HAVE you ever grabbed an offer without any hesitation, simply because the price is too cheap to resist?
Many of us have this experience especially during sales or promotional campaigns. We tend to spend more at the end or buy things which we are uncertain of their quality when the deal seems too good to say no.
It may be harmless if the amount involved is insignificant. However, when we apply the same approach to big ticket items, it can cause vast implications.
Recently, I heard a case which reinforces this belief.
A friend shared that a property project which was selling for RM300,000 a few years ago is now stuck. Although the whole project was sold out, the developer has problem delivering the units on time.
The developer is calling all purchasers to renegotiate the liquidated and ascertained damages (LAD), a compensation for late delivery.
One of the homeowners said he is owed RM50,000 of LAD, which means the project is 1½ years late. When we chatted, we found that he purchased the unit solely due to its cheap pricing without doing much research in the first place.
The incident is a real-life example of paying too low for an item which can leave us as losers, especially when it involves huge sum of investment, such as property.
To many, buying a house maybe a once-in-a-lifetime experience, a decision made can make or break the happiness of a family.
A good decision ensures a roof over the head and a great living environment, while an imprudent move may incur long-term financial woes if the house is left uncompleted.
Nowadays, it is common to see people do research when they plan to buy a phone, household item, or other smaller ticket items.
Looking at the amount involved and implication of buying a house, we should apply the same discretion if not more.
It is always important for house buyers to study the background of a developer and project, consult experienced homeowners regarding the good and bad of a project before committing.
I have seen many people buy a house merely based on price consideration.
In fact, there are more to be deliberated when we commit for a roof over our heads. The location, project type, reputation of a developer, the workmanship, the future maintenance of the property etc, are all important factors for a good decision as they would affect the future value of a project.
Beware when a discount or a rebate sounds too good to be true, it may be just too good to be true and never materialised. If the collection or revenue of a housing project is not sufficient to fund the building cost, the developer may not be able to complete the project or deliver the house as per promised terms. At the end of the day, the “price” paid by homeowners would be far more expensive.
In general, the same principle applies elsewhere. It is a known fact that when we pay a premium for a quality product from a reliable producer, we have a peace of mind that the product could last longer and end up saving us money. Some lucky ones will end up gaining much more.
For instance, when we purchase a car, we should consider its resale value as some cars hold up well, while others collapse after a short period. Other determining factors include the specifications of the car, the after sales service, and the availability of spare parts.
Quality products always come with a higher price tag due to the research, effort, materials and services involved.
In addition to buying a house or big ticket items, other incidents that can tantamount to losing huge sums are like money games, get-rich-quick scheme, or the purchase of stolen cars or houses with caveats.
When an offer or a rebate sounds dodgy, the “good deal” can be a scam.
Years of experience tells me that when what is too good to be true, we should think twice. I always remind myself with a quote from John Ruskin (1819-1900) who was an art critic, an artist, an architect and a philosopher. “It’s unwise to pay too much, but it’s worse to pay too little. When you pay too much, you lose a little money – that’s all. When you pay too little, you sometimes lose everything, because the thing you bought was incapable of doing the thing it was bought to do.
“The common law of business balance prohibits paying a little and getting a lot – it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough to pay for something better.”
Food for thought by Alan Tong
Datuk Alan Tong has over 50 years of experience in property development. He was the world president of FIABCI International for 2005/2006 and awarded the Property Man of the Year 2010 at FIABCI Malaysia Property Award. He is also the group chairman of Bukit Kiara Properties. For feedback, please email feedback@fiabci-asiapacific.com.
Rail link seen as game changer but cost is a concern.
TOK Bali, a fishing village in Kelantan with its beautiful sandy beaches and pristine blue waters has long been a hidden gem among well-travelled backpackers. But that may soon change. The idyllic town is one that is touted to potentially become a tourist hotspot, as it sits along the alignment of the East Coast Rail Link (ECRL), a multi-billion infrastructure project that promises many economic spin-offs.
After almost a decade in planning, ECRL was launched with great pomp this week.
Touted as a key game-changer for the east coast states of Peninsular Malaysia, the interstate ECRL is expected to help the economy of the four states that it covers by an additional 1.5% per year over the next 50 years.
On a micro level, more employment opportunities, particularly skilled jobs, will be made available to Malaysians. Domestic industry players especially in the construction sector, can now anticipate construction contracts to the tune of RM16bil, at least.
Another milstone:Najib checking out a train model at the ground-breaking ceremony this week.He called ECRL 'another milestore in the country's land public transport history".
The ECRL is expected to benefit freight transport because it would link key economic and industrial areas within the East Coast Economic Region such as the Malaysia-China Kuantan Industrial Park, Gambang Halal Park, Kertih Biopolymer Park and Tok Bali Integrated Fisheries Park to both Kuantan Port and Port Klang.
Prime Minister Datuk Seri Najib Tun Razak called it “another milestone in the country’s land public transport history”.
Despite the much highlighted economic benefits from the rail network, the venture is attracting its own share of controversies from the way the contract was awarded to the price of contract.
For one, China’s state-owned China Communications Construction Company (CCCC) has been appointed for the construction of ECRL via a direct negotiation method.
Detractors have labelled ECRL – at a cost of RM80mil per kilometre – as the world’s costliest rail project. Note that, the Gemas-Johor Baru double-tracking stretch costs RM45mil per km.
ECRL, however, will go over hilly terrain and has several tunnels to be built.
There are questions on whether the 688km rail venture, at RM55bil, will be financially feasible.
Sources say the price tag is unlikely to have included land acquisition costs.
They indicate that close to half of the land plots required for the rail link sit on private land and would require land acquisition. At this point, the total land acquisition cost is unknown.
No money in rail
The concerns of the critics are understandable, given the fact that public infrastructure projects, namely rail projects are usually not commercially viable.
A quick check on the finances of Malaysia’s very own Keretapi Tanah Melayu Bhd (KTMB) and a number of major rail operators abroad, affirms the fact that rail projects do not promise easy money.
The loss-making KTMB which was corporatised in 1992, has not been able to financially sustain itself, resulting in the deterioration of its level of service despite attempts to turn around the company.
According to the railway service operator’s latest publicly available audited report for financial year 2013, the group registered a total net loss of RM128.2mil. However, note that, the net loss had narrowed by 46% from RM238.5mil in the previous year.
Had it not been for the government’s subsidy which kept it afloat, KTMB would find it difficult to continue its operations without a further raise of its fare.
In India, where railway is a favoured mode of transportation, the Indian Railways has been incurring losses on passenger operations every year. Earlier this year, the lower chamber of the Indian parliament was told that the state-owned rail operator recorded a loss of Rs359.18bil (RM24.04bil) in the period of 2015 to 2016.
This was slightly higher than its loss of Rs334.91bil (RM22.42bil) in the period of 2014-2015.
On the other hand, China’s state-owned rail operator, China Railway Corp, was reported to have recorded a 58% increase in earnings last year despite huge losses in the first nine months. However, a zoom into its finances reveals that the high profit made was only possible due to a significant annual government subsidy.
Similarly, Singapore’s SMRT Corp which manages the city-state’s rail operations posted a profit of S$7.4mil (RM23.33mil) in its financial year of 2016. This was on the back of a revenue of S$681mil (RM2.15bil), which rose by 4.1% year-on-year.
While the rail operations saw higher ridership in that year, SMRT Corp would have registered a loss of S$9.6mil (RM30.26mil) for its rail business, if not for the net property tax refund of S$17.1mil (RM53.9mil).
Considering the lack of commercial viability in such rail projects, ECRL would ultimately require assistance from the government in ensuring smooth operations, while maintaining an affordable service for its users. This is akin a crucial trade-off, to complement the government’s move to provide an integrated transportation system in Malaysia, which is long overdue.
AmBank Group’s chief economist Anthony Dass tells StarBizWeek that for every ringgit spent on capital projects such as transportation, it generates a return or multiplier effect of around 5% to 20%.
In his estimation, he says the ECRL should create around RM50-55bil in terms of gross domestic product.
“The impact of this project to the economy will be multilevel. Impact on the respective states’ GDP and national GDP will be evident, though the magnitude of the impact on the respective states is poised to vary.
“On a longer term, once the entire project is completed, we expect strong benefits seeping into services related activities. Properties in the major towns is likely to enjoy more especially the port-connected towns, driven by logistics- and trade-related businesses.
“Other areas would benefit from the movement of tourism. As for the smaller towns, they are more likely to enjoy from the spillovers of this connectivity through movement of people commuting to work and new areas of business growth especially in areas like the small and medium businesses,” says Anthony.
High cargo projections
By the year 2040, an estimated 8 million passengers and 53 million tonnes of cargo are expected to use the ECRL service annually as the primary transport between the east coast and west coast.
By 2040, ECRL is projected to support a freight density of 19 million tonnes.
The freight cargo projections of the rail network stands in stark contrast to the total cargo volume running through the entire Malaysian railways today.
As of 2015, the entire Malaysian railways operations handled a sum of 6.21 million tons of cargo, according to a study related to the ECRL.
To note, the revenue from the operation of the venture is projected to be obtained through a transportation ratio of 30% passengers and 70% freight.
If the projections of ECRL are anything to go by, the planners are anticipating a ballistic growth in volume of cargo being moved along the tracks.
Is this realistic?
Socio Economic Research Centre executive director Lee Heng Guie remains concerned on the details of the project financing, albeit the expected trickle-down benefits of ECRL.
“While ECRL has been identified as a high impact public transport project that will connect east coast states with the west coast, especially Greater KL and Klang Valley, the high cost of RM55bil requires further justification. More clarity on the cost structure and terms and conditions of the loan is needed to ease public genuine concerns.
“It must be noted that the high costs, low profits and long gestation periods of transportation projects do not always make them financially viable. The financial viability of the ECRL would depend on the revenue generated to cover operating cash flow, including interest expenses.
“As the loan will have a seven year moratorium, the bunching of loan repayment together with interest payment will be substantial in the remaining 13 years,” he says.
Lowering cost the key
In terms of funding, 85% of the total project value of RM55bil would be to be funded by Exim Bank of China’s through a soft loan at a 3.25% interest.
The balance 15% would be financed through a sukuk programme by local banks.
There is no payment for the first seven years, and the government starts paying after the seventh year over a 13-year period.
At 3.25% interest per annum, the interest servicing bill for the project is huge.
“Hence the main challenge to this project will be to bring down cost as low as possible. The lower the cost, the lesser it would be the burden on the government’s balance sheet,” says an industry player.
Echoing a similar view, Lee noted the ERCL project loan is expected to be treated as “contingent liability” as it will be taken by Malaysia Rail Link Sdn Bhd, a special purpose vehicle owned by the Ministry of Finance.
This is also to ensure that the Federal Government will not breach the self-imposed debt to GDP ratio of 55%.
As at end-March 2017, the Federal Government’s debt stood at RM664.5bil or 50.2% of GDP.
At the end of the day, despite the concerns on the possible cost overrun in the ECRL project, proper management and efficiency in project delivery could lead to cost savings and ultimately lower overall expenditure for ECRL.
History has shown that Malaysian companies can lower the cost, especially on rail projects compared to foreign players.
In the late 1990s, a consortium of India and China state-owned companies were awarded the contract to build a double track electrified railway system from Padang Besar to Johor Baru. The cost was estimated at RM44bil and paid through crude palm oil.
However, an MMC Corp Bhd-Gamuda Bhd joint venture managed to win the job in 2003 with a RM14.3bil proposal. However this project was shelved and subsequently continued after a lull of few years.
ECRL is a seven year project to be built in stages. Many factors can come into play in that period like delay in construction and rise in material costs.
However in the bigger picture, the infrastructure venture should not merely be seen from a commercial-viable lens alone. The trickle-down benefits on the economy and the Malaysian population should also be factored into the calculations.
The lower the cost, the higher the multiplier effect.
Source: The Star by ganeshwaran kanaandgurmeet kaur
Arrest linked to illegal operation of carbon filter factory in Bukit Mertajam
For 10 years, a factory has been illegally burning sawdust to produce carbon for filters, forcing villagers and schoolchildren in parts of Bukit Mertajam to breathe dust-laden smoke every day. The matter has now flared up with the arrest of Penang exco man Phee Boon Poh and two of the factory’s directors by the MACC. All three are set to be remanded today.
GEORGE TOWN: An illegal carbon filter processing factory has become a burning issue in Penang with the arrest of state executive councillor Phee Boon Poh and two factory directors by graft-busters from the Malaysian Anti-Corruption Commission (MACC).
All three are expected to be remanded today.
The factory in Kampung Sungai Lembu in Bukit Mertajam was in the news on Wednesday when MACC officers raided its premises and seized several documents.
Yesterday, a team of five MACC officers raided Phee’s office at Level 53 in Komtar at about 11.30am and took away more documents.
Phee, who chairs the state Welfare, Caring Society and Environment Committee, was asked to report to the Penang MACC headquarters in Jalan Sultan Ahmad Shah. He was arrested at 3.30pm when he turned up at the MACC building.
MACC deputy chief commissioner (operations) Datuk Azam Baki said Phee was detained under Section 23 of the MACC Act for abuse of power.
The section provides for a jail term of up to 20 years and a fine of up to five times the value of the bribe or RM10,000, whichever is higher.
The 66-year-old Phee was brought back to his house in Butterworth at about 5pm in his car and escorted by two MACC vehicles. It is learnt that he packed some personal belongings from his house before leaving for the state MACC headquarters at 7.05pm.
The MACC also arrested a 70-year-old man and his 37-year-old son, the manager and director of the factory, at 6.05pm and 6.35pm respectively.
The two were summoned to the state MACC headquarters to give their statements before they were detained.
Lawyer R.S.N. Rayer, who accompanied Phee to the Penang MACC headquarters, said the exco man was asked to meet MACC officers after 2pm.
“I was informed that they (MACC officers) went to his office and took some documents including letters that he wrote. They wanted to record his statement regarding the documents.
“He gave his full cooperation and presented himself at the MACC office. I am surprised that he was arrested,” he said before leaving the state MACC building at about 4.30pm.
Earlier, the five MACC officers spent more than an hour in Phee’s office.
Shortly after they left, Phee and four assistants walked out of the office.
Phee declined to comment on the raid.
He is the second member of the current Penang state administration to be arrested by the MACC.
Chief Minister Lim Guan Eng was arrested in June last year over the purchase of a RM2.8mil bungalow in Pinhorn Road.
He was subsequently charged with using his position as the Chief Minister of Penang to gain gratification for himself and his wife, Betty Chew Gek Cheng, by approving the application for conversion of agriculture land to a public housing zone in south-west Penang to the company, Magnificient Emblem Sdn Bhd.
He allegedly committed the offence while chairing the Penang State Planning Committee meeting at the operations room in the Komtar building on July 18, 2014.
The charge under Section 23 of the MACC Act 2009 provides for imprisonment of up to 20 years and a fine of up to five times the sum or value of the bribe, or RM10,000, whichever is higher, upon conviction.
Lim faces a second charge of using his position to obtain a plot of land and a bungalow located at No 25 Jalan Pinhorn, George Town, on July 28, 2015, from businesswoman Phang Li Koon for RM2.8mil, a price which he allegedly knew did not commensurate with the property’s market value at the time of RM4.27mil.
The charge, under Section 165 of the Penal Code, provides for a jail term of up to two years or a fine, or both, upon conviction.
Late last night, Lim was among several DAP leaders and members who turned up outside the state MACC headquarters to stage a candlelight vigil in support of Phee.
Source: The Star by crystal chiam shiying, chong kah yuan, lo tern chern, andlogeiswary thevadass
10 years of smoke in the eyes for villagers
BUKIT MERTAJAM: For about 10 years now, the villagers of Kampung Sungai Lembu have been forced to breathe air laden with pollutants. Children going to school at SJK(C) Kampung Sungai Lembu also have had to put up with the thick dust.
The air is thick with a burning smell from the processing activities at an illegal carbon filter processing factory, just 1km away from the school.
The 5,000sq-m factory, about the size of a football field, has piles upon piles of sawdust, much of it burning in deep pits.
The tall chimneys spout white pollutant-filled smoke into the air which is carried to the nearby villages by the slight breeze.
A source from the Department of Environment revealed that the factory also did not have an air pollution control system.
Kampung Sungai Lembu Development and Security Committee chairman Tan Sing Lee, 58, said the factory also carried out open burning of sawdust to produce carbon.
“Every time the wind blows our way especially in December, the air is polluted. At night, the air is foggy and villagers complain about the smell,” he said.
“We reported the matter to Penanti assemblyman Dr Norlela Ariffin but no action was taken in the past two years,” he said.
The factory is also situated inside an oil palm estate, on land designated for agriculture.
Tan claimed a man in his 30s died in 2015 after he fell into one of the pits while filling it with sawdust.
A check by The Star at the factory yesterday found 20 pits, each measuring about 3m across. The pits were filled with burning sawdust and there was smoke everywhere. The sawdust is burnt to produce carbon which is then used in filters.
Permatang Pauh Umno chief Datuk Mohd Zaidi Mohd Said claimed there may have been people involved in covering up the issue before the raid on the factory by the Malaysian Anti-Corruption Commission (MACC) on Thursday.
“Several reports have been lodged against the factory.
It is impossible for the Seberang Prai Municipal Council to not be aware of it,” he said during a press conference in Kampung Sungai Lembu.
Also present was Parti Cinta Malaysia deputy president Datuk Huan Cheng Guan.
PKR rep Norlela glad over action against illegal factory
BUKIT MERTAJAM: Penanti’s PKR assemblyman Dr Norlela Ariffin (pic) is pleased that action is finally being taken by the MACC over an illegal factory in Kampung Sungai Lembu.
Dr Norlela said she raised the issue of the carbon filter processing factory more than two years ago. “The villagers told me about their concerns in February 2015. I raised the matter at the state assembly sitting but no action was taken for two years,” she said.
It was in November that Dr Norlela broke down and sobbed uncontrollably at the assembly, claiming the state government had failed to respond to her queries.
She lamented then that she had complained of many woes like illegal factories, frequent flooding and the lack of infrastructure like roads and proper jetties for fishermen.
“Early this year, before the state assembly sitting, villagers handed me an 18-page petition, appealing for the factory to be closed as they claimed it was affecting their health.
“It was also found that the factory was not operating according to guidelines,” she said yesterday.
In May, her allocation was withheld after she did not show up at the Yang di-Pertua Negri’s swearing-in ceremony.
Earlier this month, she complained that funds collected for flood mitigation had not been used to help her constituents.
“In Penanti alone, there are nine flood-prone areas that could greatly benefit from these funds,” she reportedly said, citing the Auditor General’s Report 2016 Series 1 which revealed that the Seberang Prai Municipal Council had only used RM2.2mil of RM63.39mil collected from 2008 to June 2016.
Dr Norlela is among several assemblymen who have been at loggerheads with the state leadership, often criticising it for not carrying out its duties or for not caring about the environment,
Last month, she praised the Sungai Buloh-Kajang MRT project and took a swipe at the Penang Transport Master Plan by comparing the construction cost of both projects in a video she posted on social media.
DAP's lone ranger faces his biggest test
GEORGE TOWN: Two-term Penang executive councillor Phee Boon Poh, 66, gained fame as a vocal opposition leader when he took on 38 Barisan Nasional representatives in the state assembly when he was the sole DAP assemblyman from 2004 until 2008.
Despite being overwhelmed, the “lone ranger” raised many issues.
Although PAS was represented by Mohd Hamdan Abdul Rahman, it was Phee who questioned the policies of the state administration headed by Tan Sri Dr Koh Tsu Koon.
Phee began his political career by winning the Bagan Jermal state seat in 1990, only to lose it to Barisan’s Tan Sri Dr Sak Cheng Lum in 1995.
In 1999, he contested the Sungai Puyu seat but lost to Barisan’s Loo Ah Dee. In 2004, he wrested it from Loo with a 607-vote majority.
In 2008, he retained his state seat with a 9,201-vote majority and was appointed state Welfare and Caring Society chairman.
He later took over the environment portfolio from state exco member Chow Kon Yeow.
In the 2013 general election, he beat MCA’s Sum Yoo Keong by 16,207 votes.
Phee is a distant relative of businesswoman Phang Li Koon, who has been charged with abetment in the two corruption cases against Chief Minister Lim Guan Eng.
MACC probes Phee’s letters - Directing council to 'stay away' under investigation
Phee Boon Poh mobbed by the media after he was remanded in George Town. — ZAINUDIN AHAD and ZHAFARAN NASIB/The Star
PENANG: The Malaysian Anti-Corruption Commission (MACC) is investigating two letters, which appear to have originated from state executive councillor Phee Boon Poh, asking that no action be taken against an illegal factory.
The letters, written in 2015 and 2016, directed the Seberang Prai Municipal Council from shutting down the carbon filter-processing factory which had been operating illegally for the past 10 years.
The MACC is also investigating whether Phee or his officials had authorised the letters telling the council to back off.
As Phee and two of the company’s directors were remanded yesterday, the MACC is expected to call up a DAP state assemblyman for questioning.
The MACC is believed to be investigating the role of this state assemblyman in the case.
It is understood that MACC is also probing the relationship between Phee and the factory owners.
It wants to find out how the factory could operate openly despite complaints from the villagers nearby.
“The illegal factory is on an agro-based land. (We want to know) why it has been able to operate without any action (taken against it),” a source told Sunday Star.
Too close for comfort: The illegal carbon filter-processing factory still operating and its proximity to Kampung Sungai Lembu and surrounding areas near Bukit Mertajam.
When contacted, MACC deputy chief commissioner (operations) Datuk Azam Baki said the anti-graft body will carry out a thorough probe and look into all angles.
Azam said investigations will focus on the element of abuse of power.
“We have opened an investigation paper under Section 23 of the MACC Act.
“We will look into whether one of the suspects has given (any form of) protection to the illegal factory to enable it to continue operating the last 10 years,” he said.
He declined to elaborate further as investigations were ongoing.
Sources said anti-graft officers revisited the house of the state exco member in Sungai Puyu on the mainland to look for more evidence to assist in the probe.
It is not immediately known if documents were seized.
The homes and offices of two other suspects will also be revisited as part of the probe.
More arrests are expected in the coming days as investigations into the case widen.
The Penang government will not protect any of its officials ... Chief Minister Lim Guan Eng says he believes state exco man Phee Boon ... Phee, who is in charge of the welfare, caring society and environment portfolio, was arrested yesterday by the MACC over alleged misuse of power.
Food for thought by Alan Tong
