The future direction of JobStreet

A story from Digital News Asia today regarding the future direction of JobStreet.com:


KUALA LUMPUR, Nov 28 — It was in March of 2013 that Mark Chang, Jobstreet.com founder and chief executive officer (CEO), first mooted the idea to Andrew Bassat, CEO and cofounder of SEEK Ltd, the Australian online recruitment company that already owned a 22 per cent stake in JobStreet.com.

“Since he already owned our competitor JobsDB [with an 80 per cent stake at end-2011], I thought it made sense for him to consolidate and merge resources,” says Chang, who first spoke to Digital News Asia (DNA) in New York while attending the Nasdaq listing of MOL Global on Oct 9, with follow-ups after he had returned to Malaysia.

That was of course the sale of JobStreet.com’s online business to the Australian Securities Exchange-listed company, first announced in February and concluded on Nov 20. SEEK also owns 20 per cent of the listed company.

While some in the market speculate that he sold the Internet assets of JobStreet.com because of the looming threat of competition from LinkedIn, Chang waves aside that speculation.

“LinkedIn … you name it, competition could have come from anywhere and as an entrepreneur, you have to respond,” he says.

Indeed, in a May 2013 interview with DNA when JobStreet.com first crossed the RM1-billion market capitalisation mark, he made the observation that if JobStreet failed, it would only have itself to blame. “It means we failed to reinvent and make ourselves relevant to the market.”

But responding to competition and staying relevant, he notes, can be costly as it involves the redevelopment of new products and services, and the requisite dedication of engineering resources.

“But once you have consolidated resources, it makes more sense to respond,” says the Malaysian entrepreneur, who is known to be frugal both in business and in his personal life, and is also a DNA Digerati50.

Be that as it may, that suggestion in March 2013 was the catalyst for Basset to eventually pull the trigger on the US$568-million (RM1.9-billion) acquisition.

There were various factors that compelled Chang to sell, and he won’t say if any one was stronger than the rest, but the almost 20 years he had been an entrepreneur was a key factor as well for the low-key founder who has always been a bit uncomfortable with the responsibility of being a CEO.

This he admitted to DNA as much in our May 2013 story above: “The CEO job is NOT (emphasis Chang) an easy role for me.”

And while he will be looking forward to the next 10 years where he aspires to help create the next 10 hot billion-ringgit startups with his personal funds, he will still be running JobStreet.com Bhd, the Malaysian-listed entity that even after selling off its Internet assets, will have other assets worth around US$100 million.

These assets are a combination of cash, physical assets and stakes in four existing businesses in the region, starting with Innity Bhd (22 per cent) in Malaysia, 104.com (22 per cent) in Taiwan, Asia Travel (four per cent) in Singapore, and 1010.com, a printing business in Hong Kong serving the China market.

Of course there will have to be a name change and then it will have up to a year in which to find a new business to focus on. While Chang does not discount buying out an existing listed entity, it has to be in the technology space and specifically, “be a consumer Internet” company playing in Southeast Asia.

Interestingly, in terms of timing, Chang cautions shareholders that they will see little action from JobStreet for the first 12 to 18 months, at least until his senior management team has been fully deployed back in the listed entity.

“Till then, we have a one-year commitment to help SEEK manage the transition,” he says.

That team however is lean, with the listed entity only consisting of 10 people.

Whether or not JobStreet ends up buying an existing listed company, investing in emerging ones is certainly on the cards.

“We will focus on startups from Malaysia, Indonesia and the Philippines,” says Chang. “That is where our core competency lies – that is, knowledge of South-East Asian markets.”

But the companies have to be scalable, with revenue, a proven product and a team in place, he emphasises, “because larger competitors can swamp you if you are just a single-country play.”

What JobStreet will not be doing is focusing on particular verticals. The idea is to keep its options open and to let entrepreneurs come and convince Chang and his team of the viability of their ideas and market opportunity.

And if Chang and his team feel they have the skills set and experience to help the entrepreneurs, they will make the investment.

Provided, that is, that the valuation is fair. Chang shakes his head at some of the deals he has seen, both in the United States and in the region.

“Valuations are way too high,” he says declining to highlight examples in Southeast Asia, as “the investors are friends and people I know,” he says, laughing.

This is also why he feels coming in as an investor in 2016 would be sweet timing as by then, valuations will have come back down.

So, if anything, he will be even busier running his private seed fund and ensuring shareholder value is enhanced in the listed company. No short break to bask and reflect in the satisfaction of building a RM2-billion company over the 11 years it was listed.

Chang is fine with that. “I need the momentum to be there as I build something meaningful over the next 10 years.” — Digital News Asia

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Reason why JobStreet is selling

This excerpt is extracted from the JobStreet.com Annual Report 2013 which explains the rationale behind the company’s decision to sell their online job portal business to Australia’s SEEK Asia Investment Pte Ltd.
SALE OF THE ONLINE JOB PORTAL BUSINESS TO SEEK
As referenced above, the online job portal market has evolved into an increasingly competitive and complex industry environment with new competitors and social media being increasingly used as a recruitment platform for candidates, employers and head hunters alike. Against this backdrop and an uncertain global economic environment, our Board has been constantly evaluating the long term growth strategy of the business.
Over the past few years, JobStreet.com, led by the present management team, has enjoyed tremendous growth. Our online job portal business has expanded from a Malaysian company into a regional firm with operations in 8 countries in the Asia-Pacific. While the business continues to deliver strong performance, we feel that we have now approached a strategic crossroad. Against an evolving global environment where competition has no physical boundaries and limited barriers to entry, JobStreet.com would need the resources and capabilities to take the next leap forward. Acquisition by a larger player like SEEK, will allow Jobstreet.com’s online job portal business to continue to develop market depth, deliver innovative products and ensure best-in-class services for our customers.
The sale of the online job portal business would allow the Group to immediately unlock substantial value in the business which is consistent with the Company’s intent of maximizing returns to shareholders. The Board views the sale as an attractive offerforshareholders to realise the value of the business, by selling it to a larger global player and distributing the proceeds to shareholders.
SEEK is a multinational company with a global footprint as well as a presence in the region built over many years. SEEK would have sufficient financial resources, economies of scale and management depth to strategically take on the global competitive threats. SEEK has been our shareholder since 2008 and it became our single largest shareholder in 2010 with a 22% slake. As you might be aware, in the same year, SEEK acquired a 60% stake of our primary competitor, Hong Kong based JobsDB, which was subsequently increased to 100% in late 2012.
The sale price of RM1.73 billion represents an EV/EBITDA ratio of approximately 22.2 times based on the proforma consolidated EBITDA of the disposal companies of RM77.9 million for the financial year ended 31 December 2013 and a PE ratio of approximately 30.7 times based on the proforma consolidated PAT of the disposal companies of RM58.6 million for the financial year ended 31 December 2013. We believe this is a fair and attractive price for our shareholders.
After due consideration and having considered all aspects of the sale, the Board decided that acceptance of the offer from SEEK would be in the best interest of shareholders. lt is with a tinge of sadness, but more than anything, a great sense of pride, that we see how the JobStreet.com job portal business has come of age, from a start-up in 1995, into a business courted by venture capitalists in 1999, to an IPO on the MESDAQ market in 2003 and the subsequent migration to the Main Board in 2007 before being valued at RM1.73 billion for the proposed sale.
At the time of writing, you as our shareholders have approved the sale at the Extraordinary General Meeting held on 14 May 2014. The proposed sale is still pending the approval from the Competition Commission Singapore.
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All the right moves

It has been two long years since I wrote my last chess column. I thought that I had been forgotten by the people in The Star until one day in February when one of their sub-editors emailed me to ask whether I would agree to be interviewed for the 30th anniversary of their Star2 pull-out. “Not all our present or past columnists will be featured,” she told me almost apologetically, “and we’d like to include you in. Your stories have been so fascinating.” Below are the interview questions and my response:

Q: Start date and end date of the column:
A: I am what you may call an accidental chess columnist. I never thought that I would or could write anything about chess but it all began in 1980 when out of curiosity, I answered an advertisement in The Star for freelance writers. The column began in August 1980 and ended in March 2012. Thirty-two continuous years in all, except for three short breaks in contribution.

Q: Can you tell us a little about the sorts of content you used to write when you first started, and how that evolved over time?
A:
When the column first started, it filled a much-needed void in the Malaysian chess scene. This was during the pre-Internet and early Interney days when news about local and international chess events was almost impossible to get in Malaysia. Luckily, I had contacts with some big overseas chess organisers in Europe and the United States and they were kind enough to send me detail results of their tournaments, sometimes on a daily basis, by airmail and fax. Local organisers then began sending me announcements of their forthcoming tournaments for inclusion in the chess column. So yes, for the first two decades of the column, I concentrated more on tournament reports. But in the final decade of the column, circumstances had changed. With Internet access now everywhere, overseas tournament reports were readily available. As a result, my strategy changed to writing more opinion pieces about chess development in the country. But I still wrote extensively about important world chess events.

Q: Do you think your column in the Star has served as a good platform for you and those interested in the chess world over the years?
A:
Definitely, it served as a good platform for chess education in Malaysia as a whole. I was never in it for the money and anyway, The Star paid me peanuts for a very long time. I looked at my columns as a contribution back to the game which I first learnt while in school and which had given me so much pleasure. For your information, I was never a top player in the country, never a Malaysian champion nor even a Penang champion. But I was good enough to play for the state and country in international events on three or four occasions. I was in the Malaysian team that played in the Asian team chess championship in 1974, the Malaysian contingent that went on a goodwill tour of China in 1978 and the Malaysian team to the World Chess Olympiad in 1982. I learnt a lot and was grateful to be able to encourage adults to return to the game and youngsters to take it up.

Q: Would you get feedback from your readers? And if so, what sort of feedback – what is the most interesting / weirdest / touching communication that you received?
A:
Yes, I had all sorts of feedback from readers, even overseas readers. Some chess grandmasters even wrote to me. But the most interesting contact was with the World Chess Federation which once took issue with one of my opinions and asked me to make a clarification. I never realised that my column was sometimes read in high places. Power of the Internet, you see.

Q: Of all your submissions over the decade, has there been a personal favorite/ most interesting/ most impactful/ popular?
A:
There were several but my favourite story was also my very last one on 2 March 2012. I was writing about a respected chess administrator and personality in Malaya/Malaysia from the 1940s to 1970s. But nobody among the present generation knew anything much about him, myself included. My story garnered a lot of response from people who knew him as a medical doctor. Through one of them, I managed to establish contact with his family members who helped me fill in many of the blanks and give closure to my own inquisitiveness. Very fulfilling.

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English as the medium of instruction

My old school friend, Kee Thuan Chye, wrote an interesting piece below on English proficiency that had appeared in the Free Malaysia Today news portal. I am in agreement with his point of view but I would also like to add my own two cents’ worth of comment.

In my opinion, teaching science and mathematics in English alone will not be the solution to become proficient in English and bring our nation forward. But I suppose it is the next best thing to making English the medium of instruction in school.

I had also voiced my opinion a long time ago to people like Dr Toh Kin Woon when he was still an Executive Councillor in the Penang government pre-GE12 that as an experiment, we should press for English to be re-introduced as the medium of instruction for designated schools around the country.

Do it and then gauge its response before expanding the move to more schools. However, looking at the political situation in this country, I wouldn’t hold my breath to see this becoming a reality any time soon.

Thuan Chye’s article continues:

It may be only three years away, but a short deadline can sometimes be as effective as a longer one, if not more so. It’s all about having the will to do it. And speaking of will, students are more likely to find the will to improve their English when they are pushed to do it than when they are led to believe that English is irrelevant to their daily lives or even harmful to their own culture and identity.

Even so, supporters of English are sceptical, and understandably so.

Uppermost on their minds is whether standards might not be compromised to ensure that the percentage of students who fail is kept to a minimum. We have heard stories of the passing mark for difficult subjects like Additional Mathematics being pushed down to as low as 15 or so; would this not be done for English as well? And if it were, what would be the point of the must-pass exercise then?

“If too many students fail, the Malaysian Examinations Board lowers the passing mark as a matter of course,” my friend, a retired English-language teacher, assures me. “Our SPM certificate is now not worth the paper it is printed on.”

She says if we were to look at a sample of the SPM English paper, we would realise that a pass counts for less than nothing by international standards. “That is why candidates with distinctions in English who turn up for job interviews cannot answer simple questions in English.”

Another friend attributes the malaise to what he calls the “rottenness” of our education system. He says it has become rotten because it has been made subservient to political agendas.

“The entire Education Ministry is filled with ‘yes men’ who merely implement policy,” he explains. “One day, I was at a meeting in the ministry and it was suddenly called off because the officers and heads of department had to put in place the machinery to implement a policy that they had read in the morning papers being announced by the minister.

“They were learning about it for the first time and already they had to work out the policy’s implementation! No research, no study, no academic rigour goes into it. No statistics, no projections did they quote to support this latest move. Zero. That’s how things work in our country!”

He fears this may be the modus operandi for implementing the English must-pass policy.

Yet another educator-friend feels the government is rushing things to start the policy in 2016. He thinks everyone will not be ready by then because many teachers are not equipped to teach English – and certainly not properly. This is simply because they themselves are not proficient in the language. Many who graduated with a Teaching of English as a Second Language (TESL) degree can’t even get the basics of the language right.

Learning grammar

Last month, a parent complained to me that her son spelt the word “heavy” correctly but his English-language teacher marked it wrong and insisted it should be spelt “h-e-a-v-e”!

When I was editing the page ‘Mind Our English’ for the newspaper The Star, one of the most unforgettably hilarious – and most depressing – letters I received was from a parent telling about an English-language teacher saying to the class, “Chindilella very pooth thing.” Try and figure out what that teacher meant, and think of the scary prospect of having someone like that teach your children English. If your children don’t know better, they are likely to end up with half-past-six English.

Of course English-language teachers need to be well selected. But for a long while now, it seems that many people do not want to study to become English-language teachers. Most people mark other fields of study in their applications for university entrance; it is mainly those who can’t get into courses of their choice who end up studying TESL.

At one time, our universities were accepting TESL candidates who obtained as low as Band 3 (signifying a modest grade) for their Malaysian Universities English Test (MUET). The highest is Band 6. One would think that TESL candidates should get no lower than Band 5. In fact, this should be the measure for applicants from now on to ensure that standards are maintained. We cannot simply accept students for TESL because they don’t know what else to study or are unable to get into other courses.

I think part of the problem with our current generation’s lack of proficiency in English is due to the emphasis being given to teaching English primarily for communication, as opposed to the traditional method of teaching grammar and vocabulary. This has been going on for at least three decades, and it has produced learners who don’t know the basic building blocks of the language. Without such knowledge, they often can’t string correct sentences together.

At a writing workshop I conducted recently, I was appalled, although not surprised, to discover that Malaysians in their forties and younger were not sure what an adjective or an adverb was. Don’t ask them what a phrasal verb is; they didn’t even know the basic sentence structure comprising subject, verb and object.

I admit that learning grammar may be dry and boring to some, but there is no substitute for learning the language well. How else would they be able to understand, say, the confounding, confounded past perfect tense?

My Canadian friend disagrees, however. “In a perfect world, teaching grammar may be the right thing to do,” she says. “But in this country, at this time, with these people in power, with these demographics, I believe that the communication skills needed in most workplaces today – clarity, organisation of thought, collaborative problem-solving, clarification-seeking, concise e-mail writing, etc – are not as dependent on grammar and rich vocabulary as many believe. Confidence and a sense of the language as a mere tool to be used are much, much more valuable.”

Right implementation

And how would they gain this confidence?

“When they are exposed to and motivated by the power of what language is supposed to be: a vehicle to exchange important, interesting and useful ideas,” she says.

I suppose if this is to be accomplished, the Education Ministry must think of innovative and creative ways of immersing our students in English.

It will certainly take more than the number of classroom hours allotted to the subject. It should also include promoting the habit of reading English texts. And what better than texts culled from the rich storehouses of literature written in English – not just from England but also from other parts of the world, including Malaysia?

When I was in lower secondary school, my classmates and I were introduced to literary works in English. I recall reading, as part of our syllabus, abridged texts of novels and poems from the anthology entitled Poems for Pleasure.

Many of us derived pleasure indeed from reading these, and I for one improved my English while doing so.

Much, then, has to be done to improve Malaysians’ standard of English proficiency, and that does not stop with just passing the subject at SPM. But I still maintain that we’re on to a good start by making that compulsory.

It’s important for the government to finally show that it recognises the importance of English, because in a society like ours which is feudalistic, such recognition must come from the top before the minions will accept it.

Now comes the hard work of implementing it right.

Kee Thuan Chye is the author of the new book The Elections Bullshit, now available in bookstores. This article first appeared in November 2013 issue of Penang Monthly

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FSA2013: Consent or no consent?

This is a short excerpt from my blog post yesterday on the Financial Services Act 2013:

“I am saying this because the policy owner have to understand when consent is needed from the new trustee and when consent is not needed. For example, there are certain circumstances which still do not require the new trustee’s consent when a nomination is changed.”

Let me offer you four examples of insurance nominations, as related by Rockwills Trustee Berhad at a presentation to us Rockwills Estate Planners on the new FSA2013.

Case One: Policy owner originally nominated wife to receive 50%, son to receive 25% and daughter to receive 25%. Policy owner now wants to remove wife and replace with mother. Consent is needed as the mother is other than a spouse or child.

Case Two: Policy owner originally nominated wife to receive 50%, son to receive 25% and daughter to receive 25%. Policy owner and wife now divorced, wants to remove ex-spouse and replace with new wife. Consent not needed as the new wife is now considered as his spouse.

Case Three: Policy owner originally nominated wife to receive 50%, son#1 to receive 25% and daughter to receive 25%. Policy owner now wants to wife’s share to 30% and give the 20% to son#2 who is illegitimate. Consent not needed as long as can be proofed that son#2 is his child.

Case Four: Policy owner originally nominated wife to receive 50%, son#1 to receive 25% and daughter to receive 25%. Policy owner now wants to remove wife’s share and increase son’s share to 50% and daughter’s share to 50%. Consent not needed because these are still the same groups of people, that is, spouse and children.

However, we were cautioned that this was only Rockwills interpretation and policy owners should seek the final advice from their insurance companies as each company may still look at the FSA2013 differently.

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An alarmist approach on the Financial Services Act 2013

Three months down the road, the situation hasn’t changed much. I was told me a few days ago that the life insurance companies in Malaysia are still taking it easy with regards to the Financial Services Act 2013 which had come into effect on the 30th of June this year. One fellow in the industry told me that very few insurance companies have yet to inform their policy owners about the implications of this FSA2013, which is very true because, as fair as I am aware, only MCIS Zurich has bothered to send letters out.

To compound the lackadaisical attitude, some insurance agents have been going around to tell their clients and prospects that the FSA2013 would affect only new policies and not the old ones which were purchased while the Insurance Act 1996 was still valid.

(A more preposterous story heard earlier what that an agent claimed that the FSA2013 would not affect him because his insurance company had not informed him about it. This is just like the three monkeys who see no evil, hear no evil or speak no evil, but the evil is there all the same.)

The problem with this misinformation or half-truth is that their clients are deceived into believing that nothing had changed and everything was still all right with their policies when in fact, they will hit certain obstacles later when they try to do a few things with their policies.

I have written about this earlier that one of the effects of the new Act would mean that a policy owner is no longer the trustee of his own policy, assuming that he had bought the policy before 30 June 2013 when the IA1996 was still in force. Of course, if you buy a policy now with the FSA2013, you simply cannot be your own trustee. At the risk of repeating myself, let me expand on this.

If the policy owner had bought a policy then, and nominated his spouse, child or parents (if there was no spouse or child at the time of purchase) as the nominee or nominees under Section 166 of this IA1996, he would have created an insurance trust with himself normally appointed as the trustee of his policy.

Under Schedule 10, paragraph 5(3) of the FSA2013, this trustee appointment is now invalidated. If he was the trustee then, he cannot remain as the trustee now. So who can be the new trustee of his old policy (or trustee of his new policy under the FSA2013)?

The FSA2013 lists down three classes of persons who can be the new trustees of an insurance policy, in order of priority.

  1. The first class are the competent nominees in the policy. For example, the spouse and the adult children would be considered as competent nominees. Children below 18 years old would be incompetent nominees.
  2. The second class are the parent of incompetent nominees. For example, if the only nominees in an insurance policy are all minors, then the other parent of these children will be next in line to be the trustee of the policy.
  3. And the third class is the Amanah Raya Berhad or an appointed trust company such as Rockwills Trustee Berhad. It used to be that Amanah Raya Berhad was the sole choice if there are no parents and the children are minors, but with the FSA2013, well, there is now a choice.

I’m not going to say much about what paragraph 5(3) of Schedule 10 of the FSA2013 means to our insurance policies but I believe all of us who have bought insurance before 30 June 2013 must ask ourselves these questions and have them answered satisfactorily:

  • Does the policy owner know who is the new trustee of his insurance policy?
  • Does the policy owner trust this new trustee enough to use the money for his beneficiaries?
  • Does the policy owner have control of the appointment of the new trustee?

I am saying this because the policy owner have to understand when consent is needed from the new trustee and when consent is not needed. For example, there are certain circumstances which still do not require the new trustee’s consent when a nomination is changed. I shall talk about this in tomorrow’s post. However, his new trustee’s approval is clearly needed if the policy owner wants to vary the terms of his policy; if the policy owner wants to surrender his policy, he will also need his new trustee’s consent; and if the policy owner wants to assign his policy, he too must seek his new trustee’s consent.

Normally I would assume that there should be no problem but if the new trustee (spouse or adult children) happens to be away for a considerable period – on holiday perhaps, or is now working overseas, or cannot be contacted, or senile or even dead – how long is the policy owner prepared to wait for resolution?

You may say that I am an alarmist but the fact remains that all of us should be well wary of Murphy’s Law which suggests that “if anything can possibly go wrong, it jolly well will go wrong.” Yes, we may get caught up in it one day, and then it will be too late for regrets.

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Elements of a valid Will

If you don’t already know, Downton Abbey is a critically acclaimed British period drama television series. This series, set in the Yorkshire country estate of fictional Downton Abbey, depicts the lives of an aristocratic family, the Crawleys and their servants in the post-Edwardian era with great events in history having an effect on their lives and on the British social hierarchy.

I must admit that I’ve only managed to watch two or three episodes of this television series but I have friends who watched the shows diligently to follow the complicated lives of the Crawley family.

Just today, an article in the Moneywise website caught my eye:

Luckily, this was only a make-believe situation that you would normally find in a television show, because according to the same news article, Coulson explained that a valid Will must comply with Section 9 of the Wills Act (we are talking about the British Wills Act here) which stipulates that a will must be in writing, signed by the testator who should intend by his signature to give effect to the document, and witnessed and signed by two witnesses.

In Malaysia, we have our own Wills Act 1959 which is modelled after the British Wills Act 1837. As far as the validity of a Malaysian Will is concerned, the document must still be in writing, signed by the testator to give it effect, and witnessed and signed by two witnesses.

The Moneywise website had also revealed on 7 Oct 2013 that more than half of UK adults don’t have a will. The percentage in this part of the world would definitely be even higher. As far back as 1996, Rockwills Corporation and other smaller will-writing companies that emerged later had always suggested that the percentage in Malaysia could be as high as 90 percent.

Although the awareness for estate planning in this country has grown by leaps and bounds in the 16-plus years since then, I would surmise that the percentage of people without a Will would not have dropped much at all.

Without a Will of their own, the assets of the non-Muslims in this country will be subjected to the Distribution Act 1958 (amended 2006), which would mean that when a non-Muslim dies without making a will, his assets will be distributed under rules laid down by the government in this Distribution Act.

If you die intestate, the distribution would very much depend on how much assets you own, how they are held (movable or immovable) and the make up of your family. While you are alive, it is easy to believe that your family would not dispute their portion of the assets but really, the only way to make sure that your assets go the way you intend the family members to inherit is by making a Will. As simple as that.

Rockwills Corporation has a solution for everybody that wants to make a Will. As a Rockwills estate planner myself, I can be contacted at ssquah-@-yahoo.com (but please remove the two hyphens from my email address before you email me. Thank you.)

Finally, I just want to quote two further pieces of advice from Coulson which are also applicable here in Malaysia:

“A will not only ensures your wishes are followed but also provides clarity to those left behind, and reduces the possibility of family arguments. There is a real misunderstanding, particularly among married couples or those in a civil partnership, that everything will pass to a partner or spouse. That is not necessarily correct and can leave all sorts of difficulty for the survivor.”

“Making a will can be very emotive. It can be thought-provoking but it doesn’t have to be difficult. As long as the document complies with the formal requirements of making a valid will it could be written on a scrap of paper. However, it is very easy to make mistakes or to inadvertently write something that might cause real trouble.”

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Should you sell off your family home?

I met up with a client about a week ago. Owing to some developments in her family, she had some doubts about re-writing her Will. Originally, she had included two of her children as beneficiaries but now, she wanted to include her eldest child too. However, her husband wasn’t keen on doing that. I won’t go into the details on this matter.

But what I want to say is, my client and her husband had thought about liquidating all their assets. That would include their family home which was solely in her husband’s name. And the money from the liquidation would be placed in a joint bank account.

I came home from the meeting somewhat troubled and thinking about their plans. By and large, I came to the conclusion that it would be a very bad idea. I’ll tell you why.

First, as the children all leave the coup and carry on with their separate lives, it is important that the husband and wife have a place of their own to stay independently. Especially, if the housing loan or mortgage is already paid up, the unencumbered house will provide the couple with security in their remaining years.

Second, not owning a house means that the couple will have to either stay with one of the children or look into renting a smaller house to stay. However, relocating oneself from one rented premises to another can be such a big hassle. Trust me; shifting or moving is no easy task or laughing matter. It can be problematic and consumes a lot of your time to look after the nitty gritty of the move.

Thirdly, having liquid assets about you means that you are always susceptible to your children touching you for money. Parents tend to be very forgiving and accede to their children’s request. Therein lies the danger. If the problem is not nipped early, very soon the well will be milked dry.

Fourthly, the old adage that property is the best hedge against inflation is still true. In the long term, there are more chances for capital gains from property than interest earnings from cash in the bank. Moreover, as one grows older, it is best to curb whatever appetite for stock investments or mutual fund/unit trust investments. It is a matter of stretching your dollar as far as possible, and no longer the time to gamble away your savings.

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A warning about plastic

Reproducing here part of an article that appeared on Rodale News.

5. Eating and drinking plastic
Toss your plastic water bottles into a recycling bin. According to a University of Cincinnati study, the chemical bisphenol A (BPA) found in hard plastic food and beverage containers can produce an estrogenlike molecule that mimics estrogen’s effects, creating a heightened risk for heart disease in women. Dr. Alvarez says BPA “could create too much estrogen or block the effects of its benefits.”

Do this. Replace # 7 plastic food containers and water bottles—that’s the type likely to contain BPA—with stainless steel, glass, or ceramic ones. If you’re not ready to banish other types of plastic containers, be sure you never heat them up, since this can cause other chemicals to leach into their contents.

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New EPF rule to impact on unit trust investment

From The Malaysia Insider today, a news report about an impending change to the EPF’s rule regarding regarding a contributor’s use of his EPF savings for investments in Unit Trusts:

“The EPF will revise upwards the basic savings quantum of its members to RM196,800 by the age of 55 effective January 2014, to ensure enough savings to finance members’ retirement needs,” EPF general manager, Nik Affendi Jaafar told The Malaysian Insider in Kuala Lumpur over the weekend.

He revealed that under the old scheme, which was launched in 2008, members’ targeted savings of RM120,000 at the age of 55 was not sufficient for them to maintain their lifestyle during retirement.

But the new amount will be equal to RM820 a month for 20 years from age 55 to 75.

The new rates are said to be benchmarked against the minimum pension for public sector employees, which is currently at RM820 a month, so that the monthly retirement income does not fall below the poverty level.

Following the revision, members need to have more in their Account 1 to be eligible for the EPF Members Investment Scheme, under which savings are invested in unit trusts. Currently members can use 20% of their balance in Account 1 to invest in approved unit trust schemes.

To illustrate the change, if a member is 40 years or older and has basic savings of RM80,000 in Account 1 at present (2013), his excess will be RM36,000 (derived from RM80,000 – RM44,000). He can then use only RM7,200 (20% of RM36,000) to invest in any approved unit trust. To further protect EPF contributors, withdrawals for unit trust investments are only permitted once every 3 months.

With the new EPF rules in 2014, at RM80,000, the excess will only be RM11,000 (RM80,000 – RM69,000). One can then only use RM2,200 (20% of RM11,000) to invest in any approved unit trust.

An official from the Federation of Investment Managers (FIMM) who spoke on the condition of anonymity said that the unit trust industry would be severely affected by the new ruling.

The RM326 billion unit trust industry comprises some 50,000 consultants who earn commissions ranging from 1% to 3% from unit trust investments.

The new ruling would also result in many EPF members, who were previously eligible to invest in unit trusts, no longer being qualified.

One of the leading Unit Trust Management Companies, Public Mutual (a subsidiary of Public Bank), derived one-third of its non-interest income from its unit trust operation. In 2012, less than 10% of its net profit was from its unit trust business. – September 9, 2013

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