptocurrencies (bitcoin, bitcoin cash, ethereum, and litecoin) in their PayPal wallets in the upcoming weeks. Following that, the company plans to expand this service to its peer-to-peer payment app Venmo and other selected countries in the first half of 2021. Meanwhile, the ability to make payments with cryptocurrencies will be launched early next year.

Today, we are announcing the launch of a new service that will enable customers to buy, hold and sell
#Cryptocurrency
 directly from their PayPal account.
https://t.co/QS6JRmG9hs

pic.twitter.com/uHBatfZkbF

— PayPal (@PayPal)
October 21, 2020

As one of the largest US companies to now provide access to cryptocurrencies, PayPal’s adoption of bitcoin and other virtual money may help these currencies win more favour among users. The company has 346 million active accounts around the world, and processed US$222 billion (RM920.3 billion) in payments during the second quarter of 2020 alone.

Aside from that, PayPal believes that its new system for processing cryptocurrency payments can address some of the limitations that these currencies have, allowing them to gain wider acceptance as a form of payment. Despite having been in circulation for more than a decade, bitcoin and other cryptocurrencies are not widely accepted for payments for several reasons. One key reason is their volatility; the value of cryptocurrencies can rise and fall quickly depending on various factors. This poses a risk for merchants and shoppers, who rely on the stability of currency to transact. Additionally, cryptocurrency transactions are slower and more costly than other mainstream payment systems.

(Image: Reuters/Robert Galbraith)

PayPal says that its new system will assist with some of these issues as payments will be carried out with traditional currencies, whereas merchants will receive the payments in virtual coins. Meanwhile, PayPal will manage the risk of volatility that accompanies the cryptocurrencies. “We are going about it in a fundamentally different way to make sure we provide the maximum amount of safety to our merchants,” said the president and chief executive officer of PayPal, Dan Schulman.

Schulman also commented that PayPal is working with central banks and thinking of all forms of digital currencies and how the company can play a role. This is following announcements from some central banks regarding plans to develop digital versions of their currencies.

PayPal has secured the first conditional cryptocurrency licence from the New York State Department of Financial Services, and is working with Paxos Trust Company, a cryptocurrency firm, to enable its cryptocurrency service.

(Source:
The Sun Daily
)

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Alex Cheong Pui Yin

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Previously covered recruitment-related stories and had a short stint as a copywriter for the property industry. She subsequently developed an interest in investment and robo-advisors.

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Getting Your Credit Report (CCRIS) From Bank Negara

Time and time again, we’ve been reminded about the importance of having a good credit report. Last week, we created a
simple guide on clearing your name if you had been blacklisted by Bank Negara
. But what if, you never knew you were blacklisted in the first place? Having a squeaky clean credit rating is important but even if yours is a little blotted; the first step in clearing it is by finding out what is causing your rating problems.

Financial institutions or creditors are not the only ones allowed to view your credit report. You can too! It’s time to face your financial report card as we’re going to show you how you can obtain your credit report or CCRIS report.

How do I get my credit report?

Getting you credit (or CCRIS) report is as simple as heading down to
Bank Negara (BNM)
 with your MyKad. Unlike the days of old where you’d have to wait in line and apply for the report at a counter; everything is now machine operated. All you need to do is find the credit kiosk and insert your MyKad into the slot. You will then be prompted to place your right thumb for fingerprint identification. And that’s really all you need to do. Just like the EPF kiosk; your credit report will print in a jiffy and you’re done!

If you can’t make the trip to BNM, you can e-mail/fax your application in writing together with an
application form
 and supporting documents such as a copy of your MyKad or passport (for non-citizen), driver’s license, and utility bills. As your report will be sent to your nearest financial institution, this process will take up to 4 weeks and will be sent to your home. It’s not as convenient as heading to a kiosk but not everyone may be in close enough proximity to a
BNM office or branch
.

To keep track of your credit performance, it is advised you obtain your credit report once in every 6 months. The photo below shows how your credit report will look like.

Why should you get your report?

Having your credit report means you will be able to keep track of your financial scores and will be able to remedy anything that may be amiss. Especially if you were a guarantor for anyone or if you have a large number of loans to keep track of. Avoid keeping yourself in the dark and don’t be afraid to know your credit ratings and performances. Because only you can make a difference through prompt payments and full settlement. At least, when your new credit card application gets rejected, you know what causes it and who should take responsibility over it.

Now that you know how easy it is to get your reported printed; there’s little reason not to get it done. But we’re not at the end of the blacklist story yet – there’s a reason we’ve mentioned how being a guarantor puts you at risk of blacklist and in our next article in the BNM series, we’ll tell you exactly what it means to sign up as a guarantor.

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