As far a strictly phone-based teleconferencing technology, this allows you to conduct meetings via phone lines or Voiceover Internet Protocol (VoIP). This represents a simple and usually free teleconference technology that is available to anyone with a phone line of internet connection. This is in contrast to using a system which is based on phone lines.

However, when teleconferencing using an internet connection the options are vast. In addition to video, voice and text chat, you can initiate remote control of the keyboard or mouse, meaning you can actually take control of another person’s computer to access their files or simply to provide them with some instructions. Of course, this only works when the other person accepts. You can also initiate file transfers to share images, documents and spreadsheets. You can even record the meetings via video or audio for later playback. You can even upload and publish them online. Often there are whiteboards you can use that allow you to make small sketches during your teleconference. The best thing is that often these services are located on your browser and do not need to be downloaded. If this sounds interesting, look into some of the many services that provide free teleconference technology.

Buying a house is more often than not, the single largest investment most people ever make; yet all too often it’s a decision made in rush without adequate thought and preparation. In this article we will explore some of the house-buying mistakes to watch out for in your property hunt.

One Man Shows

Buying a house is a complex transaction and should not be undertaken alone. You need to enlist the help of these individuals early in the buying process: Real Estate Agent, Banker, Lawyer and Property Inspector. It is also wise to get referrals and advice or tips from family and friends. When assembling your team, select rightly. Lack of experience in the person who does suppose to be your guide can make your property hunt a frustrating experience.

Love At First Sight

You may be in love with the house at first sight, but you have to ask yourself if the house fit your family’s needs and budget. You have to make sure that you make a list of your needs and wants and also check whether the house fits your requirements. Besides that, you should check out the neighborhoods and the communities before you buy by visiting at different times of the day and week. Even if you do not have kids, you should also check out the local schools to make sure your resale value will be good. Get past the love at first sight to consider what it’d really be like to live there.

Pre-qualified and Pre-approved Financing Being pre-qualified gives you a general idea of how much you can afford to borrow. It is a good idea to get in touch with your banker or mortgage officer early in the buying process so that you are aware of the amount you can borrow as this will determine your budget for the home. The mortgage officers will also be in a position to advise you on aspects of financing i.e. the possibility of having joint borrowers to strengthen the application or to lengthen loan tenures should a need arise.

Being pre-approved means your banker has verified your information and credit rating and agreed to provide you with a specific amount of money. You are in a better position to go house hunting knowing exactly how much you can afford and that you have the financing ready.

Over-Buying And Investment

You may qualify to borrow more, but you have to ask yourself again whether you can afford it or not. Borrowing more would mean higher monthly loan commitments for just the purchase of the house. You have not considered the cost of improvements on the house i.e. renovations and furnishings. What you need to do is analyze your monthly costs — food, transportation, entertainment, car loans and other commitments. Therefore you have to be sure to budget enough to cover closing costs (often two to five percent of the purchase price), plus moving and maintenance. Beyond mortgage payments, there’ll be costs like insurance. You don’t want your house to deprive you of your lifestyle.

Misplacing Your Trust

Remember that buying a house is a business transaction. Your decision is binding. You should do your own research and know your support team’s roles and responsibilities and not just depending on what one says 100%.

Verbal Understanding And Agreement

Get it right and get it in writing. Written agreements almost always trump verbal ones when it comes to contracts. Don’t set yourself up for surprises when you move into that new house and some of the items in it are now missing. There are many details that make up the purchase contract that governs the particulars of your house purchase. It is not unusual for an item to be missed; especially those requests made by you of the seller or seller’s agent. If you ask for a toilet to be repaired or a chipped tile to be repaired, don’t simply take someone’s word that the item will be repaired prior to transfer of the property. Make sure every item that you agree on is put in the purchase contract.

Verbal agreements are hard to prove and even harder to enforce. They can lead to an ugly “he said, she said” situation. Once the property transfers to your name; problems or issues that you thought were going to be repaired are now your responsibility. Don’t let miss communication or failed promises ruin the purchase of your dream home. Get all commitments — no matter how small —in writing.

You need to understand what you’re signing. As soon as possible, review the documents you’ll be signing. You must always ask for documents in advance, make time to read them and ask questions, where necessary. Don’t just skim through the purchase contract. Real estate contracts are long and dense, but you need to know what you’re committing to. Wrong assumptions, poorly written or missing clauses, and not understanding how the clauses affect the purchase can lead to increased costs or a void contract.

Do not sign documents in a hurry. Do not rush the closing.

Resale

You should avoid buying a home that costs much more than neighboring homes and think before buying the most expensive house in the area. Your neighbors’ lower house values will weaken yours. Remember, markets change. If you buy intending to flip your investment and the market falls and you have to sell, your selling price may not be enough to even cover your mortgage.

Price Mistake

Many home-buyers forget that the market value of a house is affected a great deal by its neighbors. The best way to gauge a fair offer price is to get your real estate agent to pull prices those comparable homes nearby recently fetched. The listings will show not just the amounts but how long the house has been on the market and its condition and size. Note that the nearby houses will affect your house’s value. That means the most expensive house on the street may be pulled down in value by its cheaper neighbors, while a low-end one will benefit from classier surroundings.

Conditional Offer

It is good practice to have your offer to purchase the house conditional upon securing financing. The last thing you want happen to you is the forfeiture of your deposits for backing out on a purchase transaction because of it. One thing is being pre-approved; the other is the property itself. The banks will do a valuation on the property to confirm the market value and then to determine the margin of loan they are willing to offer you. There may be other conditions are well that you might want to add in at this point.

Property And House Inspection

It is well worth your money engaging a Property or House Inspector to check out the house before committing to the purchase. These Inspectors know what to look out for and can advise you accordingly on the state of the house, whether it is in need of repairs so that you are fully aware of the additional expenses needed. Don’t take the word of the seller that certain repairs and maintenance has been made to the home. A formal inspection of wiring, plumbing, and general structure of the home is needed to avoid nasty surprises.

Inspection reports are great negotiating tools-when it comes to asking the seller to make repairs. If a professional home inspector cites specific repairs in the inspection report the seller is more likely to agree to them than if you simply try to negotiate based on your observations. As we mentioned above, make sure that any last minute items that arise based on the inspection report or your own visual inspection during the walk through are addressed in writing and completed before you take ownership of the property. If the seller agrees to make repairs, have your inspector verify the work is completed properly. Do not assume that everything will be done as promised.

If you’re buying a new house, off the plans from the developer, they will offer the Defect Liability Period upon Vacant Possession, where they will rectify problems, if any, with the house during Handover.

Buyer’s Remorse

No place is perfect. There will always be surprises. Don’t let a few initial blips spoil the whole ride. And don’t miss a great house waiting for the perfect one! Failing to jump on an opportunity, I believe, is a mistake. Too much shopping around can backfire. When you have done your homework and when you see something you that match, go for it.

Presently, the currency of China — the world’s third largest economy and trading nation — is not exerting befitting influence in the forex markets due mainly to limited use of the Yuan in international trade and investments, as well as restrictions placed on its supply and convertibility.

However, the window to Yuan’s liberation was opened wider when Beijing launched the pilot scheme on RMB cross border trade settlement on July 6.

But at this experimental stage, the scheme only applies to dealings with 450 designated Chinese enterprises in five cities — Shanghai, Shenzhen, Guangzhou, Dongguan and Zhuhai. Outside the mainland, it is open only to 10 Asean nations, Hong Kong and Macau. The scheme is expected to cover more areas and countries when it wins widespread appeal.

“The new service is bound to help warm up international trade, further push the Yuan around the globe and alleviate the world’s over reliance on the U.S. dollar,” commented China’s official Xinhua News Agency on July 6 when hailing over the launch of this pilot programme.

The Hong Kong Monetary Authority sees this move as “marking another milestone for RMB business and a move of strategic importance for China”.

Xiahua emphasized that the RMB cross-border settlement is the consequential development of China’s rapid economic growth.

China’s economy, which has undergone rapid development since 1979, is predicted to grow 8.5% this year and to lead Asia’s economic recovery, the International Monetary Fund (IMF) said in early October. It sees growth in 2016k 9.0%.

For the business community, the most obvious good of this scheme is that the RMB trade settlement will offer stability in forex rates. After July 6, importers and exporters of Chinese goods may choose to use RMB, instead of US dollar, in trade settlement.

In the immediate term, the programme helps to mitigate exchange risk and reduce transaction costs for enterprises trading with China, according to bankers. In the longer term, it is expected to boost regional trade. And in turn, businessmen will enjoy higher volume of business.

Apart from businessmen, Chinese banks and foreign banks which are quick to grab opportunities are expected to be beneficiaries of this scheme too.

On the day the pilot programme was launched, The Bank of China — China’s largest foreign exchange bank, transacted the country’s first cross-border Yuan trade settlement deal, according to Xinhua News Agency.

And on the same day, HSBC Bank (Hong Kong) announced it became the first foreign bank to carry out the first RMB cross border trade settlement, in partnership with its strategic partner Bank of Communications (BOC). In August, HSBC Bank Malaysia completed Malaysia’s first RMB-denominated trade settlement in cooperation with BOC.

Indeed, HSBC (China) has projected the demand for trade settlement in RMB to reach US$2 trillion in 2012, accounting for 40-50% of China’s foreign trade. Ben Shenglin, who heads commercial banking of HSBC Bank (China), said at a forum on Aug 13 in Kuala Lumpur: “If 40-50% of the settlement volume is converted to RMB, there will be more diverse options in terms of trade, costs of trade and trade finance, which will reduce foreign exchange risks and transaction costs. It will effectively promote regional trade.”

Although there has been a lot of excitement about the implementation of this programme, trade transactions using RMB have been slow.

According to the Canton Branch of the People’s Bank of China (central bank), only 87 trade transactions using RMB settlement had been completed from July HSBC (China) has projected the demand for trade settlement in RMB to reach US$2 trillion in 2012 to early September. The total value of these amounted to RMB49.9 million.

China’s newspapers, in its interviews with businessmen in Hong Kong, cited the much lower dollar interest rate as one of the main pulls away from using RMB.

As the dollar interest rate is much lower than the Yuan rate — with a disparity of more than 2% in September, businessmen said it is more cost-efficient to use the dollar for trade settlement now. But they added that if the dollar rate rises and reverts back to early 2008 levels, they might opt for RMB trade settlement.

In addition, due to limited access to RMB outside China, overseas importers are reluctant to use their RMB reserves for trade settlement.

The limited number of designated Chinese enterprises and regions permitted to perform RMB settlement, as well as restrictions placed on RMB forward contracts, are also discouraging factors.

In Malaysia, forex trend is the main consideration. Datuk Bong Hon Liong, Deputy President of the Malaysia-China Chamber of Commerce, said in an interview: “Although the chamber welcomes the new initiative, current conditions are not conducive for RMB settlement. With the Yuan trending upwards and the dollar weakening, there is no incentive for importers to use RMB settlement. As for exporters, they are very comfortable with the present rates and old system.”

But Sam Swee Low, an established importer of Chinese machinery, said: “This programme will take time to sink in and improve on. In the long run, when the stabilizing effect of the RMB settlement out-weighs all other factors, businessmen will have to turn to the RMB settlement scheme.”

Indeed, acknowledging weaknesses in implementation, China is taking steps to improve the mechanism and procedure linked to RMB trade settlement.

The Chinese government is considering extending this trial program to the north eastern region and to countries with which China has inked currency swap agreements, according to news reports from China.

The Chinese authorities are also taking Beijing does not need to raise money abroad since it has US$2 trillion in reserves steps to simplify the procedures in dishing out tax rebates to Chinese exporters under this scheme. Importers also enjoy the benefit of this rebate as exporters do factor this into the pricing of goods.

Undoubtedly, the RMB trade settlement will move China closer to having a fully convertible currency and nearer to its dream of globalizing the Yuan.

However, since 70-80% of cross border transactions are conducted in the dollar, the pre-eminence of the dollar in international trade could not be displaced easily. For now, it may be realistic to see the Yuan becoming a regional currency.

It is obvious the Yuan still has a long way to march to attain global status, as it lacks full and free convertibility. It is convertible for trade transactions and foreign direct investments, but not for purposes that encourage speculations. To gain international stature, a currency must be liquid and enjoy demand and acceptance from traders, investors and central bankers. For this to materialize, China will have to reform its Yuan monetary system further.

But China’s other efforts in recent months to globalize RMB have not escaped the keen eyes of China watchers.

Since last December, China’s central bank has signed with six countries — including Malaysia — currency swap agreements of enormous value.

On Sept 2, the IMF announced that China had agreed to use RMB to purchase US$50 billion bonds issued by the IMF. Hence, when the IMF lends to member countries it will either provide loans in RMB or, if in dollars, use its Yuan to exchange dollars with China.

China’s sale of its first Yuan-denominated sovereign bonds on Sept 28 in Hong Kong to foreigners also caused ripples in the Western world. “Beijing does not need to raise money abroad since it has US$2 trillion in reserves. The sole purpose is to pave way for the emergence of the Yuan as a full-fledged global currency,” said a commentary in The Telegraph of Britain.

From these recent moves, it will not be far-fetched to project that China will continue to launch more initiatives to widen the Yuan’s appeal, exposure and marketability.

Like it or not, China is now a major powerhouse and economic force to reckon with. Its desire to play a greater international role can’t be underestimated. If forex experts think that the Yuan will take 15-20 years to join the elite league of global currencies, they may need to take a closer look at the crouching dragon.

He then traded his official Dishdasha (middle eastern official suits for men) and Gutra (head scarf) after working hours and weekends to a baker’s uniform and found culinary success in doing something that he loves – baking/cooking, frozen dessert, cookies, brownies and cheesecakes. But he comes not from a long line of cooks.

The fine skills in food preparation were learned from his mother who is renowned for her distinctive Kuwaiti dishes which she cooks for family and friends.

This year, I’ve met the chef and owner Johnson Gilson who explains some insights of his business success. He first opened his bakery, called Food Of Arab. The name Food Of Arab now is the name of a booming new cookie brand in Kuwait. According to him, there is no magic formula; you just need to do it with passion. He then added “You put one foot in front of the other, and if you don’t get the desired results, you start over and never give up”.

Looking back, no one will argue that he regretted his decision in switching between these two professions. To further his skills, he went back to school toiling with all the kitchen stuff, and a few years ago he enrolled with an Italian frozen dessert school based in North Carolina to further hone his skills, and at the same time funding his own studies and business. The reward is now finally fruiting.

In late 2005, he could not hold back his deep passion as in his heart he wanted to do something he loves – cooking/baking and he finally decided to start a cookie & frozen dessert business from a small rented shop in Hawally, Kuwait.

He is living testament of “cherish your passion, follow your heart, do what you love to do, and the money will follow.” When asked how the idea Food Of Arab comes about? Johnson informed that although he was inspired by the cookies and cheese cakes found in bakeries in New York, the creation of improvising recipes was done by him with support from one staff, who worked day and night to produce the right balance and taste.

From leveraging his engineering experience, responsibility, dedication, persistence over the years, comes in his improvisational skills, creativity and techniques beyond recipe replication to cook and bake, where measurements are approximations and ingredients are interchangeable in a way that departs from the original but comes out tasting as good and better. Johnson can be fussy but is also known to be precise in his profession. He has to know flavors, what each taste like, texture, quality of the products and the time which it takes. According to him the longer you experiment and the more products you bake, will result in success.

The fortunes of many entrepreneurs have varied immensely, with many ideas seemingly doomed from the start and some people unable to cope with the pressures that come with running your own business. He is indeed different. According to him, the biggest challenges facing entrepreneurs are the same as they have always been.

“The first is the physical leap of faith to actually do what you believe in. Be self-motivated and have perseverance in yourself. You’ve got to summon immense self-confidence as he has the option of just getting a normal job. Secondly, it’s finance. It strikes me in every single case just how tight money for new start-ups. You’ve got to have a business plan and road map in planning a business and remain in business successfully. Thirdly, he added that one need to know their limitations and market, resources and of course the right people.

He certainly gained his own experience the hard way. By being eager to learn, doing your own research and spot the warning signs. He takes every little matter as a serious challenge. Not just about tackling issues inside the kitchen, he then also quickly began learning many lessons and unexpected dilemmas he faced about how business is approached and conducted in Kuwait such as from investment budget, registering a business, operations, logistics, copy rights, the banking end, accounting system, codes and regulations, insurance, suppliers, distributors, inventory, packaging, web marketing and many more. On the front end, with some thought and careful planning, however, you can get a brand-new product up and running on your terms.

From day one, the taste, texture of the cookies and a dazzling logo that was created by him made many to think that Food Of Arab is from a US franchise branch due to its high quality products and its management style that was set forefront. The business success he created for Food Of Arab was further captured largely through its website that has revolutionized its marketing and promotion, creating unprecedented opportunities.

His cookies, based on his own recipes, were an immediate hit and took off like lightening. During the first few days and months of operation, his cookies which was built by him with no prior experience sold out its inventory hours through only word of mouth, online order & home delivery. According to him, there were many times when they first started, the bakery couldn’t keep up with the high demand as orders were going around the clock. It became so famous that his cookies, brownies, ice cream and cheese cakes have since then been featured in many of top high end restaurant’s menu in Kuwait.

It is strange to me that a business like Johnson’s has succeeded whilst there are many others that are selling good cookies too out there.

However at the same time, there are some of the major well-recognized cookie brands that have failed in Kuwait. To me, this is a challenge given the current tight competition in a small country like Kuwait and the possibility of failure. When asked why he took a gamble? Johnson stated that it was simply because of his passion.

At 45, giddily joyful Johnson had then decided to further extend his skills on to attending one of the top culinary schools abroad. When asked about his next step and future plans, Johnson plans to explore and branch out new food projects in the near future, broaden his networks, international experience and at the same time leverage his niche strength by partnering with the right people with similar enthusiasm, passion and interest.

Johnson also pointed out by saying that all business is challenging even if you are part of a successful establishment. He also mentioned that add with challenge in bringing a brand-new product into existence and the difficulty multiplies. Having said that, he believes one should not be afraid of challenges as true success comes from doing it your way and making mistakes along the way, learning from them, being persistence and moving on ahead. He concluded by saying that one must find a niche, differentiate the products, be small yet think big, maintain good reputation, have constant improvement, be innovative, work smart and finally listen to your customers.

In the book ‘The Winning Investment Habits of Warren Buffett & George Soros’, Mark Tier listed out 23 winning habits, based on the habits of these two of the world’s richest and most successful investors. Summarized below, are four main key habits that you might want to adopt as the fundamentals to successful investing.

1. Study Their Habit

All successful investors preserve their capital as a foundation and they do this through risk minimization. Most investors have the perception that, in order to make profits in the market, there is a need to take high risks and it is right to say that risk and return come hand in hand. However, in order to ensure a long-term success, you should not just simply take any risks, but only calculated risks. This requires you to analyze the situation thoroughly as to be confident that the chances of having a good result on your side are high. With that in mind, you would only end up investing in what Warren Buffett calls “high probability events”, where the risk of loss is at the lowest and you are almost certain to make money. Always remember Warren Buffett’s “Investing Rules: “Rule No. 1: Never Lose Money! Rule No. 2: Never Forget Rule No. 1”

2. Do your homework before you invest

There are nearly one thousand companies listed in our stock market. Which one should you invest in? Having Habit No.1 as the foundation, you will know that the safest companies to invest in should be companies or industries that you are most familiar with, as you can only make good judgments if you have in-depth knowledge and understanding. This means that you will have to do your own homework and research through all available sources, such as company annual reports, industry reports or public announcements, in order to obtain the facts on the industry, the company of your interest and its competitors.

This is necessary to ensure that you can draw good conclusions on the company’s performance and future prospects. Therefore, time and hard work are the two essential elements in turning yourself into an informed and knowledgeable investor. In practicing this, you will also need to be selective and focused on certain industries in which you have most interest and experience.

3. Have your own investment philosophy and system

What is an investment philosophy? An investment philosophy is a set of beliefs that you use as the foundation in developing your personal investment system for buying and selling investments. This will make sure you are fully aware of the reasons behind every investment decision you make. As a beginner in the investing world, you could probably start by following the investment philosophies and systems of some of the great investors that come closest to your heart.

However, along the way, you should tailor your investment system to suit your personality, goals and unique circumstances so that you can practice this entire system without stress and worries. If you have the discipline to practice the right system religiously, you will not be easily influenced by the voices or rumors in the market and will not be tempted to simply follow the crowd. Hence, the chances of your making the wrong decisions will be minimized.

4. Patient

There is a Spanish proverb that says “The secret of patience is doing something else in the meantime”. If you somehow managed to inculcate the above 3 habits, you will know exactly what you are looking for and as such, will be well equipped with the patience to wait for the right moment to buy or sell your stocks. Both Buffett and Soros stressed the fact that the secret of their success is having the patience to wait. Use your free time to explore and strategies other new opportunities as there are so many companies listed in the market. Always remember that identifying the right candidates does require time and patience.

On a last note, try to adopt the above habits now! Remember, good strategies will only be successful when executed with the right mindset!

Daily FBMKLCI Chart

Trading volume was disappointing as it only increased slightly in this last week when the market rallies after the rebound. The average daily trading volume last week was 750 million shares and the previous week’s average was 662 million. Average daily trading volume below 1billion shares are considered weak. The market was slightly bullish because of positive leads locally and internationally. Locally, industrial production and export numbers were growing on-month and jobless rate fell. World Bank confidence about having a positive GDP in year 2010 and increasing foreign participation in the local equity market boost confidence further.

Internationally, governments in developed nations are confident that the global economy is improving and Australia is the first G-20 nation to raise key interest rates since the start of the global financial crisis more than a year ago as the government believes that the emergency low rates are no longer needed. In the world’s largest economy, manufacturing increases and jobless claim declines.

The US Dollar continues to slide against major currencies, continuing its down trend. This again has pressured prices of commodities to increase. Price of Gold in COMEX continues to make historical highs and is currently at US$1,050 an ounce, increasing 5% in a month. Crude Oil in NYMEX continues to stay around US$70 a barrel. Rubber futures in TOCOM slightly rose month-to­-month but it jumps about 6% last week to JPY$214.80 a kg. However, Crude Palm Oil futures in Europe Store Exchange declined from EUR 2,200 per metric ton a month ago to EUR 2,030.

The FBMKLCI is well supported by the short term trend. The benchmark index continues to stay above the short to long term 30 to 90-day moving averages despite several pullbacks from the uptrend that started in April. A major correction is yet to be seen in this 6 months bullish trend. Momentum indicators are about to turn bullish again after mixed signals in the past few weeks.

The RSI and Momentum indicators are starting to move away from the middle level and the MACD indicator is about to cross above its trigger line or 9-day moving average. ADX indicator has just started to increase again, showing good strength in momentum last week.

The Bollinger Bands started to expand again with the FBMKLCI penetrating the top bands after testing the middle band two weeks ago. The same situation (the expansion) happened exactly a month ago and the FBMKLCI made new highs for the year. Therefore, we may expect the same to happen again and this time the projection is 1,280 points before it finds the next resistance. The average daily trading range is the same as the previous week.

The immediate support and resistance levels are still at 1,196 points and 1,230 points respectively. The FBMKLCI is currently testing this resistance level for the second time in a month. The market is set to test newer highs because of the strong bullish reversal and breakout. The next resistance level is between 1,280 and 1,300 points. However, if the market fails to make new highs and the FBMKLI falls below the 1,196 points support level, then the next support level it is going to test is at 1,150 points.

Price Map For Direction Forecast

Looking ahead, the leading Ichimoku Cloud indicator continues to contract last week and this indicates that the support for the uptrend is getting thinner. Being a leading technical indicator, a major trend reversal is not expected until the cloud bands cross. Therefore, there is still a chance for the market to maintain its uptrend at least for another month.

The market sentiment is still bullish and the FBMKLCI is expected to rise in the short term to the next resistance level between 1,280 and 1,300 points. This is only valid if the benchmark index stays above the immediate 1,196 points support level. In the longer term, a major correction is expected to take place once the index moves into the next resistance level. My price map/direction forecast chart for FBMKLCI remains the same as last month.

Therefore, current opportunity is only good for short term traders who trades short term profits because the market is expected to test new highs but with a limited upside. However, accumulating shares for the long term (3 to 5 years) may be too risky at current levels as prices are way above the long term average. Opportunity for long term accumulation only exists when the market pulls back to its long term average or below it (a 200-day moving average can be used as a benchmark).

So, longer term investors have to patiently wait for a major correction to happen. My longer term forecast (1 year) for the FBMKLCI when it goes into a major correction is still at 900 points and therefore accumulating shares when the index moves to this level or slightly above provide a better low risk opportunity for longer term investors.

And innovative and proactive technologies allow organizations to stay a step ahead of the explo­sion of malicious applications. Consultant for Enterprise Security – Symantec believes that businesses should revitalize their strategies and adopt a well-rounded ap­proach to protect against data breaches in view of the current threat landscape.

The current data breach land­scape is characterized by a grow­ing number of threats targeting confidential corporate informa­tion. In 2008, 90% of company attacks were driven by organist crime, going after information that will bring financial gains, such as customer database, credit card cre­dentials, bank account information and intellectual property.

Another common source of data breach is well-meaning insiders. These are employees who have legitimate access to the corporate network but through carelessness, expose their companies to risk. Examples include leaving an un­encrypted USB thumb-drive with sensitive data in a cab or a coffee shop, or an employee who emails sensitive data out from their cor­porate email to unprotected Web email so they can work on it at home. Data indicates that 67% of security breaches were due to such negligence.

Companies should also not deny the existence of malicious insid­ers. These are again employees who have legitimate access to the network but deliberately steal company’s information either in a moment of anger, or with the inten­tion of misusing the information.

In fact, a study by Ponemon Insti­tute this year showed that about 60% of all employees surveyed in the US did not feel it was wrong to take confidential information with them when they left.

From expert observation, cyber-­criminals have dedicated teams specializing in stealing confidential information. There are primarily four key stages in the process:

Incursion, where the malware gets into a company through av­enues such as spam, web and unmatched vulnerabilities.

Discovery, where the cyber­-criminals look for valuable assets, primarily confidential information, in the company.

Capture, where the cyber-crimi­nals get hold of those valuable as­sets. Last year alone, 285 million records were stolen compared to 23o million between 2004 and 2007.

Exfiltration, where the cyber­-ciminals move the assets out of the company.

This is a global phenomenon that targets companies regard­less of size, industry and geog­raphy. With rapid broadband adoption in Malaysia, it is inevi­table that cyber security threats will continue to propagate and the risk of businesses falling vic­tim to data breach will continue to happen. Security breach is costly to every organization. It can mean the loss of reputation, competitive information and breach of compliance on data privacy regulations.

Symantec’s Asia Pacific Japan Internet Security Threat Report XIV revealed that in 2008, Malay­sia ranked second in Web-based attack and third highest in bot-in­fected computers among Southeast Asian countries. Malaysia was also the third highest country hosting phishing sites in Southeast Asia, with 47% of attackers targeting the financial sector. These statistics represent a clear indication that Malaysia is not spared from cyber threats.

IT expert advice companies to take a holistic approach in security strategies to protect their organizations against data breaches. The strategies should focus on four core areas to address the key weak­nesses that lead to data breaches — poorly protected infrastructure, poorly protected information, lack of IT policies, and poorly managed systems. Companies should start building their security strategies according to this four-pronged model that addresses those weak­nesses.

An information-centric ap­proach is effective in proactively protecting information and in­teractions. Companies should know where their confidential information is, how the informa­tion moves internally, and who has access to it so they can better protect it.

Companies are also advised to develop and enforce IT policies and automate their compliance processes. By managing risks and defining policies that span across every location, policies can be enforced through built-in automation and work-flow. This does not only identify threats, but also re-mediate incidents as they occur or anticipate them before they happen. Finally, companies need to manage their endpoints ef­ficiently through standardization, work-flow and automation.

There are solutions, which help to standardize security and management across physical and virtual platforms and endpoints to ensure that information, in­frastructure and processes can be protected completely, managed easily and controlled automatical­ly, regardless where information is used, stored or communicated.

Symantec provides solutions that address the four important needs to build a well-rounded se­curity approach to protect against data breaches for businesses:

Symantec Protection Suite to protect infrastructure and keep away security threats, from end­points, email gateways and serv­ers Control Compliance Suite to help companies put together the right IT policies, assess how their infrastructure are setup against those policies and reporting any deficiencies Data Loss Prevention Suite to identify and classify sensitive information, find the information and manage it.

Altiris Total Management Suite helps manage endpoints effi­ciently.

A majority of Asia com­panies are indeed aware of the importance of data protection and are willing to spend to ensure that they are not compromising on the protection of confidential infor­mation. However, there is a need for organizations to adopt a new attitude towards security.

Although security remains a top priority, we found that most com­panies in Malaysia are still deploy­ing security technologies that focus on protecting the infrastructure. While those are necessary compo­nents of a protection strategy, they are not the end all.

Companies should take into consideration vibrant changes in today’s technology, which con­stantly open new security param­eters within the environment of organizations. The growing mobile workforce trend, for example has introduced the need to protect end­points, including desktops, laptops and mobile devices.

Written By: Laurie Young

Publisher: John Wiley & Sons

Selling Price: US$ 55

During the last 30 years, a wide range of product companies throughout the Western economies have considered moving into or setting up service businesses.

Some have rejected the idea after careful consideration, some have wandered into competitive services without any real idea of what is involved and others have deliberately executed a carefully considered strategic manoeuvre.

And yet, very little has been published on this profound transition. As a result, myths and idiocies abound. Some routinely claim that the ‘evolution from products through services to solutions’ is inevitable.

Laurie Young, himself a successful businessman who has been at the heart of these changes in several companies and, with case studies from companies like IBM, Unilever, BT, Michelin, Ericsson and Nokia, decided to come up with this book exploring the experience of those who have made the transition; and some who have resisted it.

It covers in-depth subjects such as strategic focus, change management, service operations, branding a service business, service sales and service marketing. It is the first major work on this subject.

Interestingly, Young details in very practical ways the reasons and methodologies for change. A must-read for those planning to do so.

Book’s Title: “And Then the Roof Caved In”

Written By: David Faber

Publisher: John Wiley & Sons

Selling Price: USD 29.90

Excessive greed can bring about massive devastation to mankind. Such is the moral of the story behind this book by David Faber, a CNBC anchor, co-producer and reporter behind the critically-acclaimed documentary House of Cards.

As the title itself suggests, “And Then the Roof Caved In” lays bare the truth of the credit crisis, whose defining emotion at every turn has been greed, and whose defining failure is the complicity of the United States Government in letting that greed rule the day.

Page by page, Faber explains the events of the previous seven years that had planted the seeds for the worst economic crisis since the Great Depression (1929-1939).

He begins in 2001 when the Federal Reserve embarked on an unprecedented effort to help the economy recover from the attacks of 9/11 by sending interest rates to all-time lows.

Along the way, Faber also offers close-ups at where the crisis was incubated and unleashed upon the world — Wall Street — and introduces insiders from investment banks and mortgage lenders to ratings agencies that unwittingly conspired to ensure lending standards were abandoned in the headlong rush for profits.

Faber is no stranger to the financial world by virtue of having reported on Wall Street and corporate America for over 22 years, 16 of them as foremost reporter at CNBC. Based on two years of research, this book certainly provides deep insight into the current credit crisis and offers the views of experienced professionals — from Alan Greenspan to prominent bankers and regulators — who were on the front lines.

Last but not least, this book will make a good read for anyone who wants to get into the roots of this devastating worldwide economic crisis.

So yes, property investment is a tricky business. To be successful in it, there are numerous factors that one must consider. One obvious factor is the financial aspect: the price, down payment, financing, interest rate, etc.

Next, the physical factors: location, design, building materials, etc. The third factor involves the legal rights and obligations: titles, land status, caveats, etc. Now as if those are not enough, you must also take the non­-financial aspects into consideration. This includes the neighborhood, nearby facilities, the direction of the property and even the feng shui of the property.

Now while some people may dismiss that last point as superstition or old wives tales, you should consider feng shui seriously if you want to make money from properties, particularly in Malaysia. Remember that while it may not be important to you, it is important to tens of thousands of other people — thanks to (or blame) Lilian Too and Joey Yap! And needless to say, you will be selling and renting the properties to other people.

So this month, I’d like to talk about feng shui and how it can help you make money from properties.

Feng shui can simply be translated as Wind-Water in English. It is an ancient Chinese system of aesthetics that can be used to help improve life by receiving positive chi. Feng shui uses the laws of heaven (astronomy) and earth (geography).

While it has existed for thousands of years and practiced by the Chinese in Malaysia, feng shui was generally unknown to the rest of the population. The few who heard about it dismissed it as a Chinese custom or even superstition. However, the situation changed some 15 years ago when Lilian Too started publishing books on the subject.

The veil was lifted and, feng shui soon became a rage, even to non-Chinese.

Other feng shui masters, including Joey Yap, also started writing books on the subject while numerous feng shui shops opened to supply gadgets, trinkets and ornaments to a hungry public. So today, feng shui is mainstream.

How mainstream? Well for starters, I think every single developer in Malaysia today charges a premium for properties with good feng shui. These include those properties having the numbers 8 or 88 in their addresses.

Obviously I’m not an expert on feng shui (so please do not set an appointment to see me regarding the feng shui of your house!). However, I do know some of the basic things that people look for. Basically, you want to avoid properties that:

-        Face a junction a Face a hill

-       Near a hospital

-       Near a rubbish dump (you don’t have to be a feng shui master to figure this one out).

-       Near power lines

Now this is a very short list. If you want a more comprehensive list or accurate reading, hire a feng shui master. He should be able to advise you accordingly for a small (or large) fee. Alternatively, you can even do-it-yourself by referring to the many books on the subject.

Let me now share an interesting story that happened to me some years ago.

As my daughters were growing up, I needed a bigger place. So I went to view a few different housing projects around KL and Selangor. Finally, I found an interesting new place in Kota Damansara. The house design was good, the location was superb and the concept of it being a gated community made it better. I must admit that I was very interested in the project and actually chose a particular unit. The price of the house was RM750,000.

However, for some reason or another (I cannot remember why), I did not buy it immediately. A few weeks went by before I decided to buy it. So I went back to see the developer to buy the house. Unfortunately, the unit that I was eyeing was already taken up. Fortunately though, there was another unit available. In fact, it was the last unit left. So I decided to buy it. Now the design, lay out and size was exactly the same as the unit that I was eyeing earlier. In fact, everything was the same, except that this new unit was facing south.

The salesman told me the price of this unit was RM800,000.

`Wow!’ I was stunned. ‘That’s RM50,000 higher than the Other unit. Why do I have to pay so much extra when everything else is the same? Don’t tell me it because I bought it a couple of weeks later.’

`No sir, the price difference is not because of that.’

`Then why?’

`Sir, this unit is facing south.’

`So?’

`Ahh … this house is facing south. That means it is facing heaven — the source of warmth and all good things,’ he smiled warmly. ‘That’s why it’s priced higher.’

I leaned back slowly — half stunned in amazement. What can I say? In the end, I did end up buying the property though I must admit not being too happy about paying an extra RM50,000 for the same house. All because the house was facing south!

The story did end on a good note though. When the house was completed two years later, I received an offer for it. Though I bought it with the intention of staying there myself but as the offer was pretty good, I decided to accept it. So I sold the house for RM1.1 million and made a decent profit in the process.

So now I know the price of heaven — RM50,000!

For many novice warrant traders, break-even means the sum of what they paid for the business warrants plus the conversion/ strike price.

To these traders, they feel that in order for their trade to make a profit, there must be a good chance that the price of the underlying or mother share exceeds this break-even point.

While this may make sense in the case of physically-settled warrants (ie, warrants that convert into shares of a company), which is usually the case for company-issued warrants, it does not really mean anything when it comes to cash-settled warrants.

For cash-settled warrants, just like stocks and shares, your break-even price is the price you paid. Simple as that!

For example, if you had purchased a call business warrants today and paid 30 cent for it and sold it the next day at 40 cent, your break-even would have been 30 cent and your gain 10 cent.

Therefore, one should not be too concerned with the conversion price of call warrants. Instead, a trader should be more interested in the theoretical price of these warrants and most important of all, the direction the mother share would be taking in the short-term.

As warrants are short-term trading instruments, traders should get over this “break-even” myth right from the very beginning. Otherwise, trading in business warrants could become a costly misadventure.

The perfect time to buy a warrant is when the underlying asset is about to make a sharp gain (for a call warrant) within a short time frame. At this point of time, the gearing effect of a warrant comes into full play.

In addition, there are business warrants with different maturity periods and exercise prices to match your expectations. If you expect the market to experience a big swing, choose a warrant with a shorter time to maturity and far out-of-the-money, as this will give you a good leverage effect.

You should also study a warrant’s historical volatility (a measure of price fluctuation of the underlying asset over time) and implied volatility (market expectation on the future price fluctuation of the underlying asset) for a buy signal. For example, if you expect an upward trend in the historical volatility of the underlying, this could be a buy signal for a call business warrants.

On the global economy, let’s try to be as realistic as possible here without all the hype. Almost everyone I spoke with said that, in general, the global economy is stabilization and growth is resuming in some places especially in the Asia region. That’s really good news. What is our thought about the V-shaped recovery in the US economy?

It’s a massive balance sheet recession in the Western world and an artificial growth pumped by stimulus cannot be sustained over the long-term. Also, debt levels in the US government have already reached a critical point. How embarrassing but those are the facts. So, there is no V-shaped recovery in the US and some other parts of the world are not going back to “normal”. That’s permanently gone. Period.

The world is a much more risky place financially after the meltdown in 2008 thanks to reckless government policies looking for quick fixes. After the meltdown in 2008, it will be difficult for central banks to rely on old economic models to boost real growth. This is especially true for those central bankers in the Western world.

As the hangover from 2008 continues, some new trends and events will develop which will be felt by many economically and socially over the coming months or years. The path to this “new normal” will be rocky. Some people will prosper and they will be making more money out of the hardship of others. Businesses will continue to evolve and some of us will be forced to make tough choices in our lives. As for the investment strategy, we continue to think that buy and hold investors will lose out more.

No one can predict the future but the big picture view here is that the future global events will put to bed all the common economic predictions and the past. Like it or not, the typical boom/bust cycles or theories will no longer work correctly. The governments in the Western world are sacrificing the future generations and just postponing the bigger problem until the new global crisis happens.

Any half-baked politicians on the planet will agree that we must never confuse the public with the hard truth if you want to stay in office as long as possible. Let the fools remain as fools forever. On this note, some of the local political and business elites who go around the town with bodyguards will probably not agree with the poor taxpayers that the crime rate in this “lah-lah” land is rising faster than the stock market. What fantasy land are these “high-class” people living in?

Like most other newly-elected leaders, Obama came in on a big mandate with fiery slogans. Obama as a poker player promised a real change to America and the rest of the world. What is clear to this adviser and analyst is that this garbage of an agenda of change has increasingly faded into emptiness. These days, it is Republican business as usual.

The Obama regime is taking a huge gamble. The US and other governments on the planet are hoping that an economic recovery will occur soon enough so that real consumption can catch up quickly. The coming second dip in the US economy over the coming months will be more devastating on those who thought we have seen the bottom.

It’s easy to give economists a hard time sometimes. Some economists who didn’t see it coming before 2008 can continue to argue that the gradual recovery will continue (in nominal terms) until the cows come home in the next morning. The realists could be looking for 15% unemployment or more in the US economy as one of the hints that things are finally bad enough for the new and simple realization to set in.

Is inflation or deflation winning the war? The bond and stock markets are giving us different conclusions but the price of gold is telling us something else. If the yellow metal can continue to go up from here attracting even more serious money, it is telling us that the rest of the things around us are merely an illusion financially that all the efforts so far to jump start the economic engine such as the low interest rates, quantitative easing, etc have all failed miserably.

Meantime, the music is back and is playing loud and we are still dancing on the ceiling plus the greedy bankers are still getting their big bonuses at the approval of the big governments and at the expense of the taxpayers. The economy is not the stock market. At the moment, governments are doing everything in their power to support stock prices to boost confidence.

Yes, the global economy and markets will never collapse completely because of the huge liquidity sloshing around and overvalued equities might become even more overvalued and standing in front of a freight train is never a good idea. However, at some point, the consequences will be significant and will dwarf the previous crash.

One should never argue with Newton’s Third Law. For every action, there is a reaction. Remember that China cannot save the world.

That is no fun. Those at the bottom of the economic ladder and the burned-out working class will always get hurt the most as usual in the next round of economic and market turbulence. The best and honest thing any governments on the planet can do is to talk less and do more and warn the ordinary folks who only read the mainstream media about the truth. Invest accordingly. We still operate in a sea of uncertainty.

I think all of us bring something to the table that can help us to be successful in the stock market.

For example, engineers are much disciplined and are good at following rule-based systems. When they follow a rule-based back-tested system, this can help control emotional behavior. Emotions play a large part in financial markets.

Medical doctors are scientific and base their decisions on logic and evidence. Successful investors weigh the facts and a doctor’s thought process will give him an edge over those who make decisions based on emotions.

The best traders are able to separate their emotions from the trading process.

Accountants bring the edge of risk management to the table. The job of an accountant is to manage the risk of his clients. Risk management, in my opinion, is the essence of successful trading.

Even a housewife who follows a successful recipe for a delicious dish can apply a step-by-step trading recipe to the stock market.

In our courses, we share recipes for short-term trading as well as long-term investing.

We have a broad spectrum of professions represented on our attendance roster. Some are accountants, teachers, pilots, engineers, medical doctors, salesmen, news writers, lawyers, and business owners. Even a politician and a fashion model attended.

What this proves is that making money in the stock market appeals to almost everyone.

Scientific studies have found that pilots and professional poker players are at the top of the list of successful traders.

By the nature of their job, pilots must have emotional control and be ready at a moment’s notice for the unexpected to happen. How the pilot reacts to danger can mean the difference between life and death. In markets, you call it profit or loss.

Pilots are also trained to follow a checklist.

Professional poker players also make great traders. They, like pilots, must constantly access probability in an environment of uncertainty. In this environment, they must have complete emotional control. There are many similarities between poker and trading.

The rules to be a successful poker player are the same rules to be a successful trader. For example, Rule 89: Understand what happens with marginal hands in poker.

To understand why it is important to limit yourself to playing good hands, it is helpful to visualize what happens statistically when we play the marginal ones. It is not that these hands all lose. Not by a long shot. It is more a case of statistical averages — over a lifetime, we may win RM590, 000 with them and lose RM620, 000. It’s a long-term gradual seepage, in other words, a leak in our game. If we visualize it this way, it might help us in seeing the danger that playing marginal hands represents.

How does this apply to trading or investing?

Good trades and investments are supported by strong fundamentals, good chart patterns, and volume and high odds for profit versus risk.

A marginal trade could be a crowd following trade with more risk on the downside versus profit potential on the upside. A marginal trade might be a share hyped by the media or shares heavily tipped by remises and Joe Public.

Once a trade becomes crowded, the risk is high that it is a marginal trade. By blending the life lessons of a time honored spiritual practice with the strategy of poker, you can create a powerful approach to successful trading. In The Tao of Poker, poker player Larry Phillips offers 280 rules to bring you to new levels of achievement just when and where you need them most.

Some of his rules can applied in your trading n investing business:

-       Once you commit to a hand, play it strong. (Average up your winner.)

-       Don’t throw good money after bad. (Never average down a losing position.)

-       If you think you are beat, get out. (Cut your losses quickly.)

-       Take the long view. (Applies to investors.)

-

I had absolutely no idea how Larry Phillips would be able to link up Taoism and poker. From what I recalled from reading Lao Tzu, I just couldn’t make the connection. As it turns out, there really is no connection. The Tao of Poker has essentially nothing to do with Taoism. That doesn’t make it a bad book, but those who might be looking for the connection stated in the title have been forewarned.

But fresh fires are being lit by palm oil detractors, who have shifted their focus onto the environment battlefront. Now these efforts play on the populist sentiments surrounding ozone depletion, global warming and the resultant climate change.

The very existence of palm oil plantations is being questioned for its alleged contribution to species and biodiversity loss, with the carving out of plantations purportedly impacting the future of wildlife in their jungle habitats.

This undue attention has moved to the orang utan, whose love-able features, apparent childlike innocence and helpless vulnerability have turned the primate into a valuable mascot with which to attack palm oil.

Palm oil first attracted opposition from competing fats due to its popularity and dominance in the food and oleo-chemical sectors. In the 1980s, this manifested itself in several “anti-palm oil” campaigns mounted in the United States, centered on blocking its importation.

More seriously, concerns were raised on the purported link between palm oil and saturated fats in raising blood cholesterol levels.

This persisted despite studies that proved otherwise. Science has shown that palm oil, unlike trans fatty acids found in other oils, addresses concerns over cholesterol levels linked to rising incidence of heart diseases. All these myths and outright untruths have been debunked by research, which has forced the palm oil opponents to open up a new battlefront, shifting the focus to the environment.

In the UK, concerted efforts are being taken by environmentalists to keep out television and print advertisements extolling the “sustainable” credentials of Malaysian palm oil. The Malaysian Palm Oil Council (MPOC) which has the task of promoting the market expansion of Malaysian palm oil and its products has found this to its cost.

Its television advertisements were banned by the UK Advertising Standards Authority in May last year while an advertisement in the Economist magazine – the first in a planned series of advertorials in major magazines – was banned in September.

Facing up to these powerful “anti-palm oil” forces is the MPOB. It has, among others, been given the task of steering the orderly growth and development of the industry.

About to enter its second decade, the MPOB has shown itself up to the task. It has put up stout resistance and fought its corner strongly to elevate palm oil’s standing. It has been unrelenting in using facts to overcome prejudice and overturning outright falsehoods spread by opponents.

Its adversaries, however, are equally unrelenting in their efforts. Helpless against the force of facts as to palm oil’s health and nutritional qualities, they now ride the environment hobby horse to peddle a new anti-oil palm mantra.

Against this background, the world’s leading palm oil luminaries meet in Kuala Lumpur for the International Palm Oil Congress or PIPOC 2009 to be held in Kuala Lumpur on (9-12 Nov).

The four-day conference will focus on progress, achievements and advances made by the industry; taking cognizance of the need to balance growth with environment concerns for sustainable development.

MPOB Chairman Datuk Sabri Ahmad believes the conference will enhance palm oil’s prospects, having detected a positive shift in what was formerly entrenched opposition to palm oil due to a combination of ignorance and self-interest.

Having recently returned from a palm oil promotion mission to the US, Sabri says the policy of engagement rather than confrontation has allowed for better dissemination and acceptance of information sympathetic to palm oil.

“There’s a lot of disinformation out there and we were able to dispel various myths and long-held prejudices. This has resulted in better understanding from industry leaders whose products and services would otherwise have missed out on the advantages offered by palm oil,” he said.

Sabri says having won the argument on the health and nutrition front, the process has to be repeated on the environment front. “We have various potential consumers in the US who support anti-palm oil legislation, having been swayed by erroneous claims of palm oil’s impact on sustainability. Uncontested, these claims can stick and be very difficult to remove,” he says.

PIPOC 2009 is being seen as an appropriate stage to demonstrate palm oil’s sustainability. To drive home the message, MPOB Director­ Generai Datuk Dr Mohd Basri Wahid has coined a new word — “ecologies” — which will be used as the theme for the conference. “Palm Oil — Balancing Ecologies With Economics” features prominently in the publicity material and brochures produced in the run-up to the conference.

One of the objectives set for PIPOC 2009 is to draw up strategies towards enhancing sustainability, which will form the thrust of the efforts towards countering opposition mounted by the environment lobby.

This environment-friendly agenda comes at a time when the industry has taken on board the Roundtable on Sustainable Palm Oil (RSPO) initiatives, which came into force in 2004. RSPO seeks to promote the growth and use of sustainable palm products through credible global standards and engagement of stakeholders with the involvement of all parts of the supply chain.

This gives the roundtable nature of the group, which is reflected in the union of stakeholders from seven sectors of the palm oil industry, which include producers, processors/traders, consumer goods manufacturers, retailers, banks and investors, environment/nature conservation non-­governmental organizations (NGOs) as well as social/development NGOs.

Sustainable palm oil takes into account the plantation operational chain, its impact on the environment and biodiversity, as well as social and community factors. Factors for consideration include virgin forest encroachment, the mixing and application of fertilizers, and worker welfare.

To achieve this, the palm oil industry and planters have been urged to adopt new technologies for sustainable production. They need to take on an environment-friendly approach to maintain their competitive edge and to position the country’s palm oil industry on a sustainable footing.
“The sustainable production of palm oil through certification and fulfilling of principles and criteria of RSPO as well as the adoption of the Palm Oil Industry

Code of Practices all along the palm oil value chain is vital for the industry to remain viable and competitive,” says Mohd Basri.

The issue of sustainability is being complemented by the voluntary application of MPOB’s Code of Practice developed by its Food Safety Committee with input from industry members. According to him, this is an anticipatory move that prepares and assists the industry to conform to global food laws governing healthy ingredients, dietary inputs and hygiene standards.

One of MPOB’s greatest achievements has been its success in commercializing technologies. The fruits of research and development (R&D) done in its labs by its army of scientists are geared to be translated into technologies that can be implemented by industry to produce innovative products and services. Mohd Basri says Malaysian companies and entrepreneurs are encouraged to exploit business opportunities by commercializing the technologies developed.

Far from operating as a mere academic hothouse, MPOB has been in the forefront of commercializing its R&D findings. “We released more than 400 R&D findings last year, which are all ready for commercialization. Some 30% of our R&D efforts are geared towards this goal. Our research efforts do bear fruits,” he says.

The MPOB has produced more than 44o technologies and 71 services that cover the whole gamut of the upstream, midstream and downstream aspects of the palm oil industry. “We strive to transfer this technology to industry players who are in a position to commercialism its applications,” he adds.

Both the MPOB and the researchers share in the commercial success by way of a share in the royalties, which have been known in some cases to be very lucrative.

“This reward system is only fair and necessary if we are to retain the best brains to improve our products and services which ultimately brings with it a higher level of productivity for the industry,” says Mohd Basri.

In fact, one company that collaborated with MPOB to improve oil palm milling operations was able to cut labor from 7o down to 12, bringing with it significant savings. He adds that MPOB has also introduced many palm oil seeds, fertilizers, bio-diesel, harvesting machines, oil-palm based car components, vitamin E and other technologies spanning the entire oil palm supply chain.

Mohd Sabri says MPOB is intensifying collaboration with universities as far away as London, Beijing and Denmark to enhance its research efforts. It also invites scientists from all over the world to interact with its own academic complement of 200 researchers for an annual conference next April.

According to him, Malaysian agricultural practice in general and the palm oil industry in particular have been governed by laws and regulations that make the latter viable and sustainable long before initiatives like the RSPO came about.

He says the palm oil industry was among the first to apply scientific research, strict licensing and proper registration for its orderly development.

“We value palm oil as a golden heritage not only for Malaysia but for the world. Rest assured, the custodianship of this asset is in good hands,” he says.

The economics profession did not expect the prizes to go to individuals who were not rigorous in a mathematical sense, as economics schools have been captured for a very long time by individuals who are obsessed in presenting economics ideas, thoughts and theories in elegant mathematical terms.

One of the prize winners is not even a practicing economist. Elinor Ostrom is a political scientist by training and as she is from Indiana University, is not of Ivy League pedigree. The other co-winner is Oliver Williamson from the University of California, Berkeley.

Well-known blogger and Harvard University professor Gregory Mankiw gave Williamson a one-in-50 chance of winning the prize. Mankiw’s favorite was Eugene Fama, who developed the efficient-market hypothesis (EMH) which, according to Lawrence

Summers (the current Director of National Economic Policy to President Barack Obama and a former Harvard President), does not add up to much because a successful test of the EMH does not necessarily mean that the market is efficient.

Williamson was a favorite to win the prize for a long time but this time, he was not just a name to make the list complete. He worked on the theory of the firm — on why the firm existed — following the lead of a previous Nobel laureate, Ronald Coase.

I found his work extremely useful in conceptualizing governance in the telecommunications industry, especially his definition of governance. According to Williamson, governance comprises two elements — hierarchy and control. In the telecommunications industry, there is both networking and governance. There is networking because firms in the industry are technologically interdependent and have to work out interconnection rates. However, with developments in free internet conference calls, the telecommunications industry faces a new challenge.

However, the activities of the firms are coordinated and controlled by a regulatory commission that is organized in a hierarchy in relation to the firms. The regulatory authority has hierarchical control over the networking activities of the competing firms in the industry.

Hierarchy and control are key elements in governance and hence the term ‘network governance’ to provide an abstraction of how production and distribution is organized and regulated in the networked telecommunications industry.

In fact, Williamson has argued that economic activities can no longer be conceptualized as markets or hierarchies but as networks. So he not only defined governance as being hierarchy plus control, but also highlighted the emergence of network type of firms.

The significance of Williamson’s work is far-reaching because he belongs to a group of so-called institutional economists who did not ignore the question as to why a firm exists. Many neo-classical economists, who are the dominant folks in economics departments, only look at inputs and outputs and ignore the firm which they describe as a ‘black box’ that they do not want to bother about or discuss, although the black box is what converts inputs into outputs.

The institutional economists argue that the firm or black box exists because there are activities that can be easily organized and in a least-cost manner within the firm or the black box. It is only activities that the firm cannot produce at a low or competitive cost that are subcontracted to other firms.

Williamson changed the way courts looked at vertical integration. In the past, all forms of monopolies were considered undesirable and should be eliminated or dismantled. For example, the American Telephone & Telegraph Company (AT&T). In fact, Columbia University economist and Nobel laureate Joseph Stiglitz argued in a recent book on Fair Trade For All that monopolists should be shot dead on sight in the developing countries.

Today, Microsoft survives as a monopoly because of the work of people like Williamson who argued that if the monopolist arose because it was the fittest, then the courts should subscribe to the Darwinian concept of ‘survival of the fittest’.

Williamson has justified the vertical integration of firms by arguing that it might promote efficiencies. For example, if a miner has to transport coal but the railroad charges too much, then it might be in the interest of the coal-mine to buy the railroad or invest in a new railroad. This is not collusion but vertical integration to derive scale economies and drive down costs.

Ostrom’s work deals with alternatives to government organization, intervention and privatization. She highlights the importance of community as a sustainable form of organization to solve the problem of who gets what, when, and how. While neo-classical economists argued that people acted in their own self-interest, Ostrom postulated that people are motivated to cooperate to find solutions to common problems of resource use.

I remember being referred by a Harvard economics professor to a book by Ostrom on water organization by communities. Its relevance comes to light in many rural areas of Africa where there is no government or private sector to solve the problem of generating and distributing clean affordable water. How communities solve these types of problems is the driver of most of Ostrom’s work, which spans a few decades.

The starting point is the common conception of the “tragedy of the commons”, which simply states that if common property usage is not regulated by prices (read privatization) or government (regulation), then it will not be appreciated by people and the commons will be destroyed.

Ostrom argues that the “tragedy of the commons” need not occur because it is in the self-interest of individuals and the community to preserve the common property resource. If the tragedy of the commons were a common occurrence, then all fishery resources would be depleted and all forests destroyed.

The work of Raymond Firth on The Malay Fishermen, for example, clearly shows that there is concern for both the maintenance and sustainable development of human life and fishery resources. Similarly, Clifford Geertz’s work on Agricultural Involution shows that even when population increases and farm size remains constant, there is shared poverty but the padi fields are not destroyed.

There is concern within communities over survival into the future. For example, when we had the currency crisis in 1997, there was talk among the common men and women that regardless of what the politicians did, the people would not let the economy slide. They would collectively take a solution that would be in their self-interest to keep the economy moving again so that they could keep their jobs and see that more jobs were created for their children and relatives.

This was what the International Monetary Fund (IMF) could not see as it expected the people to revolt against what they conceptualized as crony capitalism. The IMF could not understand that Malaysians were not interested in toppling the government in order to introduce a new type of economy along the lines suggested by the Anglo-American model that was peddled by the IMF all around the world.

Some have even suggested that the outcome of the last general election was not the work of political parties or governments or the private sector, but the community that communicated through the media, the blogs, the Internet and word-of-mouth.

Governments cannot afford to be out of touch with emerging community views of equity, justice, governance and fairness, especially among the western-educated, whose education it has sponsored for decades because they will decide the outcome of future elections.

So, Ostrom says there is an alternative to the government which is not necessarily privatization, but community action. She has given a signal to academics that there is a lot of scope for home-grown solutions to the problem of political and economic development.

Having visited the larger Disneyland in California twice, way back in 1987 and then in 1989, and the original wax museum Madame Tussaud’s near London’s Baker Street tube station several times in my distant youth when the apostrophe in `Tussaud’s’ was still being used in the official name, I was especially intrigued by the novel sights in Noah’s Ark. I was also delighted that prices of tickets, souvenirs and food within the Ark were reasonable, at least by Hong Kong’s pricey standards.

In contrast, the HK$25 (USD 3) charged throughout Hong Kong Disneyland for a regular bottle of Coke sent shooting pains emanating from my wallet through to my brain each time I got thirsty. Nonetheless, I paid that sum several times throughout our visit that lasted deep into the night.

All told, our brief five-day Hong Kong sojourn was fun.

I was also surprised to discover that despite the price of Disneyland’s Coca-Cola and its perhaps even more shocking HK$18 (USD 2.50) bottles of water, the expensive cab fares, restaurant meals and tourist attraction entrance fees, I still came in well “under budget”. That always cheers me up.

I believe part of the reason I spent less than I had earmarked in total for the jaunt was my general preference for carrying more than enough cash whenever I go on holiday; the other part was my reluctance to shop for items that could be bought in US for less. And even though I had notified one of my credit card issuing banks that I would be in Hong Kong from Dec 10 to 15, I found I did not need to whip out any plastic throughout that stay.

For many of us, a frequent source of commonplace post-holiday stress is the need to re-balance a stretched budget and paying off in full — or, much worse, in part — unanticipated credit card bills. For this trip, at least, there was no such unpleasantness because I had earlier focused on three strategies that might prove useful to you, too:

1. Remind yourself that you matter at least as much as everybody else;

The reason most of us never get serious about starting a savings programme is our deep-seated harboring of a mixed-up set of priorities. We often tell ourselves: “I’ll pay all my bills first, and then see what’s left at the end of the month to save.”

That approach leads to failure, frustration and long-term insufficiency.

What almost always happens is that our ‘month lasts longer than our money’. If nothing is changed, the months turn into years which grow into decades. The end result, then, is a potent recipe for lifelong impoverishment.

If you work for your money — as most of us do — then you deserve to pay yourself first, or pay yourself second, depending upon your religious convictions.

By deciding to first set aside a chunk of change for yourself, you’ll be sending a message out to the universe. One that’s bold, simple and clear: “I matter to myself. That’s why I pay myself ahead of others. This puts me in control of my economic destiny.”

2. Understand the true power of compound interest.

Many books suggest we set aside 10% of our earnings. However, in truth, economic heavy hitters set much, much higher targets for themselves.

In my own financial planning practice, I try to inspire my clients to expand their skill sets so they will be able to earn more and more money over time. Simultaneously, I urge them to set a personal goal of reaching a 40% to 50% net savings-cum-investment rate (excluding what flows into EPF) over the next 10 to 12 years. Most people find that extreme, and it is, at least by the lax savings and investment standards of today’s hyper consuming society.

As you read this, it makes sense, I believe, for you to simply decide today to get serious — or perhaps more serious — about becoming an entrenched saver-cum-investor.

Given sufficient time, even small sums parked in low-yielding financial instruments can grow to surprising magnitude. Let me give you an eye-opening example.

Right now Malaysian fixed deposits for periods of less than one-year yield just 2% per annual. Many of us yearn for the good old days when we could earn 5% or 6% on our FDs, with occasional spikes up to 8% or 9%.

Nonetheless, if you were to magically be able to put aside just one sen in a modest savings instrument that yields a steady 2% per annul from way back at the time of Jesus Christ’s birth in Bethlehem around 4 BC, you would have about RM2,000 trillion today.

The current Forbes ranking of the super-rich once again has Bill Gates at the top of the pile with an estimated wealth of US$ 5o billion. Well, your hypothetical RM2,000 trillion works out to about US$ 600 trillion in 2009 or 12,000 times Gates’ wealth, which is not bad for a one cent original investment.

The only two problems are you don’t have 2,015 years to save and you can’t find a steady money compounded that will yield 2% year in and year out over more than two millennial. But then again, you do have more than one cent to start with.

So, please start!

Wellcall is the largest exporter of rubber hoses and tubes in Malaysia. It began operations at its sole plant in Kinta, Perak, back in 1996. It was listed on the Second Board of Bursa Malaysia in July 2006 and was subsequently transferred to the Main Board in March last year. The group started off manufacturing and selling rubber hoses to three major application markets and has since expanded to more than six major application markets, which include the air and water, welding and gas, oil and fuel, automobile, ship building, and food and beverage industries.

It uses two different processes to manufacture rubber hoses — the extrusion method, to produce hoses with a diameter of less than two inches; and the mandrel method, where rubber sheets are wrapped around a mandrel to make hoses larger than two inches in diameter. At present, Wellcall has 32 mandrel and 16 extrusion lines.

Though the market for industrial hoses is mature and registering a paltry annual growth of 4% to 5%, Wellcall has been able to buck the trend, achieving an impressive compound annual growth rate of 33% and 25% in revenue and net income respectively from 2006 to 2008.

It has its own proprietary design and fabricates its own mandrel production lines at about a quarter the cost of acquiring the machines from third parties. That, coupled with its low-cost base in Perak, has allowed Wellcall to be more aggressive in pricing and in turn capture market share from less efficient producers. Wellcall exports more than 90% of its products to 60 countries. According to its quarterly report for the third quarter ended June 30, 2009 (Q309), the Middle East is its largest market by geographical breakdown, accounting for 23.68% of its revenue, followed by Europe (22.39%), Asia (20.42%), the United States/Canada (16.29%), Australia/New Zealand (8.46%), South America (6.00%) and Africa (2.76%). The local market accounted for 6.35% of its revenue and 7.15% of its pre-tax profit.

During the last Asian financial crisis, Wellcall had continued to register sales growth and even expanded production as the devaluation of the Ringgit improved the competitiveness of its products.

This time around, the Ringgit was not as ‘competitive’. The contraction in demand for its products saw Wellcall register what may probably be its first decline in revenue — or at least its first since listing. In its Q209 ended March 31, Wellcall posted RM16.12 million in revenue and RM2.16 million in net profit, a reduction of 39.11% and 44.35% from the previous corresponding period. Q3 saw a slight revenue recovery over Q2 but compared to Q3FYo8, revenue had dropped by 44.25% to RM16.63 million. Pre-tax profit, however, saw only an 18.84% decline, due to lower raw material costs and favorable foreign exchange gains.

In its filing to Bursa Malaysia, Wellcall said: “Given the financial performance of the Group for the first nine months of the financial year, the Board anticipates a satisfactory performance for the year given the challenging economic environment.”

Due to their heavy usage, industrial hoses typically have short lifespan and last anywhere between one week to nine months before they need to be replaced. Even if a customer does not acquire new machinery, industrial hoses used in existing machinery still need to be replaced regularly. The global slowdown in economic activity may have lengthened the replacement cycle but replacements would still be needed in the future. The replacement market accounts for over 8o% of Wellcall’s sales and would serve as a buffer.

“From our recent visit, we gathered that orders have picked up over the past two to three months, particularly from the mining sector and the Middle East. Pro-Spects are promising given the recovery of the global economy,’ according to a CIMB Research note published mid last month.

“The replacement nature of Wellcall’s business should help return demand to normalcy once distributors finish destocking,” echoed Choong Khuat Hock, head of stock research of fund management firm Kumpulan Sentiasa Cemerlang Sdn Bhd in his report.

Choong opined that with its prudent management and strong balance sheet, the economic crisis has also opened the window for Wellcall to gain a larger slice of the pie.

“Most of its competitors had geared up heavily before the crisis and are now reeling as a result, with some on the brink of collapse,” he said.

CIMB likewise notes that a number of foreign and local hose makers, some of which are Wellcall’s rivals, have shut down since the beginning of the year due to the sharp contraction in demand in 4Q2008. ‘While this paints a bleak picture for the industry, Wellcall, which has financial muscle, will face less competition in securing new customers,’ CIMB adds.

Wellcall is debt-free; and cash-rich to boot. At end June 2009, it had RM40.5 million in its kitty. It also has a dividend policy of distributing a minimum of 50% of its net profit annually to its shareholders.

Its dividend yield of over 7% looks attractive, especially when paraded alongside the average 3.9% from rubber glove makers listed on Bursa.

Also, the economic power is shifting from G7 countries that saw increasing acceptance of the other economies currencies. And if US recovery is weak, rates will remain low, thus pressuring the US$ to stay weak.

Latest IMF report on global reserves currency composition showed USD holding dropped to 62.8% in 2Q2009 from 65.0% in 1Q2009 the lowest since 1995 has some level of exaggeration to suggest liquidation of US$ by the central banks. (Table 1) First, a large portion of the shift in US$ holding is due to weak US$ itself. It boosted the US$ value of those reserves held by other currencies. Second, there is no clear indication that China will turn its back on US$, with US$2trn reserve composition unknown and US Treasuries holdings of US$800bn in July from US$780bn June. (Chart 1) Third, the USD depreciated significantly since 2001 did not trigger large scale diversification.

Lately, the United Nations proposed reducing using US$ in global trade and establish a new currency to protect emerging markets from the ‘confidence game’ of financial speculation. We think this may not happen that soon, although we are not ruling out the possibility of it happening sometime mid-21^st century. Tracing back the history of the last switch in reserve currency, UK lost its position to US as the world’s largest economy in 1872 and the largest exporter in 1915. Switch in net debtor/creditor position began 1914 and the US$ emerged as a convertible net creditor currency and used in finance and trade. By 1945, the pound was dethroned.

USD is in a net debtor position like pound after WWII. They will have to maintain it if US$ remains as the global reserve currency. As such, when the global economy expands, demand for reserve assets will increase. It can only be met if US operates in current account deficit. If they stop operating in deficit and reduce supplying of reserves, it results in liquidity shortage and drags down global growth.

Can Yuan surpass the USD? With USD is in a net debtor position, while China as the world’s largest creditor just like pound after WWII, China should surpass US by mid-21st century based on Purchasing Power Parity. While it works on paper, in reality much depends on China’s policy. They must ease restrictions on liquidity flow, continue domestic financial reforms, improve bond market liquidity and make Yuan fully convertible.

Recently, China, Russia, Japan, France and Gulf States plan to dump US$ in oil trades for basket of currency or gold. This may not be viable in our view. If oil price is based on a basket of currencies, the issue will be the mode of payment – how the producers will insist on payments. Currently, USD is used as a single mode of payment. If gold is used as the payment mode, it will be converted into USD for payment.

Now, even if other currencies are used, oil producers will swap some of the proceeds earned in other currencies back to USD. At the moment, oil producers swap their USD proceeds into other currencies.

The US$ looks promising going forward based on the trend line of trade-weighted USD index. (Chart 2) We think the current risk to USD lingers around its high risk policies of quantitative easing (QE) and large government borrowing will debase the USD by runaway inflation. We think it may not happen. Looking at the bond market, yields and break-even inflation rates are still low. Recent economic data are showing the macro policies have started to prop-up the economy. If their recovery becomes firmer, we can expect speculation for an early reversal of QE. It will prompt positive sentiment on US$ and reduce its appeal as a funding currency for carry trades.

And with strong domestic demand in Asia and high US household savings, US trade deficit and reliance of US on foreign capital will ease. Hence, Asian currencies will shoulder bulk of the burden. It will ease pressure on US$ to weaken. The world economy has averted from the fear of Great Depression. But if we assume the global recovery becomes disappointing and risk appetite wanes, appetite for safe haven instruments will rekindle, thus reviving USD. Also, the authorities will not seek a weak USD, fearing loss of confidence and raise risk of financial instability.

To sum up, we are not discounting the possibilities of re-balancing reserves away from USD. We think this may happen sometime in the mid-21^st century. Meanwhile, the decision to re-price oil in our view would depend on issues related to inflation and fiscal position as opposed to the weak USD itself. Thus, we continue to hold our view that opportunity for US fundamentals to improve and sentiment swinging back in favor of USD holds.

The GST addresses the need for the Government to ensure increased revenue flows in the coming years by expanding the tax base. Upon implementation of the GST, the existing Service Tax and Sales Tax in Malaysia will be abolished.

The GST will operate similarly to that in other countries with a GST or VAT (Value Added Tax) system. There will be two rates — a zero-rate which will apply to most goods and services exported from Malaysia, and a standard rate, yet to be announced, but expected to be less than 5%. In comparison, the GST rates of the closest neighboring countries are 7% in Singapore and Thailand and 10% in Indonesia.

The GST will apply on the ‘supply’ of most goods and services consumed in Malaysia. There will be four categories of supplies for GST purposes:

-       Standard-rated (taxable) — subject to the GST at the relevant rate

-       Zero-rated (also taxable) — subject to the GST at 0%

-       Exempt — not subject to GST but with input tax restrictions

-       Out of scope — not subject to GST

Liability for GST on standard-rated taxable supplies rests with the supplier; therefore suppliers need to ensure that they collect the GST from their customers. Registered businesses providing standard-rated supplies (subject to GST) or zero-rated supplies (eg, exports — subject to the tax but at 0%) are entitled to offset their GST liability (if any) on supplies made by the GST paid on inputs (input tax).

This is known as the input tax credit (ITC). This should ensure that in most instances, the GST should not be a cost to business, unlike the current Service Tax and Sales Tax. GST should, in most cases, ultimately be borne by the end consumer.

The exception to the above is the exempt supplies. These are expected to include certain services provided by financial institutions, residential property developers, educational and health care organizations. No GST is charged on most supplies provided by these entities, but there is no entitlement to an input tax credit for GST incurred either.

In this instance, input GST will be a cost to these businesses that will either be absorbed or passed onto the customer. In other countries operating GST type systems, certain concessions or limited reliefs are provided to the exempt sectors to provide partial ITC-type credits to offset the input GST costs to the suppliers of such services. It is unknown whether such similar partial ITC credits will be available to the suppliers of exempt services in Malaysia.

All of these will not necessarily result in Malaysian consumers automatically paying higher prices when purchasing everyday goods and services. The Malaysian GST system as proposed will extend the zero-rating category to include certain other goods used by all consumers and considered basic necessities, including basic groceries. In addition, certain services that are vital to both the health and development of all Malaysians will be exempted from the GST. This will include health-care services provided by the Government, university and private hospitals and clinics.

Mass domestic public transportation services such as rail (KTM, LRT, ERL and Monorail), ships, boats, ferries, express bus, stage bus, workers bus, school bus, feeder bus and taxi services will also be exempted.

The Government has also indicated that the GST will not apply to the supply of residential real estate. This means that the sale, rental or lease of a residential home would not attract the GST as such services will be considered exempt from the GST.

While examining the GST impact on most Malaysian consumers, it has been found that in certain industries, GST should have a beneficial impact to the consumer.

Take for example a new vehicle purchased in Malaysia. Currently the Sales Tax on that new vehicle is 10%. Under the GST proposed for Malaysia, the GST charged will be less than 5%. This should result in a direct cost savings to the consumer. Similar GST cost analysis have been conducted by the Government for a variety of goods and services across various industry sectors as part of the Government’s overall study of the social impact of the GST.

The Malaysian GST system is likely to be a pioneer in how the GST will impact Islamic financial services. Other jurisdictions with dynamic Islamic financial arrangements are also planning for tax reforms which include the introduction of GST or VAT systems.

The United Arab Emirates (UAE) and the other five members of the Gulf Cooperation Council (GCC) have deferred the introduction of GST but work has been done on drafting legislation. Pakistan is also currently in the early stages of drafting a comprehensive VAT legislation. A Malaysian GST law which adequately and fairly addresses the impact of the GST on Islamic financial services is likely to become a useful reference tool for these and other countries as they draft their own GST rules.

As with any legislative or regulatory reform, ensuring compliance with the new rules will be a challenge for the authorities. One way to accomplish this would be for the Ministry of Finance and the Royal Malaysian Customs to implement a coordinated approach to ensure that all Malaysians and Malaysian businesses are adequately informed of the impending GST and their responsibilities.

Will Malaysian businesses be ready for a GST that might begin in the second half of 2011? Eighteen months should be a sufficient time-frame for even large businesses to be prepared. For the largest Malaysian businesses, namely, those operating on a wider global-scale, the expectations are that they would have already done some type of GST preparation either in-house or using tax advisers. This may include looking at how the company’s foreign operations operate under an existing GST or VAT framework.

When the Government of Malaysia announced the deferment of the GST in February 2006, the reason was to allow Malaysian businesses more time to prepare and get ready for the changes the GST would bring. But how many Malaysian businesses have taken the opportunity provided by the Government to do so? Many have indicated that they will not begin any GST preparations until such time when the Government has announced a start-date.

Malaysian businesses must do their part to ensure they are adequately prepared for the introduction of the GST and the impact it will have on their business operations, customers and suppliers. The time and resources required for a GST implementation programme need to be adequately planned for, especially in the light of other competing business transformation projects that might be ongoing.

The type of GST implementation programme required depends on the complexity of the business itself, its local and foreign operations and group structure. Certainly every business needs to look at income and expenses to determine the GST impact; along with a review of current IT systems to assess compatibility with GST requirements, as well as ensuring documentation will be compliant with the GST legislation.

When the Government does announce a GST start-date, all Malaysian businesses will need to actively engage in a GST implementation programme, or re-start the GST implementation programme they had in place in 2004/2005.

For one, looking into 2010, local research unit banker research institute believes that inflation or asset reflation could gradually emerge as a catalyst for the greater local stock market performance, given the existence of ample liquidity with prolonged low interest rates, prospects of a further weakening in the US dollar as well as rising commodity prices.

Under such circumstances, it points out that sectors that could benefit are oil and gas, plantation and property. According to the research unit, this is particularly true for the local property market, which it sees as being in the early stages of a recovery cycle and likely to gain further strength in 2010, given the ample liquidity, prolonged low interest rates, rising consumer confidence and a recovering economy. According to banker research, this is reflected in improving developers’ property sales since 2Q09, thanks to their aggressive marketing strategies (such as the 5-95 scheme) and improving property demand.

However, there is also the potential risk of countries implementing ‘exit strategies’ or policy tightening as soon as their economies show some recovery, which may lead to greater volatility in world financial markets in the year ahead as well as a potential rise in the underlying interest rate.

Already, Israel has raised interest rates and China has tightened its banks’ lending conditions to prevent the build-up of an asset bubble. Reserve banks of Australia have also raised their benchmark rate by 50 basis points (bps) and South Korea is also signalling the need to gradually raise rates as the global economic expansion gathers strength and a recovery is firmly established. While the domestic overnight policy rate (OPR) is likely to remain at the current low level of 2% at least until mid-2010, most economists expect a potential hike of 25-50 bps in 2H2010.

In this case, will the reversal in the trend of declining interest rates hurt property demand and stymie the current sector recovery? As it is, most property sector stocks have not recovered to their highs even as they have bounced off substantially from their lows since March this year and most investors are now in playing on the sector recovery theme. We look further at the sustainability of the current underlying property up-cycle if interest rates start rising ahead in this story.

Underlying Demand Seems Sustainable

According to various research houses, the current rising property demand is seen as sustainable, given a rise in consumer sentiment and the still high affordability of property ownership in the country, among others. For one, the sharp jump in consumer sentiment recently is likely to translate into strong demand for big-ticket items like property due to the high correlation between the two. The MIER (Malaysian Institute of Economic Research) Consumer Sentiment Index (CSI) has jumped significantly from 78.9 in 1Q2008 to 105.8 in 2Q2009. The CSI has now surpassed above the loo-benchmark for the first time since 2Q2008, and if this is sustained in 3Q2009, it will suggest that there is a trend of a strong recovery in consumer confidence (see Chart .1)

Another major push factor for the local property sector is undoubtedly the rising affordability that has successfully helped to boost property demand. Another local research house, Affin Investment Bank Research, reckons that the major difference in the current cycle now from the previous sector down-cycle is the all-time low interest rate.

As such, for this time round, the fall in property prices has been lower compared to the 1997/98 Asian Financial Crisis period where properties were heavily used as collateral for trading financing, which is not the case now. The current low interest rate and the resultant low mortgage rates have managed to stimulate property demand in Singapore and Malaysia despite overall weakness in the economy.

RHB Research agrees.

It reckons that the surge in the current house buyers’ affordability is supported by the low interest rate environment and attractive financing packages offered by banks. Bank Negara Malaysia (BNM) has kept its Overnight Policy Rate (OPR) unchanged at the historical low of 2%, making borrowing costs very attractive. This is further supported by attractive house financing packages offered by bankers (eg, the current mortgage rates are at around base lending rate (BLR) minus 2.0% to 2.5%).

Lower financing costs translate into higher purchasing power and hence, increasing demand for properties. Chart 2 clearly illustrates this. Back in 1980 when the average lending rate (ALR) of banks was recorded at 10.13%, the affordability index back then was pegged at the 100-mark level. In August 2009, the ALR only came up to 4.84%. Assuming a similar property price and financing tenure as well as income, the affordability of a property buyer will now be higher at around the 120-mark, meaning 20% higher as opposed to what it was then in 1980. Even in the event of rising interest rates, say by 5o bps, the affordability index is only likely to fall to 116.85, a mere 1.3% from the current level.

Apart from that, a continuous low interest rate regime will encourage investors to switch their investment from lower return assets, such as fixed deposits, to better return inflation-hedged assets such as properties.

In Malaysia, attractive housing packages offered by developers like deferred payment schemes (ie, 5-95 home loan package where house buyers will only have to make a down-payment of 5% and repayment of mortgage will only commence upon completion of the property) are also powerful incentives that improve house buyers’ affordability. Under the ‘deferred payment’ scheme, house buyers need not worry about their cash commitment until two years later (after the completion of construction works). This will enable house purchasers to save on the interest payable during the construction period and enjoy possible capital appreciation upon completion.

How China’s Leaders Think?

Written By: Robert Lawrence Kuhn

Published By : John Wiley and Sons (Asia) Pte Ltd

Selling Price : USD 34.95

Who are China’s Leaders? How do they think? What does it mean for the future? These are the questions of the moment as New China celebrates its 60th anniversary, because China impacts everyone — an economic superpower competing in every arena of human endeavor. But China’s astonishing transformation comes with challenges and contradictions. Is there a looming “China Threat?” Or an emerging “China Model?”

How China’s Leaders Think — The Inside Story of China’s Reform and What This Means for the Future draws on personal, candid conversations with over 100 Chinese leaders across all sectors to delve into the way Chinese leaders think. Author Dr. Robert Lawrence Kuhn presents an insider’s view of how those who lead China feel about their country’s growing global strength — in trade, business and finance; in diplomacy, defense and security; in science, technology and innovation; in culture, media and sports — and how this impacts the world.

This unprecedented book reflects the personal visions and collective commitment of China’s senior leaders — particularly the next generation who will come to full power in 2012. Readers will not get closer to China’s leaders than this.

Book’s Title: The Next Asia

Written By: Stephen S Roach

Published By : John Wiley and Sons (Asia) Pte Ltd

Selling Price : USD 39.95

As the most dynamic and rapidly growing region in the world over the past decade, Asia has attained a new level of prosperity. Yet Developing Asia’s new found economic ascendancy remains uncertain — As 2008 came to an end, every economy in the region had either slowed sharply or tumbled into outright recession.

Far from having the autonomous capacity to “decouple” from weakness elsewhere in the world, export-led Developing Asia had become even more tightly tied to foreign markets than was the case a decade earlier. The once-bright future is now

in doubt. Investors, business managers, policymakers, and political leaders all need to dig more deeply to uncover the challenges, opportunities, and risks that lurk in this critical region.

Written by Stephen S. Roach, Chairman of Morgan Stanley Asia, “The Next Asia: Opportunities and Challenges for a New Globalization,” peers into the future of the world’s most dynamic region and will help readers understand the economic imperatives of Asia and how it will shape the world economy.

Book’s Title: Stop Acting Rich…And Start Acting Like A Real Millionaire

Written By: Thomas J. Stanley, Ph.D

Published By : John Wiley and Sons (Asia) Pte Ltd

Selling Price : USD 26.95

The steep price we’re paying for the credit crisis begs the question: what led so many Americans to spend so far beyond their means? Why did so many buy into the myth that hyper spending like the rich would somehow convey real wealth? In his most timely book to date, no.1 New York Times bestselling author Thomas Stanley reveals the results of a major survey, which uncovers the sharp differences between the spending habits of real millionaires versus those who are just “acting rich.”

By revealing the truths about what millionaires really spend their money on, and how the rest of us spend in an illusory attempt to emulate them, Dr. Stanley has written an important, must-read book that will transform the debate about America’s hyper consumer culture, and show us all how get on the right path toward attaining genuine, long-lasting wealth now and for the future.