Right move for the planned car prices reduction 20% ~ 30% in Malaysia

 

The Government's plan to reduce car prices gradually by between 20% and 30% within the next five years is the best mechanism for consumers and the automotive industry without disrupting the ecosystem, said an industry expert.

“Five years is the right timing to reduce car prices because a sudden reduction would impact the second-hand car industry,” Malaysia Automotive Institute chief executive officer Madani Sahari said.
He said although the car price cut plan had recently received wide publicity, the exercise itself started last year with some popular car brands reducing their car prices by 2% to 5%.

“The Government has had the car price reduction plan in the yet-to-be-announced National Automotive Policy since 2011 and had started to implement it since last year in a silent way,” he said on the sidelines of a forum on “Business Time Insight The National Automotive Policy” here yesterday.

On Tuesday, Prime Minister Datuk Seri Najib Tun Razak reiterated the Government's commitment to gradually reduce car prices by 20% to 30% within the next five years.

Madani said the car price reduction did not involve a cut in the excise duties, as Malaysian companies in reality were only paying about 40% of excise duties, even though it hovered at around 65%-105%, depending on the segment, due to value-added activities undertaken in the country.

“Completely-knocked-down (CKD) cars which are assembled in Malaysia basically have value-added activities, and are therefore receiving the privilege of lower excise duties. “Based on our calculations, most of our CKD cars enjoy excise duties in the range of 40%,” he said. Meanwhile, Volkswagen Group Malaysia managing director Dr Zeno Kerschbaumer said the car price reduction policy showed the Government's effort to put consumers into the focus of their attention.

“This perfectly matches our (Volkswagen's) policy to continuously bring the latest technology to customers at the best price possible. I think it's a big message to consumers and gives them the confidence that the Government was giving the consumers interest in the focus of their policy,” he said.

He said the move was also in line with the principle that the customers had to drive the policy. “We need to leave all our options to the customers, and the customers in the end need to decide what better fits their requirements,” he said. - Bernama

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Car prices in Malaysia will be reduced gradually 

Car prices in Malaysia will be reduced gradually

Car prices will be reduced gradually until 2017, says International Trade and Industry Minister Datuk Seri Mustapa Mohamed.

As outlined in the 13th general election of the Barisan Nasional manifesto, Mustapa said the government had promised to trim car prices between 20 per cent and 30 per cent over five years.

“Infact, since October last year, the price of 10 popular models in the country have come down an average 7.3 per cent,” he told reporters yesterday after attending the ministry’s monthly gathering, the first after Mustapa was re-appointed to the Cabinet.

He said the price reduction was part of the market process as a result of more efficient and competitive players in the automotive industry.

Mustapa said the price reduction exercise should be done in an orderly manner so as not to affect the industry’s growth and existing jobs in the automotive and related industries.

“As such, we have had discussions with automotive manufacturers and they are aware of ongoing negotiations to conclude a free trade agreement which would be implemented soon,” he said.

JF Apex Securities in its research note on Monday said the ruling coalition will likely take some time to implement car price reduction considering the potential outcome which would dampen the national carmaker, Proton’s market share.

The research house said that a feasibility study needed to be done on the overall impact so as to avoid disruptions to the automotive ecosystem.

“We do not foresee changes for months to come while awaiting update from the revised National Automotive Policy,” said JF Apex.

In the meantime, Mustapa said industry players must now be ready to step up their competitiveness edge in tandem with the industry which was becoming more competitive in Malaysia and abroad.

Besides bringing down car prices, the government was also reducing traffic congestion by setting up a more efficient transport system in the country, he added. — Bernama

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Right move for the planned car prices reduction 20% ~ 30% in Malaysia

Too many graduates in Singapore, multiple skills are important

Singapore leaders start to talk about the importance of having multiple skills rather than just obtaining a degree.

A NUMBER of political leaders have appealed to Singaporeans not to place too much faith on university degrees in an apparent effort to manage public expectations.

This is the clearest sign yet that the authorities are expecting a sustained period of relatively low economic growth and slower employment opportunities.

Singaporeans, especially parents, who have long regarded the university degree as a key to a good life will likely be shocked.

For decades, the government has been en­couraging youths to study hard or lose out in a competitive world. This apparently spells a change in education strategy.

It has also thrown more light on a baffling revelation made earlier by a senior Education Ministry official to American diplomats.

This revelation was that the global economy embraced by Singapore has made it much less conducive for over-educated societies.

Having a large number of graduates, once thought crucial for Singapore’s prosperity, is now considered not conducive to the changing manpower market, at least in Singapore.

However, none of the political leaders – the Prime Minister and three ministers – has mentioned another reason for the excess of graduates – the mass intake of foreigners.

Led by Prime Minister Lee Hsien Loong and National Development Minister Khaw Boon Wan, the leaders
are now advising Singaporeans to consider non-university routes to success.

Khaw said: “You own a degree, but so what? You can’t eat it. If that cannot give you a good life, a good job, it is meaningless.”

He added that Singapore could not have an entire nation of graduates.

“Can you have a whole country where 100% are graduates? I am not so sure. What you do not want is to create huge graduate unemployment,” he said.

Then it was the turn of Education Minister Heng Swee Keat, who said that a good qualification alone does not guarantee a career, let alone a job.

Thirdly, Acting Minister for Social and Fa­mily De­ve­l­opment Chan Chun Sing said it is not the degree or diploma that is most important for graduates, but the ability to learn a different set of skills.

“The soft skills in life have to be acquired and have to be continuously refreshed. If not, even with the best degree from the best universities in the world, we may find ourselves obsolete one day.”

They were taking the cue from Prime Minister Lee who had earlier told polytechnic students that getting a degree is not the only option. He encouraged them to work for a few years or start their own business.

“You will gain experience and understand yourself better and then be better able to decide what the next step will be,” he said at Ngee Ann Polytechnic’s 50th anniversary celebration.

All these political leaders have served to clarify a comment made by a senior education ministry official that the government does not encourage more Singaporeans to get higher education.

As revealed by Wikileaks last year, assistant director of planning Cheryl Chan told the United States diplomats that it would instead cap graduate enrolment rate at 20%.

The reason, she said, was: “The labour market does not require too many graduates.”

She also admitted that only 23% of Singaporean students who entered primary school would ever complete a four-year tertiary education, a figure far below that of the United States (50%) and Taiwan.

This gave confusing signals to a worried population, which probably ranks as one of the most enthusiastic in Asia about getting a degree for their children.

Many continue to make great personal sacrifices to help their children and are unlikely to abandon this just because of what the government says. The new emphasis is for multiple skills and drive.

So far, the government has not reduced the places in university but has instead increased them. The number of universities were raised to five with a total enrolment of about 13,250 students, with about a third being foreign students. Cutting down tertiary education is obviously not in the cards – but “discouragement” is now taking place.

The ruling party is dependent on the scholarship system to recruit its future leaders, and it is still bent on attracting bright foreign students to its shores.

In addition, nearly 18,000 Singaporeans are studying in foreign institutions, mostly in Australia, the United States and the United Kingdom. According to local media reports, the market is unable to absorb the large number of graduates coming onstream.

One report quoted a McKinsey & Co study as saying that almost half of the graduates are holding jobs that do not require a degree.

The over-supply is having a dampening effect on graduates’ salaries (again no mention of the foreign arrivals), it added.

In the past 10 years, undergraduate numbers have doubled.

The effort to get Singaporeans to abandon the paper chase for their children is almost like mission impossible. Many have begun to spend thousands of dollars a month on private tuition for their kids starting as young as seven years old.

What is the new drive aimed at? One possibility is that it is trying to reduce the number of below average students from joining the paper chase but still encouraging the bright ones to carry on.

Economically, Singapore has barely escaped another technical recession. A revised first quarter GDP shows a rise of 1.8%. Gone are the days of double-digit growth, probably never to return.

So what work can non-graduates do? One suggestion from Prime Minister Lee is: “Become hawkers.”

Singapore plans to build 10 large hawker centres. It’s a chance to develop entrepreneurial skills in a business no Singaporean customer can avoid for long – if the products are good.

INSIGHT: DOWN SOUTH
By SEAH CHIANG NEE

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High salary and high performance require book smart and street smart!

Heera: ‘Qualifications bring credibility to the job’.

WHEN it comes to hiring suitable talents, it would be ideal to have a potential employee with the relevant qualifications as well as one that has practical experience.

But what if there was just one vacancy available – and the organisation had to choose between the two candidates? In a hypothetical situation between a candidate that’s “book smart” (has the relevant qualifications) and one that’s “street smart” (has the practical experience), who would be the more likely choice?

More importantly, is a high-paying job unattainable for those without formal education? Or is there still a chance for a candidate that does not have that oh-so-important diploma or degree?

The book smart candidate

Heera Training and Management Consultancy principal consultant Heera Singh believes a candidate with the relevant qualifications would generally be “technically competent” in that job.

“It certainly brings credibility to the job. For example, if someone has a Masters in Human Resources (HR) Management, then the qualification enhances his credibility,” he tells StarBizWeek.

“It also assists greatly in the recruitment and selection of employees. For example, if a job is advertised and does not specify technical qualifications, but only states practical experience required, then every Tom, Dick and Harry will apply and this will ensure lots of extra work for the HR department,” Heera says.

Leaderonomics finance and human resources leader Ang Hui Ming concurs that having the right qualifications adds more credibility to an individual seeking employment – at least on paper.

“Generally, the employee might probably have a wider knowledge-base theoretically of the function he is hired for and has some form of certification of his ability to understand at least the basic concepts of the function,” she says.

However, it has often been said that what one learns in theory can be quite different in practice.

Heera believes that the “book smart” candidate, though technically qualified, still lacks experience – an important element that may be vital in certain jobs.

Ang: ‘Being technically qualified doesn’t mean they can do the jobs well’.

“Being technically qualified does not mean that they can do the jobs well. They may be more academically inclined rather than hands-on.

“They may be technically qualified but may not like the job. Many people, for example, go to university and do courses that their parents want them to do, or courses which their friends are doing. All they want to do is to get their qualifications.”

Ang, meanwhile, feels that not having the relevant experience is not a big deal – as it is something that can be acquired over time.

“There is no real disadvantage, experience is to meant to be built anyway.

“At most, it’s the lack of reality. If a person is all academic, it is uncertain how he or she will handle real life situations where the theories they learn needs to be adapted to the situation, environment and culture of any given place and time.”

The street-smart candidate

The advantage of hiring an employee with experience means that they can do the job straight away with minimal disruptions, says Heera.

“There is minimum need for any job orientation and at interviews, you can ascertain the type of practical experience they have and see if it suits or meets your job expectations.”

Ang concurs: “Generally, the employee might have deeper expertise in the function and would have experienced real-life situations in the function. This makes the person more adaptable and adept to handle similar natured situations more wisely and calmly.”

“The type of experience is important. If they have the wrong type of experience, then it is of no use to the company. For example, if a person has worked in a HR capacity in a government department, then his experience may not necessarily gel with what is wanted in the HR department in the private sector.

“Experience can be a bad teacher as it is always difficult to mould a person who has the experience but has picked up some bad habits along the way.”

Ang feels there’s no real disadvantage to hiring someone that has no paper qualifications but is oozing with experience.

“At most, probably a possible lack of what’s new in the market, or what’s happening on a global scale or what new technology is out there that can better equip him or her in the function.

“This is only an assumption as people that are hands-on can still learn market trends and future technology if they read up and do research on their own. There is just no paper qualification – that’s all.”

Does it really matter?

According to an article on online investment site Investopedia, “Is It Better To Be Book Smart Or Street Smart,” its author, Tim Parker, points out that one does not need to have the relevant paper qualifications to be truly successful.

“Steve Jobs, co-founder of Apple, is widely regarded as one of the best businessmen of his day. He didn’t have a college degree and neither did Steve Wozniak, the other founder of Apple.

“Other successful businessmen without college degrees include Dell Computer founder Michael Dell, Microsoft founder Bill Gates and Virgin Brands founder Sir Richard Branson. People all over the world have found success without a college degree,” he writes.

But is that the rule or the exception, he then asks.

“Unemployment data shows that more than 8% of the population looking for a job (in the US) can’t find one.

However, for those with a bachelor’s degree, the unemployment rate is only 3.9%. The unemployment rate is 13% for people without a high school diploma.

“A college degree doesn’t guarantee success, but Bureau of Labour Statistics unemployment statistics show book smarts more than double your chances of finding a job.”

Of course, having an employee with both the relevant paper qualifications and practical experience would be the optimum choice, naturally.

“This would definitely be an ideal combination,” says Heera.

Ang says having both qualities would indeed be a plus point, adding however that having both relevant qualification and practical experience does not make one a best employee.

“It’s a person’s character, values and attitude that makes him or her a good employee. Qualifications and experience are all things that can be accumulated as long as one has the right attitude and desire.”

By EUGENE MAHALINGAM eugenicz@thestar.com.my

Invest earlier, get real estate-tic

Income earners in their 20s are fast making their presence felt in the property market. But getting there takes discipline.

HE acquires one property a year. He has been doing this for the past five years. Today, at the age of 38, his one regret is that he didn’t start earlier, when he was in his 20s.

Entrepreneur JS dishes out advice that he himself takes seriously. He tells young people all the time that they should invest in property from a young age, or the money that could have gone into real estate would be frittered away.

He believes that investment in property delivers the best returns. Apart from property, where else can young investors leverage on a 10% investment for a stable future gain? Any other transaction, whether in silver or shares, requires payment in full.

As real estate is based on supply and demand, one has greater control over it compared to paper investments like unit trusts and shares.

JS believes that if a person is determined to own a piece of property, he can do so when he is in his 20s.

His formula is simple: the minute you start working, you should start saving for a property.

Put aside a sum of 20% of your salary every month for two years towards a property. But the challenge will be to live within the balance 80%, especially if it means giving up Starbucks, clubbing, smoking and shopping.

If your take-home income after several years of working is RM4,000 and you put aside RM800 a month, by the end of 24 months, you would have saved about RM20,000.

And that is good enough for a 10% down payment for your first foray into the property market, probably a small apartment in the fringe of the city.

While the cheapest high rise properties in inner Petaling Jaya and Kuala Lumpur are in the region of RM400,000 to RM500,000, it is still possible to buy properties close to RM200,000 in outer KL areas like Puchong, Sentul, Cheras, Seri Kembangan, Serdang, Cyberjaya, Bangi, and in Shah Alam.

With Klang Valley’s population at 7.2 million and expected to rise to 10 million in another seven years, there will be a constant demand for living quarters.

If you are renting out your property (the average yield is about 5%) you will probably have to top up the rental you collect on your property to cover your loan repayment.

As a simple ballpark, the loan repayment would be estimated at RM1,200 a month based on 20-year loan for a RM200,000 loan.

But after a year or two, you can increase the rental and eventually your property will be self-financing.

One father who is completely sold on getting his kids to start young is Ten. He got his daughter, 29, and son, 25, to fork out RM13,500 each to purchase their respective three-bedroom apartments in Puchong for RM135,000 more than a year ago.

His daughter sold her unit a year after the purchase for RM170,000. After the real property gains tax and other costs, she was able to make a net profit of RM25,000. The capital appreciation on her apartment was about 20%, not including her rental income that year.

With that, she now has close to RM40,000 (seed money plus profit) for her next – and higher value – property. In fact, the senior manager of a multi-national is now eyeing a RM600,000 condominium in Petaling Jaya and Ten is fully supportive of her next purchase (only a 10% downpayment is needed for the first two existing loans).

A great believer in property investment, Ten, a retiree, is all smiles these days as his total property investment which was valued at RM3mil in 2010 has since more than doubled. His own house, a double-storey corner lot in Section 17, which he bought for RM63,000 in 1978 after working for five years, is now worth about RM1.5mil.

The phenomenal increase in property prices in the past few years, shares the CEO of a realty firm, is unprecedented. He attributes it mainly to a prevailing low housing loan interest rate of about 4.1%, which is barely above the 4% government housing loan rate.

According to a report by Oriental Realty and Zeppelin Real Estate Analysis Ltd, the residential property market in Malaysia has seen an overall price appreciation of 78% from the first quarter of 2000 to the third quarter of 2011.

While the CEO thinks that buying a property or two for a young adult is a good form of forced savings, he cautions that one must buy within one’s means and be careful with one’s cash flow.

“What if you lose you job tomorrow? Don’t overstretch. As the Chinese saying goes, don’t try to cover 10 woks with nine covers,” says the real estate man who has been in the business for more than 30 years.

A tip he shares for “good deals” is to look out for “leftover” property – often balance or unsold units developers want to clear cheaply or bumiputra units – which are not advertised but handled by the bigger real estate agents. Usually, there will be innovative schemes to make the units affordable. New launches are a good place to start too.

Sometimes, it’s also a fine balance between patience and research and paralysis by analysis.

Leigh, 35, was on the lookout for a property to buy when he was in his 20s. But every time he found something in a new development that he liked, his real estate businessman father would pooh pooh it.

“The first property I looked at was a studio apartment going for RM90,000. My dad was not keen as it was a new area. Today, it’s worth RM250,000.”

On his fourth attempt in 2009, he managed to buy a condominium unit still under construction in Subang at a good price from someone who had an overseas posting. He sold it two years later at RM600,000 and pocketed more than RM200,000.

When Leigh bought his current home in Mont Kiara, he took his time and studied the area, went to the ground and spoke to owners instead of researching only via online portals.

“Most of the owners were asking for RM580,000 to RM620,000. So I told real estate agents that if there were any units going for below RM550,000, please alert me,” says Leigh who joined his father’s realty firm four years ago.

After three months, he got his break when a Singaporean owner wanted to sell his unit and Leigh paid RM530,000 for it!

His advice to young investors: do your homework. Study the master plan; look into the background of the developer, quality and design of the product. Be clear on what you want: are you looking for capital appreciation or rental income? If you need the rental income to cover the bulk of your monthly housing loan, you would choose the latter.

For an investment of RM20,000 plus a housing loan, your return after three years upon completion of the property could be more than two fold.

And the key to your first property – based completely on your own finances – is to save for it.

When it comes to saving, don’t worry about the amount, worry about the habit. Says a financial coach, if you’re an employee and you’re not earning the income you need to make that first property, look at how you can add value to your boss to get that increment. If there’s a will, there’s a property waiting….

Common Sen-se by LEANNE GOH

Note: A recent chat with a 29-year-old colleague was enlightening. She has already sold one property, bought the one she’s living in and has invested in another. Among 10 of her friends, four have already bought property. 

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