Property gain tax won't hurt genuine buyers

Banning DIBS is the right move

FOR many years, the National House Buyers Association (HBA) has been urging the Government to take measures to stem the steep rise in property prices to avoid a “homeless generation” as current property prices are far beyond the reach of many low and middle-income families in urban and suburban areas.This is a ticking time bomb that will result in many social problems if left unchecked.


Real Property Gains Tax (RPGT)

The announcement of the revised rate of tax on gains made in the disposal of properties, namely, the Real Property Gains Tax (RPGT), formerly known as the Anti Speculation Act, under Budget 2014 is far more superior to what had been proposed under Budget 2013 (See table above)

This is because, typically, if the property is purchased directly from the developer, it takes two years (for landed properties) and three years (for strata properties) to be completed.

Hence, under the previous RPGT, speculators could purchase properties from property developers upon their launch and then flip these properties on completion (after two years) and having to pay 10% (i.e. within the 3rd to 5th year).

It is hoped that the revised RPGT rate will deter speculators and, at the same time, not punish genuine house buyers who buy for their own stay or long-term investment. It is worth noting that buyers of residential property could seek a once-in-a-lifetime exemption from the tax.

Budget 2014 is best described as an “excellent mathematical formula” to curb the unbridled escalation of house prices, which has in the last three years skyrocketed. The Government has taken a step in the right direction with measures to slow down the steep rise in property prices due to false demand caused by excessive speculation fuelled by easy housing loans and the previously low RPGT.


Foreign purchasers to pay more

HBA applauds the move to increase the minimum price of property that can be purchased by foreigners from RM500,000 to RM1mil. Foreigners must be prevented from “snapping up” property meant for the lower and middle income.

This artificially inflates prices and creates a domino effect which can result in higher property prices across the industry. This is especially true for development corridors such as Iskandar Malaysia which has seen foreign purchasers arriving in droves and scooping up properties with their advantageous exchange rate.


Banning the Developer Interest-Bearing Scheme (DIBS) 

DIBS is popular with speculators as they pay nothing to make a profit. Their initial down-payments and deposits are sometimes factored into the purchase price by the collusive developers, and some unethical financial institutions do not even require that the developer collect the deposit that has to be paid by the so-called purchaser.

This is one of the factors which induces “bogus” house buyers (which I have written about in this column on Aug 31 entitled: Of Speculators and bogus house buyers) who merely flip the property at the right time.

Kudos to Bank Negara for heeding our call and banning DIBS. It may be worth noting that Singapore banned DIBS in 2009.

Considering the deep pockets of property speculators, the effectiveness of these measures remain to be seen. However, they are expected to make speculation unworthwhile. HBA praises the Prime Minister for putting a stop to DIBS, which is one of the reasons attributed to the steep increase in property prices for three reasons:

1. DIBS encourages speculation as the house buyer does not need to “service” any interest/instalment during the construction stage. This will “lure” and tempt many house buyers to speculate and buy into DIBS projects hoping to flip on completion and make a quick profit with little or no capital upfront. Connivingly, the interest element is “serviced” by the participating developers.

2. DIBS artificially inflates prices as all interests borne by the developer are ultimately imputed into the property price. This in turn creates a domino effect which pulls up property prices in surrounding locations.

3. Bank and financial institution staff conniving with developers using the DIBS model should be investigated on their “modus operandi” in financing those artificially inflated prices (DIBS + sales price) and ignoring guidelines on prudent lending.

Banks and financial institutions are to be prudent and only provide mortgage financing up to the fair value/market value of the property. In this respect, a benchmark of fair value or market value is the current properties available. Somehow, properties sold under DIBS are always priced much higher; 15% to 20% higher compared with those without DIBS.

For standard condominiums costing RM500,000 without DIBS, should the developer market such properties under DIBS, the selling price could be as high as RM650,000. This creates a potential property bubble should the developer default in “servicing” the interest and the borrower/purchaser also defaults. The bank would only be able to recover up to RM500,000 if the said property is auctioned at market value.

In the event of an economic downturn, banks saddled with too much DIBS end-financing could collapse as the losses from such DIBS end-financing will erode the banks’ capital.

The collapse of just one bank/financial institution could cause a systemic collapse of the entire financial industry.

Bank Negara should take action against such bank and financial institution staff who have provided both project financing and end-financing to DIBS projects under the newly-minted Financial Services Act, 2013.

With the RPGT increase, banning of the DIBS and the Government’s aspiration to supply more ‘ownership housing schemes’ at affordable pricing, it is hoped that speculative demand for properties will stabilise to a more realistic level. I have heard that many businessmen do not do business anymore but indulge in property speculation as a livelihood and for income.

It is akin to the stock market dealings that were rampant during a ‘bull run’. Certain things have to be stopped before they become worse like the sub-prime crisis in the US.

If readers were to take a drive around completed projects, they will find signboards advertising units for sale upon the delivery of keys. If the purchaser is purchasing for his own occupation, why is there this need to put up these signboards or appoint estate agents to dispose of the units? It goes to show that some purchasers are merely speculators (not investors) from day one and the banks and financial institutions choose to “close one eye” despite knowing this.

Have the banks ever gone to the ground to check whether the units purchased and financed are actually “owner occupied”? If the property is “owner occupied”, the risk rating is lower and thus, he enjoys a lower interest rate. But if it is non-owner occupied, it should have higher interest rates. Borrowers of “owner occupied” properties are normally required to make a declaration to that effect to enjoy a lower interest rate.

But does the bank participate in this booking of credit risk?

If the property is non-owner occupied, the lending will fall under ‘real estate classification’ and not ‘housing’.

So, there may even be misreporting to Bank Negara and subsequent national statistics.

This column continues next week.

- Contributed by Chang Kim Loong

CHANG KIM LOONG is the honorary secretary-general of the National House Buyers Association (www.hba.org.my), a non-profit, non-governmental organisation (NGO) manned by volunteers. He is also an NGO Councillor at the Subang Jaya Municipality Council.

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Anonymous hackers has begun the cyber war on Singapore

 

Singapore's internet and phone regulator said it was investigating the hack

Anonymous hackers have declared war on Singapore with a pledge to hit at official infrastructure. This has left Singaporeans with a sense of foreboding about what is to come.

AN aura of uncertainty, even fear, has crept into this intelligent island where the computer widely affects every home, office and school.

Since an anonymous network of hackers threatened war on the government and its infrastructure, many official websites – including the Prime Minister’s Office – became inaccessible for a long period.

Others included the police force and internal security department and ministries like finance, home affairs and national development as well as Parliament and the Cabinet.

Many citizens are not sure whether there had been a cyber-attack or, as officially explained, the outage was due to a planned maintenance that hit “routing and hardware”.

“At no point were these websites the target of cyber-attacks,” insisted the authorities.

But an e-mail purportedly from “The Messiah”, an alleged hacker who is part of an international network, said several members had worked together to put them down.

The declaration of war with a pledge to hit at official infrastructure last Saturday has placed Singapo-reans with a sense of foreboding about what is to come.

Singapore – its economy and education system – has been heavily dependent on the Internet for two decades.

After four days of silence, a defiant Prime Minister vowed to track down the anonymous hackers and bring them to justice.

Lee Hsien Loong told reporters: “Our IT (information technology) network, the Internet, our communications have become an essential part of our business and our lives now.

“...When somebody threatens to do harm to it ... we will spare no effort to try and track down the culprits and if we can find him, we will bring him to justice and he will be dealt with severely.”

The response is not surprising. Few people had really expected the authorities to give in.

A day later, the PM Office website was mockingly hacked by Anony-mous, saying “It’s great to be Singaporean today”.

Singapore may be entering a new era of IT threats where unidentified foreign predators – for good or bad reasons – can wreak chaos to their lives.

“These may be the good guys. What if they were followed by the really bad ones with destructive ideas?” asked a political analyst.

Since the harm of computer warfare is unimaginable, most people tend to oppose its use to achieve social and human rights, the declared aim of the anonymous group.

Even within the Internet community, which is traditionally anti-government, the reaction has been mixed.

“I love these guys for fighting on our behalf but am afraid they may actually inflict harm on Singapore,” a netizen said. “We will have to fight the government our way, through elections.”

Therein lies the government’s dilemma. It is facing a dangerous new threat with some younger Singaporeans less than supportive of it.

The anonymous group is not without problems, too. It can only win if it gets the Singapore public on its side.

This is unlikely to happen if its hacking activities are stepped up to a level where people’s welfare is harmed.

This could swing Singaporeans behind the government and turn against them – which is not what they want.

Observers notice that of all the closures, the Central Provident Fund website was unaffected.

The trouble began last Saturday when an anonymous hacker wearing a Guy Fawkes mask demanded the Singapore government, over YouTube, to withdraw its recent laws to licence online news.

Economists fear that a prolonged digital war may undermine business confidence and affect the economy, particularly e-commerce here and in the region.

Singaporeans are by nature not aggressive. Some see it as Hobson’s choice, between supporting the anonymous group’s “noble objective” and their own jobs and careers.

The public stayed largely away from the hackers’ call for a general protest on Nov 5. So did most bloggers, although some Facebook users had blacked out their profile pictures as a sign of support.

Since many Singaporeans are not tech-savvy, they tend to worry about the worst of a cyber-war – chaotic roads and airports, missing bank accounts, etc.

The government, however, has insisted the websites were closed for a pre-planned maintenance which was aggravated by “routing and hardware glitches”.

The episode showed the government was apparently unprepared to meet a major hacking threat.

It signifies that defence of Singapore now goes beyond the need for national service and a people’s army, missiles and jet-fighters.

Recently, the government announced a new S$130mil (RM332mil) budget to be spent in the next five years for research in countering cyber-warfare.

The hacking began last December, when the websites of the government People’s Association and 16 related bodies were hacked and closed.

A number of assaults followed, including the town council of PM Lee’s constituency.

The hackers putting pressure on the People’s Action Party (PAP) government will likely see some long-term impact.

The ever presence of a global group of high-powered hackers, and their threat, will likely make the policy-makers a lot more cautious in the future.

 By Seah Chiang Nee
> The views expressed are entirely the writer’s own.

Youth addicted to computer games died in front of his computer!

 

Ong Yee Haw, 23, (pic) was found slumped over the keyboard in front of his computer monitor in a room by his uncle at about 4pm.

 GEORGE TOWN: A youth addicted to computer games died of a heart attack at his home in Bandar Baru Air Hitam here after apparently playing continuously for over 15 hours at a cybercafe nearby. 

He was said to have been at the cybercafe from 10pm on Sunday until 1pm the next day before returning home to his own computer.

However, it was not known which computer game Ong had been playing before his death.

His mother Chew Qun Juan, 62, said her only son had been addicted to computer games ever since he stopped working at a restaurant five months ago following a motorcycle accident.

“He injured his right hand and had to stop working. I constantly told him not to spend too much time on computer games but he never listened.

“I single-handedly raised him after my husband died of cardiac arrest 15 years ago. Words cannot describe my sadness now. I only hope that others, who are also addicted to computer games, will learn something from this.

“I hope this will not happen to anyone else. My son was still so young,” she said in between tears when met at the Penang Hospital mortuary yesterday.

A post-mortem report, she said, confirmed that Ong died of a heart attack.

Ong was cremated at the Batu Gantung crematorium yesterday afternoon. The case has been classified as sudden death.

On Dec 27 last year, a 35-year-old broker was found dead inside his home, supposedly after playing video games.

A video game console was found in front of Liu Peng Han’s body. When his body was discovered by his uncle, Liu was lying on the sofa in the living room.

There had also been several media reports of deaths due to computer addiction in China, South Korea, Vietnam and the United States.

It was reported that in 2005, a man in South Korea went into cardiac arrest and died after playing StarCraft almost continuously for 50 hours. Two years later, a 30-year-old man in Guangzhou died after playing video games continuously for three days.

Contributed by Winnie Yeoh The Star/Asia News Network

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Dubious qualifications, Will the real doctor please stand up?

 Many resort to buying academic qualifications and degree or diploma mills

SEVERAL years ago, I met a Penang businessman who had a ‘Dr’ title to his name. When I asked him in English about his field of study, he hesitated.

Pressed for an answer, he gestured with his hands and made drilling sounds to depict the act of digging a road. I then realised he was trying to tell me that his doctoral degree was in civil engineering.

Later, I heard about another Penang businessman who was asked by an air hostess to assist in a medical situation on board a plane because of his ‘Dr’ title.

The businessman hastily clarified in Hokkien to the air hostess, who was also from Penang: “Wah si kim siew eh loh koon. Beh heow kuah lang.” (“I am an animal doctor. I can’t treat humans.”)

The public must be getting used to reading about individuals whom they know did not attend a single day of tertiary education — and can hardly string together a sentence in English — being awarded doctoral degrees.

Instead of gaining respect from their peers, those who pay for their doctorates from degree (or diploma) mills become the object of scorn when they flash their ‘Dr’ titles.

As Penangites become more affluent, they seem to think they can buy anything including educational qualifications.

But no genuine institution of higher learning will confer degrees on ineligible individuals, no matter how much money is given.

So people turn to degree mills, those unaccredited education institutions that offer academic degrees and diplomas for a fee.

Degree mills look impressive and genuine because they often claim to be recognised by Unesco, an agency of the United Nations that promotes education and communication. However, the Unesco website states clearly that it does not have the mandate to accredit or recognise higher education institutions.

People who buy from diploma/degree mills know exactly what they are paying for and probably think they are not committing any crime. But they should be aware that the authorities will not hesitate to act.

Last July, it was reported that the police were tracking 525 people who allegedly bought fake degrees and certificates from non-existent international universities.

Some 40 individuals, including a Tan Sri and several politicians, had their statements recorded as part of the police investigation into fake academic degrees bought from an education institute in Selangor.

If Penang is serious about developing itself into an educational hub, the state government should ensure that it does not appoint individuals who have dubious doctoral degrees to sit in the various bodies set up to look into improving aspects of the economy, education, transport and tourism.

It may be customary for institutions of higher learning to confer honorary degrees on individuals for their contributions to society. It is equally customary for the recipients to refrain from using the ‘Dr’ title.

Some of these people think it is fashionable to use the ‘Dr’ prefix, but in reality it can be misleading.

Universities are concerned that the public may be confused by an honorary doctorate and the doctorate awarded to those who meet the academic requirements.

Therefore, some universities have begun awarding such honorary degrees as LittD (Doctor of Letters), LHD (Doctor of Humane Letters) and ScD (Doctor of Science) instead of the usual PhD to avoid further confusion.

- Contributed by David Tan, Pinang Points

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You are being snooped on, Malaysia views US-NSA spying seriously!

Asia being snooped on, too 

Spying by foreign intelligence agencies is also prevalent in Malaysia and other regional countries via the Internet or spying equipment located in embassies.

SO last week it was the turn of Asians to learn that their region was also the subject of foreign spying.

This was no surprise. If American intelligence is spying on Americans, on Latin Americans, and on Europeans (including its top political leader, Angela Merkel of Germany), it is a foregone conclusion that Asia would not be left out.

There is no revelation yet that Asian prime ministers and presidents have had their personal mobile phones and e-mails tapped.

But it is also a foregone conclusion that these things are happening. Be prepared, therefore, to read in the coming weeks about famous Asian leaders, opposition stalwarts, journalists and celebrities being the subjects of snooping.

Nevertheless, the news that American and Australian embassies are being used to snoop on Asian countries justifiably caused outrage in our region. The Australian surveillance is reportedly in cooperation with the United States.

Malaysia is one of the places where Australian intelligence operates to spy, according to reports in the Der Spiegel and Sydney Morning Herald. They revealed that the spying takes place from the Australian High Commission in Kuala Lumpur.

Other Asian countries where the intelligence collection is conducted is the Australian embassies in China, Thailand, Indonesia, Vietnam, Timor Leste and Papua New Guinea.

The news reports also revealed that the US embassies have also been conducting surveillance activities in many Asian countries including Malaysia, Indonesia, China, Thailand, Cambodia and Myanmar.

Malaysia last Friday registered its protests in official notes handed to the Australian High Commissioner and the US Deputy Chief of Mission who were summoned to Wisma Putra. The notes warned that surveillance of close friends could severely damage relations.

Indonesia warned the United States and Australia that the continuation of surveillance facilities inside their embassies threatened to derail years of trust built up between countries.

China also responded to the report that the American embassy in Beijing and consulates in Shanghai and Chengdu operated special spying facilities.

Its Foreign Ministry has demanded an explanation from the United States, saying that “foreign entities must not in any form engage in activities that are incompatible with their status and that are harmful to China’s national security and interest”.

Also last Friday, Brazil and Germany introduced a draft resolution to a United Nations General Assembly committee calling for an end to excessive surveillance.

The press reports on spying in Asian countries are based on information leaked by Edward Snowden, a former contractor with the US National Security Agency.

Newspapers and magazines had previously revealed that the personal phones of the German chancellor and the Brazilian president had been tapped. Both leaders have registered protests directly to US President Barack Obama.

Last week also saw revelations by the Washington Post that the US and British intelligence agencies had found a way of intercepting communications from Google as well as Yahoo as the data were being passed between their data centres.

“We are outraged at the lengths to which the government seems to have gone,” said Google’s chief legal officer.

The Internet giant companies have found that their encryptment system protecting e-mail and other information flowing through its data centres is not secure after all.

The technology companies are worried that their millions of customers will no longer trust that their privacy will be protected.

How will this affect the use of browsing, e-mail, Facebook and other facets of the Internet technology?

US companies and entities currently dominate the global Internet business. Much of the world’s flow of data go through Internet companies based in the United States.

The US administration had projected itself as an honest host of the Internet centres, respecting the rights and privacy of the world’s Internet and e-mail users, and a champion of Internet freedom.

That image has been shattered by the series of revelations emerging from Snowden’s leaked files. The opposite image has replaced it, of a government that has used high technology to gather billions of bits of data on practically all Internet users.

If counter-terrorism was the official reason, this now seems to be only a pretext for also spying on any important person, including one’s closest allies.

Now that they have lost confidence that the United States or other countries will respect privacy of the politicians, companies and citizens of their countries, some governments are now planning to limit the reach of American-based Internet companies.

The Financial Times reported that Brazil is planning regulations that would force technology companies to retain information on the Internet about its citizens and institutions within Brazil itself.

It also said that European officials are discussing the need to have stronger cloud computing capabilities in Europe to protect their citizens’ privacy.

Brazil is also planning to bring up in various UN agencies and fora the need for a global framework to respect and protect privacy on the Internet.

Contributed by Global Trends Martiin Khor
The views expressed are entirely the writer’s own.

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Malaysia views spying seriously

KLUANG: Spying activities on Malaysia by its allies is a serious matter, says Defence Minister Datuk Seri Hishammuddin Hussein.

This is because it can cause relations between Malaysia and these countries, long established based on trust and sincerity, to be tense.

“I believe if this (spying) is not fully explained, our long-established good relations can be adversely affected. Therefore, we need a full explanation on the extent of the spying activities and for what purpose.

“Tensions can be avoided if the allies involved uphold the trust and sincerity in their relations with Malaysia,” he said.

Hishammuddin said this to reporters after attending a Deepavali open house hosted by Johor Unity and Human Resources Committee chairman R.Vidyanathan here yesterday.

The spying issue arose following media reports on the claim made by intelligence informant Edward Snowden that the United States had 90 electronic surveillance facilities throughout the world, including at its embassy in Kuala Lumpur.

In light of this, Hishammuddin wanted a detailed explanation on the matter as such activities could threaten Malaysia’s security and its other interests.

The US ambassador to Malaysia, Joseph Y. Yun, was reported to have explained on the spying claim to Wisma Putra.

Foreign Minister Datuk Seri Anifah Aman said Yun had stated that all surveillance activities by the United States throughout the world were specifically for security, to detect threats of terrorism and weapons of mass destruction.

On his trip to China last month, Hishammuddin said it was aimed at enhancing cooperation in the area of defence, especially through joint exercises, exchange programmes involving navy and other military officers, establishing cooperation between the defence industries of both countries, and efforts to combat terrorism and transnational crime.

Meanwhile in Yan, Inspector-General of Police Tan Sri Khalid Abu Bakar said they would arrest any foreign diplomat found to be involved in spying activities.

“We will not hesitate because spying is a threat to the country’s sovereignty. In the 1980s, we have arrested foreign diplomats involved in spying activities.

“We will do the same again if there is proof of such activities,” he told newsmen after a briefing on the Sungai Limau by-election at the Yan police headquarters yesterday.

- The Star/Asia News Network Monday Nov 4, 2013