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FundMyHOME: Yay or Nay?

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Image source : Yahoo SG

In the recent Budget 2019 speech presented by Finance Minister Lim Guan Eng, he mentioned on a scheme to help the Malaysian to own a house. It is called “FundMyHome”, the first peer-to-peer (P2P) financing scheme in Malaysia which initiated by EdgeProp Sdn. Bhd.

How the scheme works?

You can picture it as a crowdfunding to buy a property which involving 3 parties: Developer, Investor and of course you as the Buyer.

Buyer and investor will buy the property together from the developer based on the equity percentage 20% and 80%. The buyer will choose the completed property on their website and pay 20% from the property price. On the other hands, FundMyHome will find the investor to buy the remaining 80% shares.

The investor will get a steady 5% return per annum for 5 years while you as a buyer will have a 5-year staying period without having to pay a single cent. After 5 years, buyer can choose to sell or own the property by buying the remaining 80% equity based on the market price.

For example : Fathi is buying a Rm 200,000 property through this scheme. He needs to pay RM 40,000 (20%) while investor will pay the remaining RM 160,000 (80%). At the end of the 5th year, the property value assessed at RM 255,256 (Assuming the property price appreciate 5% per annum). If Fathi decide to buy the property, he needs to buy the remaining 80% equity from the investor based on the market price (80% x RM 255,256 = RM 204,204)

Different scenario if the property has 0% or negative appreciation in value which I think most likely will not be the case.

Is it good or bad?

Let’s see from the buyer’s perspective. From the way I see it, their main target clients would be the first-time home buyer and those that did not get any loan offer from the banks due to bad credit rating. It may sound pretty and hassle free but you need to know the consequences in a long run.

Most of the people I know are buying property either for own stay or investment.
If you are buying the house for own stay and you are eligible for bank loan, I would not recommend this scheme. You might end up paying more than the initial price. But if you are looking for investment, you can still consider this option as long as what you gain is more than what you pay. Bear in mind, the rental period is just limited to 5 years and the risk is high.

From the news and articles I found over the web, some says the scheme is the place where the developers dump their unsold property and selling them way above the market price. To be fair, I would not say that this scheme is totally bad. It might suit some people based on their financial situation and needs. Whatever it is, the choice is yours.

Menjelang Bajet 2019

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*The following article is based on the reported news by BH online

SETIAP kali pembentangan bajet negara, seramai 1.6 juta penjawat awam pastinya tidak sabar menunggu pengumuman bonus, manakala rakyat berpendapatan rendah dan sederhana pula mengharapkan pengumuman bantuan kewangan dan pelbagai subsidi.

Tidak terkecuali Bajet 2019 yang akan dibentangkan Jumaat ini, ditunggu-tunggu pelbagai lapisan masyarakat untuk mengetahui goodies atau oleh-oleh yang memanfaatkan mereka.

Bajet berkenaan juga yang terakhir sebelum negara melangkah ke 2020 bagi merealisasikan Wawasan 2020 untuk menjadi negara maju mengikut acuan sendiri yang diilhamkan Perdana Menteri, Tun Dr Mahathir Mohamad pada 1991.

Bagaimanapun, kalangan penganalisis ekonomi yakin tidak banyak goodies yang diperoleh rakyat berikutan keadaan ekonomi negara yang tidak mengizinkan ketika ini.

Ada dalam kalangan penganalisis ekonomi menjangkakan tiada pengumuman mengenai bonus kepada penjawat awam, begitu juga kenaikan gaji dan elaun.

Jangkaan subsidi minyak dikurang

Bantuan Sara Hidup Rakyat (BSH) yang menggantikan Bantuan Rakyat 1Malaysia (BR1M) yang memanfatkan 4.1 juta penerima juga dijangka ditukar daripada pemberian wang tunai kepada barangan makanan.

Pakar ekonomi, Prof Dr Barjoyai Bardai menjangkakan subsidi minyak juga akan dikurangkan untuk meningkatkan pendapatan negara demi manfaat rakyat.

Perbelanjaan untuk sektor pertahanan dijangka dikurangkan, manakala tumpuan perbelanjaan kekal terarah kepada pendidikan dan kesihatan.

Walaupun sektor pendidikan terus diberi tumpuan, jumlah pinjaman menerusi Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN) mungkin dikurangkan.

Dianggap ‘belanjawan zaman susah’

Bajet 2019 boleh dianggap ‘belanjawan zaman susah’ berikutan bebanan hutang negara ditinggalkan Barisan Nasional (BN), selain jangkaan berlaku kegawatan ekonomi negara.

Sebagai belanjawan pertama kerajaan Pakatan Harapan (PH) selepas mengambil alih tampuk pemerintahan negara, sudah tentu kerajaan akan melakukan sesuatu yang akan dikenang oleh rakyat, aspirasi itu pastinya akan diambil kira oleh kerajaan.

“Namun, saya menjangka belanjawan untuk Pendidikan Teknikal dan Latihan Vokasional (TVET) akan meningkat kerana kerajaan memerlukan tenaga kerja berkemahiran tinggi serta memperkenalkan pembelajaran kemahiran baharu bagi mendepani cabaran Revolusi Perindustrian 4.0,” katanya ditemui, baru-baru ini.

Langkah menangani isu kos sara hidup kumpulan berpendapatan isi rumah 40 peratus terendah (B40) dan kumpulan berpendapatan isi rumah 40 peratus sederhana (M40) sewajarnya diberi tumpuan dalam Bajet 2019.

Bagi golongan tidak memiliki rumah sendiri sudah tentu mereka mahukan kediaman selesa untuk keluarga dan mengharapkan ada subsidi dan inisiatif diperkenalkan kerajaan.

Mereka sudah tentu mahu inisiatif yang akan diperkenalkan oleh kerajaan menerusi penggabungan semua agensi yang berkaitan perumahan negara menerusi Majlis Perumahan Mampu Milik Negara (MPMMN) memberi manfaat dan penyelesaian kepada masalah ketidakmampuan memiliki kediaman sendiri.

Rumah mampu milik isu yang berpanjangan yang bagaikan tiada penyelesaian sehingga ada menganggap rumah yang ingin dimiliki sebenarnya hanya ‘rumah mampu tengok’ bukan mampu dimiliki.

Penubuhan MPMMN diumumkan oleh Dr Mahathir ketika membentangkan Kajian Separuh Penggal Rancangan Malaysia Ke-11 (RMKe-11) bagi menyelaras pengurusan perumahan mampu milik awam.

Harga makanan

Menurut Kumpulan Bank Dunia, kenaikan harga makanan dan rumah serta pertumbuhan upah yang tidak menentu di Malaysia dijangka meningkatkan kos sara hidup kumpulan berpendapatan rendah secara lebih cepat dan beberapa kali ganda, berbanding golongan berpendapatan pertengahan dan tinggi.

Ketua Pakar Ekonomi dalam Makroekonomi, Perdagangan dan Pelaburan, Richard Record berkata, agensi itu menjelaskan jumlah yang tinggi daripada pendapatan isi rumah yang dibelanjakan golongan berpendapatan rendah ke atas makanan dan perumahan melonjakkan inflasi kumpulan itu melebihi kadar purata.

Sebab itulah Bajet 2019 perlu mengambil kira kepentingan golongan berkenaan, apatah lagi mereka golongan yang memberi sokongan padu kepada PH sehingga membentuk kerajaan dalam Pilihan Raya Umum Ke-14 (PRU-14), 9 Mei lalu.

Portal hartanah, PropertyGuru Malaysia (PropertyGuru) pula mengesyorkan kerajaan membenarkan pembukaan tanah rizab untuk pembangunan perumahan mampu milik pada pembentangan Bajet 2019. Langkah itu menurutnya dilihat mampu membantu meningkatkan pemilikan kediaman dalam kalangan rakyat tempatan.

Bantuan Pelajar Pendidikan Tinggi atau Baucar Buku 1Malaysia juga dinanti-nantikan pelajar, sama ada dasar itu diteruskan atau sebaliknya, hanya diketahui Jumaat ini.

Bantuan sebanyak RM300 setiap pelajar yang didebitkan menerusi Kad Diskaun Siswa 1Malaysia (KADS1M) memanfaatkan 1.2 juta pelajar pra-universiti, institusi pengajian tinggi (IPT) dan matrikulasi tahun ini.

Sabah dan Sarawak

Kerajaan sepatutnya meneruskan bantuan ini kerana ia memberi manfaat kepada pelajar dan jika jumlah penerima dikurangkan, ia seharusnya menumpukan kepada mahasiswa daripada keluarga berpendapatan rendah.

Penduduk Sabah dan Sarawak juga sudah tentu mahu menerima manfaat daripada belanjawan berkenaan dengan kurang-kurangnya 30 peratus daripada peruntukan pembangunan keseluruhan dalam Bajet 2019 disalurkan kepada dua negeri terbabit.

Pengerusi Pakatan Harapan Sarawak, Chong Chieng Jen mahu jumlah peratusan itu setimpal dengan keperluan pembangunan di kedua-dua wilayah, khususnya di kawasan pedalaman dan luar bandar yang serba kekurangan.

Berdasarkan belanjawan terdahulu yang dilaksanakan kerajaan BN ketika itu, Sabah dan Sarawak hanya memperoleh 10 hingga 13 peratus peruntukan pembangunan dalam bajet Kerajaan Persekutuan.

Dalam bajet kali ini, sudah tentu kedua-dua negeri ini mahu peruntukan lebih adil bagi memperkasakan pembangunan bersesuaian dengan saiz kedua-duanya sebagai wilayah terbesar di Malaysia.

Credit : Mohd Azrone Sarabatin

IMO 2020 Sulphur Emission

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image 1 : EGCSA

SOx emission control

IMO has been working to reduce harmful impacts of shipping on the environment since the 1960s. Annex VI to the International Convention for the Prevention of Pollution from Ships (MARPOL Convention) was adopted in 1997, to address air pollution from shipping.

The main type of “bunker” oil for ships is heavy fuel oil, derived as a residue from crude oil distillation. Crude oil contains sulphur which, following combustion in the engine, ends up in ship emissions. Sulphur oxides (SOx) are known to be harmful to human health, causing respiratory symptoms and lung disease. In the atmosphere, SOx can lead to acid rain, which can harm crops, forests and aquatic species, and contributes to the acidification of the oceans.

image 2 : International Maritime Organization 

Limiting SOx emissions from ships will improve air quality and protects the environment. This is the reason why the International Maritime Organization (IMO) will enforce the emission limit of sulphur to 0.50% m/m (mass to mass) by 1 January 2020. Currently in certain area the emission has stricter limitation at 0.10 % m/m. This is the Emission Controls Area (ECA) zones that includes Baltic Sea area; the North Sea area; the North American area (covering designated coastal areas off the United States and Canada); and the United States Caribbean Sea area (around Puerto Rico and the United States Virgin Islands).

 

What should the ship owner do?

Most of the merchant vessels in the world are equipped with diesel engines which are running in marine diesel oil (MDO) and heavy fuel oil (HFO). These engines are classified according to the IMO emission standards that commonly referred to as Tier I to Tier III standards. In the presence, IMO Tier I engines are no longer in service due to the regulations.

image 3 : Dieselnet

To further comply with the becoming IMO 2020 sulphur, the ship owners may opt to use emission compliant fuels such as LNG. They need to do major overhaul on the main engines; to change to engines that can run on the compliant fuels. This alteration may take some time and costly.

Another option is to install the scrubbers. It is an additional structure that being installed at the funnel area to act as a ‘filter’. The sulphur oxides from the exhaust are passed through a water stream system (gas treatment unit) to become sulphuric acid. This highly corrosive acid will be neutralised with sufficient alkaline seawater before being discharged to open seas.

Since the beginning of 2018, the scrubbers retrofit work had gradually increased. A survey of EGCSA members and recent reports have revealed that major ship operators such as Spliethoff, Frontline, DHT and Star Bulk have opted for scrubbers. The survey showed that 63 per cent of all ships have been or will be retrofitted with scrubbers, with 37 per cent are new building installations. 988 of 1,561 individual scrubber towers installed or on order are for open loop scrubbing. Bulk carriers are reportedly the top ship type adopting scrubber technology, with containerships and tankers following. In each of these sectors, open-loop installations predominate.

 

What happen to vessels not comply with the new regulation?

The vessels might be sanctioned and fined by individual Parties to MARPOL such as flag authorities and port States. IMO does not set fines of sanctions.

Bantah1050 – Kaji semula gaji minima

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SIDANG MEDIA MENGUMUMKAN PENYAMPAIAN MEMORANDUM KEPADA YAB PERDANA MENTERI MALAYSIA 17 OKTOBER 2018 • DI PARLIMEN

KAJI SEMULA AMAUN GAJI MINIMA. KAMI BANTAH KENAIKAN CUMA RM50!

Pagi ini (Jumaat) 12 Oktober 2018 sidang media penting telah di adakan oleh MTUC bersama wakil kepimpinan Gabungan Bantah 1050 untuk mengumumkan maklumat penyampaian Memorandum seperti di atas.

Anda sedia maklum bahawa YAB Perdana Menteri telah mengumumkan Gaji Minima baru seragam RM1050 di Semenanjung dan Sabah dan Sarawak.

Bagi Semenanjung, kenaikan Gaji Minima hanya RM50. Amaun ini adalah satu penghinaan kepada kaum pekerja di Malaysia yang telah menyumbang produktiviti mereka untuk menjamin keuntungan para majikan dan pembangunan negara.

Lebih 30 organisasi terdiri dari Kesatuan Sekerja, Organisasi dan parti politik akan hadir untuk menyerahkan memorandum dan menuntut kajian semula kenaikan RM 50 kepada jumlah yang lebih tinggi – RM 1,800.

Monopoli Sepanyol di Dunia Baharu

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Hampir kesemua ekspedisi pelayaran Sepanyol pada kurun ke-15 adalah dengan satu tujuan khusus iaitu untuk mencari emas dan perak. Ini disebabkan emas dan perak adalah begitu penting dan berharga pada ketika itu kerana ia adalah sumber utama dalam penghasilan matawang, yang mana merupakan dasar sistem monetari Eropah. 

Matawang asas Sepanyol adalah “8 reales piece” atau dikenali sebagai “peso”. Matawang ini diterima dengan meluas di Eropah disebabkan kandungan perak yang tinggi. Penerimaan ini sangat penting untuk Sepanyol kerana mereka tidak mempunyai industri ekonomi sendiri dan hanya bergantung kepada produk-produk dari negara-negara Eropah yang lain. Ini menjadikan emas dan perak yang dilombong oleh Sepanyol di Amerika tersebar luas ke benua Eropah dan secara tidak langsung memberikan impak kepada ekonomi global.  

Kawasan jajahan Sepanyol di Dunia Baharu menjadi sumber terbesar dunia bagi logam berharga ini. Justeru, Sepanyol telah memperkenalkan satu polisi yang menghadkan kawasan jajahan Sepanyol di Amerika hanya boleh berdagang dengan kapal dagang Sepanyol. Memandangkan masyarakat dibawah kawasan jajahan ini bergantung kepada pedagang Sepanyol untuk keperluan asas seperti makanan, alatan, haiwan ternakan dan senjata, monopoli perdagangan Sepanyol menghasilkan keuntungan yang besar.  

Monopoli Sepanyol di Dunia Baharu ini telah telah menjadi punca utama ketegangan antara Sepanyol dan negara-negara Eropah yang lain. Perancis misalnya, memandang kekayaan ini sebagai satu peluang yang tidak boleh diketepikan dan mula menyerang kapal Sepanyol dengan mengupah kapal persendirian yang telah diberikan lesen oleh kerajaan Perancis. Harta yang berjaya dirampas akan dibahagikan antara kapal persendirian tersebut dan kerajaan Perancis. Dengan menggunakan sistem ini, Perancis dan kemudiannya diikuti oleh Inggeris dapat meraih kekayaan dari Dunia Baharu tanpa perlu menyerang kapal Sepanyol secara langsung. Untuk mengawal masalah ini, Sepanyol telah membentuk satu perancangan pertahanan untuk kapal mereka. Pada 1522, kerajaan Sepanyol telah menghantar armada laut nya ke Laut Atlantik untuk mengiringi kapal dagang Sepanyol. Khidmat armada laut ini dibiayai oleh kutipan cukai yang dikenakan kepada pedagang yang dilindungi.  

Pada 1530, Sepanyol telah menguasai Empayar Inca yang kini dikenali sebagai Peru yang terkenal dengan kekayaan emas dan perak. Hal ini membuatkan Perancis mempertingkat usahanya dalam menyerang kapal dagang Sepanyol dengan memberikan lesen swasta kepada kapal-kapal persendirian yang membenarkan mereka untuk beroperasi jauh ke Lautan Atlantik, dan tidak lagi hanya menumpukan perhatian ke perairan berhampiran Sepanyol sahaja.  

 Pada tahun 1537, setahun selepas kapal persendirian Perancis berjaya menawan sembilan kapal dagang milik Sepanyol, beberapa kapal perang telah dihantar oleh kerajaan Sepanyol ke kawasan Caribbean untuk mengiringi kapal-kapal yang membawa barangan berharga ini pulang ke Sepanyol. Konvoi kapal dagang dan kapal perang ini dianggap sebagai armada harta karun yang sebenar. Sistem kapal dagang yang berlayar dalam kumpulan yang dilindungi oleh kapal perang membantu Sepanyol membawa pulang sejumlah besar harta karun. Pada 1545, Sepanyol berjaya menemukan deposit perak yang terkaya di benua Amerika yang terletak di kawasan pergunungan Peru. Penemuan ini dapat memastikan pertumbuhan empayar Sepanyol dan sekali gus membuatkan perak adalah logam paling berharga dan penting di benua Amerika.  

 Ketika aktiviti perdagangan Dunia Baru terus meningkat pada awal tahun 1550-an, Sepanyol menghadapi kesukaran dalam mencari kapal-kapal yang tidak hanya dapat membawa kuantiti yang banyak dan mampu untuk berlayar dengan baik, tetapi juga dapat menahan serangan dari kapal musuh. Galleon yang dianggap kapal terbaik pada waktu itu, menjadi kapal standard yang digunakan dalam armada harta karun Sepanyol. Kebanyakan galleon adalah kira-kira 100 kaki panjang dan 30 kaki lebar. Ia mempunyai tiga atau empat tiang layar, dua atau tiga dek, dan dua hingga tiga meriam. Walaupun galleon boleh membawa sejumlah besar kargo dan senjata, mereka sangat berat dan sukar untuk dikemudi. Kapal dagang yang dipanggil naos, yang pada dasarnya adalah seperti galleon tapi tidak dilengkapi senjata, merupakan sebahagian besar daripada armada yang membawa kargo, harta, dan penumpang. Kapal-kapal lain yang bergerak dalam armada termasuk patak, yang merupakan kapal kecil yang digunakan untuk berkomunikasi antara kapal, dan resfuerzos atau kapal bekalan yang membawa makanan dan kargo biasa. 

Pada tahun 1560-an, sistem armada harta Sepanyol telah ditubuhkan dan dua armada utama dibentuk –Tierra Firme dan New Spain– yang belayar ke Dunia Baru setiap tahun. Adakalanya, kedua-dua armada ini akan meninggalkan Sepanyol pada masa yang sama sebagai satu armada besar, dan adakalanya berasingan. Mereka mengikut perjalanan yang sama ke Caribbean, dan seterusnya berpisah; armada Tierra Firme ke Amerika Selatan, manakala armada New Spain ke Mexico. Dalam perjalanan pulang ke Sepanyol, kedua-dua armada akan berjumpa kembali di Havana dan pulang sebagai satu konvoi armada yang besar.  

Setiap armada terdiri daripada sekurang-kurangnya dua buah galleon bersenjata berat dan dua buah patache serta antara 10 dan 90 naos pedagang. Galleon terbesar, Capitana, membawa kapten yang mengetuai armada. Galleon yang lebih kecil, Almiranta, membawa laksamana armada. Oleh kerana kedua-dua kapal ini dilengkapi senjata yang hebat, mereka digunakan untuk membawa barang berharga kerajaan Sepanyol. Pada separuh kedua abad ke-16, sekurang-kurangnya 60 kapal bergerak dalam satu konvoi.  

Pada pertengahan 1560-an, armada ke-3 yang dibentuk – Manila Galleons, mula berlayar antara kawasan jajahan Sepanyol di Filipina dan Acapulco yang terletak di pantai barat Sepanyol. Di Filipina, produk eksotik timur seperti rempah, porselin, sutera, dan gading dimuatkan ke kapal dan dibawa ke Acapulco. Barang-barang ini dikumpul di Veracruz di mana ia akan dibawa oleh konvoi armada laut Sepanyol. Walaupun perjalanan dari Manila ke Acapulco mengambil masa empat hingga lapan bulan dan dianggap navigasi paling sukar di dunia, namun keuntungan yang mereka perolehi adalah lebih besar daripada risiko yang dihadapi. 

Menjelang tahun 1570, kira-kira lima juta peso logam berharga dibawa pulang ke Sepanyol setiap tahun. Perak menyumbang sekurang-kurangnya 95% daripadanya. Pada akhir abad ke-16, permintaan terhadap tekstil, senjata, kaca, dan kertas oleh penduduk di kawasan jajahan Sepanyol meningkat tinggi. Oleh kerana Sepanyol tidak menghasilkan barang-barang ini dalam kuantiti yang banyak, para pedagang terpaksa membeli lebih banyak produk asing untuk dihantar ke jajahan Sepanyol ini. Faktor Ini menjadikan Sepanyol lebih bergantung pada harta dari Amerika. 

Sistem armada harta Sepanyol mencapai tahap kemuncak di antara tahun 1590 dan 1600. Dalam tempoh ini, kira-kira 16 juta peso logam berharga dibawa ke Dunia Baru setiap tahun. Tetapi, pada abad seterusnya, sistem ini mulai mengalami penurunan secara perlahan-lahan. Perselisihan mengenai agama, wilayah, dan perdagangan menyebabkan Sepanyol menghadapai pelbagai peperangan dengan pihak Inggeris, Belanda, dan Perancis. Armada harta  sentiasa menjadi sasaran utama bagi musuh-musuh Sepanyol. Ketegangan perang yang memuncak dan kekurangan barangan dan kapal membuatkan Sepanyol sukar untuk mengekalkan jadual pelayaran tahunan. Disebabkan hutang Sepanyol yang semakin meningkat, lombong-lombong di kawasan jajahan mula menghasilkan kurang perak dan emas dan serangan terhadap kapal meningkat, negara-negara Eropah yang lain mula menjajah Caribbean. Ekonomi Sepanyol semakin merudum. Contohnya seperti industri pembuatan kapal. Menjelang pertengahan abad ke-17, lebih daripada dua pertiga kapal-kapal Sepanyol dibina di negara-negara asing. Pada masa ini, purata bilangan kapal dalam sebuah armada telah jatuh menjadi 25 buah kapal sahaja. 

Selepas tahun 1700, terdapat sedikit peningkatan dalam sistem armada harta Sepanyol. Faktor utama adalah kerana kawasan jajahan Sepanyol mula membeli barangan dari peniaga Inggeris, Belanda, dan Perancis pada harga yang lebih murah. Akibatnya, permintaan barangan dari kapal-kapal harta Sepanyol menurun, dan monopoli dagangan Sepanyol menjadi lemah. Peperangan dengan Belanda dan Inggeris pada awal abad ke-18 juga telah menimbulkan ketegangan yang lebih besar. Sepanjang tempoh ini, armada kecil berlayar secara sporadis dan kadang-kadang tidak berlayar langsung. Kehilangan kapal-kapal akibat taufan pada 1715 dan 1733 merupakan faktor lain yang menyumbang kepada permasalahan ini. Pada tahun 1760-an dan 70-an hanya enam armada yang belayar ke Veracruz. Sistem armada harta Sepanyol berakhir sepenuhnya pada tahun 1778 apabila Sepanyol mengisytiharkan polisi perdagangan bebas di seluruh kawasan jajahan mereka di Amerika. Kapal-kapal mula berlayar ke Amerika secara persendirian. 

Walaupun dominasi Sepanyol terhadap Amerika sudah berakhir, namun ia meninggalkan warisan yang berkekalan. Dari abad ke-16 hingga abad ke-18, lombong-lombong Sepanyol di Mexico dan Amerika Selatan menghasilkan lebih daripada 4 bilion peso logam berharga. Ini bersamaan 80 peratus daripada pengeluaran perak dunia, dan 70 peratus emas pada masa itu menjadi mata wang antarabangsa yang diterima dengan meluas.  

 Sumber : The Spanish Treasure Fleet, Timothy R. Walton

Correcting Trade Deficit in the Balance of Payment

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The balance of trade (BOT) is the difference between the value of country’s import and exports for a given time period. The balance of trade is a component of a country’s balance of payments (BOP), which is used by the economist to measure the strength of a country economy. A trade deficit occurs when a country import more than it exports, which is also known as the negative balance of trade.

One way of correcting trade deficit is by the devaluation of a home currency. This is an official lowering of the value of a country’s currency within a fixed exchange rate system. Low currency value will make export less expensive for foreign consumers. This will help foreign consumers to buy locally produced goods, which will help domestic business and encourage exports. It also will make it more expensive for the local consumer to buy foreign imported goods, which in turns will lower import. This measure will increase export and decrease import, which will finally reduce or eliminate the trade deficit.

Growth-friendly policies will also help decrease trade deficit. One of such policy is on taxation. By increasing import duty or tax, imported goods will become more expensive and less attractive to local consumers. They in turns will shift to locally produced products. Government policies such as tax incentives and exemption to local exporting industries will also help correct trade deficit. Tax incentives will also attract foreign companies to open their manufacturing plant in the home country and boost export.

Home country global competitiveness will also help reduced trade deficit by attracting more foreign business. Beside tax regime, competitiveness can be encouraged by supplying the industries with a skilled labor force. Global competitiveness can also be enhanced by upgrading local transportation infrastructure, increase local connectivity and mobility, which will support exporting industries. Efficient ports, well-connected railways, faster and high-end telecommunication infrastructure will all positively helps the home country to become more competitive.

To encourage export of goods, the home country also can introduce export subsidy, this can take many forms such as direct payments, cheap loans, and tax-relief exporter. Measure to reduce the cost of production also will encourage export, such measures include lowering cost of raw materials, cost of labor and also rental rates.

Adopting protectionism policy will further suppress import and help boost the local economy. This can be achieved by imposing a tariff on certain imported goods, which is a form of taxation. For example, the United States in 2002 imposed 30% tariff on a variety of imported steel products. Tariff, however, should be exercised with caution to avoid disputes and trade war.

Finally, a concerted national industrialization development programmes will increase foreign exchange earnings. This strategy can be done by shifting local industries to embrace modern industries. China is a very good example. China’s Open Door Policy in 1978 modernized China’s industry and turning it into ‘The World’s Factory’. Special Economic Zones (SEZ) were set up to attract capital and business which led to trade expansion.

3 Types Of Stock Investors

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Lucy is a successful baker in Penang. She makes homemade cookies and selling them to online customers. Day after day, her business is getting better. One day,  she decided to have her own shop, with extra hands and better equipments to accommodate the high demands from her customer. In order to do so, Lucy needs a vast amount of money.

Lucy has a friend, Diane. She knows nothing about baking and has no background in business, but she has the money. She knows Lucy and the cookies well so she decided to help Lucy financially, in return she owns some shares in Lucy’s bakery.

Lucy’s business is getting better and noticeable. Few years later, her company become a public listed company in Malaysia. One day, her company was awarded a contract of supplying cookies to an airline company. A guy name Brian, who happened to read the good news on newspaper decided to buy some shares in Lucy’s company at certain price and sell it at his targeted price based on his analysis. As for his brother, Dennis – He  simply buy the same shares because he feels that it is the right thing to do.

From the situation above, we can see how the stocks/shares functioning and type of people who get involve in the market. The reason why companies going public is to raise fund for the company itself. They will allocate certain amount of shares that can be traded among public. This giving us opportunity to have some ownership/shares of the company.

Type Of Investor :

Image Credit : Frugal Entrepeneur

1. Gambler
Dennis is the gambler in this situation. He knows little about the company and buy the shares because other people did. This is a big no in stocks investing. He might get lucky if the company he choose make profits but hey, the world ain’t all sunshine and rainbows. Good reported news, contract award are not 100% mean the company will do well.

 

                                                                 Image Credit : The Balance

2. Trader/Speculator
Brian is the trader. Usually their decision are driven by the technical and fundamental analysis. Their principle is to always buy low and sell high. They won’t hold their shares for too long in a company. Traders rely much on the technical analysis and charts. So the guy you saw on the movie, sitting in front of their 6 screens computer looking at the price movement is belong to this type.

 

                                                                    Image Credit : The Street

3. Investor
This is the best, peace of mind type among all type of investor. Diane is the investor. An investor hold their shares in a company in a long run. An investor will make sure that they knows the background of the company, the business nature and the people who runs the company before investing. As Warren Buffet said in his book, “Never put your money in a company that makes you confuse”. One of the best stock he bought is Coca-Cola simply because he likes to drink it and he can understand the business.

So what kind of investor you are? I do get a lot of question asking which one is better between stocks and Forex. I will try to cover it on the next post.

To Be A Debt Free In 6 Steps

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Happy Merdeka day people!

Yesterday marked the 60th year of Malaysia’s Independence Day, a very meaningful and important celebration for every Malaysian.

We have been colonized for more than 400 years by the Portugese, Dutch, British and the Rising Sun country – Japan, until our first Prime Minister, Tunku Abdul Rahman and several other leaders successfully free our country from the colonial’s fist.

That’s the snippet of our history. Those days were gone and it’s been 60 years we live peacefully and independently among our harmonious multi-racial society. After all, we are all Malaysian.

How about your financial independency? Are you as freedom as our country? You know yourself better.

My parents decided to retire completely by end of this year – in December to be precised. They will move from JB to Melaka (my dad’s hometown) and the best thing is they’re completely free from debts. No work’s commitment, no debts, they can go whereever and whenever they want. I fancy that life but I still have a long way to go.

To be a debt-free is my main life goal so far. Debts are unavoidable but you need to differentiate the good debts and the bad debts.

So what I’ve done so far for this debt free plan?

1. Debt Planning

I listed down all my current debts, the amount, and the repayment plan. By doing this, it helps  giving me a better picture on my financial commitment. I suggest you make a nice, simple straight forward charts or maps and put it in your laptop or anywhere that you could access frequently. I also made my future debt list so that I know much loan I want to commit. Take home loan for example. This will refrain me to buy an over budget house that will crush my financial health.

2. Increase Monthly Income

There’s a lot of ways on how to gain extra incomes. Driving Uber for example – I have several friends who drives Uber as a part timer and they earned pretty good. Or maybe if you’re good with numbers and charts, you can get into investment such as Forex or maybe stocks. Start with something small and something that you’re good at.

3. Plan Your Monthly Budget

This is a must for everyone. If you fail this step, there’s high possibility you will have financial problem at the end of the day. The main reason why you should do this is to let you know better on how much and where your money should go. For more tips, you can refer to my article – How To Start Your Monthly Expenses Plan

4. Set Your Limits

When I mentioned “limit” I’m referring to the lifestyle. I don’t have right to tell you on how to spend your money but the least I can tell is how I manage my lifestyle. I’ll give you an example : 5 years ago when I went shopping for a leather shoes, I told myself that I need to buy a high quality-in trend shoes and I don’t think twice spending RM 300-RM400 for a pair of shoes. Now, I wear leather shoes almost everyday to work and there are a lot of comfy, quality leather shoes under RM 200. Can you imagine how much money I could save? Again, if you can afford it by all means go for it. You know your money better.

5. Effective Communication

Well this one is for people in steady relationship especially married couple. You can’t just do it alone. Me and my wife shared the same goal and we always discuss on our financial, where we are and what we should do sort of things. Sometime you need other people to remind you of your goal. You can always cheat on yourself (like I bought the cigs roller, thinking that I could save more but its not), but its hard to cheat others.

6. No Perfect Plan

All you can do is plan. If you achieve your plan, it’s good for you. But most of the time, what you get is slightly different from what you’ve planned. Don’t ever give up. If plan A is not working for you, start your plan B. Ain’t no one can judge you. Your money, your plan.

 

Debt Repayment Plan : Stacking Or Snowball?

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Did you know – total of 22,581 bankruptcy cases recorded by the Insolvency Department (MdI) between 2012 and September 2016 involved individuals aged between 25 and 34. – source : NST, November 2016

Most of the reported cases are due to failure to settle hire and purchase loans, followed by personal loans and housing loans. Honestly, I am unaware of this housing loans. I am keen to find out more on this matter and maybe will write about it in future post.

When you decide to take up loan from the bank, you should aware of your commitment before you sign the papers. I do find some people who didn’t even know the interest amount of their loans. That is just wrong..and sad.

In this post, we will discuss on how to tackling debts efficiently with 2 simple methods that widely used and recommended by many financial expert.

Let’s take an example : Ali has several loans in his list ;

  1. Credit Card – 15% p.a interest (total debt – RM 5,000)
  2. Personal loan – 12.46% p.a interest (total debt – RM 15,000)
  3. Hire Purchase – 3.01% p.a interest (total debt – RM 50,000)
  4. Education loan – 1% p.a interest (total debt – RM 3,000)
  5. Home loan – 4.55% p.a interest (total debt – RM 250,000)


Debt Stacking Method

This method is focusing on tackling the highest interest rate. By using this method, Ali’s debt repayment plan should looks like this :

With this method, Ali should pay the minimum amount on all his loans, and use the extra available cash to pay the debt with highest interest rate, which in this case is credit card. Let say – Ali can allocate RM 2,500 monthly for his debt repayment but the total minimum amount that he needs to pay is just RM 2,200. The balance RM 300 is considered as the extra available cash and this money should go to credit card’s payment.

Bear in mind –  this method is suitable for people who wants to save more money in interest payment and it takes longer time before you can cross the debt from you list, depending on the loan amount. You need to have the patience and importantly ; don’t get demotivated.

 

Debt Snowball Method

Snowball method is focusing on lowest amount debt. This method is recommended by financial expert Dave Ramsey. Let’s see how this method can be applied to Ali’s debt list.

From the chart, the lowest debt would be the education loan which is only RM 3,000. Same as the stacking example, Ali will pay minimum on other loans and loop in the extra cash to pay his education loan. Soon when the debt paid off, it will give Ali more cash allocation which he can use to “attack” the second lowest debt which is the credit card,  and at the same time giving him motivation to settle other debts.

Personally, I prefer this snowball method. During my wedding preparation 2 years ago, I swiped my credit card here and there – telling myself that I can pay it all right after the wedding. I was wrong. It took me exactly 8 months to kill that devil credit card. To cross it off my debt list, I felt like a champ! ? (Rocky Balboa’s theme song plays in the background)

I know it’s hard for some people to get out of this debt’s chain. If you feel like you are at the dead end and feel like giving up, don’t be. You can still try to contact Malaysia Department of Insolvency to discuss your situation. Hopefully they will show you a way out.

You have any other efficient way to manage the debt? I would love to hear it in the comment.