Category Archives: News

Chua: No penalties yet, but file GST returns

No penalties have been imposed on companies which failed to file their GST returns, Deputy Finance Minister Datuk Chua Tee Yong said.

He said despite the Aug 24 submission deadline, the authorities had decided not to take punitive action yet.

“Businesses which have yet to submit the GST returns should do so without delay.

“The Customs Department has been very accommodating but please don’t take advantage of this.

“The time will come when penalties will be imposed and Customs officers will look for these defaulters,” he said after a dialogue with Chinese guilds and non-governmental organisations in Wisma MCA here yesterday.

Also present were MCA vice-president Datuk Lee Chee Leong and MCA Economic Consultative Committee member Datuk Seri Dr Lim Chin Fui.

Chua said the penalties, once imposed, would be auto-generated but businesses could still submit an appeal.

He said all GST-registered companies should make an effort to comply and that it was not fair to those who had filed the returns on time.

“The Customs Department has made it clear that it is not its intention to take immediate punitive action.

“They will not penalise companies over a mistake in the returns,” he said, adding that businesses should not take for granted that it was not a necessity to file the returns.

Records showed the first quarterly GST filing from April to June stood at 87%.

On GST refunds, Chua said several measures had been implemented to improve the process.

Don’t just invest your money, optimise it

IN this money-driven world, the need to invest is absolutely undeniable.

The unstable economy combined with rising inflation and the implementation of the goods and services tax is affecting our cost of living in unpredictable ways. At this rate, if we do not invest, we run the risk of having to work our entire lives.

Investing allows us an opportunity to grow our wealth at compounded rates, thus multiplying our money within a shorter period of time. Take a look at the multi-billionaires of today – they did not exactly make their wealth by earning monthly paycheques.

Nevertheless, when we invest, we also inadvertently expose ourselves to the risk of making investment losses. These cases are not unheard of. We’ve all come by stories of investments that are deemed to be “perfectly good” by analysts and salespersons, only to drop like rocks, costing investors their capital or worse, their entire life savings.

Take for example, the unexpected collapse of financial juggernaut Lehman Brothers which eventually pulled the entire global economy into a tailspin; or the notorious Madoff ponzi scheme that left investors wary of even the most reputable and well-regulated institutions; or the 2007-2008 financial crisis which caused unit trust funds to lose 30%-40% of their value.

More recently, the investors of oil and gas stocks were hit badly by the recent crude oil downturn, causing them to lose up to 50% of their capital. The list goes on and on.

Alas, investment misfortunes are not limited to just stocks and unit trusts.

In the case of gold investment company, Geneva Malaysia Sdn Bhd, some 1,065 gold investors are presently embroiled in a lawsuit with the company for breach of contract involving RM146mil in gold products and monies owed to them.

You may have also heard of stories of property investors aiming to make a quick buck by flipping properties, only to be caught off-guard by not being able to rent or sell the properties for profit as planned.

Even the most experienced investors are not completely “bullet proof” from committing investment blunders.

By his own admission, Warren Buffett, the greatest investor of our time, shared in an open letter to his investors, two of his biggest business and investment mistakes, one of which he claims cost him and his investors US$100bil when he bought ailing Berkshire Hathaway. He called the actions that led up to his purchase of Berkshire a “monumentally stupid decision.”

In order to learn from these investment mistakes, we must first understand the risks and rewards of investing well.

The simple science of investing dictates that you are essentially aiming for maximisation of your return of investment (ROI). As such, in a best case scenario, investing will increase your net worth significantly and substantially. This is perfect, if you have done all the right things and had picked a winner.

However, what if the reverse happens? Depending on the size of the capital invested, you could suffer a major loss to your net worth and be further away from achieving financial freedom. Chart 1 illustrates the best and worst-case scenario when you invest money.

Archidex Exhibition 2015

I attended the Archidex exhibition recently from 12 – 15 August 2015 at KL Convention Centre and if I am not mistaken, there were 9 halls with various booths of different home and construction products. What I particularly like was a new type of laminated wood infused with negative ions particles via nano technology. The cut apple will remain fresh and not get oxidised and turn brown when place on the wood. You can even check the negative ions counter and when you place your handphone over it, the counter immedately register near zero instead of negative in the thousands since electrical gadgets emit positive ions that make us lethargic and tired. I collected many colourful canvas bags, pens, note book and a diary. Some people even got themselves long golf umbrellas and big teddy bears.

Pressure on ringgit remains unabated


At RM3.85 to the US dollar, the selling pressure on the ringgit remains unabated on the back of two probable developments – first, the widely speculated put option that traders had gone into a few months ago offering RM4 for every US dollar.

The second is the arbitrage difference between the non-deliverable forward (NDF) ringgit offshore contract versus the onshore ringgit forward contract.

As of yesterday, the one-month NDF offshore had an implied yield of 8.2% versus the onshore forward yield of 3.2%.

“That’s a very decent arbitrage yield of some 5%. This is clearly another channel of pressure for the ringgit,” said Dr Suresh Ramanathan, an independent interest rate and foreign exchange strategist.

An NDF contract is a short-term forward contract where the profit or loss is calculated based on the difference between the forward rate and spot rate. It is settled in US dollars and the tenure can be one month or up to one year.

Since the ringgit is not available in large amounts in the offshore market, the NDF is the common benchmark used to speculate the currency.

Yesterday, the ringgit hit a fresh 17-year low of 3.8517 against the greenback. Year-to-date, the ringgit has lost about 8.4% against the US dollar, making it the worst-performing currency in Asia.

Suresh is, however, not overly pessimistic about the ringgit’s depreciation, as he is of the opinion that beyond the RM3.70 level, a lot of the selling pressure was purely due to arbitrage opportunities and the currency will eventually revert once the arbitrage window in both the forward and options market closes.

Last week, it was reported that Bank Negara was attempting to stem the decline of the ringgit by persuading traders to not enter into forward contracts to sell the ringgit.

“The message was to go long on the ringgit and short the US dollar,” said a trader.

This comes as dealers get offers to enter into a “put” option for the ringgit at RM4 to the US dollar over a period of between three and six months.

This means that the counter party has taken the view that the ringgit will go to RM4 against the US dollar in three months and is prepared to take delivery from the dealer at that price when the time comes.

Nonetheless, over the near term, there is still risk for the ringgit, for instance, the high bond holdings by foreigners.

Should the ringgit continue to weaken, this could be a third channel of pressure, as foreigners may start selling off their ringgit-denominated bonds.

The foreign shareholding on the ringgit bond market, via the Malaysian Government Securities (MGS), remains high. With the value of the ringgit depreciating by the day, the 3% to 4% yield that foreigners are getting from the MGS is significantly being eroded.

As at end-June, foreign ownership of MGS stood at 47%, or US$43bil (RM165.55bil) of the total outstanding of US$92bil (RM354.2bil).

“The signal this sends is that the foreigners holding the bonds are still comfortable with the ringgit risk,” said a dealer.

It will be interesting to see Malaysia’s current account position when Bank Negara announces Malaysia’s second-quarter gross domestic product (GDP) later this month.

Economists are forecasting the current account surplus to narrow mainly because Malaysia’s main exports will be hit both by the weak ringgit and lower oil and commodity prices. Oil-related products make up more than 20% of Malaysia’s exports.

On the other hand, Malaysia’s import bills will increase due to the strengthening US dollar. Furthermore, Petroliam Nasional Bhd, which contributed some 22% to national coffers last year, has built its 2015 budget based on oil prices of US$55. As of yesterday, Brent was trading at US$51.03.

Malaysia’s revised Federal Government budget is also based on Brent crude oil at US$55 per barrel

In the first quarter, Malaysia’s overall current account advanced to RM10bil (or 3.6% of GDP). That compares with RM5.7bil (or 2% of GDP) in the fourth quarter of 2014.

Down South

I am now in KL for business and will stay for 4 days until Monday. I reached here on Friday yesterday afternoon and went to see a client before calling it a day and drove back home in Rhythm Avenue. There are a few restaurants here which have operated for a long time already and are quite established with repeat patrons. I think it is a better place than Main Place which is too pricey for me. Both Rhythm Avenue and Main Place were abandoned projects under the Barisan government in Selangor and then revived to completion under the Pakatan leadership. I am pleased that Pakatan is doing well and really cares for the citizens and their financial problems. Lim Kit Siang personally took it upon himself to visit widows and widowers who have lost their spouse and network of financial support. He does not mind travelling from Penang to Johor just to comfort a person in distress.

This is his caring trademark that is now followed by his son, Lim Guan Eng. I just hope Pakatan will continue to rule more states and offer more benefits for the common people with their individual problems just to put food on the table and the struggles just to survive and get by day by day for all races, regardless of religion or creed.

Sold a Book

I sold a book ’72 Amazing Ways to Internet Profits’ for a mere $8 after paying a whopping $56 for it! Well, there is too much hype and Patric certainly knows the psychology of selling, being a greeting card seller himself before his phenomenal rise to wealth via the internet. I read it only once but the title of the book certainly attracts much interests, despite the boring contents. There is nothing new to be learnt and that is why the big boys keep making crazy amount of money every day while the normal people like us struggle to put food on the table for our families. To some people, making tonnes of money seems to be the norm each day and they are jet setting to exotic destinations, taking up the entire bungalows for their families with swimming pool included and the best scenery of the beach, white powdery sand and the azure blue seas crashing onto the shores, giving out lots of negative ions in the process.

A new conundrum emerges from the weaker ringgit


The ringgit has weakened by almost 5% year-to-date against the US dollar. Yet, Bursa Malaysia has remained at levels above 1,800 points.

STOCK markets that remain strong or unaffected amid a weakening currency represent a new conundrum for investors.

The ringgit has weakened by almost 5% year-to-date against the US dollar, and is among the worst-performing currencies in the region. Yet, Bursa Malaysia has remained at levels above 1,800 points. It is 3.1% up since January this year.

The euro has depreciated even more – 13% – against the dollar since the beginning of the year. Yet, the markets are soaring on the back of the European Central Bank embarking on a quantitative easing programme that would result in a weaker currency in Europe.

The Brazilian real has lost almost 24% against the US dollar due to a host of reasons, ranging from a multi-billion corruption scandal at Petrobras, the national oil company, to its president Dilma Rousseff facing mounting opposition to her rule. Despite the Brazilian real depreciating, the stock market has remained somewhat flat over the last year.

Brazil’s neighbour Argentina, which saw its peso devalue by almost 26% against the dollar since January last year after it defaulted on a debt, has seen its stock market almost double.

The Argentinian stock market was at 5,283 points in January last year and is now at more than 10,000 points despite the peso being the most under-performing currency in South America.

Each of the countries above is having problems unique to their respective economies.

But the reading seems to be consistent – the weaker the currency against the dollar, the better it is for the stock market. Or, in the worst-case scenario, the stock market remains unaffected.

This is unlike the case in 1998 when a depreciating currency among Asian countries against the US dollar led to a collapse of the stock market. Malaysia was one of the worst affected when the market hit up to 260 points on Sept 2 when former Prime Minister Tun Dr Mahathir Mohamad imposed capital controls. The capital controls helped rein in the currency speculators, but did not dispel the reasons why the Asian countries came under attack.

The economic logic then was that the Asian countries had sustained their years of high economic growth via debts and a dependence on foreign direct investments (FDIs). Their current account was in negative territory for a few years and governments consistently recorded a deficit in their budgets.

The weak underlying economic fundamentals meant the currencies were over-valued and, hence, the attack from speculators. It started with Thailand and had a knock-on effect on other countries in the region.

The Hong Kong government that had its dollar pegged to the US dollar fought off the speculators, thanks to the heft of China’s huge reserves. The Russian rouble also came under attack, as did the Brazilian real.

The currencies only saw some stabilisation due to multiple efforts – including the entry of the International Monetary Fund and the fear that countries could also follow the Malaysian style of imposing currency controls.

But now, that economic logic does not seem to work.

Weak currencies do not mean that the macro-economic fundamentals are necessarily weak. Some countries have deliberately weakened their currencies to be competitive.

This is one reason put forward as to why a weak currency does not necessarily result in a weak stock market.

In fact, based on what the US is experiencing now, the pundits are saying that the strong US dollar is bad for improving the economy of that country.

This is the excuse that fund managers and the various intermediaries of the market are giving, as the Dow Jones struggles to cross the 18,000-mark convincingly.

The US dollar has appreciated against all major currencies, and now investors are saying that the strong currency has its drawbacks. Any business with an international angle to it in the US has had an impact.

Exporters, including farmers, are finding themselves less competitive, while imports are getting cheaper, which means inflation will remain muted.

A low inflation rate does not give an excuse for the Federal Reserve to raise rates.

US-based multinational companies are seeing lower value from the profits of the operations outside the country and this is impacting their earnings.

The stronger dollar has also had an impact on FDI in the US, say the technocrats.

The US generally has been the largest recipient of FDI, but its share of the total global FDI flows has dropped from about one-third in 2000 to less than a fifth in 2013, according to a report. Preliminary data revealed that the FDI flow into the US last year had dropped by almost 60% compared with 2013.

The optimists say the figure in 2013 is distorted because of single corporate transactions that had hiked up the FDI flow. They also say that as the US ties up more trade pacts the investment flows would improve because of the incentives.

A strong currency, which is an indication of a strong economy, is supposed to be good because it means higher income and more private-sector spending and investments. It translates into a buoyant domestic economy that, in turn, tends to attract more foreign flows.

However, that does not seem to be the economic logic for now.

Lau’s Tencent worth of contribution

IN the corporate world, Malaysian-born SY Lau might be synonymous with Tencent Holdings Ltd, a China-based company best known for its mobile text and voice messaging communication service, WeChat.

However, Lau, who is Tencent’s senior executive vice-president and president of its Online Media Group, is quick to attribute his success to his humble upbringing within a “strict but loving” Malaysian upbringing.

“My parents were strict but they were also very loving. But I was also in an environment where I wasn’t penalised for making mistakes.

“I would learn later that what kills innovation is when you do not allow children to learn when they commit right and wrong things,” he tells StarBizWeek.

Lau was a speaker at the Chief Marketing Officers Conference in Kuala Lumpur earlier this week.

While his parents might have allowed him to “make mistakes,” Lau says however that certain faults were less forgivable than others.

“There was no grey area between what was right and wrong. For instance, when I went to school and I got 97 (out of 100) for mathematics, my mother would hit my hand three times,” he quips.


Lau named Media Person of the Year at the Cannes Lions Festival of Creativity.

This strict upbringing is probably what moulded Lau into the perfectionist that he is today.

“I was pushed from young and have since always strived to be the best at whatever I did,” says Lau.

Lau says this translated into making him a “determined and competitive individual in the working world.”

Not surprisingly, Lau is no stranger to accolades within his line of work. In 2011, New York-based Advertising Age recognised him as one of “The World’s 21 Most Influential People in Marketing and Media.”

Earlier this year, Lau received another global award when he was named “Media Person of the Year” at the Cannes Lions Festival of Creativity in France.

As the first person from China to receive this award, Lau joins a list of luminaries that include Facebook founder Mark Zuckerberg, former Microsoft chief executive officer Steve Balmer and Google executive chairman Eric Smith, among others.

Lau believes that having a strong, positive mindset, is crucial to being able to achieve success. This, he says, has helped him grow his business in China.

“If people start facing obstacles and they start painting negative images, then (working in a place like) China would be a challenging place to work for anyone.

“If people view difficulties as a challenge, it presents a different sort of melody, where you could actually learn to dance to a new beat and create a bigger fire in the future. I call this passion.”

Lau says he sees former sugar baron and tycoon, Robert Kuok, as a huge inspiration.

“I have an admiration for Kuok. He is humble, maintains a low profile and his knowledge is diverse.

“Staying humble is vital for achieving greatness. Many people, when they get recognition for whatever success they achieve, only end up losing themselves.”

Tencent is today the largest Internet service provider in Asia, with a market capitalisation of US$172bil (RM636bil) as of March 20.

The company specialises in Internet, mobile services and online advertising.

Lau joined Tencent in 2006 as a member of the senior management team, focusing on driving corporate growth, with the specific goal of overseeing Tencent Online Media Group (OMG).

Today, OMG is one of the largest media companies in the world, with a portfolio that includes a matrix of online information and entertainment products. As the market leader in China, OMG’s products and services provide penetration into a market numbering in the hundreds of millions of active users per month.

Going forward, Lau says the aim is to create more recognition for Tencent and grow its product offering to customers all over the world.

We’re just 16 years old. Despite the fact that our name precedes us, we’d like to see a future where the world knows us not by globalisation of the ambitions that we have.

“Instead, we’d much prefer if the world knows us because we are much more appreciated by users globally.”

Commenting on Malaysia, Lau says the country’s growth prospects for online media looks bright.

“Malaysia is actually pretty advanced. Around 16.7% of its gross domestic product comes from Internet-related services. In China, it’s just 4%.

“Furthermore, the average number of hours spent on the Internet in Malaysia by users is between five and six. In China, it’s just between three and four hours.

“Also, the Internet penetration rate in Malaysia stands at around 65%, compared with China at 45%. So, Malaysia is pretty advanced in this area.”

Generally, Lau says he is optimistic about the prospects for online media in Asia.

“Various indicators suggest its a bright outlook going forward. But just like anything in life, there’s no guarantee.

“The future might be bright but it’s only the case for those that are prepared and willing to think more for their users, rather than those that only think of short-term revenue and profits.”

RM4 to the dollar seen


The ringgit has fallen to the lowest level in the last six years and closed at 3.73 to the US dollar yesterday.

Ringgit expected to weaken on expectation of US rate hike

KUALA LUMPUR: The ringgit is expected to weaken to the 4.00-level versus the US dollar in the next six months as investors anticipate a hike in the benchmark US federal funds rate.

The hike may come earlier than anticipated after recent indicators show growth has visibly strengthened in the world’s largest economy.

Johns Hopkins University’s Eni Professor of international economics Michael Plummer said the greenback would continue to be exceptionally strong in the next few months on market anticipation of a rate hike by the US Federal Reserve.

He told StarBizWeek on the sidelines of the 19th Asean Finance Ministers and Central Bank Governors Meetings that should the ringgit weaken towards the 4.00-level, there could be space for Bank Negara to intervene to stabilise the currency.

“We are now at RM3.70 against the US dollar even before the US has increased the interest rates. The country has only spoken about increasing its rates, and when it does there is a possibility that the ringgit would tumble to 4.00 against the dollar,” Plummer said.

His ringgit outlook echoes a recent report by Macquarie Research’s Asean economist PK Basu, who said the currency could fall to 3.95 to the US dollar by September before strengthening to 3.82 by year-end.

Basu expects Bank Negara to cut the benchmark overnight policy rate (OPR) either in May or July and keep it at that level through 2016.

The cental bank raised the OPR last July by 25 basis points to 3.25%.

The ringgit has fallen to the lowest level in the last six years and closed at 3.73 to the US dollar yesterday as concerns mount over the Malaysian economy’s exposure to commodities following the drop in crude oil, palm oil and rubber prices.

“In the short-run, the country should be prepared for the further weakening of the ringgit and yet take advantage of that,” Plummer said, adding that the weaker ringgit would make exports competitive and boost the economy.

He said exports would benefit across the board instead of just selected industries.

On another note, former Indonesian finance minister Dr M Chatib Basri said Asean had no need for a single currency given the problems facing the 19-member euro-zone.

“We do not need to have an Asean single currency to have integration like the European Union,” he said.

Chatib added that Asean integration was vital for the region’s businesses to expand beyond their markets but was no antidote against trade protectionism.

Credit card mistakes to avoid


Credit cards provide convenience when we are strapped for cash but can also prove to be a headache if utilised inappropriately. – AP

Credit cards provide convenience when we are strapped for cash but can also prove to be a headache if utilised inappropriately. – AP

Using them wrongly can lead to unwanted problems

CREDIT cards are one of the most commonly used – and misused debt instruments out there.

Granted, they provide convenience when we’re strapped for cash. On the other hand, they can prove to be a headache if utilised inappropriately.

The following or some examples of how not to use your credit card.

Not settling your debts immediately

This is one of the most common issues that face credit card holders, says licensed financial adviser and syariah financial advisory for Excellentte Consultancy Jeremy Tan.

“They only pay the minimum amount of 5% instead of settling it immediately,” he says

MyFP Services Sdn Bhd managing director Robert Foo concurs with this point.

“If possible, you should settle your bill within the first month itself. If you can’t, that already is a mistake.”

According to Tan, paying the minimum payment result in high credit card finance charges of 1.5% per month.


“In addition to finance charges for the outstanding, all purchases billed will also incur finance charges from the date of transaction. Additionally, all new purchases subsequent to the statement date will also incur finance charges until the outstanding amount, including new purchases, are paid for.

Tan advises individuals to always ensure that they should have money at hand when making purchases, so that when the credit card bill arrives, one would be able to make the payment on time.

Alternatively, he says individuals could consider using debit cards instead.

“A debit card purchase directly deducts monies from your bank’s savings or current account.Alternatively, making a purchase using a credit card, which requires discipline, immediately make payment to the credit card account.”

He adds that one could pay for purchases by installment by leveraging off financial institutions that offer credit cards with zero interest or interest-free terms.

Tan, however, notes that easy payments of zero interest or interest-free installment plans, as advertised by financial institutions, may be a debt trap for credit cardholders.

“Cardholders may be unconsciously caught with mounting debts and may even face bankruptcy due to inability to pay. In addition, when regular payments are not made, it is no longer zero interest or interest free.

“Finance charges of 1.5% per month will be levied for the outstanding amount. The compounding effect of interest on interest will be the debt trap. The effective interest rate will then be more than 18% per annum.”

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