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NIK ZAFRI BIN ABDUL MAJID,
CONSULTANT/TRAINER
Email: nikzafri@yahoo.com, nikzafri@gmail.com
https://nikzafri.wixsite.com/nikzafri

Kelantanese, Alumni of Sultan Ismail College Kelantan (SICA), IT Competency Cert, Certified Written English Professional US. Has participated in many seminars/conferences (local/ international) in the capacity of trainer/lecturer and participant.

Affiliations :- Network Member of Gerson Lehrman Group, Institute of Quality Malaysia, Auditor ISO 9000 IRCAUK, Auditor OHSMS (SIRIM and STS) /EMS ISO 14000 and Construction Quality Assessment System CONQUAS, CIDB (Now BCA) Singapore),

* Possesses almost 30 years of experience/hands-on in the multi-modern management & technical disciplines (systems & methodologies) such as Knowledge Management (Hi-Impact Management/ICT Solutions), Quality (TQM/ISO), Safety Health Environment, Civil & Building (Construction), Manufacturing, Motivation & Team Building, HR, Marketing/Branding, Business Process Reengineering, Economy/Stock Market, Contracts/Project Management, Finance & Banking, etc. He was employed to international bluechips involving in national/international megaprojects such as Balfour Beatty Construction/Knight Piesold & Partners UK, MMI Insurance Group Australia, Hazama Corporation (Hazamagumi) Japan (with Mitsubishi Corporation, JA Jones US, MMCE and Ho-Hup) and Sunway Construction Berhad (The Sunway Group of Companies). Among major projects undertaken : Pergau Hydro Electric Project, KLCC Petronas Twin Towers, LRT Tunnelling, KLIA, Petronas Refineries Melaka, Putrajaya Government Complex, Sistem Lingkaran Lebuhraya Kajang (SILK), Mex Highway, KLIA1, KLIA2 etc. Once serviced SMPD Management Consultants as Associate Consultant cum Lecturer for Diploma in Management, Institute of Supervisory Management UK/SMPD JV. Currently – Associate/Visiting Consultants/Facilitators, Advisors for leading consulting firms (local and international) including project management. To name a few – Noma SWO Consult, Amiosh Resources, Timur West Consultant Sdn. Bhd., TIJ Consultants Group (Malaysia and Singapore) and many others.

* Ex-Resident Weekly Columnist of Utusan Malaysia (1995-1998) and have produced more than 100 articles related to ISO-9000– Management System and Documentation Models, TQM Strategic Management, Occupational Safety and Health (now OHSAS 18000) and Environmental Management Systems ISO 14000. His write-ups/experience has assisted many students/researchers alike in module developments based on competency or academics and completion of many theses. Once commended by the then Chief Secretary to the Government of Malaysia for his diligence in promoting and training the civil services (government sector) based on “Total Quality Management and Quality Management System ISO-9000 in Malaysian Civil Service – Paradigm Shift Scalar for Assessment System”

Among Nik Zafri’s clients : Adabi Consumer Industries Sdn. Bhd, (MRP II, Accounts/Credit Control) The HQ of Royal Customs and Excise Malaysia (ISO 9000), Veterinary Services Dept. Negeri Sembilan (ISO 9000), The Institution of Engineers Malaysia (Aspects of Project Management – KLCC construction), Corporate HQ of RHB (Peter Drucker's MBO/KRA), NEC Semiconductor - Klang Selangor (Productivity Management), Prime Minister’s Department Malaysia (ISO 9000), State Secretarial Office Negeri Sembilan (ISO 9000), Hidrological Department KL (ISO 9000), Asahi Kluang Johor(System Audit, Management/Supervisory Development), Tunku Mahmood (2) Primary School Kluang Johor (ISO 9000), Consortium PANZANA (HSSE 3rd Party Audit), Lecturer for Information Technology Training Centre (ITTC) – Authorised Training Center (ATC) – University of Technology Malaysia (UTM) Kluang Branch Johor, Kluang General Hospital Johor (Management/Supervision Development, Office Technology/Administration, ISO 9000 & Construction Management), Kahang Timur Secondary School Johor (ISO 9000), Sultan Abdul Jalil Secondary School Kluang Johor (Islamic Motivation and Team Building), Guocera Tiles Industries Kluang Johor (EMS ISO 14000), MNE Construction (M) Sdn. Bhd. Kota Tinggi Johor (ISO 9000 – Construction), UITM Shah Alam Selangor (Knowledge Management/Knowledge Based Economy /TQM), Telesystem Electronics/Digico Cable(ODM/OEM for Astro – ISO 9000), Sungai Long Industries Sdn. Bhd. (Bina Puri Group) - ISO 9000 Construction), Secura Security Printing Sdn. Bhd,(ISO 9000 – Security Printing) ROTOL AMS Bumi Sdn. Bhd & ROTOL Architectural Services Sdn. Bhd. (ROTOL Group) – ISO 9000 –Architecture, Bond M & E (KL) Sdn. Bhd. (ISO 9000 – Construction/M & E), Skyline Telco (M) Sdn. Bhd. (Knowledge Management),Technochase Sdn. Bhd JB (ISO 9000 – Construction), Institut Kefahaman Islam Malaysia (IKIM – ISO 9000 & Internal Audit Refresher), Shinryo/Steamline Consortium (Petronas/OGP Power Co-Generation Plant Melaka – Construction Management and Safety, Health, Environment), Hospital Universiti Kebangsaan Malaysia (Negotiation Skills), Association for Retired Intelligence Operatives of Malaysia (Cyber Security – Arpa/NSFUsenet, Cobit, Till, ISO/IEC ISMS 27000 for Law/Enforcement/Military), T.Yamaichi Corp. (M) Sdn. Bhd. (EMS ISO 14000) LSB Manufacturing Solutions Sdn. Bhd., (Lean Scoreboard (including a full development of System-Software-Application - MSC Malaysia & Six Sigma) PJZ Marine Services Sdn. Bhd., (Safety Management Systems and Internal Audit based on International Marine Organization Standards) UNITAR/UNTEC (Degree in Accountacy – Career Path/Roadmap) Cobrain Holdings Sdn. Bhd.(Managing Construction Safety & Health), Speaker for International Finance & Management Strategy (Closed Conference), Pembinaan Jaya Zira Sdn. Bhd. (ISO 9001:2008-Internal Audit for Construction Industry & Overview of version 2015), Straits Consulting Engineers Sdn. Bhd. (Full Integrated Management System – ISO 9000, OHSAS 18000 (ISO 45000) and EMS ISO 14000 for Civil/Structural/Geotechnical Consulting), Malaysia Management & Science University (MSU – (Managing Business in an Organization), Innoseven Sdn. Bhd. (KVMRT Line 1 MSPR8 – Awareness and Internal Audit (Construction), ISO 9001:2008 and 2015 overview for the Construction Industry), Kemakmuran Sdn. Bhd. (KVMRT Line 1 - Signages/Wayfinding - Project Quality Plan and Construction Method Statement ), Lembaga Tabung Haji - Flood ERP, WNA Consultants - DID/JPS -Flood Risk Assessment and Management Plan - Prelim, Conceptual Design, Interim and Final Report etc., Tunnel Fire Safety - Fire Risk Assessment Report - Design Fire Scenario), Safety, Health and Environmental Management Plans leading construction/property companies/corporations in Malaysia, Timur West Consultant : Business Methodology and System, Information Security Management Systems (ISMS) ISO/IEC 27001:2013 for Majlis Bandaraya Petaling Jaya ISMS/Audit/Risk/ITP Technical Team, MPDT Capital Berhad - ISO 9001: 2015 - Consultancy, Construction, Project Rehabilitation, Desalination (first one in Malaysia to receive certification on trades such as Reverse Osmosis Seawater Desalination and Project Recovery/Rehabilitation)

* Has appeared for 10 consecutive series in “Good Morning Malaysia RTM TV1’ Corporate Talk Segment discussing on ISO 9000/14000 in various industries. For ICT, his inputs garnered from his expertise have successfully led to development of work-process e-enabling systems in the environments of intranet, portal and interactive web design especially for the construction and manufacturing. Some of the end products have won various competitions of innovativeness, quality, continual-improvements and construction industry award at national level. He has also in advisory capacity – involved in development and moderation of websites, portals and e-profiles for mainly corporate and private sectors, public figures etc. He is also one of the recipients for MOSTE Innovation for RFID use in Electronic Toll Collection in Malaysia.

Note :


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Showing posts with label PROPERTIES REAL ESTATE. Show all posts
Showing posts with label PROPERTIES REAL ESTATE. Show all posts

Thursday, September 09, 2010

WILL MALAYSIA ENCOUNTER ASSET BUBBLE? - AN 'ANALYSIS' BY NIK ZAFRI



Today, I am not going to write about Sub Prime Mortgage Crisis, REIT, Commercial Property Bubble etc as I've written enough. But today, I'm going to share some good articles that worth looking into.

I read Jagdev Singh Sidhu's brilliant article in the Star Thursday September 9, 2010 entitled

"Diffuse the property bubble before it is too late - Making a Point - By Jagdev Singh Sidhu"

(Nik Zafri's notes : I pray that we're not too late)

THE subject of property prices and financing has gathered momentum ever since news broke that Bank Negara is assessing the situation to determine if new measures should be instituted to cool down fast escalating property prices.

Lobby groups for the industry have been busy making their case heard, saying that any move to impose higher downpayments for houses would hurt the property market.

Their concerns come at a time as a growing number of people have complained that prices of houses, especially in the hotspots in the country such as the Klang Valley and Penang, are spiralling beyond affordability.

The last thing everybody needs is such speculation spreading to other areas where for the moment, speculative activity appears to be contained for the moment in the hotspots as 94% of houses sold in the country are priced below half a million ringgit and 85% of houses launched in the past nine months cost below RM500,000.

Dealing with speculation is tough and the last thing anyone should do is to make genuine buyers suffer, especially first time buyers.

Suggestions that houses costing below RM500,000 should not be subject to the new higher downpayment requirement makes sense.

Also first-time house buyers or owner occupied houses should be given the most ease of financing to allow them to fulfil the dream of owning a home.

It’s also hard to clamp down on speculative activity as the wealth creation process is an allure that developers, banks and policy makers might find hard to turn away.

After all, the money generated from flipping houses adds to the bottomlines of companies and the money in the hands of people could well filter down to other consumption activity that would go a long way to help spur economic activity.

But the profit from speculating activity, this time driven largely by cheap and ready financing, is unsustainable and history is full of examples of the dire consequences of a property bubble gone burst.

It’s then not surprising that the authorities in other countries in the region, where a property bubble has formed, are working hard to manage and diffuse the situation. Rules introduced in China, Hong Kong and Singapore are far more drastic that what the authorities here are reported to be contemplating.

In fact the new rules that are talked about are tame compared with what has been done in the past. In 1995, reports said that Bank Negara imposed a maximum 60% loan for residential properties priced above RM150,000 to put the brakes on the then fast rising house prices.

Furthermore, a real property gains tax of 30% was imposed on foreigners selling their properties irrespective of the holding period of the property.

Those measures were met with a huge hue and cry from the lobby groups, and developers who claimed that such draconian measures would maim the market. A couple of years later Malaysia entered its worst-ever recession, and as they say the rest is history.

The point is, just as the saying goes, those that fail to learn from history are doomed to repeat it, and for Malaysia, failing to deal with any property speculative bubble would spell trouble for the banks that have grown to rely more and more on households to drive their lending activity.

In the interest of financial stability and common sense, the move to act should be made soon.

Deputy news editor Jagdev Singh Sidhu is amazed just how much his house is “worth” in the secondary market.

------------------------

(Nik Zafri : Here's another from United States (It's old but the REIT players...you can consider the points GLG is making (but obviously it was a bit late) – BUT we in Malaysia can change it! Take Preventive Actions now!) :



if you like subprime, you'll love the commercial property bubble

August 29, 2007

  • Analysis by: GLG Expert Contributor

  • Analysis of: Commercial Real Estate, Come On Down

  • Published at: www.washingtonpost.com


Summary

It's fine to talk about gloom and doom, but it's an ill wind that blows no good. Counter cyclical investment is worth thinking about.

Analysis

If you like subprime...you'll just LOVE the commercial property bubble! Every day we hear about a new record price for commercial property. Great news... if you're selling.

Alright, you say, here comes another gloom and doom prophecy. Nothing new about that. But let me regale you with some ancient history.

There once was a gentleman by the name of Knuppe. He pioneered mini-storage. His rule of thumb was, 'Build to yield 12% on hard cost. Sell at a capitalization rate of 10%.'

Well a few years ago I bought a self-storage REIT to yield 8%. Considering I was paying for management and getting liquidity, thought that 8% was pretty fair.

Hoped to get some increase of value with increasing rents. Well, from time to time I checked in on the stock. When I had more than doubled my money and the yield was down to 4%, wondered what the upside could be. Maybe the yield could go down to 3%? I sold. At the time that Mr. Knuppe was in his prime, normal commercial vacancy rates were on the order of 5% and capitalization rates something like 10%.

At about that time there was a very smart gentleman by the name of Michael Young. He asked what made real estate so special that investment in it got such a premium over, say, bonds or equities. Then he proceeded to figure a way to parse out credit leases like a bond strip, selling periodic payments to one buyer and reversion of the property to another. Today the ratios are just about opposite, 10% vacancy and 5% cap rate, except you might have a hard time buying to yield 5%. Capitalization rates are trying to go down to half that. What happened? Briefly, finance discovered real estate

Recommended reading: "A Demon of Our Own Design" by Bookstaber, "The Black Swan" by Taleb and "The (Mis)Behavior of Markets" by Mandelbrot.

(Nik Zafri : here comes the best part!....read on...)

Some fairly smart folks figured ways to package and sell "asset based" products without a firm understanding of the underlying assets or their markets. It is fairly well accepted that at the moment the global economy has been awash in liquidity.

As most people in normal times would rather put money to work rather than stick it in the mattress, that means that various investments are likely to receive the bounty.

The problem, as always, is that supply being roughly equal, more money being bid means higher prices. This has trickled down to real estate through various investment vehicles.

Real estate investment trusts (REITs) are an old one. Mortgage backed securities (MBS) and collateralized debt obligations (CDOs) are newer. This doesn't mention synthetic leases, which are, at least priced, a lot like bonds, or Mr. Young's "lease strips".

At one time in the Paleolithic of real estate, forty or so years ago, a debate was current as to whether the tax advantaged status of limited partnerships inflated apartment prices. More recently there has been discussion of the inflationary aspects of tax advantaged, "1031", property exchanges.

Today, however, we are talking about REAL money, that which is under management in pension and other investment funds. If the fund managers can't find a way to invest, they don't make their bonuses. Every picture tells a story. The office complex in the aerial photo (http://www.charlesbwarren.com/aerial%20services.html) is of PacificShores.

Touted as being 2/3 leased before ground was broken in late 1999, its tenants evaporated in the dot-com meltdown the following spring. For years it represented a substantial part of the office vacancy in San MateoCounty. The picture was taken mid-day, midweek in Fall, 2004.

Recently it sold for upwards of $500 per square foot. It is now reported to be 91% leased. The parking lot is a bit more full than pictured, but not 91%.

At a ULI workshop in 2006 one of the speakers opined, "The fun is gone out of this cycle. A few years ago you could buy based on capitalization rate. Then you could justify an investment based on discounted cash flow. Now the only reason to buy is price per pound."

I think that price per pound for existing property is now getting high enough to "justify" new construction... if your expectation of investment returns is low, very low. So what? How does this help? Maybe I get "told-you-so" points in a few years?

If you are just a thrill seeker, invest on the momentum and hope to get out before the roller coaster goes over the top of the hill. Or maybe you sit on your money. Earn 5% short term. When the bubble pops maybe at least some real estate might get interesting again.

Otherwise, if you're adventurous, you might try shorting REITs. Charles B. Warren, ASA urban real property San Francisco http://www.charlesbwarren.com/

Analyses are solely the work of the authors and have not been edited or endorsed by GLG.

This author consults with leading institutions through GLG


Tuesday, June 29, 2010


REAL ESTATE INVESTMENT TRUST (REIT) - BY NIK ZAFRI

I've noticed these few days that major corporations in Malaysia are racing into Real Estate Investment Trust (REIT) - or is it M-Reit? (Whatever...)

Is it safe to say that this a sign of real estate and development industry in Malaysia may have successfully prevented the 'sup-prime mortgage crisis' from hitting Malaysia? Fascinating...

Well to start with, from 2007-2008, I've noticed profit from rental income were being distributed in form of dividend to its holders. Well, I think this also has something to do with the pivotal role played by Security Commission issuing guidelines on property trust funds - making more and more REIT companies listed in Bursa Malaysia.

But, the norms are happening again, I went to this small coffee shop known only as 'Peter' in Taman Sri Gombak near the place I'm staying and asked around 'MIC' (mind you - it's Malays, Indians and Chinese) on REIT. Only one or two answered correctly but the rest blinked at me and replied :

"Huh? What? Unit Trust?"

Once again, I think information is not well-disseminated. No wonder new establishments (newly completed office buildings) nearby are not being rented yet.

Well, I'm going to do my bit now...information dissemination :

To start with,

a) REIT is different from Unit Trust

b) REIT works like stock-trading in Bursa Malaysia...giving investors returns via capital appreciation from dividends and change of price... (aaaah, some of "MICs" said and nodded their head in agreement) -

c) REIT's benchmark is on Market Demand & Supply to ascertain its' stock price (Unit Trust is on NAV - value of its assets less liabilities & calculated daily by unit trust companies)

d) you can buy from remisiers/stockbrokers as well but NOT Unit Trust Agents and Banks (so be careful)

f) There is equity REIT (the common one), mortgage REIT (a bit complex - profit based on mortgage loans after procuring mortgage backed securities) - Well you can also go for both,

e) Yes...based on regulations or tax incentives, at least 90% taxable profit of REIT goes away as dividends. (Non-Residents are subject to approximately 30% tax - I think...)

f) high yield

g) If you're not sure, start with small investment

h) Eye for good & strategic places for assured Return of Investment (this is important!!)

i) Don't worry about fluctuations - do a lot of reading on REIT.

And most important, ASK AROUND or ASK the information counter where you're buying.

GOOD LUCK!

Monday, June 16, 2008

The Star Global Malaysians Forum - Posted: 13 September 2006 at 8:36pm

Question by stingray2000

Hi Nik, I'm have a zero knowledge on the construction/building. But I just wonder how to build a house/apartment on the land rising on the sea? Is the any website for the beginner ?
--------------------------
Posted: 13 September 2006 at 8:46pm

Nik Zafri's response

I'm sure you've been to resorts/hotels near the sea? The concept is very much the same. Before I answer to your queries...I'm curious...why would you want to build one when you can easily find lots of finished properties near the sea?
----------------------------
Posted: 13 September 2006 at 8:57pm |

Stingray2000's response

Just for my curiousity, I would like to know more about the concept of raising the land from the sea in malaysia? I heard from rumours that the housing build on the sea will have potential problem(land sinking etc) later on...have you seen this issue before ? It remind me the collapse of condominium case ...

Just for my curiousity, I would like to know more about the concept of raising the land from the sea in malaysia? I heard from rumours that the housing build on the sea will have potential problem(land sinking etc) later on...have you seen this issue before ? It remind me the collapse of condominium case ...
-----------------------------
Posted: 13 September 2006 at 9:48pm

Nik Zafri's Response :

Exactly why I asked. And it's pretty costly as well - in the context of raising the land - dredging expenditures - perhaps may require more sand as well for filling (of course - bays would become deeper/wider increasing erosion - not to mention disturbing inhabitants of marine life around the offshore sand deposits)

Not only houses & condominiums but chalets, hotels etc. using the similar concept are also facing the same risks. (I'm sure they are all well-aware of that)

We can only try our best to prevent such negative effects like planting more big trees - coconut/palm, 'sophisticated' soil treatment (vs shrinkage), drive the concrete foundation piles deeply into the sand, pile caps supporting casting concrete piers, floor slabs supported by masonry shear walls/steel tube columns etc.

But again, the 'force of nature' can be too strong sometimes and I do pity those businesses like hotels, chalets, yacth clubs, marinas because I love these places for good vacations and scenic views but I have also noticed the cost of maintenance and possible migration everytime I visited them - but what to do? What if I'm in their shoes? Tourism business is 'damn' good and it a definite money-generator and the profit will at least 'top up' the maintenance/migration costs. (I'm being positive here actually)

Some of the tips I can give to you are (besides what I've mentioned in the 2nd para) - be 'alert' on certain climate shift, atmospheric conditions (ie temperatures), news/history of disasters, rain pour, possible erosions, researches on greenhouse effects, inundation, type of barriers/dikes/polders used near the seaside, pumping system (sand/sea water) etc. - in short you should start some serious homeworks if you plan to buy or build one.

Good luck.

Monday, June 09, 2008

The Star Business - 25/12/07

New launches to drive growth


Chief executives have lined up new products for next year. Mah Sing Group Bhd CEO Datuk Seri Leong Hoy Kum expects the company's new launches will be well received in a buoyant, domestic-driven economy. Guinness Anchor Bhd's MD Charles Ireland feels 2008 should be a better year as the market for malt liquor has started to stabilise. Prudential Assurance Malaysia Bhd's CEO Tan Kar Hor will cultivate new product lines like retirement planning and Islamic products

DATUK SERI LEONG HOY KUM
Managing director and CEO
Mah Sing Group Bhd

WHAT is your outlook for the property market next year?

We believe that the property market in 2008 will be robust, underpinned by a resilient domestic driven economy. Various pump-priming initiatives under the Ninth Malaysia Plan will provide a boost to propel the economy upwards and increase disposable incomes.

Malaysia’s young population, rising urbanisation, low unemployment rate and increasing wages, as well as a high savings rate will continue to contribute to the property market’s positive run.


Datuk Seri leong Huy Kum
The Government has been proactive in this manner, with several goodies announced for Budget 2008. EPF contributors will be allowed to make monthly withdrawals for financing one house effective Jan 1, 2008.

This could potentially unleash close to RM9.6bil annually into the property industry, allowing homebuyers to afford homes costing 20% more than previously.

The 50% waiver on stamp duty for purchase of homes under RM250,000 should boost demand for homes, and the Group has taken the initiative to ride on these incentives.

We are setting up a help desk to advise our buyers on the EPF withdrawals, as well as waiving the remaining 50% stamp duty for Mah Sing homes priced up to RM250,000, to ease the burden of home ownership.

Besides domestic demand, there has been increased foreign interest in our properties as they like the quality of our properties, boosted by the waiver of real property gains tax.

We have the most liberal landownership laws in the region, and now, foreigners are allowed to buy unlimited units of residential properties above RM250,000 without restriction of usage.

What are some of the opportunities and challenges for industry players going forward?

Growth corridors including the Iskandar Development Region (IDR) and Northern Corridor Economic Region have resulted in renewed interest in these areas, and improving infrastructure as well as strong economic and population growth will spur demand for housing there.

Malaysia’s increasing exposure as an international property market will attract more foreign participation. It is indeed an opportune time for foreign investors because whilst our properties may be world class, valuations still lag behind those of our regional peers.

Increases in raw material prices have increased construction costs, resulting in higher pricing for good housing projects in strategic locations.

Buyers will want to hedge against inflation by investing in assets that have potential upside.

Which property sector and development types offer the best potential for your company?

In terms of the residential market, we believe that medium to high-end gated and guarded residential properties should do well.

Demand for these properties is a reflection of Malaysians’ growing affluence and sophistication. These properties would need innovative concepts and practical layouts, as well as being supported by a strong brand.

For the commercial market, there is a shortage of good office space, especially Grade A offices in Kuala Lumpur. The limited number of good quality investment grade buildings available for sale in the market has driven up the capital value of prime offices.

Depending on the location, commercial retail buildings should do well.

What are the challenges faced by the industry and the impact on your company?

Prime land is increasingly scarce, especially land that fits our fast turnaround business model.

However, we have a proven landbanking track record, securing good land year on year to maintain our earnings visibility.

Sometimes, landowners also approach us either to sell land, or to propose joint ventures on their land to tap into our branding, experience and skills.

Our capability to appropriately manage cash flow is key to the company’s ability to capitalise on opportunities

Increases in raw material are inevitable, but we have taken steps to mitigate the effects, for example, by using step up pricing for new launches, bulk purchasing to enjoy discounts, and lowering our funding costs via shrewd negotiations.

Human capital, i.e being able to continuously recruit, train and retain good people who are willing to take the company to new heights amidst increasing globalisation, will be the key to success.

We have a very strong team which is striving to realise the Group’s vision.

What are some of the interesting property launches that can be expected from your company in the coming months?

We have started a registration exercise for our new commercial projects, which will be launched in 2008.

Southgate Commercial Centre offers investors the opportunity to own offices in the heart of Kuala Lumpur, as opposed to just leasing the offices in most new buildings.

There will be food and retail outlets to support the offices. Southbay City in Batu Maung, Penang will be a new “must-visit” destination, integrating leisure, commercial and retail offerings near the upcoming Second Bridge on the island.

Our existing residential projects are Perdana Residence, Kemuning Residence, Hijauan Residence and Aman Perdana in the Klang Valley, and Sierra Perdana, Austin Perdana and Sri Pulai Perdana in South Johor within the IDR.

We shall continue our sales from these projects, mainly semi-detached homes and bungalows within gated and guarded communities.

What are your expectations of project take-up rate, sales revenue and earnings for the company next year?

We believe 2008 will be another good year and we should be able to achieve another year of uninterrupted profitability and good take-up. This will be underpinned by our unbilled sales exceeding RM1bil, which is twice our revenue in 2006.

We have a remaining Gross Development Value (GDV) of RM3.042bil, representing a total GDV of RM4.119bil, which will ensure earnings visibility for seven years.

We expect another year of good sales, especially with the implementation of the Employees Provident Fund withdrawals next year. We will continue to focus on the lifestyle medium to high-end residential and commercial segments, which have given us very good results.


Charles Ireland
CHARLES IRELAND
Managing Director
Guinness Anchor Bhd

WHAT is your outlook on consumer spending for 2008?

The Malaysian economy seems to us to be in pretty good health. When the Ninth Malaysian Plan’s spending kicks in, we hope that the present growth rate of 6% will be sustainable throughout 2008.

Within the malt liquor market (MLM), we are extremely supportive of the Visit Malaysia Year initiatives and are delighted that it has been extended to 2008. This is because we know that generally, tourists enjoy relaxing with a beer at the end of the day when on holiday, and that other spending that they do will further support the Malaysian economic growth.

While we are optimistic for 2008, we are also not discounting that several other factors can impact consumer spending, such as inflationary pressures and the external environment, like high oil prices and the US subprime mortgage market as well as the accompanying credit crunch.

As for the MLM, we were spared another year of excise duty increase in the recent Budget 2008 and the market is slowly beginning to stabilise, registering a marginal growth year-on-year.

How was consumer spending in 2007?

The malt liquor industry had a tough year with a 1.4% contraction in the market.

Consumers were, not surprisingly, still careful in their spending on beer given the very high prices due to us having the second highest excise duty in the world.

I am pleased to say though that despite this, GAB performed very well. Our revenue breached the RM1bil mark to reach RM1.07bil while pre-tax profits stood at RM152.16mil.

Our success was due to our continued focus on our people, brands and performance. We launched several innovative marketing initiatives to attract consumers to our brands, increased our budget allocation for employee training and improved operational efficiency to strengthen our financial performance.

This, together with continuous support from our consumers and trade partners, has helped us open up a clear lead over the competition.

What is your expectation of spending at the higher end? Please define “higher end” in your industry.

Whilst GAB proudly boasts a full diverse portfolio of brands, we have the best “higher-end” beer brands in Malaysia. As such, a good performance in this segment is critical to our success.

Higher-end outlets for us are modern pubs and clubs, white table restaurant and hotels. We expect that this sector will continue to perform as Malaysia transitions into more of a service economy and there is further growth in middle-to-higher income jobs.

Furthermore, the Visit Malaysia Year initiatives will hopefully continue to bring additional affluent consumers to the country.

GAB is well positioned to grow in this segment. Consumers regularly choose our brands as part of their evening. Whilst we are the clear market leader overall, we have over 90% market share of this “higher-end” segment.

How have the tourism dollars helped to boost consumer spending, what further measures can be introduced to boost tourism?

Tourism is very important in bringing in tourist ringgit into the country, helping boost the economy and, consequently, consumer spending.

The price of beer and stout is one factor that tourists consider in making a choice of holiday destination. We also know that beer prices in Malaysia are the highest in the region and believe that this may lead to tourists choosing neighbouring countries over Malaysia.

To this end, we believe that it was a good decision by the Government not to increase excise duties this year to give the rest of the world a chance to catch up.

We further believe that the industry should play its part in boosting tourism. The Ministry of Tourism’s initiatives should be commended and complemented by us.

We are currently thinking of how we can support the ministry in its efforts and have started dialogues with them on how we can help.

What are the new challenges at a time when consumers are said to be spoilt for choice?

One of the wonderful things about a business is that there are always challenges and the trick is to turn these challenges into opportunities.

Over the past six years, GAB has been successful.

We believe that by working hard with our great people and fantastic portfolio of brands to deliver performance, we are able to continue to grow to deliver ahead of shareholders' expectations.

Tan Kar Hor

TAN KAR HOR
CEO Prudential Assurance Malaysia Bhd

IS your company on track toward achieving the risk-based capital (RBC) framework by 2009?

Insurance companies in Malaysia have known for a long time about the impending introduction of a risk-based capital framework. The possibility of such a framework being introduced was highlighted as early as 2001 in the Financial Sector Masterplan.

Since 2004, Bank Negara has also been working closely with the insurance industry to draw up the framework that is applicable for Malaysia, and there have been several rounds of refinement of the proposed framework following discussions between the central bank and the insurance industry.

This has allowed insurance companies, including Prudential, to test the impact of the proposed framework on their financial positions and to strategise in areas such as product development, investment decisions and efficient capital management.

As far as Prudential is concerned, we are on track to implement the RBC framework by 2009.

What are the current initiatives and processes put in place or being undertaken to achieve the RBC framework?

With the impending introduction of the RBC framework, there will be higher demand for professionals with specialised skills such as actuaries and risk managers.

This is especially so because the RBC framework uses statistical science to make explicit provisions for uncertainties in an insurer’s future financial position, for example, the amount of claims and the market view of investment return.

As a leading insurer in Malaysia, Prudential is fortunate to be able to attract and retain people with specialised skills. We focus a lot not only on attracting and retaining the right people, but also training them.

The new framework also gives insurance companies more opportunities and flexibility to demonstrate good internal governance and risk management systems and practices. We are further strengthening these areas to cope with the new framework.

Being part of a large global financial services group (UK-based Prudential plc), we are also fortunate that our group head office supports us by providing their experience on new developments in the regulatory regimes in other countries in which we have operations as well as training to update the skills of our specialised staff.

Are mergers and acquisitions (M&A) on the company’s agenda in view of the deadline for RBC compliance getting closer?

At present, we are not considering any mergers and acquisitions.

What steps are your company taking to gain a larger foothold in the sector?

The launch of our sister company, Prudential BSN Takaful, last year was a significant milestone that enabled us to widen our product range to include syariah-compliant insurance plans. We expect strong contribution from our takaful business given the huge market potential.

We will continue our efforts to expand our agency force, improve their productivity through rigorous training programmes and leverage on IT to enhance their efficiency.

We are also aggressively broadening our insurance solutions to meet our customers’ needs.

Retirement is one of the key focus areas as the market is ripe for financial solutions that can help customers proactively plan for retirement and be able to live comfortably through their golden years. We are building our strength and expertise in this area, supported by our market leadership in investment-linked products and deep understanding of the retirement space through consumer research and vast experience worldwide.

Besides retirement, healthcare remains a major concern as one gets older. We will continue to develop even more innovative insurance plans to ensure our customers are well protected against escalating medical costs.

With all these initiatives in place, Prudential is well positioned to deliver sustainable, profitable new business growth in the coming year.

Will financial advisor be one of the important distribution channels for the company going forward, judging by its success in developed countries?

Developing our agents to be financial advisors is an important step to cater for customers who are nowadays more financially-savvy and require solutions that can meet various financial needs.

Training programmes that our agents undergo increasingly emphasize on customer needs analysis, the provision of financial advisory services and proper advice to customers as a way to increase their skills and professionalism.

We will also continue to synergise the strengths and competencies of Prudential’s insurance, takaful and fund management businesses in Malaysia to deliver innovative financial solutions that cater to customers’ needs.

This synergy will further solidify our brand name and position as a significant retail financial solutions provider in the market.

What will be your investment in IT infrastructure and other expansion plans?

We have put in great efforts to transform our agents to be more receptive to technology in conducting their business.

Many of them are already using notebooks and mobile devices such as Treo smart phones and BlackBerry equipped with customised insurance solutions that give them the flexibility to conduct their business while on the move.

Besides real-time accessibility to customer information, these devices also allow our agents to prepare quotations and provide on-the-spot response to customer enquiries.

These efforts are part of our ongoing commitment to innovative services and products, and transforming our agency force into the most ‘well-connected’ in Malaysia.

Prudential will continue to leverage on technology to further improve agents’ efficiency and customer service delivery. In the pipeline is the development of Sales Force Automation (SFA), which will give our agents instant access to customer data and enable them to issue policies right in the customers’ homes.

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Here's my version of summary (Nik Zafri)

1. Property market demand will depend many factors

a. Future - Malaysia’s young population, rising urbanisation, low unemployment rate and increasing wages, as well as a high savings rate

b. Current - EPF withdrawals

2. Future - the Development Regions

Current - Volatile construction raw materials pricing ' still need further assistance'

3. Buyers are recommended to hedge against inflation by asset investments that have potential upsides

Potential upside relates to :

- spread ratio/yield result in order to get risk/return ratio. In short, take additional risk to benchmark the current risk. Only then a decision can be obtained to know if additional pick-up of yield is worth in terms for 'taking additional risk' (huh?) It's kinda 3D thinking in asset management.

Again 'potential' means 'Future'.

4. Future : Landowners should work together with Developers instead of selling land.

5. Current : Tourism is still the most popular 'profit generator'.

6. Future : Risk Based Capital to (Future) Risk Weighted Assets ratio of x%.

Current : Impact testing on Product development, investment decisions and efficient capital management.
7. Current : Competent Human Resources, Knowledge Workers etc. still being hunted.

8. Current and Future : ICT will still rule!