Rehda can help control property prices

Publication: NST

Date of publication: Sep 12, 2013

Section heading: Main Section

Page number: 018

Byline / Author: By R.C.W

I REFER to the recent remark by the president of the Real Estate and Housing Developers' Association (Rehda) that property prices can be expected to rise by 10 per cent following the increase in petrol prices.

How did he arrive at the figure when the Housing and Local Government Ministry is of the view that any rise in prices should be no more than three per cent?

While we can understand that there will likely be a general increase in the cost of goods and services, one cannot simply generalise and make a statement that property prices will rise by a whopping 10 per cent, unless a proper study is carried out to ascertain what will go up in prices and by how much.

It seems to me that it is becoming a trend that whenever there is a change in fuel prices, Redha will issue a message to the public that material prices will go up and therefore property prices.

I recalled that Rehda made a similar remark a few years ago when the government raised fuel prices.

It is simple economics that everyone knows that prices of goods and services in general will rise whenever there is a hike in fuel, but a person of his standing in the housing industry should be more responsible by not generalising the future price of properties, unless he has carried out a detailed study and there is evidence to support the rise by that margin.

No doubt, Rehda has a duty to protect its members but it also has a duty to make responsible statements to the public.

While, on the one hand, the government is concerned over the galloping house prices in the the last few years and looking at new budgetary measures on how to curb speculation and excessive rise in property prices, here we have someone making an announcement that property prices will rise substantially, just because there is a hike in fuel prices.

Rehda should do more to help the government and the public to manage property prices while ensuring its members continue to earn a reasonable profit.

It is a fact that developers in general are already raking in huge profits over the last few years and will continue to do so.

On top of this, even with the impending goods and services tax (GST), they will pass this burden on to buyers at the end of the day but it certainly does not give them a "licence" to increase prices automatically by a large margin.

Currently, there is no price control on properties or building materials and, therefore, buyers have no choice but to pay for whatever quoted by the developers.

In some cases, buyers not only have to pay high prices but also end up getting shoddy workmanship and materials.

The government should consider setting up a body to monitor any increase in property prices by developers, some of which have contributed to higher prices.

R.C.W, Kuala Lumpur

Global Blue Card provides tax refund opportunity for Malaysian shoppers

Published: Thursday September 12, 2013 MYT 12:00:00 AM 

Updated: Thursday September 12, 2013 MYT 8:01:58 AM

MISSING out on a tax refund opportunity can put a dampener on any overseas shopping trip.

Global Blue, with 30 years of expertise helping travelers shop and spend overseas, has launched the solution to help globe shoppers with its new Global Blue Card.

The new tax-free shopping card allows Malaysian travellers and shoppers to save up to 19% on purchases made abroad, while removing the hassle of filling out tax-free forms.

Overseas travel is part of a new lifestyle for many Malaysians, and picking up a new watch or loading up on brand-name handbags is as central to the travel experience for them as sightseeing or sampling the local cuisine.

Global Blue executive vice-president Arjen Kruger said, “Overseas consumption continues to rise among Malaysian tourists and there is no doubt that tax-free refunds are a major force behind this trend.

“At Global Blue, we aim to eliminate obstacles such as language barriers, lack of know-how and time wasted at the counter that limit access for so many globe shoppers, thus ensuring the most efficient tax refund service.”

You can now register for your Global Blue Card for free via www.globalblue.com and join a group of smart shoppers while enjoying worldwide tax-free shopping.

The traditional process for collecting tax refunds requires filling out tax-free forms and long queues at the airport to submit paperwork. The Global Blue Card streamlines the entire process into three easy steps.

When shopping at any of Global Blue’s 270,000 partner stores across 37 countries, just swipe your Global Blue Card at check-out to automatically generate your tax-free form.

Get the form stamped at the customs desk in the airport, designate the credit card details on which you want to receive the refunds on and leave it in Global Blue’s refund mailbox.

In most cases, your refund will be transferred to your credit card account within five business days upon receipt at Global Blue’s processing centre.

Besides providing convenient Tax Free Shopping, Global Blue Card holders will also be able to receive exclusive promotions from leading retailers and membership information from Global Blue’s official website, Weibo, Wechat and mobile apps in the near future.

All-round fiscal responsibility

Posted on 11 September 2013 - 07:26pm

Last updated on 11 September 2013 - 10:13pm

Tricia Yeoh

THE government says it intends to pursue fiscally responsible policies, but this must be consistently applied throughout its bureaucracy from top to bottom, and in all areas.

Last month, ratings house Fitch Ratings downgraded Malaysia from a "stable" to "negative" outlook, noting the poor state of Malaysia's public finances and uncertain prospects for budgetary reform and fiscal consolidation.

Indeed, there have been concerns expressed over recent years of the country's federal government debt, which has risen up to 53.5% of GDP at the end of 2012.

The two budgetary vulnerabilities it identified were the reliance on petroleum-derived revenues, and the high and rising weight of subsidies in expenditure.

It is likely for these reasons that the Najib administration decided to revert to its "subsidy rationalisation" plan, namely the announcement last week of the fuel price increase of 20 sen for RON95 and 15 sen for RON97 at the petrol pumps, which will reportedly save government up to RM3.3 billion annually.

From a fiscally responsible point of view, removing petrol subsidies both ensures that government is reallocating resources to better target aid to the poor, as well as reduces the dependency people (including the rich) have on cheap fuel. The same argument would go for the goods and services tax (GST) that may be announced in the 2014 budget.

Both reducing subsidies and introducing the GST would, in the long run, certainly help boost Malaysia's debt situation, thereby improving our international ratings. But the real reasons for which people are questioning these decisions have little to do with economic theory.

First, subsidies to independent power producers (IPPs) contribute an estimated RM8 billion annually out of the total subsidies paid a year (RM42.4 billion in 2012). Although some IPP contracts are being renegotiated, there is a need for greater transparency as to the terms of these new contracts. A legitimate question is therefore why the subsidy rationalisation scheme is not being uniformly implemented across the board.

Second, leaders had previously committed to the maintaining of petrol price before the general election. Although one understands the need for politicians to be expedient, this does not help Malaysians in their financial planning. Knowing one's potential rapid increase in living costs would allow for adjustments to be made accordingly. Surprise price increases are not helpful in this case.

A third and most common complaint by now is the exorbitant and excessive spending of government, many foolish practices of which are reported year after year by the auditor-general.

It is all well and good for government to responsibly raise revenues so that the national coffers do not run dry. But an equally, and perhaps more, responsible thing to do would be to watch where the money is being spent, and to do so in an accountable manner.

The Resources Governance Index 2013, which measures the quality of governance in the oil and gas sectors around the world, ranked Malaysia 34 out of 58 countries and scoring only 46 out of 100. Placed in the "weak" category, Malaysia performed poorly in the areas of "institutional and legal setting" and "safeguards and quality controls".

Transparency in government procurement is another equally important area. The Auditor-General's Report in 2011 revealed that the open tender process was not conducted for several projects. It is particularly important for projects that are privatised under either PPP (public-private partnerships) or PFI (private finance initiatives) arrangements to be awarded under open tenders, which is not necessarily the case at present.

Finally, the greatest concern is that incomes are not rising in commensurate measure with the rise in living costs. A more open and competitive economic environment would allow for greater job opportunities that accompany investments, especially that of higher value functions. Malaysia's performance in the Economic Freedom Index 2013 dropped slightly, affected by declines in monetary freedom, trade freedom and freedom from corruption.

It is important for information to be made available in the value chain of money both going in and out of government accounts. Although recorded in the thick budget books of "Estimates of Federal Government Revenue and Expenditure" respectively, there are still elements that could be made more transparent.

In short, while the government waxes lyrical about the need to exercise fiscal responsibility, this must be applied in all areas of its policymaking. There must therefore be a visible drive to reduce wastage and excessively lucrative pay-outs to companies at the expense of the public. Without this, the level of trust in what these funds are being used for will not improve, subsequently making all justifications of economic efficiency futile.

Tricia Yeoh is COO of an independent think-tank. Comments: letters@thesundaily.com

For Celcom, GST has a nice ring to it

Posted on 12 September 2013 - 05:40am

Liew Jia Teng sunbiz@thesundaily.com

KUALA LUMPUR (Sept 12, 2013): Celcom Axiata Bhd is looking forward to the implementation of the goods and services tax (GST), which is widely expected to be announced in the upcoming Budget 2014 to be tabled in Parliament on Oct 25.

For one, telecommunication companies (telcos) like Celcom will save some money as they no longer have to pay the government out of their own pocket for the service tax that were supposed to be collected from the sales of airtime through pre-paid top-ups.

"The impact for us is positive. Today, we have to absorb the service tax and we won't be able to claim it back. But with the implementation of GST which we expect to happen in 2015, it's going to be value added to us," its CFO Chari TVT told reporters yesterday.

Telcos are at a stalemate over the service tax (on prepaid lines) issue, with some operators wary about raising prices amid rising competition, Celcom CEO Datuk Seri Mohamed Shazalli Ramly said.

"Some players want to use this as a competitive advantage (by absorbing the 6% service tax for pre-paid users) and some players want to pass it to the customers. We have not come to the position on how best we can do this and which route we want to take," he told a press conference to announce the group's latest quarterly results.

Shazalli said telcos are aggressively lobbying for more incentives and rebates to be included in the budget.

"We normally ask for incentives once we execute our programmes such as digital services and other new businesses.

We should be able to get some form of rebate to allow us to be a catalyst of digitising the whole Malaysia," he said.

Smartphone ownership on Celcom's network climbed to 3.57 million units in the first half this year, driven by aggressive sales of new device launches and bundles which pushed device sales to RM128 million.

"I would like to see a lot more digitisation effort in the country, to make sure the benefit is translated directly to Malaysians," Shazalli said.

Celcom, a unit of Khazanah Nasional Bhd-controlled Axiata Group Bhd, said quarterly sales sailed through the RM2 billion mark for the first time in the three months ended June 30, 2013 after it expanded 5% from RM1.92 billion a year ago.

It also marked the 29th continuous quarterly revenue growth for the group.

Net profit during the second quarter grew 4.3% to RM555 million from RM532 million previously.

On a six months basis, revenue increased 4.3% from RM3.83 billion to RM3.99 billion, while net profit grew 2.1% from RM1.05 billion to RM1.07 billion.

Earnings before interest, tax, depreciation and amortisation (ebitda) stood at RM1.78 billion, with a margin of 44.5%.

Shazalli said the target is to sustain full-year ebitda margin level at between 40% and 45%.

"We want to be the most profitable telco, as there is no point comparing who is bigger than the other based on revenue."

Maintain GST rate for five years

Published: Wednesday September 11, 2013 MYT 12:00:00 AM 

Updated: Wednesday September 11, 2013 MYT 8:18:46 AM

IT is heartening that the director-general of the Inland Revenue Board, Tan Sri Mohd Shukor Mahfar, has expressed the possibility of a reduction in the income tax rate with the introduction of the GST.

The GST is a broad-based tax system and a tax on consumption.

With the reduction of income and corporate tax rates, it will spur and encourage entrepreneurship and business activities and growth of capital which all countries need for sustained growth and prosperity.

Furthermore, there is a dire need to reduce the income and corporate tax rates to be in line with our neighbours so as to be competitive and attractive for investments both local and foreign.

Lower income and corporate tax will also discourage the introduction of all types of tax-saving schemes and allow businesses to concentrate on business.

The GST rate should be set to

be revenue neutral except to capture taxes from those who have avoided paying their dues under the income and corporate tax regime.

The GST should not be a tool to generate more tax revenue to burden the people.

Furthermore, many countries have introduced GST at a low rate with the hidden intent to subsequently increase the rate as a easy way of increasing revenue.

The Government must assure us that this will not be so and the GST rate should be maintained for at least five years before any review is conducted.

Such reviews should be conducted transparently and with full justification for any rate change.

However, GST revenue will always rise with the growth of the economy and there should be no reason to increase the rate if our Government judiciously designs our budget with prudence and care.

TAXPAYER

Petaling Jaya

CIMB Research: DiGi to benefit most from GST

Published: Friday September 13, 2013 MYT 8:33:00 AM 

Updated: Friday September 13, 2013 MYT 8:36:04 AM

KUALA LUMPUR: CIMB Equities Research said the likely introduction of the goods and services tax (GST) should be positive for the mobile carriers as they would no longer have to absorb the 6% sales tax for prepaid users.

“DiGi would benefit the most as 71% of its revenues are prepaid vs 58% at Celcomand 55% at Maxis,” it said.

It said on Friday the sector and its stock calls remain a Neutral across the board despite this potential development as the impact would be limited.

Assuming that the telcos are able to recover only half the tax as some consumers would reduce their usage when GST is imposed, it estimated only a 3%-6% lift for CY15 core net profit and 3%-5% for target prices. M1 is its top pick in the region.

CIMB Research said the GST proposal is likely to be included in Budget 2014 proposals which will be tabled on Oct 25. Should it indeed be on the cards, the GST would only be introduced in 2015 as the government will take around 14 months to implement it.

“Our economists expect it to range between 4% and 6%,” it said.

The imposition of GST should be positive for the mobile operators as they would finally be able to pass on the 6% sales tax on prepaid revenue that they have been absorbing. Postpaid users already bear this tax.

“DiGi stands to benefit the most from a GST, followed by Maxis and Axiata (throughCelcom). Prepaid revenue makes up 71% of DiGi’s total revenue versus an estimated 55% at Maxis and 58% of Celcom.

“The cellcos currently book only 94% of prepaid revenues as they absorb the 6% sales tax. Prepaid users may cut back on usage when GST is introduced as they are generally price sensitive and have tighter budgets,” it said.

Assuming that the telcos are able to recover only half the tax since some consumers would reduce their spending, DiGi’s FY15 core net profit could be lifted by 6% versus 4% for Maxis and about 3% for Axiata.

“We estimate a 4.6% or 21 sen rise in our DCF-based target price for DiGi and a 2.9% or 21 sen increase for Maxis. Axiata’s SOP-based target price would rise by 2.9% or 20 sen. We have not built this into our forecasts.

“We remain Neutral on the sector as this development would not have a significant impact on the industry’s earnings. Moreover, GST is only expected to be introduced in 2015. We prefer M1 which is the biggest beneficiary of mobile data repricing in Singapore,” said the research house.