Household debt clean-up : A personal journey

Personal financial stability is not something easy to resolved. If you were ever in an economy classroom, either during high school or as part of your college or university degree, no matter how much you understand the concept of 'want' and 'need', believe me, you will never get to feel the 'forcefield' pulling you to spend on the unnecessary thing in life, until you have 'disposable income'.

Whoever invented modern credit is evil. Financial institutions, be it banks or cooperative or finance companies, is always on the prowl for you to take whatever they can give you in the form of credit cards and personal loans before you have even step out into the real world and become part of the 'workforce'.

However, how else can you afford the basic thing in life if not for credit? It is a Catch-22 situation as most of the basic needs like food, a place to live and transportation cost money. Coupled that with the self-appointed financial guru who propagates the need to own your own place and transport (though this now seems to have been losing steam), you will feel left out if you don't own a house or a car by a certain age. Then to make matter worse, you live in a world where everywhere you turn, you are bombarded by advertisement promoting so many things like a brand handphone, a computer, a tablet, the need to travel to see new places and more expensive version of your need.

That was what happened to me.

In my years of living, I have bought more than one house, sell a few, kept a few; bought a few cars, sold a few, had two cars at one time, one car at another time, owned cheap cars, owned expensive cars; bought more than one personal computer for my house, left it dusty before buying a newer version; owned a tablet; a few smart phones. All this thanks to the supposedly disposable income I have which I increased to more than 10-fold thanks to the easy approval of credit cards and personal loans. Some are obtained through 100% loans which allow me to buy cars and houses (it doesn't exist for awhile in Malaysia but it is making a comeback through various affordable housing scheme)

When 2012 arrived, I am more than a few hundred thousand Ringgit Malaysia in debt. One thing I have always made sure is to never have any arrears in any of my installments. My business helped me to make sure of this but it is not a perfect personal financial stability that I aspire to have. So, I started to get my personal finance in order.

I listed out my debts which include a car, a house, an Amanah Saham Bumiputra (ASB) loan, a personal loan and a few credit cards which when tabulated comes up to more than RM100,000-00 disposable income but are mostly maxed out. Some of the credit cards are there as I have taken a balance-transfer credit card to lower down the interest charged on my other credit card debt. I was surprised that more than half of my drawing from my businesses goes to paying the credit card debt. And yes, the first thing to a cure from an addiction is to admit that you have a problem. Then, look for a solution.

Another myth in this modern age is to make sure you have savings for your old days. Yes, that is not bad advice. However, how about living your old age without debt and having a stream of cash supplementing you? That is equally important right? Without delay, I listed my assets and see whether I can match my liabilities.

My assets seem to be part of the problem too. A house still under a mortgage. An ASB certificate which is not mine. A few unit trusts. The car is never an asset as it is always a liability. After calculating all this, I find that it is easier for me to cancel a few loans such as the ASB loan and the few credit card, especially those which have high interest charged to it every month. Then I decided to sell my car which was already 6 years old this coming May and bought a cheaper car. I then did one of the most surprising decision ever, even to me. I put the current house I am living in on the market. At a very steep price. Canceling the loans allow me to be liquid as dividends are paid for the ASB for 2011, unit trusts are sold with cash as payment and the car was sold at a good price.

The journey is not over yet. I have only cleared 30% of the debt I have. I still have to see whether I can get the price I want for my house. What I do after will require another entry. As I cleared a few of the credit card debt, banks which always on the look-out for someone who has more than he can spend is already calling more offering me new loans. Then, my feet, knowing me, starts to itch to travel somewhere far. 

Let us see how much of the 'want' I can resist so I can totally clear up the debt.

Social media ROI : A personal experience

As a lawyer and an author, I use social media extensively to promote my service and my only book. As lawyers in Malaysia are not allowed to advertise their service conventionally through mass media like in the newspaper or the local television, social media is a blessing. 

I always read on so many publication, articles by social media practitioners and experts, about the return on investment (ROI) when you invest in social media. There are so many ways for you to invest in social media. You can do it yourself. You can have a staff within your company to update your social media pages. You can contract it out for a company which claims to know how social media work. You can even spend millions of Ringgit to try to get new clients through social media.

Yes, social media's ROI is about how much time you spend on a FREE platform in order for you to get some form of returns. Amazingly, people who use social media seems to always keep on protesting when any form of change happens to this free media. A few years back, you can only get to be well-known if you work hard and pay. Social media still requires you to work hard but rarely do they ask you to pay, except for the data usage bills either through your handphone network or fixed line connection.

Here are my social media connection. As a person, I am on Facebook, Twitter, LinkedIn, Tumblr and Google+. My book and my legal firm have pages in Facebook and Google+. I also have two blogs. One is where I write about legal issues and property, which I use nowadays as a place to draft writings which I then submit to magazine, newspaper and even will form part of my next book. The other is my personal story about life, marriage, holidays, travel and such. 

If you ask me, I believe there is no boundary between the either blogs as I never believe what you did at work or in business will not affect your personal life or vice versa. So, type my names   : Khairul Anuar Shaharudin or my internet name : kruel74, in Google or whatever your favourite search engine, you can find me in either one of the listed social media (or maybe a website or two). Oh, I utterly believe in social media that all my businesses (I have a few) do not have websites.

Now that you know where you can find me on social media, let me tell you how much I gain from social media. In a nutshell, I gain more than 50% increase in 2011 in comparison to 2010, from the investment I made through social media. I got businesses from people who know me as a blogger, I got business from people who know me by chatting with me on Twitter, people ask me through Facebook about property issues and then ask me to take care of their legal matters and the blogs contribute by getting editors and producers to feature me either by asking me to write or being guest in radio show.

Last year alone, I was writing for the local daily, the Sun newspaper as I was 'found' in a Facebook group which consist mainly of young people who invest in property, Property Talk and Lifestyle, by a member who is a sub-editor; and that entry resulted in me being on BFM Radio talking about the article which was first an entry in this very blog, after the producer of the 'Property Show' found me through a connection in LinkedIn, Niki Cheong, who is a columnist in the Star, another local daily, who is now in England pursuing his study. Can you see how social media plays as an investment which in turn may (or may not) resulted in you getting rare opportunity.

However, as much as you invest in social media, if you only writes and sit behind the screen and hope to be discovered, you are wasting your time. All the social media cannot help you achieve any returns if you don't meet people, talk to them and let them know who you are and what you can do.

BFM Radio interview No. 2

My second interview on BFM Radio was done on 27th December just after the Christmas holiday but was aired on BFM Radio on the last day of business in 2011, a Friday, 30th December 2011. I hate the fact I used the word 'actually' too many times. That seems to be my nervous tick but all in all it was better than my first interview in 2010 where I seems to be banging on the table a lot (you can't really hear it in the recording). 

You can hear the recording in 2010 in four segments here on various topic :

Broadcast on 24-04-2010

Broadcast on 01-05-2010

Broadcast on 22-05-2010

Broadcast on 12-06-2010

The topic this time around was on Bumiputra property with some pointers on Malay reserved land too. Here is the link :

Investing in Bumiputra lots

Biggest property news in Malaysia in 2011 Part 2

This is the continuation from my first blogpost on the 'Biggest Property News in Malaysia in 2011 Part 1'. In the first part, the issues were about affordable houses; the effect of MRT on the land cost and the tussle between the landowners and the MRT Corporation on the land acquisition process. The second part covers some of the news affecting investors in 2011 and the few mega property projects in the Klang Valley announced by the private sectors.

Here are four other property news in the limelight in 2011 :

5) 1Malaysia Development Berhad (1MDB) in the news

Announced in 2010 as a fully government-owned sovereign wealth management fund with various fingers in various pies including; a joint-venture with PetroSaudi International Limited to invest in oil and gas and real estate which has since made 1MDB, according to their website, RM425 Million profit through part divestment; the building of Kuala Lumpur International Financial District (KLIFD) in the 30 hectares of the Imbi area bordering Jalan Tun Razak, Jalan Sultan Ismail and the MEX highway and the building of Bandar Malaysia at the current Sungai Besi airport which will offer affordable houses.

1MDB was in the news at the end of 2011 due to the funding that they were said to have received from the government a subsidy of RM1.11 billion in the 2012 Budget although they raised a sukuk worth RM5 billion in 2009; the lack of work on KLIFD; and the acquisition of the 495-acre land parcel which was the Royal Malaysia Arm Force (RMAF) Sg. Besi airport which will be turned into Bandar Malaysia. 

The first news is opposition's fodder which claimed that 1MDB seems to be getting funding which it does not need. The second news was finally put to rest with the tender process announced by 1MDB for major foundation work for KLIFD due to take off in early 2012. The last news ran smack into the competitive nature of other government agencies which have already been tasked with building such houses as the price of houses at Bandar Malaysia was announced to be between RM220,000-00 and RM300,000-00.

Here are links you can go through about 1MDB :

- 1MDB official website

- News about Bandar Malaysia in Sg. Besi

- News on the tender process on KLIFD

- The need for fund for 1MDB

6) Return of the mega property projects

At the start of 2011, the mega projects seem to have lost some steam due to the property slowdown within the well-known area of the Golden Triangle of Kuala Lumpur, or so it seems. This happened even when someone bought a RM38 Million penthouse condominium at The Binjai on the Park near KLCC in middle of 2010. It seemed then that the days of the launches of mega property projects in Malaysia are numbered. Then a few announcements which made headlines dispelled this notion. Some of these property developments were old news with new owners or new managements. Some were new projects which seemed to have been planned a long time ago but were just recently launched in 2011. Here are two of the most notables mega property project launches in 2011.

There seemed to be a lot more of property launches as we entered the middle of 2011 as opposed to the quiet 2009 and 2010. It is so much so that banks have started to be choosy in giving out loans. One of it those that made the news was the launch of a new mega development project by NAZA TTDI of their KL Metropolis at where the Matrade building is now situated. Spanning 75.5 acres, it is envisioned itself as the new international trade and exhibition district. Developed in the span of 15 years, it will be done in 3 phases. The gross development value is estimated at RM15 Billion and was launched by the Prime Minister in October 2011.

SP Setia, once a favored property counter on Bursa Malaysia, has finally launched its long awaited KL Eco City in November 2011, which is located at a narrow piece of land at the former Kampung Haji Abdullah Hukum. Located at the opposite of the always busy Midvalley City, one can just imagine the hectic traffic situation of the area bordering Bangsar and the New Pantai Expressway, once it is completed. It will comprised of mixed-used commercial and residential properties which will be placed in a few towers within the 10.1 hectares of land. It is also said to be the first mixed-used commercial property to receive the currently sought after Malaysia Green Building Index (GBI) standard and will be completed in 10 years.

Links on the projects stated above and news on mega property projects :


- KL Metropolis website

- News on launch of KL Metropolis

- KL Eco City website

- News on the launch of KL Eco City

- Wrap up on mega property launches for 2011

7) Real Property Gain Tax

The tax treatment on the disposal of property was changed in 2010. Between April 2007 until the end of 2009, the Real Property Gain Tax (RPGT) was given a holiday. Due to the property market condition within those year, the move was done to fire up a lackluster property market as the world's economy took a tumble. When it was reintroduced in January 2010, the tax treatment for RPGT was totally a different animal than what it was  before April 2007.

Before April 2007, RPGT was tiered according to how long you have owned the property. RPGT is calculated based on the profit you make when you dispose of a property at a maximum of 30% within the first year of ownership but becomes 0% on the sixth year of ownership. This only applies to residential property. With commercial property, the amount of 5% from the profit will have to paid as RPGT even after the fifth year.

When it was reinforced (the law was never abolished but was just put on hold) in 2010, the tax treatment for the disposal of property was given a flat 5% tax from the profit you make if the sale was done within the first 5 year of ownership of the property. The way RPGT is collected also differs with a 2% of the transacted price has to be paid before being refunded by Lembaga Hasil Dalam Negeri once it is checked and cleared.

Now, in 2012, after it was announced in the 2012 Budget in October 2011, the RPGT was changed again. Starting from January 2012, RPGT will now be two-tiered. within the same vein when it was reintroduced in 2010, RPGT, which is taxed on any profit gained from the sale of a property will beat the rate of 10% for any disposal below 2 years of ownership. Any property disposed after 2 years of ownership but less than 5 years will still have a 5% levy but none will be levied after 5 years of ownership.

Links on the issue of RPGT :

- My blogpost on RPGT in 2012

- Official portal of LHDN

- Online brochure of RPGT by LHDN

8) Regulation for banks in giving out property loans

In 2011, as announced in Budget 2011, in order to slow down the overheating property market and to stop property speculator in damaging the economy of scale for genuine buyers, especially those who are in need of affordable houses, the government changed the rule on the amount of property loans given by financial institutions at any one time. Using Bank Negara Malaysia as the enforcer, financial institutions can only gives out housing loan in the margin of 70% for anyone who has more than 2 properties. It means that if someone who already has 2 properties bought using housing loans, the next property loan he takes will be limited to a margin of 70%. This does not deter anyone who is cash rich to buy more than two houses and still speculates.

The rule had affected sales of properties as only genuine buyers may now buy property and not speculators. The news of the change of how housing loan is given out by banks through a new ruling by Bank Negara Malaysia did not help, either. It was decided in not so many words, the criteria on the margin of loan and maybe the interest rate levied on a property loan will now change due to the way a housing loan application is calculated. On the table but not yet announced or implemented is the new rule where the calculation for an application of a housing loan will be based on nett income of a borrower and not the current usage of gross income. It may even means that one person or one household with incomes below RM5,000-00 can now only own one property below the price of RM300,000-00. It will be in line with the promotion of affordable houses by the government though.

The links on this not yet determined its accuracy news can be found below :

- News on the nett income calculation for housing loans

- Banks may offer more competitive home loans

- Round up of Budget 2012 on property and construction sectors



These are all the news I consider worthy to be mentioned as the biggest property news in Malaysia during 2011. Some are already being implemented and some are coming days. From what I see, there are only a few keywords to the news : Affordable houses and Curbing Speculations.


HAPPY NEW YEAR 2012!

Biggest property news in Malaysia in 2011 Part 1

Everyone is doing a list, so why shouldn't I? Furthermore, 2011 has been an exciting year for the property market in Malaysia. Not every news is necessarily can be considered as good news. It seems that there are property news for everyone in Malaysia.

Those low-income group who never owns a house received various news about houses which they now can afford. Those who had just graduated and started working can now afford to buy a house. Those who have worked a few years and found it hard to buy property can now afford to do so. The business communities are getting new business enclaves. Speculators in property prices especially those who buys residential houses got their fair share of news too.

Let us go through these news which can be found the whole year of 2011 :

1) MRT finally got off the ground

Of course, one of the biggest news this year is when the government decided to finally integrate the public transportation system by having the Klang Valley Mass Rapid Transit (KVMRT) as the final piece in the puzzle that has never been completed properly. Klang Valley public transports are always fragmented with KTM's Komuter, LRT, Monorail and a few bus companies plying the route. Launching it in July 2011, after announcing it back in June 2010, Dato' Seri Najib, Prime Minister of Malaysia, said that he hopes that it will finally solve the woes of the city dweller by allowing them to park their car from wherever they are staying and ride public transport to work or wherever they need to be in the city.

The biggest news which came in light of the MRT project, among others were :

a) Its alignment as to where the train will passes and who will benefits from it;

b) Land acquisitions which had threaten a few heritage sites and the issue of land surface acquisition vs. underground land for the projects. Among notable cases which were filed in court due to this matter were by businesses in Jalan Sultan (Chinatown), Jalan Imbi and Jalan Bukit Bintang;

c) The possibility of the rise of land prices wherever the MRT will pass and the issue of MRT Corporation getting involved in property development;

d) The issue of the contracts awarded and whether the right companies were given the right jobs. This is one issue which will never fully resolved as this RM40 Billion project has so many interested parties.

Some news and link on MRT :

- KVMRT Official site

- News on the launch

- News on some controversies surrounding MRT

2)  My First Home Scheme

My First Home Scheme covers houses (first or second hand houses) between the price of RM100,000-00 to RM220,000-00 for first-time homeowner. In the 2012 Budget, the maximum price for this scheme has been raised to RM400,000-00. The scheme is given in the form of 100% housing loan provided by various financial institutions which include Maybank, CIMB Bank, Affin Bank and RHB Bank, among others. The 100% housing loan is due to the arrangement where the first 10% payment to buy the property will be guaranteed by Cagamas Berhad and has a maximum tenure of 30 years. This means that the 10% will be paid by Cagamas and the buyer will owe the amount to Cagamas. It is only open to Malaysia citizen below the age of 35 years old with household income of less than RM3,000-00. This scheme is already open for application and the executors for this scheme are the banks. You can check the scheme at any participating banks.

Here are some news and links on the My First Home Scheme

- National House Buyers Association interview in iProperty.com

- My blogpost on My First Home Scheme

- The Star coverage on My First Home Scheme

- Slow response to the Scheme and controversy

3) Perumahan Rakyat 1 Malaysia (PR1MA)

Launched in May 2011 and is known as 1Malaysia People's Housing Scheme/Perumahan Rakyat 1 Malaysia, hence the acronym PR1MA. Unlike the My First Home Scheme, the executor for this project is a new entity which acts much like a housing developer. It will identify locations around Malaysia and build houses for people who fulfill certain criteria. The corporation is called 1Malaysia Housing Program Corporation has been established and as of today, two projects have been launched under it. One is in Putrajaya and will be built by PR1MA itself and the other one is a joint venture between PR1MA and Sime Darby Property in Bandar Ainsdale, Seremban. The mode of allocating the property to the masses is through balloting.

The price of the houses in this scheme are between RM100,000-00 to RM220,000-00.  The criteria to be eligible for this scheme is that the applicant must be Malaysians who never own a house before (first time homebuyer) and has a household income of RM6,000-00. Some of the features for the houses build by PR1MA include the exemption of stamp duty, eligibility of 105% loan from selected financial institutions with the 5% to be utilised to pay insurance and legal fees and a lock-in period, where the housebuyers cannot sell the house within the first 10 years of ownership. An Act of Parliament has been enacted for this scheme and was passed in early December 2011.

Some links on PR1MA :

- PR1MA official website

- News on the passing of the PR1MA bill in Parliament

- News on the first balloting in Precinct 11, Putrajaya

- Announcement on Bandar Ainsdale

- My blogpost on the difference between PR1MA and My First Home Scheme

4) Syarikat Perumahan Negara Berhad to build 10,000 houses in 2012

The seemingly current bridesmaid's company to the government's effort in providing affordable houses. May even be asking itself why is it sidelined while these news on My First Home Scheme and PR1MA filtered in. At the end of 2011 SPNB can be seen to be back in the news. As explained by the Prime Minister when the PR1MA bill was tabled in early December, PR1MA will concentrate to build affordable hosing in the urban area whilst SPNB will still build affordable housing in the rural area. The statement by the PM is supposed to solved the problem on the overlapping functions of these two government agencies.

It was announced at the end of 2011, SPNB had signed an agreement with Bank Simpanan Nasional (BSN) which will provide financing for the 10,000 units of houses which SPNB had been tasked to build in 2012. The cost was estimated at RM650 Million with the government subsidisind the building of the houses with a RM200 Million subsidy and the balance will be financed with the housing loans provided. This is with each house estimated to cost around RM65,000-00.

For the past few years, SPNB has been offering affordable houses in a various categories which overlap what PR1MA has to offer. Among them were Rumah Mampu Milik (Affordable Houses) and Rumah Mesra Rakyat (Rakyat-friendly Houses). An example of the former is Alam Prima which is located in Section 22, Shah Alam and the latter can be found in various small town in Selangor such as Kuala Selangor and in rural areas in Sabah and Sarawak. SPNB is also the agency in charge to revive abandoned projects around the country and to act as the contractor to build more government quarters.

Depending on how you see it, there is a lot of overlap between the government agencies in providing affordable housing to the masses. One other question which beg an answer is how will the government ensure that nobody will abuse the offer of so many affordable houses by various government-linked companies. There is also the issue about the term of 'affordable housing' when the government raised the limit of My First Home Scheme's house price to RM400,000-00 and even now contemplating to raise the household income eligible for the scheme up to RM7,000-00.

The links on SPNB :

-  SPNB official website

- Vote buying using affordable houses

- New understanding between SPNB and BSN

- My blogpost on affordable offered by Federal government and the Selangor state