Poor 3G services under MCMC scrutiny, a move in right direction

3G services under MCMC scrutiny - Telcos using 900/1,800 Mhz instead of 2,100 Mhz



PETALING JAYA: The Malaysian Communication and Multimedia Commission (MCMC) has issued a stern warning to cellular companies that are providing 3G services on lower-than-agreed bandwidth, causing a deterioration in the quality of 3G services.

Most of the 3G players are using the 900 megahertz (MHz) and 1,800MHz frequency bands to roll out 3G services instead of the primary 2,100MHz band meant for 3G.

The regulator has given the players till the end of the year to come up with a plan to rectify the situation or face hefty fines, given the rise in the number of complaints regarding the capacity and speed of 3G services.

“We did an audit over three months ago and this has come to light. They have been putting up 3G coverage but not capacity and speed, and hence, the 3G services are slow. We issued the warning two weeks ago and have given them till the end of December to come back to us or action will be taken against them,” MCMC chairman Datuk Mohamed Sharil Mohamed Tarmizi told StarBiz yesterday.

He, however, added that “some of them have taken steps, but a lot more needs to be done”.

The rationale for telco operators to roll out their 3G on the lower bands is simply because it is more cost-effective to do so, according to telco experts.

Simply put, the higher the band, the higher the data capacity that can be carried on that network. However, the higher bands have smaller areas of coverage, and hence, the investment has to be higher.

“Some players have economised on investing in 2,100MHz to push coverage instead of higher capacity and speed. They are trying to compromise on quality. They may be stretching their dollar by not putting in enough base stations despite having made a lot of money all these years,” said an telco expert.

Another added that “consumers need more bandwidth for tablets than phones and this means the players may have compromised on the quality of service. Perhaps, some of the players had underestimated the tablet demand and had under-provisioned”.

The four recipients of the 3G spectrum are Celcom Axiata Bhd, DiGi.Com Bhd, Maxis Bhd and U Mobile.

The four players did not respond to queries from StarBiz as at press time.

“The concern is two-fold – first, there is concern about the quality of service of existing customers on the 900MHz/1,800MHz spectrum.

“Second, and more important, is the fact that rolling out 3G on any spectrum other than 2,100MHz could mean under-utilisation of the 3G primary band given to the players by the Government to provide maximum benefit of higher data capacity and speed to consumers,” said the expert.

“The onus is now on the regulator to find out if the Internet data rates charged for 3G services commensurate with the actual delivery of speed and capacity. If not, then consumers should not be burdened.”

Late last year, MCMC also dished out parts of the 2,600MHz spectrum band to eight players, including the main incumbent telco operators, to roll out 4G/ long-term evolution or LTE services.

Some of the players have asked to be allowed to upgrade on the 1,800MHz, on top of the 2,600MHz. Again, this would be a move to provide less capacity, but the regulator does not want a repeat of the 3G debacle.

Sharil said: “We have mandated that for every two base stations on 1,800MHz, operators will have to roll out one base station on 2,600MHz, as they have to provide adequate capacity and not coverage alone.

“The lower-bandwidth base stations are to accommodate for some handsets usage.”

MCMC has been making serious efforts at raising the quality of services for consumers in Malaysia.

Last year, it conducted a survey and found that the rate of dropped calls was bad among certain operators, and highlighted its findings.

- Contributed by  B K Sidhu The Star Nov 28 2013

MCMC moving in right direction - Operator must live up to their 3G claims!

KUDOS to the Malaysian Communications and Multimedia Commission or MCMC for checking on what the operators have been doing on 3G deployment.

The commission seems to be moving in the right direction in checking on the quality of services, which is a concern, and said to be lagging behind Hong Kong, Seoul and even China.

Over two months ago, the regulator did an audit check and came up with some interesting news. It found out that most of the 3G operators have not been using the 2,100 megahertz (MHz) spectrum fully to roll out 3G services. Instead, some have been using the lower bands, 900MHz and 1,800MHz, to roll out the services. It’s more economical to do so. They have been providing 3G coverage but not real 3G speed and capacity.

3G is meant to give you higher speeds just like 4G can give you super-fast data speed.

3G has been in the country for nearly a decade. The first two blocks of 2,100MHz spectrum were awarded to Celcom Axiata Bhd (then part of Telekom Malaysia Bhd) and Maxis Bhd in 2002.

Four years later, in 2006, Time dotCom Bhd (TDC) and MiTV Corporation Sdn Bhd got two more blocks of the same spectrum. MiTV’s spectrum is used by sister company U Mobile, while TDC, as soon as it secured the spectrum, sold it to DiGi.Com Bhd for a handsome profit.

To be fair, 3G has never taken off despite the hype. In Europe, operators paid hefty sums for the spectrum, while here, it was for a small fee.

But a decade later, finding out that the operators are still on a bandwidth that is lower than 3G and claiming to be offering 3G services makes us wonder if we have been overcharged.

This, perhaps, explains why there have been complaints about the 3G service; the speed and capacity have not been there, and it has been patchy and unreliable for most users.

There is no denying that the operators have been investing. It is not easy for them, as they have to deal with all kinds of challenges and authorities to get the service to the customer. However, when they claim it to be 3G service, it should be 3G service.

Two weeks ago, the operators were issued a stern warning to make the change or face hefty fines. One operator is rushing to do so, while the others are still waiting. They have till the year-end to face the regulator.

It is also unfortunate that it has taken the regulator so long to find out, as now the march is towards 4G and consumers will never find out how much extra they would have paid for the 3G service if it is not 3G speed and capacity they are getting.

But then, had the regulator not found out, consumers would not have found out, too. This tells us a lot about the state and quality of services, the promises and marketing pledges made, the pricing, the spectrum usage and all the money paid by consumers for what they had thought were 3G services.

However, as consumers, what do we benchmark our 3G services against? The onus is on the regulator to both set the benchmark and make sure it is adhered to. When we pay 10 sen for a product, we do not expect a five-sen product.

This is unfortunate, especially since our operators make among the highest earnings before interest, tax, depreciation and amortisation margins in the world. When they make so much, they should not compromise on service in the pursuit of profits.

Consumers should get a fair deal for what they are paying for. If indeed there has been any inconsistency, then the parties involved should be gracious enough to admit it and compensate the consumer.

Contributed by B K Sidhu The Star Nov 29 2013
Business Editor (News) B K Sidhu feels the local regulator should follow what the European regulators do; force operators to drop broadband charges.

China monitors US bombers in defense zone

 China's defense ministry spokesman Geng Yansheng on Wednesday said the country has observed US B-52 bombers flying in the newly established air defense identification zone over East China Sea.


http://english.cntv.cn/program/newsupdate/20131128/102355.shtml

Geng said the US aircraft flew south and north along the eastern border of the East China Sea Air Defense Identification Zone from 11:00 a.m. to 1:22 pm Tuesday, about 200 km to the east of the Diaoyu Islands.

The Chinese army monitored the entire process, carried out identification in a timely manner, and ascertained the type of aircraft.

"We need to stress that China will identify every aircraft flying in the air defense identification zone according to the country's announcement of aircraft identification rules for the air defense identification zone," Geng said.

"China is capable of exercising effective control over this airspace," Geng added.

China announced the East China Sea Air Defense Identification Zone on Saturday. The US State Department and certain officials expressed concern after the announcement.

Pentagon spokesman Colonel Steven Warren said Tuesday that the US conducted a training exercise that had been planned for a long time. It involved two aircraft flying from Guam and returning to Guam.- Xinhua

US B-52 bombers challenge China's new ADIZ

China's latest move in defending its sovereignty is facing opposition from other countries. Two US B-52 bombers have flown over the Diaoyu Islands in the East China Sea, in defiance of the air defense identification zone set on Saturday. China is taking a measured response, while stressing that it has the ability to manage and control its airspace.

http://english.cntv.cn/program/china24/20131128/100592.shtml

Just days after China announced the establishment of an air defense identification zone, or A-D-I-Z. The US sent two B-52 bombers through the zone and over the Diaoyu Islands

China’s defense ministry asserted it has the ability to control the airspace. It says it identified the aircraft and monitored the entire two hours and 22 minutes.

The US said it was a long planned training mission, and put its own spin on the matter to fault China.

"This unilateral action appears to be an attempt to unilaterally change the status quo in the East China Sea. This will raise regional tensions and increase the risk of miscalculation, confrontation, and accidents. We have made this case to China." US State Department spokeswoman Jen Psaki said.

Japan, which claims the Diaoyu Islands as its territory, was quick to join its ally.

“Our stance is that China’s move cannot be accepted, and so I think the US is also dealing with the issue with the same stance.” Japanese defense minister Itsunori Onodera said.

Aircraft flying through an A-D-I-Z must report a flight plan, maintain two-way radio contact and respond to identification inquiries, or face defensive emergency measures.

More than 20 countries and regions use such zones, including the US and many of China’s neighbors.

The Foreign Ministry called for calm, saying the zone does not target any country.

"China’s establishment of an air defense identification zone over the East China Sea is a legitimate exercise of the right of self-defense. It’s not aimed at any particular country or target. So we hope that the countries concerned will not overreact or panic over the event." Chinese Foreign Ministry spokesman Qin Gang said.

China has also lodged protests over US and Japanese criticism. The country says the establishment of the zone has a sound legal basis and is in accordance with common international practice.

Related post:

China sets up air defence zone over East China Sea, a strategic move

Are you settling PTPTN student Loan? Over 45,000 defaulters settling out of records total of 412,245

OVER 45,000 National Higher Education Fund (PTPTN) loan defaulters have come forward to settle their unpaid loans totalling RM23.44mil.

Deputy Education Minister Datuk Mary Yap said these defaulters had come forward to settle their dues following legal action initiated against 132,801 defaulters which included blacklisting them with immigration authorities.

“Following this, some 45,550 loan defaulters came forward to negotiate loan repayment with the PTPTN administrator with the amount at RM23.44mil,” she said in reply to a question by Wan Hassan Mohd Ramli (PAS-Dungun).

Yap said graduates were given 16 months upon graduation to secure a job and start loan repayment, after which three-reminders would be issued to defaulters over a period of six months before legal action is initiated against them.

“However, legal action and blacklisting them with the immigration authorities would only be the last resort. What is important is for them (loan defaulters) to come forward to negotiate their repayments,” she added.

To a supplementary question by Datuk Nawawi Ahmad (BN-Langkawi), Yap said there was no “automatic mechanism” to deduct the salaries of defaulters.

However, Yap said defaulters employed by the Public Service Department would be easily identified and issued notices to repay their loans.- The Star Nov 26 2013

PTPTN records total of 412,245 loan defaulters, says Muhyiddin 


KUALA LUMPUR, Sept 30 — A total of 412,245 borrowers did not service their National Higher Education Fund Corporation (PTPTN) loans as at August 31, said Education Minister Tan Sri Muhyiddin Yassin.

The deputy prime minister said, of the total, Malays formed the largest number of defaulters at 328,550, followed by the Chinese (55,445) and Indians (28,250).

He said there were currently 1.24 million PTPTN borrowers when replying to a written question by Lim Lip Eng (DAP-Segambut) at the Dewan Rakyat here today.

Muhyiddin said the enforcement implemented included blacklisting errant borrowers from going overseas, as well as summonses to raise defaulters' awareness, understanding and responsibility to repay their loans.

He clarified that such action was not made arbitrarily, without any room for borrowers.

“Based on its existing work procedure, PTPTN has been flexible in recovering loans from borrowers before they are blacklisted,” he said, adding that the move to blacklist, via immigration department, was a last resort to remind hardcore defaulters to repay their loans.

Muhyiddin said PTPTN had opened 12 state PTPTN offices, two one-stop centres and four branch offices at strategic locations to enable borrowers to negotiate loan settlement.

Apart from that, he said PTPTN had also given borrowers an incentive as announced by Prime Minister Datuk Seri Najib Tun Razak in the 2013 Budget last year.

It involved a 20 per cent discount for the settlement of the entire loan from October 1, 2012 to September 30, 2013 while PTPTN would continue to give a 10 per cent discount annually for those who made consistent repayment according to schedule from October 1, 2012.

Meanwhile, Muhyiddin said 1.36 of the 1.42 million or 88.9 per cent of the Muslim pupils from Year One to Year Six could master Jawi.

“There is no data on non-Muslim pupils who are literate in Jawi as Jawi is taught in Islamic Education,” he said. He was replying to a written question by Er Teck Hwa (DAP-Bakri) who wanted to know the number of trained teachers with qualification in written Jawi, as well as the number of Bumiputra and non-Bumiputra pupils who were literate in Jawi. — Bernama

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Group buying giant Groupon, CEO Joel Neoh

Working conflict: ‘I tend to think of my work as leveraging conflict rather than managing it and often times, we learn the most through conflict,’ says Joel Neoh of Groupon Malaysia.

From runway model to successful entrepreneur, Joel Neoh will give any 30-year-old a run for their money.


AT the age of 20, he earned his first million – after founding a fast-growing student agency set-up. Three years later, he emerged as the winner of Malaysia’s first corporate reality TV programme, The Firm, despite being the youngest contestant on the show.

Joel Neoh has come a long way since. Now, he is an integral part of one of the world’s fastest growing companies, Groupon (as listed by Forbes in 2010).

Apart from juggling his day to day as the CEO of Groupon Malaysia, Neoh heads Groupon Asia Pacific, overseeing operations for the public-listed group-buying website company in 11 other countries: Japan, Australia, New Zealand, Korea, Singapore, Hong Kong, Taiwan, India, Indonesia, Philippines and Thailand.

The mechanical engineering graduate, who also modelled part-time during his university days, has been named Ernst & Young’s Entrepreneur of the Year 2012, Asia’s Top 10 Young Entrepreneurs by Top 10 of Asia magazine, and most recently, Young Global Leader 2013 by the World Economic Forum. Earlier this year, as a result of his professional achievements, Neoh was awarded the Malaysian Service Medal by the Prime Minister, Datuk Seri Najib Tun Razak.

Appointed as a key line-up speaker for The London Speaker Bureau and Asian Business Angel Forum in 2012, Neoh now also serves on the Advisory Board for the School of Business, Monash University.

That’s a whole lot to take in, for someone who just turned 30.

“Growing up, I was always asking a lot of questions; always challenging the status quo. I must’ve annoyed a lot of people. But looking back, I think that’s one of the key criteria of an entrepreneur – curiosity,” he said over a phone interview, undoubtedly squeezed in between his daily meetings.

In 2006, Neoh had set up Youth Malaysia, a non-government organisation that managed events for youths. After the successful conceptualisation of YouthSays, a survey platform for Malaysian youths (which become a big revenue churner), the organisation went on to organise Youth 08 – arguably the largest youth festival at that time.

After organising its third youth festival in 2010, Neoh realised that the Internet offered great business growth opportunities and that e-commerce, especially, was the holy grail of the World Wide Web.

In September 2008, Neoh founded GroupsMore, a Malaysian e-commerce company based on the business model of US-based Groupon Inc. Within three months, GroupsMore was catering to over 20,000 customers.

The company’s seemingly overnight success eventually caught the attention of Groupon Inc and instead of filing a lawsuit for copyright infringement (which Neoh feared when he first heard from them), the American corporation expressed interest in collaborating with its Malaysian counterpart.

In January 2011, GroupsMore was acquired by Groupon for an undisclosed sum and Neoh’s company became known as Groupon Malaysia. Under Neoh’s stewardship, Groupon Malaysia has become the leading social e-commerce platform in Malaysia and was dubbed the fastest growing country in Groupon for 2011.

“I’m always looking to take up the biggest challenges because I know that would give me the largest opportunity for growth and learning. It was difficult at first – while my friends were excited that it would soon be payday, there I was, worrying about whether I had enough money to pay my staff. My journey as an entrepreneur has evolved and every day is a challenge. But I believe in never, ever giving up,” Neoh opined.

Neoh also believes in this: recruiting people who are significantly better than himself. “I make it a point to hire people who have better skills so that we can all learn from each other. So far, we’ve brought some of the best talents onboard.”

Of course, doing that also requires the man to set aside his ego.

“It’s hard, but it must be done. There’s no point in hiring people who aren’t better than I am, because all I’d would get be team that listens to me, without really challenging what I have to say. I tend to think of my work as leveraging conflict rather than managing it and often times, we learn the most through conflict.”

Neoh is also big on giving back to the society, and has been championing for the larger group to take on more of such activities. Most recently, he pooled resources to raise over USD$100,000 (RM318,700) within a week for the victims of Typhoon Haiyan in the Philippines.

In retrospect, Neoh revealed that he had a hard time convincing his family, particularly his mother, about his passion for entrepreneurship.

“My mom had no clue what I was up to – she must’ve had a hard time explaining what I did to the relatives. I was constantly trying to convince her to let me become an entrepreneur, and that was also part of the reason why I joined The Firm. After I appeared on the show, she started burning DVDs of the episodes for all my aunts and uncles.”

Still, Neoh was quite sure that his mother had yet to catch on to the bigger picture.

“It was not until a year ago when I bought her an iPad that it finally struck her, because her friends kept telling her to go onto the Groupon website. I think the best way for my mom to understand what I did was to be an end user of the service itself. For me, the most rewarding thing is when the people you care about start using and believing in the things you build.”

- Contributed by Lee Mei Li The Star

Ugly business of Pilipinos kidnapping in Malaysia

It is understandable that family members of a hostage would want to see their loved one released as quick as possible but paying the ransom only encourages the crime to flourish. 
 
Last week, the whisper among the intelligence operatives in Sabah is that the asking price for the Taiwanese tourist kidnapped from Pom Pom island is RM10mil.


When I heard that was the amount demanded for the release of 58-year-old Chang An Wei abducted at gunpoint after her 57-year-old husband Hsu Li Min was shot dead by Filipino gunmen in the exclusive island resort off Semporna town on Nov 15, I worried about the consequences of paying for her freedom.

I tweeted: “If ransom is paid for Taiwanese hostage abducted from Pom Pom, $$$ will be invested into powerful boats & guns. Expect more kidnappings.”

Intelligence operatives also speculated that Chang was on the way to Jolo or was already on the island, the kidnap capital of the Philippines.

Kidnapping is big business in Jolo.

Last year, in Zamboanga City in southern Philippines, I had a chat with Lee Peng Wee. The tycoon made his money through seaweed grown mostly in kidnap-prone Philippines provinces such as Sulu and Tawi Tawi.

He was instrumental in securing the release of nine Sabahans kidnapped in Sipadan and held in Jolo in 2000. The Sipadan kidnapping was big international news – 21 hostages were abducted, including 10 tourists from Europe and the Middle East.

At his residence where 12 years ago he and Malaysian negotiators strategised on buying the Malaysians’ freedom, I asked him how the situation in Jolo was.

“It is the same. They kidnap two and release one. They kidnap three and release two,” he said, referring to Filipinos abducted in southern Philippines.

“Kidnapping is easy money. These people do not have a steady livelihood.”

The typical modus operandi is: kidnap-for-ransom group will abduct rich individuals in southern Philippines and they then sell the human commodity to bandits (some using the name of Abu Sayyaf) in Jolo. The island is so lawless that it is a “holding pen” for hostages.

Many in Malaysia assume that the Filipino kidnap-for-ransom group only targeted the east coast of Sabah. Wrong.

On Tuesday, JV Rufino, the Director for Mobile for the Inquirer Group in the Philippines, tweeted a link to a Philippines Daily Inquirer story headlined, “Military: Abu Sayyaf behind Sulu treasurer’s abduction”.

In Jolo, Sulu provincial treasurer Jesus Cabelin was allegedly taken by a group led by Julli Ikit and Ninok Sappari, who is a member of the Abu Sayyaf, according to the Philippines Daily Inquirer.

It reported that Sappari was “linked to several incidents of abduction in the island-province, including the March 2012 disappearance of Indian national Viju Kolara Veetil and six health workers of the Autonomous Region in Muslim Mindanao”.

“The victims were later freed after ransom had been allegedly paid,” the report continued.

Cabelin was the fourth kidnap victim in Jolo since Oct 22. Kidnapping is common in the Philippines especially in Jolo and nearby provinces.

However, it is rare for these groups to operate outside of Filipino waters. If you count the numbers of actual kidnappings at resorts in the east coast of Sabah, there are only three – Sipadan in 2000, Padanan in 2000 and Pom Pom in 2013.


(This count does not include kidnapping cases such as the abduction of the cousins who owned a bird’s nest farm in Lahad Datu or seaweed farm owners in Semporna).

One way to stop kidnappings by Filipino armed groups inside Malaysian waters is to stop paying for ransom.

Ransom was paid for all the 21 Sipadan hostages except Filipino cook Roland Ullah who “walked out” of captivity in 2003.

The then Libyan leader Muammar Gaddafi bankrolled the payment for European and Filipina hostages and Malaysian businessmen raised the money to free the Sabahans. (The ransom for the first hostage – a Malaysian – released was paid for by a Filipino tycoon who described to me the payment as “small change”.)

At the back of my mind during the Sipadan hostage crisis, I was worried that ransom payment would only encourage kidnap-for-ransom groups to launch more kidnappings in my home state of Sabah.

Nevertheless, if you were a family member of a hostage, you would understand that not paying ransom is an option you would not consider.

I’ve met the Malaysian hostages twice while they were held by the Abu Sayyaf and I’ve spoken to almost all their family members, so I understand the agony they faced.

The negotiation for the release of the hostages dragged until Aug 20, 2000, when the last of three abducted Malaysians were released. Less than a month later, Filipino gunmen raided Padanan island and abducted three Malaysians on Sept 10.

This time the mood from the top was “no negotiation” with the kidnappers. Kuala Lumpur had learnt its lesson – paying ransom for hostages only encouraged the crime to flourish.

The then Philippines President Joseph Estrada ordered a military offensive on the Padanan kidnappers in Jolo. The three Malaysians were released after 46 days in captivity following a military operation.

That was the last raid by Filipino gunmen on a Malaysian island until the killing and kidnapping in Pom Pom.

Paying for Chang’s ransom will only encourage more kidnappings in Malaysian waters.

Contributed by One Man's Meat Philip Golingai

China sets up air defence zone over East China Sea, a strategic move

The Chinese government on Saturday issued a statement on establishing the East China Sea Air Defense Identification Zone.

The move, however, provoked anger in Japan, which accused China of "one-sidedly" setting up the zone that covers the disputed Diaoyu islands, and described the zone as "totally unacceptable."

Having no intention to generate tensions, China's move is to uphold its own legitimate rights and safeguard what has always been its own.

As pointed out by many military experts, the establishment of the air zone is a necessary, rightful and totally legitimate measure taken by China in protecting its sovereignty and providing air security.

Actually, the establishment of the air zone is not only perfectly legitimate, but also in line with current international practice.

An air defense identification zone is established by a maritime nation to guard against potential air threats. Since the 1950s, more than 20 countries, including the United States, Australia, Germany and Japan itself, have successively established such zones.



China's Defense Ministry spokesman Yang Yujun has stressed that the zone "has no particular target and will not affect the freedom of flight in relevant airspace."

Since the zone is both in line with the UN Charter and in respect of relevant international laws and customs, China has every right to decide on its own whether to set up such zones, without getting permission from any other countries.

And Japan should know better than to continue its overreaction and learn to accept the "unacceptable."

On Saturday, US Secretary of State John Kerry also voiced concerns over the zone, fearing it might "constitute an attempt to change the status quo in the East China Sea," and increase tensions and risks in the region.

But is it China to blame for upsetting the status quo over the islands?

The status quo of the Diaoyu islands, which had lasted for decades under the principle of shelving the dispute, has already been broken more than one year ago when the Japanese government launched a unilateral move to "purchase" and "nationalize" the islands.

The farce of "buying" the Chinese territories is a sign of Japan's expanding nationalism and growing belligerence, which should be identified as the real danger in the region.

Instead of "increasing tensions and creating risks," the setup of China's air zone could contribute much to regional peace and security by curbing the increasing rampancy of Japan's right-wing forces, as well as the continuous and dangerous provocations of Japanese politicians, which even Washington should be vigilant against.

The White House has repeatedly said that the United States does not take a position on territorial disputes between China and Japan, a neutral stance the Chinese government has appreciated.

But keeping a blind eye to the dangerous tendency in Japan could prove to be risky and might even jeopardize the US national interests.



Air defense identification zone a strategic decision: experts

The establishment of the East China Sea Air Defense Identification Zone is a strategic decision in accordance with China's current national security situation, experts said.

"Setting up the air defense identification zone can effectively safeguard national sovereignty and security," said Zhang Junshe, a military expert, adding that the move conforms to the fundamental spirit and principle of international law.

The Chinese government issued a statement on Saturday morning on establishing the East China Sea Air Defense Identification Zone. It also issued an announcement on the aircraft identification rules and a diagram for the zone.

According to the announcement, China will take timely measures to deal with air threats and unidentified flying objects from the sea, including identification, monitoring, control and disposition.

"The move also accords with common international practices as the United States and Canada took the lead around the world in setting up such zones starting in the 1950s," said Xing Hongbo, a military and legal expert, adding that more than 20 countries have set up air defense identification zones since then.

"Various aircraft with high altitude and high-speed flying capabilities have been broadly used around the world with the development of aviation technology, and it's hard for China to identify an unidentified flying object and adopt countermeasures immediately," said Meng Xiangqing, a military expert.

The establishment of the zone can help set aside early warning time to ascertain an aircraft's purpose and attributes and adopt measures to protect air defense security, Meng said. - Xinhua

Typhoon-hit Philippines: China Sends Hospital Ship, Others jostling for powers and dominance as Philippines welcomes former invaders

 

(Reuters) Following Typhoon Haiyan's devastating effect on the Philippines, the Chinese government is sending its hospital ship, the "Peace Ark," to aid displaced victims. 

 

Members of the medical crew stand at the inpatient room inside their Chinese Navy hospital ship Peace Ark before its departure from a navy base in Zhoushan, east of Shanghai, China, on a relief mission to the Philippines, on Thursday, Nov 21, 2013. Military flags fluttered in the wind aboard China's navy hospital ship Peace Ark as it began a goodwill mission to the Philippines on Thursday, nearly two weeks after the Southeast Asian country was struck by a devastating typhoon that killed more than 4,000 people. -- PHOTO: AP

In response to Typhoon Haiyan, which has claimed the lives of over 4,000 people, and has left millions homeless in the Philippines, China’s Ministry of Foreign Affairs announced that the country will be sending a hospital ship to aid victims who have lost homes and family members. The so-called “Peace Ark” is expected to set sail on Thursday, however, 16 members of the Red Cross Society of China were dispatched on Wednesday to areas with the largest devastation due to weather conditions.

“The 51-member emergency medical team sent by the Chinese government will set off within the next few days,” Foreign Ministry Representative Hong Lei said during a press conference on Wednesday. “The Red Cross Society of China will send an international rescue team to the disaster-hit areas in two groups. China will also dispatch the naval hospital ship, "Peace Ark," to join the relief effort in the disaster-hit areas.”

The Chinese government has been subject to heavy criticism for a lack luster effort to help typhoon victims in the aftermath of the Nov. 8 disaster. The relationship between China and the Philippines has been strained following territorial disputes over the South China Sea, The New York Times reported. China offered the services of its “state-of-the-art hospital ship” on Monday, which the Filipino Health Ministry graciously accepted.

With one of the largest economies in the world, second only to the United States, China announced that it would be donating $200,000 when the disaster initially occurred. The country recently changed its donation to $1.6 million, following an outcry from both international and domestic entities. Publications that usually support the communist state, such as the government owned People’s Daily, and its publishing asset the Global Times, have come out in protest against Beijing’s lethargic response.

“China has been following closely the typhoon disaster in the Philippines. It is reported that the disaster has injured about 20,000 people and left the disaster-hit areas lacking in doctors and medicine,” Lei added. “We have got the confirmation after coordinating with the Philippines and will send relief workers to the disaster-hit areas to provide humanitarian medical assistance in the spirit of healing the wounded and rescuing the dying. It reflects the Chinese people's goodwill toward the Philippine people.”

Contributed By Justin Caba Medical Daily




Philippine aid controversy shows powers jostling for regional dominance

Haiyan, the strongest typhoon to make landfall in recorded history, has killed over 3,976 people in the Philippines. But from the start, the size of the rescue package sent to Haiyan victims has been seen as a race.

Besides the initial emergency fund of $100,000 and the $100,000 in aid offered by the Red Cross Society of China, the Ministry of Foreign Affairs of China has pledged another 10 million yuan ($1.63 million) of rescue material to Manila on Thursday.

Washington is not shy to promote its rescue efforts to one of its important allies in Southeast Asia, with the aircraft carrier George Washington dispatched and $20 million offered, plus marines and sailors to distribute food and medicine. Japan also sent a high-profile rescue team including warships and 1,180 Self-Defense Forces members. Both countries have extensive experience in disaster relief work.

Rescue effort of Haiyan has particular political concern beside natural sympathy to the victims. Attention to the disaster relief to the typhoon stricken Philippines has reflected the rivalry among major powers for the regional dominant role.

Since Washington's pivot to the Asia-Pacific region in 2011, the South China Sea, among other areas, has witnessed escalating tension.

Alongside China's growing regional influence, Washington has to stress its ability to provide security to its allies to secure its influence in Southeast Asia. It becomes more urgent after President Barack Obama missed two important regional meetings in October and questions were raised about US commitment to its traditional allies.

Though on a humanitarian aid mission, the arrival of aircraft carrier George Washington has a strong symbolic meaning, as it signals US military presence and deployment ability in this strategically important region.

Japan, increasingly isolated in East Asia, is taking rescue efforts to strengthen its diplomacy in Southeast Asia, which Prime Minister Shinzo Abe has emphasized since the beginning of his current term. It is also a way for Japan to demonstrate its status as a regional power.

China's aid to the Philippines was criticized as "meager" and not matching its economic power. In the future, China will face increasing pressure to take more responsibilities in regional affairs.

For both the government and the public, there is a learning curve. Foreign ministry spokesperson Qin Gang remarked on Thursday that China's rescue aid to the Philippines is not a "one-time deal" and will correspond to the post-disaster situation.

Domestically, the Chinese public is tilting against sending rescue aid overseas. An online survey conducted by Sina News, following Chinese government's announcement of further aid, indicated that more than 65.3 percent of the people taking the poll believed the additional aid amount was more than enough, while 9.4 percent thought the figure was less than appropriate.

Some hold that sending aid to foreign countries is premature for a country still plagued by its own development problems. There are also voices opposing political factor affecting humanitarian support.

However, the case with Manila, a staunching ally of Washington's pivot policy, is more complicated not just because of the lasting row over the disputed Huangyan Island.

The Philippine government's incompetent performance in the hostage crisis in 2010 which killed eight Hong Kong tourists, the Aquino administration's stubborn refusal to apologize and failure to deliver proper compensation for that incident, and the Philippine Coast Guard shooting dead a Taiwanese fisherman this May all soured the Chinese public's perception toward their neighbor in the south.

Sending military force for overseas humanitarian aid is still a relatively new mission for China. The security dilemmas sparked by the expanding military footprint is a concern for Chinese authorities.

China's rise will be bound to be a bumpy process, and the controversy surrounding disaster aid to the Philippines attests to that.

Contributed By Guan Yan
The author is a commentator with the Global Times




Japanese troops welcomed back in typhoon-hit Philippines

 

Japanese troops welcomed back in typhoon-hit Philippines

Tacloban (Philippines) (AFP) - More than 1,000 Japanese troops were offered a warm welcome in the Philippines Friday as they prepared to launch relief operations across typhoon-devastated islands that were brutally occupied by Japan seven decades ago.

The troops were aboard three vessels that arrived at the central Philippine port of Cebu on Thursday night, an official at the Japanese embassy said, in what is the biggest overseas deployment of Japan's military since its defeat in World War II.

They will join a huge international relief effort to help survivors of Super Typhoon Haiyan, which flattened dozens of towns through the central Philippines on November 8, leaving at least 5,500 dead or missing.

"We have already delivered small amounts of aid but the main effort will begin after a meeting with Philippine forces today," Takashi Inoue, deputy director of public affairs with the Japanese embassy in Manila, told AFP.

Japan's contribution to the humanitarian effort comes as a newly-confident Tokyo looks to make its mark again on the world order, after decades in which the idea of its troops on foreign soil was complete anathema.

In many parts of Asia, memories linger of the brutality of invading Japanese soldiers prosecuting an expansionist romp through the region in the name of the emperor.

In a twist of historic irony, the Japanese troops are returning to areas of the Philippines that saw Japan lose one of history's biggest naval battles to the US-led Allies.

Eulalia Macaya, 74, who survived World War II and the typhoon, said she remembered being terrified by Japanese troops as a little girl.

"We were hiding in holes dug under the floor of our homes," she recalled. "The Japanese soldiers were patrolling but we couldn't see much of them. We could only see their boots. We were so afraid."

But Macaya, who was waiting for treatment at a temporary field clinic set up by the Japanese government in Tacloban, the typhoon-ruined capital of Leyte, said she was very pleased the former occupier was back.

"I don't hold any grudges anymore. There's no more bad blood between us," she said.

Tente Quintero, 72, a former vice mayor of Tacloban, said that at a time of dispute with an increasingly emboldened China over the ownership of South China Sea islands, Filipinos now saw the Japanese as friends and allies.

He declared himself "happy" there were Japanese boots back on Philippines soil.

"There's nothing like two allies living in harmony with each other," he said.

Beatrice Bisquera, 91, said the devastation and hardships Haiyan had brought were worse than anything Filipinos suffered under Japanese military rule.

"During the Japanese occupation we just hid in the mountains. Now, there's nowhere to hide," she told AFP.

General Roy Deveraturda, Commanding General of the Philippine armed forces Central Command, said the Philippines was thankful for the Japanese typhoon support, and past animosities were no longer a concern.
"This is a different world. We have seen the generosity of their donation," he told AFP.

"They have already showed remorse. Their help is most welcome."

For some Japanese relief workers already on the ground in Leyte, their country's participation in the international relief effort alongside the United States is an indication of Japan's very different relationship with the outside world.

"Nearly 70 years ago, we were enemies. Now we're friends," said Joji Tomioka, a doctor helping to coordinate a civilian medical team.

"We cannot forget the past, but we must learn from history so that we will not do the same thing again."

Sources: AFP

Old is Gold

Historical buildings offer unrealized value 

Refurbished heritage properties in Jalan Lau Ek Ching in Ipoh. One is for sale at RM2mil.  

What price is one willing to pay to own a piece of history?

According to valuation surveyor and property consultant Choo Ah Sit, sources have revealed that the former OCBC Bank building on Lorong Hang Jebat in Malacca has been attracting attention from foreign buyers. Some Singaporeans are said to have offered between RM22mil and RM25mil for the property.

However, since foreign buyers are required to obtain approval from the state’s Foreign Investment Committee, which can be a time-consuming process, the owners have offered the early mordernist style building to a local company for RM17.5mil.

The total land area for the five lots covers some 7,739 sq ft with a 3½-storey building with a total built-up area of about 23,500sq ft. Crunching the numbers, if the offer of RM17.5mil goes through, the price of the property works out to RM2,261 per sq ft.

“With that kind of money, you can construct a new 15-storey building, but not in the core zone of the Unesco heritage site, of course,” Choo said.

Property valuer Choo Ah Sit says the prices for heritage buildings have gone ‘crazy’ since Unesco recognised it in 2008.

Having observed the property market in Malacca for the last 33 years, Choo’s honest assessment of the market is, in his own words, “crazy”.

“The current trend now is, ‘You like, you pay. Don’t ask about the price’,” Choo declared.

From a map showing the Jalan Tun Tan Cheng Lock-Jalan Hang Jebat area (famously known as the Jonker Street area) and its immediate lanes, there are no less than 20 properties available for sale, but there are few signboards to indicate the owners’ intentions.

“In some cases, someone who has taken a fancy to a building will simply ask around for the owner’s contact. Surprisingly, word spreads fast. This is how some transactions are concluded,” revealed Choo.

The steep jump in prices, said Choo, came in tandem with the declaration of the area as a Unesco heritage site.

“From the 1970s to the 1990s, there was no interest in these buildings. One was because of the Rent Control Act that saw rental rates for buildings built before World War II being fixed at RM100 to RM200 per month. The returns were not enough to motivate owners to perform the necessary maintenance, resulting in some of these structures falling into a sorry state of disrepair. Only when the Act was abolished and the free market allowed to take over, did prices start to move upwards by anywhere between 30% and 50%,” Choo said.

For an idea of how much investors are expected to fork out at current market prices, Choo revealed that asking property prices in the heritage zone in Malacca can start from RM600psf to as high as RM1,600psf, depending on location factors such as accessibility and traffic flow.

Choo cites three interesting cases.

One property located along Jalan Tun Tan Cheng Lock made a record sale of RM1,221psf while prices for two single-storey shop houses in Jalan Hang Kasturi appreciated from RM980,000 to RM1.75mil in a short span of nine months.

Choo surmised this may be caused by the property changing hands over a short period of time. He also does not rule out factors such as speculation and the undervaluing of property.

.  
A pre-war shop with a restaurant for sale in Lorong Panglima, Ipoh, for RM1.5mil.

Another plum lot is a two-storey pre-war building occupying 1,717sq ft on Jalan Tun Tan Cheng Lock that is asking RM2.8mil or RM1,630psf.

“The high prices are mainly due to a fixed supply and it will keep rising because of this. Where foreign buyers are involved, it may have something to do with the prestige of owning a piece of property in a Unesco heritage site. The other thing is our favourable exchange rate,” said Choo of the dramatic prices.

Over in Penang’s Georgetown, which received the Unesco heritage designation at the same time as Malacca, Jennifer Yeoh, 47, a real estate agent for the past five years, said the appreciation for old buildings had been foreseen by some businessmen who transformed these premises into restaurants, hotels and retail outlets as early as a decade ago.

Case in point is Gurney Paragon on Gurney Drive. Standing together with the brand new mall is the 88-year-old St Joseph’s Novitiate.

In 2004, the 10-acre parcel of land was sold to Hunza Properties for RM97.86mil, or roughly RM250psf back then.

Today’s prices have, of course, risen significantly.

In Yeoh’s listings, for example, there is a row of seven units on Lebuh Clark each occupying 650sq ft going at RM1.2mil a unit or RM1,846psf. Over on Jalan Irving, a two-storey bungalow with a built-up area of 3,964sq ft is going for an asking price of RM4.5mil or RM1,135psf. On Beach Street (Lebuh Pantai), the owner of a two-storey shop house covering an area of 4,475sq ft has put the property up for sale at RM1,005psf.

“The trend is not to buy them singly but to purchase maybe a row of seven units at a time so that bigger commercial projects can take place,” says Yeoh.

She reckons buyers in this category are also antique appreciators in a way. In some of Yeoh’s listings, there is still old furniture from the post-World War II era inside.

Over in Ipoh, head of business development for Oriental Realty, Gladwin Agilan said the interest in pre-war and heritage buildings started in 2008 when a group of local businessmen began buying properties on Jalan Raja Ekram, Jalan Lau Ek Ching and Lorong Panglima and converting them into watering holes and eateries.

History, said Agilan, 37, was the main selling point. He cites Lorong Panglima as an example.

“In the past, this was known as Concubine Lane, formerly a red light area. Tin miners were said to keep their mistresses there, away from the public eye, in these very houses. Over time, international media and local historians played a part to stoke interest in the area.

With the influx of visitors who have found the architecture and nostalgia an ideal spot for wedding photography, local authorities were prompted to repair infrastructure like drainage and other utilities,” Agilan said.

Over 10 years, Agilan has seen property prices for pre-war buildings in Ipoh starting from as low as RM150,000 to RM180,000 and appreciating to a current price of RM550,000 to RM600,000.

“In our records, the last transaction for a pre-war building was at RM950,000. Today, offers have reached RM1.1mil,” he said.

In his current listings, a refurbished two-storey pre-war building measuring about 900sq ft on Panglima Lane is going for an asking price of RM800,000, which works out to an auspicious RM888psf.

The first floor is already tenanted, but the upper floor can be adapted into a homestay. Over in Jalan Lau Ek Ching, where the famed Bricks and Barrels watering hole is located, the current asking price for any one of the refurbished buildings covering 1,900sq ft on this row is RM2mil, about RM1,052psf.

Agilan explained the intention of most owners is not to restore but adaptive reuse. First on the agenda is the electrical rewiring, plumbing, roofing and flooring.

Walls are usually in the form of cement skreed and if the original floors are of timber, these will usually be replaced with double volume metal decks for safety and functionality. Renovation costs for such projects are usually in the range of RM100,000 to RM150,000.

According to Agilan, Ipoh is a veritable trove for heritage building hunters as there are no less than 2,000 units over 80 to 100 years old scattered in seven main areas.

The buildings can be found on Jalan Sultan Iskandar, Jalan Sultan Yusuf, Jalan Silang, Jalan Bandar Timah, Jalan Othman Talib, Jalan Bijih Timah and the two streets mentioned earlier.

However, Agilan reckons the chance to own a property in this market segment requires a lot of conviction.

“The owners really have a lot of holding power. There are cases where offers have had to wait between six months to a year before getting a reply. The oft-received response I always get from the owners is ‘Not now’ when it comes to the question of selling their property. Understandably so, as some of them are ancestral homes,” said Agilan.

But mindsets, observed Agilan, are slowly changing with the younger generation.

“In the 1980s, during the lull in tin prices, many moved to Kuala Lumpur. Back then, these properties had not reached their full worth yet as buyers did not know what to do with them.

“However, the economic revival in Ipoh has changed things and given people new ideas so this is a very good time to sell, and buy,” concluded Agilan.

- Contributed  by story and photos by Grace Chen The Star Metrobiz

The new Beijing beckons

 

Customers with bags containing first day purchases from a H&M fashion collection designed by French fashion designer Isabel Marant at a window display at a H&M store branch in Beijing, China. — EPA

Here, you are surrounded by optimistic and enthusiastic young people with the zeal to do well not only in China, but in the globalised world.

I JUST took a short trip to Beijing to attend a conference on women. It has been seven years since my last trip and 28 years since my first. In 1985, China was gingerly opening up to the world. People still wore blue Mao jackets and rode around mostly on bicycles. There were few hotels of the standard we were used to in Malaysia.


Today, so little of that Beijing remains. Tall glittery skyscrapers abound. Shopping malls carry every type of international luxury brand and people dressed as if they had just walked out of the pages of Vogue China that just celebrated its 100th edition by commissioning the photographer Mario Testino to shoot the entire issue.

Sitting at the French bakery chain Comptoirs du France, I saw a fashionable young couple walk by with their miniature dog. The dog wore a Chanel sweater....

When I arrived at the vast modern Beijing Capital airport, a young volunteer from the conference received me. She was a graduate student at Beijing University, spoke perfect English and was extremely efficient in getting me to my hotel and comfortably settled.

In fact, throughout the conference, a whole bevy of eager young volunteers shepherded us through the programme with remarkable efficiency, politeness and charm. Whenever a special request was made, they followed through until it was fulfilled.

I also met some impressive young female entrepreneurs and corporate leaders. There is now a generation of young Chinese who had been educated abroad and who are returning to start their own businesses or head companies.

The head of McKinsey in China is a Beijing-born woman as is the head of SK China, South Korea’s third largest company. Additionally, young women are using their cosmopolitan education to start businesses. The organiser of the conference was a 27-year-old former chess champion born in Chengdu.

Another 27-year-old has combined the experience of her education at both a Swiss finishing school and Harvard Business School to start a business giving etiquette lessons to Chinese wanting to venture out into the world beyond their own country. They have an acute sense that to succeed in this globalised world, they need to discard provincial habits and tastes.

The most impressive person I met, however, was Zhang, a taxi driver. I hopped into his taxi at my hotel and asked him to take me to Panjiayuan, the flea market. Taxis in Beijing are very clean and neat except that they tend to smell of cigarettes. But they are safe and as long as you get someone to explain to the taxi driver where you want to go in Mandarin, you will get there in one piece.

So I was not expecting Zhang to turn round and wish me a good afternoon. It turned out Zhang spoke pretty decent English. When I asked him why, he said he decided to learn it because he wanted to communicate with his international passengers and he loved to practise with them.

Indeed, Zhang proved to be a gem, not only did he take me to the flea market and wait until I was done but he also took me to find some other items I was looking for, drove me around Tiananmen Square so I could take photos and then took me back to my hotel, all the while chatting merrily in English.

(Some were however a bit cynical about Zhang, that he should by coincidence have picked me up that day. Apparently, there are no such coincidences in China.)

China does still have many problems, Beijing’s terrible pollution being just one. And no doubt there are huge gaps between the cities and the countryside. But there are enough eager young educated and entrepreneurial Chinese today ready to take the lead in almost everything, both domestically and perhaps even internationally. The socialist slogans are now found only on posters you can buy at the flea market.

For a few days, I had a break from home news because there is no Facebook or Twitter in China. It was nice to be with optimistic and enthusiastic young people wanting to do so much, instead of the angst-filled navel-gazing we indulge in back home and the thousands of ways we find to bring people down.

We seem to think that our country is special when we should be worrying about how this giant country only a few hours away is poised to leave us in the dust, despite our headstart.

I did meet one young Malaysian currently working in Shanghai who wants to come home to start a new IT enterprise. It was so refreshing to meet someone who is still eager to invest in his own country. I just hope that our daily nonsense does not crush his eagerness.

Contributed by Marina Mahathir

> The views expressed are entirely the writer’s own.

Bank Negara Malaysia new ruling to curb interest capitalisation and developer interest bearing housing loan schemes

Fee ling the heat: Although the guidelines on the prohibition of the DIBS is not surprising, the new rule on using the net selling price to determine the loan- to-value ratio is a negative surprise to some analysts.

PETALING JAYA: A new circular from the central bank that took effect last Friday will pile more pressure on an already hard-hit property sector, even if its merits are likely to be felt in the long-term, analysts and industry executives said.

In a bid to make the property market sustainable, the new rules have put the brakes on interest capitalisation schemes (ICS) and the developer interest-bearing scheme (DIBS).

It also calls for the use of the net selling price of a property as the benchmark for obtaining bank loans, which raises the amount to be paid upfront.

Alliance Research’s banking analyst Cheah King Yoong said the measures were “more onerous” than anticipated and posed downside risks to his 9% loan growth estimate for the banking sector next year.

“Although the guidelines on the prohibition of the DIBS was not a surprise, the new rule on using the net selling price to determine the loan-to-value (LTV) ratio is a negative surprise to us.

“While it is difficult to gauge the impact on banks, the fact that this new rule applies to all property financing, including first-time home buyers, means that property buyers’ affordability will be affected, and this will lead to lower property loan growth,” Cheah said in a report yesterday.

“We believe the latest policies illustrate the sheer determination of the authorities to contain the growth of household debt.

“These measures, together with potential rate hikes in 2014, fiscal tightening by the federal government and subsidy rationalisation next year, could further drag on loan growth in the retail segment, temporarily leading to a rise in credit costs, and dampen investor sentiment on the banking sector,” he added.

The circular prohibits financial institutions from granting end-financing facilities to individuals or non-individuals for the purchase of property offered under an ICS, including the DIBS.

Financial institutions are also barred from granting a bridging facility to finance a property development that offers ICS.

According to Alliance Research’s Cheah, this effectively removes any alternative incentives that developers might concoct to replace the DIBS.

“Nonetheless, our channel checks show that for the banking groups under our coverage, property loans with the DIBS only made up 1% to 3% of their outstanding mortgages,” he said.

Affin Bank is the exception, with some 7% of its mortgage loanbook comprising loans tied to the DIBS.

“Given that property loans with the DIBS are immaterial to overall outstanding mortgage loans as well as new mortgage loans approved, we do not expect the restrictions to have a significant impact on the banking sector,” Cheah said.

Public Bank has the highest exposure to housing loans at 56% of its gross loans, followed by Alliance Bank with 55% and Hong Leong Bank, 46%, company data showed.

Another key item on the circular requires banks to calculate the LTV ratio based on the net price of a property instead of its gross price.

To illustrate, a property with a list price of RM1mil, rebate of 5% and 90% financing would incur a down payment of RM50,000 after discount.

Under the new regime, the down payment increases to RM95,000 because the 90% loan will be computed using the discounted price tag of RM950,000.

While property executives expect a slowdown in sales, they believe that genuine buyers will remain undeterred.

Mah Sing Group Bhd group managing director and CEO Tan Sri Leong Hoy Kum told StarBiz via email that demand for properties would continue to be robust, especially among those buying to own or for long-term rental income.

“There is still a large supply-demand gap as supply growth for properties has been on a decreasing trend since 2003, with Malaysia’s supply growth in the second quarter of this year at only 0.8%.

“The fundamentals driving the property market’s growth in recent years have not changed, for example a younger population leading to new household formation, a rising middle-income group, the supply-demand gap and stable employment.

“Initiatives in Budget 2014 may remove the speculative element, but not the fundamentals,” he said.

Leong noted that the lending environment was still conducive, with low interest rates and banks offering BLR minus 2.4%, from BLR minus 2.1%-2.2% a year ago.

Mah Sing had stopped offering the DIBS for most of its launches since the start of the year. None of its projects in Iskandar Malaysia feature the DIBS.

-  Contributed by John Loh The Star./Asia News Network

Related posts:
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2. Property gain tax won't hurt genuine buyers
3. New tax rate on property to keep away flippers

Increase transparency in property prices

Companies factor in freebies into the cost of the property

 

The marketing tactic of offering lifestyle-oriented freebies is often quite effective when it comes to high-end premium homes

DEVELOPERS often offer sales gimmicks and marketing ploys like free legal fees, rebates, air-conditioners and furniture. Budget 2014, however, seems to make it a requirement that developers be transparent about their property prices.

The adage “There’s no such thing as a free lunch” rings true in this instance. While developers are quick to advertise various blandishments such as “free legal fees/stamp duty, etc”, such freebies are always factored into the property price. These freebies should be translated into cash incentives to be deducted from the purchase price of the property, as otherwise, it becomes meaningless to offer these gimmicks, which are usually recovered in the form of substandard materials. Here, we again thank our Prime Minister for announcing that developers, when offering their products, should disclose the value of the freebies to the buyers. Such transparency is a move in the right direction so that buyers would know what they are letting themselves in for. The enforcers of the law should be able to count on the Urban Wellbeing,

Housing and Local Government ministry to do its job to ensure that there is strict compliance and observance.

Whilst such a requirement will not deter speculation, it will hopefully educate house buyers on what makes up their final property price and not to be misled by developers advertising such freebies.

Additional measures

The National House Buyers Association (HBA) reiterates its call on the Government to take additional measures to stem the steep rise in property prices. There are basically two ways to reduce speculation: increasing the entry cost and increasing the exit cost.

Whilst Budget 2014 has increased the exit cost in the form of the higher real property gains tax or RPGT, more measures are needed to increase the entry cost to further reduce speculation.

The current stamp duty payable for the transfer of properties is based on the value of the property. This does not deter speculators, as the stamp duty payable is the same, regardless of the number of properties already held or bought.

The Government’s current low stamp duty regime has been misused by property speculators to accumulate multiple properties, driving up these prices by creating false demand and denying genuine buyers the opportunity to buy such properties.

It is every Malaysian’s wish to buy at least one property in their lifetime for their own dwelling, and perhaps an additional piece of property as a long-term investment or to fund their children’s education.

Hence,HBA has proposed that the current scale stamp duty remains the same for the first two properties bought, but is increased to a flat rate based on the property price for the third and subsequent properties to discourage speculative buying.

(See table for a comparison between the current stamp duty and the stamp duty proposed by HBA.)

With the same scaled stamp duty payable regardless of the previous number of properties held, speculators are not deterred from buying multiple properties.

Even for properties costing RM600,000, the stamp duty payable is only 2% of the value of the property.

The HBA-proposed stamp duty would not cause any disruption to genuine house buyers who can only afford two properties in their lifetime (one for their dwelling and one for long-term investment).

On the other hand, property speculators would be discouraged as the stamp duty greatly increases their entry cost.


RPGT will not lead to higher property prices 

Certain parties with vested interest are claiming that the revised RPGT rate would lead to higher property prices, as speculators would definitely factor in the RPGT into their property prices, only for the subsequent buyer to end up paying the RPGT indirectly.

Such statements only confirm that speculators are indeed responsible for driving up property prices.

If indeed the speculators factor in the additional 20% to 30% RPGT into their property prices, then it would make the property prices unattractive to the next buyer.

Financial Institutions may be unwilling to finance such exorbitantly overpriced properties, as such institutions have their own market intelligence to determine the fair value of such properties.

RPGT will lead to an orderly property sector
 
The aspiration of every rakyat is to own a roof over their heads and shelter their young rather than making money from properties. Hence, having the RPGT in place would deter speculators, and eventually lead to a more orderly property sector driven by market demand and not speculative forces.

Therefore, HBA supports the Government’s RPGT proposal and urges the public to support such a move to curb the current excessive speculation in the property sector.

HBA strongly believes that the cost of a roof over one’s head should not be left to market forces. The repercussions whereby a large section of society is deprived of affordable housing is serious and far-reaching. The present property price increase does not commensurate with the present rise in wages. The affordability of house ownership is becoming an elusive dream to the present generation. Controlling the upward spiral of property costs is not in the interest of housing developers. In fact, they certainly favour it. Therefore, it would be totally unrealistic to expect any developer to be interested in bringing down property prices.

Contributed by Buyers Beware Chang Kim Loong

CHANG KIM LOONG is the honorary secretary-general of the National House Buyers Association (www.hba.org.my), a non-profit, non-governmental organisation (NGO) manned by volunteers. He is also an NGO councillor at the Subang Jaya Municipal Council.

Related posts:

1.  Property gain tax won't hurt genuine buyers
2,  New tax rate on property to keep away flippers