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Wednesday, October 24, 2012

Former badminton star admitted a British barrister-at-law and now an advocate and solicitor of Malaysian High Courts

Raising the bar: Ang showing her admission petition to her father Chin Huat. Looking on is her mother Yoong Lai Chun and sister Annie. 
 
KUALA LUMPUR: She used to be a star in the badminton court but now it is the court of law that beckons gutsy Ang Li Peng.

She has created history by being the first Commonwealth badminton gold medallist to be called to the Malaysian Bar.

The national badminton player overcame the odds, including the language barrier, to achieve her ambition, which seemed like a dream seven years ago.

“I am over the moon. I never thought this day would finally come. Thank God, everything turned out beautifully today. It is amazing, it is like a dream come true,” the 31-year-old said after being admitted and enrolled as an advocate and solicitor of the High Courts in Malaya at the Jalan Duta Court Complex here along with others.

The petition was made by lawyer Tan Sri Cecil Abraham at the Appellate and Special Powers High Court before Justice Abang Iskandar Hashim.

Besides family members and friends, Kuala Lumpur Racquet Club founder Datuk Seri Andrew Kam and Olympic Council of Malaysia honorary secretary Datuk Sieh Kok Chi turned up to show their support.

Ang posing with her gold medal at the 2002 Commonwealth Games in Manchester.
Ang posing with her gold medal at the 2002 Commonwealth Games in Manchester.
 
Ang, who read law in Britain and has been a barrister-at-law at Middle Temple since last November, said she wanted to become a lawyer because as a badminton player, she believed in fair play and justice.

But the road to success was not an easy one. She managed to do her A-levels at the age of 24 and had to overcome her struggles with the English language.



“I did not speak good English. I could not even construct a sentence properly,” said Ang, who had studied at a Chinese medium school.

“That is why I'm very pleased for being able to graduate with a British law degree. I kept practising and will keep practising,” she added.

Ang, who is now pursuing her post-graduate studies in law in London, said she still had a lot to learn.

“The transformation from one court (badminton) to the other is challenging but I will continue to work hard and focus on being a better lawyer,” said the former doubles champion, who plans to specialise in corporate law.

She said it was very tough to study A-levels seven years after completing her SPM examinations.

“Going back to school was really tough. There were times when I wanted to quit.

“But I decided to remain steadfast with the support of family and friends. Determination is the best way,” said Ang, who retired from professional badminton at the age of 21 after winning the Commonwealth doubles gold in Manchester.

By FLORENCE A. SAMY The Star/Asia News Network

Tuesday, October 23, 2012

BJCC renamed Penang Golf Club: welcome to the newly upgraded Penang Golf course

THE renovation project at the 18-hole Bukit Jambul Coun-try Club (BJCC) golf course in Penang has been completed well ahead of its scheduled time.

The upgraded section is slated to open to golfers starting this Saturday.

Island Golf Properties Bhd chairman Datuk Eiro Sakamoto said the RM11mil golf course, which would be known as the Penang Golf Club, had been completed 14 months ahead of schedule.

“The course has been leng-thened slightly, and is now a par-72 golf course instead of its previous par-71 course.

“Among the upgrading works done were the resurfacing of the tee boxes, fairways and greens as well as the careful tendering of the golf lanes,” he said.

“The bunkers have also been redone. In addition, the subsoil drainage throughout the golf course has also been carried out to allow the smooth flow of rainwater,” he told a press conference at the club premises on Saturday.

All systems go: Sakamoto (left) having a discussion with Penang Golf Club chief operations officer Johnny Khoo at the newly renovated 18-hole golf course
 
Sakamoto said the cow grass at the fairways had also been replaced with Bermuda grass.

“The putting greens, the area surrounding the pin flags, have also been covered with an imported grass known as TifEagle, a hybrid type of cultivated grass that enhances the smoothness and fineness of golf greens,” he said.

Sakamoto also said approximately RM2.5mil had been spent on 100 new all-weather golf buggies for the new golf course.

“In the coming months, we’ll also upgrade the clubhouse building at a cost of RM4.5mil. We already have a new restau-rant known as the Sakurajima Restaurant which serves both Japanese and Chinese cuisines.

“We are now looking at a terrace coffee house and new changing rooms,” he added.

He also said the new golf course with all 18 holes would be open on Saturday during the 2nd Penang Chief Minister’s Golf Tournament.

“Chief Minister (Lim Guan Eng) will launch the game at noon,” he said.

By CAVINA LIM The Star/Asia News Network

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Sunday, October 21, 2012

Breaking the Goods and Services Tax (GST) taboo for a fairer Malaysian tax system


Tax-free necessities: People are still not aware that their basic needs will be protected under the proposed GST regime because essential food items like rice, meat, fish, seafood, chicken, vegetables, cooking oil and salt will be ‘zero-rated’, which means there will no GST imposed.
Tax-free necessities: People are still not aware that their basic needs will be protected under the proposed GST regime because essential food items like rice, meat, fish, seafood, chicken, vegetables, cooking oil and salt will be ‘zero-rated’, which means there will no GST imposed.  
 
When the Finance Minister tabled Budget 2013 and reduced personal income tax rate by 1%, some quarters have asked if this brings us one step closer to the GST.

EVER grumbled about having to pay the RM50 government tax for your credit card each year?

Well, the good news is there will be no more such tax if the proposed GST (goods and services tax) is implemented. And you will pay GST on the credit card only if your bank charges you for the card.

“These days, banks are offering credits cards for free and giving waivers on annual subscription. If the card is free, there will be no GST on it,” says Customs Department director-general Datuk Khazali Ahmad in an interview.

He stresses that key sectors like the financial services, public transport, healthcare, education and residential housing will be exempt from GST.

This essentially means that education, medical care, bus and train tickets as well as highway tolls will still be just as affordable as today. Thus, the lower income groups will not be burdened by the GST.

When it comes to insurance, Khazali says, if it is a life policy (including education, investment-linked and endowment), no GST will be imposed. But if it is a general insurance policy for medical, fire, motor, burglary, then the normal GST rate (proposed at 4%) will apply.

Despite the GST being a fairer, more effective and transparent taxation system and one that has been successfully implemented in 146 countries, it has not been easy to push the idea through in Malaysia.

In fact, the government has been talking about the GST for more than two decades now (even when Datuk Seri Anwar Ibrahim was the Finance Minister in the 1990s).



In December 2009, the GST bill was tabled in parliament for first reading but it was withdrawn on April 19 this year for amendments.

The Finance Ministry on its website has asked the public for views and feedback on the proposed GST.

With public awareness still very low on how GST works, it might be years before it actually comes to fruition.

People are still not aware that their basic needs will be protected under the proposed GST regime because essential food items like rice, meat, fish, seafood, chicken, vegetables, cooking oil and salt will be “zero-rated”, which means there will no GST imposed.

Critical services like schools, financial services, hospitals, roads and public transport will be “GST-exempt”, which means the consumer will be exempted from paying GST on them.

And if you buy a flight ticket to a destination abroad, you will not have to pay GST.

“You will be charged GST only on goods and services (which are not zero or exempt-rated) that you consume in the country what you consume outside the country will not be subject to a local GST. A flight ticket abroad and overseas travel is consumption outside Malaysia, so you don't pay GST here on it,” says Khazali.

The GST is a consumption-based tax where the tax is borne by the person who consumes the goods or services.

Ultimately, it should reduce business costs because manufacturers, distributors and suppliers are able to claim back the GST they paid on goods and services acquired for the purpose of their business.

And these businesses are supposed to pass those savings down to the consumer, which should result in lower prices.

Khazali says people find it hard to accept the GST even though it benefits them because “tax” is never a popular subject.


“Generally, nobody likes to be taxed or, rather, the word “tax” is taboo to many.

“However, governments all over the world need to impose tax to get the revenue to provide their citizens with their social needs, employment, security and so forth.”

Educating consumers on the GST, he admits, is not easy because the moment you say that GST is a form of tax, “you will be faced with a wall of resistance”.

“So we have to explain the GST and its benefits to the people continuously to avoid or eliminate whatever misconception they have about it,” he adds.

Khazali also notes that most people do not know that the GST actually replaces the current sales and services tax which they have already been paying on a lot of goods and services because it is embedded in the price of what they buy.

Under the current system, by the time the goods reach the consumers, the sales tax that is paid at the manufacturers level would have cascaded at each level of the distribution and the supply chain, and this results in a higher price.

But with the GST, since businesses at every stage are able to get a refund on the GST paid on the goods and services acquired or used for the purpose of their business, this will eliminate the cascading effect suffered under the current sales and services taxes.

And because of this, an immediate reduction in prices should be seen for goods and services where people have all along been paying an embedded sales tax.

He also stresses that the government has repeatedly emphasised that the people will have to understand the GST first before the government actually implements it.

“The public should not have any fear over GST. It is a form of consumption tax which has been implemented in nearly 150 countries in the world, whether developed or developing, so there must be something good about it. “

He says the GST is also supposed to result in cheaper prices for imported goods. At present, unless exempted, imported goods are subject to an import duty and sales tax.

People find it hard to accept the GST even though it benefits them because ‘tax’ is never a popular subject. - Datuk Khazali Ahmad People find it hard to accept the GST even though it benefits them because ‘tax’ is never a popular subject. - Datuk Khazali Ahmad

With the GST replacing the sales tax (5% to 10%), imported goods will still be subject to an import duty and a GST; but because the proposed GST rate is lower than the existing sales tax, consumers should be paying less.

Before implementing the GST too, he says, the government will also educate businesses on the need to pass down the savings they get from the GST refund, and set up a mechanism to stop businesses from trying to profiteer from it.

For him, the GST is a good thing because it will reduce business costs, lead to more competitive pricing, make exports more competitive because exports will be zero-rated (meaning no GST), increase gross domestic production and reduce grey economy activities.

Khazali also believes there might be a change in consumption pattern with the GST because the GST works on the affordability concept.

“Consumers have to decide which goods or services to buy. They pay GST only when the goods or services are consumed. So they may divert more of their expenses towards essential goods and services rather than on luxury goods.”

Khazali also points out that if the GST is implemented here at the proposed rate of 4%, it will be the lowest rate in the region.

Indonesia, Thailand, Cambodia, Vietnam and Laos charge a 10% GST rate, Philippines 12% and Singapore 7%.

But what is to stop the government from hiking the rate after it has been implemented?

Khazali cites past experiences, saying Malaysia increased its sales tax rate only once from 5% in 1972 (year of implementation) to 10% in 1983 and service tax rate too increased only once, from 5% in 1975 (year of implementation) to 6% in 2011.

There are still nuts and bolts to sort out with implementing the GST here, including tabling a new bill for it, putting an anti-profiteering mechanism in place, getting public understanding and acceptance on it. For now, it looks like it is still quite a long journey away.

Is GST the way to go?

No burden: The people can be assured of zero tax on basic essential items like rice, cooking oil, meat, chicken, vegetables, sugar, salt and water.
No burden: The people can be assured of zero tax on basic essential items like rice, cooking oil, meat, chicken, vegetables, sugar, salt and water. 
The Goods and Services Tax has been successfully implemented in 146 countries but many Malaysians are still unaware of its benefits.

JAYCEE Sim (not her real name) is a self-professed shopaholic who loves nothing more than spending her weekends at shopping malls. She is thus pleased with the one per cent cut in income tax rate announced in the Budget 2013 (for chargeable income up to RM50,000) because some extra money in the pocket is always welcome, especially when prices have been on the rise.

But she dreads the much-talked about Goods and Services Tax (GST) which has yet to be implemented in the country.

“I think it will cause a further hike in prices,” says Sim who teaches at a private college. But her friend, Debbie Lim, who owns her own business supplying component parts, is all for the GST.

“I think it is only fair. You pay for what you consume. You consume more, you pay more tax. If you don't spend, then you don't pay lah,” says Lim, who has family members in Singapore and has seen how the GST works there.

Lim too loves to shop and enjoys trying out new food places with friends.

She believes that post-GST, she can continue to do this without feeling the pinch, because there will be zero tax on essential food products like meat, chicken, fish, seafood be it locally produced or imported.

“Hey, without tax, maybe food prices can even come down. I can live with that!” she laughs.


So far, 146 countries have imposed the GST which is seen as a more efficient form of tax.
In Malaysia, which has a population of 28 million, there are approximately 12 million people in the workforce but only 1.7 million pay taxes.

PricewaterhouseCoopers Taxation Services Sdn Bhd senior executive director Wan Heng Choon refers to the GST as a fairer tax.

“I fall under the unfair' category of paying taxes. Out of our population of 28 million, I am one of the 1.7mil paying taxes. The rest of the population do not contribute but consume the same goods and services (like roads, schools, hospitals, public transport etc.) that the government provides for every single one of us. How can that be fair?” People here generally fear the GST, he says, because they do not understand how it works.

“Tell me which country will introduce a tax that drives prices up? It doesn't make sense. The GST has been successfully implemented in 146 countries. The difficulty here is that the simple mechanism is not understood,” he adds.

The people, he says, can be assured of zero tax on basic essential items like rice, cooking oil, beef, mutton, pork, chicken, fish, prawns, squid, vegetables, sugar, salt and water above.

They will also be exempted from paying GST on critical services such as public transport, toll, taxis, hospital and healthcare, schools, residential property, land for agriculture use, and financial services. Thus, the lower income group will not be burdened by the GST.

“If you conduct a poll, two out of 10 people will not know that essentials will be tax-exempted or zero-rated. That is a worrying statistic to me,” says Wan.

As for other consumer items like clothes, shoes, non-essential food items and furniture, Malaysians have in fact already been paying tax without realising it, because sales tax (sometimes as high as 10%) has been embedded in the price of the goods.

The GST system, on the other hand, will make the taxing system more transparent. The consumer will know what he is paying a tax on and how much.

Under the GST regime, the sales tax and services tax that people have been paying all this while, will be removed and replaced with a one-time consumption tax the GST.

So, it is not a case of consumers paying tax twice for what they buy.

Malaysia is looking at a GST rate of about 4% which actually works out to be cheaper than the present 5% to 10% sales tax and 6% service tax.

Refunds

A significant difference too under the GST regime is that the manufacturer, supplier and wholesaler get a refund from the Government on the GST (which in their case is an “input tax”) they have paid to buy raw materials, parts and utilities used, to produce their goods. So, it is the end user or customer who pays the 4% GST.

When manufacturers, wholesalers, suppliers get a refund on their input tax, it is good for business because it brings their production costs down. And when their costs are reduced, they can sell their products at a cheaper price to their customers.

At the customer level, since one has already been paying an embedded tax (of 5% to 10%) on many items prior to the GST, prices should not vary much.

As the GST covers a wider range of products (including those previously without a sales and service tax), some prices will go up but others will come down. But the important thing to bear in mind is that essential food items and key services will not be affected.

Wan says the Finance Ministry and Customs department have done years of extensive work on the GST.

They have come up with a Shopper's Guide, a list of 350 items in the CPI basket showing the estimated prices after the GST is implemented and the percentage of increase and decrease for each of these items, and shared this list with a number of trade associations including the Federation of Malaysian Manufacturers and the Chartered Tax Institute of Malaysia (CTMB).

“It astounds me that the list is not made available to the public. People want to know if their cup of coffee or roti canai will go up,” he says, adding that people need time to become aware of, accept and prepare for the GST.

Australia, he notes, took a year to prepare the public, explaining how the GST works and addressing concerns.

“If you release the list and information to the public only about three months before the implementation date, that's madness.”

Because the price of some non-essential goods might be higher, Wan suggests that the Government consider identifying the lower income group and offering them a one-off BRIM-like direct financial assistance to help them cope with the GST.

“Thus, the Government gives them support to deal with the GST but leaves it to them to decide how to spend that money.”

Dr Veerinderjeet Singh, chairman of Tax and Malaysia Sdn Bhd and former president of CTMB, believes that because Malaysia already has a sales tax embedded in the price of goods, it should be easier for people here to accept the GST than a country that never had similar taxes.

“People never really understood the objective and as a result, some sections are not for it. The GST is good for a country and this has been proven worldwide. We already have a sales and service tax; what we are doing is to merge and tweak it into the GST which is a more effective tax system,” he says, adding that the Government has done five years of solid work on the GST and spoken to every association. Now, they only need to go down to the ground to speak to the man-in-the-street.

Should manufacturers, suppliers or traders try to profiteer from the GST by not passing on their cost savings to the customers, action can be taken under the Price Control and Anti-profiteering Act that has been in place since April last year. Enforcement comes under the Domestic Trade and Consumer Ministry which is looking into establishing a price monitoring council to combat profiteering.

Dr Veerinderjeet points out that with the GST regime, there are more checks and balances in place as manufacturers, suppliers and wholesalers have to get their documents in order to claim their refunds on their GST (input tax).

He says it would also help uncover the underground economy because these businesses would now have to be registered to recover their input tax. And when they register their businesses, they will have to pay income tax, thus the government gains by collecting more taxes.

Wan notes that in the past, when the country's economy was growing at 7% to 9% annually and Foreign Direct Investment (FDIs) were coming in at a healthy rate, the Government did not worry too much about revenue because “the growth in the economy generated income that took care of things.”

“But remember 1997 and 1998 when corporate profits plummeted and PNLs (profits and losses) turned red? Where does the Government get its money from then?

“That's why the GST as a tax is a much better source for the Government. Regardless of whether there is an economic boom or recession, the GST can ensure a steady revenue to the Government .”

Wan suggests that people take a macro view of the economy, given the fact that the country has had a budget deficit for 16 consecutive years.

“People should not underestimate the impact of a budget deficit. If the government is spending more than it earns in revenue, a direct impact is that the value of the Malaysian ringgit will fall. What happens if that happens? We import inflation. A falling ringgit has greater far reaching implications on the overall economy and recession than the GST will ever have.

“The GST, on its own, is not going to be the silver bullet that cures deficit but it is definitely one of the strategies to help balance the books,” he says, adding that Malaysia should also tighten its subsidies and do something about its bloated civil service because a country as wealthy as it is should not slide down the slippery slope of the likes of Greece and Spain.

Dr Veerinderjeet admits that the one per cent cut in personal income tax rate took him by surprise and he feels it has been “overly-generous”.

“It benefits everybody in the taxable threshold, including the higher income group. People will save RM25 to RM475 in taxes. It is a good measure because it reduces liability and puts more money in your pocket. But I would have preferred for it to be held back for a rainy day,” he adds.

Currently, the maximum corporate tax in Malaysia is 25% but for personal income tax, the maximum is 26% which is something odd, given that individuals now pay a higher tax rate than companies.

Dr Veerinderjeet says it wasn't like that years ago.

“Personal taxes have always lagged behind corporate taxes. But countries have been lowering corporate tax rates over the years (to stay competitive) and we too have lowered ours.

“Many of us, including professional bodies, have been lobbying for the top margin tax rate for personal income tax to be aligned with corporate tax rate of 25%,” he shares, adding that the income tax bands too should be widened so that someone who works hard and earns an additional RM10,000 to RM15,000 a year will not find himself pushed up into a higher tax rate bracket.

Tax system

Dr Veerinderjeet favours a revamp of the entire tax system, including personal income tax, corporate tax, petroleum tax, real property gains tax, customs duties, sales tax, service tax, the GST and fixing the anomalies and income tax laws that may be burdening business and introducing incentives that encourage innovation and business while reviewing those that have not achieved their objectives.

“It is not as simple as introducing the GST, then think of lowering personal and corporate tax rates. Is this system sustainable for the future? We are looking at 2020 who are we benchmarking ourselves against in terms of our tax system? Are we benchmarking against a developed nation?”

On views that the GST should be deferred to give back to the rakyat, Dr Veerinderjeet says Malaysia needs far more development and it needs to fund this development.

“We are giving back to the rakyat in different forms like better roads, better schools and better hospitals,” he says.

With 146 countries already implementing the GST, it is perhaps only a matter of time before the Government here follows suit. But for this, they must really go down to the ground to allay the fears, address the concerns and explain to the people why GST is the way to go.

Consumers assured of a fairer tax system


“YOU know that shirt you are wearing? You've paid tax on it,” Customs Department director-general Datuk Khazali Ahmad points out during a recent interview on the proposed Goods and Services Tax (GST).

What people do not realise, he adds, is that the Customs Department has been collecting sales and service taxes over the years. This is because the taxes have already been included in the prices consumers pay at the check-out counters.

And the amount collected is significant. Just take this year alone, till Oct 4 even without the GST the Customs Department has already collected RM7.3bil in sales tax and another RM4.36 bil in services tax.

Last year, it took in RM8.57bil in sales tax and services tax came up to RM4.98bil. In 2010, its collection for sales tax was RM8.17bil and RM3.92bil for services tax.

“Some people are not happy with the GST because they think the Government is introducing a new tax to add to the tax that is already in place.

“But the GST is not a new tax. The GST is only a replacement tax (to replace the sales and services tax) to make our taxing system more efficient and transparent,” says Khazali.

He understands the people's fears that the GST will affect prices of goods, services and their consumption pattern. But these fears are unfounded, he says.

“There is a zero tax on a lot of basic necessities (see chart) and we are giving exemptions on critical services (schools, hospitals, public transport, tolls, banking),” he explains.

“Consumers should be better off as essential food like rice, vegetables, cooking oil and fish are not subject to GST at all.”

Currently, the people are already paying a sales tax of 5% to10% and services tax of 6% on goods and services. With a proposed 4% GST rate, prices of these goods and services would in fact, be down.

He says this is because suppliers and manufacturer get a refund on what they pay as GST to produce their goods; so with the GST regime, they would now have to remove these elements from their cost.

“We have gone around to meet the suppliers to make sure that whatever cost savings they get (from their refund), will be passed on to the clients and consumers. We will ensure the public do not pay more when the GST is introduced.”

However, for certain goods and services that are now not subject to any sales or service taxes, there might be an increase in price with the GST but the rate should not be more than the GST proposed rate.

Khazali says the Customs Department will work closely with the Finance Ministry, Domestic Trade, Co-operative and Consumer Ministry and consumer associations to monitor prices and release a shoppers' guide to the rakyat so that they know how much they should be paying.

They will also get hypermarkets to co-operate and be the price-setters.

By SHAHANAAZ HABIB, The Star/Asia News Network

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Oct 07, 2012

Malaysian young lawyers not up to par

KUALA LUMPUR: All young Malaysian lawyers do not meet the standard international quality benchmark set by their employers, according to a Bar Council survey.

Bar Council treasurer Steven Thiru said the survey, conducted on 400 law firms, also found that employer satisfaction of new working lawyers was “shockingly low”.

“It found that young lawyers practising for less than seven years do not have basic attributes like English proficiency, communication and critical thinking skills and commitment to the profession, which is vital for the career,” said Thiru at a forum between the Bar Council and the National Young Lawyers Committee (NYLC),

He said the problem was prevalent among both local and foreign university law graduates.

Thiru placed the blame on the failure of several tertiary education institutes, which did not include practical skills with academic learning.

“So, what we get is law firm employers having to retrain young lawyers in basic practical skills that they should have learned in university,” he said.

The findings come in the wake of the NYLC's recommendations to the Bar to increase the wages of young lawyers and provide more flexible working hours.

The young lawyers have been complaining that they are being paid “too little” for the amount of work they do.

The NYLC, citing its own survey, said 28.2% of young lawyers in the Klang Valley wanted to leave the profession in the next five years while another 38.7% were considering leaving.

Outside the Klang Valley, 15.3% said they would leave and another 48.2% were considering.

“Most cite low salaries and no work-life balance as the main reasons for opting out,” said NYLC chairman Richard Wee.

He said most young lawyers were attracted to overseas firms offering better benefits.

He said NYLC had suggested a starting pay of RM3,000 to RM4,000 a month for young lawyers in Klang Valley and RM2,500 for young lawyers elsewhere. The current salary is RM2,000.

He said that of the 14,500 lawyers in the country, 2,070 were considered as young.

Thiru and other senior lawyers however, said young lawyers did not deserve the raise.

Chee Siah Le Kee & Partners' Wong Fook Meng said young lawyers should earn the raise they were demanding for.

“They fail to realise that they should be working to learn and better themselves as lawyers, rather than focus on the cash.

“There are no shortcuts, young lawyers must create value and contribute meaningfully to their firms to justify higher compensation,” said Wong, who is a member of the Bar Council's Constitutional Law Committee and former NYLC deputy chairman.

By NICHOLAS CHENG
The Star/Asia News Network

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New directions for young lawyers
Lawyers must constantly improve skills 

Saturday, October 20, 2012

Watch out for get-rich-quick schemes

Good profitability comes from making the right-buying decision
 
HAVE you bought any gold in the last five years? If you had bought, either you are laughing all the way to the bank or you are worried sick that you might never see your life savings back in your bank account.

If you had bought physical gold because you believe the price of gold will go up, then you have made a great investment decision. If you had bought because there is a high income return in the form of interest or share of profits, then you have let greed cloud your buying decision. You are buying for all the wrong reasons.

Other than buying shares in the stock market based upon reliable insider information, I know of no other buying opportunities that guarantees you high returns in a short period of time. You might argue that corruption is a guaranteed clean profit scheme but then it is not a buying decision where personal financial risk is involved. It is always other people's money.

The only common denominator in any get rich scheme is greed. Lots of human greed preyed upon by conmen who will continue to thrive because of gullible people buying for the wrong reasons. Their belief that “there is a greedy sucker born every minute” is justified.

In business, you are hailed a marketing wizard when you sell well. If you had bought well, it will be reflected in your gross margins, cash flow and bottom line. So who should be rewarded more, seller or buyer?

Most businesses are obsessed with selling decisions and place less emphasis on buying decisions. You will find these businesses having higher cost of goods, higher obsolescence, poor cash flow and weaker profits.

In this era of commoditisation where final prices for similar products in the market tend to level out, the buying decision becomes even more important and crucial if you intend to eke out any ounce of strategic advantage over your competition. Buying accurately products that sells, negotiating for the lowest prices, buying the right quantity to prevent inventory overstocking, improving cash flow and in this process creating operational efficiency that will help you survive the battle and eventually win the war.

Even the biggest organisations make poor buying decisions. One great example is Tenaga Nasional Bhd's (TNB) buying deal with the original independent power producers. Granted that the buying decision was right in view of the energy crisis at that time, the one-sided negotiated deal to buy at high prices and all the power produced, caused massive amount of losses to TNB. Just to show how one major buying decision can change the fortunes of a company.

In contrast, AirAsia's early decision to buy massive numbers of new aircraft of one type and from one supplier has defined their success path that you are seeing today. New planes versus old leased planes reduces maintenance costs and are more fuel efficient. Reduced training required for flying and cabin crew. Familiarity breeds efficiency.

Planes can be rerouted anywhere and replacement easily available as there are same numbered seats in all the planes. Expensive spare parts are kept to a minimum and maintenance procedures easily standardised. AirAsia, being the single largest customer of Airbus Industries, will definitely pay the lowest price for an A320 aircraft with the best financing terms from European banks.

These buying decisions are driven by the low cost business model plan. The only buying decision beyond its control is the supposedly high charges of operating out of the new LCC airport. Protracted negotiation between the only authorised airport operator and its biggest customer who will win?

To make money when you sell at a lower price than your competitors, you must have a comparable lower operating cost and lower cost of goods. Selling price is now determined by your buying cost.

So if you want to go into a price war, just make sure you can continuously buy cheaper than your competitors and your operating cost kept even lower. The best example is Walmart, the biggest retailer in the world. Using its massive buying power to have the lowest cost of goods, it has out-priced its competitors by a margin across all categories. To ensure it has the lowest operating cost, it has deliberately built its low-cost warehouse buildings on low-cost land in the outskirts where labour is easily available and cheap.

Buy cheap, sell cheap. Forever cheap. Proven successful formula when products and services become commoditised. Just make sure your buying strategy is sustainable.

I have been trading for 27 years and I have lost count on how many wrong buying decisions that I had made. Some were really inexcusable silly mistakes, some were downright poor judgement calls and some out of pure greed. In all these cases, I was not focused enough and was buying for all the wrong reasons and it had caused me considerable amount of discomfort and agonising moments in my business life.

I have a successful brand because I developed a great buying strategy that is able to meet my customers' needs on a sustainable basis. I have a profitable company because I bought well and because I am personally involved in all the major buying negotiations.

If you are on your own, be fully involved in the buying process. What you buy determines what you sell and how you sell. How you buy determines your profitability.

Just remember not to buy pieces of paper that promises you immediate high returns. For your children's sake... Wise up!

ON YOUR OWN
By TAN THIAM HOCK

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