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Saturday, August 26, 2023

Reversing declining R&D investments

 The country's gross expenditure on the segment has been on downtrend in the past couple of years. More investments are needed in high-growth areas that will yield strong returns.


SIX decades ago, Malaysia was richer than South Korea and Taiwan.

But today, the country is behind these two technology superpowers and is still trying to break out of the middle-income trap.

Taiwan overtook Malaysia’s gross domestic product (GDP) per capita in the mid-70s, and not long after that, South Korea overtook Malaysia in the mid-80s.

A major reason for Malaysia lagging behind Taiwan and South Korea is the failure to invest adequately in research and development (R&D) that ultimately resulted in low local technology creation.

This is reflected in the number of patents granted, as mentioned in the World Intellectual Property Indicators report.

In 2022, a total of 6,876 patents were granted in Malaysia, out of which almost 85% were granted to non-residents.

In contrast, South Korea granted 145,882 patents in 2022. Three out of four patents in that year were granted to residents.

Official figures show that Malaysia’s gross expenditure on R&D (GERD) has been declining in the past several years, even before the Covid-19 pandemic.

In fact, the country’s GERD per GDP dropped to just 0.95% in 2020, which was the lowest since 2010.For comparison, countries like South Korea, the United States and Japan spent 4.81%, 3.45% and 3.26% of their GDP in 2020 for R&D, respectively.

Notably, China’s GERD per GDP stood at 2.4% in 2020, significantly higher than Malaysia despite having an almost similar GDP per capita.

It is noteworthy that Malaysia is well behind its GERD per GDP target of 3.5% by 2030. The intermediate target is 2.5% by 2025, which is just two years’ away.


Science, Technology and Innovation (Mosti) Minister Chang Lih Kang

In a reply to StarBizWeek, Science, Technology and Innovation (Mosti) Minister Chang Lih Kang acknowledges that the gap to achieve the 2030 target is “stark and significant”.

He also adds that there is a funding shortfall of RM40bil to achieve the 2025 target.

“The slump in GERD before 2020 primarily stems from a dwindling contribution from the business sector, which started around 2016.

“While the government has consistently provided substantial R&D funding, it’s imperative for the business and industry sectors to substantially participate.

“After all, these sectors stand to gain the most from R&D innovations, utilising outcomes to enhance products, refine business processes, and overall drive competitive advantage,” says Chang.

Malaysia’s long-delayed ambition to become a high-income nation relies on the country’s ability to effectively spend on R&D efforts in high-potential areas.

Increased R&D efforts that would lead to greater technology adoption in the country are highly necessary, considering that Malaysia is set to become a super-aged country by 2056.

Amid declining fertility rates, more of the country’s workforce must be automated and mechanised to avert any crisis in the future.

Mosti Minister Chang also says that a higher expenditure on R&D serves as a foundational indicator in many global indices like the Global Innovation Index (GII) and the Global Competitiveness Index (GCI).

In the Madani Economy framework unveiled by Prime Minister Datuk Seri Anwar Ibrahim last month, these two indices were mentioned as some of the key performance indicators (KPIs), moving forward.

Anwar envisages Malaysia to be among the top 20 countries in GII by 2025. As for GCI, Malaysia aims to rank in the top 12 within the next 10 years.

It is understandable why Anwar hopes to improve Malaysia’s ranking in such indices.

“These indices are meticulously scrutinised by foreign investors when determining potential investment destinations,” according to Chang.

Spending it right

A similarity between South Korea and Malaysia is the fact that both governments have in the past invested significantly in building local industries, including for R&D efforts.

“Chaebols” or South Korean mega-conglomerates were once small businesses that received generous support from the government since the early 1960s. This has helped to nurture internationally recognised brands such as Samsung and Hyundai.

Similarly, Malaysia has also channelled billions of ringgit into profit-driven entities such as car manufacturer Proton and semiconductor wafer foundry Silterra.

However, unlike in South Korea, these heavy industrialisation projects that were introduced during the administration of Tun Dr Mahathir Mohamad failed to sustain commercially and continued to depend on government handouts.

These two projects have since been privatised. Proton Holdings Bhd made a rebound after China’s Zhejiang Geely Holding emerged in the carmaker with a 49.1% stake.

Meanwhile, Silterra was sold to Dagang NeXchange Bhd (Dnex) and Beijing Integrated Circuit Advanced Manufacturing and High-End Equipment Equity Investment Fund Centre (Limited Partnership) – also known as CGP Fund.

Dnex holds a 60% stake in Silterra, while CGP Fund owns the remaining 40%.

An analyst explains that the failure of Proton and Silterra was the result of continued government funding in the past, even if the management did not achieve tangible results.

“South Korea was different. You have a set of KPIs outlined along the timeline. If you don’t perform, you won’t get the money,” the analyst says.

Like it or not, the government has a big role to play in stimulating R&D efforts in the market.

The US government, for instance, is a major funder of R&D and is also a major user of the new innovations that may have yet to receive demand from the public.

It is noteworthy that the Internet and the global positioning system (GPS) began as projects under the US Department of Defence.

It is typical of the private sector to innovate and to create new products only when they foresee market opportunities.

With shareholders’ ultimate focus being on profit, the private sector may have its limitations when it comes to risk-taking.

In the case of Malaysia, businesses do not reinvest an adequate amount of their profits into R&D, despite the fact that Malaysian companies retain high operating profits.

In 2022, the gross operating surplus of businesses constituted 67% of GDP, which increased from 62.6% in 2021.

The easy supply of cheap foreign workers, particularly before the pandemic, has further allowed Malaysian companies to avoid R&D and automating a large part of their operations.

Distinguished professor of economics Datuk Rajah Rasiah agrees that the domestic private sector does not invest adequately in R&D.

“As firms move up the technology trajectory towards frontier innovations, they expect strong support from the embedding ecosystem, especially the science, technology, and innovation (STI) infrastructure.

“Although Malaysia did attempt to create the STI infrastructure after 1991, almost all of them (such as Mimos, Science and Technology Parks and the incubators in them as well as the Malaysian Technology Development Corp) were not effectively governed, and hence, they have become white elephants.

“Given the lack of such support and ineffective governance of incentives and grants in the selection, monitoring and appraisal of their output, private firms are unconvinced that attempts to upgrade to participate in R&D will materialise,” he says.

Techpreneur Tan Aik Keong also points out that Malaysian companies face fundraising difficulties for R&D purposes, especially small and medium enterprises and unlisted companies.

Tan was recently appointed as a member of the National Digital Economy and Fourth Industrial Revolution Council. He is also the CEO of ACE Market-listed Agmo Holdings Bhd.

“Investors and lenders may hesitate to support R&D initiatives due to the inherent risks and uncertainties associated with these endeavours.

“The lack of a guaranteed correlation between R&D investment and immediate revenue generation can lead to doubts about the return on investment (ROI),” he says.Tan opines that the lack of “proven success stories” whereby R&D investments in Malaysia resulted in significant ROIs contributed to the scepticism.

In addition, he says that companies with no prior experience in R&D investments would find it challenging to start investing heavily in R&D.

“For listed entities, there is relatively more flexibility in terms of fundraising for R&D purposes.

“Capital market instruments such as private placements and rights issues can be leveraged to raise larger sums of funds to support R&D initiatives.

“Fortunately, the availability of matching grants from agencies like Mosti, MDEC, Miti, and MTDC can provide much-needed financial support and incentive for companies to invest in R&D activities,” he says.

Acknowledging the challenges, Mosti Minister Chang says that alternative financing mechanisms are being considered

A notable example is the Malaysia Science Endowment (MSE), which has set an ambitious goal of raising RM2bil.

“MSE is more than an alternative R&D funding for the nation.

“The working model is to utilise its interest, which will be generated from the investment.

“The fund would be optimised further through a matching fund mechanism – bringing quadruple helix stakeholders together to focus on solution-driven R&D and prioritising based on the nation’s needs,” he says.

Mosti, with Akademi Sains Malaysia, is currently actively developing a fund-raising mechanism to establish the MSE.

In addition, Chang says the government will continue to deploy a myriad of fiscal incentives that include tax exemptions and double deductions on R&D expenditures.“The overarching goal is to promote a symbiotic relationship where both the private sector and the government collaborate seamlessly to advance Malaysia’s R&D aspirations,” he says.

Lack of quality researchers?

R&D efforts are not just about investing a large sum of money. They will only yield best results if they are supported by qualified, world-class researchers.

Unfortunately, in the case of Malaysia, brain drain has become a major challenge in pushing for greater R&D.

The ongoing decline in interest among schoolchildren in science, technology, engineering and mathematics (STEM) studies will only worsen the situation in the future.

Agmo’s Tan notes that the declining interest in science subjects among students threatens the availability of skilled researchers, scientists, and engineers needed for a thriving R&D ecosystem.

“The potential for brain drain is a legitimate concern if Malaysia does not foster an environment conducive to R&D growth,” he says.

In 2020, Malaysia saw a decline in the number of researchers per 10,000 labour force at only 31.4 persons, as compared to 74 persons in 2016.

At 31.4 persons, this was the lowest level since 2010.

Rajah says that Malaysia lacks quality R&D researchers, as well as engineers and technicians to support serious R&D participation.

“Malaysia’s researchers and R&D personnel in the labour force fall way below that of Japan, South Korea, Taiwan, Singapore, and China.

“In fact, this is one of the major reasons why national and foreign firms participate little in R&D activities in Malaysia,” he adds.

When asked about the commercialisation of research done by Malaysian universities, Rajah says the commercialisation ratio against grants received in Malaysia is very low.

This is compared to the Silicon Valley and Route 128 in the US, the science parks in Taiwan, and the Vinnova targeted areas in Sweden.

However, Rajah says the blame for the low rate is mistakenly placed on the scientists.

“Most universities in Malaysia focus on scientific publications, which is a major KPI for them. Malaysia does well on scientific publications.

“Mosti and the Higher Education Ministry should make intellectual property (IP) and commercialisation equally important.

“In doing so, the government must tie grants and incentives to link researchers and firms by offering matching grants so that the research undertaken by the scientists are targeted to the pursuit of IPs and monetary returns.

“Firms in this case will ensure that the 1:1 sharing of funds with the government brings returns for them – widely undertaken successfully in Japan, the Netherlands and Taiwan,” he says.

At the same time, Rajah suggests a critical appraisal of previous grants approved to ensure that mistakes are not repeated.

CLICK TO ENLARGECLICK TO ENLARGE

In further strengthening the country R&D expertise, there are calls to improve universities’ curriculum more holistically.

Technology consultant Mohammad Shahir Shikh said there is a gap and misalignment between industries’ requirements versus theoretical research in new knowledge discovery by the universities.

He calls for greater partnership between universities and the industry, including for improving business operations via the integration of new technologies.

Mohammad Shahir has previously served as an engineer with chipmaker AMD for 11 years.

He raises concerns about the severe shortage of STEM graduates in Malaysia to serve the needs of the industries.

“The country’s target was to have 500,000 STEM graduates by 2020, but we now have only 68,000 such graduates.

“Even then, the highest number of unemployed graduates here is from the STEM stream.

“My proposal to the government is to start assisting potential schools and STEM students become familiar with scientific terms in English and improve their communication skills,” he adds.

Mohammad Shahir points out that about 30% of Finland’s workforce consists graduates from the STEM stream.

“This is a priority that needs to be addressed if we want to achieve our national innovation goals,” he says.

National STEM Association president and founder Prof Datuk Dr Noraini Idris laments that only about 15% of form four students take pure science subjects, namely physics, chemistry, biology and additional mathematics.

The percentage has fallen from abogaut 19% back in 2019.

“This is alarming. We need more students to take pure sciences if we want to create more scientists, data analysts and researchers for the future.

Noraini calls for a complete revamp in the national education system, whereby “STEM culture” is fostered among children from a very young age.

“My team and I have proposed the “cradle-to-career” model which instils the interest for STEM from nurseries and preschool to tertiary education.

“It also needs formal and informal support, whereby informal refers to family, peers and community to foster the interest in STEM.

“For this to happen, we need the effort of various ministries and not just the Education Ministry,” she says.

It is high time, according to Noraini, to set up a department for STEM directly under the Prime Minister’s Department to coordinate the joint-efforts across ministries.As the country works towards improving STEM’s acceptance, Agmo’s Tan says Malaysia must put more emphasis on R&D efforts in emerging technologies such as artificial intelligence, blockchain, extended reality and cloud computing, among others.

“We must encourage the establishment of R&D centres by high-tech companies through attractive incentives,” he adds.

Looking ahead, the government has a lot of issues on its plate to address.

To reboot the economy, it is not only about spending more money on R&D.

More importantly, every ringgit invested must be spent efficiently in high-growth research areas that will yield strong ROIs.

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Tuesday, August 31, 2021

Pakatan’s dependency on dubious NED funding, Suaram

Suaram adviser questions Pakatan Harapan's funding from the National Endowment for Democracy

https://www.thestar.com.my/news/nation/2021/08/30/suaram-adviser-questions-pakatan-harapan039s-funding-from-the-national-endowment-for-democracy


MALAYSIAN CIVIL SOCIETY MUST SEVER NED FUNDING TO BE CREDIBLE ( by Kua Kia Soong, SUARAM Adviser, 30.8.2021)

It is painful to watch Malaysian NGOs squirming their way out of justifying NED funding for their activities. The NGO I belong to, SUARAM used to receive funding from the National Endowment for Democracy (NED) until the organisation was exposed as a CIA “soft power” front for the US government several years ago. Knowing the blood-drenched “regime changing” record of th...

Lihat Lagi  https://www.facebook.com/kiasoong.kua/posts/3761531817280035

  

https://youtu.be/DPt-zXn05ac 

'We lied, we cheated, we stole', ‘the Glory of American experiment’ by US former Secretary of State/Ex-CIA director Mike Pompeo 

 


PETALING JAYA: Pakatan Harapan should explain its dependence on funding from the National Endowment for Democracy (NED), says Suara Rakyat Malaysia (Suaram) adviser Kua Kia Soong.Inside America's Meddling Machine: NED, the US-Funded Org Interfering in Elections Across the Globe “It is up to Pakatan Harapan to explain their dependence on NED funding if they can,” he said in a statement on Facebook yesterday.

Daniel Twining, the president of the International Republican Institute (IRI) revealed three years ago that they – through NED – had been funding the Opposition in Malaysia since 2002.

NED is a non-governmental organisation in the United States that was founded in 1983 for promoting democracy in other countries by developing political groups, trade unions, deregulated markets and business associations.

Twining allegedly told a forum in 2018 that the IRI, with funds from the NED, had worked to strengthen Malaysian opposition parties and its efforts paid off when Pakatan Harapan won the 14th General Election.

Kua also urged all NGOs in the country to stop accepting funds from NED to remain credible.

Kua said Suaram used to receive funding from the NED until the organisation was exposed as a CIA “soft power” front for the US government several years ago.

“Knowing the blood-drenched ‘regime changing’ record of the CIA in so many third world countries since 1947, we could not continue receiving funds from such a dubious source for our own credibility.

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Suaram adviser questions Pakatan Harapan's funding from ...

 

Suaram adviser questions Pakatan Harapan's funding from ...

 

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Thursday, July 4, 2019

Penang all set to make waves as EIA approved, work of second phase of PSR has begun


Ministry has given the green light to the Penang government for the EIA report on the Penang South Reclamation scheme near Teluk Kumbar. The project will take off early next year.


GEORGE TOWN: The state government has secured approval for the Environmental Impact Assessment (EIA) report of the Penang South Reclamation (PSR) scheme near Teluk Kumbar.

It is learnt that the Energy, Science, Technology, Environment and Climate Change Ministry has given the green light, paving the way for the three man-made islands totalling 1,800ha to take shape off the southern coast of the island.

The report incorporates 23 conditions proposed by the relevant government agencies and non-governmental organisations. It is prepared by project delivery partner SRS Consortium.

Among the key conditions are compensating more than 900 fishermen with low-cost houses in the Bayan Lepas area, planting artificial corals to sustain the marine ecosystem around the islands, and sourcing the sand for the reclamation from legitimate sites.

Sources told The Star that SRS Consortium would start reclaiming the first island measuring 930ha in the first quarter of 2020. It will take about three years to complete the first island. The cost to reclaim is about RM60 per square foot.

SRS Consortium will call for a tender to reclaim the three islands in the third quarter of this year.

Sources said the state government would sell some state land via an open tender exercise, while SRS Consortium will internally generate the seed funds to raise about RM2bil to start the reclamation of the first island.

The reclamation for the second and third island will commence when SRS has raised sufficient funds from the sale of the reclaimed land. For serving as the project delivery partner, SRS Consortium will be paid a 6% fee based on the RM46bil construction cost.

However, the state government is negotiating with SRS to reduce it.

More than RM70bil is expected to be raised from the sale of the three man-made islands, enough to spearhead the state’s economic development for the next 30 years.

About 75% of the three islands are for sale via open tender.

Some RM46bil from the targeted revenue will be used for the construction of the RM9bil light rail transit (LRT) line, the RM9.6bil Pan Island Link 1 (PIL 1), and other supporting infrastructure projects under the Penang Transport Master Plan (PTMP).fina

Presently, the price of industrial land on Penang island is around RM70psf-RM200psf, depending on its status as leasehold or freehold land. However, as the industrial lots on the proposed man-made island are freehold land, the pricing is about RM200psf.

When the reclamation of the islands starts in 2020, there could be a 10% appreciation.

On the three islands – Island A (930ha), Island B (445ha) and Island C (323ha) – the plan is to construct a dam and three power plants for the islands and develop industrial, residential properties and state government administrative buildings.

Chow was earlier quoted as saying that Island A is seen as a continuation and expansion of the Bayan Lepas Free Industrial Zone (FIZ) while Island B will be “a playground for city planners and architects to give their best design” with a tram system and green spaces.

Island C is meant for a mixed development project.

Source link 


Read more:

Chow: Work on second phase of PSR has begun - Nation


https://youtu.be/TrfcwvrcG14 
The above Video is about Penang South Reclamation (PSR).  We thank Prof. Dato' Dr Zubir and Puan Zuraini for coming forward to explain the actual situation at Penang south.  Prof. Zubir is an expert on marine science and the former Director of Centre for Marine and Coastal Studies at Universiti Sains Malaysia. He shares about his study at the PSR area and his survey among the fishermen.   Puan Zuraini is the officer at Pusat Perkhidmatan Setempat Nelayan at Penang south. Drawing from her own upbringing as a daughter of fisherman, she shares about her engagement with local fishermen in PSR area who are hoping that the project will provide job opportunities to them and bring development to the rural area.

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Thursday, January 3, 2019

UEC recognition, unequal wealth distribution between ethic groups, TAR UC funding


 UEC recognition: Malays' feelings must be respected,  PM. Mahathir says while it is very easy for the government... See more: http://www.sinchew.com.my/node/1826751


MCA and DAP voice concerns over Dr M's UEC remarks

PETALING JAYA: MCA and DAP have voiced strong concerns over Tun Dr Mahathir Mohamad’s remarks on the Unified Examination Certification (UEC) recognition.

MCA vice-president Datuk Tan Teik Cheng said the issue must take into account the feelings of the Chinese community too as their sentiments about the recognition of the certification appeared to be ignored.

“The people who supported (Dr Mahathir) include Malays, Chinese, Indians and other ethnic groups.

“UEC is not just a Chinese but a national issue, but the government only takes into account the feelings of the Malays and not the Chinese,” he said in a statement yesterday.

Tan questioned why the feelings of the Chinese were not considered in the issue.

“Is it because he considers the Chinese second-class citizens in Malaysia?” he asked.

Selangor DAP secretary and Sungai Pelek assemblyman Ronnie Liu said he read Dr Mahathir’s remarks “with concern” and expressed his disappointment.

“Excuse me but recognising the UEC was part of the Pakatan Harapan pledge. This was a promise made to the voters.

“You can’t just turn around after the election and say you can’t fulfil your promises because you are concerned about how some people might feel about it.

“I’m very disappointed with this and I hope Pakatan leaders will speak up about the importance of keeping promises,” he said.

Dr Mahathir in an interview with Sin Chew Daily said the government needs to address the unequal wealth distribution between ethnic groups before recognising the UEC. http://www.sinchew.com.my/node/1826751

“Recognising UEC is easy, just sign. But we need time to bring two to three racial groups, including natives in Sabah and Sarawak, onto the same position of economic development.

“They (Malays) feel that they are getting lesser, and this kind of imbalance is getting bigger,” he said. - The Star

Why TAR UC should still receive government funding?

Helping TAR UC will heal the nation - Letters | The Star Online



Private universities have no political interference because their owners are private citizens. TAR UC is an entity created by a political party and in that sense, I see no difference between it and UiTM. The huge elephant in the room is that TAR UC was gracious enough to allow my niece, daughter and my friend Salahuddin to study at an affordable price while the other allows in only one race.


Helping TAR UC will heal the nation - Letters | The Star Online

By Prof Dr Mohd Tajuddin Mohd Rasdi

I read with sadness that this year, Tunku Abdul Rahman University College (TAR UC) will not be getting some of the financial assistance it received over the past 50 years.

The Pakatan Harapan government, on Dec 6, said in Parliament that the government would only provide TAR UC with a development fund of RM5.5 million, not the RM30 million matching grant it had been getting under the previous Barisan Nasional government.

The reason for this retraction of funding was that TAR UC has political ties with MCA. My utmost respect to the principle behind the reason given, as well as to Finance Minister Lim Guan Eng who has foiled critics who would like us to think that he favours one race.

But I would like to go on record to say I believe the funding for TAR UC should be continued. My reasons are as follows.

Firstly, TAR UC has never indulged in any extremist activities that would destroy our nation-building efforts to create a harmonious society.

I have read that Universiti Teknologi Malaysia once held a seminar attacking the lesbian, gay, bisexual and transgender community, while Universiti Teknologi Mara (UiTM) held a conference attacking our fellow Christian citizens. Universiti Sains Islam Malaysia also held a forum on the conditions to kill Malaysian citizens who are considered, under Pahang mufti Abdul Rahman Osman’s classification, “kafir harbi”.

These three shameful acts of bigotry and extremism have no place in a Malaysia where tolerance and respect for diversity form its two main anchors of co-existence. I do not remember TAR UC acting in this shameful manner, which is a testament to its commitment to producing level-headed Malaysians devoid of a sense of bigotry or racial and religious extremism.

Secondly, TAR UC has been providing high quality education at a most affordable fee that has put hundreds of thousands of young Malaysians into the job market and created a good and tolerant society.

Agriculture and Agro-Based Industry Minister Salahuddin Ayub is one such character. A man of strong Islamic faith and commitment, he follows the true path of Islam, not the brand touted by his former party, PAS, which supports leaders who have been tainted with massive corruption and hurtful messages of extremism.

I, too, sent my niece and daughter to TAR at one time. My niece was studying for a certificate in fashion design and my daughter took a diploma in Mass Communications. Both have turned out to be well-rounded citizens. My niece once worked in the office of former Skudai assemblyman Dr Boo Cheng Hau while my daughter became a journalist with BFM and is now a full-time lecturer at First City University College, having obtained a masters degree from Monash University.

Neither of them ever said a word to me about being discriminated against while they were there. Both enjoyed studying there and have no qualms about recommending TAR to other Malay families.

For that, I wish to credit MCA for being a party that has put the interest of the country above any racial ideology, although the party is one which supports a race-based philosophy.

I would like to go on record again to say that I am against any race-based or religious party and would not hesitate to support a law that disallows any political party to be based on religious or ethnic grounds. I would not hesitate to sign a memorandum outlawing the existence of parties like Umno, MCA, MIC, PPBM and PAS.

Although each of these political parties, except for the new PPBM, has made great contributions to its members and the country, we must move on and disregard these entities as we enter a new future. Having said that clearly and in no uncertain terms, I praise MCA for being a moderate party which contributed greatly to nation-building during Malaya’s formative years, and for its sacrifice in setting up and sustaining TAR UC until now.

With respect to Lim’s principle that TAR UC can be given funding if it severs ties with MCA, I would say that while the minister’s principle is most admirable and idealistic, non-political interference in some universities in Malaysia is impractical.

As long as UiTM exists, there will always be political interference. As long as public universities have 80% funding and not 50%, there will be interference simply because these entities belong to the people of Malaysia.

Private universities have no political interference because their owners are private citizens. TAR UC is an entity created by a political party and in that sense, I see no difference between it and UiTM. The huge elephant in the room is that TAR UC was gracious enough to allow my niece, daughter and my friend Salahuddin to study at an affordable price while the other allows in only one race.

I therefore have no problem with TAR UC being “politically connected” to MCA. Has MCA ever raised a sword in the halls of TAR UC, shouting slogans of abuse against Malays and Islam? Have its vice-chancellors spoken to derail our nation-building efforts by uttering statements that would jeopardise national harmony? I seem to recall one vice-chancellor of UiTM indulging in racial statements that, to me, were totally unbecoming of a civil servant of the nation.

Finally, if for nothing else, I wholeheartedly believe that TAR UC’s funding should be continued in memory of the father of our nation, the humble and easy-going but hardworking Tunku Abdul Rahman. The Tunku was a unique individual who did not indulge in building mega projects such as the Petronas Twin Towers, the Penang Bridge or a whole city called Putrajaya. His simple sense of tolerance, compassion and balanced political experience brought him the trust of all communities. There were other leaders during his time but they were too “ultra-Malay” to gain the trust of the whole nation of diverse faiths, cultures, languages and expectations.

The simple concrete building of TAR UC boasts no special architectural characteristics. The landscaping of the campus boasts no requirement of maintenance like Putrajaya. The students drive Kancils and Myvis as opposed to the Vios and Civics seen at other private universities. The whole atmosphere of the campus is compact, full of simple life and gurgling with enthusiasm for study towards an assured future.

The Tunku promised that we would live a life of calmness, dignity and happiness in a moderate existence of financial stability, social respectability and political honesty. TAR UC, in my opinion, speaks volumes of the legacy of the Tunku.

Let us all continue to support TAR UC as a manifestation of the true spirit of Malaysia. - Malaysia Today



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Politicising education hurts the Chinese 

 WHEN Finance Minister Lim Guan Eng, in his Budget 2019 presented early this month, removed the RM30mil matching grant for Tunku Abdul Rahman University College (TAR UC), it hurt not just the MCA but also the Chinese community. The government will provide a mere RM5.5mil as development fund to TAR UC.

Monday, May 16, 2016

Where does the money go?


RECENTLY I was offered an easy loan with just 5.8% interest rate after activation of my credit card.

There was no pre-qualified questions asked when the sales personnel approached me through the phone. As I had no intention to get funding, I did not take up the offer.

It is understood that the “attractive” rate was offered to attract potential customers. If there is a delay in repayment eventually, the rate would jump up according to the interest incurred on the credit card outstanding balance, which ranges from 15% to 18% per annum.

When I asked around, I found most of my family members had on at least one if not more occasions being offered an easy loan, credit card balance transfer, personal loan, or other credit facilities via phone calls every month.

This contrasts with what I had heard from friends and peers from the property industry regarding housing loan. There have been complaints about stringent requirements for housing loan application and low approval rate. They have this question in mind – where does the money go?

Their concerns are understandable when I see the home loan approval rates was only hovering around 50% for the past few years. In 2013, the approval rate was at 49.2%, it improved slightly to 52.9% in 2014 but went down to 50.2% in 2015.

According to the group president of the Real Estate and Housing Developers Association (Rehda), Datuk Seri FD Iskandar, rejection rate for affordable housing loan applications was more than 50%, and the strict housing/mortgage lending conditions were denying aspiring owners their first homes.

Based on Rehda’s survey in the second half of 2015, loan rejection was the number one reason for unsold units, and affordable homes top the list.

For example, an individual or family with a combined household income of between RM2,500 and RM10,000 are eligible to apply for PR1MA homes that cost between RM100,000 and RM400,000. However, with loan eligibility based on net income, many with their existing commitments such as car loan or credit card outstanding payment, are not able to secure a loan for an affordable home. This dampens the effort of helping qualified households in owning their first homes.

Looking at the situation, I am puzzled with different treatments given to loan application. At one end, there is an easy access for personal loan and credit card financing. On the other, stringent requirements are imposed on housing loan. It seems like the priority has been given to spending on liability instead of asset.

If we look at it from the business perspective, credit card, personal loan and easy loan offer higher profit margin to the banks with interest rates ranging from 12% to 18%, compared to housing loan interest which is about 4.5% to 5%. This may explain the shift of focus among the banks.

Central bank concerned

Reports show that our household debt stood at an alarming 87.9% of GDP as at end of 2014 – one of the highest in the region. It is comprehensible that Bank Negara is concerned with the situation, and would like to impose responsible lending with housing loan.

However, when we look at the details, residential housing loans accounted for 45.7% of total debt, hire purchase at 16.6%, personal financing stood at 15.7%, non-residential loan was 7.7%, securities at 6.5%, followed by credit cards and other items at 3.9% respectively.

A recent McKinsey Global Institute Report highlighted that in advanced countries, housing loans comprise 74% of total household debt on average. As a country that aspires to be a developed nation by 2020, our 45.7% housing loan component is considered low.

Looking at the above, it is ironic that our authorities and banks are strict on funding a house which is a basic necessity and asset for people, but lenient on car loan, personal loan, credit card and other easy financing with higher interest rate, that tend to encourage the rakyat to overspend on depreciating items.

It is common nowadays to see young adults paying half of their salary for car loan, and people go on extravagant holidays or purchase luxury items which rack up their credit card balance. As such it is not surprising that the number of counselling cases took on by Credit Counselling and Debt Management Agency has also shown a worrying upward trend, with the number of cases leaping by 20,000 from 2013 to 2014. There was an average of about 35,000 counselling cases annually from 2008 to 2014, but that figure rose to approximately 60,000 in 2014.

It is important for the authorities and banks to encourage prudent lending and spending, re-look into high housing loan rejection rate, and consider to tighten lending conditions of other loans, such as personal loan and credit card. These will encourage the rakyat to channel their money into assets instead of liabilities, and improve the financial position of the people and the nation in the future.

By Alan Tong

Datuk Alan Tong has over 50 years of experience in property development. He is the group chairman of Bukit Kiara Properties. For feedback, please email feedback@fiabci-asiapacific.com.



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Saturday, March 12, 2016

Little by little, a little becomes a lot


NOW that Christmas, New Year and Chinese New Year are over, many of us have started to reconcile the amount spent for these celebrations.

Not surprisingly, many have underestimated the current cost of living and have therefore overspent.

Hence, it did not come as a surprise to me when I overheard one of my relatives saying that the price of an eight-course Chinese New Year package at the restaurant that she often frequents has increased by 15% from RM898++ to RM1,028++ within a year. Not only has the price increased, she also noticed the serving portions were smaller than the previous year.

The rising cost of living caused by the depreciating ringgit, hike in transportation costs, the goods and services tax implementation, etc, was the hottest topic of discussion during these festive gatherings. Among the various counter-measures, some young ones welcomed the option to reduce the Employees Provident Fund (EPF) contributions, citing that it would help relieve their burden.

The reduction in EPF contribution came about early this year when the Government announced that employees had the option to reduce their EPF contribution by 3% from March 2016 until December 2017 to spur economic growth and at the same time, put more money into the rakyat’s pockets. According to our Prime Minister who is also the Finance Minister, this move is expected to increase consumer spending by RM8bil a year.

It sounds good as we now have the option to have more disposable income. Yet, should we encourage spending or saving during this challenging time.

Before answering this question, let’s ask ourselves what we should do with the extra disposable income. Repay credit card instalments, go after items such as expensive household goods, electronic gadgets or gourmet food?

If we are not careful, we will end up spending based on our desire instead of necessity. Hence, having more money to spend is not necessarily good. It depends on how we plan our future finances, and whether we spend the money on “good debt” or “bad debt” as explained in my previous articles.

If we unnecessarily spend the additional income on luxury goods such as a new car which depreciates over time, we are practically paying for “bad debt”, as these items are liabilities instead of assets.

In contrast, if we convert the additional income into “good debt” such as investing in commodities/ shares or to fund our housing loan, we can enjoy the long-term benefits as the value of these assets will likely appreciate over time.

At a glance, 3% taken out from the EPF per month may not be seen as a lot. However, it will become a significant amount in the long term.

For an individual earning RM5,000 a month, 3% equals to RM150. As such, the total amount is RM3,300 for the duration of 22 months (March 2016 to December 2017). Assuming the average EPF interest rate at 6.5% per year (based on the dividend declared this year), the compounding rate for RM3,300 could potentially become RM23,190.64 after 30 years!

Therefore, unless there are really good reasons to use this additional disposable income, it is better to retain this seemingly small amount as retirement funds, giving its potential to grow significantly in the longer term. Besides, the savings in the EPF can also be withdrawn during rainy days to fund the payment for children’s education, purchase a new home and payment of medical expenses for treatment of critical illnesses.

At this testing time when many are faced with the burden of rising costs and economic slowdown, it is important to resist the temptation of instant gratification, be prudent in spending, and be able to differentiate between “good debt” and “bad debt” in making financial decisions.

For those who have yet to opt out from reducing the EPF contribution from 11% to 8%, it is important to use the additional money wisely so as to ensure that your retirement fund is not affected. Every ringgit saved or invested is essential in making a difference in our future financial position.

When I was a kid, my parents encouraged me and my siblings to save. Each of us would have our own piggy banks and they would continue to remind us about the beauty of saving. Until today, I still like this Malay proverb – ‘Sedikit, sedikit, lama-lama jadi bukit’ (little by little, a little becomes a lot).

Datuk Alan Tong has over 50 years of experience in property development. He is the group chairman of Bukit Kiara Properties. For feedback, please email feedback@fiabci-asiapacific.com.

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Thursday, January 14, 2016

Penang Forum tells Chief Minister: the unmitigated disasters on hill projects

The Penang Forum steering committee released the following ‘executive summary’ to the media during its meeting with the chief minister of Penang

The Penang Forum steering committee released the following ‘executive summary’ to the media during its meeting with the chief minister of Penang:

To address public concerns over hill degradation in Penang, the Penang Forum took the initiative in September 2015 to co-organise a public forum on hill development with the MBPP and relevant Penang state authorities.

But the council and the state decided not to participate in the effort and missed the opportunity to engage with the public.

In organising the public forum, the Penang Forum is non-partisan and has not been influenced by any other body or organisation.

The Penang Forum has not been misinformed. Its information and data came from two sources:
  • answers provided by the State Exco to the State Assembly sitting in November 2015 on the number of legal projects and illegal clearings on sensitive hill land between 2008 and 2015; and 
  • photographs provided by members of public, resident associations, Google Earth satellite imagery and drone shots. The scarring on Bukit Relau has grown into an unmitigated disaster. Despite a stop work order and a fine against those responsible, major earthworks, including the building of road infrastructure, have taken place.
 While it is technically possible to build safely on hill slopes many stringent conditions must first be in place and complied with. The present approach to environmental and engineering impact assessment done in isolation for individual hill development projects should be reviewed.

The Penang Forum calls on the Penang state government to comply with its own stated policies of prohibiting development on hill land above 76m (250 feet) and/or with a gradient greater than 25 degrees.

Special projects should be limited only to those of public interest.

We recommend that the authorities implement a holistic planning and monitoring system that takes account of cumulative impacts for the whole hill area under development.

We call for violators to be prosecuted to the full extent of the law, including jail sentences and to be blacklisted for future projects.

We call upon the authorities to require all offenders to restore the damaged hills to their original condition.

Penang Forum steering committee 11 January 2016

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