PUDGi - A new venture

THIS IS A MISSION STATEMENT :

Nani Yunus and I have decided, after a long thought and she agreeing to it (although she said it was my decision - kids, this is how a marriage works), we are going to move to a place called Giching in 2016. Here's the Airbnb link for the place : https://www.airbnb.com/rooms/4458240.

It is in Sepang, just across the entrance to Bandar Baru Salak Tinggi (Jalan Haji Jumani to be exact), 5 minutes drive to Salak Tinggi ERL (the fare will be RM18 one-way now after staying at RM12.50 for a long time). It is 10 minutes to F1 Sepang International Circuit track, Mitsui Premium Outlet and both KLIAs. Seri Serenia, where the new Xiamen University Malaysia Campus is, is just 15 minutes drive from it. There'll be another premium outlet there, soon.

The land is owned by my mom, the real property guru who bought the land in the 80s and can make a bundle if she sells it now. I am thankful for her as a mother and learned all my property skills from her (a book about her is in the planning stage). We never live in a kampung and this is as close we ever get to live in one.

In 2011, we did it by selling our house in BBSA- Bukit Bandaraya Shah Alam at a price we didn't expect anyone would be willing to pay but surprisingly, someone did. We have to apologize because for all you know, we are the one who started the price range for the 20' x 70' double-storey terrace house in that area to cost upward of half-a-million RM.

As we don't have kids, yet (insha Allah when we have rezeki), we could easily relocate and we choose Ara Damansara to be the place we might want to buy a house and we want to try it out first. So, we rent. I wrote a few article saying we should rent first before buying a place and I practiced what I preached. I am renting my current abode and extend it last year until near the end of 2016. Alas, the place is getting too crowded, there will be 7 malls in this area alone with all the condominiums to be completed soon and although LRT will be just 3 minutes drive, it is not a nice place to live anymore.

I did write a few of my books in this house including PINJAM - sebuah novel Anuar Shah, PENTAS and the upcoming PERSONA (all with Fixi) with a few short stories and a few of my Ask the Lawyer books. Nani Yunus did make a good career for herself with Reapfield Property Shah Alam. We love it here in Ara Damansara and it is our first fully gated and guarded community with us, a Malay couple, being the minority (again, I did write articles about this a few times). We love the park behind our house with dogs roaming (wild and tame) and we even feed a few of the dogs, one we name Doggie (yes, we know) and one black poodle we still not sure to name him Dash or Bash. The stray cats Stranger and Stoking don't come here anymore and we lost our cats, Cookie and Muffin, here. We hope they are in a better place.

So, after discussing with our cats, Pudgy, Kiddo and Jelly, we are moving very slowly to Giching. We will still use this current place as our transit home until our tenancy runs out in November 2016.

Kg Giching might just be our retirement place. We are NOT retiring. We plan to never retire. I am very much involved with my legal firm Khairul, Suhaila & Hazlina and Nani Yunus with her 'Property Listings by Nani Yunus' project. We have tried the commute from it to our respective workplaces and we'll be using more public transport than ever. We've been testing ERL, LRT, Komuter, Uber Malaysia services, GrabTaxi and even busses to get around. We will drive if we need to. We will be buying properties in Transit Oriented Development soon as transit houses and maybe rent or sell them accordingly. We will still attend events and lepaking like we always do in Klang Valley.

We are also jumping into the start-up bandwagon with PUDGi - Pusat Urbanisasi Desa Giching, a cafe cum event venue with writing residency planned in the future with involvement, I hope, from Malaysian Writers / Penulis Malaysia (a Facebook page group), Fixi, DuBook Press, Lejen Press or any of the indie publishers who like to support us or do a community-base event. We also aspire to make our home a homestay, an open-air wedding venue and a place for a few agriculture projects. We want to make it communal more than anything else.

We welcome anyone to come talk to us to make it a more vibrant community-based project than just a place to live. We may want to give mostly what we get from it although we are not the ultimate owner. My mom will be very much involved with whatever we do with it. She's a scary woman who knows her way in the corporate and agriculture world. She was the 1st batch of Sekolah Tun Fatimah after all (and I think Sekolah Pertanian Malaysia, which became Universiti Pertanian Malaysia before its current name - Universiti Putra Malaysia). The stories she could tell and did.

So, as 2016 beckons, we are dreading it very much on our new journey. Most of our friends would have known about this already. This is not easy for us and of course, with some rezeki, we are going to make it work. Or we will be 'balik bandar, tanam something' with our tails between our legs if we fail. We've tried and failed a few times with different projects because that's where the fun is.

Wish us luck and pray for us. We'll be updating about it and inviting all to come to PUDGi soon enough.

Follow us on Facebook, Twitter and Instagram under the name of PUDGi2015.

How new F&B business can bypass GST collection / Bagaimana bisnes GST baru boleh tidak mengutip GST

I have written this as an article published in Malaysia Insider titled How a new F&B outlet can bypass GST by Khairul Anuar Shaharudin and the new internet magazine LivingMsia titled Getting into the food business? Be GST smart! (Check out LivingMsia as they are a new internet magazine with lots to offer). They are different from each other as I edited them for each publication.

Here is the article reproduced ad verbatim from Malaysian Insider :

Caution: this is not something the taxman (Customs Department) would like you to know, but the advice here is not against the law with regards to the goods and services tax (GST) in Malaysia.

You are starting a new food and beverage (F&B) business because you think you have delicious food to sell. Here are some tips for new F&B ventures to make sure you will survive the first few months, maybe even a year or two, in this new GST era:

1) There is a threshold of RM500,000 per year before you have to collect GST from your clients. That amount translates to just above RM40,000 per month. You need to calculate an amount for your livelihood after deducting costs, which may translate to half of that amount or even less.

You can sell your food and beverages more cheaply than those who have to collect GST for every single item they sell.

The threshold set makes sure any business that crosses the threshold is taxable under GST. If you are ambitious and cannot wait to make your first million in the first year of your business, you can go ahead and break that threshold and then you will have to collect GST from your clients.

Those who are smart and know the real value of a business for its longevity, be patient. Business is a marathon and not a 100-metre dash, after all.

2) In order to make No. 1 work, you have to have a game plan. Like buying your ingredients for your food business from among those stuffs which are zero-rated items in GST. Many raw materials are zero-rated but this may change in the future. Hence, study the list of zero-rated items and make sure you make adjustments accordingly.

3) Lower the costs of your operation. You can do this by doing a few cost-effective measures of running an F&B business:

a) Operate the business yourself. Don't use too much labour, especially foreign labour. Man the point of sale yourself, cook and serve every customer yourself (personal touch is always good) and if you can, do everything yourself.

b) Run your business from a stall or half a shop. Get a place where the rent is cheap. If you still want make it a full-service F&B business, the patrons can stand or sit on high chairs. This requires less space.

c) Sell from home. Run a delivery service or a pick-up service. Cakes baked at home and delivered to buyers make surprisingly good business. Packed-lunch business is also picking up in the Klang Valley.

d) A take-away only business like goreng pisang or nasi lemak stalls can be lucrative but still below the threshold for GST collection.

e) Cater to small groups of people with a certain target of money to be collected each month. A cook with talents for certain types of food can command good money.

f) Keep short hours for your F&B business. Foot traffic in most areas (even in malls) fills up only in short durations of time and not all the time every day. Concentrate on either breakfast or lunch or dinner or a combination of two only, ideally those adjacent to each other.

g) Cook and send to other places to sell your food. There are not many nasi lemak bungkus on the tables of mamaks these days.

4) Close the shop for a certain period of time each year when you near your threshold for that year. Or set a target of RM500,000 revenue per year and the moment you achieve it, close your shop until the next year comes around. People in Europe do it. Maybe it is time for us to follow suit.

5) Finally, albeit expensively, close your business every time you have bypassed the threshold. Be forewarned, the Customs Department did warn that businesses which take this route may be found liable in trying to bypass GST.

Do refer to a tax consultant about all your GST inquiries before implementing these suggestions. – May 26, 2015.

Berikut adalah terjemahan artikel di atas di dalam Bahasa Malaysia :

Amaran : Ini bukan sesuatu yang pihak berkuasa, Jabatan Kastam, mahu anda tahu tetapi nasihat di sini bukan lah sesuatu yang menyalahi undang-undang berkenaan cukai barangan dan perkhidmatan (GST) di Malaysia.

Anda akan memulangkan perniagaan makanan dan minuman (F&B) yang baru kerana anda merasakan anda mempunyai makanan yang sedap untuk dijual. Berikut adalah beberapa tips untuk perniagaan F&B yang baru yang memastikan anda dapat bertahan selama beberapa bulan dan mungkin juga setahun dua di dalam era GST yang masih baru ini :

1) Terdapat had RM500,000 setahun yang perlu dilepasi sebelum anda perlu mengutip GST daripada pelanggan anda. Jumlah ini menjadi lebih kurang RM40,000 sebulan. Anda perlu mengira jumlah yang diperlukan untuk hidup setelah menolak kos, yang mungkin akan memakan setengah atau kurang daripada jumlah itu.

Anda boleh menjual makanan dan minuman anda lebih murah daripada mereka yang mengutip GST daripada pelanggan untuk setiap barangan yang mereka jual.

Had yang telah ditentukan memastikan hanya perniagaan yang telah melebihi had tersebut dikenakan cukai GST. Sekiranya anda jenis yang terlalu cepat kaya dan tidak boleh menunggu untuk mencapai jumlah sejuta anda pada tahun pertama perniagaan anda, anda boleh memilih untuk melepasi had tersebut yang menyebabkan anda terpaksa mengutip GST daripada pelanggan-pelanggan anda.

Mereka yang bijak dan tahu tentang nilai sebenar sebuah perniagaan adalah berapa lama ia wujud, akan tahu untuk bersabar. Perlu ingat, perniagaan adalah satu maraton dan bukannya larian 100-meter.

2) Untuk membuat No. 1 berjaya, anda perlu mempunyai perancangan rapi. Antaranya membeli barangan mentah untuk perniagaan makanan daripada barangan kadar-0 dalam GST. Banyak bahan mentah adalah barangan kadar-0 tetapi ini mungkin berubah di masa hadapan. Oleh itu, kaji senaran barangan mentah kadar-0 dan pastikan anda membuat pelarasan sewajarnya. 

3) Kurangkan kos operasi anda. Anda boleh lakukan ini dengan beberapa kos yang efektif dalam menjalankan perniagaan F&B :

a) Lakukan semua operasi anda sendiri. Jangan gunakan terlalu ramai pekerja, terutama pekerja asing. Jaga kaunter wang anda sendiri, masak sendir dan hidangkan makanan untuk pelanggan anda sendiri (sentuhan peribadi selalunya menarik pelanggan yang lebih) dan sekiranya boleh, lakukan semua perkara sendiri.

b) Jalankan perniagaan anda daripada gerai atau sewa hanya setengah kedai. Dapatkan tempat di mana sewa adalah murah. Jika anda mahu menjadikan ia perniagaan F&B berservis penuh, pelanggan boleh berdiri atau duduk atas kerusi tinggi. Ini memerlukan ruang yang lebih kecil.

c) Jual daripada rumah. Lakukan penghantaran atau pelanggan boleh mengambilnya sendiri. Kek yang dibakar di rumah dan dihantar kepada pelanggan adalah pernigaan yang menguntungkan. Perniagaan makanan tengahari berbungkus semakin popular di Lembah Klang.  

d) Perniagaan makanan bungkus-sahaja seperti yang menjual goreng pisang atau nasi lemak cukup menguntungkan tetapi masih tidak melepasi had untuk mengutip GST.

e) Masak untuk pelanggan dalam majlis tertentu dengan jumlah tertentu dengan sasaran jumlah wang tertentu untuk dikutip setiap bulan. Tukang masak yang boleh memasak makanan tertentu boleh membuat duit yang banyak. 

f) Pastikan masa buka perniagaan F&B anda pendek. Trafik pelanggan di kebanyakan tempat (termasuk pasaraya) hanya banyak dalam tempoh masa tertentu dan bukan setiap masa pada setiap hari. Tumpukan samada untuk sarapan pagi atau makan tengahari atau makan malam atau gabungan dua daripadanya, secara ideal yang bersebelahan antara satu sama lain.

g) Masak dan hantar ke tempat lain untuk menjual makanan anda. Nasi lemak bungkus semakin kurang di meja-meja di kedai mamak sekarang. 

4) Tutup kedai anda untuk beberapa lama pada setiap tahun apabila anda hampir mencapai had GST untuk tahun tersebut. Atau setkan sasaran perolehan RM500,000 setahun dan apabila anda mencapainya, tutup kedai anda sehingga tahun seterusnya. Banyak kedai di Eropah melakukannya. Mungkin sudah sampai masa kita melakukan yang sama.

5) Akhirnya, walaupun mungkin sedikit mahal, tutup perniagaan anda apabila anda telah mencapai had GST tersebut dan buka perniagaan baru. Jabatan Kastam ada memberi amaran akan mengambil tindakan kepada perniagaan yang sengaja melakukan sedemikian untuk sesiapa yang didapati cuba untuk lari daripada mengutip GST.

Sila rujuk pakar cukai dan GST tentang sebarang hal-hal GST sebelum melakukan cadangan-cadangan di atas.

London Book Fair 2015

After the Tokyo Book Fair 2014 (which I still haven't blogged about) and the New Delhi Book Fair 2015, last week, between 14 to 16 of April 2015, I managed to attend the London Book Fair 2015. Unlike the Tokyo Book Fair 2014 and the New Delhi Book Fair 2015, I properly attend the three-day event as I was given the task by the owner of Fixi, Amir Muhammad, to help him to bring Malaysian publishers to the London Book Fair in 2016. We are determine to do it without government help as we think the London Book Fair can be a springboard to a lot of Malaysian publishers to break new territory.

It was one year, in 2014, after Fixi won the Bookseller International Adult Trade Publisher Award at the International Book Industry Excellence Awards. Here is the Star newspaper coverage about Fixi win last year. It was a proud moment for Fixi and I had just joined Fixi. I now can claim to be one of Fixi's stable of writers with 2 short stories being accepted in their anthologies (Lost in Putrajaya and MF2014) and 2 Malay novels : Pinjam and Pentas. Here's my Goodreads link.

At the London Book Fair, where the business of books were conducted by business people, there were so many writers abound looking for opportunity. As you have to pay to get a badge, at GBP35, you know all that attended the London Book Fair were serious people. Unlike the other book fairs I attended, I planned to do so as well. I attended nearly most of the interesting forum, book launches, author's talk, technology briefing and pavilion's launches. Singapore have a pavilion which Amir said was getting bigger and bigger. Indonesia on account of being the guest country in October 2015's Frankfurt Book Fair 2015 (the biggest book fair in the world) had quite a big pavilion too.

Mexico was the Market Focus country for London Book Fair 2015 and had a huge pavilion. I managed to catch Elena Poniatowska, a famous Mexican writer; Chris Evans before he opened up the Club room, a frank discussion among translators from various countries about the fees they are getting paid for doing translations, a discussion by those who are bringing the Susanna Clarke's book : Jonathan Strange and Mr. Norrell  to television, a talk by Conchita Wurst and a few other talks which I managed to hear bits and pieces of. Some of these writers I only heard of for the first time although they looked adored by a few people.

Outside of London Book Fair, I managed to get into Amir Muhammad's good grace to be brought to meet the people from the Big Bad Wolf, a few od Indonesian filmmakers and we even had dinner with writers Tash Aw, Zen Cho and Lina Tan (a television producer). From Malaysia there were Ling Lung and his wife from Lejen Press with Syafiq, the writer for Ajaib and Awan and Fixi had Ariff Adly, the writer for Kacau and Gelap.

Needless to say, the sight, the sound and the experience at the London Book Fair 2015 left me wanting more and I hope I will be back next year.

Oh, Amir Muhammad and I did went to the British Library a day after the London Book Fair where we managed to sight the original manuscripts of Hikayat Raja Babi (will be published by Fixi at the Pesta Buku Antarabangsa Kuala Lumpur 2015) and the Magna Carta.

Why a housing bubble will always happen again and again. All over the world

If you read the news around the world, there are people keep saying a housing bubble is imminent in their county. Although it has just happened, like in the United States when the last housing bubbles brought down a few investment banks which had been hit by the sub-prime scandals, people who are smart enough say a housing bubble is in the making there. China is another country people is expecting to have its property bubble burst anytime soon. Why does this keep happening again and again?

It is due to the nature of housing. People keep on buying houses to live in it and to try to make a lot of money out of it by selling it at a higher margin. The question is, why don't people learn that they will drag down the economy due to their greed to make a profit? Why do they keep on doing the same thing again and again? Aren't the governments around the world doing anything about it?

Here's the thing about housing. There are genuine buyers who want to have a roof above their head and there are those who think houses as an investment. They are mixed together without any borders separating them in the same space. When you see a long line queuing up at a property launch, you cannot determine who are the genuine buyer and who are the speculators. The speculators who buy and want to make money out of the property want the same treatment the genuine house buyers are getting. It will make the profit higher as the housing developers will throw in so many things into the sale. Including cheaper housing loans.

Governments around the world have been trying to control speculative buying of property by imposing tax on the profit anyone makes when a property is sold. In Malaysia it is known as Real Property Gain Tax. The current tax regime impose tax on property sold within 5 years of the property being bought. The tax imposed is a withholding tax where the seller will have to pay the Internal Revenue Department and only get it back once it is checked out there was no profit made on the property transaction. The withholding tax for Malaysian property sellers is 2%.

Does this current withholding tax stop or reduce the property transactions or sales of houses? Does it stop the speculative buying of houses? No. It does not.

Here's why.

Any good property speculator will know you only have to factor in the cost of the Real Property Gain Tax into the margin that you will make from the sale of the property. This Real Property Gain Tax is not the only thing the property speculator has to contend with. The Malaysian government has imposed in 2010 a maximum margin of 70% on any third housing loan taken by any one buyer. That is already a deterrent factor there. Still people buys houses speculatively and try to make huge profits out of it.

Banks are also culprits in the making of housing bubbles. Why? Because they make so much money out of giving out housing loans to people who want to buy houses, whether they need it or not. A speculators adage has always been "If you can use other people money, do not use your own money." This has also been the adage that fueled a few of economic crisis in the world.

Another factor why housing bubble will visit the world every few years in this modern era is due to the property gurus that keep teaching people to buy and sell property to make a profit out of it. While these property gurus go running and laughing to the bank thanking the gullible students for paying them an arm and a leg trying to learn how to make money from property speculation, new property speculators are born and play the property speculation game all over again

So, as the sun keeps on shining and people keeps on needing a house, a housing bubble will keeps on visiting each property hot spot.

Again and again...

*Originally wrote this as a LinkedIn post : https://www.linkedin.com/today/post/article/20140617041553-25491383-why-a-housing-bubble-will-always-happens-again-and-again-all-over-the-world?trk=prof-post

Lawyer Hartanah : 40 Lagi Soalan Yang Patut Anda Tanya Peguam Anda Sebelum Membeli Rumah di Malaysia

Buku eBook saya Lawyer Hartanah : 40 Lagi Soalan Yang Patut Anda Tanya Peguam Anda Sebelum Membeli Rumah di Malaysia mula dijual pada hari ini. Pemasaran affiliate boleh didapati di JomNiaga : http://www.jomniaga.com/affiliate/tools/17104/go. Pra-pelancaran untuk buku ini adalah dari 17hb September 2013 sehingga 29hb September 2013. Pelancaran penuh akan dilakukan pada 30hb September 2013.

eBook Bahasa Malaysia ini adalah terjemahan dari buku saya : 40 More Questions You Should Ask Your Lawyer Before Buying A Residential Property in Malaysia. Saya telah menterjemahkan buku ini sendiri untuk memastikan maksud yang saya cuba sampaikan tidak hilang. Dapatkannya sekarang di pasaran atau melalui web di www.bookplanet.com.my.

What is a housing loan and how many types of housing loans are there?

I am writing a new book. It is about Housing Loan and of course, in continuation of my Ask The Lawyer series, I have titled the book '40 Questions You Should Ask Your Lawyer Before Taking A Housing Loan in Malaysia'. I want to be as concise as possible so there will not be 40 More Questions You Should Ask Your Lawyer Before Taking A Housing Loan in Malaysia.

My two books tackled issues about buying residential property from housing developer and is skewed towards buying these residential property in cash. Why? Because I opined you need to understand the basic before involving purchasing property using a housing loan. A housing loan needs it's own book to be understood. Now that I have columns in New Straits Times' Real Estate and Decor and also in thestarproperty.my with occasional articles in various other publications, I will complement my published books and to-be published books with articles in them. 

As always, I use this blog to gauge responses from my readers or would-be readers. If you still have not got my book from bookstores like MPH, Times or Kinokuniya, you can order online through my publisher Book Planet. The link for my books is here : Ask the Lawyer series in Book Planet. 

While waiting for my book to finish, go through this first chapter. Consider it like reading an excerpt of the whole book as this first question is the whole template for the whole book. Comments and complains are welcome, as usual :

Question 1 

Housing loan is a financial instrument borne out of a need of the consumers, who are house buyers seeking to buy houses. In this day and age, everyone has some form of debts or another. Borrowing money has become a norm and it is recognised by financial institutions around the world as the best way to check the financial credibility of a potential customer. In short, the more debts you have with one financial institution, the potential for you to get any type of loan from another financial institution is higher. Of course, as a borrower, you must make sure you are capable to manage all the loans you have taken from all the financial institutions you have taken loans from before you are given another loan by another financial institution. One of the biggest amounts of money by borrowing one will take in his or her lifetime is the housing loan. House, even the smallest one, is expensive. The need for a house has never diminished as people need somewhere to live whether they can afford it or not. Hence, housing loan is needed to help people to buy a house according to their need and for those who buy house as investment, as one way to finance the investment.

   In the whole scheme of property purchase, there can only be two types of house buyers. There are those who buy a house to stay in it and those who buy a house as a form of investment. All the housing loans in Malaysia are tailored for those who buy houses in order to stay in it and not for those who buy a house for investment. With the current property climate in Malaysia where government has to intervene in order to fulfill the supply of affordable houses to the masses, I don’t think we will ever see financial institutions coming up with housing loans for the investors. That is why all borrowers of housing loans are asked to sign a letter of undertaking (which will be explained in this book) affirming that they will be living in the house they bought and taken a housing loan for. In order to answer the question “What is a housing loan?” the answer is - any type of loan taken from a licensed financial institution in Malaysia to finance the purchase of a residential property in Malaysia. In order to explain the concept of housing loan further is to dissect each type of the housing loan available and to see the mechanics of each type of housing loan. As questions relating to housing loan are answered one by one in this book, the enigma surrounding housing loan is unraveled one by one.

   There are so many types of housing loan available to finance the purchase of any type of property in Malaysia. These housing loans relate to all types of properties available for sale from either housing developers or individuals. There are so many ways to divide housing loans into basic categories. Types of properties are divided into property issued with title and property without title or property to be subdivided later. Housing loans available to finance the purchase these properties can be divided into the same category too. The documentations for housing loan given by financial institution for residential property with title is very much different from documentations for housing loan given by financial institution for residential property to be subdivided later. The difference between these documentations will determine the process and the cost to prepare the documentation for the housing loan. The documentation for the housing loan to finance purchase of property with title is more straightforward than the documentation for housing loan to finance property to be subdivided later. The nature of residential property to be subdivided later requires another round of documentations to be executed when the property is finally issued with a title.

   However, the more popular way to divide the types of housing loan on offer by financial institution is whether a housing loan is a conventional loan or an Islamic loan. As financial institutions streamlined the operation of their conventional banking and Islamic banking, when a bank officer attend to a customer’s enquiry about housing loans, the first question the loan officer will ask is whether the customer is applying for a conventional housing loan or an Islamic housing loan. Both housing loans are different from each other and the documentations for both types of housing loans are very much different. Both conventional housing loan and Islamic housing loan are different products. The terms used to explain how the conventional housing loan and Islamic housing loan is given and disbursed are different among financial institutions. Conventional banking term such as ‘interest’ is substituted with ‘profit’ when being referred in Islamic banking. This is just one of the terms which differ between a conventional housing loan and Islamic housing loan. An explanation on the difference in either the concept or the documentations of an Islamic housing loan can be found within this book.

   There is no right way to list the types of housing loans. Like all loan products offered by financial institutions, when you want to take a housing loan, the important question is to ask yourself why you are taking the loan. It is understandable if the housing loan is to finance the purchase of your dream home. If you have saved to pay the deposit on the house and able to pay the installments until the time the house is yours, there's an array of housing loans to choose from. However, there are many other types of housing loans which relates to houses but is not intended to be used for the purchase of a house. These types of loans include, as was mentioned above, taking housing loan for investment purpose, refinancing of existing house after a few years as value of the house rises and mortgaging a house free from any encumbrances to the bank for cash. Currently, housing loan for residential property is one of the cheapest loans around among a bank’s various products and is a favorite way to own a property under your own name.

Real Property Gain Tax in 2013

This is an update from my blog post in 2011 about the Real Property Gain Tax (RPGT) in Malaysia for the current year 2012. You can go to the blog post here. That blog post explains about how does the Real Property Gain Tax in Malaysia works.

It was announced in Budget 2013 that the change for Real Property Gain Tax in Malaysia for 2013 is the addition of 5% to the current 10% RPGT for the sale of property which was bought 2 years from the date of the Sale & Purchase Agreement and the addition of 5% to the current 5% RPGT for the sale of property which was bought between 2 years and 5 years from the date of the Sale & Purchase Agreement. On the 6th year, there will be no Real Property Gain Tax levied on the sale.

As such, here is the rate which will be in force from 1st January 2013 :

Sale of property between 0 to 2 years of purchase : 15% RPGT

Sale of property between 2 to 5 years of purchase : 10% RPGT

Sale of property after 5 years of purchase : 0% RPGT

As I had advised in the blog post about RPGT in 2011, adjust your property investment accordingly.

Can accessory parcel or common property in strata development be sold?

One of the question to be found in the sequel to 40 Questions You Should Ask Your Lawyer Before Buying A Residential Property in Malaysia. This new book will concentrate more on strata development. 40 more questions and now finishing up the final 10 questions. This is also the reason why I have not post up an entry here for quite some time. 

Here is a rough draft of the answer to the question 'Can accessory parcel or common property in strata development be sold?'. Most developers in Malaysia have done it one time or another but is it legal? 

Accessory parcel and common property are two different subject matters in a strata development although both can be seen to overlap each other. Accessory parcel is an extension of a parcel owned by the purchaser in a strata development which can be a building attached to the parcel or just a space labeled to show its connection with the parcel. In short, an accessory parcel is privately owned and comes together with a parcel when it was bought by the purchaser of a parcel within a strata development. As for common property or facility, it is shared by everyone with a strata development although some of these common properties are within the sphere of a parcel. Common properties are managed by the management of a strata development and they can be immovable or movable objects. Certain accessory parcels may look like the part of common properties and vice versa. The best example for this is none other than the parking lot. When a property is bought and sold in a strata development which has many parcels attaching themselves to each other with overlapping functions such as a floor to a parcel which can be a roof to another parcel, a parking lot which can be an accessory parcel to one particular parcel can exist next to another parking lot which is a common property. That is why it is important in the initial development plan of a strata development for the housing developer to survey, label and get approval for every inch of the strata development. That is why the plan for accessory parcel, especially if it is not attached to the sold parcel and the plan for common facilities are given the option to be attached in the First Schedule of the Sale & Purchase Agreement of a strata development. In order to answer to question whether the accessory parcel or common property can be sold or not, we need to differentiate the beneficiaries of each subject matter.

Accessory parcel is built within a strata development to be sold to a particular purchaser. In the preamble of the Schedule H of the Housing Development (Control and Licensing) Regulations 1989, it is stated that ‘….the Vendor (the housing developer) and the Purchaser has agreed to purchase the parcel with vacant possession….with accessory parcel with vacant possession distinguished as accessory parcel No: ………….. of Building Land Parcel No:……………… (which is delineated and shaded BLUE in the Accessory Parcel Plan annexed in the First Schedule)’. The additional wording which appears in a bracket ‘(hereinafter referred to as “the said Parcel”)’ means that an accessory parcel is part of a parcel within a strata development. As it owes its existence to a particular parcel, in a nutshell, an accessory parcel can be transacted as long as it belongs to that particular parcel.

In Section 34(2) of the Strata Title Act 1985, under the ‘Rights of proprietor in his parcel…’, it is also specifically stated that ‘No rights in an accessory parcel shall be dealt with or disposed of independently of the parcel to which such accessory parcel has been made appurtenant’. It means that each accessory parcel must co-exist with the parcel that it is attached to. As such, the only transaction which is available to the owner of the accessory parcel who is also the owner of the parcel is to rent out any particular accessory parcel under his control. If the accessory parcel is a parking lot, that parking lot can only be rented out on a monthly basis and not sold individually as it cannot be separated from the parcel. As all accessory parcels must be labeled to indicate which parcel it is attached to, it is impossible to be sold.

Common property or common facility is built by a housing developer for a strata development to be shared among the purchasers. Common property is generally whatever not within a parcel. If the accessory parcel is privately owned once it is sold to the purchaser, common property is publicly shared among the purchasers and is actually owned collectively by all the purchasers within the strata development. If the decision about any accessory parcel is to be made by the owner of the parcel, any decision about any common property is made by the collective effort of the purchasers through the management of the strata development. Management of strata development differs depending on the time the strata development is at. From the time of vacant possession to within one year of the date of vacant possession, the management will be under the control of housing developer. After that one year the common property will be managed by the joint management body until strata title is out which will then pass the management to the management corporation.

At each interval, the powers given to the management are properly spelt out. When in relation to common property, the housing developer has the decision to decide what initially can be built and labeled as common property or common facilities. Under Clause 17 of Schedule H of Housing Development (Control and Licensing) Regulations 1989, the housing developer ‘…shall, at its own cost and expense, construct or cause to be constructed the common facilities serving the housing development…’. Common facilities plan can also be attached in the First Schedule of the same agreement. Among the duties and powers given to the Joint Management Body under Section 8 of the Building and Common Property (Maintenance and Management) Act 2007 are to ‘…maintain the common property and keep it in a good state of good and serviceable repair;’ -Section 8(1)(a) and ‘to purchase, hire or otherwise acquire movable or immovable property for use by the purchasers in connection with the enjoyment of the common property;’ – Section 8(2)(d). The same provisions as replicated in Section 43 of the Strata Titles Act 1985 as duties and powers of the Management Corporation. 

In all the clauses and sections of the agreement, regulations and acts, common property can only be managed, maintained, controlled, enjoyed and added with movable property. There is nowhere in any of these provisions that a common property can be sold. However, if a shop or a retail space is labeled, marked and reserved as a common property, it can be rented out or even leased as it can be enjoyed by every of the owner(s) of the parcels within the strata development. In the Third Schedule, Strata Titles Act 1985, as By-Laws for the Regulations of Subdivided Buildings, under clause 3, the Management Corporation is allowed to ‘…by agreement with a particular proprietor grant him exclusive use and enjoyment of part of the common property or special privileges in respect of the common property or part of it’ That will also mean that a common property such as a car park, under the control of the management of the strata development, can be rented out or leased out to the owner of parcels within the housing development. For any shop(s) or additional parking lot(s) or any other space(s) to be sold by the housing developer which are other than the residential property within the housing development, such spaces have to be parcels and declared as such. As long as these spaces are labeled as common property, it cannot be transacted as such.  

Updates : Book and Work

The last post for this blog is in early March. 

It has been a very busy two months leading up to this moment. We were appointed to two of the biggest property companies in Malaysia which sell high-end freehold properties. We offered our service and when they appoint us into a select group of solicitors to handle documentations for the sale of their properties, our infrastructure took a beating that even the partners (especially me) who always had time for other endeavors find it hard to go out.

Then, one of our long-time valuable staff who we thought will one day be the heiress to this medium-sized legal firm decided to concentrate on her study and tendered her resignation. I personally was heartbroken as I had suggested and we, as a collective, decided nearly two years ago to send her to a local university's law school. We paid for her law school's fee and ask her to stay on board after she finished her study. She had worked with us nearly 5 years then. We had watched her grow and learned various trade secrets which she then shared around. We found her to be the best candidate.

We gave her the space and time to take leaves without question. During her exam weeks, she did not have to come to the office at all. We were willing to sacrifice the time and in some way, some money too, in order to ensure the legal firm's next generation is well in place. As it was a project I had suggested, I consider it a failure on us to retain her. Her excuses of being under pressure due to her study and the feeling that she was more of a burden to her colleagues due to her absence, did nothing to lessen the pain of a failed succession plan project. I guess we need to go back to the drawing board.

However, nothing can stop me from making this lifelong project of building a successful business. To a certain extent, the business is already successful though the growing pain is still very much evidence. Reading a New Yorker's article about Uniqlo about Uniqlo having more staff than enough to man each of its store in order to ensure every customer's need is tended to at any given moment , we decided to fill up the void with more staff. We anticipated our good work may just bring us more business. It would also be good for us to ensure our clients are treated the instance the need anything too.

As for my book, I have abandoned writing it for some time until something gave me a second wind to go back writing it. In April, I was invited by Penang Regional Development Authority (PERDA) to give a one-day talk. I recruited my partner and senior associate to accompany me and we had a great time disseminating knowledge and answering questions, some which I never thought of hearing, which made me decided there is still a need for a sequel to my book. I am now halfway in writing the book and is giving myself the whole of 2012 to finish it.

I am also is reading the book 1Q84, by Haruki Murakami, one of my favorite Japanese author, which has a character who is a writer and Murakami's idea of why one writes can be seen to be manifested in that particular character. 

As long as I am motivated to write, I will...

Office : Do we still need one?

One of our main grouse every day is the commuting that we have to make to reach our office. As we have now reached the year 2012, I am wondering about the need for the existence of office. If we dissect the television series The Office, in a situation where people comes to their office which sells paper, the series never look like that the office ever need to exist. The people keep on coming and going. The people is always out to sell the paper. The account department can exist anywhere as long as the record of transactions are kept.

What do we use office for? We use it to type out our work. We need computers for that. We have mobile devices for that. Laptops and tablets. Computers can be linked securely virtually with each other, right? Google and IBM have tools for that if I am not mistaken? Storage space? Isn't cloud computing the thing everyone should jump on at the moment? How about meeting? Can't work be distributed among the staff with use of emails and meetings be about "Where are we now?" than the need to sit down and ask everyone how their work is going. Even my own legal firm rarely got visitors as we always meet client at wherever is convenient for them.

I think we are too traditional whenever we think of the existence of office as a need. We have the biggest businesses in the world like Google and Apple which use office as playgrounds. We have people feeding businesses in the world like Starbucks and McDonald's as they congregate there to hold meetings. When I was writing my books, I tend to go out and write them at whatever cafes I can find. My house has an office which my wife uses more than me as I use sofas and lounge chair to do any work done.

The only institution which I consider really needs an office or buildings are banks. Offices or buildings for banks or financial institutions are more than just offices. They are assets as they can't actually holds money as assets as the thing they trade in money. Then, there is still the issue whether we need real fiat money to transact which is another issue altogether. Maybe storage is an issue like my legal firm which has to deal with such matters. The only thing that makes me wonder is if everyone is not going to office anymore and have offices in their houses, why do property developers still keep on building offices?

All this issue about the need for an office is boils down to the fact of a new social media start-up of mine. Which has an office but does not really being used. So, I am going to add a few items to make into a playground or more of a hangout place. As it is a penthouse which has a nice view,  I want it to be a barbeque place with pool table inside and beanie bags all around.

Isn't work is for you to make money and survive the world? Then, why has it become a thing we live for? I long for the day we make a living out just so that we can feed ourselves and not die of starvation.

Dawn (Pakistan) article on Property Investment in Malaysia

Was commissioned by our Counsel General in Karachi, Pakistan, En. Abu Bakar Mamat to write an article about investing in the property market in Malaysia. It was to come out in Dawn, a Pakistani newspaper. It came out last Sunday. Here is a snapshot of the article in Dawn (sent over through Twitter by En. Abu Bakar Mamat).

Although Dawn have an online portal : Dawn.com, I couldn't find a link to show the full article. For the sake of posterity and in case you are curious, I reproduced the article below :

Malaysia is a great property investment destination. As a well-known Islamic country with great infrastructure, accessible through various points of entry and with a predictable climate, all the cost and returns from any investment you make can be easily calculated from the offset.

Anyone above the age of 21 can invest in property in Malaysia including foreigners. The only restrictions for foreigners are the price of property that they buy must be above RM500,000-00 (USD$166,000-00). Another form of restriction is the type of property that they can buy must not be the native or bumiputra properties and areas in certain areas due to the restrictions found on the tittles of the land as imposed by state governments. A property tax of 10% is levied on the profit you make if you sell a property within 2 years of purchase but it will be lowered to 5% for profit made between 2 to 5 years. After the 5th year, no tax is levied for residential property.

The usual popular properties easily bought by foreigners are freehold properties in the middle of towns like Malaysia's capital, Kuala Lumpur or the beautiful island state of Penang. Apartments or condominiums there can easily reach the price of RM1 Million (USD$330,000-00) with a possible returns of 8% per year. The lands there are easily bought and transacted by foreigners as the land offices in these towns have vast experience in deals involving foreigners.

Property loans for foreigners can be obtained up to 80% of the property price but it depends on the collateral that you can offer such as fixed deposit cash emplaced at the banks. It will be easier if you join the Malaysia My Second Home (MM2H) program so that you can enjoy multiple entries visa and various other convenience.

It will take between 6 months to one year for a property transaction involving for foreigners depending on the type of property that you buy. The usual transaction involves the booking by paying a 2% deposit, another 8% upon the signing of the sale agreement and then the balance of 90% will depend on how much property loan you have obtained. Any purchase of property by a foreigner in Malaysia will require consent from the land office and this usually takes up to 3 months. 

Upon arrival in Malaysia if you are on a property hunt either for investment or holiday homes, consult your local real estate agent or lawyer.