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Saturday, September 15, 2012

Anti-American world-wide stirred up by US film 'Innocence of Muslims'


Tara Todras-Whitehill for The New York Times
Egyptian protesters threw stones at riot police officers during clashes near Tahrir Square in downtown Cairo on Friday.







Anti-American rage that began this week over a video insult to Islam spread to nearly 20 countries across the Middle East and beyond on Friday, with violent and sometimes deadly protests that convulsed the birthplaces of the Arab Spring revolutions, breached two more United States Embassies and targeted diplomatic properties of Germany and Britain.

The broadening of the protests appeared to reflect a pent-up resentment of Western powers in general, and defied pleas for restraint from world leaders, including the new Islamist president of Egypt, Mohamed Morsi, whose country was the instigator of the demonstrations that erupted three days earlier on the anniversary of the Sept. 11, 2001, attacks.

The anger stretched from North Africa to South Asia and Indonesia and in some cases was surprisingly destructive. In Tunis, an American-run school that was untouched during the revolution nearly two years ago was completely ransacked. In eastern Afghanistan, protesters burned an effigy of President Obama, who had made an outreach to Muslims a thematic pillar of his first year in office.

The State Department confirmed that protesters had penetrated the perimeters of the American Embassies in the Tunisian and Sudanese capitals, and said that 65 embassies or consulates around the world had issued emergency messages about threats of violence, and that those facilities in Islamic countries were curtailing diplomatic activity. The Pentagon said it sent Marines to protect embassies in Yemen and Sudan.

The wave of unrest not only increased concern in the West but raised new questions about political instability in Egypt, Tunisia and other Middle East countries where newfound freedoms, once suppressed by autocratic leaders, have given way to an absence of authority. The protests also seemed to highlight the unintended consequences of America’s support of movements to overthrow those autocrats, which have empowered Islamist groups that remain implacably hostile to the West.

“We have, throughout the Arab world, a young, unemployed, alienated and radicalized group of people, mainly men, who have found a vehicle to express themselves,” Rob Malley, the Middle East-North African program director for the International Crisis Group, a consulting firm, said in a telephone interview from Tripoli, Libya.

In a number of these countries, particularly Egypt and Tunisia, he said, “the state has lost a lot of its capacity to govern effectively. Paradoxically, that has made it more likely that events like the video will make people take to the streets and act in the way they did.

Some of the most serious violence targeted the compound housing the German and British Embassies in Khartoum, the Sudanese capital, causing minor damage to the British property but major fire damage to the German one. The foreign ministers of both countries strongly protested the assault, which The Associated Press said had been instigated by a prominent sheik exhorting protesters to storm the German Embassy to avenge what he called anti-Muslim graffiti on Berlin mosques.

The police fired tear gas to repulse attacks in Khartoum, where about 5,000 demonstrators had massed, news reports said, before they moved on to the United States Embassy on the outskirts of the capital.

In Tunis, the United States Embassy was assaulted at midday by protesters who smashed windows and set fires before security forces routed them in violent clashes that left at least 3 dead and 28 hurt. Witnesses and officials said no Americans were hurt and most had left earlier.

The worst damage was inflicted on the American Cooperative School of Tunis, a highly regarded institution that, despite its name, catered mostly to the children of non-American expatriates, nearly half of whom work for the African Development Bank. School officials, who had sent the 650 students home early, said a few protesters scaled the fence and dismantled monitoring cameras, followed by 300 to 400 others, some of them local residents, who looted everything including 700 laptop computers, musical instruments and the safe in the director’s office, and then set the building on fire.

“It’s ransacked,” the director, Allan Bredy, said in a telephone interview. “We were thinking it was something the Tunisia government would keep under control. We had no idea they would allow things to go as wildly as they did.”

The school’s director of security, David Santiago, said a group of staff members formed a posse armed with baseball bats to chase lingering looters away hours after the assault. “Our elementary school library is burning as we speak,” he said angrily as he and his colleagues sought to assess the damage. “It’s complete chaos.

Thousands of Palestinians joined demonstrations after Friday Prayer in the Gaza Strip. Since there is no American diplomatic representation in Gaza, the main gathering took place in Gaza City, outside the Parliament building, where American and Israeli flags were placed on the ground for the crowds to stomp. Palestinians also clashed with Israeli security forces in Jerusalem and held protests in the West Bank.

Witnesses in Cairo said protests that first flared Tuesday grew in scope on Friday, with demonstrators throwing rocks and gasoline bombs near the American Embassy and the police firing tear gas. The Egyptian news media said more than 220 people had been injured in clashes so far.

In the eastern Libyan city of Benghazi, where J. Christopher Stevens, the American ambassador, and three other Americans were killed Tuesday, militias fired rockets at what they thought were American drones overhead, prompting the government to temporarily close the airport as a precaution. The bodies of Mr. Stevens and the others killed in the Libya attack were returned to the United States on Friday.

In Lebanon, where Pope Benedict XVI was visiting, one person was killed and 25 were injured as protesters attacked restaurants. There was also turmoil in Yemen, Bangladesh, Qatar, Kuwait, Bahrain, India, Pakistan and Iraq, and demonstrations in Malaysia. In Nigeria, troops fired into the air to disperse protesters marching on the city of Jos, Reuters reported. In Syria, about 200 protesters chanted anti-American slogans outside the long-closed American Embassy in Damascus, news reports said.

In the Egyptian Sinai, a group of Bedouins stormed an international peacekeepers’ camp and set fire to an observation tower, according to Al Ahram Online, a state-owned, English-language Web site. Three people, two Colombians and one Egyptian, were injured in the ensuing clashes.

In Yemen, baton-wielding security forces backed by water cannons blocked streets near the American Embassy a day after protesters breached the outer security perimeter there, and officials said two people were killed in clashes with the police. Still, a group of several dozen protesters gathered near the diplomatic post, carrying placards and shouting slogans.

In Iraq, where the heavily fortified American Embassy sits on the banks of the Tigris River inside Baghdad’s Green Zone and is out of reach to most Iraqis, thousands protested after Friday Prayer in Sunni and Shiite cities alike.

Raising banners with Islamic slogans and denouncing the United States and Israel, Iraqis called for the expulsion of American diplomats from the country and demanded that the American government apologize for the incendiary film and take legal action against its creators.

In Egypt, in particular, leaders scrambled to repair deep strains with Washington provoked by their initial response to attacks on the American Embassy on Tuesday, tacitly acknowledging that they erred in their response by focusing far more on anti-American domestic opinion than on condemning the violence.

The attacks squeezed Mr. Morsi and the Muslim Brotherhood between conflicting pressures from Washington and their Islamic constituency at home, a senior Brotherhood official acknowledged. During a 20-minute phone call Wednesday night, Mr. Obama warned Mr. Morsi that relations would be jeopardized if the authorities in Cairo failed to protect American diplomats and stand more firmly against anti-American attacks

On Friday, Mr. Morsi, on a scheduled state visit to Rome, called attacks on foreign embassies “absolutely unacceptable.”

By RICK GLADSTONE

Friday, September 14, 2012

Banks to sue Dubai Group's US$10 billion loans in debt pile

DUBAI: Royal Bank of Scotland (RBS) and two other banks have begun legal proceedings against an investment vehicle owned by Dubai's ruler, an unprecedented move to secure repayment after two years of unsuccessful debt talks.

RBS, along with German lender Commerzbank and South Africa's Standard Bank, had threatened legal action after walking away from negotiations over Dubai Group's US$10bil debt pile, sources said in July.

The banks began legal proceedings in a London court on Sept 6, breaking with the precedent in previous restructuring cases involving Dubai state-linked entities because of the opaque and untested insolvency system in the United Arab Emirates (UAE).

Given the complexities of the case, in particular the lack of precedent, the London filing threatens to extend debt talks well into the future, having dragged on since Dubai Group missed interest payments on two facilities in late 2010.

“Arbitration could be two years and we don't want to see the destruction of shareholder value just because these banks have thrown their toys in the corner,” said a source.

In a statement, RBS said it was forced to take action after several concessions offered to the group failed to secure a solution.

“We do, however, want to make clear that our preference was always to conclude an agreement without formal legal proceedings and we therefore remain open to such an outcome if an acceptable commercial resolution is forthcoming,” it said.

Such sentiment adds fuel to the belief that the legal action is more likely a negotiating tactic on behalf of the three banks all of which are unsecured creditors to secure a better deal from Dubai Group.

“They are unsecured and have nothing so they are doing it out of desperation or because they expect the Dubai government will bail out the group,” said one UAE-based banker.

The government walked away from debt talks in January, dashing any hope creditors had of state support.

Dubai Group, a unit of Dubai Holding which is the investment arm of Sheikh Mohammed bin Rashid al-Maktoum, was hard hit by the global financial crisis in 2008 due to excessive use of leverage in its investments and a sharp decline in the value of its portfolio companies.

Like a number of other state-linked entities in the emirate, it embarked on talks with creditors to restructure debt and extend maturities.

The London filing comes at a time when others on the restructuring are considering a proposal, put to the group before the summer, which would see all lenders extend their obligations to allow for Dubai Group's asset values to recover before they are sold.

Debt extensions range from 3 years for secured creditors up to 12 years for unsecured creditors. The sheer length of time is the main concern for the three banks because of the cost it would impose on unsecured lenders to extend cash for so long.

“Over 35 banks are working towards an agreement and a global term sheet is now being considered by bank credit committees, a number of which have indicated their support,” Dubai Group said in a separate statement. “We believe that we can reach a consensual agreement with our creditors.” - Reuters

Thursday, September 13, 2012

iPhone 5 opens the door for Nokia, Samsung

There's no doubt that the iPhone 5 is going to be a great, fast-selling smartphone, but it's out-innovated by Nokia and Samsung.

  (Credit: Sarah Tew/CNET)
 


News flash: The iPhone 5 is not the end-all and be-all of the smartphone universe, a fact that should thrill Nokia and Samsung alike.

Here's what it is: a strong improvement to the iPhone 4S that offers up a larger screen, 4G LTE speeds, and a terrific camera. The iPhone 5 carries on the goodness that Apple excels at, like iTunes entertainment and cloud storage.

But however good the iPhone 5 is, it lacks the knockout, gasp-inducing feature that Apple followers have come to expect: perhaps double the battery life of any other phone on the market, or an innovative camera feature that lets you drag and drop subjects around the screen, or other far-out concepts come to life.

Instead, we see a lot of catching up: LTE support, panorama mode, and photo capture while a video records, maps with turn-by-turn navigation, and a slightly larger screen with the same pixel density as on the iPhone 4 two generations ago. And it still lacks certain other perks, like NFC, which is useful for mobile payments, and for sharing content from phone to phone.

For the first time in a long time, Apple has given its rivals room to bask in their own innovations.

Samsung Galaxy Note 2
Samsung's Galaxy Note 2 is the anti-iPhone.
(Credit: Jessica Dolcourt/CNET)
 
The Nokia's Lumia 920 offers wireless charging, for example, a capability it'll pilot in coffee shops and airline lounges. Its camera is literally surrounded by springs, and the screen uses a very smart display filter that could match or even surpass the iPhone 5's display (we have to wait to see them side by side.

Meanwhile, Samsung's Galaxy Note 2 offers up an enormous 5.5-inch screen and a truckload of tricks with its S Pen stylus, and a new camera feature that will compile the best of a handful of group photos, increasing the chances that everyone's smiling. Its phone/tablet hybrid is the antithesis of the smaller iPhone screen.

On the battery front, Motorola's new Motorola Droid Razr Maxx HD can't be beat; it features a powerful 3,300mAh battery that promises 21 hours of talk time to Apple's 8 hours of talk time over 3G on the iPhone 5.

Make no mistake that the iPhone 5 will sell like wildfire and bring delight to Apple fans everywhere -- in fact, I even think it makes for a great universal choice.

Yet its lack of a "gotcha" feature gives shoppers considering other powerful alternatives -- like the intriguing Lumia 920, the larger-than-life Samsung Galaxy Note 2, or even the won't-quit Motorola Droid Razr Maxx HD -- fewer reasons to stick with Apple.

Jessica Dolcourt

 by Jessica Dolcourt 

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Full coverage: The iPhone 5 arrives



Wednesday, September 12, 2012

Reducing income tax

I BELIEVE that the path to economic recovery in Europe and for the rest of the world will be a very long journey this time.

It needs all sorts of new ideas to test and try, as old ideas used previously to boost the economy may not work this time, as you still hear some countries considering another round of quantitative easing and financial bailouts.

Perhaps certain administrative policies of these countries may have to be tweaked but they have not done so.

One aspect that I wish to discuss here is the taxation policy, which Malaysia can reap benefits from and put itself on a level playing field with Singapore and Hong Kong.

The taxation policy of a government can impact the level of disposable income of households (i.e. after-tax income).

A tax increase will reduce household income, as it takes more money out of household.

A tax decrease, on the contrary, will increase disposable income, because it leaves households with more money.

Disposable income is the main factor driving consumer demand and thereafter, pull a sluggish economy out of recession.

Despite this knowledge, some countries in Europe had begun raising tax rates, especially on value added tax/sales tax on products and services.

Recently, I read that France is planning to increase the top tax rate for individual income tax to 75%. That is to say, the more you earn there, the less money you can take home after paying your taxes.

Individuals are also consumers. As consumers have less money to spend (since most of the money is used to pay tax), they are likely to cut down on spending.

As a result of “careful” consumer spending, businesses (which are also paying taxes) will derive lesser income and thereafter, pay lesser tax.

This is because the income that is subject to tax is less, therefore, the tax amount will also be less.

So, instead of the intended effect of higher tax revenue from tax hikes, the tax revenue will go down instead.

So, what is the solution?

The answer – major reduction of individual income tax rates.

Let people pay less tax and have higher take-home pay (after tax) and encourage them to spend more.

In the case of Malaysia, a major reduction in individual income tax rates should slow down the effect of brain-drain of our talented individuals to overseas countries and help the country to retain the “tax base” or “tax-paying individuals”.

KEVIN TEO Singapore

Related post:

Time to reform Malaysia's tax system?

Let the Will and Kate show begin!

Admittedly, they are a winsome twosome who brought back excitement and glamour to the British royal family. But why the blazes are we so dazzled by the likes of them? 



TOMORROW, the most famous and glamorous royal pair in the world comes to town: Prince William and Princess Catherine a.k.a. the Duke and Duchess of Cam­bridge.

What a mouthful but, boy, don’t we just love the sound of it – so posh, so noble and yes, sooooo romantic.

It’s a tad ironic that many nations in the last couple of centuries dumped their monarchs in revulsion over their feudalistic, despotic ways, yet royalty’s power to excite the imagination has not dimmed.

For example, South Korea is stoutly republic but that hasn’t stopped its TV stations producing many popular K-dramas based on a fictional royal family set in modern times.

The ones I’ve seen usually have storylines of a long-lost princess or prince being discovered or the royal family battling conspiracies and winning the love and support of the Korean citizenry.

British royalty, however, has lasted – “as old as the hills”, as one wit described it on an online site – and is arguably “first among equals” where royal houses are concerned.

Despite its lineage, by the latter half of the 20th century, Queen Elizabeth II and her family had settled into stodgy respectability and were admired in a rather detached way.

After all, it was hard to go gaga over them when they were rather dull and not particularly good-looking or trendy. Princess Margaret was slightly scandalous but she seemed more desperate than daring.

Enter Diana and British royalty was turned on its head.

No one could and still can’t beat her combination of beauty, glamour, charity and blue blood.

I was in London the day she died on Aug 31, 1997. When I came back, I lamented her passing in a long column in the Sept 11, 1997, issue of Clove.

In it, I mentioned how I missed the opportunity to see her in person because she died a few weeks before she was due to attend an AIDS charity gala in Singapore.

If I had met Diana, I would be able to boast of a hattrick of sorts – seeing in the flesh three generations of British royalty. That’s because I had tea with Queen E when she came to KL for the Commonwealth Heads of Government Meeting in 1989 and I am attending the British-Malaysian Chamber of Commerce lunch on Friday where William will give a speech with Kate in tow.

Queen Elizabeth in person looked exactly like her photos and she spoke in a tinkly, girlish voice. And what did we talk about? The weather. The Malaysian weather, to be exact.

And she was funny. During her 1989 visit, she made a trip to Ipoh at the invitation of Sultan Azlan Shah. It had rained before her plane touched down.

As I recall, Queen E shared that when Sultan Azlan escorted her from the plane, he wanted to guide her down the red carpet that had been rolled out. But the rain had soaked the carpet and she said she didn’t want to walk on it, probably because she didn’t want to ruin her shoes.

She painted an amusing picture of two royal persons ever so courteously jostling each other on the red carpet without batting a protocol eyelid.

I have kept the invitation card embossed with her crest which states: The Master of the Household is commanded by Her Majesty to invite Ms June H.L. Wong to a Reception to be given by The Queen and The Duke of Edinburgh at Carcosa Seri Negara on Tuesday, 17th October, 1989, at 5.00p.m.

I never found out who the Master of the Household was and why I was invited but I am eternally grateful for the experience.

But why should this piece of cardboard be precious enough for me to keep?

After all, as a Malaysian, I have royals aplenty of my own, all nine households. So why am I quite thrilled by Will and Kate’s visit? I am not the only one: all the 1,100 seats at the BMCC lunch were snapped up a month ago.

That’s a question a UK TV station wants to ask The Star editors – Why are Malaysians interested in British royals so removed from their life? – as part of its coverage of the visit. I am still mulling over my answers to that and other questions.

I can say it’s because we were a former colony and/or protectorate and being part of the Commonwealth, we never completely severed our ties with Old Blighty.

My 85-year-old dad can still sing God Save The King which he learnt as a schoolboy!

I can say it’s because many Malaysians speak English as a first language, earned their degrees in the UK and there is such a familiarity with Britain that London is sardonically described as a second home to rich Malaysians.

And yes, I must add that Malaysians are crazy English football fans.

I should point out we aren’t interested in all British royals though – just the queen, these two and Harry.

And that possibly because we were so enamoured of Diana that we are merely continuing that obsession through her sons and daughter-in-law who are – fortunately or unfortunately – young, good-looking and trendy, vital factors in today’s visual-fuelled world.

And who doesn’t love a real-life story of a commoner who wins the heart of a prince and becomes a nation’s future queen?

But I honestly believe that if Kate was plain, we wouldn’t be so interested. That’s why Sarah Ferguson and Sophie (Prince Edward’s wife lah!) never wowed us the way Diana did.

In time to come when William loses more hair, he may also lose his shine, the way his dad did. How Kate holds up and evolves in her role as princess remains to be seen and, therefore, her longevity on the popularity scale.

But for now, they are the It Royal Couple. Welcome to Malaysia, Your Highnesses.

> If you can offer other reasons why we are interested in British royals and what it is you like to read about the Duke and Duchess, let the writer know so that the better she can answer the UK TV station people. Ta and toodle pip!

So Aunty, So What? By JUNE H.L. WONG 

Tuesday, September 11, 2012

China defense ministry acts as Japan buys its Diaoyu Islands

(Reuters) - Japan brushed off stern warnings by China on Tuesday and bought a group of islands that both sides claim in a growing dispute that threatens to deepen strains between Asia's two biggest economies.

A territorial dispute between China and Japan has intensified with Beijing sending patrol ships near disputed East China Sea islands in a show of anger over Tokyo's purchase of the largely barren outcroppings from their private owners.

The arrival on Tuesday of the two patrol ships of the China Marine Surveillance off the islands was meant to assert China's claims, said the Chinese government's official news agency, Xinhua.

The marine agency is a paramilitary force whose ships are often lightly armed, and Xinhua said it had drawn up a plan to safeguard China's sovereignty of the islands.



BEIJING, Sept. 11 (Xinhua) -- The armed forces of China are completely opposed to the Japanese government's move to "purchase" the Diaoyu Island and two of its adjacent islands, Chinese Defense Ministry Spokesman Geng Yansheng said Tuesday.

Xinhua said two marine surveillance ships had reached the waters near the islands to "assert the country's sovereignty" (AFP/JIJI PRESS/File, Jiji Press)

Geng issued a statement on the Japanese government's implementation of so-called "nationalization" of the Diaoyu Islands.

Despite strong opposition from the Chinese side, the Japanese government blatantly announced on Sept. 10 to "purchase" the Diaoyu Island and its affiliated Nan Xiaodao and Bei Xiaodao. This act is a severe infringment of Chinese territorial sovereignty, Geng said.

Geng said the Diaoyu Island and its affiliated islands are China's inherent territory. China has sufficient historical and jurisprudential evidence surrounding this.

Geng said the Japanese government's action and the so-called "island purchase" was totally illegal and invalid.

In the statement, Geng said since the start of the year, the Japanese government has endorsed right wing forces to clamor for the "island purchase" and even move in to "purchasing the islands" by itself. He said this severely harmed the general situation of the development in China-Japan relations.

Geng said in recent years, Japan has expanded armament under various excuses, frequently incurred tension in regional situations and repeatedly stirred up troubles on the issue of the Diaoyu islands. Such moves are worthy of high vigilance by its Asian neighbors and the international community.

"The Chinese government and armed forces stand firm and are unshakeable in its determination and will safeguard sovereignty over the nation's territories," Geng said.

"We are watching closely the evolution of the situation and reserve the right to take reciprocal measures," Geng said.


Related:
TOKYO, Sept. 11 (Xinhua) -- The Japanese government has exchanged the official contract on the purchase of Diaoyu Islands with Kurihara family whom the Japanese side called "the private owner", NHK reported Tuesday morning.
Japanese Cabinet on Tuesday morning decided to disburse reserve funds to purchase part of China's Diaoyu Islands, before signing a sales contract with whom the Japanese side called "the private owner" of the islands scheduled later Tuesday, it said.  Full story
BEIJING, Sept. 11 (Xinhua) -- Two ships of the China Marine Surveillance (CMS) have reached the waters around the Diaoyu Islands Tuesday morning to assert the country's sovereignty.
The CMS has drafted an action plan for safeguarding the sovereignty and would take actions pending the development of the situation, the CMS sources said.  Full story
VLADIVOSTOK, Russia, Sept. 9 (Xinhua) -- Chinese President Hu Jintao met with Japanese Prime Minister Yoshihiko Noda here on Sunday and made clear China's position on its relations with Japan and the Diaoyu Islands issue.
The two leaders met on the sidelines of the 20th informal economic leaders' meeting of the Asia-Pacific Economic Cooperation forum.  Full story
TEHRAN, Sept. 10 (Xinhua) -- China's top legislator Wu Bangguo said here Monday that Japan's decision to "buy" the Diaoyu Islands is illegal and invalid.
Wu, chairman of the Standing Committee of the National People's Congress, briefed Iranian parliament speaker Ali Larijani on the latest development concerning the Diaoyu Islands.   Full story
BEIJING, Sept. 10 (Xinhua) -- Premier Wen Jiabao said Monday the Diaoyu Islands are an inalienable part of China's territory and China will "absolutely make no concession" on issues concerning its sovereignty and territorial integrity.
Despite repeated solemn representations of China, the Japanese government announced Monday it would "purchase" part of China's Diaoyu Islands from "private Japanese owners" and bring the islands under "state control."   Full story
BEIJING, Sept. 10 (Xinhua) -- Following is the full text of the Statement of the Ministry of Foreign Affairs of the People's Republic of China issued on Monday.
Statement of the Ministry of Foreign Affairs of the People's Republic of China
10 September 2012
Regardless of repeated strong representations of the Chinese side, the Japanese government announced on 10 September 2012 the "purchase" of the Diaoyu Island and its affiliated Nan Xiaodao and Bei Xiaodao and the implementation of the so-called nationalization" of the islands. This constitutes a gross violation of China's sovereignty over its own territory and is highly offensive to the 1.3 billion Chinese people. It seriously tramples on historical facts and international jurisprudence. The Chinese government and people express firm opposition to and strong protest against the Japanese move.  Full story
Related post:


Japan's buying Diaoyu Islands provokes China to strike back 

Managing strata properties in Malaysia


I LIKE to highlight the rather difficult and controversial issue of the management (and maintenance) of stratified properties, particularly flats, apartments and condominiums, in the context of the proposed Strata Management Act, 2012 which is expected to be tabled during the upcoming session of Parliament.

The Building Management Association of Malaysia (BMAM) is the only multi-stakeholder organisation (established in 2009) representing the collective interests of chambers of commerce, developers, engineers, architects, shopping and high-rise complex managers, management corporations (MCs), joint management bodies (JMBs) and managing agents.

However, BMAM was not nvited to participate in the workshops and discussions held by the National Land Council and the Housing and Local Government Ministry when the draft Bill was deliberated, although the implementation of the Act will have consequences that will directly affect BMAM stakeholder-member organisations.

According to the information available to us, the Bill states that only licenced valuers who have been admitted as Property Managers pursuant to Section 21(1)(a) of the Valuers, Appraisers and Estate Agents Act, 1981 (VAEA Act) to manage and maintain stratified (or subdivided) buildings as managing agents.

No such restrictions exist in the current laws that regulate building management, namely the Strata Titles Act, 1985 (ST Act) and the Building and Common Property (Maintenance and Management) Act, 2007 (BCPMM Act).

Building management is a multi-disciplinary occupation and cannot be exclusive to the valuers alone.

The JMBs and MCs want to have the independence and opportunity to appoint any fit and proper person, or appropriate entity, as managing agent on a “willing seller-willing buyer” basis on mutually agreed terms and conditions.

The Bill, by restricting building management and maintenance to valuers, would create a monopoly, and is inconsistent with the spirit of the Competition Act, 2010, which clearly discourages the creation of monopolies.

Though building owners (JMBs and MCs) and Real Estate Investment Trusts (REITs) have been exempted from this ruling, most JMBs and MCs, led by volunteers, do not have the time, skill, expertise or experience to manage and maintain their buildings, and neither can they afford to appoint a registered property manager as a managing agent.

JMBs and MCs would be required to pay a management fee in compliance with their Fee Schedule, excluding other operating costs such as staff salaries, electricity, water, cleaning, security, etc.

We will soon see the mushrooming of more urban stratified slums and ghettos, thereby defeating the objectives of the Government’s squatter resettlement programmes and public housing projects.

The fiduciary responsibilities of the MCs and JMBs have been clearly stated in the ST Act and the BCPMM Act on the management of the Building Maintenance Fund and the Sinking Fund.

The managing agent appointed by the JMB or MC to manage and maintain the subject properties is only required to perform these functions for and on behalf of the JMB or MC. A registered property manager is therefore not required.

The MCs and JMBs only need building and facilities management for their common properties.

Since common properties and facilities cannot be sold, and most residential building owners do not lease their common properties to third parties as they would need them for their own use.

Many non-valuer managing agents have several years of experience in building and facilities management.

They have also been admitted as members and registered building managers by BMAM upon satisfying the required admission criteria.

They are qualified and skilled in building management, operations and facilities maintenance, and have also subscribed to a professional building management liability insurance policy entered into between a local insurance company and BMAM.

Any attempt by the ST Act to split managing agents as valuers and non-valuers will be detrimental to the growth and development of the building management industry in Malaysia.

It will result in the loss of valuable management talent in the industry. It will also have serious social implications on the upward career mobility of qualified and experienced local building managers, many of whom are bumiputras.

The Commissioner of Buildings (COB) should be the sole regulatory body to
supervise and oversee the management and maintenance of stratified buildings in Malaysia.

The involvement of third parties, who have no ownership interests in the properties, will not only erode the COB’s authority but may also result in unnecessary layering, additional costs (with no proportionate increase in service quality), corruption, rent seeking and abuse of power.

PROF S. VENKATESWARAN
Secretary-general
Building Management Association of Malaysia

Monday, September 10, 2012

Time to reform Malaysia's tax system?

Comprehensive review timely as Malaysia is driving its transformation programme

RECENT developments in parts of Europe have sparked a debate in the eurozone on austerity and growth. Those who argue for austerity or “fiscal prudence” claim that debt management is key to restoring investor confidence and, therefore, long-term prosperity.

Borrowing more is not an acceptable response to a crisis caused by over-borrowing and over-spending. In contrast, those who prefer greater stimulus claim that, without further investment, growth will simply not return, and without some Government stimulus, no economy can pull itself out of recession to achieve long-term stability and growth.

Whilst there is no clear “right” answer, there is one aspect of Government policy that is absolutely central to this taxation. Governments must ensure a balanced system of taxation that provides the right incentives to business and citizens, while enabling the Government to meet its debt and spending obligations. Getting this balance right can drive increased confidence among the investor community and stimulate economic activity, international competitiveness and long-term growth.

A new approach

In the past, many countries have relied on the support of international bodies and other inter-governmental assistance to begin the process of tax reform in respect of designing the tax system itself and in improving the ability to collect taxes. In the post “credit-crunch” world, it has become apparent that the operational ability to increase tax revenues is somewhat limited. A new hands-on approach is required to assist the public sector, generating increased tax revenues and driving corporate activity without raising taxes or damaging international competitiveness.


Malaysia has never had a comprehensive review of its tax system
 
Like any business, a Government has costs and it has revenues. A framework is required to help Governments optimise their tax revenue and balancing this need with the creation of the right incentives for citizens and businesses to stimulate the economy. To achieve this, our experience in working with Governments is typically structured around three core work streams:

Tax reform design - Modeling the economy and designing a new system of taxation appropriate for the jurisdiction, with the emphasis on simplicity, fairness, participation and economic stimulus;

Tax compliance - Building the taxpayer base to ensure all taxpayers have paid the correct amount of tax under the law and will continue to do so and;

● Tax operational improvements - underpinning both streams, identifying and delivering detailed operational improvements, ensuring transparency of data and processes within the tax administration, across Government departments and with taxpayers.

Malaysia has never had a comprehensive review of its tax system. The setting up of a Tax Review Panel a few years ago basically focussed on the proposed Goods & Services Tax and has done some good work in this area but the focus on income taxes was limited and too restrictive. A comprehensive review is now timely given that Malaysia is aggressively driving its transformation programme towards achieving developed nation status by 2020.

Tax reform design

A tax system is at its best when it is at its simplest, levying the minimal number of taxes, thus making compliance easy for taxpayers and the tax authorities. Headline rates should be minimised, often in exchange for the removal of reliefs or deductions. In addition, it is essential to improve the quality of the taxpayer base. Finally, international trends are to shift the burden of taxation towards indirect taxes to ensure participation in the tax system, improve the reliability of collections and increase fairness.

An effective communications strategy is critical to the success of any tax reform project. To succeed, these projects require a proactive approach to ensure that stakeholders are aware of their progress.

Tax reform projects should have four key phases:

Understand - Work closely with the Government and external bodies to gather and verify data. Quickly establish a detailed understanding of the current tax system and understand the issues from a number of different perspectives. At the same time, model the economy and current tax collections, benchmarking them against other jurisdictions.

Model - Develop an outline model for the proposed tax system, meeting regularly with stakeholders to develop and test ideas and model alternative taxation methods. Produce a detailed proposal for the new tax system, including clear legislative and operational proposals, for political approval.

Implement - Bring the approved model to life. This can include taking a lead drafting new legislation and guidance. A highly operational approach, working to ensure systems, processes and controls are best-in-class and fit-for-purpose is essential at this stage.

Roll-out - Roll out the new system to the various groups of taxpayers and stakeholders and train the Tax Administration teams, including training on tax technical and operational / systems issues.

Tax compliance

In many developing economies, the incidence of tax evasion is certainly not small. Broadening the taxpayer base and ensuring current taxpayers are paying the correct amount of tax under the law helps keep taxes low. Economic and forensic analysis must be applied to identify areas of the economy requiring particular attention. A range of techniques is typically required to provide a complete picture of the tax-paying community.

To deliver real change for the tax administration, forming a single team to identify taxpayers, initiating assessments, managing taxpayer responses and building IT databases is key. Enhancements to processes and systems also drive improved service levels to taxpayers (whether this be speed or quality), which is vital to gain support for the tax system and for improving participation.

Tax operational improvements

Real operational improvements are essential to the successful delivery of any tax reform project. This may include improvements to existing IT systems to automate processes and controls and improve the way data is managed. This applies both to the tax administration's systems and the way it interacts with other Government departments. For example, the tax administration should automatically be informed whenever a new business registers with the Companies Commission.

On a practical basis, it is essential to ensure new tax documents and forms are produced where required, both in paper and electronic form. It makes sense to consider these as part of a wider programme of improving taxpayer interaction, for example, with the implementation of a new website or the ability to file tax returns online. Key to the success of any new document is simplicity both for the tax administration to review and process and for the taxpayer to understand.

Conclusion

The post credit-crunch world has generated a renewed focus on how a Government raises its revenue the right balance of fiscal prudence and stimulus is difficult to achieve. However, with a clear view on what taxes are levied, who pays them and how they are administrated, jurisdictions can drive real improvements in tax collections, real efficiency gains and, in doing so, drive the participation of the taxpaying community. This, in turn, can provide assurance for the investor community, enable the Government to meet its obligations and drive long-term growth for the wider economy, its businesses and citizens.

It is timely that Malaysia announces a comprehensive fiscal reform which is wide-based and wide-ranging and puts into place a long-term plan to mould a world class tax system that will be comparable to the leading developed nations in the world. It is time to let go of the ad-hoc approach of tinkering with the tax system let us get on with it!

By Dr Veerinderjeet Singh and Andrew Burman

Dr Veerinderjeet is chairman of Taxand Malaysia and Andrew Burman is senior director at Alvarez and Marsal Taxand in the United Kingdom. Both entities are part of the Taxand Global Organisation. They can be contacted at vs@taxand.com.my and aburman@alvarezandmarsal.com respectively.