Golf clubs in Malaysia face closure with new tax

Golf industry cries foul over new form of taxation and there is definitely a cause for concern.

Golf clubs in Malaysia face an uncertain future with the new tax issue hanging over their heads.

THE Malaysian golf industry has come under threat of closure again and this time it comes from the Inland Revenue Board.

The IRB now wants to tax all the 180 proprietary clubs (private commercial clubs) on the advance licence fees since the clubs were set up.

The advance fee is the collection of 80% of membership fees that they collect when folks first sign up.

This amount is collected in advance and slowly released into the balance sheet of the companies for the period of the trust deed.

While the industry disputes that the money was taxable as it was a sum that they had to refund if there was a breach of the trust deed, the IRB said it was income to the club and thus is taxable.

The total amount the authorities want the clubs to cough up is more than RM600mil – a sum the golfing industry cannot afford to pay and this could spell the end of many clubs in the country.

A spokesman for the Malaysian Association of Golf & Recreational Club Operators (Magro) said it was not as if the clubs had not been paying taxes or had been hiding the advance fee from the IRB.

He said that the clubs had been in touch with the IRB from the start and had proposed the normal way of taxation based on services.

“This was accepted until 2010 when the IRB wrote to a few clubs and after conducting field audits, decided that the advance fee was taxable.

“The total bill is over RM600mil and they wanted to back tax us all the way to the day the very first member signed up,” the spokesman said.

However, the IRB after several rounds of discussion agreed to cap the backdate of taxation and allow the amount owed to be paid over three years.

A club manager of a popular club in Petaling Jaya said even that concession by the board is totally unacceptable because it will mean the effective end of the golf industry in Malaysia.

“All our profits for the next few years will be wiped out just paying this back taxes. Our club owners will definitely want to exit this business.

“Most of the land we sit on are worth a lot of money and it will make sense for the owners to close down the club and build residential units instead.

At the most, the value of a golf course is only about RM200 per square foot but the houses, condominiums and shops built on top of these land will be worth thousands of ringgit per square foot,” he added.

Already there are several clubs in the Klang Valley, which have either been closed down like Kajang Hill GCC or downsized like KGSAAS, because it is so much more profitable to develop the land into residential and commercial projects.

The owners could also go the way of Palm Garden Golf Club where the owners bought back all the sold membership and turned it into a “premier public course” and thus paying taxes only on income earned from services.

There are about 500,000 members to the 180 proprietary clubs (this ruling by the IRB does not affect members club, at least, not yet) who will eventually lose out in terms of facilities.

There is also the 50,000 direct and indirect workers who will be jobless once the clubs close down.

There is also a tremendous loss of tourism dollars. A total of 120,000 foreign golfers play in Malaysia each year.

They spend an average of four hotel room nights per visit translating into 480,000 room nights. Each of them spend an average of RM300 per night for accommodation and a further RM1,500.

This means that if the golf industry collapsed the country’s economy would lose RM864,000,000 annually.
Let’s not be pound wise penny foolish. The tax dollars can be found through other means and let’s hope the authorities realise this.

CADDY MASTER By WONG SAI WAN

Related post:

Golf courses targeted for re-development - Too valuable for golf?

Cost of vehicle ownership in Malaysia

MALAYSIA is perceived to be one of the costlier countries in the region when it comes to vehicle prices. But industry observers believe that this is compensated by the fact that the country’s fuel prices are heavily subsidised, and that it also enjoys the lowest interest rates in South-East Asia.

“One should not compare vehicle cost of ownership in the region purely based on the price of the car alone,” says Malaysian Automotive Association president Datuk Aishah Ahmad.

According to data by the Malaysia Automotive Institute (MAI), the average interest rate in Malaysia for a loan tenure of between 60 months and 108 months is between 2.5% and 3.6% - which is the lowest in Asean.

Interest rates in Vietnam is the highest, which has a flat rate of 16% per annum for loans that range between 12 months and 60 months.

“Given the fact that Malaysia’s interest rates are the lowest in the region, as well as the fact that fuel prices are subsidised, the total cost of vehicle ownership is one of the lowest in Asean,” says MAI chief executive officer Madani Sahari. The cost of interest rates used in MAI’s calculations is over 5 years.

The MAI is the think-tank for the Malaysian automotive industry.

Madani notes also that the price of subsidised RON 95 in Malaysia was one of the lowest in the region at RM1.90 per litre. Comparatively, the cost for the fuel in Thailand is RM3.80 per litre, Indonesia (RM3.35 per litre), Singapore (RM5.10 per litre), Vietnam (RM3.60 per litre) and the Philippines (RM3.20 per litre).

“In terms of road tax, we are also quite competitive in Asean. Malaysia is still cheaper compared with countries such as Thailand and Indonesia and comparative to Vietnam and the Philippines,” he says.

Perusahaan Otomobil Kedua Sdn Bhd managing director Datuk Aminar Rashid Salleh says Malaysians are blessed to have their fuel subsidised.

“We have low fuel prices and interest rates. All of these factors have contributed to Malaysia’s low cost of vehicle ownership.”

Madani points out that over a five-year period, the average road tax and insurance in Malaysia was among the lowest in the region, costing RM1,990 and RM15,310 respectively.

The five-year cost of road tax and insurance in Singapore was the highest at RM13,779 and RM39,806 respectively, compared with Indonesia (RM9,186 and RM22,965), Thailand (RM2,297 and RM33,682) and the Philippines (RM1,531 and RM14,238).

When comparing vehicle prices, especially those of popular international marques such as Toyota, Honda and BMW, Madani points out that prices in Malaysia were still lower compared with countries such as Singapore and Vietnam.

According to data from the MAI, a 1.5-litre Toyota Vios (as at September 2012) costs RM87,313 in Malaysia but costs RM88,456 and RM303,136 in Vietnam and Singapore respectively. The Vios is cheapest in the Philippines at RM60,271.

A brand new 1.5-litre Honda City meanwhile retails for RM88,443 locally and costs RM106,090 and RM295,800 in Vietnam and Singapore respectively and lowest in the Philippines at RM61,472.

The BMW 3 series, a popular premium model that is represented in most Asean countries, costs RM238,800 in Malaysia. It costs RM248,200 and RM541,200 respectively in Vietnam and Singapore. It costs the least in Indonesia, retailing at RM191,900.

However, when taking into account the vehicles’ selling price, down payment and loan repayment (including interest rates), road tax and insurance, as well as the fuel prices of the different countries, the total vehicle cost of ownership for a 1.5-litre Toyota Vios is RM130,382, which is the second lowest in the region after Philippines, where the total vehicle cost of ownership is RM128,933.

Total vehicle cost of ownership for the Toyota Camry (2.5-litre) in Malaysia is also second lowest in the region at RM243,182. The total vehicle cost of ownership for the Toyota Altis (1.8-litre) in Malaysia is however the cheapest in the region at RM163,973.

After the Philippines, Malaysia also boasts the second lowest total vehicle cost of ownership for the Honda City (1.5-litre), Civic (1.8-litre) and Accord (2.4-litre) models in the region. Malaysia also has the lowest total vehicle cost of ownership for the BMW 3 series.

By EUGENE MAHALINGAM eugenicz@thestar.com.my

IMF aid to Europeans stirrings of resentment

Members feel Eurozone countries aren't willing to swallow the necessary tough medicine

Critical role: Last month, European Central Bank president Mario Draghi (right) gave the International Monetary Fund, headed by Christine Lagarde (left), an important new task: requesting that the Fund keep an eye on the behaviour of countries like Spain if the bank took measures to contain their borrowing costs. - PHOTO: REUTERS

IT IS one of the ironies of the eurozone crisis: the Europeans who have long dominated the International Monetary Fund (IMF) are now the ones borrowing its money and swallowing its advice.

The IMF, traditionally a lender to poor countries, now devotes more than half of its financial resources to the eurozone. Moreover, the fund and its managing director, Christine Lagarde, have emerged as the taskmasters that European leaders seem to need to flog them towards a solution to the crisis.

The Fund's critical role in Europe has revitalised the organisation's claim to relevance in world affairs. Last month, Mario Draghi, president of the European Central Bank (ECB), gave the Fund an important new task: requesting that it keep an eye on the behaviour of countries like Spain if the bank took measures to contain their borrowing costs.

"The ECB wants an independent observer," said Manuela Moschella, an assistant professor at the University of Turin who studies the IMF. ''They want someone who can blow the whistle and say what is going on.''

But there is also resentment among some of the 188 countries that belong to the fund and supply its financial firepower. These discontents are likely to surface in Tokyo when the I.M.F. and the World Bank hold their annual meetings, which were to start Tuesday.

The United States and Canada, among others, have objected to the shift of resources to Europe at the same time that European countries have blocked changes that would give emerging countries a greater voice in making I.M.F. decisions.

Tough pill to swallow

Canadian leaders, in particular, have said that countries whose people live on a few dollars a day should not be asked to help maintain the European welfare state.

''The feeling is that the Europeans don't want to swallow the tough medicine,'' said Bessma Momani, a professor of political science at the University of Waterloo in Ontario. There is, she said, ''a more general sense that European society and way of life are passé.

''Before the beginning of the financial crisis in 2008, the fund provided almost no financial assistance to Europe. Now resources committed to the European Union, including Greece and Portugal, account for 56 percent of the I.M.F. total - (EURO)110 billion, or $143 billion.

The first European countries to seek I.M.F. help in recent years were former Soviet Bloc countries, like Latvia and Hungary in 2008, both of which are members of the European Union. The I.M.F. also played a main role in the Vienna Initiative in 2009, in which the European Union and commercial banks cooperated to prevent the collapse of the financial systems in Eastern Europe.

Management of the I.M.F. has long been dominated by Europeans, leading to accusations that the region is now getting preferential treatment. Since its founding in 1946, all of the fund's managing directors have been European.

''There is at least the suspicion that the European members will get easier terms'' for financing, Ms. Moschella said.

''This is really a threat to the credibility of the organization. I think the I.M.F. has behaved correctly, but the suspicion is there.

''European countries continue to contribute more money to I.M.F. coffers than they take back in loans. Germany's quota, or maximum financial commitment, is $14.6 billion, while France's is $10.7 billion. The largest contributor is the United States, with a quota of $42.1 billion out of a total for the fund of $238 billion.

Officials at the fund argue that the euro zone crisis has become a threat to the global economy, including poorer countries, and it is in everyone's interest to fix it. As members of the I.M.F. and financial contributors, European countries have as much right to ask for help as other members.

''When there are systemic crises that affect other countries in the world, it is natural for the fund to be involved,'' said Reza Moghadam, director of the fund's European department.

''The fund has huge depth of expertise in crisis management,'' Mr. Moghadam added. ''We have dealt with a lot of crises in the past, and there is huge institutional knowledge.

''Many analysts agree that there is no other organization with the clout, money or expertise to serve as outside arbiter to quarreling euro zone members.

''Expertise and impartiality - that's what they bring to the table,'' said Carl B. Weinberg, chief economist at the research firm High Frequency Economics in Valhalla, New York. ''They know how to walk into a government treasury and look at the books and know what they're seeing.'' Mr. Weinberg, as a banker earlier in his career, worked with the I.M.F. on debt restructuring programs in Mexico and other countries.

Ms. Lagarde has helped Mr. Draghi and U.S. leaders put pressure on European officials to move more aggressively to fight the crisis.

 European firewall

During a speech in Washington late last month, Ms. Lagarde beseeched European leaders to ''implement the European firewall - notably the European Stability Mechanism; implement the agreed plan for fiscal union; and, at the country level, implement the programs that are essential for growth, jobs and competitiveness.

''If, as expected, Spanish leaders ask for help from the European Central Bank, the I.M.F. would monitor whether the country kept promises to overhaul the economy and contain government spending. The E.C.B. does not want to take the risk of buying Spanish bonds, a way of lowering the country's borrowing costs, without such conditions.

The euro zone crisis has also presented the I.M.F. with unprecedented organizational challenges. Instead of dealing with one country, it must deal with the 17 members of the European Union that use the euro. They frequently do not agree, and decision-making is slow. In overseeing lending and restructuring programs in Greece, Ireland and Portugal, the fund has shared authority with the E.C.B. and the European Commission, with the three having come to be known as the troika.

''The fund's relationship with Europe is more complicated than anything it has ever been involved in,'' said Edwin M. Truman, a senior fellow at the Peterson Institute for International Economics in Washington.

While he said the fund had done a ''reasonable job'' in Europe, Mr. Truman also called the I.M.F.'s involvement on the Continent a ''political subterfuge'' because the euro zone countries were effectively outsourcing responsibilities they should be taking on themselves.Some observers say that European countries made the fund's task more difficult because they hesitated too long to ask for help, for reasons of pride.

''We should have let the I.M.F. in earlier in Greece,'' said Erik Berglof, chief economist at the European Bank for Reconstruction and Development. ''We could have maybe had an earlier solution to the Greek problem and not allow it to grow in magnitude before it was addressed.

''There is a risk that European leaders will repeat the same mistake in Spain, waiting to call in the I.M.F. until the crisis is acute. No national leader likes to take orders from an outside institution, especially in Europe, where countries are not used to being charity cases. The stigma and loss of sovereignty are likely reasons that Prime Minister Mariano Rajoy of Spain has delayed asking for help.The fund has learned from its own mistakes in places like Asia that too much austerity can be counterproductive, but was not always able to apply that experience. In Greece, for example, Germany and other northern countries insisted on a strict austerity program.''The I.M.F. has learned a lot how to design programs and structural reform measures and how to embed them in the local political system,'' Mr. Berglof said. ''That experience the European institutions didn't have from the beginning.

''Though the I.M.F.'s presence in Europe may not please everyone, it is likely to continue growing. No other institution, even the E.C.B., has the political independence or expertise needed to oversee restructuring programs in a country like Spain. Canada and other countries that resent paying for a European bailout are not likely to block one altogether.

Said Mr. Berglof of the E.B.R.D., ''There is a broader constituency that has a very strong stake in the resolution of the economic problems in Europe.

Political uncertainty

''The International Monetary Fund is cutting its global economic forecast yet again, calling the risks of a slowdown ''alarmingly high,'' primarily because of policy uncertainty in the United States and Europe, Annie Lowrey reported from Washington.

It foresees global growth of 3.3 percent in 2012 and 3.6 percent in 2013, down from 3.5 percent this year and 3.9 percent next year when it made its previous report in July. New estimates suggest a 15 percent chance of recession in the United States next year, 25 percent in Japan and more than 80 percent in the euro area.

Financial market stress, government spending cuts, stubbornly high unemployment and political uncertainty continue to hamper growth in high-income countries, the fund said. At the same time, the emerging-market countries that fueled much of the recovery from the global recession, like China and India, have continued to cool off, with global trade slowing.

By Jack Ewing, The International Herald Tribune

Money talks or advice?

Getting sound advice before making key decisions will help reduce losses. Most young entrepreneurs do not realise the importance of money until they run out of it. Money makes money!

AS a parent, I do miss my two boys when they are studying overseas.

Always worried whether they have sufficient money to spend and sufficient memory to store all the good advice given.

Whenever they do whatsApp me, it will most likely be on issues concerning money and occasionally seeking advice.

At times asking for money to pay for tuition fees and sometimes giving me a heads up on some supplementary credit card charges coming my way. When it comes to money matters, my two boys are extremely polite and write beautifully as if their livelihood depends on it.

Once in a while, they ask for advice. Like choice of subjects, universities and internship. Maybe just to make this old man feel needed. Well, definitely no complaints from me as advice is free.

And it gives me an opportunity to connect with them. Which means an excuse to Skype. Having a face to face chat on anything and everything which inevitably ends with me asking them whether they have enough money left in their bank account.

Just a gentle reminder that they can always depend on their old man whenever they need advice. And money.

So when you are on your own, what do you really need at this juncture of your business cycle? Money or advice?

For a new startup, my advice to you is to get proper advice from sincere people with relevant and preferably substantial experience. The older the person, the better.

Business people who have been cheated before and survived through business failures, partnership break ups and financial crisis.

Let the devil's advocate honestly tear your business plan to shreds, telling you all the possible pitfalls that you will encounter and watch your beautifully crafted dream evaporate before your misty eyes.

If you are able to take all these harsh and negative comments objectively, revisit your business plan, discard the potential pitfalls and insert positive corrective steps into your new business plan. You now have a fighting chance that your new startup will survive its formative years.

Then you start worrying about money.

So what happens when you have nobody to turn to for advice? Are you gungho enough to still proceed and take the risk, gangnam style? Putting all your energy and money into that one song and dance and hope for it to be a big hit?

Should you dance by yourself or should you get back up dancers? If you need partners, what do you want from your partners? Money or advice? Or complementary skills?

My favourite example of a wildly successful partnership has got to be the Tony and Din duo act of Tune and AirAsia fame.

One, the consummate showman with charismatic leadership. The other, an actuary, brilliant in crunching big numbers and an astute statistician.

Both started with little money, lots of guts and a perfect blend of complementary skills needed for the low cost airline business. Massive capital expenditure to be paid for by massive sales of low cost tickets which requires accurate forecasting and inspirational marketing to convince the masses to fly. In this case, two big heads better than one.

There will be instances when you need partners with money and easy access to more money. Partners who can help you leverage for growth and have the trust of bankers.

Are you prepared to give up a big chunk of your business? Partners with skills and no money will not be demanding as advice is cheap.

If you are involved in serious money talk, be prepared to let your new partners have a bigger share of profits just as you expect him to contribute a bigger share of financing.

A smaller share of big profits is still better than 100% share of zero profits. Just bury your big ego and get your business going.

Most young entrepreneurs do not realise the importance of money... until they run out of it. Money makes money. Small investments make small money and big investments make big big money. Cash is king and Talk is cheap. But absorbing relevant sound advice before making key decisions will help you to reduce losses or hopefully make more money. So learn to listen. Attentively.

There are no statistics available as to how many new startups actually survive the initial years. And how many more actually survive and win big at the finish line. My gut feel is one big success story out of a thousand.

If all of them received solid sound advice before they start, 500 of them will probably not start, the 499 stubborn startups will probably survive and there will still be only one big winner at the end.

At least, there will be 500 less casualties of empty wallets and broken dreams.

Bringing up your children to become productive and upright citizens involves huge capital investment with a lifetime dosages of advice and love.

With no monetary returns expected. All you can hope for are the occasional moments of being needed when they need advice. Or money.

If they shower you with love and kindness in your twilight years, consider yourself blessed and your investment justified. May all parents be blessed.

ON YOUR OWN By TAN THIAM HOCK

To access earlier articles of On Your Own, log on to www.thiamhock.com. Honest comments welcomed and approved

America's Highest-Paying Office Jobs

If you want to keep getting raises, get promoted to senior management. As tough as the economy has been, people in executive positions saw their paychecks increase by an average of 6.6% this year, to $108,800. That’s according to data just released by Compdata Surveys, a national compensation survey and consulting firm in Olathe, Kan.

Compdata looked at base salaries for 26 senior management jobs below C-level. For the eighth consecutive year, commercial lending directors take the top spot, with the highest average paychecks. They are earning $143,700, on average, in 2012, up from $139,000 last year.

In Pictures: America’s 10 Highest-Paying Office Jobs

“Commercial lending directors hold the top spot again this year and have for many years. Although their salary did take a slight hit during the recession, it was minor compared to other senior management positions,” says Amy Kaminski, a vice president at Compdata Surveys. “This is likely because of the nature of their work.”

Commercial lending directors are responsible for the development, administration and oversight of commercial lending policies. “Since a large number of new businesses fail within the first five years, a lot of pressure is put on commercial lending directors to ensure the loans they are granting are sound,” Kaminski adds. “The recession only amplified the difficulty of this position as the qualifications to obtain any type of loan became more rigid.”

Ranking second on the list, engineering directors are making an average of $131,300 this year, up 7.4% from 2011.

“Engineering directors have always been one of the higher paid senior management positions,” Kaminski says. “Engineers are in great demand, and finding a person with the right combination of education, experience and leadership skills to oversee a company’s engineering activities can be difficult. Now, with speculation of an engineering shortage looming, compounded with an increased emphasis on growing the manufacturing industry in the United States, engineering directors have become a valuable asset.”

In the No. 3 position, general managers are earning $131,200, up slightly from $127,900 last year, while No. 4 finance directors are making $125,000, which is 9.5% more than they made in 2011.

The biggest winners over a five-year period are material management directors, who are earning 18% more this year than in 2007, and accounting directors, whose paychecks have grown 17.8% in the same period.

“Over the past several years, an emphasis has been placed on lean manufacturing practices, with these practices even inching their way into other industries,” Kaminski says. “Keeping tight control over inventory levels or materials needed for businesses to function is a big element of implementing lean practices – and that is where materials management directors come in.”

They control, measure, and regulate efficient inventory levels, making sure to have enough materials on hand to conduct business. “The recession reinforced this practice, as budgets were slashed and employers demanded that no dollar be wasted,” she says. “Keeping the proper amount of materials on hand while trying to ensure minimal or no overstock is a balancing act at which material management directors need to excel.”

Of the 26 jobs included in the survey, only one—controller assistant—is earning less in 2012 than last year. These professionals manage the accounting functions under the general direction of the controller, including establishing and maintaining accounting principles, practices, and procedures. To hold this position, you need a Bachelor’s degree and six years of experience. They’re earning $81,400 this year, down 2.2% from 2011.

“We would not consider this a large enough decrease to show a trend, especially since this position did experience a higher than expected increase in 2011,” Kaminski says. When you look at the overall results of the past five years, this position is still trending upward.

So, why are some employers compensating their managers so well right now?

“It’s no secret that having the most talented and experienced individuals on staff are going to be the key for most businesses to successfully begin moving forward after the recession. However, some studies suggest as the economy continues to improve, more individuals will be looking to change employment,” Kaminski says. “Companies cannot afford to lose those needed to lead their workers towards economic growth.”

Providing competitive compensation plans is an important element in retaining those individuals. Although the unemployment rate is just under 8%, the pool of qualified leadership candidates is significantly smaller, “making the need to retain your successful leaders that much more important,” she concludes.

Salary Data for All 26 Management Jobs:

Commercial Lending Director – $143,700 a year, on average
Engineering Director – $131,300 a year, on average
General Manager – $131,200 a year, on average
Finance Director – $125,000
Information Systems Director – $121,500
Accounting Director – $118,600

Development Officer – $118,200
Marketing Director – $118,100
Information Security Director – $116,600
Human Resources Director – $116,000
Operations Director – $115,200
Controller – $114,800
Materials Management Director – $113,000
Plant Manager – $112,000
Mortgage Lending Director – $111,100
Nursing Services Director – $109,600
Senior Manufacturing Manager – $108,000
National Sales Manager – $106,300

Systems and Programming Manager – $100,600
Plant Engineering Manager – $98,900
Distribution Manager – $86,500
Quality Control Manager – $83,600
General Accounting Manager – $83,300
Advertising and Public Relations Manager – $82,500
Human Resources Manager – $82,000
Assistant Controller – $81,400

America's 10 Highest-Paying Office Jobs

If you want to keep getting raises, get promoted to senior management. As tough as the economy has been, people in executive positions saw their paychecks increase by an average of 6.6% this year, to $108,800. That's according to data just released by Compdata Surveys, a national compensation survey and consulting firm in Olathe, Kan.Here are the 10 highest-paying senior management jobs below C-level.

This is an update of a piece that ran previously.

Jacquelyn Smith, Forbes Staff

 

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