2009 What Do you Want to Achieve?

This year 2009, what do you want and how to achieve it? Whether you are a student, entrepreneur, employee, government servant & etc, we have to plan for our goal. Below is some of theory that I will plan for my goal in 2009.

I will use the theory of how to plan for a S.M.A.R.T Goals, the goals must be:

Specific
Measurable
Attainable
Realistic
Timely / Tangible

Specific - The goal must be specific rather than general goal. Below four "W" will lead you better planning your goal.

Who: Who should do it ?
What: What you should do?
Where: The place.
Why: What reason make you to plan this goal?

Measurable - The goal must be able to determine, such as I want to save extra RM100.00 per month, then after 6 months need to measure it, whether you achieve it?

Attainable - The goal must make it come true. Do your abilities, skills, and financial capacity to reach it? If not, how to make it happen?

Realistic - The goal must be justifiable by yourself, do you willing to do it? You can not set a goal that, I want to earn RM1million per year, but in realistic you just work 8hour office work with your employer and take a salary of RM2,000 per month.

You must beleive that the goals is acheivable, not matter how you must achieve it.

Timely - A goal without time frame is equal to zero. We must set a time, when we must acheive it.

Tangible - When we acheive a goal, it must be able to feel the satisfication. Goal must also be concrete,real and attainable.

Happy planning for your goals. In the market the is a lot of open source that can assist you to setting up the goals. Not matter you plan your goals in a paper, computer,mind and etc, the most important is we must acheive it and fulfill the theory of S.M.A.R.T then we will feel the satisfication.

Happy New Year 2009

Dear Friends,

May you & your family well & happy always.

Let all the Malaysian put more effort and cross our fingers to overcome this global economic slowdown.

We Malaysian can do it, we will do the best!!!

OTL

Summarise from Bank Negara Malaysia Press Statement release on 30 Dec 2008

Monetary and Financial Developments November 2008 Highlights of the Press Release

1) Commercial Bank lowered the fixed deposit (FD) rates for tenures between 1 and 12 months were within the range of 3.02% to 3.53% and the base lending rates (BLR) in response to the reduction in the Overnight Policy Rate (OPR). The average lending rate (ALR) decreased to 5.98% in November (6.01% in October).

2) On gross terms, however, financing raised by the private sector was slightly lower at RM53.1 billion. Total loans outstanding expanded at an annual growth rate of 10.7% as at end-November.

3) During the period 1 November to 26 December 2008, the ringgit appreciated by 2.4% against the US dollar. The ringgit, along with most regional currencies, had earlier depreciated in November due to portfolio outflows caused by the global de-leveraging process and heightened risk aversion amid the global financial turmoil.

4) The ringgit appreciated against the pound sterling (13.6%), but depreciated against the euro (-6.3%) and the Japanese yen (-6.1%). Against regional currencies, the ringgit depreciated against the Philippine peso (-0.5%) and Singapore dollar (-0.2%), but appreciated against other regional currencies in the range of 2.2% to 3.6%.

5) Investor trimmed their long position in US dollar following the reduction in the Fed Funds rate to 0% - 0.25% on 17 December 2008.

6) Inflation 5.7% in November 2008.

7) Broad money, or M3, expanded at a faster annual rate of 12.5% in November or increased by RM8.8 billion,reflecting the higher provision of credit to the private sector and expansionary Government operations.

8) Net non-performing loans (NPLs) of the banking system at 2.4% of total net loans.

9) Banking system capitalisation remained strong with a risk-weighted capital ratio (RWCR) of 12.5%.

10) The international reserves of Bank Negara Malaysia amounted to RM336.4 billion (equivalent to USD97.7 billion) as at 28 November 2008. As at 15 December 2008, the international reserves amounted to RM330.4 billion (equivalent to USD96 billion). The reserves position is sufficient to finance 7.8months of retained imports and is 3.4 times the short-term external debt.

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Comment :

Lower FD will affect the return for the deposit holders; for those retire and rely on interest rate they may receive lower income but need to bear the higher expenditure for their daily life. The inflation is at 5.7% base on BNM information. In reality it might be higher, depend on the person spending or expenses.

As November financing by private sector still at a stable level, with the global recession, do the Malaysia bank still will continue provide loan at double digit growth? Loans outstanding expanded at an annual growth rate of 10.7% as at end-November.

Although MYR appreciate 2.4% against USD, but if we compare with Dec 07, MYR actually depreciate around -5% against US. MYR depreciate roughly -23.2% against Japenese Yen from Dec 07. And compare with our neighbor country Singapore’s SGD we depreciate around -4.9% from Dec 07.

Inflation may come down, but the other issue is do we have the purchasing power? The rural area people is highly rely on plantation, nowadays Crude Palm Oil (CPO) and rubber commodity price coming down a lot, to maintain their daily expenses also a problem.

On November Broad money, or M3 still at the stage of expand, but BNM Malaysia also mention that foreign outflows continued to exert a contractionary impact on M3 and for the Nov 08 net foreign assets outflows around 12.1 billion from Oct 08 22.7 billion.

Malaysia international reserves also decrease starting from this few months, as this may indicate more outflows money. Do these mean the foreign investors’ lack of confidence to us? Why they would like to outflow the money? Where do they put the money?

2009 Most and Least Fuel Efficient Vehicles

The Most Efficient Overall Vehicle:

Toyota Prius
Engine(s) : Toyota Hybrid System II
Gasoline 1.5L DOHC I4 VVT-i
57kw (76 hp) @ 5000 rpm
115 Nm (85 lb-ft) @ 4200rpm
Electic: 500 V
50kw (67 hp) @ 1200 rpm
400 Nm (295 lb-ft) @ 0 rpm
AT-PZEV:
Net power: 110 hp (82kw)

Transmission(s) 1-speed planetary gear
Wheelbase 2700mm
Length 4450mm
Width 1725mm
Height 1490mm
Curb Weight 1325kg



Source:
1. http://www.fueleconomy.gov/
2. http://en.wikipedia.org/wiki/Prius

Merry X'Mas & Happy New Year 2009

Dear my Friends,

Merry X'mas & Happy New Year... May you & your family be well, happy & free from worry in the coming year... And hope all of us can over come the global recession...

Tough time never last, tough people do!!!

OTL

Lower EPF, Higher Tax? Do you mind?

Malaysia government allow EPF contribution minimum contribution to reduce from 11% to 8%. The lower contribution to EPF meant to help families cope the inflation and over come the global recession, so that they have more cash in the monthly budget.

The EPF reduction will apply automatically next year, for those who prefer to maintain their contibutions at 11% will need to fill-up KWSP 17A (AHL) through their respective employers. Or the may download it through KWSP website strating from Dec 2008.
KWSP 17A Form

You will still wondering whether you should cut the contribution stating from Jan 2009? Several matters or question you need to consider:

1) With lower contributions of EPF mean lower savings in your retirement account, how do you utilise the extra money?

2) For every RM1 less that you save in your EPF account, you stand the pontential to lose RM61 on retirement if assuming EPF pays 5% p.a dividend for the next 20years. Do you mind?

3) If assume, that you reduce the contribution and have extra RM50/month for the next 2 year you will get extra RM 1,200 but you will end up losing RM 3,050 for the next 20 years. Are you satisfy with that?

4) How much your EPF contribution per year? If your EPF contribution at 8% exceed RM6,000 per annum, then you can ignore this question. If you EPF contribution at 8% is below RM6,000, please take note for it.

Employees EPF contributions & Life Insurance are tax-deductible up to the combined limit of RM6,000 per annum.

If assume that your annual salary are around RM54,550.00 (RM 4545.83 per month) and without any other income & bonus. Then your EPF contribution at 8% is RM4364 while at 11% is RM6000 (round up figure).

And assume that, you do not have any further deduction beside personal relief RM 8,000 and eligible EPF contribution at the cap of RM 6,000.

If your EPF contribution at 8% your taxable income will be RM 42,186 and tax payable is RM2459.18, while at 11% your taxable income will be RM 40,550 and tax payable RM2246.50, and the difference tax payable is RM212.68 . With the extra RM1636 additional money in your pocket, you end up need to pay extra RM212.68, around 13% of the RM1636, since the tax bracket at 13%.

5) In short, if you are tax payer (eligible to pay tax after deduct all the tax deductable expenses), and your EPF contribution add up life insurance premium sum is below RM 6,000 , you may end-up pay more tax, depend on how much your tax bracket, the higher you are the higher tax you pay.

Will you still consider to lower your EPF contribution? Do you benefits from this government move? Government encourage us to spend, so spend as much as you can... Haha... Boost up our economy... ...

2009 Malaysia Growth may hit 8-years Low

According Morgan Stanley recent report, Malaysia trade surplus will condense, as slowing in demand and lower commodity price.

Mr. Deyi Tan Morgan Stanley economist predicted that South East Asian nation may grow 0.5% in 2009, while Malaysia goverment still expect our nation growth rate will at the rate of 3.5%. The economist also forecast that the trade surplus may narrow to 17.1% in 2009 from 20.6% 2008. Whose figure should the people rely on? We are the net export country, and the demand for export will decrease and the price of our commodity come down.

Malaysia growth model of trade is depend on commodity resource and fiscal pump-priming. With the currenct stituation, demand for export slow down, palm oil & crude oil price come down more than 50%, it is tough for us to maintain the trade balance.

On 11th Jan 2007 according to AFX news, Malaysia's second finance minister Nor Mohamed Yakcop remain confident that Malaysia economic growth will achieve around 6-6.5% in 2008 despite higher crude oil price at the point of time. He also mentioned that revenue from the state-run oil comapny Petronas will be better for with the higher oil price, but where is the money Petronas spend when the time Petronas enjoy higher oil price?

As Malaysia growth may be slow down, when the good time do the government keep the money? If yes, will the government spend it?




Reference :
1) http://www.btimes.com.my/Current_News/BTIMES/articles/20081219105257/Article/index_html
2) http://www.forbes.com/markets/feeds/afx/2007/11/01/afx4287510.html

Investment Behavior during Market Bull Run!!!

For those invest in shares, we will familiar with Investment Guru Mr. Warren Buffett, one of his quote "You only have to do a very few things right in your life so long as you don't do too many things wrong.”

2008 KLCI reach the highest points around 1,500 and lowest around 800, in drop 46% in 10 months time from the top. This is a huge different, if base on today KLCI around 880 to achieve 1,500 it need to increase around 70%.

Back to Warren Buffett quote, we only have do a few things right such as sell the stock at the peak point and hold the cash, and wait for the right timing.

More worse is, we buy the stock at the peak point, at that time we can see a lot of stock transaction even the housewives, students, pensioner, small businessman and etc went to "invest" shares. More crazy is, the housewives after went to wet market also rush to securities firm just to buy shares. They just speculated the stocks, they may not even know what stocks they bought, they are so happy that time because they are making money at that moment. After the shares start to drop, they still longing that the stock may go up again. Until reach the certain level, they started to complain that shares can not buy and come out a lot of their own terminology. Just want people to agree them, that we should not buy shares.

Will those claim themselves as investor repeat their "investing" style once again in the future? Or will there more and more people behave like them, buy stocks while the stock reach the peak?

We understand the theory of, while people is greedy for the shares we should sell it, while people is fear for the shares we buy it. Beside that, we should also look at the fundamental of the shares, are the company in healthy conditions?

After we understand the theory, how do we execute it? Your action affect your destination.

Happy Investment!!!



Reference / Source :
1) http://www.bloomberg.com/

New Honda City coming to Town

Today I saw an advertisement, Honda launch the New Honda City, it look so nice, but yet to see this real car soon.

I just get the performance information from Honda Malaysia website:

1.5 litre i-VTEC engine

Maximum power:

120PS [88kW]@6,600rpm, quite powerful with this range size of car
Maximum torque:
145N•m [14.8kg•m]@4,800rpm

The 1.5-litre i-VTEC powerplant in the all-new City provides classleading performance and fuel economy. Achieving lower fuel consumption without compromising on engine output and even environmental considerations. The engine is compliant with Euro 4 level emission standards.

DBW technology controls the engine and 5-speed automatic transmission to give you smoother shifting for reliable acceleration and linear driving performance at regular speed range.

The class-leading 5AT offers efficient speed range with its wide and close gear ratio. Power start acceleration is briskly achieved for an exhilarating drive. With fuel economy and quietness on high speed in mind, the excitement never stops. Its automatic lock-up control does its job smartly as well as to improve response. Fuel wastage is reduced during low speed with its extended lock up.

On the road price : RM 84,980.00 [if your insurance Non Claim Bonus (NCB) is 0%]

This is around RM10K more than it rival Toyota Vios , but this is the latest model, as the Vios already quite sometime in the market.



Reference / Source :
http://www.honda.net.my/models/city_performance.cfm

When will Malaysia Government Implement Good and Service Tax (GST)?

Last week on one occasion when I met up my uncle, we have a talk regarding to Good and Service Tax (GST) in Malaysia, as this is new to Malaysia although it was newly acquainted in 2005 Budget. GST was implemented in Singapore since 1st April 1994. GST had been implemented in countries such as New Zealand, United Kingdom, Republic of South Africa, Canada, Pakistan and etc.

On that time I thought, what for we have so many taxes, since we have personal income tax, if those who own vehicle need to pay road tax, those who own house need pay Land Assessment Bill (cukai tanah) and etc. Is this GST makes us pay more? A burden to the people? Enough!!! The people (rakyat) is having a hard time, did government know this? With GST, it will replace the existing sales & service tax, that seem not much affection to us in certain points.

After listened to my uncle points of view, I think that implementation of GST is not really a "bad" things, as long as government spends the money wisely and re-distribute the money fairly, and this is the 1st time I agree that government pay back the money, previously I object that government should subsidise or pay money to rakyat. Why I will say so, I will explain in details in the this article later. In fact I think the earlier implementation of GST, the better to Malaysian.

GST (also known as Value Added Tax) is a multi stage tax, unlike the the current sales tax which is the single stage tax. Although GST involve multiple stage tax but it only cost to the final consumer.

For example, a consumer would like to purchase a wooden table, and standard GST rate apply:

1. Woods supplier:
Sales price : RM50.00
GST 5% : RM 2.50
Total : RM 52.50

Payment to Government:
GST Charged : RM 2.50
Less GST incurred: RM 0.00
GST Payable : RM 2.50

2. Furniture Manufacture:
Sales price : RM 150.00
GST 5% : RM 7.50
Total : RM 157.50

Payment to Government:
GST Charged : RM 7.50
Less GST incurred : RM 2.50
GST Payable : RM 5.00

3. Furniture Wholesaler:
Sales Price : RM 200.00
GST 5% : RM 10.00
Total : RM 210.00

Payment to Government:
GST Charged : RM 10.00
Less GST incurred : RM 7.50 (2.50+5.00)
GST Payable : RM 2.50

4. Retailer :
Sales Price : RM 250.00
GST 5% : RM 12.50
Total : RM 262.50

Payment to Government:
GST Charged : RM 12.50
Less GST incurred : RM 10.00 (2.50+5.00+2.50)
GST Payable : RM 2.50

5. Consumer :
Sales Price : RM 250.00
GST 5% : RM 12.50
Total : RM 262.50

As we can see for the above example, the GST will only cost the final consumer to pay the tax of RM12.50. If we assume woods supplier cost is RM 0, the woods supplier make RM 50.00, the furniture manufacture profit RM 100.00, the wholesaler profit RM 50.00 and the retailer also make RM50.00.

The discussion paper of tax review paper mention a few terminologies which we need to understand:
1. Input tax
2. Output Tax
3. Standard-rated supplies
4. Zero-rated supplies
5. Exempt supplies

That I will not elaborate much, as I would more concern is, how will this benefit to Malaysia. I strongly believe when GST implement the personal tax may be reduce, will this a good news to us?

The implementation of GST is good to us. As we know, currently we are using tax return form to file our annual income tax. If a person under declare his income, how efficient the LHDN to detect or in detecting the under declare? We earn is to spend. If the govt. guards the tax revenue on the consumer spending, it is more difficult for the people to evade paying the tax. You can't go to KFC tell them, I am not going to pay the sales tax, they will kick you out.... Haha...

But the problems are, if we reduce the income tax, the rich will pay less income tax. With the implementation of GST, the sellers will not care whether the consumer is rich or poor, they will just bill you with the GST. According to tradition, we have the idea of the rich pay more, the poor exempted from paying tax... haha... this one should be no argument.. LOL... maybe some of the rich guy will not happy, but they have to do so, or else LHDN will come after them. In general (rakyat) will object the GST, they will say with GST they need to pay more on goods, while the rich can save for income tax, poor become lesser money since they pay the GST, they will complain how can the government do so? But if with the government proper control and wise management of the tax, the government can actually pay back the money to the poor.

How come I will say the government pay back money to the poor, with the proper control of GST, we can cut down the tax evasion. The rich, who make a lot of money they sure would prefer luxury life, buy big bungalow, condominium, cars, jewellery, branded wears and etc. Then we tax them from there. Of course for the super duper rich people, they will also incur in income tax as the government will not totally expel off.

Government may set certain rules, under certain income the government will pay back some money to them in order to reduce their burden of GST.

From the example that I give, if the woods supplier under declare the income tax definetly the furniture manufacture will not agree. Why?
1. Woods supplier sell the woods to Furniture Manufacture RM 50.00, but if it declare it at RM 30.00.
2. Woods supplier will pay only RM30.00 at 25% corporate tax, the other RM20.00 evasion.
3. Furniture manufacture will object for that, why I pay RM50.00 you declare RM30.00, sooner furniture manufacture will sell the product in RM 150.00, it seem that it make profit of RM 120.00 in stead of actual RM 100.00. And the input GST incurred is lesser, Furniture manufacture customer have to pay more GST. Now the Furniture manufacture have to pay the tax for the Woods supplier.
4. So in this example, it seem that the buyer will check & balance for the purchasing. Rather than current tax system, the buyer just buy the goods, how you declare is your matter.

My opinion is that, if we implement the GST the government tax revenue will increase due to the efficient of collecting the tax, it is a good news. With the extra money, will the government spends wisely and making sure it brings benefits to us as the nation people?

1 Billion New Units of ASW 2020

Recently Amanah Saham Nasional Berhad (ASNB), wholly-owned subsidiary of PNB opened for subscription one billion new units Amanah Saham Wawasan 2020 (ASW2020).

ASNB said in order to maintain the fair distribution, maximum investment of 10,000 unit per account holder for the new subscription of one billion units. ASW 2020 is a fixed price unit trust that open to all Malaysian which six months and above are eligible to invest , it subject to the quota of 51% bumiputras and 49% non-bumiputras.

This ASW 2020 become quite a hot topic among the family members, friends, colleague, housemates & etc. Malaysian perception is, this unit trust is at the fixed price and the distribution from year to year is better than "FD" interest rate. If I have extra money, why don't I put in inside ASW 2020. That is the reason why I also invest on it.... hehe..

From ASNB website it mention that, ASW 2020 objective is "to provide reasonable level of regular distribution income to Unitholders from investments in a selected portfolio of authorised investment." And it categorise as equity fund and type as income.

The ASW 2020 distribution for the past few years as below:
ASW2020 return for 2006 - 6.80%
ASW2020 return for 2007 - 8.00%
ASW2020 return for 2008 - 7.00%

If benchmark with Malaysia bank FD interest rate is around 3.00% to 3.80%. ASW 2020 is much better than them.

Is this kind of investment benefits to the unit holders? If you ask me, I will definitly say "Yes". But are this kind of investment benefits all the Malaysian? This depend how you view on it. If a poor Malaysian, they not even have enough money to buy the house, nice food & cloth, car and etc do they have money to invest? :-)

As the recent annual report of ASW 2020 as at 31 Ogos 2008, they is 1,410 unit holders who own more than 500,001 and above units, which around 25% of the total fund, average around 1.4million units/holders.

If we take simple mathematics calculation , average around 9,836 units/holder for the whole ASW 2020 fund. From here we can see how big the difference between those rich investors and those average investors. Is this fair enough? Anyway this the the regulation set out by ASNB, like it or not is there.

Have you start to invest in ASW 2020?