A Capitalist's Life

Where to get government grants to start-up business in Malaysia?

2009-09-19T14:57:00.006+08:00

My friend had attended an investment conference in Kuching, Sarawak a few weeks back and picked up this interesting booklet on the government grants available in Malaysia and where to apply for them. For everybody's benefit I have scanned it and uploaded it online. Download it here.

Hope the information here would greatly help anyone with an entrepreneurial idea here in Malaysia!

McKinsey Youth Leadership Academy Program

2009-05-05T19:02:00.003+08:00

A few weeks back I applied for a special youth program by McKinsey & Co called the Youth Leadership Academy (YLA). Applying via e-mail, my application was shortlisted and I was invited by the McKinsey people for a one-on-one interview last Saturday at their KLCC office, which was situated on the 57th floor of the KLCC Tower 2. The meeting went quite well and I felt that my odds were quite good of getting in.

True enough,yesterday evening, fate came knocking at my door; or more like it came ringing on my phone. At the time I wondered who was interrupting me while I was doing my maths revision. I saw that it was from an unknown 012 number and when I picked up the phone I instantly recognised the voice on the other side. It was Mr. Dago, one of the McKinsey people who had interviewed me last Saturday at their office, and he congratulated me as he informed me that I had made the cut for the YLA program. I was ecstatic.

Apparently I was one of the 22 successful youth applicants (all of whom were Malaysian undergraduates, either doing their year 1 or year 2 of their course) and he mentioned that they were most impressed by my leadership experience as the IET Student Chapter Chairman on campus and of my plans to establish The Capitalist Society NGO and a Renewable Energy Society on campus.

The YLA program was created to train and mentor young and visionary Malaysian youths into successful future leaders. I was most attracted to the program because it offered a way for me to expand my social network and, more excitingly, each successful applicant would be assigned a mentor either from McKinsey or from the industry. A good mentor would be able to offer me guidance in my current endeavors and might even be able to open doors for me in the industry, hopefully bringing my vision of establishing a renewable energy venture closer to reality.

Being a part of the program now, my plans for The Capitalist Society NGO and the Renewable Energy Society will now be able to be accelerated.

The Global Credit Crunch Explained

2008-08-08T15:32:00.002+08:00

I came across thing interesting video made by the BBC on the global credit crunch, check it out. Also, they have other interesting information about the global credit crunch here.

Twenty Habits of the World's Most Valuable Businesses

2008-07-26T20:58:00.004+08:00

1. Operate in a large or growth market.
2. Have unique, timely products.
3. Sell only leveraged products ( i.e. not selling time ).
4. Have residual income.
5. Have great systems.
6. Great customer service.
7. Powerful brands.
8. Not dependent on any one person.
9. Usually first in the market place or a market leader
10. Attracts the best and brightest people.
11. Reward based on performance not longevity/time.
12. Have high margins.
13. Have few real competitors.
14. Keep innovating, with a flow of new products and services
15. Have an investor entry and exit strategy.
16. Have a big customer database.
17. Have great marketing.
18. Anticipates customers' needs.
19. Always adds values to customers' experience.
20. Educate before they sell.

Interesting Quotes

2008-07-22T12:09:00.003+08:00

" To turn $100 into $110 is work. To turn $100 million into $110 million is inevitable. " - Edgar Bronfman

" Men will never be free until the last king is strangled with the entrails of the last priest. " - Denis Diderot

" The only way I can get to sleep at night is by imagining a secret cabal of highly competent puppetmasters who are handling the important decisions while our elected politicians debate flag burning and the definition of marriage. " - Scott Adams

" History does not repeat itself. At best it ryhmes. " - Mark Twain

" Nearly all men can stand adversity, but if you want to test a man's character, give him power. " - Abraham Lincoln

" God is on everyone's side ... and in the last analysis, he is on the side with plenty of money and large armies. " - Jean Anouilh

" In the absence of justice, what is sovereignty but organized robbery? " - St. Augustine

* For more information on the quoted persons, google them *

Birth of the Trans-Sarawakian Railway

2008-07-11T15:10:00.004+08:00

Recently the Borneo Post newspaper reported that a railway would be constructed in Sarawak for the SCORE project. Sarawak is sorely in need of better transport infrastructure, especially with the state's aim of becoming an industrial powerhouse in the 21st century. The benefits of railway transportation include the cheap transportation of bulk goods over long distances ( ideal since Sarawak is a large state), its capability of transporting huge loads at a time, immunity from traffic jams and it's relative predictability when compared to road transport (considering that the current road infastrutcure here is not something to be desired).

Even though the railway project will mostly be concentrated in the central region of Sarawak, where the SCORE project is situated, it was mentioned that the development of the railway would go on "beyond the year 2020". Could this mean the construction of a Trans-Sarawakian railway linking Kuching in the South to Miri in the North? The planned railway thus far is said to be 320km long, but who knows how long the actual railway could be. In an era of rising costs of fossil fuels, the possibility of a Trans-Sarawakian railway certainly seems plausible.

Ideas are a dime a dozen

2008-05-16T21:45:00.004+08:00

Back January 2008, I attended the first National Youth Congress, held in PWTC. One story told by one of the speakers that day had a deep impact on me. It went something like this (if I remember correctly):

"I once went to India on a business trip. On this business trip, I was supposed to visit two companies, where one of them was much larger than the other. I decided to visit the smaller company first. After finishing my negotiations one of the directors of the smaller company, he asked where I was heading to after this? I told him I was to visit another company, the larger one. The director of the smaller company then gave a warning to me that the larger company was well known for stealing other people's business ideas. Even so, I still decided to visit the larger company. Upon arrival at that company, on top of the door of it's head director, there was a plaque. It read 'Ideas are nobody's property'. "

What I learned from this story is if we are so paranoid of people stealing our so-called brilliant idea that we refuse to tell others about it, then in the end, we achieve nothing. In fact, if we don't intend to act on it, it's probably better if someone did steal your idea, if only to see it become reality.

Have you ever questioned yourself when you see successful entrepreneurs out there who built their business around a simple idea? So simple you sometimes wonder to yourself "Why didn't I think of that?". Well, in all likelihood, any idea that he/she or you came up with may have also already been considered by many other people.

Often the most difficult part is not coming up with the idea itself,but its implementation. One could have a brilliant idea, but without proper implementation, even if you somehow came up with a way for permanent life or space warp technology, you'll be bound to fail. Implementation of an idea involves planning the next move, getting partners and seeking resources to turn the idea into a reality. Many factors have to be considered, many of which are beyond our control, yet if you are so paranoid as to not even let your pet dog know of your idea, then you have already failed.

The June 13 Incident

2008-05-11T17:12:00.003+08:00

It is entirely possible that the world economic crisis and the US Sub-prime mortgage fiasco in 2008 may have been foreshadowed by what I’d like to call the June 13 incident in 2007, specifically, what happened after that day. On that day, the interest-rate spread (the difference between the interest rates of two different investments) between the main junk-bond index (a.k.a. the dross standard) and the ten-year US Treasury Bond (a.k.a. the Gold Standard) shrank to just 2.4 (2.4%) percentage points ( 7.7% (junk bond) – 5.3% (Treasury Bond) = 2.4%). What does this basically mean?

Well, junk-bonds are considered far riskier investments than treasury bonds, so logically, since we are assuming more risk, we should expect higher ROIs (return on investments). Such a low interest-rate spread between these two meant that investors were in fact overpaying for riskier investments.

After the June 13 incident, many investors around the world suddenly woke up to the reality of the financial situation after the many dream years of strong global economic growth since 2003. Since the June 13 incident, investors have demanded higher returns for riskier investments and some even retreated back to US treasury bonds even though the interest rate was dropped to 5.2% and other blue-chip corporate bonds.

Many commercial banks in the US, caught off guard by this sudden shift in investor behavior, saw their risky sub-prime mortgages bond values plummet into the abyss as investors did not want to buy them anymore, causing them to lose billions of dollars. In a desperate measure to remedy the situation, the banks were suddenly less keen to lend money to people at low interest rates as compared to before, in order to prevent their balance sheets from collapsing further. This means that it is now much harder for businesses and consumers in the US to get loans since the ‘cost’ of capital is now much higher than previously.

The interest-rate spread has been growing ever since the June 13 incident. As of April 2007, the spread was about seven percentage points (7%). Since the world’s economic engine for the past few years was largely fueled by the American consumer spending beyond their means on cheap credit; economic growth now could be presumed to be much slower as American consumers begin to spend within their means.

How exactly did we get ourselves into this mess? Well, ironically, one of the major factors is world economic growth. After the gloomy days of September 11, 2001, the world economy rebounded from 2003 onwards and entered a period of booming economic growth.

The economies of China, India and Asia, which are more savings-oriented than the West, provided a flush of cash to world financial systems, making capital cheap and plentiful.

Now, usually, economic growth is a good thing, but not when it is coupled with easy money. Investors figured that with capital so cheap and abundant, and asset prices ever increasing, they could not lose! A good example is the sub-prime mortgage fiasco in the US, where people were loaning money to buy homes that they really couldn’t afford, but thought that they could due to ever increasing property prices in the US, which actually turned out to be a bubble. Cheap money also gave consumers the illusion that they were richer, so they borrowed more to fund their more lavish lifestyles.

Of course, such a situation cannot last very long, so after the June 13 incident, many investors around the world came to their senses. The result is that we are now potentially in the midst of another global economic crisis. The important lesson that we can gather from here is to watch for interest-rate spreads in the future, as an indicator for the value of ‘capital’ and as a possible sign of a looming economic crisis.

Free Airfares on MAS !?!

2008-05-08T15:37:00.007+08:00

In a time where airlines around the world are struggling due to rising jet fuel costs, it is nice to know that at least some have been coping well and are even trying their best to relieve some of their customers' financial burdens. Below is an excerpt from MAS's website of a letter from MAS's CEO, Dato' Sri Idris Jala, whom I am proud to say is a fellow Sarawakian, and is famous for his turnaround of Malaysia's former ailing national airline.

4th May 2008

Dear Malaysians,

I have an important announcement from Malaysia Airlines.

Everyday, and all around us, we are all feeling the pinch of how everything is getting expensive. We, at Malaysia Airlines, have decided that it is time we lowered our fares so that Malaysians can continue to travel.

We recently declared that Malaysia Airlines is transforming into a World’s Five Star Value Carrier and we promised that you will be able to enjoy 5 Star Service at a low price. Many people thought it would be impossible. Well, not anymore! Today we are ready to deliver on that promise.

LCCs operate by keeping their costs really low and passing some of these savings to passengers. But this means that passengers have to accept some sacrifices.

We believe there is a way for passengers to enjoy low fares and Malaysian Hospitality.

For the first time in our history, Malaysia Airlines is offering Everyday Low Fares. From the 5 th of May, we will offer zero fares on all our routes within Malaysia. Later we will offer very low fares on our regional routes within ASEAN. We have put aside up to 30 per cent of our seats for these special Everyday Low Fares.

To get these special fares, you only need to take 3 steps:

Step 1: Go to our website at malaysiaairlines.com as these fares are only available via the internet.

Step 2: You must buy the ticket at least 30 days before flight departure.

Step 3: Remember these tickets are non-refundable and the flight dates cannot be changed.

What we are now offering gives everyone a win-win situation. It helps us to meet our business objectives. And it provides our customers an excellent deal – you get to enjoy the best of both worlds – really low prices plus our 5 Star services – our food and beverages, entertainment, luggage allowances and other benefits that come with traveling on Malaysia Airlines.

I would like to personally invite you to click on malaysiaairlines.com

Yours sincerely,

Dato’ Sri Idris Jala
Managing Director/CEO
Malaysia Airlines

*Do take note that although you don't pay for the airfare, you are still obligated to pay for the airport tax fee, but at least you still get prices that are way below the normal rate

Superweapons of Ace Combat ( Part 1 )

2008-05-07T18:12:00.011+08:00

Stone Henge

Featured in the PS2 game, Ace Combat 4: Shattered Skies, this superweapon is essentially an array of giant rail guns which was originally designed to take out asteroids on a collision course with earth, but was later captured and used as a massively powerful and long range anti-aircraft weapon. Having a range that can almost cover an entire continent, this seemingly invincible superweapon was capable of taking out large numbers of aircraft flying above 2000 ft over a large swathe of sky. As if one of them were not overkill enough, an array of 8 of them were created making it even more powerful than otherwise. The area surrounding the weapon itself is littered with AA guns and SAM sites, and it even has an airbase for the deployment of interceptor fighter jets. It's failure was that a small group of fighters, flying below 2oooft, in almost zig-zagging and random flight paths, would have been capable of penetrating it's powerful attack volleys. It was eventually destroyed by a single Ace pilot in the game.

SCORE one for Sarawak!

2008-05-07T08:00:00.004+08:00

Sarawak Corridor of Renewable Energy (SCORE) is one of the many regional development corridors in Malaysia, and is being pioneered currently by the Sarawakian government, specifically by the newly created RECODA (Regional Corridor Development Authority). As a Sarawakian myself, I cannot help but feel proud that this plan aims to bring my beloved state into an industrialized and first-world style state by 2030.

The core industries that are prioritized for development are as follows:

Oil-based industry
Aluminium industry
Timber-based industry
Steel industry
Palm-oil industry
Tourism industry
Livestock industry
Aquaculture industry
Marine Engineering industry
Glass-manufacturing industry

The 3 main advantages cited for SCORE's success are the availability of large swathes of land for development ( Sarawak being the largest state in Malaysia, covering about 40% of Malaysia's total land area), cheap and abundant hydro, coal-based and natural gas-based energy sources, and Sarawak's strategic location between the economic behemoths of North Asia ( including China) and India, as well as Australia to the south.

SCORE's area of development is focused upon Sarawak's central region, itself divided into three main areas, north, central and south. These areas have been designated as 'growth nodes' and are as follows:

Similajau - Heavy Industry Centre (Northern Node)
Mukah - Smart City and Central Nerve Centre (Central Node)
Tanjung Manis - Industrial Port City (Southern Node)

I sincerely hope that this plan will eventually work out and bring much needed development and prosperity to Sarawak. Some people may be pessimistic of the prospects, even the plausibility, of such a grand scale project, but as with all great undertakings, the first step is to believe in the lie, the so called 'vision', and only then, after much determination and hardwork, will the 'vision' eventually materialize itself into reality. I call upon all Sarawakians, as their patriotic duty, to wholly and fully support this plan that it may come to fruition and pave the way for a glorious future for Sarawak and it's people.

Books for Aspiring Malaysian Capitalists

2008-05-06T10:35:00.004+08:00

Often times when we go to the local bookshops, we find that one of the largest sections there is the investment and wealth-related section. Too often though, these bookshops stock capitalistic-themed books which are not at all relevant to the Malaysian market, usually catering to the US market or the UK. I have, however, come across some books which I have found very useful and extremely relevant to the Malaysian market for those aspiring Malaysian capitalists out there.

Books to consider for Real Estate Investment

This book I predict, will become a classic in Malaysia, as it is one of the most comprehensive and systematic guides to beginning real estate investment I have ever come across in Malaysia. In 'How to become a Property Millionaire', Azizi Ali shares his own experience in real estate investing in this book and I like it because it makes a lot of sense and he doesn't try to be too fancy; although, his language can be a bit off sometimes and some of his humour can be a little awkward since this is one of the first books he wrote, but nothing too serious. The best part of this book is that he has devised a systematic and objective way of evaluating a property for investment and has developed a system for tenant management. Be aware though, that this book is actually an updated version of his older book called 'How to become a millionaire landlord' which is essentially the same except for the colour and some added chapters.

After you're done with Azizi Ali's book, it is a good idea to read these two books by local author Renesial Leong, 'Your Tenant, Your Jewels' and 'Property Jewels', which both deals with content relating to their respective titles. I would categorize her books as more for the intermediate property investor as she talks about investing in the many different types of properties available in Malaysian, such as land, factories, shophouses etc, in comparison to only landed residential property in Azizi Ali's book. She has also come up with many ideas and suggestions which can help you during your property investment ventures. However, her books, I feel, does not give you as solid a foundation as Azizi Ali's book, but it does help to complement and supplement the latter's book.

In Stock Market Investing, I like to divide it into two main categories; fundamental investing and technical investing. Fundamental investing, which is favored by investor Warren Buffet, is investing in a company's stock based on the company's actual performance, irrespective of it's stock price. Usually this will involve analyzing a company's annual report for the past few years to see if the company is consistent and profitable and then buying the company's stock when it is selling at a discount. On the other hand, technical investing, which is favored by hedge fund investor George Soros, is investing in a company's stock without regard for the company's underlying performance but by looking at the trend and history of a company's stock price movement. This technique is usually much more difficult to do than fundamental investing but can be a way to let you earn from stocks relatively quickly. Usually, this technique involves considering the odds of something happening which could either make the stock price move up or down.

Here I will recommend some books written by local authors dealing with the two different categories of stock market investment.

Books to consider for Stock Market Investing

Books on Fundamental Investing

Written by local author Ho Kok Mun, the books 'How to make money from your stock investment even in a falling market' and 'Essential Stock Investment strategies to make money even in a falling stock market' ( yeah, I thought his book titles were long winded too ) are a good way to start learning about the techniques involved in fundamental investing. I would advise to start with his first book, the 'How to...' one, because in it he goes through the techniques and formulas you will need to analyze a company's annual report. Once you're done with that book, you can graduate towards his second book, the 'Essential Stock..' one . In this book, he goes into the more subjective part of fundamental investing, where he advises you on how to look beyond just a company's annual report and to see the bigger picture, such as how popular are the company's products in society and is the management of the company good etc.

Book on Technical Investing

Although you might see Azizi Ali's name written on this guy's book, he did not really contribute to the content of the book except for praising the author and sharing a little bit of his experience. I also have to admit that the author, Bill Wermine isn't really a local author, he is from the US ( if I'm not mistaken ), however he does claims to have been investing in the Malaysian market for over a decade and his advice is sound. In this book, 'How you can get rich Swing Trading' he teaches you some basic techniques you could use to start on your journey of technical investing. His book provides you with the knowledge you will need to analyze candle stick charts ( a popular kind of chart for analyzing stock price movement ) and provides a few good examples. Although he advises you to create a system for your investing, he doesn't really go into much detail and prefers that you develop your own system, which would involve a lot of trial and error. The candle stick charting software that he recommends in his book, I feel, is quite redundant and expensive; and if I'm not mistaken, as long as you have a registered account with any local brokerage companies ( now known as 'Investment Banks' for some reason ), you can download charting software from their website or use a web-based version of it from them. Thus far I am using OSK's brokerage service, and I find their system to be adequate. Some advice from my own personal experience with technical investing; first, start with a capital of at least RM10k to avoid your profits to be erroded and your losses to be amplified; by having to pay brokerage fees, and second, make sure you don't misread your charts!!!

There you go. These are the books that any aspiring Malaysian capitalist should read and I can attest that I have read each of these books myself. Of course, these books won't turn you into a Donald Trump or Warren Buffet overnight, I admit, I myself am still learning too, but it will provide you with some solid grounding you will need when you start investing in the future.

Become a "Goldmember"

2008-05-04T16:45:00.000+08:00

The title occurred to me when I recently re-watched the 3rd installment in the comedic movie series of Austin Powers. Public Bank has just recently announced their Gold Investment Account which allows you to own gold outright in an affordable manner with convenience and minimal hassle.

Although I would normally advocate anyone to invest at least some part of their wealth in gold as a good hedge against inflation, with gold prices hovering some where at about US$1000 per troy ounce these days, I think we should probably wait for prices to come down to more reasonable levels first.

Global Food Crisis of 2008

2008-05-04T16:05:00.000+08:00

In 2008, after years of good crop yields, massive food surpluses and world economic growth, we have entered into the first global food crisis of the 21st Century. Years of agricultural prosperity dating back to the sixties and seventies have resulted in many countries around the world to neglect agricultural growth for the more sexy and prestigious, industrial, technological and services economic growth.

The major factors cited in various media as to what have caused this crisis are as follows:

1. The rapid rise of oil and energy prices which has more or less screwed up the logistics of commercial agricultural production, since agricultural machines cost more to buy, run and repair, food more costly to transport and oil based fertilizers and pesticides cost more to buy.

2. Increased demand for food from India and China as they grow ever more wealthy these days due to their rapid economic growth. Also, with rising economic growth, comes a change in their diet to include more meat, which means that even more food will be diverted from humans to feed livestock.

3. Bad harvest due to weather related events such as the droughts in Australia, a major global food supplier, recently.

4. The shift from growing food crops to biofuel crops, which divert more food away from humans and encourage more wild speculation on the world's commodities market.

5. Reduced investment over the years in agriculture worldwide, causing less supply to be available.

The Economist (April 19th-25th 2008 Edition) has a good cover story about this food crisis and the BBC has compiled some interesting facts and figures in colourful diagrams and graphs here.

May Day 2008

2008-05-04T15:39:00.002+08:00

The biggest holiday celebrated in the former Soviet Union, Labour day is now a globally celebrated holiday. Meant to celebrate the humble and lowly worker, the main driver of any business and nation's economy, it does, however, strike me as some what of a celebration of communism, which could be bad news for capitalism. I'm not saying that the workers of the world should not be recognized or celebrated, by all means, they should be! There are some marxist groups which could come to exploit this holiday as what happened in Malaysia recently.

As reported by Giam Say Khoon, from theSun newspaper, dated 2 May 2008, 200 people attended a Labour day march which was organized by the May One Committee, a coalition of union workers (which i thought was illegal in Malaysia) NGOs and some politicians. They made the following "demands" to the Party Rakyat ( I believe this is the name of Malaysia's coalition of opposition parties ):

* The enactment of a minimum wage policy and the abolishment of the minimum wage policy;
* For maids to be recognized under the Employment Act 1955 and International Labour Organisation Convention;
* the automatic establishment of a workers union;
* work places free of sexual and gender discrimination and the establishment of the anti-sexual harrasment act;
* protection be expanded to migrant workers in the Employment Act 1955;
* an end to talk on free trade agreements; ( Gasp! )
* that settlers not be evicted and the establishment of an affordable housing scheme;
* stop the privatisation of utilities and hospitals;
* abolish the Internal Security Act (ISA), Emergency Ordinance and Universities and University Colleges Act 1971;
* a government that is clean, transparent and free from corruption and cronyism; (what government isn't ?!?)
* the enactment of a freedom of information act.

I worry especially about the parts where they wanted to set a minimum wage, establish workers unions and abolish free trade! These seem like very communistic things to do and could only potentially hurt the economy of this country more. Being a free market idealist, and pro-globalist, the best way to help any economy is to open it up, rather than to shut itself out, and of course you need a government that can regulate it well enough too.

Back to blogging after extremely long hiatus

2008-05-04T15:28:00.000+08:00

I cannot explain it, but somehow I suddenly felt this urge to blog again this fine Sunday afternoon after a long 'hiatus'. I do not know why, although I suspect that it is probably to procrastinate from my studies for my finals, HAHAHAHAH! But, I digress. In these recent months I feel that are a great deal many things happening to the world and to myself, what with my foundation studies in University coming to and end,campus politics,assignments completed, uncertainty in Malaysia's government, the financial crisis in the US, uncertainty of the global economy, the commodities boom, the global food crisis of 2008, oil being worth more than US$100 per barrel.

I feel that in these potentially trying times and period of great personal growth, I need to document my thoughts in this online journal, so called "Blog". In any case, look forward to posts from me in the weeks and months to come.

Welcome to the University of Nottingham Malaysia Campus

2007-07-25T09:21:00.000+08:00

One of my seniors once said " I'm never ever coming back to this stupid, stupid university again! " at the end of his undergraduate course, yet he is still here today pursuing his Masters qualification. LOL.

Another senior told me that in this uni, be prepared for assignments, assignments and more assingments ( did I mention more assignments? )

Anyway, this got me and and friends thinking the other day of a joke that is applicable to students who hail from this studious university.

A bald youth enters a hospital to see his/her doctor.
Nurse: I'm sorry for asking but are you a cancer patient?
Student: No,I'm a University of Nottingham student.

Gap Between Rich and Poor

2007-07-08T23:13:00.001+08:00

Just a quick tip people; did you know that the richest 20% of Malaysian society owns 54.3% of it's wealth?

This information was sourced from the Human Developement Report 2006 done by the UN.

I dunno bout you, but I was shocked when I saw this. Apparently Malaysia has one of the highest income disparities in South East Asia. Something should be done about this widening gap between the rich and the poor.

Whichever way this problem should be handled, I'm more in favor of a market based approach instead of the usual bumbling government approach and it's bureaucracy. Restrictions on business should be lifted to encourage more people into this area which in turn will raise employment levels as well as raise the competition for competent workers, which in turn will drive wages higher.

Any other suggestions as to how we can tackle this growing problem?

Boleh Tumpang-kah?

2007-07-08T21:23:00.000+08:00

An interesting idea I came across from the internet. Imagine you and some other shoppers gang up together to get a group rate discount from the shopkeeper for the stuff you want to buy, like that 40 inch plasma TV or them Nike sneakers. Brought to you by the folks @ tumpang.com

Interesting concept, check out the following link to find out more. Viva La Capitalism!

The Extinction of RPGT

2007-07-08T21:22:00.001+08:00

Recently the government of Malaysia has abolished their RPGT (Real Property Gains Tax) on properties sold in Malaysia. On the upside, those who stand to benefit the most are of course people who are thinking of selling their property, fixer-uppers, those who would buy a dilapidated house, fix it up and renovate it and sell it for a quick profit, and those companies who are in the property development business. On the downside, expect property prices to sky rocket, perhaps as much as 25% in the short term.

The capital gains tax omission not only applies to real estate investments here, it also applies to stocks. As far as I know, Malaysia is one of the few countries in the world that does not have a capital gains tax on any profits gained from an increase in share price.

There is some speculation however that the government may be preparing to launch their GST (Goods & Services Tax) very soon and that is one of the reasons for the recent and sudden abolishment of the RPGT. This would mean that we consumers here would be paying more taxes when we spend our money for food, entertainment, and so on. Of course there will be some essential items that would not have GST but when it does come out, we all have to be more careful of our spending in Malaysia. Potentially though , during the national budget this year,the government could announce a reduction of income tax payments as well as corporate tax to compensate for the launch of the GST.

So before people start complaining about the GST and it’s implications, here is a quote from the Joyce Gon, a writer from The Edge Malaysia;

“So, before anybody starts complaining about another yet another tax, they must ask this question - would you rather pay tax as you earn or as you spend?”

The 4 Financial Mindsets of People

2007-07-08T21:19:00.000+08:00

Many people view their money matters differently. In my opinion we can devide them into 4 mindsets, the communist, the blind consumerist, the stupid capitalist, and the rich capitalist.

The Communist

This person believes that the current capitalist system is evil and that instead of being motivated by money, everybody should be working towards a common good for all mankind. This person does not believe the marketing hype of companies who are all fighting for their money. Allergic to credit or taking loans, they insist on saving and buying things in cash whenever they can. Often idealistic and extremely risk adverse, they would rather live well beneath their means (i.e.; buy no-brand clothes, generic food products, take the public transport etc.) saving most of their income in bank fixed deposit accounts earning mediocre incomes which are below the expanding rate of inflation every year.

The Blind Consumerist

These are the people who do not believe that ‘tomorrow’ exists. These people are allergic to money and happily exchange the money for other things. Corporations love this class of people as they are the one’s who are most susceptible to their marketing voodoo. Credit cards are a must for these people. To these people, bank loans are a wonderful way to pay for that trip to Fiji or that new furniture seti in the living room. Often these people are the early adopters of a new fangled gadget and the one’s who are most sensitive to the latest fashion trends. These people only consume ‘branded’ products as anything else is beneath them. Their idea of a retirement plan is the assumption that the apocalypse will happen way before they have to save up money for retirement. Their worst quality is the constant need for instant gratification.

The Stupid Capitalist

The stupid capitalist is a variation of the blind consumerist. These people do believe that a tomorrow exists and that it is crucial to make investments for a financially secure future. However, these people often lack the knowledge to invest and are often propelled by sheer greed. They believe that you must risk all to make big profits, so they gamble, speculate on the stock market, or join pyramid schemes. Although some of the lucky few do make some money, the laws of probability are against them and most end up losing their shirts. Milder versions of these type of people can be seen drowning in their own debts from making too many bad investment decisions. Sometimes these people just never learn from their own mistakes and frequently make the same bad investments over and over.

Rich Capitalist

These people are normally financially stress free. They embrace the current capitalist system as they can see that it provides people with opportunities to become wealthy. They know that the key to making money from investments is not by taking big risks but by taking calculated risks. So how do these people do it? They are constantly evolving and learning. They always seek to expand their knowledge and to learn from their past experiences (especially if they had lost money previously). They are patient and do their own in-depth research before making any investment. Part of their psyche have the characteristics of a communist (saving money) but these people seek to use this money to fund their latest investments that in most cases will give them handsome returns. One of their key qualities is delayed gratification.

What's your investment IQ?

2007-07-08T21:15:00.000+08:00

If you would like to know what is your investments IQ, especially in stock market investments, then look no further.

I came across this Investment IQ test after reading the book ‘The Winning Investment Habits of Warren Buffet & George Soros’ by Mark Tier. It is on his website and a brief registration process is required before you can begin. Don’t worry about the registration, as the registration process is just so that you can receive the results of your test by e-mail.

I like this test because in the results it will tell you what your strengths and weaknesses are and how they can be improved. So what are you waiting for, give it a shot and see what your investment IQ is!

One path to Billions

2007-07-08T21:14:00.000+08:00

I was once told at a business seminar I had attended what it takes to become a billionaire. Surely, there are many ways that one can amass the fortune necessary to become obscenely rich, but here is one systematic way to become a billionaire.

From the diagram, the first step is to own a business, most billionaires today own businesses. Think Bill Gates (Microsoft) and Ted Turner (CNN). In business, your potential income will be very high but in most cases it is not very stable. The income from business would go up and down depending on the current prevailing economy. So what can you do stabilize this roller coasting income? You go to the next step.

In step 2, you invest your excess cash in real estate. Most billionaires own at least a few properties. This is because owning real estate allows us to stabilize our income. It is the rental income from such properties that allows for our income to be stable. This is because rental income is very predictable, passive and consistent. After all it is a basic human need to have shelter, a need which is second only to Food and Drink and let’s face it, some people just can’t afford to own property or be bothered to own it. Nonetheless, in order for us to become a billionaire through real estate alone would take us almost forever (although I’m not saying that it can’t be done this way, it’s just that is would take a hell of a long time), which is why you need to proceed to step 3.

When you have reached this stage, it is assumed that you now have more that enough cashflow every month coming in to sustain your current lifestyle. For example,let’s say that your monthly rental income is RM100,000. Now let’s say you only use RM20,000 to maintain your current lifestyle while the other RM80,000 is left alone. Since rental income is predictable, passive and consistent, we know that the following month will bring in another RM100,000 and another spare RM80,000. So what do you do? Here’s the fun part, you gamble it all on the world financial markets (i.e. stock market, global commodities, forex etc.). Investing in the world financial markets allows us maximum leverage to make a lot of money with very little cash. And of course, since that money that you will be using is money that you can afford to lose, the risk element is all but almost non-existent. Eventually you would hit the jack pot and then you will achieve your dream of owning at least RM1 billion in cash!!!

Be warned though, you still need to invest time and effort equip yourself with the necessary knowledge, skills and determination if you really dream of becoming obscenely rich one day. At least now you can have some idea of how to become a billionaire one day.

The Automatic Business

2007-07-06T10:38:00.000+08:00

After reading through the book ‘The E-Myth Revisited’ by Michael E. Gerber ( by the way I highly recommend this book ), it has shown me that although most people go into business in order to achieve financial freedom, what they have got themselves into instead is financial slavery !

Most small businesses that are started up today will eventually die within the first 5 years ( and the one’s that do survive normally aren’t making that much money either). The problem is most people go into business with the idea that our boss is an idiot and that even a monkey could run a business. Although you may think that your boss is an idiot, wait until you get into business (where your employees will also probably think you’re an idiot ). However, the main point to remember when we are to start a business is to create a business which would be able to run with or without your supervision. We should think of every business undertaking as if we were to franchise it.

In a franchised business, everything has been well documented and the procedures have been streamlined. In this sort of business, anybody, given enough training, could run it and still make a profit. This is because the founders of such a business have gone through great effort to ‘systemize’ their business. This is also why franchises are sometimes referred to as turn-key businesses (like starting up your car with your keys).

Therefore, the main focus of any budding small business owner, if he/she wants to be successful, is to systematize their business to run with or without them. Remember, we should be working ON the business not IN the business, and systematisation can help us to achieve this mantra.