MD: The chipmaker only moving a unit back to US, not shutting any plants
KUALA LUMPUR: Intel, world’s largest chipmaker, is committed to remain in Malaysia even though the rationalisation of its operations will lead to the moving of its assembly and test development (ATD) unit back to Arizona in the United States.
“The wafer fabrication and assembly lines must be close to each other, as there is a need for a lot of interaction because we need to respond to market trends and consumers fairly quickly,” Intel Malaysia managing director Atul Bhargava said.
“Being in different time zones (makes it difficult and that is why) we are moving the unit back to the US. Intel continually optimises its resourcing and business model in line with evolving business needs,’’ he said.
The migration will begin in the first quarter of 2011 and be completed by June the same year.
Atul Bhargava … ‘Our investment in Malaysia is growing every year.’
The affected workers, about 500 of them, at the plant in Kulim Hi-Tech Park will be absorbed into the group and redeployed for other job functions at the Kulim and Penang facilities.
“So we are not shutting down any plants. It is just that the ATD development needs to be closer home in the US,” he added.
Intel has been in Malaysia since 1972. It is the largest offshore facility outside the United States for the chipmaker. The company has so far invested US$3.9bil (RM13bil) in Malaysia.
Intel Malaysia comprises three campuses and employs more than 10,000 people.
Intel Penang is a key assembly and testing site, Intel Kulim assembles processor packaging and is an important operations centre for mobile modules, and Intel Kuala Lumpur includes a multimedia super-corridor development centre as well as a sales and marketing office.
Of the 10,000 people employed, 55% are involved in the manufacturing division, 25% in the design of products, and the balance 20% are in services (IT, shared and other service-related areas).
“We are fairly big in doing design work here and our plants are high-tech, so we really need knowledge workers as the job is not about pushing of buttons,’’ Atul said.
As Malaysia marches towards becoming a knowledge-based and innovation nation, it is necessary to have a workforce that is able to work towards achieving that goal.
“If there is one thing I could tell Prime Minister Datuk Seri Najib Tun Razak, it is that the need to change the human capital (development in the country),’’ Atul said.
He said improvements were needed in the systems adopted by local universities and they should strive to become the world’s Top 100.
They need to change the curriculum to be industry friendly and adopt newer methods of teaching. Only then can talent that can help the country in the innovation phase be created.
“I have been advocating the need to do it either organically or hook up with institutes like MIT; make that quantum leap, emulate, so that people will know us,’’ he said. (MIT refers to the Massachusetts Institute of Technology in the United States.)
Asked whether Intel would follow Western Digital and invest more to expand its operations in the country, Atul said: “Our investment in Malaysia is growing every year as we are here for the long haul.
“We have worked hard and diversified, we have the latest technology here, and we are committed to stay. But just like other companies we move around for the needs of our customers.”
(Western Digital recently announced it would invest about US$1.2bil in Penang.)
Atul said in whatever Intel did, it made sure there is benefit to the company, the country and the consumer. Related Stories:
In the song, Wee narrated how the country had never been shortlisted for the World Cup and how Malaysians had to resort to merely betting on the games and watching football matches in order to get a feel of participating in the tournament.
He also rapped about illegal bookies and wives and girlfriends of football fans complaining about being neglected due to the football matches.
The over four-minute long video also features a number of women clad in attractive sport outfits playing football.
In his blog, Wee said he had written the song to bring a different feel to Malaysia’s participation in the World Cup and urged everyone to work harder for sports.
In the video clip, he had also taken a dig at Malaysia’s performance in the last Thomas Cup badminton tournament and on “Datuk Lee’s” comments and reasoning behind it.
The Malaysian badminton team had lost to both Japan and Indonesia during the Thomas Cup.
The video, which recorded over 151,000 views so far, has attracted diverse comments from viewers, including praises and criticisms.
The 27-year-old Muar-born artiste first made headlines with his infamous Negarakuku YouTube music video in 2007, which he did while studying in a university in Taiwan.
The song had used the national anthem as the background to his rap.
He was subsequently questioned by the Bukit Aman Commercial Crimes headquarters for his song and asked to provide a translation of it in Bahasa Malaysia.
Since then, the rapper had also been criticised for hitting out at Tenaga Nasional Bhd after his home in Muar was hit by a blackout and for his views and sentiments on the Chinese independent school system.
He was reported to be planning and seeking government funding for a film.
HERE we go! Here we go! Here we go! World Cup fever is upon us again. And, as usual, quite suddenly, and often not too wisely, vast amounts of cash are flying around. And the competition amongst the advertisers becoming at least as hotly contested as the games themselves.
To kick-off, in Ad Age we hear that Trevor Edwards, Nike’s VP-brand and category management, feels “It’s the No. 1 event in all of sports, viewed by half the world’s population.”
If he’s right, that would explain another report in Media magazine that CCTV supposedly paid in excess of the US$292.7mil for coverage of the 2002 tournament.
If they and others are still spending that kind of money, and there’s every indication they are, then that’s a lot of moolah for a recession-struck world.
And there are, as usual, a lot of “official” advertising sponsors who are obviously handing over huge sums to FIFA and spending equally large bundles on advertisements.
Regular sponsor Coca-Cola are out there with a quite cute, 60-minute spot that features the story of Roger Miller, the first player, appropriately an African, to do a goal-scoring victory dance. So they trace the evolution of the football victory dance ever since. Lots of money on stock footage, all probably handed over to Russian club owners.
Campaign magazine picks the Adidas’ Star Wars Cantina spot as a standout. In the commercial they have assembled a team of celebrities such as David Beckham, Franz Beckenbauer, Snoop Dogg, Noel Gallagher, Ian Brown, Ciara, Jay Baruchel, Daft Punk and DJ Neil Armstrong.
These folks have been magically incorporated into the cantina scene from the original 1977 ‘Star Wars’ movie (nerd alert; Episode IV: A New Hope).
It must have cost a mint for both the celebrity’s fees and for George Lucas film rights (all of whom really need the money).
And it may be a little bit of a stretch to use the theme line Celebrate Originality, with a bit of old film and stars that are not all fully match-fit.
AdWeek likes the Nike Write the Future spot (and so do I). It shows many prominent soccer stars at pivotal, win or lose moments in a football game.
In a flash forward they imagine how their lives might turn out should they not perform too well. The sight of Wayne Rooney as bearded and down and out and living in a caravan is wonderful. And the cameo by Homer Simpson is a blast.
The director is Alejandro G. Iñárritu, who made the movies Babel and 21 Grams.
The spot debuted on TV but has become a big viral hit; being talked about, passed around and celebrated on Facebook and YouTube.
Again, it probably cost the national debt of Greece, but it certainly proves the actual worth of a well-written, brilliantly executed TVC.
Yet not everyone plays by the ‘official’ rules it seems.
FIFA are getting a bit edgy as some people are realising that paying for the right to call yourself “official sponsor” isn’t worth as much as FIFA and Trevor Edwards maybe think it is.
In fact FIFA are trying to stop people using other anthemic songs about football as opposed to paying FIFA, I guess, to use the “official” World Cup songs; Waka Waka. This Time for Africa (written by Fozzi Bear one assumes and performed, oddly, by that not-at-all African hip-swinger Shakira) and Waving Flag (an infinitely better song with real African feel and sing-a-long zeal).
Campaign magazine again reports another sponsorship foul. It seems that Mars (the very sweet, caramelly chocolate bars) paid a heap of dosh for official sponsorship of the English footy team.
Then they made a fairly dull spot that shows old sportsmen and women reliving past glories.
But then Kit Kat, (the greenly-challenged chocolate biscuity fingers) which didn’t fork out great heaps of cash for sponsorship, is being advertised using a football theme too, and with a far more imaginative spot to boot.
So Mars are talking about suing Nestle. I’m told this is called “ambush marketing”. But hey, anyone who can afford it (and it seems they can) is advertising using football as a theme.
Pepsi have a neat ad where a bunch of soccer stars, en route to a game in South Africa, are waylaid by a bunch of kids who challenge them to a soccer match for their cans of Pepsi.
Problem is the crowd, who form the goal mouth and the boundary, keep moving. So the stars lose. People have been saying it portrays Africans as cheats.
The Cup may be big, but minds remain small. Carlsberg beer has an ad featuring creaky old timers like Bobby Charlton, Alan Shearer and the ilk playing an afternoon pub game.
Old pros again, but this time done with immense charm. Optus, the Australian telco have an excellent spot where a team is training and playing against African animals like rhinos and elephants. Jolly exciting, beautifully made and quite relevant.
And, as a penalty shootout, Malaysia has old makciks dancing about, more old football players and football players turning into what appear to be African animals. A yellow card I suspect.
There it is, the final whistle. Another great result for the World Cup and its sponsors. It provokes many excellent creative ideas, which is very good indeed. But within days it’s all over and will be quickly forgotten.
Advertisers who have plead poverty for three years have turned up with surprise money, as if suddenly and miraculously discovered down the back of the sofa, and they’ve blown the lot.
The lack of moderation and the feeding frenzy that accompanied the event does tend to end with one asking whether it was all really worth it.
In the rush to participate did they all take their eye off the ball (boom tish!)
For me it’s all a bit too much, so I think I’ll lock myself in the dressing room for the duration. And ask myself:
“Is the cash more beautiful than the game?”
Wake me when it’s over.
Paul Loosley is an English person who has been in Asia 32 years, 12 as a creative director, 20 making TV commercials. And, as he still can’t shut up about advertising, he tends to write every month. Any feedback, email p.loosley@gmail.com (but only if you swear never use the word ‘soccer’).
FOR Masterskill Education Group Bhd’s founder Datuk Seri Edmund Santhara, who spent most of his early years growing up in the estates, it was a big deal when he secured a seat in a local university many years ago. But this he could not have envisaged until it finally happened – owning one.
Masterskill, the country’s largest operator of non-government nursing colleges, made its debut on Bursa Malaysia last month, making its mark as the country’s largest initial public offering so far this year. The growth path of this health science college over the past three years has been phenomenal; revenue has more than doubled from RM126.5mil in FY2007 to RM273.4mil in FY09. FY08 in particular, was a pretty outstanding year for Masterskill as revenue surged 60% from the year before.
That year, student enrolment jumped 55%.
Today Masterskill generates net profits of RM97.38mil.
Where it all began
“Masterskill started from an idea. We saw a need in the market. I wanted to bridge an opportunity gap, as Malaysia is a net importer of nurses. We have a serious shortfall of nurses and health workers, so surely something is wrong. There is ample room for growth in Malaysia’s healthcare industry,” he says.
From a more altruistic perspective, Edmund says his primary focus is to provide an opportunity to Malaysians who want to succeed by caring for somebody else.
“Before Masterskill, the Health Ministry (MOH) struggled to get bumiputras to study in the science stream. In Masterskill, 80% of the bumiputras are in the science stream!” he says. Today, 52% of Masterskill’s students are bumiputras from Peninsular Malaysia, 21% are Christian bumiputras and the remainder are Chinese and Indians.
“When I first started out conceptualising this idea, we were doing a paradigm shift. We were going against the hospitals. Firstly, we don’t own hospitals. We decided not to compete with the other players. We trained students with a skill that the market really needed,” says Edmund.
Backed only with their dreams, Edmund and his partners approached the MOH with their idea of setting up a health science college.
“We wanted to use some of the public hospitals as our training ground. The benefits for doing this were obvious. By doing this, students would get better clinical exposure, and the hospital’s staff ratio would also increase. We suggested using some of the public hospitals as training ground for the students,” he says.
MOH saw merits in the idea, and allowed them to proceed. Then came the second part of the headache. Masterskill’s college was in Cheras, but the hospitals for training were in Sabah and Sarawak.
“We decided to take in students from Sabah and Sarawak. During their holiday break, they would be able to return to their hometowns and concurrently do their practical training. This immediately lowered our transportation cost which resulted in a savings of up to 50%,” he says.
Idea turns reality
Edmund says most of his inspiration and drive come from his humble background in the estates.
His parents were rubber tappers and school was 28 miles away. Going to school was a constant challenge, but through the combination of hitch-hiking from lorries, a walk and further hitch-hiking from other vehicles along the same route, he managed to get to school.
“I used to get caned for going to school late. It was pure hardship, living from day to day. Education was my only way out (of the estates),” he recalls.
“Education was the platform to reveal my ability. It was the key that could open my first door. Desperation leads you to success,” he says.
It’s been a huge leap for this salt-of-the-earth entrepreneur since. One can imagine how overwhelming it must have been when he got his cheque for RM1mil in 2007 from his partner.
Following the IPO exercise, Edmund has a 22.1% stake in the company worth RM335mil based on current market value.
Wealth of change?
Has all this wealth changed Edmund? “Money is a bi-product of success. It facilitates, but it is not the carrot,” emphasises Edmund. He believes success comes through getting things done.
“The power is in execution and speed. The outcome will be decided by the industry and God,” he says.
And certainly, Edmund practises what he preaches, not just in his professional life, but also in personal discipline.
He recently lost 10kg in a month and plans to lose a further 4kg.
He is a big believer of self actualisation – a concept where one is able to have an achievement and stand among his fellow man.
Therefore, it isn’t surprising that he is most let down when he fails to meet his expectations.
On that note, he also believes in engagement with the community. He does his bit by giving motivation talks to the underprivileged.
“If I speak to 100 people, and I inspire one person, then I have achieved my goal,” he says.
Now everyone can learn
Not surprisingly, Edmund does not go in search of rich students for his courses in Masterskill.
He goes to rural areas such as Limbang, Kuala Penyu, Sabah and Sarawak to attract students.
“What Masterskill offers students is an opportunity to study and graduate from an institution that is recognised and one that gives you a career beyond Malaysia.”
“It is a rewarding career and one that is noble and makes you feel happy. It’s about saving lives,” he says.
He says many households in Sabah and Sarawak only have a monthly income of RM600 to RM700.
“Once a student studies and graduates from Masterskill, he earns a living and his income increases the household income by four to six times? This definitely has a social and economic impact on every family,” he says.
Edmund’s indulgences are his children and chess. Today, Edmund has an eclectic collection of close to 500 chess sets from across the globe.
His passion for the game has seen him start the Kuala Lumpur Chess Association, of which he is founder and director. He is also the director of the Asian Chess Federation.
Edmund was a gold medalist in the inter-varsity competition in 1998 when he represented University Kebangsaan Malaysia.
Edmund’s grandmother, with whom he was very close, had passed away last year. She had been extremely proud when he got into a local university.
Does he have any major regrets? “Today I own a university. I wish I could tell her (grandmother) that,” he says.
ONCE a monkey has gotten hold of food in its hand, it is close to impossible to get the primate to let it go. And this makes trapping it easy for monkey catchers.
In Malaysia, a villager developed the ingenious “Monkey Trap” by burying a coconut and drilling a narrow hole big enough for a monkey’s hand to go through. He would place pieces of fruit, nuts or meat on skewers in the coconut. The odour and smell of the treats attracts monkeys to reach into the narrow opening and grab hold of the treats. As the monkey attempts to extract the treats, it finds that its fistful of food will not fit through the narrow opening.
The monkey will scream in frustration as he continues to hold on to his food and attempts to remove his hand from the coconut. The villager comes over and drops a net over the monkey. Even though the monkey sees the villager approaching, so intent is it on keeping the food that it grips the morsels even tighter and tries even harder to dislodge its fist.
Nothing is keeping that monkey captive except the force of its own attachment. All it has to do to escape is let go of the food. But so strong is the force of greed that it is a rare monkey which can let go.
Aren’t many business leaders just like monkeys? We may laugh at the monkey for its stupidity but every day we see similar foolishness displayed by many business leaders who struggle with letting go. Like monkeys, many leaders fail when they hold on too tightly to something that leads them astray.
We simply can’t let go of products, services and practices that worked in the past which contribute little today but require significant amounts of our time and attention. Or we struggle to let go of our ego and pride. And some business leaders simply can’t let go of their business and stay on in their roles way past their expiry date.
But the phenomenon is not limited to business leaders. Many people are traumatically bonded and cling on to bad relationships even though they know better. Or we can’t let go of a bad habit. Worse still, many hold on to old beliefs and dogma like “if it’s not broken, why fix it” and end up missing the boat when changes need to be made. Why is this?
In the case of the monkey, greed is the key reason. Greed and avarice are why executives fail to let go. And greed leads to fear.
Chinese philosopher Zhuangzi wrote: “He who considers wealth a good thing can never bear to give up his income; he who considers eminence a good thing can never bear to give up his fame. He who has a taste for power can never bear to hand over authority to others. Holding tight to these things, such men shiver with fear; should they let them go, they would pine in sorrow.”
While greed for food holds the monkey back, what holds us back? Is it our ego, power, pride or greed?
Successful business leaders struggle with letting go of their products and services that worked previously because they fear the unknown. The fear of losing the past outweighs the gain of the future. Thich Nhat Hanh, a famous Buddhist teacher, said: “People have a hard time letting go of their suffering. Out of a fear of the unknown, they prefer suffering that is familiar.”
They believe if they keep going the same way, even though it may be painful now, somehow life will return to the excesses of before in the future. Albert Einstein rebuts this belief: “Insanity is doing the same thing over and over again and expecting different results.”
Status Quo
Each of us naturally wants to maintain status quo, sticking to the safe and comfortable. According to Edward Miller, dean of John Hopkins medical school, people won’t change even if their lives depended on it. He studied people two years after their coronary artery bypass grafting and found 90% of them had not changed their lifestyle even though they knew they could die. They just could not change their lifestyle for whatever reason.
CEOs are supposedly the prime change agents for their companies but they are often most resistant to change.
When Louis Gerstner took over as CEO of IBM, he started by sticking to the McKinsey routine that had worked for him throughout his career – analysis paralysis and strategy. He thought he could revive the company through drills such as selling assets and cost cutting which were his comfort zones. But he was wrong and to his credit, he changed his consultant approach to a more cultural transformative one, thereby enabling IBM’s revival.
But most leaders resist change and are crippled by excuses to retain status quo. If you walk into any business and hear the following excuses, you are in a business where there are a lot of monkeys who just can’t let go:
· We’ve never done it before and it’s not possible.
· We/another company/person tried it before and it won’t work here. Our company is different.
· We’ve been doing it this way for the past 50 years.
· Why change – it’s working OK. Everything is fine here.
· Management will hate it. This company is not ready for it.
· It needs further investigation and more thought.
· Our competitors are not doing it. Why should we?
· We don’t have the money/resources/assets to do this.
· The union will scream. It’s too much trouble to change.
· Customers won’t buy it. It’s too radical a change
Ego
Ego is responsible for the majority of business failures. Disney, Wang Laboratories and even General Motors’ slide from glory was due to leadership ego. Even celebrity CEOs are not immune to ego issues. Steve Jobs was kicked out of the company he founded because of ego issues.
A personal example while I worked at GE is of the legendary Jack Welch, whose refusal to part with Montgomery Ward, a trouble departmental store that came to GE looking for an infusion of US$100mil to reverse the retailer’s fortunes. It wasn’t enough and the next year it came back and asked for more.
GE, faced with losing its original investment, gave the firm the additional money and then proceeded to give more the next year and the following years. To protect an initial US$100mil investment, GE eventually wasted billions. Just like the monkey who couldn’t let go, the world’s greatest CEO couldn’t let go of a black hole and later admitted it was ego that stood in the way.
Nelson Mandela quit as president of South Africa after his first term a legend. Some leaders can’t let go of their businesses and stay in the job way past their expiry date, causing the business or country to be ruined in the process.
Outdated beliefs
It is hard to identify even one single big business success that was achieved by following conventional wisdom. Yet many still rely on it daily.
A secretary working part-time while studying at a university in the US refused to learn the computer and only used the typewriter. She was typing 300 words a minute and believed if she kept improving her speed, her job was safe. Whilst everything around her told her to embrace the computer, her inner belief said otherwise. A year later, they fired her and replaced her with someone who typed 80 words a minute but could use the computer.
The newspaper industry globally is in decline and many blame the advent of the Internet to this decline. But researchers Michael Moore and Sean Paul Kelley believe that it is greed and the reliance on outdated wisdom that has seen the print media’s decline.
Each of us have beliefs and conventional thinking stifling our progress. Take time and re-examine your beliefs and remove and replace the ones that don’t work. Businesses need to do this often too.
In life, there are many things that we have to learn to let go. We have to let go of situations, things, memories, attachment to people and even ourselves. It can be very painful when it’s time to let go.
Letting go is similar to crossing monkey bars. You have to let go at some point in order to move forward. Letting go can be one of the scariest experiences in your life but only by boldly taking a leap of faith into the unknown can you truly be the leader you were meant to be.
So, this weekend, why not reflect and learn to “let go” of something that is holding you back from greatness. Remember, every exit is an entry to somewhere else.
Think of it this way: you’re on a hiking trip and along the way you keep picking up heavy objects, things that don’t really help you get up the hill. After a while, these objects begin to slow you down and unless you get rid of them, you’ll never complete your trip. So, let them go.
Roshan Thiran is CEO of Leaderonomics, a social enterprise passionate about transforming the nation through leadership development. For more information on leadership programmes for your organisation, call 012-3291968 or login to www.leaderonomics.com.
IN times of old, when we buy a property, it was meant for stay, as the term owner-occupied. Slowly, this was extended, when people bought properties for investment purposes. Realising this venture as a business, financial institutions, which usually finance these investments, started assessing the risks associated with it. Hence the birth of the loan or mortgage related insurance coverage.
Today, in Malaysian there are two main types of housing loan related insurance coverage, called MRTA (mortgage reducing term assurance) and MLTA (mortgage level term assurance). The former was the first to be offered, but both protect the loan borrower against death or total permanent disability (TPD). Basically, in the event of loss of life or TPD (or in some instances also covering critical illness, depending on the terms) the policy will cover the remaining payment obligation due under the housing loan to the bank.
The main differentiation factor lies in the offerings and coverage categories, whereby MRTA acts like a life insurance, the premium is lost in the end, but for MLTA it acts as a term policy, whereby there is cash-back in the event of no claim. Furthermore, the MRTA is a reducing balance coverage, that pays back in accordance with a reducing balance schedule, and at the end of the tenor the payable sum is zero. This is not the same for MLTA whereby the coverage is fixed from start, meaning the person gets cash-back mounting to the sum insured.
While it is easy to see, which options stands out the better, we need to further analyse two more factors. Firstly, it involves the fact that the premium for the MLTA is much higher. This can go to 10 times higher in totality compared to a MRTA premium. Which brings us to the second factor, which is the purpose. The purpose of the home mortgage insurance, if we can remember, is to cover us against TPD and death, whereby our family is not burdened with the financing. If we seek to find a reasonable cost approach and in the MRTA instance, to be financed by the bank via lump sum payment capitalised into the loan, then the choice is obvious.
Let us take an example in order to show the details. Thirty-year old Vaniza Carlos is buying a RM125,000 property, and is taking up a 30-year term 80% loan financing package. She is faced with the option of choosing a loan insurance package, and her friendly insurance agent Cryced sets out the terms as per Table 1.
Which will be your pick?
Just for analysis purposes, in order to equate the total cost of the MLTA to current value (to bring it to MRTA equivalent), using the NPV approach at 10% discount rate (method of derivation which was featured in my previous article), the NPV value works out to about RM9,950, which is effectively only about 3 times higher than the cost for MLTA. Year 2020 is 10 years into the loan agreement, where the outstanding loan sum would have reduced to about 75% of original sum.
Nevertheless, under the bancassurance umbrella, there are many types of term life policies which are not directly linked to the property but offers similar risk coverage. Bancassurance is defined as insurance business being provided by banks of financial institutions. This term was coined after banks started merging with insurance companies, and in combination started offering products with dual, loan and risk coverage facilities, among others. But do be careful, as MRTA and MLTA usually covers main critical illnesses (albeit limited from the full list of known 36 critical illnesses), whereas term life policies differs.
It is interesting to note that banks are now insuring this “business venture” or property investment, and if this can be extended to say a business of setting up a restaurant with an initial cost of RM100,000, with the same terms being applied. Food for thought, isn’t it?
Raymond Roy Tiruchelvam … “I forget what I was taught, I only remember what I learnt” is a business planner with SABIC group of companies
THROUGHOUT history, man has always taken pride in customising his mode of transport.
The earliest form of “vehicle mod” can be traced back to probably when horses were domesticated and individualised in every way imaginable.
Native Americans painted them, knights donned them with colourful linen and cowboys saddled them with studded silver.
Fast forward to the era of the automobile and vehicle customisation has become a huge fad – a platform for artistic automotive expression.
Rims or customised wheels are among the most popular upgrades that can help boost your vehicle’s resale value, says a tyre agent.
But let’s talk about resale value. The common automobile, like almost everything else on this planet, starts to depreciate in value as time goes by.
Car modifications, as pleasing as they may seem in the eye of the beholder, generally tend to knock down the value of one’s car even further when compared to a non-customised or “stock” vehicle.
Used Autos Sdn Bhd owner Peter Wong, a Segamat-based used car dealer, explains: “The idea of vehicle modifications screams personalisation, meaning that the car is meant to suit the owner’s individual needs and no one else.
“Because the vehicle will now end up looking totally different from what the manufacturer intended, the range of buyers you can attract will be limited.”
Still, there are vehicle customisations that can actually help increase, if not retain (rather than decrease) the resale value of your car.
All souped up
Rims, or customised wheels, are among the most popular upgrades that could help boost your vehicle’s resale value, says Klang Valley-based tyre agent Vincent Pang.
“Customised wheels not only positively impact the performance and handling of any vehicle, but they can help improve its value as well. Plus, they enhance your vehicle’s appearance,” Pang says.
He, however, advises that customers should go for rims that are identical in size to the vehicle’s original wheels.
“A larger rim means more weight, meaning more effort is needed to spin the wheel and this could result in worse fuel economy. If you must go with a bigger wheel, choose alloy rims, which are lighter, as opposed to (heavier) steel ones.”
Another trick is to compensate for the larger wheel with a lower profile tyre. This is to ensure that the diameter of the new wheel and tyre is the same as the original.
“Keeping the diameter of the new wheel and tyre package equal to the vehicle’s original wheel size should result in very little impact on fuel economy,” says Pang.
“Getting wider rims are also great for handling and stability, something that a lot of buyers look for in a car. However, these wheels will require wider tyres, which can cost more,” he adds.
Jeremy Yeoh, a Kuala Lumpur-based used car dealer, says many vehicle owners are spending more on mobile electronics that help increase their car’s resale value.
“Aftermarket GPS navigation systems are quite popular with today’s drivers because they provide flexibility and mobility compared with systems installed by the car manufacturers.
“These units, which can be stuck on practically anywhere within the vehicle cabin, come with added features such as UBS and Bluetooth connectivity, which are easier to update and use,” he says.
Aftermarket stereo systems are also popular, provided the installation is professionally done and does not interfere with the vehicle’s electrical system, says Wong.
“I’ve known of car owners that installed crazy sound systems into their vehicles and the wiring job was poorly done. This caused an overload and the car caught fire.
“DVD entertainment systems are also quite popular, but it depends on the types of vehicle. These are ideal SUVs (sports-utility vehicles) and MPVs (multipurpose vehicles), which are great for carrying five to seven passengers during long trips.”
According to Yeoh, certain visual upgrades can also increase the resale value of a car if they are “not over the top” and legal.
“Given our hot climate, adding a sun-roof or window tinting, as long as it is legal, can help garner a higher resale value.”
ON paper, it seems promising. But will it fall short on execution?
That question may seem like a cynic’s oft-quoted critique, but it resonates with the sentiments of the general Malaysian populace who were over the week given large doses of information on how the Government plans to steer the country towards a high income nation. All of that – and some – were encapsulated in the 420-page 10th Malaysia Plan.
For starters, the broad plan sets a target growth rate of 6% per annum over the span of 2011-2015 to bring the country closer to its aspiration to turn into a high income nation by 2020. The Government will fork out some RM230bil on development, just as it did in the Ninth Malaysia Plan (9MP).
Prime Minister Datuk Seri Najib Tun Razak tabling the 10th Malaysia Plan in parliament on Wednesday.
Essentially, it echoes the salient targets of the New Economic Model that was revealed in March as well as transformation efforts under the Government’s Transformation Programme.
Views seem mixed; while some economists opine that the growth target may be ambitious, others say it’s achievable but the Government needs to pull out all the stops to get there.
“10MP makes the right soundbytes,” says Maybank IB Research. But “the market wants to see action,” says Citigroup, referring to past delays and false starts in project and policy implementation.
The main approach
A higher sum of money will be devoted to soft infrastructure (40%) such as skills training and human capital development in contrast to hard infrastructure (60%) such as roads, power stations and ports. That marks a shift from the past plans and is very much in keeping with the main thrust of the 10MP – change.
Second Finance Minister Tan Sri Nor Mohamed Yakcop elaborates: “The world has changed and countries have become more liberalised and we have to get the 10MP right to get to Vision 2020. We want to be driven by productivity and innovation and no longer by factor accumulation.’’
Tan Sri Nor Mohamed Yakcop ... ‘Progress is going to come from skills.’
No doubt. There’s wide room for improvement in this area. The number of people getting technical and vocational knowledge in more developed nations far outweighs those in Malaysia. Toss in the fact that presently, over 77% of secondary school leavers are entering the workforce armed with merely SPM qualification and the push to get this plan on high gear becomes imperative.
“We don’t need more brick and mortar. Progress is going to come from skills and now is the time to do it,’’ says Nor Mohamed.
The plan further expounds the Government’s repeated calls for the private sector to take the driver’s seat to build the economy. Towards this end, the Government is looking for businesses to invest some RM115bil a year to achieve a growth rate of 12.8% per year in private investment as opposed to a paltry 2% in the 9MP.
In line with this, the Government will gradually scale back its pump priming strategy whereby in 2015, it intends to slash the deficit to 2.8% of GDP from a projected 5.3% in 2010.
Apart from the ambitious target of private investments to pick up speed dramatically, the plan also sees household spending growing by 7.7% per annum, much more than it has been. There are concerns if this can happen given the debt levels of households.
Do people have the appetite to take on more debt? Is it wise to expect a rising spend policy when subsidies are expected to be slashed leading to higher inflation?
Aspiration vs achievement
Some will argue that the plan repackaged many of the previous objectives. One example is efforts to improve human capital levels which have been spelt out in the past.
“We need a transformation in the planning approach. There must be a major change,’’ says economist Datuk Dr Zainal Aznam Yusof.
He argues that economies are getting lighter on their feet and reacting faster than they did 40 or 50 years ago.
“It must be beyond a rolling plan and there must be continuous planning and we should not wait for the mid-term review to change things,’’ he says.
A more nimble approach in planning is painfully obvious based on the aspirations of the past five-year plans and its actual achievements.
The past 10 years has seen Malaysia traverse a bumpy path – two recessions and a world that has grown smaller on the back of globalisation which also makes it more vulnerable to external factors. Understandably, it would be difficult to take into consideration economic cycles when formulating policies as rarely, downside risks are taken into account when setting targets.
Suffice to say that many key indicators set have not met their mark not just in the 9MP, but also in the previous two plans.]
In fact, among the major economic targets contained in the 9MP, the only one that was met was inflation.
In comparison, key targets such as GDP growth, private investment, exports and consumption, both public and private, were pleasantly surpassed in the Fifth and Sixth Malaysia Plans. Noteworthy is that these two plans – between 1986 and 1995 – were unveiled when Malaysia was being transformed into a manufacturing-led economy and when foreign investors viewed Malaysia as a darling investment destination in Asia.
On the other hand, the last three plans coincided with the Asian Financial Crisis and the financial sector crisis in the United States and Europe that plunged the world into a recession. But analysts say the culprits could also be private sector withdrawal and weak implementation.
The private path
A central feature of the 10MP is to crank up private spending but as history has proven, that is no walk in the park.
“The private sector has lost dynamism, with private investment languishing due to external and internal constraints,’’ says CIMB Research head of economics Lee Heng Guie in a recent report.
The constraints include the weak government bureaucracy where approvals take far too long and that the private sector is being crowded out by government linked companies (GLCs).
Zainal says that to have more effective implementation, what is needed is a more realistic and forceful approach, akin to what is being done in Singapore. While consultation and engaging the public on key policies are fine, it ought to be employed with discretion. Otherwise, it could come at a cost. “What you will lose is leadership strength in the timeliness and aggressiveness in implementation,’’ he cautions.
To address the infamous red tape and bureaucracy and government hindrance to private investment, several measures have already been put in motion.
Pemudah and Pemandu are two government agencies that have been entrusted in bringing about on-the-ground change that is needed for Malaysia to remain competitive in the world.
And progress has been made.
Via Pemudah, the time taken for a number of government services have been cut. It now takes three days to start a business compared with 11 previously.
A vast improvement has also been made in registering standard property titles and getting tax refunds but there is a lot more left to be done before the country can meet its aim of breaking into the top 10 in the World Bank’s Doing Business survey where Malaysia was ranked 23rd in the 2010 report.
Improving approval process is one step. Eventually, it still boils down to wooing domestic businesses and foreigners to invest more in the country.
Centre for Public Policy Studies chairman Tan Sri Ramon Navaratnam says it will be difficult for the Government to see private investments grow by 12.8% a year during the duration of the plan.
“How do you do it when there is really nothing attractive enough to attract FDI in a significant quantity and to prevent domestic investments from going abroad to more attractive pastures?’’ he asks.
He feels that unless there is change to the policy of allocating 30% of wealth to just one race, corruption eradicated and a more merit-based and liberal environment promoted, the task is difficult if not impossible.
“There must be a holistic improvement to the environment,’’ he says.
Backing the sector
The concept of the Public Private Partnership would be backed with a RM20bil facilitation fund and this is seen as a major kicker in getting the private sector to open up their wallets.
Nor says the Government would give private companies a grant of up to 10% of the cost of the project.
“The rules are simple and the Government will give a cheque,’’ he says.
The Facilitation Fund is expected to attract private sector investments worth RM200bil during the 10MP.
“If those are government initiated projects, then it is pretty much government driven. But the private sector will bite into the money made available and take advantage of the facilitation fund,’’ says an economist from RHB.
Other measures proposed is a timely focus on SMEs and trying to get their contribution to GDP up to a level enjoyed by other more developed countries. To do so, funding and market access issues would have to be ironed out.
Malaysian Investment Development Authority (Mida) would also be reformed to make it more effective as a one-stop centre in bringing in FDI into the country.
On its part, the Government has proposed to establish a Talent Corp to inject more professionalism and capability into the service.
Even so, at this point, sweet talking the Malaysian diaspora into coming back to Malaysia and keeping the next wave of talent from moving abroad to greener pastures is a mountain of a challenge as the brain drain over the years has built up tremendous momentum.
Much of the same?
The 10MP contained excerpts of what the proposed New Economic Model but not the more controversial changes proposed, such as the doing away with affirmative action and cutting foreign labour, and that took some by surprise.
The current 30% bumiputra equity ownership remains one of the key thrusts of government policy and while the equity number stands, the Government has broadened it to non-financial indicators such as professional employment and real estate ownership.
The Government felt there was a need to transform the bumiputra development agenda to enhance participation among competitive and resilient bumiputra companies.
Such an approach will be based on four key principles – market-friendly, needs-based, merit-based and transparency.
“I am encouraged by some of the announcements and confused by others. Are they going to have quotas for employment and properties?’’ asks Navaratnam.
Whether that would deter foreigners or even domestic investors from investing into the country is up in the air but while the Government spoke about maintaining affirmative action, it also sent a strong signal that it was moving ahead with its international obligations to liberalise more sectors of the economy, especially in the growing and important services sector by 2015.
Liberalisation will bring about more competition and allow companies to benefit and prosper in a more open business atmosphere. In addition, the Government will enact the Competition Act next year.
“That’s a good development but at the moment many people are unaware of what the Competition Act will do,’’ says an analyst.
He feels once the ramifications of the Act is assessed, there could very well be lobbyists who might put pressure on the Government to repeal or change the legislation.
The changes to the bankruptcy law is lauded as it will encourage risk taking among entrepreneurs, which is essential, especially in the high-tech businesses, in building a more dynamic business community.
“Banks will have to be more cautious and they will eventually have to learn to price in such new risk elements,’’ he says.
That, coupled with the removal of distorted price controls and subsidies should help improve the competitiveness of the economy.
The leeway for mistakes is getting slim. There is just 10 short years that stand between now and the time the country achieves its big objective of becoming a high-income nation. Considerable work needs to be done.
CIMB Research sums up the task ahead pretty well.
“If the reform programmes and high-impact projects under the 10MP are properly executed, it will be positive for both the economy and the capital market in the short-to-medium term. But if the reform moves are stalled and implementation of the planned projects and programmes is delayed, it could hamper growth and investment prospects,’’ it says.
The broker says there should be more openness in government expenditure including significant acceleration of enforcement and prosecution for misappropriation and mismanagement of resources within the Government.
It points out that expenditure leakage and wastage is a pervasive problem and has an impact on the overall economy.
“Unless the Government means business, this is our last chance,’’ says Navaratnam.
Atul Bhargava … ‘Our investment in Malaysia is growing every year.’
