Legal Cat-asthrophe

Media appearances past few months

2013-05-22T12:02:00.000+08:00

It has been a few weeks of non-stop media appearances for me. Some are in articles in news portals, two radio guest appearance and author appearances at one book fair.

For posterity sake, here are those media appearances :

My two articles in The Malaysian Insider :

One is on the issue of Gated and Guarded Community in Malaysia published on 2nd April 2013 :

Whither neighbourliness?

Another is about Affordable Housing in Malaysia published on 19th May 2013 :

Affordable housing : Political Rhetoric or Serious Solution?

Then I answered a question in News Straits Times pullout Real Estate and Decor about discharge of a strata property :

Q & A on 5th April 2013

And my article was published by News Straits Times : Real Estate and Decor about Gated and Guarded Properties in Malaysia on 3rd May 2013 :

One day inside a gated and guarded development

In April and May, I had two radio interviews by BFM Radio both in The Property Show. Here are the podcasts from the show. Here is my interviewer, Azura Rahman, from the show :

First interview was about my new book :

40 More Questions You Should Ask Your Lawyer Before Buying A Residential Property in Malaysia

My second interview was about Malay Reserved lands in Malaysia :

Understanding Malay reserve land

Finally during the recent Kuala Lumpur International Book Fair at PWTC which happened between 26th April and 4th of May 2013, my new book was launched and I made two author appearances at my publisher's booth :

That was it. I just realised I had a busy April and May 2013. It was good to be busy.

You can still get my book here, at True Wealth Sdn Bhd's Book Planet website :

40 More Questions You Should Ask Your Lawyer Before Buying A Residential Property in Malaysia

CREDIT REPORTING AGENCIES IN MALAYSIA : WHAT IS CENTRAL CREDIT REFERENCE INFORMATION SYSTEM (CCRIS) AND CREDIT TIP OFF SERVICE (CTOS)?

2013-04-17T13:20:00.000+08:00

This is an excerpt from my next book. The book's working title is 40 Questions You Should Ask Your Lawyer Before Taking A Housing Loan in Malaysia, another book under Ask The Lawyer series. I am targeting for it to come out next year, 2014. Do get my new book 40 More Questions You Should Ask Your Lawyer Before Buying a Residential Property in Malaysia here. Any questions, comments and inquiries are welcomed.

CCRIS and CTOS are credit reporting agency, a newly-governed industry in Malaysia. People applying for housing loans in Malaysia will have their financial information checked by the financial institutions they are applying the housing loan to. Here is excerpts for one of the question in my book under the title above :

Central Credit Reference Information System (CCRIS) is an online credit checking system operated by Bank Negara Malaysia with all Malaysian’s resident’s credit information in the system. As long as that person has an identification card and credit history, he can check his credit history in CCRIS. CCRIS is managed by the Credit Bureau of the Bank Negara Malaysia since 1982 and formed under the Central Bank of Malaysia Act 1958. The Credit Bureau collects the credit information of any borrower from all financial institutions in Malaysia and then issue a credit report when it is requested by any of the financial institutions governed by Bank Negara Malaysia. Central Credit Reference Information System is a computerised database and there is nearly more than nine millions borrowers’ credit information currently being stored by Central Credit Reference Information System. All the information about the function of Credit Bureau and Central Credit Reference Information System, can be found in the Bank Negara website on Credit Bureau : http://creditbureau.bnm.gov.my.

The financial institutions are required to report the name, identification number, address and credit facility details such as type of credit facilities, credit limit, outstanding balance, conduct of account and any legal action status. A borrower can check your Central Credit Reference Information System report at Bank Negara or Bank Negara’s various branches in Malaysia. A borrower cannot ask a representative to check his own Central Credit Reference Information System report. Under the various banking laws including Banking and Financial Institutions Act 1989, Islamic Banking Act 1983 and Central Bank of Malaysia Act 1958, confidentiality is imperative in dealing with Central Credit Reference Information System report. It can only be released with a financial institution authorised by an applicant for a housing loan or any other loans to get the Central Credit Reference Information System report from the credit bureau. Upon getting the Central Credit Reference Information System report, the financial institution and its officer can only use it to process the loan and not use it for anything else such as marketing its products

Financial institutions giving housing loans or any other loans to borrowers in Malaysia need up-to-date information about the applicants of the loans. Central Credit Reference Information System is where these financial institutions go in order to get the credit history of the borrower. The Credit Bureau sourced the information from all licensed commercial banks, Islamic banks, investment banks and several other financial institutions. In order to ensure the borrower’s data is up-to-date, verifications are done against the data at the National Registration Department and Companies Commission of Malaysia. Here are the list of information listed in the Central Credit Reference Information System report :-

1. Outstanding credit including housing loan, hire purchase, credit card, overdraft and personal loan;

2. Special attention account under close supervision by any financial institution; and

3. Application for credit

All these three types of information will be for anything under the applicant’s own name, joint name with another person, sole proprietorship, a partnership or a professional body.

Any account fully settled or application rejected, deleted or cancelled are not included in the report. Credit repayment behaviors are listed at the end of the report for outstanding credit report or special attention credit report with 1, 2 or 3 or more stated according to the month in a year for the last twelve months. These can affect certain loan application, including housing loan. Any financial institution processing an application from an applicant of a housing loan will give special attention to any account with late or missed monthly installment payments, high debt servicing ratio between the borrower’s take home income and the debt the borrower already have, high utilisation of approved credit such as credit card, too many loan applications and any loan under litigation or special attention account. Unless it can be disputed, it is good for a borrower to clear some of the debts before applying for a housing loan.

Any borrower can dispute your credit report in Central Credit Reference Information System by first going to the bank which has entered the wrong information and then at any of the Bank Negara branch. Any financial institution supplying the inaccurate report must rectify any inaccurate or incomplete information immediately by sending it to the Credit Bureau. The financial institution is obligated to reflect the latest credit position of the borrower. A data review by the Credit Bureau can be done if the borrower is not satisfied with financial institution. The borrower can get and filled the Request for Data Review form to do a data review. It can be downloaded from the Credit Bureau website and then submitted to any Bank Negara Malaysia’s branches.

Credit Tip Off Service (CTOS) is a different form of credit report used by some financial institutions in Malaysia. Credit Tip Off Service is not related to Bank Negara Malaysia or any government agency and it is not endorsed by any of them. Credit Tip Off Service is run by CTOS Data Systems Sdn Bhd, a private company, better known as CTOS Sdn Bhd. The website for CTOS Sdn Bhd is http://www.ctos.com.my/ with its office in Megan Avenue 1, Jalan Tun Razak, Kuala Lumpur. CTOS Sdn Bhd collects data made public in news, court filings of legal proceedings allowed to be made public by the court, Companies Commission of Malaysia, information provided by the borrower and any of the borrower’s creditors, people or companies the borrowers registered with such as clubs, memberships and even include utilities companies. CTOS Sdn Bhd also collects a person’s directorship in companies either listed or not and all his sole proprietorship or partnership holdings. CTOS Sdn Bhd is registered under Credit Reporting Agencies Act 2010 and governed by the Securities Commission of Malaysia. Any refusal by CTOS Sdn Bhd to update its record can now be reported.

A few people claimed Credit Tip Off Service is an illegal gathering of information by a private company and is a blacklist. There a few evidence of this as CTOS Sdn Bhd is a company gathering information made public relating to credits and liabilities. CTOS is a lead information system with clients that need to check a particular person or company’s background, especially financials, in their normal course of business such as bankers, legal firm, insurance company and credit card companies. CTOS Sdn Bhd does not update their database or delete a settlement on any of the borrower’s case automatically unless the borrower or the person being checked informs CTOS Sdn Bhd of such matter. CTOS Sdn Bhd also claims it is not a blacklist report. Having a credit report under CTOS Sdn Bhd does not mean an applicant of a housing loan will not get approved. Applicants may receive a rejection from the bank the borrower is applying for a housing loan with the word ‘CTOS issue’ and the best course it to get in touch with CTOS Sdn Bhd to know what is the issue if the bank is unwilling to divulge the information. Getting credit especially a housing loan from a financial institution is still about the borrower proving himself to be credit worthy. Any data from CTOS Sdn Bhd is a public record and a borrower can get this record at his disposal too. A settled court case or a bankruptcy already being settled will have proofs and the borrower can update the financial institution the borrower is applying the housing loan with the proof.

The difference between Central Credit Reference Information System report and Credit Tip Off Service report is the weight given to each report. Most financial institutions give more weight by rejecting a housing loan application when they found the applicant has a ‘CTOS issue’. Central Credit Reference Information System is run by Credit Bureau under Bank Negara Malaysia, with banking laws to back the collection of information. Credit Tip Off Service is not imposed on financial institution as it is not run by any government agency but is supervised by Securities Commision. Other than these two agencies, there are several other credit reporting agencies such as Financial Information Service Sdn Bhd (FIS) and SME Credit Bureau Sdn Bhd. The unscrupulous use of a borrower’s or an individual’s information, especially financial information by any agency under Credit Reporting Act 2010 shall be reported to Securities Commission. With the coming of the Personal Data Protection Act 2010, the usage of personal data on individuals by financial institutions are now under another layer of scrutiny including disallowing the financial institutions’ credit department to divulge an applicant’s or a borrower’s data to its marketing department unless expressly allowed by person.

40 More Questions You Should Ask Your Lawyer Before Buying A Residential Property in Malaysia

2013-03-13T18:46:00.000+08:00

My new book is out. It is now in bookstores around Malaysia. You can get it at those bookstores like MPH, Kinokuniya, Popular and others. If you cannot get it there, get it online here at my publisher's online bookstore :

Book Planet link for 40 More Questions You Should Ask Your Lawyer Before Buying A Residential Property in Malaysia

If you still have not buy my first book, you can get it online too at this link :

Book Planet link for 40 Questions You Should Ask Your Lawyer Before Buying A Residential Property in Malaysia

Or its Bahasa Malaysia equivalent :

Book Planet link for 40 Soalan Yang Patut Anda Tanya Peguam Anda Sebelum Anda Membeli Rumah di Malaysia

The Bahasa Malaysia version of the new book is still being edited and hoping for it to come out in April 2013.

Update on 40 More Questions You Should Ask Your Lawyer Before Buying a Residential Property in Malaysia

2013-02-07T08:00:00.000+08:00

As of 6th February 2013, I have finally edited the final draft of the manuscript for 40 More Question You Should Ask Your Lawyer Before Buying a Residential Property in Malaysia. I have also sent the first draft of the Bahasa Malaysia equivalent of the book entitled 40 Lagi Soalan Yang Anda Patut Tanya Peguam Anda Sebelum Membeli Rumah Kediaman di Malaysia.

I was told by the publisher the book will be sent for distribution in April 2013. As the first book is still selling well, there will be a reprinting to ensure the books will be sold side by side. My publisher, True Wealth Sdn Bhd is now doing its own distribution.

The first book has been a great marketing tool for my medium-sized legal firm. As I was told by Azizi Ali who is someone I learned how to invest in property 13 years ago and is now a friend, a client and a mentor, it is better to hand someone a book with your name written on it than a business card.

Thanks to my first book, I became more than just a lawyer. I am now a lawyer, an author, a speaker and even a point of reference for prominent people. Last Monday I met Mr. Piya Sosotikhul, the grandson of Boonsom Boonyanit of the Boonsom Boonyanit vs Adorna Properties fame who now has a Facebook page Justice for Boonsom Boonyanit vs AdornaProperties as he found me through my book. An honor and I can consider it as a landmark in my career as a lawyer. Mr. Piya was looking for an avenue to help more than his family as he learned how his family's case has become a landmark in Malaysia legal system.

I am writing my next book which will unravel the mystery of housing loan. The working title is 40 Questions You Should Ask Your Lawyer Before Taking a Housing Loan in Malaysia under the Ask the Lawyer series of book.

I don't have any picture to share on the cover of the book yet. Maybe I will update it on this same page when I have it. Till the next update!

Real Property Gain Tax in 2013

2012-10-17T11:44:00.003+08:00

This is an update from my blog post in 2011 about the Real Property Gain Tax (RPGT) in Malaysia for the current year 2012. You can go to the blog post here. That blog post explains about how does the Real Property Gain Tax in Malaysia works.

It was announced in Budget 2013 that the change for Real Property Gain Tax in Malaysia for 2013 is the addition of 5% to the current 10% RPGT for the sale of property which was bought 2 years from the date of the Sale & Purchase Agreement and the addition of 5% to the current 5% RPGT for the sale of property which was bought between 2 years and 5 years from the date of the Sale & Purchase Agreement. On the 6th year, there will be no Real Property Gain Tax levied on the sale.

As such, here is the rate which will be in force from 1st January 2013 :

Sale of property between 0 to 2 years of purchase : 15% RPGT

Sale of property between 2 to 5 years of purchase : 10% RPGT

Sale of property after 5 years of purchase : 0% RPGT

As I had advised in the blog post about RPGT in 2011, adjust your property investment accordingly.

Property Manager : Regulated Professionals?

2012-09-24T16:38:00.000+08:00

In my new book, 40 More Questions You Should Ask Your Lawyer Before Buying A Residential Property in Malaysia, I tried to tackle the issue of living in strata developments in most part of the book more than anything else. The process and the dynamic of living in strata developments are a different kettle of fish than living in landed properties. It all comes down to how does the housing developer of a strata development handles the process of getting the individual strata titles. As this process is being handled, the management of the strata property is also a matter which can elevate the status of a housing developer or can be a bane to it.

The three stages of managing a strata property starts the moment vacant possessions are passed to the purchasers. In the first year from that date, the management will fall on the housing developer. Upon the anniversary of one year from the date of the passing of the vacant possessions, the housing developer must passed the management of the strata development to the Joint Management Body consisting of all the owners, who were once purchasers of the strata development together with the housing developer. The Joint Management Body will then formed the Joint Management Committee who will be the council which will manage the strata development. When the strata properties in the strata development have been issued with individual strata titles, that is the moment the management will pass to the Management Corporation which is the owners in the strata development, managing the strata development all by themselves.

It may seem easy to manage a strata development if not for the intricacies involved in pleasing every each property ow within it. That is why property managements are needed in ensuring strata developments are properly managed. That is why the Building and Common Property (Maintenance and Management) Act 2007 which governs the conducts of Joint Management Body/Committee allows for the appointment of agents to help manage the common property and the strata development as a whole. The Strata Titles Act 1974 also recognised the need for property managers and allows it if the Management Corporation decided to do so. This Building and Common Property (Maintenance and Management) Act 2007 and the Strata Titles Act 1974 actually works hand in hand with the Valuers, Appraisers and Estate Agents Act 1981. This Act which is also known as Act 242 helps housing developers, Joint Management Bodies and Management Corporations, together with the owners of strata developments, choose the best property management agent for their strata development. Currently, Act 242 is in the midst of being amended. Let us look at the amendment to Act 242 in detail. The excerpt below is from a press release by Malaysian Institute of Professional Property Manager.

The Valuers, Appraisers and Estate Agents Act 1981 provides legislative regulatory control by the Board of Valuers, Appraisers & Estate Agents Malaysia (the Board) on a property manager, be it a person, firm or company, who is carrying out property management services for a fee. In order to improve the regularization of the professional property management practice, the Board formulated and implemented the Property Management Standards on 1 June 2010. Besides its clear and timely objective to safeguard the interest of the public from unscrupulous and illegal property managers, it is also to tighten the corporate governance legislative framework which gives the profession a code of conduct within which they are allowed to operate. The provisions regulate the professional ethics; and more importantly the fiduciary duties and obligations of property managers.

While it follows that property managers are governed by the above guidelines, the rapid progress in the property and building industry has given birth to a breed of unlicensed property managers that has been taking the profession for granted. Operating without any license, it could safely be said that a majority of this group are also operating without any background, skills or experience in the field. This in turn has created a lot of problems to home owners. On a regular basis, we would read or watch on the local news, incidents of misconduct or sheer negligence on the part of unlicensed property managers who have failed to perform their duties, and the affected home owners are left with no recourse on liability. The proposed amendment is set to rectify this problem - to further protect the public’s interest, particularly its physical and financial well being.

Professional property management practice is a specialized profession involving specialized training, knowledge and skills on subjects which include but not limited to, building maintenance, facilities and services management, financial management, property laws and insurance management. Every professional in property management practice for a fee must hold a professional degree in Property Management or Real Estate Management and must be duly registered by the Board. Valuers, who are trained in the art and science of property management which incorporates valuation, land economics and other skills, are first and foremost qualified property managers having obtained their degree in Estate Management or Property Management. After obtaining these degrees, registrants will have to undergo two years of training and pass a Test of Professional Competence. Further, continuous professional development of ten hours per annum must be exhausted in order to remain registered which also makes them eligible for Professional Indemnity Insurance. Anyone who fulfills the above requirements is rendered fit to offer services relating to real estate which include property management, estate agency, consultancy and valuation.

The proposed amendments to Act 242, amongst others, provides the proposed opening of a Register of Property Managers under the Act, to encourage all unlicensed property managers, under certain criteria, to register with the Board ensuring proper control. Whether they are named managing agents, building managers or valuers, if they are offering the services of a property manager for a fee, they must be registered.

The question of ‘monopoly’ and that ‘the opening of the Register is inconsistent with Competition Act, 2010’ should never have been raised here. As in every professional career that requires the knowledge of a core discipline and the need to be registered for professional practice, such as architects, engineers, doctors or lawyers, it is this same spirit that is put forward by the initiative to amend Act 242. Would you also say that the law which requires all lawyers to be registered and licensed has created a monopoly in the profession among licensed lawyers? If you would not risk your life on an unlicensed lawyer (or any other professionals who are in charge to safeguard and protect the public’s well being), why would you risk your life on an unlicensed property manager?

It is very important to note that registered property managers who are found to be negligent are subject to disciplinary actions under the Act and may even face disbarment from practicing – which will make the licensed property managers more responsible, failing which they might be in danger of losing their license and will eventually, be out of business. They can also be expected to comply with all the laws attached to the profession, as well as their fiduciary duties, such as providing audited accounts for public viewing which is one of home owner’s basic rights. Having said that, it is to be emphasized that building owners have all the right to manage their own properties, and Joint Management Bodies (JMBs), Management Corporations (MCs) and shopping centre owners can manage their own buildings or hire a registered property manager of their choice. The Act 242 only applies to those who practise property management and offering services as a property manager for a fee.

Another misconception is that the fee involved in appointing a licensed property manager is expensive. Contrary to what was said, the minimum management fee payable to a registered property manager is in fact, RM50 per holding per month, and not per unit. This has been clearly defined in the Local Government Act for subdivided buildings as “the Common Property and any parcel thereof” – which clearly provides that the minimum fee is RM50 per common property. To say that the management fee is RM50 per unit is not only wrong, but disregarding the fact that property managers are not managing individual strata units but only the common property.

It is a fact that property managers not registered under the Act will face difficulty obtaining indemnity insurance cover. Even if they do obtain it, if something goes wrong and a claim is filed, the insurance company may deny compensation on the grounds that the property managers are not legitimate, simply because they are not registered with the Board. The importance of an indemnity cover cannot be stressed enough. The basic terms and conditions of a Management Agreement between a Joint Management Body or Management Corporation and the property manager must provide indemnity cover because the two parties will eventually be exposed to risk if the companies or people they entrust their duties to are negligent or reckless in performing their duties. Taking the coverage will also be of comfort to the individual property manager as he will not have to suffer in his personal capacity in the event that he is sued for something outside his control. In this, the benefit works for both home owners and the licensed property managers themselves.

The task of a property manager is not simply “administrative” in nature. It requires clear judgment, immediate reactions to complaints, good communication skill, trustworthiness, ethics and a lot of other skills, values and competencies which comes through education, training and experience. A good property manager is expected to manage properties under its portfolio as if it were his own, paying a great deal of attention to every management detail, not limited to just the physical asset. In no way is the proposed amendment denying the fact that there are unlicensed managing agents out there who are absolutely competent and capable of performing their duties. What the Board is submitting is that, one may continue to practise as a professional property manager as long as one is registered under the Act so that their duties in managing their strata estates can be made clearer - ensuring the quality and professionalism of services rendered to the public at large is maintained at the highest level. In short, the amendment of the Act 242 ensures corporate governance, transparency and protection of the public.

Let us hope that the proposed amendment which will be tabled at the Parliament very soon will help raise the standard of property managers and make them into a regulated professional body like the other well-known professionals such as lawyers, doctors and engineers with guidelines and professional indemnity insurance.

Strata Titles Board, the law exist but the office isn't?

2012-08-09T12:53:00.000+08:00

Another chapter from the sequel of my second book. Still in its rough draft. Comments are welcomed or questions even

The Strata Titles Board, as the name suggested, is an office established to deal with disputes under the Strata Titles Act 1985. The Strata Titles Board can only settle disputes in strata development which is already has been issued with individual strata titles and has a functioning Management Corporation. The Strata Titles Board can hear and makes decision on any disputes which is brought to it by the owner of a strata property or the management corporation of a strata development or any person or body having interest in the strata property, which is usually the financier for the strata property or strata development. The disputes which the Strata Titles Board can hear are listed in the Strata Titles Act. Every state in Semenanjung Malaysia has its own Strata Titles Board and consists of less than twenty members with a President and more than one Deputy President. The appointed of members in the Strata Titles Board is made by the Minister of Housing and Local Governments with the recommendation of the relevant State Authority. The member of the Strata Titles Board is appointed for two years and is eligible for reappointment. The appointment can be declined, resigned from and revoked. Although the provisions in Part IXA of Strata Titles Act 1985 has been in existence since the amendment of the Strata Titles Act in 2007, no state in Semenanjung Malaysia has set up its own the Strata Titles Board yet although the need for it has increased.

What is the importance of the Strata Titles Board in the whole scheme of things when it comes to strata development? The Strata Titles Board is a good place to settle problems arising from anything that an owner, Management Corporation and any person or body which has interest in a strata property in any strata development. There are so many provisions in the Strata Titles Act in order to allow it to work faster and better than any dispute resolution process. The Strata Title Board can even hear issues which are not provided for under Part IXA of the Strata Titles Act 1985, and any matter brought in front of the Strata Titles Board even survive the death of any member of the Strata Titles Board. The member of the Strata Titles Board who resigns or retires during a hearing must finish hearing any dispute that was brought before the Strata Titles Board when he was a member. Members of Strata Titles Board are protected when doing anything done in good faith during hearings and can be paid allowances. The Strata Titles Board is given six months to settle any dispute brought before it except if otherwise decided the matter is complex. The proceedings of the Strata Titles Board are open to public and all its members are considered as public servants when serving the Strata Titles Board.

Matters that can be settled by Strata Titles Board which are listed in the Strata Titles Act 1985 are spelt out from Section 67H until Section 67O of the Strata Titles Act 1985. A Strata Titles Board can revoke any amendment of additional by-laws which are made by the Management Corporation. This is if it is found that the owners feels that the additional by-law which is added, revoked or amended interferes with the enjoyment of strata properties or common property within the strata development. The Strata Titles Board can order the Management Corporation to pay compensation to the owners adversely affected by the additional by-law. Additional by-law which is found to be made outside the power of the Management Corporation can be found invalid by the Strata Titles Board. If the Management Corporation in collecting the service charges under Section 45 of the Strata Titles Act 1985 - Management Fund, charged an unreasonable interest rate, the Board may order the no interest rate is paid or order a different interest rate to be paid. The Strata Titles Board can make an order regarding any disputes on costs of repairs for any rectification or repair of defect of any strata property or common property either on the Management Corporation or the owners, depending on which party is liable to it. The Strata Titles Board can ask the Management Corporation which has refused unreasonably to consent to any proposal by owner to alter the common property within the strata development.

The Strata Titles Board is also allowed to hear applications with regards to general meetings of the Management Corporation. The Strata Titles Board is empowered to invalidate or refuse to invalidate any resolution or election in any meeting of the Management Corporation which is done without complying with the provisions of the Strata Titles Act 1985. If a meeting of the Management Corporation is called and resolutions are made while an owner is improperly denied to vote or was not given proper notice of the agenda of the meeting, if an application is made, the Strata Titles Board can nullify the resolution. When making decisions about insurance, the Strata Titles Board can ask the Management Corporation to vary the amount the buildings in the strata development is insured if it is found that the amount of contribution under Section 43(1) of the Strata Titles Act 1985 is not reasonable. The Strata Titles Board can order the Management Corporation to make or pursue an insurance claim if there is any damage to the buildings in the strata development, if the Management Corporation unreasonably to do so. The Strata Titles Board can order the Managing Corporation or the managing agent or any member of its council to supply any information or document unreasonably withheld to any owner.

In discharging its duties, the Strata Titles Board acts very much like a tribunal or court. It has certain powers which allow it to issue order as to cost. The Strata Titles Board can order the cost to be paid either the applicant or the Management Corporation or any person whom an order has been made against. The Strata Titles Board even has the power for costs to be paid by any party who has made a frivolous application. Another power endowed on the Strata Titles Board is to order any party relevant to the strata development to do or refrain from doing a specified act in relation to the unit or common property within the strata development. A lawyer can appear on behalf of the interested party either the applicant or the Management Corporation in front of the Strata Titles Board. A member of the council can appear on behalf of the Management Corporation. The Strata Titles Board also has the power to summoned witnesses to give evidence and produce documents. Penalty can be imposed on the party who does not follow the order by the Strata Titles Board. Any order by the Strata Titles Board can be appealed to the High Court on point of law. With the powers and provisions in the Strata Titles Act, it can be seen that the Strata Titles Board has a very wide power and can settle a lot of the disputes in relation to strata properties which are already issued with individual strata titles. It is high time that the government seriously consider the setting up of Strata Titles Board in all the states in Semenanjung Malaysia in order to have a place for owners and management of strata properties to have a platform to settle their disputes.

Service Charge in a Strata Development : How far can the management go to collect?

2012-07-03T15:56:00.000+08:00

How far can a management of a strata development go to collect the service charges and for that matter any charges that are allowed to be levied on the owner? We have heard stories about refusal to allow entry to the strata development compound, shutting off of water supply and even to the extent of changing locks of the property? Are all these allowed to be done in Malaysia by management of strata development for the sake of collecting these charges? Here is an excerpt from my coming book '40 More Questions You Should Ask Your Lawyer Before Buying A Residential Property in Malaysia'. It is still a rough draft and unedited, so comments especially if you find any mistake is welcome :

The service charges and the sinking fund which are allowed under the property laws to be collected by the management of a strata development are also liabilities are imposed on and must be observed by the purchasers of strata properties. These liabilities on purchasers which will then become owners are all stated in Schedule H of the Housing Development (Control and Licensing) Regulations 1989 under clause 18 with regard to the payment of service charges. Under clause 18(1), the purchaser shall be liable for and shall pay the service charges for the maintenance, management of the common property and for the services provided by the housing developer prior to the establishment of a joint management body under the Building and Common Property (Maintenance and Management) Act 2007. Under clause 18(2) the service charge payable shall be paid within fourteen days when the purchaser received from the housing developer a written notice requesting for payment to be made. If the service charge is not paid by the purchaser at the expiration of the fourteen days, interest on the service charge shall commence immediately thereafter and be payable by the purchaser. The interest is to be calculated from day to day at the rate of not more than ten percent per annum. In these clauses, it can be seen that until a joint management body is formed for that particular strata development, a purchaser of a strata property will be liable to pay the housing developer the service charge and an interest of up to 10% interest can be imposed for non-payments.

When a joint management body is formed within one year of vacant possession for the strata development, the owners in the strata properties are liable to pay service charges to the joint management body under Section 23 of the Building and Common Property (Maintenance and Management) Act 2007 and it includes the interest at a rate of not more than 10% within fourteen days from the service of a written notice requesting the payment of the service charge. The written notice must also include a statement of charges which contain a detail of what the charges are for. When the management corporation takes over the management upon issuance of individual strata property, under Section 45(3)(c) of the Strata Titles Act 1985, the management corporation is allowed to determine interest to be charged on any late contribution by any owner of the strata property not more than 10% per annum. In lieu of these provisions, it can be seen that any late payment of service charge to either the housing developer or the joint management body or the management corporation, an interest of not more than ten percent can be levied to the original amount. However, when the service charges come under the purview of the joint management body and the management corporation, as the case may be, there are avenues for these two institutions to recover any debt owe to them.

There are three options which can overlap each other when the management of strata property decided to do more than just send notice to the owners and demand for payment of any arrears. If the owners of the strata property still don’t pay their service charges or sinking funds upon demand, there are general recovery provisions for the managements of strata development to take. For the joint management body, under Section 32 of the Building and Common Property (Maintenance and Management) Act 2007, after 28 days, upon sending two notices demanding the payment of any arrears of any charges, the joint management body can start to institute proceedings in court to recover the service charges. Under Section 33 of the same Act, if the owner of the strata property fails to pay the charges for more than six months, the Commissioner of Buildings, upon request of the housing developer or the joint management body, can issue a fourteen-day written notice on the owner or owners to pay the arrears.

The Commissioner of Buildings, upon the request of the housing developer or the joint management body, can issue a warrant of attachment authorising attachment on any movable property within the strata property or anywhere within the local authority area. The warrant is to be executed by an officer within the Commissioner of Buildings’ office. The officer is allowed to use forcible entry into the unit, take an inventory, effect the attachment and sold the movable property in a public auction, unless the arrears and collection charges are paid within seven days of the attachment exercise. A collection charge can be added to the amount recovered by the Commissioner of Buildings and the amount recovered shall be deposited into the Building Maintenance Fund with the balance returned to the owner. Other than civil proceedings by the housing developer or the joint management body, which is to be endorsed by the Commissioner of Buildings, the failure or refusal to pay maintenance and management charges are also an offence which if convicted can result in the owner being fined with not more than Ringgit Malaysia Five Thousand and further fine of Ringgit Malaysia Fifty for each day the offence continues.

In Section 52, Section 53, Section 53A, Section 54 and Section 55A of the Strata Titles Act 1985, management corporation, the management entity which takes over the management of a particular strata development upon issuance of individual strata titles to owners, are given nearly the same provisions in law as those given to the joint management body under the Building and Common Property (Maintenance and Management) Act 2007. Section 52 basically lays out the foundation for the owners to give guarantee that each proprietor is liable to pay the portion of their charges according to the share of his unit in the strata development and the management corporation can recover the said sum through the court of law. Section 53 states the term for written notice for owners to pay shall be fourteen days and if remain unpaid another written notice of fourteen days shall be issued before a summons is filed in court.

Section 53A is nearly the exact copy of the Section 33 of the Building and Common Property (Maintenance and Management) Act 2007 which allows the recovery of the debt by the owner through attachment of movable property. However, the authority which can issue the warrant of attachment is the Land Administrator upon a sworn application of any member of the management corporation. The person allowed to execute the warrants can be a member of the management corporation or employed by the management corporation or through the assistance of the Commissioner of Buildings’ office. The whole process of executing the warrants of attachment is outlined in Section 53A including if the house is tenanted and the tenant’s movable property is attached. Section 54 is on the issue of service of documents and Section 55A is on the failure to contribute being an offence which can be fined with Ringgit Malaysia Five Thousand with each continuing day an additional Ringgit Malaysia Fifty daily is imposed.

A comprehensive mechanism has been spelt out in both the Building and Common Property (Maintenance and Management) Act 2007 and Strata Titles Act 1985 when it comes to the liability of proprietors, owners and even in some case, tenants of strata property in paying all the charges imposed on them in a strata property. Before there was the Building and Common Property (Maintenance and Management) Act 2007, one of the serious issue brought up by housing developers managing strata development is the failure and the refusal of owners to pay their dues. There were cases where the housing developers resorting to cutting off the water to the specific unit which refused to pay their maintenance charges. With the provisions under law and the recovery cost being allowed to be added, either for the joint management body or management corporation, such practice shall not be a point of contention anymore.

What is meant by 'Service Charge' in a strata development?

2012-06-25T12:51:00.001+08:00

Service charge is the main point of contention between the owner and the management in a strata development as it does not exist in landed property when one owns a property. It is an additional burden to strata development property owner as it has to be paid monthly. Under clause 18 of Schedule H of the Housing Development (Control and Licensing) Regulations 1989, the payment for maintaining the common facilities or common property provided by the housing developer is known as ‘service charge’. Payment of service charge is paid to the housing developer before the joint management body for the property is established. The portion of the service charge to be paid by the purchaser is determined by a licensed land surveyor, appointed by the housing developer, who assigns the amount payable each month by the owner according to the allocated share units within the strata development. It means that the purchaser of a strata development pays according to the space that the purchaser owns within the strata development. The more space that the purchaser owns, the more service charge that the purchaser has to pay. An owner of a penthouse or a duplex pays more than a standard unit. In order for the purchaser to take vacant possession of the property that was bought, a four-month service charge has to be paid in advance and then the purchaser pays the service charge monthly in advance.

A Building Maintenance Account is established and maintained by the housing developer where all the collected service charge are deposited. The housing developer will then hand over the account to the Joint Management Body when it is formed and the account will finally be managed by the management corporation upon issuance of individual strata titles. Under the Fifth Schedule of the Sale & Purchase Agreement of Schedule H of the Housing Development (Control and Licensing) Regulations 1989, a sample of service charge statement is set out outlining the itemised billing and payment that the purchaser has to make every month. The Fifth Schedule is known as ‘Form of Service Charge Statement’ and has the descriptions, estimated monthly expenses and estimated annual expenses for the service charges. The listed descriptions for the service charge include the electricity supply, electrical system maintenance, firefighting system maintenance, lift or escalator system maintenance, security maintenance system, water supply, swimming pool maintenance and a few other common properties which need maintenance and upkeep. The list also includes management fee, management office expenses, staff expenses and bank charges for the management of the strata property. The list is not exhaustive as other services can be added on.

Under Section 16 and 17 of the Building and Common Property (Maintenance and Management) Act 2007, when the housing developer transfers the management of the strata property to the joint management body, the housing developer also has to transfer the Building Maintenance Account to the joint management body. The Building Management Account is to be opened before vacant possession is delivered. The housing developer has to deposit all the service charges received from the purchasers and to pay the service charges for the unsold parcels too. The housing developer will need to make sure that the Building Maintenance Account is maintained, audited by professional auditor, file a certified statement of accounts with the Commissioner of Buildings and permit the Commissioner of Buildings' office to have access to the Building Maintenance Account. A housing developer who fails to do as such can be liable to pay between RM10,000-00 and RM100,000-00 with fine not exceeding RM1,000-00 for each day the offence continues if convicted. When the Building Maintenance Account is transferred by the housing developer within one month of the establishment of the joint management body, the account will be under control of the joint management body called ‘the Building Maintenance Fund’. Even if the housing developer is unfortunate enough to go into composition or arrangement with its creditors or goes into liquidation, the money in the Building Maintenance Account will not form part of the property of the housing developer and be under receivership. The money in the Building Maintenance Account will still have to be transferred to the joint management body by the administrator of the liquidation process. The Building Maintenance Fund will always be under the control of the joint management body. The monies in the Building Maintenance Fund shall include maintenance charges for the building, any money from the sale, disposal, lease or hire of any property, mortgages, charges or debentures which is done by the joint management body, moneys and property payable to the joint management body due to the joint management body’s functions and powers; and any money lawfully received by the joint management body be it interest, donation and trust.

When the strata development is issued with individual titles, accessory parcels and common property, according to the Strata Tiles Act 1985, the management of the strata development will pass to the the management corporation. Management corporation is born through the first annual meeting called by the housing developer. Part of the duties and powers of the management corporation are to take over from the joint management body, and then manage, maintain, audit and send report to the Commissioner of Buildings, the management fund. Under Section 45 of the Strata Titles Act 1985, the management fund is where all service charges are paid into when strata titles are issued to a strata development and management corporation manages the common property. Service charges in the management fund are allowed to be used for nearly the same usage whether it is under the housing developer, joint management body or the management corporation. Management corporation is given additional usage of service charges under Section 45(2) of the Strata Titles Act 1985 in which management corporation is allowed to invest the money in the management fund with approval at general meetings. Service charges can also be raised through the annual general meetings accordingly through votes.

In my next post, I'll try to tackle the issue of liability to pay the service charge, how far the management can do to collect it and what's the liability of the management to give good service.

Can accessory parcel or common property in strata development be sold?

2012-05-25T13:08:00.001+08:00

One of the question to be found in the sequel to 40 Questions You Should Ask Your Lawyer Before Buying A Residential Property in Malaysia. This new book will concentrate more on strata development. 40 more questions and now finishing up the final 10 questions. This is also the reason why I have not post up an entry here for quite some time.

Here is a rough draft of the answer to the question 'Can accessory parcel or common property in strata development be sold?'. Most developers in Malaysia have done it one time or another but is it legal?

Accessory parcel and common property are two different subject matters in a strata development although both can be seen to overlap each other. Accessory parcel is an extension of a parcel owned by the purchaser in a strata development which can be a building attached to the parcel or just a space labeled to show its connection with the parcel. In short, an accessory parcel is privately owned and comes together with a parcel when it was bought by the purchaser of a parcel within a strata development. As for common property or facility, it is shared by everyone with a strata development although some of these common properties are within the sphere of a parcel. Common properties are managed by the management of a strata development and they can be immovable or movable objects. Certain accessory parcels may look like the part of common properties and vice versa. The best example for this is none other than the parking lot. When a property is bought and sold in a strata development which has many parcels attaching themselves to each other with overlapping functions such as a floor to a parcel which can be a roof to another parcel, a parking lot which can be an accessory parcel to one particular parcel can exist next to another parking lot which is a common property. That is why it is important in the initial development plan of a strata development for the housing developer to survey, label and get approval for every inch of the strata development. That is why the plan for accessory parcel, especially if it is not attached to the sold parcel and the plan for common facilities are given the option to be attached in the First Schedule of the Sale & Purchase Agreement of a strata development. In order to answer to question whether the accessory parcel or common property can be sold or not, we need to differentiate the beneficiaries of each subject matter.

Accessory parcel is built within a strata development to be sold to a particular purchaser. In the preamble of the Schedule H of the Housing Development (Control and Licensing) Regulations 1989, it is stated that ‘….the Vendor (the housing developer) and the Purchaser has agreed to purchase the parcel with vacant possession….with accessory parcel with vacant possession distinguished as accessory parcel No: ………….. of Building Land Parcel No:……………… (which is delineated and shaded BLUE in the Accessory Parcel Plan annexed in the First Schedule)’. The additional wording which appears in a bracket ‘(hereinafter referred to as “the said Parcel”)’ means that an accessory parcel is part of a parcel within a strata development. As it owes its existence to a particular parcel, in a nutshell, an accessory parcel can be transacted as long as it belongs to that particular parcel.

In Section 34(2) of the Strata Title Act 1985, under the ‘Rights of proprietor in his parcel…’, it is also specifically stated that ‘No rights in an accessory parcel shall be dealt with or disposed of independently of the parcel to which such accessory parcel has been made appurtenant’. It means that each accessory parcel must co-exist with the parcel that it is attached to. As such, the only transaction which is available to the owner of the accessory parcel who is also the owner of the parcel is to rent out any particular accessory parcel under his control. If the accessory parcel is a parking lot, that parking lot can only be rented out on a monthly basis and not sold individually as it cannot be separated from the parcel. As all accessory parcels must be labeled to indicate which parcel it is attached to, it is impossible to be sold.

Common property or common facility is built by a housing developer for a strata development to be shared among the purchasers. Common property is generally whatever not within a parcel. If the accessory parcel is privately owned once it is sold to the purchaser, common property is publicly shared among the purchasers and is actually owned collectively by all the purchasers within the strata development. If the decision about any accessory parcel is to be made by the owner of the parcel, any decision about any common property is made by the collective effort of the purchasers through the management of the strata development. Management of strata development differs depending on the time the strata development is at. From the time of vacant possession to within one year of the date of vacant possession, the management will be under the control of housing developer. After that one year the common property will be managed by the joint management body until strata title is out which will then pass the management to the management corporation.

At each interval, the powers given to the management are properly spelt out. When in relation to common property, the housing developer has the decision to decide what initially can be built and labeled as common property or common facilities. Under Clause 17 of Schedule H of Housing Development (Control and Licensing) Regulations 1989, the housing developer ‘…shall, at its own cost and expense, construct or cause to be constructed the common facilities serving the housing development…’. Common facilities plan can also be attached in the First Schedule of the same agreement. Among the duties and powers given to the Joint Management Body under Section 8 of the Building and Common Property (Maintenance and Management) Act 2007 are to ‘…maintain the common property and keep it in a good state of good and serviceable repair;’ -Section 8(1)(a) and ‘to purchase, hire or otherwise acquire movable or immovable property for use by the purchasers in connection with the enjoyment of the common property;’ – Section 8(2)(d). The same provisions as replicated in Section 43 of the Strata Titles Act 1985 as duties and powers of the Management Corporation.

In all the clauses and sections of the agreement, regulations and acts, common property can only be managed, maintained, controlled, enjoyed and added with movable property. There is nowhere in any of these provisions that a common property can be sold. However, if a shop or a retail space is labeled, marked and reserved as a common property, it can be rented out or even leased as it can be enjoyed by every of the owner(s) of the parcels within the strata development. In the Third Schedule, Strata Titles Act 1985, as By-Laws for the Regulations of Subdivided Buildings, under clause 3, the Management Corporation is allowed to ‘…by agreement with a particular proprietor grant him exclusive use and enjoyment of part of the common property or special privileges in respect of the common property or part of it’ That will also mean that a common property such as a car park, under the control of the management of the strata development, can be rented out or leased out to the owner of parcels within the housing development. For any shop(s) or additional parking lot(s) or any other space(s) to be sold by the housing developer which are other than the residential property within the housing development, such spaces have to be parcels and declared as such. As long as these spaces are labeled as common property, it cannot be transacted as such.

Updates : Book and Work

2012-05-11T12:20:00.003+08:00

The last post for this blog is in early March.

It has been a very busy two months leading up to this moment. We were appointed to two of the biggest property companies in Malaysia which sell high-end freehold properties. We offered our service and when they appoint us into a select group of solicitors to handle documentations for the sale of their properties, our infrastructure took a beating that even the partners (especially me) who always had time for other endeavors find it hard to go out.

Then, one of our long-time valuable staff who we thought will one day be the heiress to this medium-sized legal firm decided to concentrate on her study and tendered her resignation. I personally was heartbroken as I had suggested and we, as a collective, decided nearly two years ago to send her to a local university's law school. We paid for her law school's fee and ask her to stay on board after she finished her study. She had worked with us nearly 5 years then. We had watched her grow and learned various trade secrets which she then shared around. We found her to be the best candidate.

We gave her the space and time to take leaves without question. During her exam weeks, she did not have to come to the office at all. We were willing to sacrifice the time and in some way, some money too, in order to ensure the legal firm's next generation is well in place. As it was a project I had suggested, I consider it a failure on us to retain her. Her excuses of being under pressure due to her study and the feeling that she was more of a burden to her colleagues due to her absence, did nothing to lessen the pain of a failed succession plan project. I guess we need to go back to the drawing board.

However, nothing can stop me from making this lifelong project of building a successful business. To a certain extent, the business is already successful though the growing pain is still very much evidence. Reading a New Yorker's article about Uniqlo about Uniqlo having more staff than enough to man each of its store in order to ensure every customer's need is tended to at any given moment , we decided to fill up the void with more staff. We anticipated our good work may just bring us more business. It would also be good for us to ensure our clients are treated the instance the need anything too.

As for my book, I have abandoned writing it for some time until something gave me a second wind to go back writing it. In April, I was invited by Penang Regional Development Authority (PERDA) to give a one-day talk. I recruited my partner and senior associate to accompany me and we had a great time disseminating knowledge and answering questions, some which I never thought of hearing, which made me decided there is still a need for a sequel to my book. I am now halfway in writing the book and is giving myself the whole of 2012 to finish it.

I am also is reading the book 1Q84, by Haruki Murakami, one of my favorite Japanese author, which has a character who is a writer and Murakami's idea of why one writes can be seen to be manifested in that particular character.

As long as I am motivated to write, I will...

Office : Do we still need one?

2012-03-07T13:05:00.000+08:00

One of our main grouse every day is the commuting that we have to make to reach our office. As we have now reached the year 2012, I am wondering about the need for the existence of office. If we dissect the television series The Office, in a situation where people comes to their office which sells paper, the series never look like that the office ever need to exist. The people keep on coming and going. The people is always out to sell the paper. The account department can exist anywhere as long as the record of transactions are kept.

What do we use office for? We use it to type out our work. We need computers for that. We have mobile devices for that. Laptops and tablets. Computers can be linked securely virtually with each other, right? Google and IBM have tools for that if I am not mistaken? Storage space? Isn't cloud computing the thing everyone should jump on at the moment? How about meeting? Can't work be distributed among the staff with use of emails and meetings be about "Where are we now?" than the need to sit down and ask everyone how their work is going. Even my own legal firm rarely got visitors as we always meet client at wherever is convenient for them.

I think we are too traditional whenever we think of the existence of office as a need. We have the biggest businesses in the world like Google and Apple which use office as playgrounds. We have people feeding businesses in the world like Starbucks and McDonald's as they congregate there to hold meetings. When I was writing my books, I tend to go out and write them at whatever cafes I can find. My house has an office which my wife uses more than me as I use sofas and lounge chair to do any work done.

The only institution which I consider really needs an office or buildings are banks. Offices or buildings for banks or financial institutions are more than just offices. They are assets as they can't actually holds money as assets as the thing they trade in money. Then, there is still the issue whether we need real fiat money to transact which is another issue altogether. Maybe storage is an issue like my legal firm which has to deal with such matters. The only thing that makes me wonder is if everyone is not going to office anymore and have offices in their houses, why do property developers still keep on building offices?

All this issue about the need for an office is boils down to the fact of a new social media start-up of mine. Which has an office but does not really being used. So, I am going to add a few items to make into a playground or more of a hangout place. As it is a penthouse which has a nice view, I want it to be a barbeque place with pool table inside and beanie bags all around.

Isn't work is for you to make money and survive the world? Then, why has it become a thing we live for? I long for the day we make a living out just so that we can feed ourselves and not die of starvation.

Dawn (Pakistan) article on Property Investment in Malaysia

2012-02-22T08:00:00.000+08:00

Was commissioned by our Counsel General in Karachi, Pakistan, En. Abu Bakar Mamat to write an article about investing in the property market in Malaysia. It was to come out in Dawn, a Pakistani newspaper. It came out last Sunday. Here is a snapshot of the article in Dawn (sent over through Twitter by En. Abu Bakar Mamat).

Although Dawn have an online portal : Dawn.com, I couldn't find a link to show the full article. For the sake of posterity and in case you are curious, I reproduced the article below :

Malaysia is a great property investment destination. As a well-known Islamic country with great infrastructure, accessible through various points of entry and with a predictable climate, all the cost and returns from any investment you make can be easily calculated from the offset.

Anyone above the age of 21 can invest in property in Malaysia including foreigners. The only restrictions for foreigners are the price of property that they buy must be above RM500,000-00 (USD$166,000-00). Another form of restriction is the type of property that they can buy must not be the native or bumiputra properties and areas in certain areas due to the restrictions found on the tittles of the land as imposed by state governments. A property tax of 10% is levied on the profit you make if you sell a property within 2 years of purchase but it will be lowered to 5% for profit made between 2 to 5 years. After the 5th year, no tax is levied for residential property.

The usual popular properties easily bought by foreigners are freehold properties in the middle of towns like Malaysia's capital, Kuala Lumpur or the beautiful island state of Penang. Apartments or condominiums there can easily reach the price of RM1 Million (USD$330,000-00) with a possible returns of 8% per year. The lands there are easily bought and transacted by foreigners as the land offices in these towns have vast experience in deals involving foreigners.

Property loans for foreigners can be obtained up to 80% of the property price but it depends on the collateral that you can offer such as fixed deposit cash emplaced at the banks. It will be easier if you join the Malaysia My Second Home (MM2H) program so that you can enjoy multiple entries visa and various other convenience.

It will take between 6 months to one year for a property transaction involving for foreigners depending on the type of property that you buy. The usual transaction involves the booking by paying a 2% deposit, another 8% upon the signing of the sale agreement and then the balance of 90% will depend on how much property loan you have obtained. Any purchase of property by a foreigner in Malaysia will require consent from the land office and this usually takes up to 3 months.

Upon arrival in Malaysia if you are on a property hunt either for investment or holiday homes, consult your local real estate agent or lawyer.

Sang Kancil and the crocodiles

2012-02-10T11:26:00.002+08:00

There was this Sang Kancil who liked to wander around the forest. Although a bit cunning, he always abided by the laws of the forest set upon all animals since time immemorial. He kept to himself as what he wanted was to be able to eat and drink in order for him to survive.

One day, as he was wandering around the forest, feeling hungry, he came across a river full of crocodiles. On the other side of the river was an orchard full with ripe fruits, ready to be eaten. He knew that the river was full of crocodiles which would just eat him if he was to fall into it.

After doing some thinking and understanding the nature of crocodiles, he called upon one of them. Being the leader of the crocodiles in the river, Buaya came over and talked to Sang Kancil. Sang Kancil told him that he was asked by the great Lord of the Jungle to count the population of crocodiles in the river.

Buaya went to get all his brethren and they lined up across the river. They let Sang Kancil climb on top of them one by one in order for Sang Kancil to do his counting. While he did that, he sang “Satu dua tiga lekuk, jantan betina aku ketuk”. He did this until he crossed to the other side.

As smart as Sang Kancil was, as he came down on the other side of the river, he immediately told all the crocodiles in the river that he had just pulled a prank on them as there was never such instruction from the Lord of the Jungle.

Now, change the scenario. The river is the country that we are living in and lovingly call Malaysia. Change Sang Kancil into the rakyat who are only trying to make a living from the bounty of the land. Then imagine the leaders of this land as the crocodiles who control the river. Everyone must go through them to get to the fruits of their labour.

Imagine how we have to think every minute of the day to get some benefits from the river. We have to outsmart the guys who are supposed to be the guardians of what are rightfully ours. These leaders do let us have a taste of these benefits in so many forms but never the whole of the benefits so that you will understand who actually rules over you.

These benefits come in so many forms. Affordable housing, scholarships and sometimes when we are lucky, cash, such as was offered under BR1M. When it is given, we take it and we spend it. Then we come to the river again and bow our heads before we can drink from it or outsmart the crocodiles again to be able to eat the fruits....

I wonder how we have come to this....

Originally published in Malaysian Insider at this link : Sang Kancil and the crocodiles

Household debt clean-up : A personal journey

2012-01-19T09:00:00.000+08:00

Personal financial stability is not something easy to resolved. If you were ever in an economy classroom, either during high school or as part of your college or university degree, no matter how much you understand the concept of 'want' and 'need', believe me, you will never get to feel the 'forcefield' pulling you to spend on the unnecessary thing in life, until you have 'disposable income'.

Whoever invented modern credit is evil. Financial institutions, be it banks or cooperative or finance companies, is always on the prowl for you to take whatever they can give you in the form of credit cards and personal loans before you have even step out into the real world and become part of the 'workforce'.

However, how else can you afford the basic thing in life if not for credit? It is a Catch-22 situation as most of the basic needs like food, a place to live and transportation cost money. Coupled that with the self-appointed financial guru who propagates the need to own your own place and transport (though this now seems to have been losing steam), you will feel left out if you don't own a house or a car by a certain age. Then to make matter worse, you live in a world where everywhere you turn, you are bombarded by advertisement promoting so many things like a brand handphone, a computer, a tablet, the need to travel to see new places and more expensive version of your need.

That was what happened to me.

In my years of living, I have bought more than one house, sell a few, kept a few; bought a few cars, sold a few, had two cars at one time, one car at another time, owned cheap cars, owned expensive cars; bought more than one personal computer for my house, left it dusty before buying a newer version; owned a tablet; a few smart phones. All this thanks to the supposedly disposable income I have which I increased to more than 10-fold thanks to the easy approval of credit cards and personal loans. Some are obtained through 100% loans which allow me to buy cars and houses (it doesn't exist for awhile in Malaysia but it is making a comeback through various affordable housing scheme)

When 2012 arrived, I am more than a few hundred thousand Ringgit Malaysia in debt. One thing I have always made sure is to never have any arrears in any of my installments. My business helped me to make sure of this but it is not a perfect personal financial stability that I aspire to have. So, I started to get my personal finance in order.

I listed out my debts which include a car, a house, an Amanah Saham Bumiputra (ASB) loan, a personal loan and a few credit cards which when tabulated comes up to more than RM100,000-00 disposable income but are mostly maxed out. Some of the credit cards are there as I have taken a balance-transfer credit card to lower down the interest charged on my other credit card debt. I was surprised that more than half of my drawing from my businesses goes to paying the credit card debt. And yes, the first thing to a cure from an addiction is to admit that you have a problem. Then, look for a solution.

Another myth in this modern age is to make sure you have savings for your old days. Yes, that is not bad advice. However, how about living your old age without debt and having a stream of cash supplementing you? That is equally important right? Without delay, I listed my assets and see whether I can match my liabilities.

My assets seem to be part of the problem too. A house still under a mortgage. An ASB certificate which is not mine. A few unit trusts. The car is never an asset as it is always a liability. After calculating all this, I find that it is easier for me to cancel a few loans such as the ASB loan and the few credit card, especially those which have high interest charged to it every month. Then I decided to sell my car which was already 6 years old this coming May and bought a cheaper car. I then did one of the most surprising decision ever, even to me. I put the current house I am living in on the market. At a very steep price. Canceling the loans allow me to be liquid as dividends are paid for the ASB for 2011, unit trusts are sold with cash as payment and the car was sold at a good price.

The journey is not over yet. I have only cleared 30% of the debt I have. I still have to see whether I can get the price I want for my house. What I do after will require another entry. As I cleared a few of the credit card debt, banks which always on the look-out for someone who has more than he can spend is already calling more offering me new loans. Then, my feet, knowing me, starts to itch to travel somewhere far.

Let us see how much of the 'want' I can resist so I can totally clear up the debt.

Social media ROI : A personal experience

2012-01-16T23:32:00.000+08:00

As a lawyer and an author, I use social media extensively to promote my service and my only book. As lawyers in Malaysia are not allowed to advertise their service conventionally through mass media like in the newspaper or the local television, social media is a blessing.

I always read on so many publication, articles by social media practitioners and experts, about the return on investment (ROI) when you invest in social media. There are so many ways for you to invest in social media. You can do it yourself. You can have a staff within your company to update your social media pages. You can contract it out for a company which claims to know how social media work. You can even spend millions of Ringgit to try to get new clients through social media.

Yes, social media's ROI is about how much time you spend on a FREE platform in order for you to get some form of returns. Amazingly, people who use social media seems to always keep on protesting when any form of change happens to this free media. A few years back, you can only get to be well-known if you work hard and pay. Social media still requires you to work hard but rarely do they ask you to pay, except for the data usage bills either through your handphone network or fixed line connection.

Here are my social media connection. As a person, I am on Facebook, Twitter, LinkedIn, Tumblr and Google+. My book and my legal firm have pages in Facebook and Google+. I also have two blogs. One is where I write about legal issues and property, which I use nowadays as a place to draft writings which I then submit to magazine, newspaper and even will form part of my next book. The other is my personal story about life, marriage, holidays, travel and such.

If you ask me, I believe there is no boundary between the either blogs as I never believe what you did at work or in business will not affect your personal life or vice versa. So, type my names : Khairul Anuar Shaharudin or my internet name : kruel74, in Google or whatever your favourite search engine, you can find me in either one of the listed social media (or maybe a website or two). Oh, I utterly believe in social media that all my businesses (I have a few) do not have websites.

Now that you know where you can find me on social media, let me tell you how much I gain from social media. In a nutshell, I gain more than 50% increase in 2011 in comparison to 2010, from the investment I made through social media. I got businesses from people who know me as a blogger, I got business from people who know me by chatting with me on Twitter, people ask me through Facebook about property issues and then ask me to take care of their legal matters and the blogs contribute by getting editors and producers to feature me either by asking me to write or being guest in radio show.

Last year alone, I was writing for the local daily, the Sun newspaper as I was 'found' in a Facebook group which consist mainly of young people who invest in property, Property Talk and Lifestyle, by a member who is a sub-editor; and that entry resulted in me being on BFM Radio talking about the article which was first an entry in this very blog, after the producer of the 'Property Show' found me through a connection in LinkedIn, Niki Cheong, who is a columnist in the Star, another local daily, who is now in England pursuing his study. Can you see how social media plays as an investment which in turn may (or may not) resulted in you getting rare opportunity.

However, as much as you invest in social media, if you only writes and sit behind the screen and hope to be discovered, you are wasting your time. All the social media cannot help you achieve any returns if you don't meet people, talk to them and let them know who you are and what you can do.

BFM Radio interview No. 2

2012-01-05T15:43:00.002+08:00

My second interview on BFM Radio was done on 27th December just after the Christmas holiday but was aired on BFM Radio on the last day of business in 2011, a Friday, 30th December 2011. I hate the fact I used the word 'actually' too many times. That seems to be my nervous tick but all in all it was better than my first interview in 2010 where I seems to be banging on the table a lot (you can't really hear it in the recording).

You can hear the recording in 2010 in four segments here on various topic :

Broadcast on 24-04-2010

Broadcast on 01-05-2010

Broadcast on 22-05-2010

Broadcast on 12-06-2010

The topic this time around was on Bumiputra property with some pointers on Malay reserved land too. Here is the link :

Investing in Bumiputra lots

Biggest property news in Malaysia in 2011 Part 2

2011-12-29T11:19:00.002+08:00

This is the continuation from my first blogpost on the 'Biggest Property News in Malaysia in 2011 Part 1'. In the first part, the issues were about affordable houses; the effect of MRT on the land cost and the tussle between the landowners and the MRT Corporation on the land acquisition process. The second part covers some of the news affecting investors in 2011 and the few mega property projects in the Klang Valley announced by the private sectors.

Here are four other property news in the limelight in 2011 :

5) 1Malaysia Development Berhad (1MDB) in the news

Announced in 2010 as a fully government-owned sovereign wealth management fund with various fingers in various pies including; a joint-venture with PetroSaudi International Limited to invest in oil and gas and real estate which has since made 1MDB, according to their website, RM425 Million profit through part divestment; the building of Kuala Lumpur International Financial District (KLIFD) in the 30 hectares of the Imbi area bordering Jalan Tun Razak, Jalan Sultan Ismail and the MEX highway and the building of Bandar Malaysia at the current Sungai Besi airport which will offer affordable houses.

1MDB was in the news at the end of 2011 due to the funding that they were said to have received from the government a subsidy of RM1.11 billion in the 2012 Budget although they raised a sukuk worth RM5 billion in 2009; the lack of work on KLIFD; and the acquisition of the 495-acre land parcel which was the Royal Malaysia Arm Force (RMAF) Sg. Besi airport which will be turned into Bandar Malaysia.

The first news is opposition's fodder which claimed that 1MDB seems to be getting funding which it does not need. The second news was finally put to rest with the tender process announced by 1MDB for major foundation work for KLIFD due to take off in early 2012. The last news ran smack into the competitive nature of other government agencies which have already been tasked with building such houses as the price of houses at Bandar Malaysia was announced to be between RM220,000-00 and RM300,000-00.

Here are links you can go through about 1MDB :

- 1MDB official website

- News about Bandar Malaysia in Sg. Besi

- News on the tender process on KLIFD

- The need for fund for 1MDB

6) Return of the mega property projects

At the start of 2011, the mega projects seem to have lost some steam due to the property slowdown within the well-known area of the Golden Triangle of Kuala Lumpur, or so it seems. This happened even when someone bought a RM38 Million penthouse condominium at The Binjai on the Park near KLCC in middle of 2010. It seemed then that the days of the launches of mega property projects in Malaysia are numbered. Then a few announcements which made headlines dispelled this notion. Some of these property developments were old news with new owners or new managements. Some were new projects which seemed to have been planned a long time ago but were just recently launched in 2011. Here are two of the most notables mega property project launches in 2011.

There seemed to be a lot more of property launches as we entered the middle of 2011 as opposed to the quiet 2009 and 2010. It is so much so that banks have started to be choosy in giving out loans. One of it those that made the news was the launch of a new mega development project by NAZA TTDI of their KL Metropolis at where the Matrade building is now situated. Spanning 75.5 acres, it is envisioned itself as the new international trade and exhibition district. Developed in the span of 15 years, it will be done in 3 phases. The gross development value is estimated at RM15 Billion and was launched by the Prime Minister in October 2011.

SP Setia, once a favored property counter on Bursa Malaysia, has finally launched its long awaited KL Eco City in November 2011, which is located at a narrow piece of land at the former Kampung Haji Abdullah Hukum. Located at the opposite of the always busy Midvalley City, one can just imagine the hectic traffic situation of the area bordering Bangsar and the New Pantai Expressway, once it is completed. It will comprised of mixed-used commercial and residential properties which will be placed in a few towers within the 10.1 hectares of land. It is also said to be the first mixed-used commercial property to receive the currently sought after Malaysia Green Building Index (GBI) standard and will be completed in 10 years.

Links on the projects stated above and news on mega property projects :

- KL Metropolis website

- News on launch of KL Metropolis

- KL Eco City website

- News on the launch of KL Eco City

- Wrap up on mega property launches for 2011

7) Real Property Gain Tax

The tax treatment on the disposal of property was changed in 2010. Between April 2007 until the end of 2009, the Real Property Gain Tax (RPGT) was given a holiday. Due to the property market condition within those year, the move was done to fire up a lackluster property market as the world's economy took a tumble. When it was reintroduced in January 2010, the tax treatment for RPGT was totally a different animal than what it was before April 2007.

Before April 2007, RPGT was tiered according to how long you have owned the property. RPGT is calculated based on the profit you make when you dispose of a property at a maximum of 30% within the first year of ownership but becomes 0% on the sixth year of ownership. This only applies to residential property. With commercial property, the amount of 5% from the profit will have to paid as RPGT even after the fifth year.

When it was reinforced (the law was never abolished but was just put on hold) in 2010, the tax treatment for the disposal of property was given a flat 5% tax from the profit you make if the sale was done within the first 5 year of ownership of the property. The way RPGT is collected also differs with a 2% of the transacted price has to be paid before being refunded by Lembaga Hasil Dalam Negeri once it is checked and cleared.

Now, in 2012, after it was announced in the 2012 Budget in October 2011, the RPGT was changed again. Starting from January 2012, RPGT will now be two-tiered. within the same vein when it was reintroduced in 2010, RPGT, which is taxed on any profit gained from the sale of a property will beat the rate of 10% for any disposal below 2 years of ownership. Any property disposed after 2 years of ownership but less than 5 years will still have a 5% levy but none will be levied after 5 years of ownership.

Links on the issue of RPGT :

- My blogpost on RPGT in 2012

- Official portal of LHDN

- Online brochure of RPGT by LHDN

8) Regulation for banks in giving out property loans

In 2011, as announced in Budget 2011, in order to slow down the overheating property market and to stop property speculator in damaging the economy of scale for genuine buyers, especially those who are in need of affordable houses, the government changed the rule on the amount of property loans given by financial institutions at any one time. Using Bank Negara Malaysia as the enforcer, financial institutions can only gives out housing loan in the margin of 70% for anyone who has more than 2 properties. It means that if someone who already has 2 properties bought using housing loans, the next property loan he takes will be limited to a margin of 70%. This does not deter anyone who is cash rich to buy more than two houses and still speculates.

The rule had affected sales of properties as only genuine buyers may now buy property and not speculators. The news of the change of how housing loan is given out by banks through a new ruling by Bank Negara Malaysia did not help, either. It was decided in not so many words, the criteria on the margin of loan and maybe the interest rate levied on a property loan will now change due to the way a housing loan application is calculated. On the table but not yet announced or implemented is the new rule where the calculation for an application of a housing loan will be based on nett income of a borrower and not the current usage of gross income. It may even means that one person or one household with incomes below RM5,000-00 can now only own one property below the price of RM300,000-00. It will be in line with the promotion of affordable houses by the government though.

The links on this not yet determined its accuracy news can be found below :

- News on the nett income calculation for housing loans

- Banks may offer more competitive home loans

- Round up of Budget 2012 on property and construction sectors

These are all the news I consider worthy to be mentioned as the biggest property news in Malaysia during 2011. Some are already being implemented and some are coming days. From what I see, there are only a few keywords to the news : Affordable houses and Curbing Speculations.

HAPPY NEW YEAR 2012!

Biggest property news in Malaysia in 2011 Part 1

2011-12-27T13:19:00.001+08:00

Everyone is doing a list, so why shouldn't I? Furthermore, 2011 has been an exciting year for the property market in Malaysia. Not every news is necessarily can be considered as good news. It seems that there are property news for everyone in Malaysia.

Those low-income group who never owns a house received various news about houses which they now can afford. Those who had just graduated and started working can now afford to buy a house. Those who have worked a few years and found it hard to buy property can now afford to do so. The business communities are getting new business enclaves. Speculators in property prices especially those who buys residential houses got their fair share of news too.

Let us go through these news which can be found the whole year of 2011 :

1) MRT finally got off the ground

Of course, one of the biggest news this year is when the government decided to finally integrate the public transportation system by having the Klang Valley Mass Rapid Transit (KVMRT) as the final piece in the puzzle that has never been completed properly. Klang Valley public transports are always fragmented with KTM's Komuter, LRT, Monorail and a few bus companies plying the route. Launching it in July 2011, after announcing it back in June 2010, Dato' Seri Najib, Prime Minister of Malaysia, said that he hopes that it will finally solve the woes of the city dweller by allowing them to park their car from wherever they are staying and ride public transport to work or wherever they need to be in the city.

The biggest news which came in light of the MRT project, among others were :

a) Its alignment as to where the train will passes and who will benefits from it;

b) Land acquisitions which had threaten a few heritage sites and the issue of land surface acquisition vs. underground land for the projects. Among notable cases which were filed in court due to this matter were by businesses in Jalan Sultan (Chinatown), Jalan Imbi and Jalan Bukit Bintang;

c) The possibility of the rise of land prices wherever the MRT will pass and the issue of MRT Corporation getting involved in property development;

d) The issue of the contracts awarded and whether the right companies were given the right jobs. This is one issue which will never fully resolved as this RM40 Billion project has so many interested parties.

Some news and link on MRT :

- KVMRT Official site

- News on the launch

- News on some controversies surrounding MRT

2) My First Home Scheme

My First Home Scheme covers houses (first or second hand houses) between the price of RM100,000-00 to RM220,000-00 for first-time homeowner. In the 2012 Budget, the maximum price for this scheme has been raised to RM400,000-00. The scheme is given in the form of 100% housing loan provided by various financial institutions which include Maybank, CIMB Bank, Affin Bank and RHB Bank, among others. The 100% housing loan is due to the arrangement where the first 10% payment to buy the property will be guaranteed by Cagamas Berhad and has a maximum tenure of 30 years. This means that the 10% will be paid by Cagamas and the buyer will owe the amount to Cagamas. It is only open to Malaysia citizen below the age of 35 years old with household income of less than RM3,000-00. This scheme is already open for application and the executors for this scheme are the banks. You can check the scheme at any participating banks.

Here are some news and links on the My First Home Scheme

- National House Buyers Association interview in iProperty.com

- My blogpost on My First Home Scheme

- The Star coverage on My First Home Scheme

- Slow response to the Scheme and controversy

3) Perumahan Rakyat 1 Malaysia (PR1MA)

Launched in May 2011 and is known as 1Malaysia People's Housing Scheme/Perumahan Rakyat 1 Malaysia, hence the acronym PR1MA. Unlike the My First Home Scheme, the executor for this project is a new entity which acts much like a housing developer. It will identify locations around Malaysia and build houses for people who fulfill certain criteria. The corporation is called 1Malaysia Housing Program Corporation has been established and as of today, two projects have been launched under it. One is in Putrajaya and will be built by PR1MA itself and the other one is a joint venture between PR1MA and Sime Darby Property in Bandar Ainsdale, Seremban. The mode of allocating the property to the masses is through balloting.

The price of the houses in this scheme are between RM100,000-00 to RM220,000-00. The criteria to be eligible for this scheme is that the applicant must be Malaysians who never own a house before (first time homebuyer) and has a household income of RM6,000-00. Some of the features for the houses build by PR1MA include the exemption of stamp duty, eligibility of 105% loan from selected financial institutions with the 5% to be utilised to pay insurance and legal fees and a lock-in period, where the housebuyers cannot sell the house within the first 10 years of ownership. An Act of Parliament has been enacted for this scheme and was passed in early December 2011.

Some links on PR1MA :

- PR1MA official website

- News on the passing of the PR1MA bill in Parliament

- News on the first balloting in Precinct 11, Putrajaya

- Announcement on Bandar Ainsdale

- My blogpost on the difference between PR1MA and My First Home Scheme

4) Syarikat Perumahan Negara Berhad to build 10,000 houses in 2012

The seemingly current bridesmaid's company to the government's effort in providing affordable houses. May even be asking itself why is it sidelined while these news on My First Home Scheme and PR1MA filtered in. At the end of 2011 SPNB can be seen to be back in the news. As explained by the Prime Minister when the PR1MA bill was tabled in early December, PR1MA will concentrate to build affordable hosing in the urban area whilst SPNB will still build affordable housing in the rural area. The statement by the PM is supposed to solved the problem on the overlapping functions of these two government agencies.

It was announced at the end of 2011, SPNB had signed an agreement with Bank Simpanan Nasional (BSN) which will provide financing for the 10,000 units of houses which SPNB had been tasked to build in 2012. The cost was estimated at RM650 Million with the government subsidisind the building of the houses with a RM200 Million subsidy and the balance will be financed with the housing loans provided. This is with each house estimated to cost around RM65,000-00.

For the past few years, SPNB has been offering affordable houses in a various categories which overlap what PR1MA has to offer. Among them were Rumah Mampu Milik (Affordable Houses) and Rumah Mesra Rakyat (Rakyat-friendly Houses). An example of the former is Alam Prima which is located in Section 22, Shah Alam and the latter can be found in various small town in Selangor such as Kuala Selangor and in rural areas in Sabah and Sarawak. SPNB is also the agency in charge to revive abandoned projects around the country and to act as the contractor to build more government quarters.

Depending on how you see it, there is a lot of overlap between the government agencies in providing affordable housing to the masses. One other question which beg an answer is how will the government ensure that nobody will abuse the offer of so many affordable houses by various government-linked companies. There is also the issue about the term of 'affordable housing' when the government raised the limit of My First Home Scheme's house price to RM400,000-00 and even now contemplating to raise the household income eligible for the scheme up to RM7,000-00.

The links on SPNB :

- SPNB official website

- Vote buying using affordable houses

- New understanding between SPNB and BSN

- My blogpost on affordable offered by Federal government and the Selangor state

klia2 : Why not?

2011-12-02T10:48:00.001+08:00

I was invited to a briefing by Malaysia Airports (MAB) at the Courtyard Garden somewhere in Jalan Dungun, Kuala Lumpur. After braving the horrendous traffic and the heavy rain, I managed to arrive slightly before 8pm. The moment I stepped into the restaurant, I was surprised to see a familiar face which I have seen in various media before. It was the face of Tan Sri Bashir Ahmad, the CEO of MAB. Then as cards were exchanged, the names that I saw on the cards were surprising too as all the top managements of MAB were there. There were the Sr. GM of Operations, Dato' Azmi Murad and GM of Corporate Communications, Nik Anis, among others. It made me curious but excited for the session to start.

The moment the briefing starts, with Tan Sri Bashir taking the lead, I can say that it was a public relation effort by MAB with the social media. When I look around the room, I can see a few familiar faces like Christopher Tock, Patchay, Thomas Yap, Daniel Cerventus and Firdaus 'Feeq' to name a few who are part business, travel and lifestyle bloggers. As the briefing was going on, they were basically tweeting about what was unveiled in front of their eyes. The briefing was on the specifications of the new klia2 which will be completed in 2013. And it started with this Youtube video :

After the video presentation, Tan Sri Bashir announced that there are no low cost terminal in the world for them to use as a reference, hence klia2 was built according to the need of the low cost operators such as AirAsia. Then Tan Sri Bashir gave us the facts and figures about the size of the terminal : 257,000; the contact stands : 68; the capacity to handle how many passengers : 45 Millions; the fully automated Baggage Handling System (BHS); a dedicated runaway (Runaway 3) an aerobridge (where plane can taxi below it to go from one side to another after landing and save time) and connectivity between KLIA and klia2. He also told us how MAB increased the capacity according to what is asked by AirAsia. The whole list of what klia2 has to offer can be found at MAB website : Latest News on klia2.

That was the kosher part of the briefing and as expected, questions came fast and quick with most of those who attended the event wanted to know what is the controversy that seems to be created by AirAsia. If you don't know anything about what is the stand-off between AirAsia and MAB is all about, read this blogpost by Tony Fernandes : Say no to airport tax increase and this report by Malaysian Insider about the issue (a two sided version and read the comment section to) : MAHB removes AirAsia anti-tax hike posters, stickers. So, this controversy is all about a hike of RM7-00 in contrast of us never knowing we had been paying airport tax through airlines we've flown in the pre-AirAsia era.

Here is my two sens worth.

The new klia2? Nice and amazing. I was told they are trying to emulate Dubai and Changi. There's hotels, there's retail experience and good restaurants/food outlets. Good and well. Here's a question I asked and didn't really get an answer. Will you have a resting area like what Dubai and Changi have for those who doesn't want to pay any hotels or whatever additional cost. A settee or a reclining seat which you can sleep on for 2 to 3 hours and a bathroom with shower facilities and such. The answer was not fully given meaning, they may not have it.

Then the issue with AirAsia. Sorry to say, I don't agree at all with AirAsia. This carrier thrive on every sen it collects from its consumer. Simple mathematics will show that they have been collecting additional charges without explaining why and which seems to go only into their pockets. And the eccentricities of its own, one Tony Fernandes which is trying so hard to be the next Richard Branson (whom he has a close relationship with) does not show any regards for others. Yes, he did bring low cost carrier in a big way into Asia but he is not the solve all, end all solutions. He still has a long way to go. And with an increase of airport tax, he is losing RM7-00 which he can play with to tax his next passenger. For all you know, anticipating an increase, he will increase his charges first. MAB is having a tough time as Tony is popular and a smart businessman.

I fly on leisure quite a lot and AirAsia is not my instant choice. I know people use AirAsia if they planned ahead and with their marketing strategy and their pay first, fly later promotion, they are quite popular. klia2 maybe relevant to be a better choice than the current LCCT but I may not be one of its frequent user when it comes into being. If the price increase of RM7-00 is to make sure klia2 will be a better terminal, for me, I would gladly accept it.

As for me, as I have tweeted after the briefing, what I find to be the best information I got from MAB is that a Victoria Secret's pop-up store has opened in the satellite building in KLIA. As for someone whose both kampungs are within the vicinity of both airports, I have long ago given up on having an airport which will benefit them as truthfully, it does not. Here is my long ago blogpost on the matter : How I lost my kampung...

Abandon housing project solution in Malaysia?

2011-11-17T12:02:00.001+08:00

In Malaysia, there was once this institution called Danaharta. It was owned by the government. It goes around helping banks with high non-performing loans to manage and finally settled this problem. It was in existence from 1998 to 2005. It was a non-profit organisation with impossible Key Performance Index and it managed to settled all the problems in the banking industry with an act enacted by Parliament. It saved a banking industry. It was ahead of its time. It was the brainchild of a genius in the government then and it was run by people who were really good at what they were picked for. Now, Danaharta has become Proharta and is a private entity.

During the existence of Danaharta, it did got involved in abandon housing projects as Danaharta was given the power by Pengurusan Danaharta Nasional Berhad Act 1998 gives it the right to acquire, manage, finance and dispose of the assets and liabilities of a financial institution in trouble. And the bulk of the financial institutions that were in trouble were dealing with abandon housing projects. Although Danaharta was not established to save abandon projects, it became so. During the period of 1998 until nearly 2005 (even later), you can see Danaharta taking the advertisement spaces in major newspaper to sell off properties like factories, commercial properties and even residential. Danaharta was also known to revive abandon housing projects, clean up the management and sell it off too. It did made a tidy sum before closing down shop.

Was before there was Danaharta, the Bank Negara Malaysia also had an entity called Tabung Projek Perumahan Terbengkalai or now better known as TPPT. It was established in 1990 and ceased in 1992 after reviving 19,000 units of properties. It used a fund under Tabung Pusingan Perumahan Kos Rendah which was provided by Bank Negara Malaysia. Nowadays, TPPT Sdn Bhd has moved away from its office in Bank Negara itself and is another housing developer in Malaysia which used its early days as reviver of abandon housing projects to sell new and completed houses. Here's a link to its website (a bit outdated though) - TPPT Sdn Bhd.

In the housing industry nowadays, since years ago, we seem to be facing the problem of housing development being abandon long before the housing project is completed. It is a bit of a mystery why a law which was enacted since 1970s didn't address the issue of abandon projects. What the law before 2007 had was clauses which ask housing developer to have RM200,000 in its Housing Development Account at any one time and this is the only money supposedly they need to maintain if they want to be in operation. There are penalties which the enforcing authority under Kementerian Perumahan dan Kerajaan Tempatan (KPKT) imposed but are usually paid by the culprits of abandon housing developments without any problem.

The amendments to the Housing Development (Control and Licensing) Act 1966 in 2007 was supposed to add additional penalties and address the issue of abandon housing development. It did stop the fly-by-night establishment of new property developer who circumvent the law by being a bit clever. Here was the scenario in early days of the 2000s. These law benders, some of them have legal background, circumvented the law by building houses without being penalised. The law stated that any person who build more than four (4) houses and sell it for profit is considered to be a housing developer and whatever they do is considered to fall under the housing development law. What these developer did was to sell bungalow plot without any property built on them under one agreement and another agreement is signed for a bungalow to be built on the property. So, they became outside the law before the amendment in 2007 which states that any housing development that KPKT found to be similar to housing development will fall under its purview.

Now, the first bill of the amendments to curb the housing development is on its way through Parliament. The news on 17th November in The Star Property mentioned among other that fines will be increased to RM50,000-00, housing developer need to refund cancelled Sale & Purchase Agreement within 30 days with fine starting from RM250,000-00 and RM5,000-00 for each day of non-compliance and the best of all, the Housing Development Account will now be 3% of the housing project development total cost and not just RM200,000-00.

I find the new law to be refreshing as it will ensure only housing developer with deep pockets to enter into the business of housing development. There will be complains about certain housing developers to not being able to meet the requirement and we can already hear the Real Estate and Housing Developer Association (REHDA) breathing down the neck of the Minister trying to tweak the Act to suit them but I really hope KPKT and Attorney General office will stand firm on these amendments. National House Buyers Association (HBA) will agree to the amendments as they have been fighting for so long for a solution to the issue of abandon housing projects problem. Here are one of their view on abandon project : Cleaning up abandoned or stalled housing projects

In the meantime, I am also hoping that another effort will be made by the government on all the abandoned housing developments around the Malaysia. The last I heard it was spearheaded by Syarikat Perumahan Negara Berhad (SPNB) which is also tackling the issue of affordable housing. The problem with an institution such as this is when they have to deal with the state governments which sometimes are a bit slow in giving their approval to help the process along. My suggestion is either an institution like Danaharta or TPPT should be given all-encompassing power again or SPNB should be given more power and allocation which can take over and manage the abandon housing development.

Google+ Page of Khairul, Suhaila & Hazlina

2011-11-10T15:29:00.001+08:00

I have always believe in utilising social media even before the term was popular. When I was told by a friend about Google+ Page, which is kind of but not exactly like Facebook Page, I straight away jumped at the opportunity to create my medium sized legal firm's Google+ Pages. Unlike the unsearchable Facebook Page, here's a searchable alternative.

Khairul, Suhaila & Hazlina's Google+ Page

Or, if you are more into Facebook :

Khairul, Suhaila & Hazlina's Facebook Page

Here is the Google+ Page for my book :

Ask the Lawyer!'s Google+ Page

and the Facebook page :

Ask The Lawyer's Facebook Page

And for the past two weeks, I have been appearing in articles in online and offline publication. One is an interview by the Sun, a local newspaper about my book and they took excerpt from 5 questions which can be found in my book and another one where I was interviewed by Malaysian Insider, a local online news portal, about affordable housing in Malaysia (they got my name spelled wrong - 'Anuar' was spelled as 'Anwar' and I gave more leads which the reporter followed through than actually giving much about subject matter itself)

The Sun's interview picture :

and the link to the Malaysian Insider article :

Affordable housing the new way to win votes in Malaysia

Real Property Gain Tax in 2012

2011-10-24T14:58:00.001+08:00

The 2012 Malaysia Budget was announced a few weeks ago and one of the thing that was announced was the change in the Real Property Gain Tax in 2012. In order to understand the tax that was levied before, let us go a bit further. Pre-2009, the time before the Real Property Gain Tax was tweaked to inject some excitement into the property players in Malaysia.

The Real Property Gain Tax was not what it was today. It was a charge of a whooping 30% for any property disposed 2 years from the date it was bought (the date on the Sale & Purchase Agreement or whatever form of transfer which allow a person to own land in Malaysia). It goes down as the year goes up. 20% for the third year disposal; 15% for fourth year disposal and 5% for fifth year disposal. And after the 6th year, no tax is levied. Here's a little secret, this Rates of Tax was NEVER repealed. It was just suspended by a decree in Parliament and it was passed through debate. And it was done in 2009 for the Budget 2010.

The change in 2009 was as a measure to excite the market and the market was excited that it got confused when the rate was 5% for only some of the years and not across the board. Under pressure, an announcement was made at the end 2009 so that any sale done by anyone after January 2010 was taxed at 5% whatever the year it was disposed. That is much, much lower than the 30% right? However, the government does want you to pay the 5% regardless whether you will be taxed or not. As long as you sell your property and make a chargeable gains or simply said, a profit, you need to pay that 5%. Only after looking through all the documents filed by your lawyer or yourself, and if you profit is not taxable according to the rates of tax, only then will the money be refunded.

Then, a change is now at hand which will be in force in 2012. For any property sold after it was purchase for 2 years, a 10% tax is levied. That is not so bad right? Just hold the property you have invested in to make money for 2 years and then sell the property. If you don't have the time to wait, factor in your Real Property Gain Tax cost into your profit. And there are other factors you can add into the selling price of the property. All your cost to buy, maintain and even sell the property can be factor in. Such as your legal fees, your renovation cost and your advertisement cost (even your real estate agent cost). When you send your Real Property Gain Tax form, send the Inland Revenue Department the receipts for all the said item. And please remember, you can get once-in-lifetime exemption for the property you have lived in all your life which you consider as your private residence.

Although the change in the tax regime for property acquisition is good, it will not help speculators to stop speculating. Government seems to forget a few things when they formulate their strategy. They still have not make property ownership easier for those who are under the Malaysia My Second Home campaign. For now, the participants of the scheme need only to put in some money and show proof of the deposit. They should just tweak it so that they are allowed to buy properties in certain areas and put in a caveat about when and how it can be transferred. That can create ripple effect for that area and maybe a new set of tax rate can also be levied on them. Please remember that Malaysia still has one of the cheapest property prices in the region (in contrast with Singapore and Hong Kong)

Altium @ Damansara Perdana

2011-10-06T13:28:00.001+08:00

Does Petaling Jaya need a skyscraper? Actually, there is no real skyscraper in Petaling Jaya and that Telekom Tower you see when you use the Federal Highway is not one. That is in Kuala Lumpur. A few weeks back, I was invited to the launch of a new skyscraper in Petaling Jaya, specifically at the busy and vibrant Damansara area. It was also to announce the ambassador for this new commercial building.

The said commercial development is The Altium at Damansara Perdana. And the said ambassador is non other Jojo Struys, better known as a TV personality and columnist with The Star. The developer for the project is AQRS, The Building Company.

The Altium is a unique building which marries Green and Technology. The Altium consist of three main components. The Prime, a 22-level Grade-A MSC compliant green corporate office; The CEO Suites, 12-level SOVO Suites, a lifestyle and work solution business suites and The Pulse, a 3-tiered retail and F&B podium, a place for social and business networking.

To see more of the Altium, here is The Altium homepage.

Mind-fucking students' mind

2011-09-13T16:40:00.001+08:00

What do you actually do when you go to university?

Learn? Yeah, right. Only 10% of all students really study at all time. The other time? They will be hanging around doing nothing and some even goes the distance doing various delinquencies. Where else most people learn how to smoke pot.

I was not the naughtiest or the learned student in my batch of '98. I studied locally and I never work for anyone. I build my business from scratch and the road was not rosy at all. So, I do know a few thing about being an entrepreneur. Not being related to any royalty or politician in Malaysia will take me longer to drive that Ferrari.

My ranting above is related to an experience I had this morning.

I was asked to be a part of a project related to making local university's students to think outside the box. As I was busy bullshitting the student council members who was enraptured with whatever all that I can think of including embracing social media and even a dose of real life situation vs. life in the university, the lecturers who is supervising them came in.

I bet she was horrified at what I was telling the students. Especially when I told them about their alumni members who are now making a living by singing and doing public relations unconventionally.

She then expertly divert the students attention to the need to use their mind to focus on how to read case law while applying various techniques to do more research. I did divert her mind that I do understand their need to be educators by saying the alumni members used their legal trained mind to apply it to their everyday business.

I tweeted just now, I think as much as the project is under the patronage of their Vice Chancellor, the best way to make the students competitive when they enter the job market in one or two years with a high income is to make them realised that the world out there is big and a law degree doesn't help you gain more money or even make you get ahead of your career unless you really apply common sense and teach the teachers to think outside the box.

At the back of my mind, I was actually thinking, the students who are now successful adult, no thanks to the oppressive nature they were asked to learn, are what they are due to the oppression. Whatever it is, when the slot I was given comes, the only way I can make them see the way the can be successful is to mind-fuck their young minds.

Only then can they truly see the light...