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Contents Special Feature

18 BNM: A New Pricing Strategy to Promote Greater Efficiency 19 She Has 3 Policies but No Coverage by Axcelink

06

Investment Know How 37 What is Business Trust?

Wealth Protection

38 Lawrence Seow on 10 Great Ideas When Writing a Will

Family Wealth Management

40 Evonne Chen on Family Business Succession

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34

Investment Education

42 Kathlyn Toh on Taking Your First Step to Investment Success, Multiplying your Profit

Women Financial Planning

44 Brenda Yong on Financial Planning for the Divorcee

Investment Tips

58 Special Interview

06 Internal Auditors: Safeguarding the Risk Management of Banking Institutions by KPMG 09 Now Everyone Can Afford Medical Insurance by Pathlab Health Management and MXM International Sdn Bhd 34 Maybank- Becoming the Preferred Bank for SMEs

Special Report

22 Balance & Focus- Citibank's Investment Mantra for 2013 24 It's Time to Rethink Retirement by Allianz 26 SIDREC Continues to Receive Funding From the Regulator 27 Annual International Claims Convention 2013 30 Offshore Investment: A Whole other Horizon for Malaysia 32 Investor Confidence Currently Low Across Developed Asia by Manulife 58 Mind Your Money: Money Compass Save & Invest Road Shows and Seminars

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46 Ken Chee on How Much Do You Actually Need In Order to Retire

Wealth attitude

47 KC Lau on How Much Should You Spend On A New Car?

Estate Administration

49 Evanna Phoon on Family Business Trusts for Malaysian Businesses

Real Estate

54 CF Liew on REIT- What the Layman Investors Don't See

Financial Planning

56 Linnet Lee on One Insurance Too Many?

Silver Malaysia

62 Jonathan Quek on Lesson to Learn From the Crisis in Cyprus 64 Silver: Commodity or Money

Market Info

66 Company news and milestones

Money Compass


Achieving and Creating Miracles 2012 proves again Dream Union maintains its momentum. Winning 51 Awards, Dream Union Dominates 90% of the total Awards in 2012.

Mission

Leading a group of partners with extraordinary dreams to become the No.1 insurance agency in Malaysia.

Top agent 2011 and grand prize Audi Tt winner

Vision

To offer services with transparency & convey the true meaning of insurance to our clients. Be the role model of the industry to groom leaders & assemble strong teams. To provide a platform for all dreams to gather, reaching greater heights in unity.

Top agent 2012 and grand prize BMW Z4 winner

Top agent 2013 grand prize

To create a union to bond our dreams together and create a platform to build and expand the Insurance business

Dream Union Sdn Bhd (910871-U) Wakil Insuran Manulife Insurance Berhad (8114942-M)

HQ Office: No.48-1, Jalan Setia Prima S U13/S, Setia Alam, Seksyen U13, 40170 Shah Alam, Selangor D.E Tel: 03-3342 2621 | Fax: 03-3358 0563 | H/P: 019-234 8621 Penang Branch: No. 29-1, Seberang Perai Tengah, Jalan Todak 6, Kompleks Sunway Perdana,13700, Seberang Jaya, Pulau Pinang. Tel: 04-719 9514 KK Branch: Unit 1, Tingkat 1, Lorong Iramanis, Kolombong, 88450, Kota Kinabalu. Tel: 088-440888 | Fax: 088-387802 | H/P: 012-8888 621


Editorial Team Advisory Panelists Malaysia Financial Planning Council (MFPC) National Association of Malaysian Life Insurance Fieldforce & Advisers (NAMLIFA) Financial Planning Association Malaysia (FPAM) Association of Financial Advisers Malaysia (AFA) Publisher TC TAN Published by Universal Media Publishers (M) Sdn Bhd Suites 5.02, Wisma Chinese Chamber 258, Jalan Ampang, 50450 KL T: 42521666 F:42525225 info@moneycompass.com.my www.moneycompass.com.my

Principal Consultant Amy Seok Editorial

editorial2.moneycompass@gmail.com

Shakila Rajendra Art Director Kief Tan Graphic Designer Hew Chun Hor Contributors KC Lau, Linnet Lee, Kathlyn Toh, Ken Chee Christine Benz, CF Lieu, Evanna Phoon, Lawrence Seow, Evonne Chen, Brenda Yong Subscription

subscription.moneycompass@gmail.com

Wen Hong Advertising

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CS Ng, Syahmi Printer Tankoh Print Sdn Bhd Distributor Center Paper Agencies Sdn Bnd Disclaimer Opinions expressed in Money Compass are not necessarily those of the publisher. Readers and investors are advised to exercise due care and be responsible for their own investment decisions.

Editor’s Note It was exactly one year ago that we here at Money Compass took the leap of faith and published the English edition for you to enjoy. In this past year we hope that you, our readers have had the pleasure of reading and expanding your view into the financial world. We also would not have reached this pinnacle issue without the support of our columnists, contributors and supporters who have been generous enough to constantly strive for this magazine to flourish. We would like to take this opportunity to thank you all! Over these two months Money Compass has also launched a platform created to cater to the financial needs of all Malaysians with the Money Compass 2013 Save & Invest Road Shows and Seminars. This year the theme was “Mind Your Money” and the series of road shows and seminars will cover eight major cities in Malaysia including Kuala Lumpur, Ipoh, Penang, Johor Bahru, Malacca, Kuching, Sibu and Kota Kinabalu. This issue, we have a special feature with MXM International Sdn Bhd which will give insight into the importance of healthcare protection and prevention. For over 15 years, MXM International has consistently provided a healthcare programme that is tailored to suit the needs of Malaysians. Now, with their MediSavers programme they offer a plan so affordable that nearly everyone can sign up for this healthcare insurance programme without the worry of putting too much strain on their finances. A new survey recently released by the Institute of Bankers Malaysia (IBBM) and KPMG titled ‘Internal Audit Matters: Risk Management’ was aimed at assessing the readiness of the Internal Audit Function on Risk Management related issues in Malaysian banking institutions. To highlight this, Money Compass sat down with three top executives from IBBM and KPMG. They share their views on the capabilities of internal auditors in another of our special interviews. In the next two years, Maybank plans to expand its retail financing into the retail SMEs market as many SMEs today require assistance from financial advisers to take their businesses on to the next level. Maybank’s Deputy President, Datuk Lim Hong Tat shares why the growth of moving into the SME Retail Financing business is so important. Good advice from our columnists can also be found in this issue where you will be able to learn how much you need in order to retire comfortably, get tips on writing wills and also advice on why silver is a sound commodity. With that, we hope that you will enjoy this issue and continue with us on the Money Compass journey! Editor, Shakila Rajendra

Copyright 2013 by Universal Media Publishers Sdn Bhd All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitteed, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission of the publisher

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Money Compass


Special Interview

Internal Auditors: Safeguarding the risk management of banking institutions A new survey recently released by the Institute of Bankers Malaysia (IBBM) and KPMG titled ‘Internal Audit Matters: Risk Management’ was aimed to assess the readiness of Internal Audit Function on Risk Management related issues in Malaysian banking institutions. In conjunction with this, an exclusive interview between Money Compass and three top executives from IBBM and KPMG was conducted so that they could share their views on the survey results as well as the ways to enhance the quality and capability of the internal auditor. Eckart Koerner, Executive Director of Advisory Financial Risk Management Services, KPMG Management & Risk Consulting Sdn Bhd, said in the interview that the survey was conducted through an online platform with targeted institutions which were selected to participate in this survey. It took eight weeks to complete the survey. Out of 42 institutions on the invitation list, about 60%, or the equivalent of some 30 institutions eventually participated and responded to the questionnaire. Tay Kay Luan, CEO of IBBM said the 60% return rate was very commendable as it provided data on current issues and their reactions toward various issues from capacity building to current processes.

Capability Development Needed for Internal Auditors Tay admitted that internal auditors have done a commendable job to ensure the level of governance and compliance were left intact, judging from how well the banking industry has been governed so far. Nonetheless, the survey showed that in the

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capacity building and capability development areas, they were still faced with some issues and challenges.

“Internal auditors still need to re-equip themselves because there are constant changes to the industry landscape every day and there are new regulations being introduced.” “The survey shows that the introduction of ICAAP was one of the areas in which internal auditors need to understand better and acquiring it would enable them to do the job better. Another area to look into was anti-money laundering as this is a very complex area to understand.” Eckart Koerner also shared his concern about the internal audit function’s qualification on risk

management related issues, especially on capacity building and capability development. The questions he posed included: do internal auditors have the right skills to conduct audit jobs; do internal auditors have the understanding on how risk management works and how to measure, identify or monitor risk, as well as the capability to advise on risk management functions in order to create value adding effects to the company. According to the survey results on competency level, the internal auditors’ biggest concern was ICAAP / capital management, whereby 67% of the Internal Audit respondents were not fully satisfied with their present competency level in this area. This was further confirmed by the Risk Management respondents whereby 42% were not fully satisfied with the internal auditors’ competency level in the ICAAP area as well.

Money Compass


Special Interview

“However, I think we have not reached the level yet to view internal auditors as strategic partners which add value to meeting the banking institutions strategic objectives.” Bank Negara has concluded in its Garisan Panduan that internal auditors should move toward risk based internal audits to find out which areas are more vulnerable from the bank’s perspective. These are areas such as credit risk, market risk and operational risk so that the bank would then devote its resources toward the areas with higher vulnerability.

Both functions also have concerns in the market risk area whereby according to the survey, two-thirds of the Risk Management respondents were not fully satisfied with the present internal auditors’ competency level and find they do not have the appropriate specialised skills to deal with the complexity of the market risk management areas. Furthermore, 42% of the Internal Audit respondents themselves are concerned with their present competency level for this risk area.

Lack of Capable Internal Auditors (CIA)

Lee Min On, Internal Audit Partner of KPMG, said the internal auditor profession has grown from a non-mandatory to mandatory area for banking and non-banking institutions. In the past ten years various other financial based institutions also offer internal auditor certification rather than just certification from CIA. Nevertheless, in Malaysia the

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problem is that internal auditors, be it from financial or non-financial institutions, do not require certification from CIA or other professional financial-based certification. This differs widely from external auditors. Additionally, internal auditors are moving from assessing compliance to risk management. This requires internal auditors to widen their job scope and includes skills such as figuring out the problems with the banking institutions itself as well as the process and how to overcome the obstacles that prevent internal auditors from achieving their objectives.

“Although we are not there yet, the survey results do reveal that the internal auditor functions and risk management areas are quite frequently updated.”

However, he opined that the key concern was that there wasn’t enough talent in the workforce and they do not have the capacity to take on these tasks. In this area, IBBM could play an important role as it is one of the institutions that could make sure there are sufficient resources in the workforce that have the competency. In the short term, banks could put internal auditors into operation for certain periods of time, say 6 months, and repeat this on-the-job training for different levels of operation. This could help internal auditors understand the process and acquire the relevant knowledge. In the long term, formal education institutions have to come on board to create channels such as university courses that produce sufficient high quality workforce and competency. Meanwhile, Tay opined that awareness was the first and most important step to take as well as the willingness and readiness to acquire new technology and new knowledge. Internal auditors should also know the key functions of the job and how it works and a good way of acquiring this skill was the introduction of case studies.

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Special Interview

IBBM and KPMG survey calls for a review

of the readiness of internal audit function on risk management related issues among banks in Malaysia Banking institutions are operating in a more regulated environment. These has not only impacted the importance of the risk function as second line of defense but also internal audit as third line of defense, according to a new survey by the Institute of Bankers Malaysia (IBBM) and KPMG titled ‘Internal Audit Matters: Risk Management’. In October 2012, IBBM partnered KPMG to do an industry wide survey to assess the readiness of Internal Audit Function on Risk Management related issues in Malaysian banking institutions. The survey looked into the expectations of both the Chief Internal Auditor (CIA) and Chief Risk Officer (CRO) in relation to risk management issues, the capabilities expected from internal audits of the banks regarding particular risk management issues, and the support which could also be provided to the risk management unit of the banks in this respect. It was aimed at the industry platform involving all Malaysia-based Banking Institutions, local and foreign. The empirical evidence from the previous global financial crisis reaffirmed the view that banks that instilled a strong risk governance framework and culture fared much better in this downturn. As part of this strong risk governance framework and culture the three-lines-of-defense risk management principle seems to be more important than ever before, which consists of; frontline business and corporate functions (1st line), risk management function (2nd line) and internal audit (3rd line). A functioning three-lines-of-defense would filter risks to appropriate limits in par with the firms risk appetite and enforce adequate checks and balances.

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Mr Tay Kay Luan

Mr Lee Min On

“The survey findings reflect a need for collaboration between Risk Management and Internal Audit functions to upscale Internal Auditors’ competency in various risk areas and to equip them with more technical competencies on these subject matters through more comprehensive training programmes,” said Mr. Eckart Koerner, Executive Director, Advisory Financial Risk Management Services, KPMG Management & Risk Consulting Sdn Bhd. “It highlights the need to better prepare internal auditors to meet the expectations of Risk Management function. “This is very crucial as nowadays internal auditors’ job scope go beyond merely ensuring the organisation’s compliance to internal policies as well as external guidelines and statutory requirements, but they are also expected to equip themselves with the appropriate skills to face the new challenges which the Risk Management functions is exposed to,” he added. The survey findings support the current view of which there are concerns and key gaps that both functions are not complementing each other’s role in the banking institution. “Training and skill development approach must be reviewed to ensure that theoretical basis is

Mr. Eckart Koerner

complemented with secondment to relevant departments such as Risk Management function or the business units,” said Mr Lee Min On, Internal Audit Partner, KPMG. “With adequate level of Risk Management knowledge, internal auditors are able to scope out their audit plan and perform reviews more effectively,” he added. “The survey outcomes showed the importance of sharing our thought leadership research findings. Indeed, such a survey is useful towards improvement processes for the banks, allowing bench strengths and insight for both policy makers and researchers; and form the basis towards future capacity development initiatives as part of our value proposition”, said Tay Kay Luan, CEO of IBBM. Towards the conclusion that training programmes should be adaptive and aim to equip internal auditors with skills and technical competency that could be benchmarked with international best practices and the everevolving regulation, Tay further added that, “As learning providers for the banks, it is our intent that we can contribute towards addressing that knowledge gap.”

Money Compass


Special Interview

Now Everyone Can Afford Medical Insurance succeeded in providing to the healthcare needs of 80% of our population with its MediSavers programme.

He outlines that the most important factor to the MediSavers programme is its affordability. “With MediSavers, we have strived to produce a plan which where everyone can afford a medical card. The plan allows for those who ordinarily may not be able to foot their medical costs. This is very important as medical costs continue to increase.”

Money Compass interviews MXM International Sdn Bhd Group President and CEO Dato’ Marcus Kam MXM International’s next groundbreaking chapter, the Pathlab MediSavers plan. MXM International is one of the country’s market leaders and has been a pioneer in the medical insurance industry for over 15 years. Group President and CEO Dato’ Marcus Kam is enthusiastic about pioneering the next chapter in the company’s vision by introducing the MediSavers plan and in his opening note shares, “I am indeed proud today to witness that the Pathlab MediSavers plan has marked yet another new chapter as our company has tirelessly served and contributed

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to the medical protection needs of the Malaysian population for more than 15 years.” As an industry veteran with pioneering experience in the medical insurance field, MXM International has continued to modify its healthcare programme and tailor its benefits so that it is best suited to Malaysian needs. Dato’ Kam does admit that it has not been an easy path producing a product that adheres to the one-shoe-fits-all concept. Nevertheless, he is proud that to date, MXM International has

For those wondering how MediSavers has made the “everyone can afford medical insurance” concept into a reality, we learn that the key is in having economies of scale such as Pathlab which have a vast customer base. This enables the company to negotiate with insurance companies and obtain more competitive premium rates and product packages for its customers.

A Brighter Future for the Healthcare Sector

Kam truly believes that the healthcare sector is a growing industry. Populations in markets such as Malaysia, Singapore, Indonesia and Thailand continue to grow with emerging affluent groups that demand better healthcare services. Besides that, a growing aging population also drives the demand for healthcare services.

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Special Interview

“People today may be wealthy, but not necessarily healthy,” mentions Kam who also foresees that in the future, the balance between health and wealth in our everyday lives will eventually even out. Kam predicts that there will be a shift in the healthcare industry that sees it moving from the public to private sector in the future. This is inevitable as medical bills continue to snowball over the years and the government cannot afford to pay increasing public medical expenses. Eventually, this expense would have to be transferred to the private sector and the reality of it is that the population would have to start funding their own medical costs instead of relying on government funding. While the government has talked about and has been aware of this issue for the past 20 years, very little progress has been made and Kam believes that it is an inevitable issue which the public would have to prepare themselves for. “The current population will have to prepare themselves as early as they can in order to be ready for the impending privatisation of healthcare,” Kam cautions. “Up to now the national healthcare

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fund is still a sensitive issue but it is definitely one that has to be addressed soon. The United States government almost went bankrupt as a result of its rising medical bills. This should be motivation for our own government to move the healthcare sector from public to private as it is an inevitable outcome that eventually, medical costs would have to be transferred to the people.” As a result of this Kam is confident that MXM International will profit from this privatisation of healthcare as it has the experience and expertise to become a leader in the private healthcare sector.

A Tremendous Market Potential

MXM International provides a comprehensive and holistic healthcare solution that covers medical insurance, health protection and health prevention services. As the longest serving and largest company in Malaysia that provides a combination of medical insurance plans with healthcare screening tests, MXM International has more than 50% of the market share. Kam has estimated that not more than 20% of the Malaysian population is covered by medical insurance

protection if you exclude the public healthcare sector. Adding to this, he estimates that even for this 20% of the population, not all are covered by a full range of medical insurance and health protection. Even as MXM International has a huge market share based on its current penetration rate, there is a tremendous opportunity to be found in the potential market allowing for the company to grow much further.

Furthermore, Kam points out that MXM International does not intend to simply grow in the Malaysian market. “We are aggressively expanding the company footprint into regional countries such as Thailand, Vietnam, Myanmar and Cambodia. We aim to utilise our expertise and experience accumulated in this industry over the last 15 years in Malaysia to tap into these markets and are looking to design products that specifically meet the needs of these individual countries. Looking to our years of experience in designing and tailoring products, we have no problem catering to these specific market demands,” he concludes.

Money Compass


Special Interview

A Medical Insurance Plan with Lifetime Free Protection Sam Tang, General Manager of MXM International Sdn Bhd and Pathlab Health Management Sdn Bhd (Medical Department), said that 15 years ago many people had very little knowledge about medical cards. He continued, “Most of them treated the medical card as a rider when they bought life insurance policies.” Along the way, more and more people began to realise the importance of medical cards with the rising trend of healthcare awareness. This is especially true with rising medical costs forcing the medical card to become a necessity for the layman. In this regard, Pathlab Health Management plays an important role as one of the pioneers in medical healthcare education. Besides this, it is one of the first companies to combine the medical card with healthcare screening services to provide a comprehensive yet affordable medical insurance plan. MediSavers makes healthcare protection available and accessible to everybody.

Tang emphasises that, “Many people begin to realise the importance of having a medical card as we acknowledge that medical costs are getting higher and higher. However it is not easy to convince people to fork out their money for medical insurance. ” “MediSavers provides the highest benefit while keeping costs at a minimum level. This medical insurance is equivalent to a healthcare credit card in which you can use the

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card to pay for your medical bills through the MediSavers plan.” The key selling points for MediSavers are: comprehensive healthcare screening up to the age 80; hospitalisation and surgical annual limit up to RM600,000; personal accident coverage up to RM200,000; private and government cash income benefits up to RM30,000; worldwide emergency medical evacuation and repatriation up to USD 1,000,000; guaranteed renewal plus no alteration of policy benefits; easy payment plan, as well as lowest price in the market. Tang explained that MediSavers’ premium is one of the lowest in the market and yet it provides a higher protection coverage to customers. Besides this medical insurance programme also provides an easy payment plan to keep the monthly premium installment at a very affordable level so that customers

can enjoy better medical protection benefits.

A Healthy Customer Base = Cheaper Premium

To explain the secret to having a marketing strategy that makes MediSavers the cheaper solution with the highest protection benefits, Tang pointed out that Pathlab Health Management’s competitive edge is its healthy customer base, as most of its existing customers have consistently had their medical checkups every year, thus having a higher awareness of the healthy lifestyle.

“If your customers know how to take care of their health, the claim will definitely be controlled at a healthy level. This allows us to provide a more competitive premium to our customers as compared to other insurance companies.”

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Special Interview

Exposure to Huge Market Potential

For the past ten years or so, the renewal rate of more than 90% has made this company record the highest renewal rates among any others in the industry. In addition, the customer base is growing at a record pace of a double digit percentage annually. This reflects its tremendous market potential.

He says that this strategy can be viewed as a reward to the MediSavers members for having relatively low health risks, warranting them to enjoy a cheaper insurance premium yet higher protection coverage. Additionally, the company has a well-established strategic alliance with an alarm center that provides a 24-hour support service to the members.

Lifetime Free Protection

He stressed the key concept that differentiates MediSavers from other products in the market is its “lifetime free protection”. Under a friendintroduce-friend mechanism, the member could introduce his/her friends or relatives to participate in the membership system and earn a commission to cover his/her insurance premium. Thus, a lifetime free protection objective could be achieved through this mechanism.

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For those who are interested in becoming a full time agent, the company will provide an agent system which assists the member to upgrade themselves to agent level and set up their own agency. Tang added the best part in becoming a MediSavers Agent is that it provides a guaranteed income to the agent as this medical insurance plan has a guaranteed renewal up to the age of 80 or until the lifetime limit is exhausted. More importantly, the medical insurance is on an automatic renewal mode which provides a sustainable income to the agent. For normal members, this is still a very attractive medical insurance plan not only because it has guaranteed renewal up to age 80, but also because there is no alteration of policy benefits and protects the lifetime benefits of the member.

“Besides the traditional Chinese market, we have seen another potential markets emerge, especially with the Malay market. Moreover, the MediSavers concept becomes more attractive to the Malay as we have Islamic medical insurance products from Takaful Ikhlas. We have made sure that the medical card, which has become a necessity, is now available to everybody,” said Tang. Unlike life insurance, we only need one medical card and only claim medical bills on one medical card each time. Furthermore the rising rate of medical costs make it impossible for most people to afford more than one medical card. Even in the case of life insurance plus rider, premiums will go up as the claims become higher. Thus, choosing the right medical card is very crucial. Tang highlighted that MediSavers has a customer base large enough to keep the claims and the premiums at a healthy level. The guaranteed renewal up to age 80 and no alteration of policy benefits also provide additional benefits and protection to its members.

Money Compass


Special Interview

Professionalism, quality and service excellence: the key elements of the best medical insurance product increased between 13% and 15% per annum. Thus, it is virtually impossible to sell medical insurance without any changes in premium throughout the policy’s term.” The guaranteed renewal policy would ensure policy holders can renew their insurance policy in any circumstance, and also make sure that the insurance companies would not run into a financial black hole. Tan mentioned that Pacific Insurance’s total insurance premium in 2012 was RM58 million, while about RM35 million paid for medical claims in that particular year. This explains why medical insurance has become a very important part of society. Without insurance, patients would have to fork out a total of some RM35 million in medical bills. Pacific Insurance Berhad’s chief executive officer Sonny Tan Siew Hock said in an interview with Money Compass, that medical insurance was generally divided into two major kinds of products: Hospitalisation and Surgical Insurance as well as Clinical Insurance. In Malaysia, most insurance companies focus on hospitalisation and surgical insurance products, while very few sell clinical insurance products. Unlike typical medical insurance products from other insurers in the market, medical insurance products

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from Pacific Insurance are mainly guaranteed renewable products. Once a person is insured, Pacific Insurance has an obligation to renew the insurance policy up until the age of eighty or until the life time limit has been exhausted.

Guaranteed Renewal Concept

“The renewal of the policy is guaranteed. However this does not apply to the premium. This is because medical insurance is very sensitive to inflation. Medical inflation in private healthcare is at least 2.5 times normal inflation. From past records, private healthcare inflation cost has

Professionalism, Quality Products and Customer Service Excellence

Pacific Insurance has been one of the major medical insurance players here in Malaysia since the early 1950s. While, according to local industry statistics, the company ranked 6th place in terms of premium generated from medical insurance, it has ranked No.1 in the individual medical insurance segment for past 8 years, with 32.50% market share in 2012. We wonder how Pacific Insurance has achieved this dominant position in the medical insurance market.

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Special Interview

Tan explained that the company has always focussed on three pillars namely; professionalism, quality products as well as customer service excellence to build its unique market position. As far as professionalism is concerned, Pacific Insurance not only complies with all industry regulations but also to ensures that the product offered is of the best quality; all staff and distributors have very good product knowledge, while distributors have a good understanding on the product they offer so as to not mislead clients when selling them the product.

“For customer service excellence, the CEO’s mobile phone is on 24 hours so that the call centre can contact him when important decisions have to be made. We spend a lot of time with intermediaries and their customers to give them a better understanding about our products. The CEO even personally gives talks to customers.�

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Thus, Pacific Insurance believes in the principles of professionalism, customer service excellence and quality. They even advise customers not to purchase products that provide inadequate protection. There would be no point to having a medical insurance policy whereby the policy is not sufficient to pay for basic medical treatment.

Providing an Exclusive Product to MediSavers Members

Tan further explained that products designed exclusively for customers of Pathlab Health Management (M) Sdn Bhd are based on the above three key principles and are top quality products. Pathlab Health Management (M) Sdn Bhd has chosen to make this product available for MediSaver members in order for them to enjoy high quality and excellent services. To him, a quality medical insurance product requires some key factors such as guaranteed renewability and

all products are designed with a narrow profit margin as to ensure value for money. Besides providing exclusive products, Pacific Insurance is also constantly collaborating with Pathlab to conduct talks to the customers, in order to create awareness and to make sure that they have a clear understanding of their healthcare needs. He opined that the local medical insurance market has tremendous potential for development as the population of those having medical insurance is quite limited with an estimation of between 15% and 20%. More importantly, even within this group of people, the medical insurance coverage is usually inadequate. Nevertheless, awareness among our population towards the importance of medical insurance has been lagging and more education and awareness campaigns are needed to enhance their knowledge on medical insurance.

Money Compass


Special Interview

Encik Ab Latiff Abu Bakar, President and CEO of Takaful Ikhlas Sdn Bhd Background of Takaful Ikhlas Sdn Bhd

Takaful Ikhlas Sdn. Bhd. (Takaful IKHLAS) was incorporated on 18 September 2002 and is a whollyowned subsidiary of MNRB Holdings Berhad. Takaful IKHLAS has within the last 10 years of its operations, established a strong presence in the provision of Islamic financial protection services based on the Takaful System, which stresses on a spirit of cooperation and joint responsibility among its participants. Takaful IKHLAS’ objective is to be the preferred provider of Islamic financial protection services and towards this end will leave no stone unturned. Takaful IKHLAS has more than 1.8 million registered certificate holders. Takaful IKHLAS’ commitment and adherence to cherished values, coupled with the application of appropriate technology in conducting business have earned the company a sound reputation for its ethical approach in service delivery. The Company offers individuals and commercial enterprises a comprehensive range of Family, Group and General Takaful Plans and Riders, with more being planned in the not too distant future. The distribution/service channels comprise of highly knowledgeable and well-trained people including 5,000 agency personnel, brokers, financial institutions, motor franchise holders, co-operatives and Islamic bodies. Takaful IKHLAS has a customer service center at its Corporate Head office in Bangsar South, Kuala Lumpur and also regional offices in Selangor, Kelantan, Johor, Kedah, Sarawak, Sabah, Pahang, Perak,

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Terengganu and Putrajaya.

The working relationship between Takaful Ikhlas Sdn Bhd and Pathlab Health Management (M) Sdn Bhd

The synergy or initiative between Takaful Ikhlas Sdn Bhd and Pathlab Health Management (M) Sdn Bhd started with the appointment of Pathlab Health Management (M) Sdn Bhd as our corporate agent in August 2010. An individual medical product on hospitalisation and surgical benefits to be marketed by Pathlab Health Management (M) Sdn Bhd was launched in December 2010. The initiative between Takaful IKHLAS and Pathlab Health Management (M) Sdn Bhd focused on individual comprehensive Hospitalisation and Surgical Insurance coverage with a High Annual /

Lifetime limit of up to RM600,000 and Personal Accident coverage of up to RM200,000 tailored for members of Pathlab Health Management (M) Sdn Bhd. Individual Muslim professionals and employees who do not have any group hospitalisation benefits or coverage from their employer are a suitable target market for Pathlab Health Management (M) Sdn Bhd and Takaful IKHLAS. The increasing cost of hospitalisation and surgical benefits is a pushing factor for the community to find a suitable product that will suit their needs. The need for a Shariah compliant product by Pathlab Health Management (M) Sdn Bhd was due to the increasing trend of Muslim membership.

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Special Interview

New Technology Gives Fresh Life to the Insurance Industry payment transaction is completed, the customer immediately enjoys the protection benefits of medical insurance. Another advantage is that the payment system has an installment function that allows customers to choose a one-off payment or monthly installments. This function matches one of the key concepts of MediSavers which is to make medical insurance affordable for everyone through an easy and convenient monthly installment. Technology has changed our lifestyle, and it has also transformed our way in which business is done too. MXM International has strategically collaborated with a local payment settlement house, Revenue Harvest Sdn Bhd to provide an easy and convenient way for MediSavers agents and members to make their premium payment. This payment gateway enables the customers to make their premium payment at any time and any place and immediately enjoy the medical insurance protection benefits. Revenue Harvest Sdn Bhd managing director Eddie Ng Chee Siong said, in an interview, that the company is appointed by Myclear, a subsidiary of Bank Negara Malaysia, as a third party payment settlement house. Revenue Harvest provides payment settlement services for debit cards and ATM cards. The premium payment methods offered by Revenue Harvest to MediSavers plan are: (i) D200 terminal service and (ii) online

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payment service. The D200 terminal is suitable for face to face customers, while the online payment gateway is designed for remote customers. Currently, Revenue Harvest is the only payment settlement company in Malaysia that provides both a physical terminal and online payment services.

Ng said that, “All transactions will go through our back end system and through Myclear to confirm with the relevant banks on whether the account has sufficient funds for payment. Upon receiving the confirmation the transaction will be made. For this payment system, a single transaction amount can vary between RM3 to RM3,000.”

Policy Takes Effect Immediately After Payment

Ng also mentioned one of the advantages of this payment settlement system is that once the relevant documents and the premium

Moreover, its direct debit service allows adjustments on direct debit amounts that suit the medical card’s premium structure. This is because the premium on the medical card will have to adjust every ten years to tally with the age band. By comparison, the direct debit services provided by banks do not allow changes to the Standing Instruction. The payment settlement service provided by Revenue Harvest is currently available for payments made through local debit cards and China UnionPay. As most Malaysians have at least one ATM card or debit card, it makes this service accessible to all. Besides that, the payment arrangement between Revenue Harvest and China UnionPay provides an opportunity for MXM to extend the program to the Chinese expatriates working and studying in Malaysia.

REVENUE HARVEST Tel: 03 6257 8455 Website: www.revenue.com.my

Money Compass


Special Interview

Testimonial 1:

Shazlien Nazliela from Taiping Perak used to work with Malaysian Airlines for 21 years before moving to run her own trading business while promoting the MediSavers plan to others. She previously had as many as six medical insurance policies. When her friend told her she could only utilise one medical card at one time to pay for her medical bills she cancelled four medical insurance policies and keeps two with her, which includes MediSavers. Despite practicing a healthy lifestyle, Shazlien suffered from colon cancer in 2011. “I remember it was in December 2011. Suddenly I felt pain on the left side of my abdomen. I was busy at that time and ignored the pain until I vomitted blood. I went to the hospital for a checkup and that was when the doctor told me I had colon cancer.” She felt lucky to be covered by MediSavers as the medical insurance not only covered her hospitalisation and surgical fees that amounted to RM26,000, but also paid for her monthly chemotherapy cost. A total of RM80,000 medical cost was fully covered by this medical insurance.

“I only had this medical insurance for two years yet it covered everything. It sounds too good to be true but it’s true. With this medical condition, I am still able to renew my policy.”

Money Compass

Testimonial 2:

Miss Ong was introduced to the MediSavers plan through her friend. When she bought the insurance she asked if she could immediately enjoy the benefits under the policy. Coincidentally, she was hospitalised two days later due to an accident. “When I bought the medical insurance, I asked my friend if the policy could immediately take effect. She told me yes. I bought the medical insurance policy on 23rd of June and on 25th of June I was admitted to hospital for one week. This insurance really helped me a lot.” She recalled that the medical insurance not only covered her medical cost of RM 11,000, but she was also entitled to enjoy RM3,500 hospital cash income benefit. Since then, MediSavers has fully covered her medical cost when she was hospitalised in 2007, 2009, 2011 and 2012. Despite this, she is still allowed to renew her insurance policy.

“My medical insurance limit is RM600,000. I have spent about RM40,000 on medical fees, but I am still allowed to renew my policy. Without this insurance policy, I really wouldn’t have known how to settle my medical bills.”

Testimonial 3:

Miss Tham is a motor insurance agent. She was introduced to the MediSavers by one of her motor insurance clients.

She said that, this client had contacted his insurance agent and was offered a medical insurance plan that had a RM400,000 lifetime limit, but the yearly limit was capped at RM90,000. The insurance premium was expensive and cost more than RM3,000.

“Later, he met another friend who introduced MediSavers to him which offered a lifetime and annual limit up to RM600,000, but had a monthly premium of less than RM200. It was too good to be true.” “So, he came to me to seek advice on the insurance policy.” Miss Tham and her husband met with her client’s friend and after understanding that the MediSavers program provides not only a higher lifetime and annual limit, as well as guaranteed renewal, but also offered the opportunity to earn commission when introducing people to the plan, she couldn’t find a reason why she herself shouldn’t take up the plan. She managed to promote about 6 policies within a month. From there, she was effectively entitled for free medical insurance protection and further enjoyed its benefits when she was hospitalised for surgery due to fibroid.

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Special Report The Malaysian Insurance Institute

Annual International claims convention 2013 “Staying Ahead During Uncertainties”

The Malaysian Insurance Institute (MII), supported by the General Insurance Association of Malaysia (PIAM), the Life Insurance Association of Malaysia (LIAM), the Malaysian Insurance and Takaful Brokers Association (MITBA), the Association of Malaysian Loss Adjusters (AMLA) and the Malaysian Takaful Association (MTA) organised the Annual International Claims Convention 2013 (AICC 2013) at Hotel Istana, Kuala Lumpur today. Khadijah Abdullah, CEO of MII, opened this year's convention with the keynote address followed by the officiating the event. Following the success of the International Claims Convention held in 2012, MII once again organised the Annual International Claims Convention 2013 (AICC 2013).

The recent flood in Jakarta’s commercial business district that held the city at a complete stand still has caused more than 103,000 people homeless and 27 deaths. It was about a year ago that Bangkok was devastated by flood recording estimated of insured losses up to US20 billion. Similar scenario would hit any of major cities in Asian which would further aggravate the socio-economic difficulties. With the climate changes, man-made disaster, political unrest, terrorism and financial crisis remain as the great concern we are not expecting a quiet, peaceful and disaster-free year in 2013. Therefore insurers would need to implement prudent underwriting and claims practices. The preparedness and new knowledge to handle catastrophic, complex and long-tail claims by the insurance professionals such as loss adjusters, claims personnel and legal practitioners will continue to be top priority in today’s circum-

stances. The readiness and state of infrastructure and system also are the major factor in claims management efficiency and effectiveness. Hence AICC2013 attempts discuss these concerns at the industry and regional level. This convention has brought together 12 speakers consisting of insurance claims management experts from around the Asian region. They share ideas, experiences, expertise and knowledge to help insurance practitioners face the challenge of growing a business this surmise. This year, the MII is pleased to receive corporate sponsorship from Tradewinds Travel & Services. This convention attracted 100 insurance claims personnel from across Malaysia, Singapore, Bangladesh, Denmark, the Philippines, Thailand and Singapore.

For more information, please contact: Nur Fazliana Mohd Zuki (Senior Executive, Corporate Communications) The Malaysian Insurance Institute (MII) No. 5, Jalan Sri Semantan 1, Damansara Heights, 50490 Kuala Lumpur Tel: 03-2087 8882 ext 313 | Fax: 03-2093 7885 | Mobile: 016-221 3096 | Email: fazliana@mii.org.my / fazliananur@gmail.com

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Money Compass


Special Feature

She has 3 policies but no coverage! Is the topic of this article familiar to you? It was actually a newspaper cutting circulated through email by a lady who failed to make claim from an insurance company in Singapore. When I received this newspaper cutting from a client, I knew that she had started to worry about the policies that she had bought. Even though this actually happened in Singapore, that doesn’t mean that it wouldn’t happen in Malaysia!

Why does this happen?

Too many types of insurance products - some of the products are uncommon or expensive. Due to budget constraints, the benefits that are packed into the policy may also been restricted to the most common benefits. Insurance is “technical” product clients may not be informed with all the terms and conditions, therefore it creates misunderstanding. Product is not available in the market – Some of the products may not exist in the market, when she bought the policies, and she did not

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review her policies from time to time. Agent/Financial Adviser hesitates/are not able to introduce a new product – insurance is a “sensitive” product, unlike other brand names, people will normally try to skip the insurance topic. Therefore, consumers will not be informed with the latest benefits that are offered by the insurance company. This case has actually brought out an important message to the consumer:-

Have you ever reviewed and analysed your insurance policies? Even if you have done, please ask yourself the below questions: • How frequent was your review? • Were the policies reviewed done with no bias and integrity? • Were the policies reviewed solely on the benefits and premiums or was it deeper into other terms and conditions, such as: • Is your I/C admitted? • Who is your nominee? Is your nomination done before or after your marriage?

• • •

• •

• What is the renewal terms and conditions of your medical card? • What is the different between buying a medical card policy from a life insurance company and general insurance company? Does the policy that you bought match with the purpose of you buying that policy? Have you overpaid on what you have bought? Did you duplicate your benefit after you have done your review by purchasing another policy from the person who reviewed your policy without a proper restructuring of your policies? Do you know the risk factor of an investment linked product? Have you been told that your investment linked policy which is all in one also providing you with a retirement fund? Is this true? Did you appoint a contingent owner for your children’s policies?

Why do you need to review your policy by a Licenced independent financial adviser who is specialised in insurance analysis? Because the advisory service that is

Money Compass


Special Feature Let me share some of my findings from the customers that appointed me to review and analyse their policies.

1) Hold more than 1 hospital and surgical benefit plan/ medical cards that allow you to make full claim.

Impact: over paid on benefit that you are unable to make full claim from both policies. Why?: Because the concept of the H & S / medical card is to reimburse what you have spent. It is not for you to make money unless there is hospital benefit which will pay you a small amount of cash for being an in-patient. Solution : Top up your medical benefit with a deductible plan not a full claim plan.

2) Nominee is fiancée

Impact: The life assured's parent will contest with the fiancée in the court. Why?: Because the sum assured belongs to the life assured’s parent under Insurance Act 1996. Solution: Do an absolute assignment which totally surrenders the ownership of the policy to the fiancée.

3) Bought a basic whole life non par plan (MLTAcommonly used by insurance agent) that only cover for death and TPD with guaranteed return which does not cover with premium waiver benefit Impact: Once the life assured diagnosed with critical illness, he/she has to a) Continue paying housing loan monthly repayment, and b) Continue paying insurance policy premium Why?: Policies only cover for death and total permanent disability not

Money Compass

FREE Financial Planning Seminar Title : She has 3 policies but no coverage? Entry Ticket Time : 10.00am - 11.30am Date : 24-8-2013(Sat) Venus: No 22C, Jalan Desa Jaya, Taman Desa, Off Jalan Klang Lama, 58100 Kuala Lumpur. Tel: 03-7983 9985 H/P: 017-336 2162 Registrration closing date: 19-8-2013(Mon) Independant Financial Adviser Language: English

Limite Spaced

critical illness coverage. : There is no premium waiver benefit Solution: Add a premium waiver benefit into the policy while the insurance company still allows it to be added. “A man worries if he gets into the wrong career; A lady worries if she marries the wrong guy”. A policy owner should worry if he bought the wrong policy. A policy is a life time commitment, paying policy premium is like taking care of a spouse for several tens of years. When you are old, when you fall sick, your policy should take care of you like your spouse. If you bought a wrong policy, it is just like your spouse run away when you need her/him the most. what can you do with it? Time has passed, you have no turning back. Imagine how much have you paid for several tens of years? You may think few hundreds a month is small money, but a RM300/ month policy after paying for 30 years, how much have you paid? It’s RM108,000! Pay an independent financial adviser who is specialized in policy review and analysis for a policy “checkup” would be your best choice to avoid making mistake due to lack of insurance knowledge!

Michelle Teo

CFPTM, Certified RFP Trainer Independant Financial Adviser Tel : 017 3362 162 Email : glteo652@axcelink.com Website: www.axcelink.com

Michelle Teo is the co- founder cum

executive director of Axcelink, she has 20 years of vast experience in the financial services industry. She provides professional service in Insurance policies checkup and analysis. Particularly, she has the most comprehensive, thorough knowledge & strong expertise in the context of Malaysia's Medical Insurance field. To date, She has analysed almost 2000 policies from various Medical Insurance provider companies.She has committed to consistently analyse and study the most beneficial Insurance policies packages, in order to customise personal medical insurance for her customers. With long-term dedication to the financial service industry, Michelle has developed a personal investment concept, with the close partnership of independent & professional fund managers and investment adviser, and has dedicated herself to provide comprehensive and peace of mind financial planning services to valued customers. Financial Planning Advisory Hotline: 03- 7981 8985 Every Friday in June from 12pm to 2pm (excluding public holiday)

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Special Report

Balance and Focus – Citi’s Investment Mantra for 2013 Invest in infrastructure and consumer sectors and bonds in emerging markets, gold and equity markets in HK, Japan and the US.

Investors need to stay balanced and focused on investment opportunities in a year that will continue to be influenced by ‘new realities’ such as market volatility and divergent global economic growth. Global growth is projected at around 2.7% in 2013. Asia will remain the most dynamic with US growth likely to outperform those of other developed markets while Europe will experience recession in the next two

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years as austerity measures take effect. Even in Asia, growth will be mixed with China charting a rebound to growth closer to 8% while the more open economies like Singapore, Hong Kong and Korea could see slower than historical growth trends on weaker international trade. The other three ‘new realities’ facing investors are low interest rates as

central banks maintain high levels of liquidity to spur growth; global inflation and prevailing government fiscal problems like the US fiscal cliff and the European debt crisis. “Since the Global Financial Crisis, we have been rolling from one crisis to another. Uncertainty and volatility have been the norm. What should we expect in 2013? We accept that the world has changed and we need to face new realities,” said Haren Shah, Chief Investment Strategist for Wealth Management, Citi Asia Pacific.

Money Compass


Special Report

Despite these on-going ‘new realities’, by being selective and focused, there is still money to be made in equities, commodities and bonds in the financial markets around the world. For 2013, Haren pointed out that Citi’s investment themes focus on infrastructure and consumer sectors in emerging markets like China, India and Indonesia that are experiencing rapid growths in urbanisation. For instance, China’s urbanisation is set to be the driver of the country’s economic restructuring and sustained growth going forward. In commodities, gold is a good bet due to excess liquidity and potential inflation factors. With near zero interest rates in developed countries and asset inflation especially in emerging markets, gold is regaining its status as a store of value and safety. In terms of fixed income, investors looking for yields can gain the best value in emerging market debt and investment graded debt as interest rates are forecast to remain low and not expected to be raised until 2015 in the US. Strong corporate balance sheets also favour emerging market bonds. Investors should take heed as markets should continue to grind forward in 2013 with the best upsides in Asia, US and Japan. Economic recovery and liquidity are expected to shore up Hong Kong shares while undervalued Japanese equities offer value to investors. As growth in the US will likely be better than other

developed markets, investors should look at sectors that would benefit from a recovery. Hedge Funds are another investment focus area as volatility is anticipated to remain. Haren also said, “On the currency front, regional currencies are expected to remain strong with some minor exceptions and the US dollar will strengthen relative to other G10 industrialised countries as it seems to have the best economic performance going forward.”

Investment Strategy (in summary)

1. Emerging Market’s Urbanisation – Infrastructure, Consumerism 2. Inflation and Re-inflation – Gold 3. Seeking for Yields – Investment Grade Bonds, Emerging Market Debt 4. Asia Liquidity Play – Hong Kong 5. Value Play & Rebounds in Developing Markets – Japan, Selective US Sectors

About Citi Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management. Additional information may be found at www.citigroup.com | Twitter: @Citi | YouTube: www.youtube.com/citi | Blog: http://blog.citigroup.com | Facebook: www.facebook.com/citi | LinkedIn: www.linkedin.com/company/citi Additional information may be found at www.citigroup.com | Twitter: @Citi | YouTube: www.youtube.com/citi | Blog: http://blog.citigroup.com | Facebook: www.facebook.com/citi | LinkedIn: www.linkedin.com/company/citi

Money Compass

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Special Report

It’s time to

Rethink Retirement

• Pension reforms have begun to change income mix of private households • Lifetime benefits were cut in 16 OECD countries on average by 22% for men and 25% for women • New Allianz report reveals: rise of elderly in workforce - more 60 to 64 year olds are employed than ten years ago – biggest increase in Germany and the Netherlands

After a decade of pension reforms in Western Europe and the establishment of new systems in Eastern Europe and Asia, the structure of a retirement income for individuals has begun to change. The recently published Allianz survey, “Allianz Demographic Pulse” reveals, that the second and third pillars, income from financial assets and employment – as well as the rise of the elderly in the workforce – are gaining importance. Nevertheless, currently it is not clear whether the complementary incomes are strong enough to compensate for decreasing levels in the first pillars in absolute terms. “For future retirees to achieve retirement income levels comparable

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of those of today’s retirees, they will have to change their working and savings behavior. The individual must take more responsibility to arrive at an adequate retirement income and Rethink Retirement”, says Jay Ralph, Chairman of Allianz Asset Management and a member of the Board of Management of Allianz SE. Participation rate of people aged 60 – 64 years has risen The financial crisis put the changing structures of pension provisioning systems to the test and the reform path is still feeling the pressure of the debt crisis, high volatility of markets and low interest rates. The challenges that this environment poses for funded pillars

are considerable. In other words, it is not only the increase in retirement ages that has had an influence on the number of people staying longer in the workforce; so have the setback of pension assets and the need to save longer for retirement. Whether in Europe, Asia or the United States, the participation rate of people aged 60 – 64 years has risen over the last ten years. In Europe, the biggest increase can be observed in Germany and in the Netherlands, where participation rates more than doubled. Furthermore, the economic downturn reduced individual retirement assets substantially.

Money Compass


Special Report

Western countries began introducing pension reforms at the turn of the century. These measures led to a decrease in the replacement rates of the first pillar: Calculations show for example, that lifetime benefits in the 16 OECD countries that introduced the most wideranging reforms were cut on average by 22 percent for men and 25 percent for women. Further effects of the changes in the pension landscapes are the establishing of a new incentive structure promoting an accumulation of assets in the second pillar. Modern pension systems of the future will consist of different strong pillars - no longer only the social security pension, but rather a mix of occupational and private pension savings determine

the retirement income of the future. A new retirement reality After more than a decade of reforms, nearly all countries show an impact on the structure of retirement income, particularly those with major early reforms. The portion of income coming from the first pillar has decreased nearly in all countries examined in the new Allianz Demographic Pulse survey. In Sweden, Germany or France, for example, lower levels from social security were compensated by a larger share of investment income and individual plans, as newly introduced plans from the last decade have not yet reached the payout phase. Thus, the question arises of whether retirement income

will be adequate. As the EU commission points out in its Adequacy Report: “There were great advances in the sustainability of public pensions, but adequacy outcomes are less impressive”. “One of the challenges for the future is to foster labor market opportunities so that older employees can continue working. Sixty-five percent of the European workforce is interested in having the opportunity to combine a part-time job with a partial pension as an alternative to full-time employment”, says Ralph. “However, people will also have to adapt to this new retirement reality and save more. This could be encouraged, for example, by increasing the use of automatic payroll deductions and pension default options.

About Allianz Together with its customers and sales partners, Allianz is one of the strongest financial communities. Around 78 million private and corporate customers rely on Allianz's knowledge, global reach, capital strength and solidity to help them make the most of financial opportunities and to avoid and safeguard themselves against risks. In 2012, around 144,000 employees in over 70 countries achieved total revenues of 106.4 billion euros and an operating profit of 9.5 billion euros. Benefits for our customers reached 89.2 billion euros. This business success with insurance, asset management and assistance services is based increasingly on customer demand for crisis-proof financial solutions for an aging society and the challenges of climate change. Transparency and integrity are key components of sustainable corporate governance at Allianz SE.

Money Compass

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Special Report

SIDREC continues to receive funding from the regulator The Securities Industry Dispute Resolution Center (SIDREC) today hosted its third Annual General Meeting (AGM) following the release of its 2012 annual report, which reflected an increase of nearly six times the number of cases and queries received in 2011, its first year of operations. The number of enquiries indicated a greater awareness on SIDREC, attributed by continued promotional activities such as roadshows with the Securities Commission Malaysia (SC) and Bursa Malaysia Securities Berhad, press advertisements and as well as other awareness campaigns. SIDREC, set up under the Capital Markets and Services (Dispute Resolution) Regulations 2010, aims to enhance investor protection by affording investors with small claims access to settlement of disputes without the need to resort to expensive litigation. SIDREC is expected to be mainly funded through fees, levies and subscriptions paid by its members, who are capital market license holders including stockbrokers, derivatives brokers, unit trust management companies, and fund managers. However, the SC is

presently financing SIDREC in its start-up phase. At SIDREC’s AGM this morning, the matter of its membership fees, which had been scheduled to become applicable in 2013 was clarified by its Chairman, Dato’ Ranita Mohd Hussein, who announced that the SC has agreed to fund SIDREC for a further two years. Sujatha Sekhar Naik, CEO of SIDREC, elaborated that the extended funding was on the understanding that a case levy, would be imposed on members who have claims registered against them. Members will be informed of the structure of the case levy in due course. She explained that the extended funding by the SC was an interim measure to allow time to monitor developments and a thorough review towards determining an equitable apportionment of costs that takes into account of all concerns raised. Sujatha also highlighted that worldwide, the operation of industry dispute resolution bodies was financed either wholly or substantially

by its members. As such the principle of industry contributing to the funding of SIDREC is very much in line with international practice. However, SIDREC was cognisant of the challenges of costs to business faced by members and would work closely with the SC to arrive at an equitable funding structure. SIDREC is also very appreciative of SC’s willingness to extend its funding to facilitate the review of the funding structure. SIDREC will continue to focus on achieving greater awareness of its services through engagements and collaboration with its members and other stakeholders towards its objective of providing an independent and impartial avenue to investors and members for the resolution of disputes. SIDREC is the first dispute resolution body catered exclusively to address small claims in the Malaysian capital market. It provides a mediation and adjudication mechanism aimed at investors who have claims of RM100,000 or less arising from transactions involving capital market products and/or services. The facility is provided free to eligible individuals and sole proprietorships.

Securities Industry Dispute Resolution Center SIDREC is a body corporate established to act as a dispute resolution body in relation to any claims made by eligible claimants against any person licensed to carry out the activities of dealing in securities, trading in futures contracts and fund management under the Capital Markets and Services Act 2007. In essence, SIDREC will provide dispute resolutions in any dealing or transaction involving capital market products or services between clients and their securities brokers, futures brokers, fund managers and unit trust management companies. For more information, please visit www.sidrec.com.my.

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Money Compass


Special Report

Great Eastern Life Transforms Into a LIFE Company:

Rewarding Customers For Staying Healthy

Since it has declared that it is “no longer just a life insurance company, it is a LIFE company”, Great Eastern Life Assurance (Malaysia) Berhad (Great Eastern Life) has actively helped and rewarded customers to live healthier, better and longer through its industry-first integrated Live Great Programme and product innovation. In an interview with Money Compass recently, Nicholas Kua, Chief Marketing Officer of Great Eastern Life shared that Great Eastern Life’s Live Great Programme is a holistic health and wellness approach which aims at helping Malaysians to live healthier, better and longer. The programme comprises expert advice, simple health tips, support, articles, apps, rewards, workshops and events, and more. “Our customers can log on to

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livegreat.greateasternlife.com to get some helpful health tips and sign up for exclusive privileges from more than 1,100 partner establishments across Southeast Asia under our Live Great regional customer loyalty programme, the first of its kind,” he said. The Star Health Fair 2013 which was organised by The Star with Great Eastern Life as the event partner has successfully drawn more than 40,000 visitors to the fair. In the fair, Great Eastern Life promoted “Live Great Programme” and inspired Malaysians to lead a healthy lifestyle by being physically and mentally fit. It was a platform for the visitors to go through five simulated scenarios of a possible daily routine to learn through how to maintain a healthy lifestyle and helped them to realise the actions and decisions they made today will impact their quality of health tomorrow. Apart from that, the “Live Great Challenge” that included physical and mental fitness, healthy eating and financial fitness test enabled

participants to tackle all healthy related issues and made them to be more cautious of their daily healthy related choices. Great Eastern Life is also taking a revolutionary step through product innovation especially in health insurance by rewarding customers for staying healthy through the newly launched Smart Premier Health, in line with its transformation of being a “LIFE company”. The plan rewards customers on 2 levels, firstly by reducing the cost of insurance they pay and secondly, by enhancing the annual coverage they enjoy every 3 years. The reduction in the cost of insurance, which takes place annually, can scale up to as high as 25% while the triennial increase in the annual coverage will be at a quantum of 10%. Great Eastern Life believes this unprecedented two pronged strategies will become a very effective tool against medical inflation which is as high as 15% for the customers.

Money Compass


Special Report

Participants’ nutrition knowledge were put to test in the Healthy Eating Challenge.

Free health checks by Great Eastern Life’s Live Great Partners during The Star Health Fair 2013. Nicholas Kua said, “We hope that the plan will benefit our customers in three ways. Firstly, to manage medical cost effectively through no claim bonus; secondly, to hedge against medical inflation and lastly, to help and reward customers to live healthier, better and longer.” On the other hand, Great Eastern Life’s Smart Medic is an affordable and comprehensive medical plan with monthly premium as low as RM100. “As this medical portfolio is very well managed, we do not increase our premium even though the medical inflation could be as high as 15%,” Nicholas Kua said. In view of its strong leadership in new product introduction and innovation, Great Eastern Life has been named winner of the prestigious Frost & Sullivan 2013 Malaysia Excellence "Private Health Insurance Provider of the Year” award for the second year. The award is a testament of Great Eastern Life's outstanding health

Money Compass

insurance achievement in areas such as leadership, technical innovation, customer service and strategic product development. Great Eastern Life is one of the insurers which has an in house HealthCare Services Department that provides 24/7 call centre service. Therefore, customers and agents have round the clock access for assistance on any hospital admission related enquiries or claim matters. This 24-hour support helps reduce waiting time, facilitates hassle-free transactions and provides peace of mind to policyholders in times of emergency. The call centre is also equipped with an Interactive Voice Recognition (IVR) System and Short Message System (SMS) to enable instant self-help to the agency force and policyholders. Nicholas Kua shared that Great Eastern Life will not rest on its laurel after receiving the award. In fact, the award will continue to inspire them to enhance the performance of their

Nicholas Kua, Chief Marketing Officer of Great Eastern Life healthcare services and also develop an innovative range of health insurance products to meet the constantly evolving needs and trends of our customers.

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Special Report

Offshore Investment: a whole other horizon for Malaysians Offshore financial centres (OFC) often conjure images of exotic and remote locations in the Caribbean, Channel and Jersey islands where the rich and famous hide their millions in order to escape the tax man. However, much has changed since the days when moneyed industrialists and entrepreneurs ran away with their booties to ask Swiss banks to safeguard their assets from the political and social turmoil occurring in their homelands. With the Internet now connecting people and finance like never before, trillions of dollars are moved around the world every day at light speed fuelling the global economy and international markets’ intense competition for ever-cheaper access to capital. The emergence of the global nouveau riche, particularly those residing in the BRIC countries (Brazil, Russia, India and China) and Asia means that in today’s economy OFCs play a crucial role in the financial planning needs and businesses of many individuals, corporations and even government organisations. Malaysians are generally honest, law-abiding citizens. Many are not comfortable disrupting the status quo. This sometimes extends to putting some of their hard earned savings into an offshore location despite a strong curiosity for what that might mean in terms of a financial return. At the heart of this discomfort is a

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lack of understanding about the financial options which are available to Malaysians. Many have incorrect assumptions that offshore investments are not even permitted for Malaysian citizens and residents, or that you need to have millions of dollars ready to invest to even qualify for offshore financial services. These misconceptions are far from the truth as Malaysia already has its very own OFC in the federal territory of Labuan.

These misconceptions are fuelled by consistent, often politically motivated rhetoric, which we find in the media and public discourse concerning OFCs. Many critiques of OFCs however fail to recognise the important role played by OFCs in facilitating all sorts of transactions required for a modern economy to function. A significant portion of foreign exchange related activities including mutual funds, hedge funds, unit trusts, international joint ventures involving stakeholders from multiple different countries, international stock listings, buying and selling of ships, aircrafts, and many other activities, would be nearly impossible without access to OFCs which now play a crucial role in the economies of many countries including Malaysia. Labuan, the tiny island off the cost of Sabah, was declared an OFC and free trade zone in 1990 and currently houses over 6,000 offshore companies including private and public

funds, wealth management, insurance and insurance related companies, trading companies, asset holding companies and many others. The areas of insurance and wealth management are especially interesting from the perspective of individual Malaysians. A few insurance companies licensed as life insurance providers in Labuan offer unique and cost effective ways for high net worth individuals (“HNWI”) to invest their money into jurisdictions such as the Cayman Islands, one of the world’s largest OFCs, via Labuan. These were originally designed for expatriates living in Malaysia who wanted to save their money offshore via the Labuan gateway. Today, local Malaysian HNWIs are also qualified to participate in offshore investments. Fortunately for Malaysians, the definition for HNWI in Labuan is not what we might normally assume.

The requirement for Malaysians is that the individual must be able to have a saving capability equivalent to a minimum of RM1,250.00 per month and/or have a RM20,000.00 nest egg to invest as a one-off lump sum. For many Malaysians these amounts are very manageable, meaning the doors are now open to a broad range of Malaysians who might already be invested in insurance, property, stocks or bonds locally but would like to diversify their assets to include holdings in offshore jurisdictions.

Money Compass


Special Report

Stanney Majawit is the Business Development Manager of Investors Trust Assurance (ITA) in Malaysia, a Cayman Islands-based international insurance company with operations in more than 30 countries. Established in 2002, ITA specialises in medium to long - term investment solutions tailored to meet the needs of affluent clients worldwide, mostly in emerging economies. It works with some of the world’s top asset managers under its convenient open architecture platform, providing clients with greater investment choices. For more information, visit www.investors-trust.com

These concepts are particularly opportunistic for people who are planning to send their children overseas for education, as holdings in USD for example provide a strong currency hedge against any appreciation of the USD while your children complete their education abroad. These unit linked offshore insurance products are typically held in non-Ringgit denominations and they differ vastly from their onshore equivalent in Malaysia because the premiums received are 100% invested into the funds from day one. This is in contrast to onshore unit linked insurance where your premiums are not fully invested into the

Money Compass

funds until the seventh year. However the protection coverage on these offshore unit linked insurance premiums is minimal and therefore not for those who have not taken care of their basic insurance needs. There are also other avenues. As a result of many deregulation exercises in Malaysia from the last decade, local banks have also started selling offshore funds as feeder funds or fund of funds which they sourced from many master funds offshore. Unfortunately, these feeder funds have higher entry levels and they are usually pushed through banks’ private banking facility, which means that they are still out of reach for

many Malaysians. Nonetheless, they provide alternatives for investing offshore and brighten the offshore scene for us Malaysians. Offshore investment in Malaysia will continue to be a niche segment as it is with the rest of the world. But at this stage, our participation is still relatively small. Fear of the unknown, misinformation, or as in the majority of situations, little to no information at all, are the biggest causes. For Malaysians who are interested in learning more, they can do more research online or contact any of the Bank Negara Licensed Financial Advisers or Independent Insurance brokers for further advice.

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Special Report

Investor Confidence Currently Low Across Developed Asia In contrast, Malaysians are generally positive on investments

with a high preference towards cash as compared to more “risky” investment vehicles like stocks and equities. Malaysia investors also see it as a “good time” for holding fixed income investment as the market is seen as showing positive signals.

• Malaysia ranks as one of the most optimistic countries in the ASEAN region after Indonesia, with an Index of 52 • Malaysian investors rank highest in the ASEAN region for their strong affinity towards Mutual Funds or Unit Trust funds investments • The financial priority of most Malaysian investors’ is to “save for a rainy day” while the priority for their regional counterparts, is to “save for retirement”. • A majority of investors (70 percent) feel now is a “good time” to invest in real estate, particularly in their own homes • 62 percent of Malaysia investors feel they will be better off financially in two years’ time and 41 percent feel they already better off today compared to two years earlier. The inaugural Manulife Investment Sentiment Index in Asia (Manulife ISI) shows that investors in developed Asian markets are less confident that it is currently the right

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time to invest, with Hong Kong and Taiwan the most pessimistic. This contrasts with much higher levels of confidence in the emerging markets such as Indonesia and Malaysia as well as the developed markets namely Canada and the United States. Robert A. Cook, President and CEO of Manulife Asia said, “From an investment point of view, there’s no more exciting place than Asia right now. There are so many opportunities across the region for people to invest to achieve their life goals. To help them do that, it’s extremely important that we understand investors’ needs. The Manulife Investor Sentiment Index helps us do that by providing the kinds of market insights that the Index has been doing in North America now for many years.” As for Malaysian investors, they are some of the most optimistic in the region, yet they remain conservative,

They believe it will give them higher returns as compared to other types of investments. Yet there exists the concern that Malaysian investors’ who have a high affinity towards holding cash and fixed income may see the value of their savings erode and this may result in low purchasing power in years to come in view of inflation. Hence there is a need to initiate and sustain in-depth education on the availability and suitability of various investment products, other than cash, fixed income and their own homes. “Malaysian investors have a penchant for insurance products that provide a steady stream of income, in addition to the investments in their own home and holding cash. However, being cash-rich means that they do have the means to invest, but they need to tap into the other investment opportunities that the Malaysian market has to offer which has higher growth potential or capital appreciation. Savings is the first step of any money management strategy, yet investment management is also key for Malaysians to make their money work for them,” said Mark O’Dell, Group Chief Executive Officer, Manulife Holdings Berhad. Further supporting the notion that Malaysian investors are conservative and invest heavily in cash and their own homes, a large majority also do not use a financial planner for their investments (92 percent), hence underscoring the need for more financial education.

Money Compass


Special Report Manulife Investor Sentiment Index - Key findings:

Investor sentiment • Malaysia and Indonesia report markedly higher sentiment towards investing, compared to developed Asia (+52 and +54 respectively). • Investors across most of Asia report low net sentiment about investing (China +13, Singapore +10, Japan +4). Hong Kong (-4) and Taiwan (-8) are the most pessimistic. • The young (25-29) are more optimistic than the other age groups overall for Malaysia. • Investors in Indonesia and Malaysia optimistic about cash and property, with little appetite for stock and equities. In contrast, in Hong Kong and Japan the reverse is true. • Nearly two thirds (63 percent) of those saying that it is a “bad time” to invest in stocks/equities report the main reason is “market volatility”. This is most significant in China (75 percent) and Malaysia (79 percent). • Malaysian investors are generally

positive towards cash, insurance and secured assets with a flavor for fixed income investments.

Maintain their pre-retirement standard of living and be financially independent; However for Malaysians, their financial priority is to “save for a rainy day” • Malaysian investors believe that most of their retirement income should come from their savings as pension schemes will contribute 15%.

Financial position • 62 percent of investors believe they will be better off in two years’ time (only three percent believe they will be worse off) • China has the most optimistic investors, with 60 percent reporting they feel better off now than two years ago and as for Malaysia, 41 percent feel they are better off today than two years ago. • In Malaysia, 7 percent of investors say they are worse off now than two years ago, in contrast to Japan (36 percent).

Financial planning • Malaysian investors see saving for a rainy day as their number one financial priority today. • 33% of Malaysian investors have no plans to start retirement planning, as they feel the balance held in their accounts would fund their retirement. • 92% of Malaysians do not use the services of a financial planner. Given Malaysia investors’ biggest investment is in insurance and their primary residence, it is not surprising that the majority do not use a professional advisor and feel that they can manage their own investments

Financial goals • Over 40 percent of 25-29 year olds in Malaysia say their top financial priority is to save for the purchase of a home. • Nearly two-fifths of Asian investors see “saving for retirement” as their top financial priority. Their retirement savings will be used to : Pay for healthcare expenses;

Summary of Manulife Investor Sentiment Index (March 2013) Asset Cash

Canada U.S.

Asia

Indonesia

Malaysia China Singapore Japan Hong Kong Taiwan

17

-53

23

90

83

13

7

-17

-15

-1

Fixed Income Investment

13

-2

21

66

51

29

12

-9

-4

1

Mutual Fund/ Unit Trusts

19

40

9

24

33

3

-2

-1

5

-1

Own Home Other Real Estate Stock / Equities

51

46

27

84

66

19

25

21

-11

-15

20

42

14

70

57

3

9

5

-23

-24

1

32

11

-8

26

8

8

27

26

-10

Overall

20

18

17

54

52

13

10

4

-4

-8

The Manulife Sentiment Index is calculated as a net score of the percentage of “Very good time” and “Good time” to invest, minus the percentage of “Bad time” and “Very bad time” to invest, cited for each asset class. The overall index for each market is calculated as an average of the index figures of all asset classes. About the Manulife Investor Sentiment Index in Asia Manulife’s Investor Sentiment Index (Manulife ISI) in Asia is a quarterly, proprietary survey measuring and tracking investors’ views across seven markets in the region on their attitudes towards key asset classes and investment vehicles.The Manulife ISI is based on 500 online interviews in conducted in Hong Kong, China, Taiwan, Japan, and Singapore; in Malaysia and Indonesia it is conducted face-to-face. Respondents are middle class to affluent investors, aged 25 years and above who are the primary decision maker of financial matters in the household and currently have investment products.The Manulife ISI is a long-established research series in North America. Manulife ISI has been measuring investor sentiment in Canada for the past 13 years, and extended this to its John Hancock operation in the U.S. in 2011. This is the first Manulife ISI launched in Asia.The research was conducted between mid-December 2012 and late January 2013 by TNS, a leading global research firm. The results of the second wave will be released later this year.

Money Compass

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Special Interview

Maybank:

Becoming The Preferred Bank for SMEs

Small and Medium Enterprises (SMEs) today require assistance from financial advisors to take their businesses to the next level and keep them moving forward as the operating environment is becoming increasingly challenging and competitive. In this issue, Maybank Deputy President who is also the Head of Community Financial Services Datuk Lim Hong Tat and his management team share their views on the importance of the SME Retail Financing business to the Banking group, its growth performance and moving forward plans for this business. Datuk Lim said that financing any business with an amount below

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RM5million is categorised by the bank as the retail SME market. Currently, Maybank has a market share of 16% in the retail SMEs financing market. The bank aims to expand its loan business in this market segment aggressively, to account for 20% of total loan business in the next five years, compared to 13% last year.

“We are confident that we can achieve 18% target this year and our SMEs retail financing business is expected to grow more than 20% in the next year. Last year alone, SME business has achieved 10% growth,” he added Maybank plans to expand its retail

SMEs business within the next two years as the market potential is substantial with a huge and growing customer base. The bank aims to assist these SMEs to grow further. A transformation programme had been initiated by the banking group since last year to develop a “customer friendly” and lean operating model, in order to expand its market share in the retail SME market segment. This programme was officially launched in December last year throughout the nation. The new operating model provides more competitive pricing, a variety of products and greater convenience to customers. This model also comprises an effective risk assessment tool that shortens the time required for loan approval.

Money Compass


Special Interview

Additionally, Maybank is also introducing the SME Property & Business Financing scheme in which the customer is entitled to a loan facility of up to RM5 million for acquiring properties and developing his/her business. The loan package provides a flexible working capital financing with highly competitive interest rates. Customers can apply for this loan facility at any Maybank branch. Currently, Maybank has more than 400 branches that provide services to the community and expects to expand this network by five to eight branches every year. While the Klang Valley area is saturated, the penetration rate in Sabah and Sarawak is still relatively low. Thus, these two states will be the main focus for the branch expansion plan. “We are aggressively entering into the retail SME market as we see a huge market potential here. We have a competitive advantage in this market.” Currently there are over 600,000 SMEs in Malaysia in which 400,000 SMEs are Maybank customers, equivalent to 60% of total SMEs in the market. He revealed that Maybank has 24% market share inthe current accounts segment, which is mainly contributed to by SMEs.

Datuk Lim said, “SMEs are a very important growth engine for our economy, about 32% of our GDP is contributed by SMEs. It is expected to increase to 41% by 2020.” Maybank aims to assist sole proprietors, partnerships and small family businesses to grow their businesses. Once these customers expand their

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businesses, Maybank will continue to serve them through its range of other corporate banking services.

Up to RM500,000 Loan without collateral

Datuk Lim also mentioned that eligible Maybank customers with a good track record of more than one year are eligible for loan financing of up to RM500,000 with no collateral required under the SME Clean Loan scheme.

While Maybank only began to expand its footprint in the retail SME market more aggressively since December last year, the bank has always strived to provide superior products to its customers. Besides a wide range of loans and savings product, the bank also provides cash management solutions and offers commercial cards to customers. Owing to the advantages mentioned above, Datuk Lim is confident that Maybank is in a better position to expand and grow its retail SME business healthily in the future.

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Special Feature

A New Pricing Strategy to Promote Greater Efficiency

Bank Negara Malaysia announced a new pricing strategy for payment services to address the current price distortion between electronic payments and paper-based payment instruments. Under the new pricing reform, the fee for electronic payment methods will be reduced to incentivise businesses and consumers to adopt the more cost effective electronic payment methods while charges will be levied on cheques to reflect its higher cost. Effective 2 May 2013, the fee for Interbank GIRO or IBG transactions that is performed online via internet banking and mobile banking, will be at 10 sen. The low online IBG fee is aimed at providing the incentive for users to switch from other more costly payment methods to lower cost alternatives. Online payment via internet banking and mobile banking lends significant benefits to both individuals and businesses. Individuals enjoy the convenience of transacting anytime anywhere, avoiding

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the queues at bank counters while businesses can lower the costs of doing business through the reduction or redeployment of resources used for handling cash and cheques. With more payments done electronically, there will also be cost savings from manual processes including postage. To reduce the cost and inefficiencies associated with the use of cheques, the charge for cheques will be progressively increased to reflect its production cost, which is currently at RM3.00. A period of one year is given for the general public and businesses to familiarize with, adjust and migrate to using IBG for their payment transactions. Effective 1 April 2014, banks will charge a cheque processing fee of 50 sen on the issuer of the cheque. This fee is in addition to the existing stamp duty of 15 sen per cheque leaf. During the one-year period, Bank Negara Malaysia will work closely with the financial industry to further improve the payment infrastructure to ensure payment services are easily accessible, secure and convenient. In addition to cheques and IBG,

adjustments in pricing for the other payment channels and methods, including automatic teller machines (ATM) will be phased in progressively to steer consumers to adopt the more cost effective electronic payment methods. By the year 2020, the pricing of all payment services will be based on the cost of providing the service. Today, 1.6 billion financial transactions are carried out using electronic means, double the amount in 2006. While the progress is positive, the target is to increase the number of electronic payments per capita from 56 in 2012 to 200 by 2020 and to reduce the number of cheques cleared in the country by half from 204 million to 100 million during the same period. Achievement of these targets will bring Malaysia closer to reaping annual savings up to 1% of GDP which studies have shown an economy would achieve by shifting from paper based to a more electronic based payment systems. The need to accelerate the migration is even more important now as Malaysia transitions towards a high value added, high-income economy.

Money Compass


Investment Know How

What is Business 1. What is a Business Trust?

A Business Trust is defined as a unit trust scheme where the operation or management of the scheme and the scheme's property or asset is managed by a trustee-manager.

2. What is the typical structure of a Business Trust? SPONSOR / SHAREHOLDERS

UNIT HOLDERS

Holds units

Distributions

BUSINESS TRUST (“BT”)

Ownership Fees TRUSTEEMANAGER (“TM”) • Manages & operates BT

Ownership (beneficial)

Income

• Acts on behalf of unit holders Ownership (legal)

ASSETS

3. What are the general features of a Business Trust?

a. A Business Trust is a business enterprise set up as a trust pursuant to a deed, and managed by a trustee-manager. It is suitable for capital intensive businesses with stable cash flow such as infrastructure and telecommunications. b. The Trustee Manager holds the assets on trust for the unit holders of the Business Trust. The Trustee Manager also manages and operates the Business Trust. c. Unit holders can participate in the profits or income arising from the management of the assets in the Business Trust through receipt of distributions. The distributions can be paid out of cash flow without being constrained by accounting profits.

4. What is the advantage of a Business Trust as compared to a company? A company is restricted to paying dividends out of accounting profits, while Business Trust can pay distributions to investors out of operating cash flows without being constrained by accounting profits. Money Compass

Trust?

5. What are the benefits of a Business Trust to investors?

• A Business Trust provides a new alternative investment instrument with an element of equity and debt, i.e. high yield with stable growth. • A Business Trust allows investors to have a direct exposure to cashflow-generating assets. The structure unitises big ticket assets into liquid and affordable units which are traded on the Exchange, giving investors a new alternative to existing yield. • A Business Trust typically have high payout ratio because of its ability to distribute cash flows in excess of accounting profits and this imposes discipline on TrusteeManager when considering acquisitions. • In addition to maintaining the payout, Trustee-Manager as the responsible entity is also expected to actively manage the business for growth via acquisitions and expansion to enhance returns to investors. The incentives of Trustee-Managers are typically structured to align their interest with unitholders.

6. What rights would an investor have as a unit holder of a Business Trust?

• Participate in any increase in the value of units held by the unit holder • Receive any distribution of income from the Business Trust (whether in the form of cash or units in the Business Trust) • Attend and vote at a general meeting of unit holders • Call for a general meeting of unit holders • At the unit holders general meeting, a unit holder may : i. appoint the auditor of the Business Trust ii. appoint a replacement trusteemanager iii. remove the trustee-manager • Right to participate in the distribution of the proceeds from a

Business Trust during the windingup of the Business Trust, after expenses of the winding-up and creditors of the Business Trust have been fully-paid • Unless otherwise provided in the deed of the Business Trust, there is no rights for investors to redeem units in the Business Trust. As the units of the Business Trust will be listed on the Main Market of Bursa Securities Malaysia Berhad, unit holders may sell their units or purchase additional units on the stock exchange, just as they would do for ordinary shares of a listed corporation • Other rights and privileges of a unit trust holder will be set out in the deed of the Business Trust.

7. How does an investor buy a Business Trust?

Investors can invest in Business Trusts during the initial public offering, or by buying Business Trust units listed on the exchange. Business Trusts are traded just like stocks, subject to the same trading, payment and settlement rules (T+3).

8. How does an investor trade a Business Trust?

Similar to trading in stocks, an investor will be required to have a Central Depository System (CDS) account and a trading account maintained with a broker. Investor may buy or sell Business Trust through the broker, remisier or via online trading during trading hours.

9. What are the risks involved when investing in Business Trust?

The risk of price fluctuation which is impacted by the demand and supply in the market.. Investors are advised to read the prospectus and other announcements made in relation to the Business Trust to find out about the risks of a particular Business Trust. If in doubt, please seek professional advice.

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Wealth Protection Lawrence Seow graduated in electrical and electronics engineering from Univer-

sity of Wales, College of Cardiff, United Kingdom with Honours in 1994. Upon his return to Malaysia, he worked as a project engineer in YTL, a public listed corporation from 1995 to 1998. In 1998 during the Asian financial crisis, he took a bold step in changing his career to insurance business. Lawrence is a firm believer in proper financial planning. He pursued his career in unit trust and estate planning industry in 2000. He successfully completed his professional examination on financial planning in 2006, which earned him the designation Certified Financial Planner (CFP). He acquired the Registered Financial Planners (RFP) in 2007 and the Syariah RFP in 2010. His main motivation in this industry is to inspire every earning individual to be at his best in financial planning and help each person to improve his finances. He is currently the Head, Financial Planning In VKA Wealth Planners Sdn Bhd.

10

Great Ideas When Writing a Will

I usually ask my clients what are the concerns that will take place immediately upon death of an individual? The first few concerns were funeral arrangements, paying off debts and immediate family living expenses. Most of the time clients are not aware that almost immediately the deceased’s assets shall be frozen pending letter of administration (if without will) or Grant of Probate (with a will). This can pose a bigger concern than what was mentioned earlier. Writing a will mainly reduce the time for the estate of the deceased to be transferred, saves cost on legal fees and investments will have minimum impact from delays. We all know the landscape of certain investments especially equities can change in as short as six months. With that I’d like to share 10 great ideas when writing a will.

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1. Appointment of executors

Executors must be reliable, trust worthy and unbiased in carrying out their duties. The main responsibilities of executors are paying off debts, outstanding income taxes, transfer of estate to beneficiaries according to the written will. Appointment of joint executors is a must if beneficiaries are minors. How many executors do we need to appoint in a will? At least three substitutes executors for contingency purposes and don’t forget to get their consensuses before appointment. We don’t want them to be taken by surprise and not prepare to take on the responsibilities later. If all fails, then appointing a private trust corporation to be the executor will be most effective. These appointed executors will never resign or predecease unlike individuals. They are also non-biased and places

beneficiaries interest on top of priority list.

2. Appointment of trustees

1 2

Again this appointment must be in the hands of capable and trust worthy individuals in nature because the entire assets will be taken care of by the appointed trustees. The main role of the trustee is to hold in trust for the beneficiaries until a specific time mention in the will be transferred to the rightful owners. Imagine entrusting your properties to the trustees who failed to take considerable care and interest in maintaining the assets, by the time it lands in the hands of the beneficiaries that asset may have depreciated in value. Again by appointing a trust corporation to be the trustee, they shall be professionally managed and interest of the individuals shall be protected. Money Compass


Wealth Protection 3. Appointment of guardians

4. Distribution of assets, simple vs. specific?

In writing a will, some will say it is an expression of one’s intention when they are no longer around. How simple or complicated the instructions really depends on the testator/testatrix wishes in giving to the loved ones. The below table illustrate some examples for comparison:Simple

6. Distribution of luxury items, jewelleries, watches and diamond rings

3 6 8 4 7 9 10 5

One of the benefits of writing a will is having the right person to take care of minors upon execution of the will. Usually the natural guardian here is the surviving spouse, however in the event where both parents predecease before the children reach the age of maturity, these roles can be assumed by appointing another substitute guardian. It is advisable to appoint up to three guardians for contingencies. The main roles of guardians are to take care of the daily welfare of minor, health care and education needs.

Multiple ownership, consent from all in order to sell Potential dispute among beneficiaries

Just like in the previous idea no. 5, it is impossible for the executor to identify and distribute these delicate items by percentage. Therefore it is good if these items are catalogued into different groups for certain beneficiaries to receive, such as proper labelling of the items or a list stating the items for the executor to follow. This list can be kept with the items inside a safe deposit box for proper protection and fair distributions.

7. Joint bank account holders

There are different views on this subject and some banks’ practices may differ. Commonly a joint account holder has the right to withdraw the money upon the death of the other owner if they both signed a survivorship clause upon opening accounts.

Specific

Given to specific beneficiaries, testator may sell off assets before time No disputes

Certain assets cannot divide, car, jewelry, safe deposit boxes, etc.

Can be more specific on how to give

Potential business failure if shares transferred to non interest parties

Business succession can be achieve by giving to parties who are keen

No testamentary trust

Testamentary trust

No instruction to executor

Can direct executor on the estate

5. Transfer of vehicle ownership

Because of the nature of the asset, vehicles cannot be shared in joint names therefore it is advisable to give 100% to a single beneficiary but substituted with another if the first choice is not available. For minors, it is better to instruct the executors to dispose of the vehicle and the sale of the car placed under trustee care until the minor can receive the money.

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If that is the case, any named beneficiaries in the will which defers from the joint account may not receive the money. A lot of business accounts are done like this and upon death, surviving business partners may withdraw all the money without the deceased’s widow being aware of it.

8. Have enough substitute beneficiaries

It would be advisable to have at least three sets of substitute beneficiaries

in a will to prepare for different circumstances. If we only have one beneficiary in our will, if that single named person predeceases then the entire estate shall have to be distributed according to the Distribution Act 1958 (Amended Act 1997). This defeats the purpose of setting up a will in the first place where we can choose who to give our estate to.

9. Commorientes

This clause seems to contradict the earlier idea no.8, however with this clause in place it further protects the assets from being distributed to a deceased beneficiary who has passed on at about the same time when the will was executed. It would then go to the next surviving beneficiary on the list. By doing so, it protects the assets from being given into the estate of the first deceased beneficiary which may not be what the testator/testatrix wishes to. The usual time frame for this clause is 30 days.

10. Residual clauses

Under this clause, any assets not listed during the writing of the will shall be distributed accordingly to the named beneficiaries given under the clause. This is to accommodate changes in the estate of the individual who may acquire more assets in the future. Without this clause, any assets not listed in the will shall fall under intestate and shall follow the Distribution Act 1958 (Amended Act 1997). As a professional financial planner, we definitely have more solutions to your estate planning needs. These are just some common guidelines when considering writing a will, at the end of the day is how we understand your objectives and translate it into a will. Protect your assets today by having a comprehensive estate planning done after all it is for your loved ones.

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Family Wealth Management Evonne Chen is a licensed Financial Advisor Representative with Standard Financial Planner (SFP) Sdn Bhd, holding the Capital Market Services Representative License by Securities Commission Malaysia, Financial Advisor Representative License by Bank Negara Malaysia and the Corporate Unit Trust Advisor Representative License by Federation of Investment Managers Malaysia. Evonne was appointed SFP’s Managing Director, Advisory & Practice Management in 2010. Evonne is among the first few CERTIFIED FINANCIAL PLANNER ® professionals who became a licensed independent financial planner in Ipoh. She specialises in giving advisory in business succession planning, assets protection planning, family wealth management and corporate investment planning for business owners and professionals. Currently she is the Chapter Secretary for the Financial Planning Association of Malaysia Ipoh Chapter. She has been a lecturer for the CFP Certification Programme since 2005.

Series on Business Succession 6

A Family Wealth Management Story Solutions on family wealth management and succession continues

After setting up the wealth preservation structure to manage the business owners’ estate, what else needs to be in place to prevent financial leakage and to continue growing the family wealth?

Back to basics

The core subjects in a financial planning course are wealth protection, wealth accumulation, wealth preservation and distribution. Wealth Preservation & Distribution Wealth Accumulation

Wealth Protection

It is a bottom up approach just like when building a house. Wealth protection is the first step in financial planning and forms the base of any wealth planning. Without it, it is as if we are building a house on quicksand. If our wealth is not protected, any misfortune will form a leakage in our wealth and disrupt the wealth accumulation process. In succession planning, we start from

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the top and utilize various tools for wealth preservation and distribution. Once the important structures and practices are set, the family wealth management must include the structures and guidelines for wealth protection (insurance planning) and wealth accumulation (investment planning), because the distribution structure alone is insufficient to preserve wealth across generations. A typical high net worth family wealth management plan consists of (let’s say for family ABC): • ABC & Co (Family office that manages money and family activities) • ABC Private Fund (to manage investments such as private equities, venture capital, private mandate etc.) • ABC Trust Company (Private trust company that manages hundreds of family trusts, as the generations grow) • ABC Insurance Company (Captive insurance that manages insurance

for family members liabilities, private jet, sail boat, art collection, real estate etc.)

What is captive insurance?

A captive is an insurance company set up by a risk owner to underwrite the risks of its own parent company or group of companies. A captive is suitable for any organisation whose cost of traditional insurance exceeds the cost of establishment and operation of a captive. It serves as an efficient risk-transfer vehicle with cash flow advantages. In other words, it manages the insurance spending. As such it makes economic sense for high net worth families to set up a captive insurance especially to insure those assets with a history of low-loss ratio. Insurance premium paid to traditional insurers can in turn be invested into the family’s own captives which will progressively build up underwriting surpluses each year and eventually reduces dependence on re-insurance.

Money Compass


Family Wealth Management As a result, this will reduce the whole family insurance spending and put a stop to this financial leakage and more wealth will be retained and preserved. Moreover, an effective risk management programme will result in recognisable profits for the captive. Risk management (refers to personal, property and liability risks) for a wealthy family instead of being viewed as a liability cost, can be restructured as a potentially profitable part of the family business activities. Traditionally, captive insurance companies have been set up in offshore jurisdictions to ensure cost effective access to global reinsurance markets and to maximise investment potential for corporate or family funds retained within the captive.

Benefits of captive insurance

The use of a captive insurance is an integral part of general business risk management. The reason for using a captive is to allow your entire family business and your family to retain control over the family risk management program. The benefits of having a captive are as follows: 1) You are able to obtain insurance coverage when certain risks are not insurable with commercial insurers. By establishing your own captive you can customize the coverage and the insurance policy to meet your unique risk management needs. 2) In general, access to the reinsurance market is only available through licensed insurers. With a captive, you can gain access to the international wholesale market of insurance that is less expensive than the reinsurance available in the commercial market. 3) You are able to save more on insurance premium payments. Premiums charged by commercial insurers would have added costs such as overhead expenses, administrative costs, distribution costs, taxes and miscellaneous fees. By having a captive, you are able to obtain the same coverage at a lower cost. 4) Retain profits and build family Money Compass

financial reserves. Premiums paid into a captive can be invested to grow the financial strength of the family or the family business and thereby increase the surplus especially if the claims are low the captive stands to generate a substantial amount of underwriting profits for the captive owners. 5) Economic and environmental fluctuation; market condition and industry changes may lead to an increase in premium by commercial insurers. Captives are less affected by these external factors and thus have steadier premiums that can be effectively forecasted and factored into a family's long-term budget, allowing the family to be in a better position to manage costs and achieve its financial goals. Types of captive insurance Types of captive insurance

Premium size required to set up

Pure captive

> USD 5 million

Group captive

< USD 5 million

Rent-a-captive

> USD 1 million

Protected Cell Company

> USD 200,000

Pure Captive The most common form of captive insurance is pure captive; an insurance company formed primarily to underwrite only the risks of its parent company, its affiliated companies or the family. Since this is being formed as a subsidiary company, the operating costs will be high. Therefore premium paid per year must be at least USD 5 million in order to make owning a captive feasible. Premiums

Business

Captive Insurance Policies

Protected Cell Company (PCC) For premium sizes ranging from USD 200,000 and USD 1 million, instead of setting up a captive, a protected cell company could be an alternative. A PCC structure consists of a central core cell (PCC owner) and a number of different protected cells. A PCC is akin to a traditional rent-a-captive. For premium sizes too small to justify setting up a captive, they can just 'rent' a cell. Under the PCC structure, it creates a legal, distinct and

functional segregation of each cell's assets, liabilities and capital; at the same time they enjoy the benefits of a captive at a lower cost. A PCC cell may be an ideal solution for those who retain worldwide risks on a reinsurance basis; and for companies that need to segregate risks associated with different projects or joint-ventures. This is also a popular structure for family wealth management to manage risks associated with multiple families as well as for the diverse investment purpose or objectives of the family wealth. CELL

CELL

CORE

CELL

CELL

CELL

CELL

In conclusion, risk management is the wealth protection process of making and implementing decisions that will mitigate and minimize the effect of accidental financial loss for your family or for an organisation. Therefore it is essential to include a risk management structure while planning for family business succession. The captive insurance structure mentioned above may or may not be applicable to your family or to your business at this point in time, nevertheless since you are now aware that this cost saving structure is available, you may start to develop the overview and guidelines in your family risk management so that as the size of the family wealth grows, and the costs on insurance gets higher, that would be a good time for your successor to create such a structure, for the benefits of future generations. In the next issue, we will look into areas related to the family wealth accumulation process to complete the family business succession planning.

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Investment Education Kathlyn Toh is a Professional Investor and Trader specializing in the U.S. and

global equities market. She is also the Director and Chief Trainer of Beyond Insights Sdn. Bhd., an institution that is focusing on bringing out the best in people through financial training, and a pioneer of Trading Psychology and CFD Trading education in Malaysia. To subscribe to their newsletter, please go to www.beyondinsights.net, or follow Kathlyn on Facebook at ww.facebook.com/beyondinsights.

Taking your First Steps to Investment Success

Multiplying your Profits

I will be sharing with you the 4th and last step of my simple 4-step formula for achieving success in investment and trading. (For the articles on the first 3 steps for my S-T-P-M formula, you can refer to the previous issue or email a request to article@beyondinsights.net.) This 4th step is about LEVERAGE, i.e. how you can accelerate your return from stock market investment, and how to make your money work harder for you. We talked about CFDs as a leverage instrument in the previous issue and we will continue with Options here.

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From the survey conducted during Invest Fair Malaysia in 2012, we realised that the percentage of investors in Malaysia who know what CFD is only 7% and even less know about Option (only 3%). This is naturally so because CFD and Option are not yet developed in the Malaysian stock market, or rather our market volume has not been able to support the development of these instruments. But for those who got to know these instruments and how to use them correctly â&#x20AC;&#x201C; it helps them to venture into international stock market where much more profit opportunities are

available, at a much faster pace.

What is Option?

By definition, an Option is a contract which gives the Buyer the right, but not the obligation to buy or sell a stock at a specified price on or before a specified expiry date. There are 2 types of Option Contract â&#x20AC;&#x201C; Call Option and Put Option. A Call Option for Stocks gives the Buyer of the contract, the Right but not the obligation to Buy the Stock at a Specific price on or before an Expiry Date by paying a small premium now (typically 2-10% of the stock price).

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Investment Education

A simple analogy to Buying a Call Option – think about buying property. When we buy a property we will normally pay a “booking fee, which is normally about 10% of the property price. That “booking agreement” gives us the right to purchase the property at the agreed price at a future date (usually within 3 months to get the loan approval). However as a buyer we are not obligated to buy the property (in which case we will lose the booking fee), but the seller has the obligation to sell if we decide to buy it. It is also possible for us to transfer the “right” to another person, at a higher price, should the value of the property goes up before the agreed date. A Put Option for Stocks gives the Buyer of the contract, the Right but not the obligation to Sell the Stock at a Specific price on or before an Expiry date by paying a small premium now (typically 2-10% of the stock price). Put Option can be used as an insurance for your Stocks. E.g if you buy 100 units of Starbuck stocks @$60 but worried the market will crash anytime this month. Then, you can buy 1 contract of Starbucks Put Option which allows you to Sell 100 units of Starbucks stocks at $60 within 1-2 months expiry by paying a small premium now. Option has all the advantages mentioned above for CFD except the dividend part, which the Option holders are not entitled to any dividend. Despite that Option is actually a much more powerful instrument because of the following features and advantages: • Options is one the most powerful and versatile financial instrument as it can be constructed to meet many trading objectives, protection or hedging.

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• Ability to make money in any market direction (uptrend, downtrend and even sideways) means more opportunity to trade and meet your financial goals faster. • Higher probability of winning as you can make money in more than 1 direction concurrently (eg. Win as long as a stock stays above a certain price or below a certain price). • As option buyer, your risk is only limited to the premium paid in worse case scenario (usually 2-10% of stock price). • A trade can cost as low as $20 but it’s better to start with a capital of about $2000. • Can be used as insurance. • Creative used of 2 or more Options contract can lead to many powerful strategies to take advantage of different market trend and protection requirement.

Key differences between CFD and Option

Here are some key points that an investor or trader should know when deciding to start using CFD or Option: • CFD is useful for investment and single directional trading (i.e. stocks on a clear up trend or down trend) and you can get dividends if you are a buyer. • Option can also be used for Non-Directional trading, where you can win concurrently in more than 1 direction including sideways. • Option, whilst more powerful,

presents a steeper learning curve as you have to learn how to choose the right contract with different exercise prices and expiry date, and how to use them in correct combinations to achieve your trading objectives. Hence for those who are new to the stock market, we would recommend them to start with CFD as it is easier to compre hend and then proceed to learn options.

Conclusion

Whether you are a short term trader, mid term trader or a long term “buy and hold” investor, Options gives you the leverage to achieve your profit target faster and the a ability to diversify with your capital while protecting your investment much more effectively. It is definitely worth learning if long term success and consistent income stream from the stock market is your goal. There is much more I can share about how I have used them to generate average of 300% returns in the past 3 years and I conduct free seminars from time to time, check out our website www.beyondinsights.net for the next session.

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Women Financial Planning Brenda Yong, is highly qualified in advertising (IAA, NY, USA), business management

(SIHE Wales, UK) and financial planning (RFP and Shariah RFP). She is also a licensed Financial Advisor (FAR & CMSRL/A9249/2008) with Standard Financial Planner Sdn. Bhd. by Bank Negara & Securities Commission and an Offshore Wealth Consultant. Her latest achievements include being inducted to the Million Dollar Round Table (MDRT, an international recognition-financial advisory category) as the first lady in the licensed financial advisor category in Malaysia and the SFP Top Adviser Award in 2010/2011/2012. She is also a Certified Career Consultant for Crown Career Direct, one amongst the 500 plus consultants worldwide and the original writer/trainer for â&#x20AC;&#x153;Wealth of Lifeâ&#x20AC;? Training series. She is also a regular article contributor to various financial/lifestyle publications and has been interviewed by most top radio stations (in Malaysia).

Breaking Up is Hard to Do.....

... sang Neil Sedaka, a song he recorded and co-wrote with Howard Greenfield. Sedaka recorded this song twice, in 1962 and 1975. And indeed, breaking up is hard, not only on the hearts of the family members, but from a lifestyle and economical aspect of a person's life. Standard and common reasons for divorce are infidelity, substance and physical abuse, gambling and incompatibility. Less common reasons are interference from in-laws as well as religious and cultural differences, but these are valid reasons, nevertheless. According to Crown Financials, USA research, 90% of broken marriages are due to financial related matters, either too much or insufficient that initiated heated arguments in the homes affecting both the couples and

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their innocent children. Malaysia being a plural society and having a dual judiciary system, means the couple either goes through civil court for non-Muslims or Syariah court for Muslims. There are those who straddle both judiciary systems. When a non-Muslim marries a Muslim and converts, Pertubuhan Kebajikan Islam Malaysia (PERKIM) is the body that assists their transition into Islam and it gives religious support. However, the converts will still want to provide some financial assistance for their non-Muslim family members (eg. aged-parents or siblings) and maybe leave a legacy as well. More so, when the marriage is over. Having a licensed financial planner who is qualified in both conventional and Islamic financial planning would be ideal as she will be able to

understand the religious and financial side of things from the conventional and Syariah aspect and advise her client accordingly. Stress and lifestyle also takes its toll on our social fabric which is fast unravelling due to Malaysians losing their Asian culture and adopting many Western values. This would also include financial distractions, especially in larger towns. How bad is it? Here is a quick look at numbers, the divorce rate among non-Muslims increased by a whopping 169% from 2009 to 2010. Figures from the Malaysian Quality of Life (MQLI) 2011 report showed that 0.22% of marriages among Malaysians aged from 18-50 ended in divorce in 2010, almost double the 0.13% recorded in 2000.

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Women Financial Planning Furthermore, Economic Planning Unit (EPU) director of macroeconomics, Allauddin Anuar said 80% of the divorces involved Muslim couples. This was based on figures from the Malaysian Islamic Development Department (Jakim) and the National Registration Department (NRD). Perhaps the numbers are lower for non-Muslims because more are opting for co-habitation instead of marriage, especially if they do not intend of have children. Often times, the ones who suffers more are the women and children. Why? Because women are more nurturing and caring and will most probably want custody of the children. Men will want to re-marry and may want children with the new wife, so he is happy to give custody to his ex-wife. Women who hold a job with a good salary will find it easier to manage their finances. However, if they are dependent on their husbands, most find that when love flies out of the window, so does financial support. Regardless of what the divorce document says. There are loopholes to exploit and our family court system is not that strong yet. Those who choose to fight it out in court may find most of their money goes to the lawyers whilst the ex drags their feet for the next payment and some may even pull a disappearing act. In Syariah law, children will always go to the female relations (eg. sisters, aunty or grandmother) whilst property will be taken care of by the male relatives (eg, brothers, uncles or grandfathers). As I was saying about the social fabric, there is no prize for guessing who is left 'holding the baby' with no financial support. In all fairness, I must acknowledge that there are responsible men who love their children and continue to support

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them until they are independent. There are those who also take on the role of single dad or even both. I salute every one of them. However, this article addresses women who are on the other end of the stick and how they manage their situation. The common 'catch 22' scenario is while the mother has to work, she has issues about getting a child minder. If there are precious little finances, unless she has relations to help out, she may not be able to afford one. More so if there are several children. It is common to see women struggle to keep bodies and souls together and non-profit organisations like Ibu Tunggal gives them some form of salvation as these organisations them a vocation and lend emotional support. There are also other great bodies like Womenâ&#x20AC;&#x2122;s Aid Organisation which supports and helps abused women and their children. These women must then learn how to re-build their world and this includes how to handle finances which were previously managed or should I say mismanaged by their ex-husbands. There is also another group of women who hold fairly good jobs but have no financial savvy as they may have left the finances to the men.

Yet another group are those who hold high paying jobs but either have no time to manage their own finances with added responsibility as a single mom or also left family financial matters to the men. The last group would be those I call superwomen who can manage finances, household, work and family matters. They are few and far between, but yes, they do exist. Yet you would be surprised that they too, seek the help of financial advisers to check and balance that they are on the right track. As I stated in my first article, generally Asian women seek lady financial advisers as they are able to better understand and empathise with a woman's challenges in life. Is it any wonder that this applies even more for divorcees? Lady financial planners are simply from the same planet, Venus, (taking a page from Dr John Grey's book entitled Man from Mars, Women from Venus). They certainly make better candidates in understanding a woman's mind and help put them on the right financial track so that divorcees can have peace of mind and a better quality of life.

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Investment Tips Ken Chee is the Chief Executive Officer and Co-Founder of 8 Investment Pte Ltd, a company that focuses on equity investments and education. His investing strategies have allowed his students to generate between 11% and 67% in annual returns from their investments. This excludes the massive passive income from their investment dividends! Ken was awarded the Spirit of Enterprise Award by the President of Singapore in 2005 and a self-made millionaire at the age of 34. With his wealth of experience and recognition, Ken is often being featured in national media such as The Straits Times, The Sunday Times, My Paper and in magazines. Today, Ken is very much dedicated to educating the public to take charge of their financial future.To find out more, you can visit www.ValueInvestingSummit.com or call +6018 219 0411.

How Much Do You Actually Need

In Order to Retire?

Let’s assume you want to retire at 65 years old and you live till 85 (Malaysia’s average lifespan is 70.8years old). And for your golden years, you want to have a minimum monthly allowance of $1,500 (in today’s dollars) to spend. With a long-term 3% core inflation rate, how much money do you need to have in total when you reach 65 in order to achieve that? The answer as follows based on your current age: Age 0 : $3.53 million Age 10 : $2.62 million Age 20 : $1.95 million Age 30 : $1.45 million Age 40 : $1.08 million Age 50 : $840k Age 60 : $598k

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These figures are based only on having a $1,500 monthly allowance. If you want more, the sum will be bigger! (I’m assuming you have also paid up your home and car in full by the time you reach 65). Hence, based on the above table and the law of averages, we can safely conclude that EVERYONE needs to be a cash millionaire by the time they reach 65 years old — just to enjoy the basic $1,500 allowance every month. Here’s a cruel fact: If you save every single cent of your paycheck every month, how long will it take you to save a million? The answer is likely to be NEVER for most people. So what are you going to do about it? I asked myself the same question in

2001 when I was an employee and that’s why I decided to walk down a different path (or two): business and value investing. To keep doing the same thing you do today and hope for a different result tomorrow is simply madness! If you want different results, you need to take different action! I did 11 years ago. What about you? Want to learn from REAL value investors and make your first million with only $10 a day the Warren Buffett way? Then join us for a 2-hour Millionaire Investor seminar. Book your FREE seat at www.MillionaireInvestor.asia or call us at +65 8518 5187 (Singapore) or +6018 2190411 (Malaysia).

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Wealth Attitude KC Lau

is the best selling author of Top Money Tips for Malaysians. His popular personal finance blog is one of the most visited websites in the financial blogosphere with more than 11,900 email subscribers. He also hosts regular and free financial training online featuring different financial experts. You can follow his latest updates by visiting www.KCLau.com.

How Much Should You

Spend On A New Car? I’ve heard this complaint many times. I am one of those who complain about this too: “The cars are so expensive in Malaysia.” Well, to what extent is the high pricing of consumer vehicles in Malaysia? Let me first tell you my experience chatting with an American over breakfast. This happened on 28th July 2012. In the beautiful morning, I drove 10 miles to Portland, Oregon to meet Noah, a business coach who had just helped me with my online project called Founder Method, which is a membership site providing guidance to Malaysian entrepreneurs. We sat down in a fine restaurant. We shared information on a lot of stuff and eventually we got to the point of discussing the difference of lifestyle standards between Malaysians and Americans. “For a Honda Civic, how much do you think I pay for instalments every month?” I asked. I sold this car

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Motor Cars (Including Station Wagons, Sports Cars and Racing Cars)

CBU Engine Capacity (cc) MFN

CKD MSP ASEAN ASEAN CEPT MFN CEPT MFN

Local taxes CBU & CKD ASEAN Excise Sales CEPT Duties Tax

< 1,800

30%

0%

10%

0%

10%

n/a

75%

10%

1,800 - 1,999 30%

0%

10%

0%

10%

n/a

80%

10% 10% 10%

Import duty

2,000 - 2,499 30%

0%

10%

0%

10%

n/a

90%

Above 2,500

0%

10%

0%

10%

n/a

105%

30%

Notation CBU = Complete Built up CKD = Complete Knock Down MFN = Most Favoured Nation MSP = multi-sourcing parts n/a = not applicable

Source: http://www.maa.org.my/info_duty.htm

before I moved to stay in the USA for 12 months. “About RM1500?, Noah took a guess. “Wow, how do you know? I paid RM1,425 every month. It’s pretty close!” “I don’t know about the price in your country, but here, a Honda Civic cost around US$17,000. With zero down payment, it will be around $1,500 to pay it off in one year.” Noah explained his calculation. “Damn! My instalment was for a 7-year loan!”, I exclaimed.

Why Are Cars Priced Higher Here?

Without blaming anyone, let’s see the taxes imposed on the vehicles here before hitting the road. There are import duties, excise duties and sales tax being imposed on cars. These taxes are also one of the highest in the world. This makes most foreign cars extremely expensive for the local buyers. These explain why a Honda Civic here costs RM120,000 but only US$17,000 in the USA.

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Wealth Attitude Malaysians Pay A Lot For Cars

Loan Payment Calculator

It is a commonly known fact that a young fresh graduate might be paying 30-50% of his salary just to own a car that seems like a necessity, especially if you are working in the big cities. For example, if you get the lowest specification Perodua Myvi model (manual 1.3 liter, solid colour) priced at RM41,924.30 on the road, zero down payment, and 9 years loan repayment, your monthly instalment is RM489.51. Now add on the petrol, toll fees, parking fees, and maintenance expenses, you’ll most likely spend around RM800 per month just because you own this car. For a fresh graduate earning RM2,000 a month, RM800 is 40% of your salary. Don’t sweat. I’ll be giving you some suggestions below in order not to overspend on cars. Since we can’t change the National Automotive Policy on our own, the logical thing to do is to play within the rules. There are many ways to spend less on car including not getting a new one, or not to own one at all. Either way, it involves living below your means. Now let’s get to the question we are discussing on this article - how much should you spend on a new car? ow Do You Know If You Can Afford A New Car? The answer is the 20/4/10 rule. Michael Kling at Wise Bread (personal finance blog) shares this easy-to-remember rule: Put down at least 20% Finance the vehicle for no more than four years Keep total monthly vehicle expense — including principal, interest, and insurance — under 10% of gross income Apparently, Michael is living in the USA and he is talking about a different living standard. But the principles hold true for us

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Source: http://www.autoworld.com.my/v2/tools/loan_payment.asp

who are living in Malaysia. If cars are expensive, it simply means we should get cheaper options. If you are following these rules, before buying a Myvi, first you got to have at least 20% down payment ready in your bank account, which is about RM8,400. Secondly, by financing the remaining 80% on a 4 years hire-purchase loan, you’ll be paying RM779.79 per month. According to the third rule, you got to keep your total monthly vehicle expense under 10%. By excluding the maintenance, petrol, toll and parking expenses, you got be earning around RM8,000 a month in order to afford a new Myvi. Okay. I know this is kind of hard to swallow. How many years do you need to climb the corporate ladder in order to get to the income level of RM8,000 per month? Some people take as long as 10 years to get there.

The Millionaire Next Door Drives a Myvi

The truth is that there are many frugal people driving a Myvi in Malaysia. I’ve heard a story from my friend, Lee, who is a top level manager of a property development project in Penang. He told me that a middle-aged man drove a Myvi to his office. That guy went in wearing short pants, and bought 8 units of RM400k/unit properties in one shot! You see, even the millionaire next

door is driving a Myvi. So if you are not earning more than RM8,000 a month but drive a car as good as Myvi or even better, you really need to take a close look at your finances. Are you heading towards the right direction?

Car Loan vs Housing Loan Psychology

After paying many years on both car loan and property loans, here is the main difference I realised - it is totally the opposite feeling when you pay the nth instalment.

The feeling of paying a car loan

1st instalment - “I pay so little to enjoy such a nice ride! Totally worth it.” 50th instalment - “When is the final payment going to come? I am tired of this old car.”

The feeling of paying a housing loan

1st instalment - “It is going to take forever to pay off this mortgage.” 50th instalment - “Oh... I am paying so little to enjoy this expensive home.” The answer is obvious - don’t buy a car you can’t afford. Until the time you can really afford your dream car according to the 20/4/10 rule, you might be interested in one of the money tips I shared in my bestselling book Top Money Tips for Malaysians - How to get your first car free. Check it out!

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Estate Administration Evanna Phoon is a dynamic technopreneur who owns www.MalaysiaTrustee.com & www.MalaysiaWills.com, a Senior Franchisee of Rockwills.

In June 2010, she initiated Malaysiaâ&#x20AC;&#x2122;s first online will writing service. In March, she partnered with KC Lau and revolutionised the entire financial planning industry to become the first and only Malaysian to use Webinar Series to provide free education to the public. To attend her regular free Webinar series, subscribe at www.MalaysiaWillscom.

Family Business Trusts for

Malaysian Businesses Why are more & more Malaysian Businesses setting up Family Business Trusts?

Because they want to have succession planning in the management and ownership of the company. Lots of clients come to us for this because their company is a cash-cow. They want this company of theirs to go on and exist to continue to make profit, so that their descendants and each of the family members enjoy the benefits. As they are already successful and

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the matter now is only passing on the business and making sure it continues to profit after they pass on for generations. For this to happen there needs to be family harmony so that there is no infighting as this can make the family business difficult to flourish. Profitability of business very much depends on the relationship of the shareholders. If the relationship of the shareholders are very good, and if there is a translated or transferred board of directors, then the business

will be good. If there is infighting, the board of directors may not be able to function well, therefore affecting the business as a whole.

Objectives of having Family Business Succession Plans

When we create a Family Business Succession Plan, our aim is to have a succession plan that protects and preserves the family business that would be controlled by the family or the family is able to engage the professionals to manage the family business for the benefit of the family.

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Estate Administration eldest son being the MD of the company. He wanted to prevent the fragmentation and got this idea of a succession plan and wanted his siblings to join. Because he only owns 10% of the shares, he wanted the siblings to support and park their shares in a trust. If the siblings refuse, it will be difficult which is why when the parents (or founder) are still around, it is much easier to have a succession plan drafted out. If the founder fails or refuses to plan for the succession of the family business, the business will break up by the next two or three generations. The next problem is finding someone competent enough to run the business as with some families with old fashioned thinking, they are reluctant to pass their businesses to daughters if they have no sons or if the sons are incapable.

Another objective is to prevent fragmentation of the family business. If you don't control it, as you pass your shares to your children, your children pass their shares to their children, the business will break up because there are too many shareholders. Each one may fight each other, and then the business may lose control, especially if it's a listed company because you can trade your shares in the market. You may find that suddenly outsiders take over by buying the majority of the shares. To prevent fragmentation, having a Trust or foundation provides that ring-fence protection. At the same time, the Trust or foundation can be designed to improve family unity and harmony rather than increase infighting. The founder may also want money obtained from the Trust by way of dividends to let the family members enjoy this particular income. As the family size increases, not every family member will want to work in that company, so the founder may want whatever money received

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by the Trust to be allocated to those family members to enjoy it.

Problems of Not having a Family Business Succession Plans

There are around 90% of family businesses around the world that will be continued by their next generations. However, as little as 3% successfully go beyond the third generation. In Chinese we say wealth doesn't pass three generations. The high percentage of this failure very much rests on the founder if they refuse to acknowledge the importance of having a succession plan in place. The moment the founder passes on his business to his children, and if that second generations wants to set up such a scheme, it will be very difficult to do. I've done a few presentations where the parents founded the business and made it successful, are listed on the board and pass it on the children, with the

Wealth the family receives from the business will be lost over time because of the mismanagement of inheritance by the children. If the child suddenly receives a big inheritance, and they just don't know how to manage it at that time, wealth can be lost quite easily. Sometimes the child may be quite good but influence by the spouse or third party could make them change their attitude. If the father runs the business very well and made lots of money, but hasnâ&#x20AC;&#x2122;t educated his children on how to spend the money, there is a danger. If this child gets the whole inheritance and has never had to work for money in his whole life, the child will simply spend the inheritance away. It would be difficult to pass the family business to this child and the business will not successfully continue beyond this child. In business if there is no planning, what you will get is fragmentation of the shares. Because of this fragmentation of your inheritance, there is a chance that outsiders become eligible for the ownership of the shares.

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Estate Administration Besides this problem, there may also be an issue where, let's say this founder has a daughter and his business is making money. The daughter may want to study overseas and let’s say she marries a foreigner. You cannot be sure if the foreigner is genuine or a gold digger. The parents could worry and think “if I pass the inheritance to my daughter, will this guy leech off her?” This is because he can claim a portion of her assets by way of divorce. You will then have to check the divorce laws in his country as there are certain jurisdictions that maintain that the longer you marry, the more claims you can get. He may marry her for five or ten years then ask for a divorce and claim half of her wealth, including the family business. If it is not a foreigner the spouse’s estate could also spread to third parties and fragmentation of the inheritance will further occur. Through the lack of planning, children could lose their family’s fortune because of the lack of control over the shares. If a wealthy business owner has several children, each child could fight among themselves over this power of control. Without proper planning, family wealth doesn’t last for more than three generations. I’m not guaranteeing that it is a 100% successful but with family wealth planning there is a better chance your family business and wealth will last longer.

The Process of Preparing a Family Business Succession Trust

When we prepare a family business succession trust for the founder, we need sit with the client and think of the objectives or purpose. You may want to clarify your business goals, provide financial security for the family, avoid fragmentation, ensure smooth transaction when the key person retires or dies and achieve long term viability of the business at the same time. Having a Trust or foundation can achieve these objectives. A Family Business

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Succession Trust will cover the management and succession plan which is very important here. The distribution part consists of the money received but the dividend is more important because if it is not taken care of by a succession plan, distribution cannot happen. If the company doesn't get money, the shareholders can't benefit from it. To prevent the disharmony of management, we try to advise the client to incorporate family values that he can teach his children and grandchildren.

Are there any families that have been successful beyond three generations?

One of them is Lee Kum Kee, the oyster sauce business and it has gone beyond six generations. Another one is a soya sauce business from Japan which also passed through six generations. There are also some cases where the family business falls into third party hands in the second generation, like Porche. It was a family business but the second generation brought in the in-laws, and infighting occurred culminating in the business falling to a third party. There are also some famous family businesses that are owned by outsiders.

as long the management is done by the family, usually 30% will be sufficient. If it touches the takeover amount, 33%, then we have to make arrangements to get exemptions because the shares are immediately transferable to the trustee. This is when the take-over code comes in, which is like having to make a general offer to buy everybody’s shares. We may have to tell the client, that they need to engage an investment banker to deal with the Securities Commission for the exemption for the takeover. Investment bankers won't come cheap in this case. We’ve briefly covered family business trust, the importance of it, process and highlighted some important areas. Hope you enjoy reading this article. Behind every successful business, there are successful people. Clients that are suitable to for this plan are those that own family businesses. A family business is a business whereby family members control the management of the company. It doesn’t matter which member of the family does this so long as the family as a whole unit manages that particular company or business.

The types of businesses that suitable for Family Business Succession are Sdn Bhd companies and Public Listed companies and the size of the business shall not be less than RM1 million profits before tax.

Important Areas while preparing a Family Business Succession Trust There will be four important areas to look at. Firstly, are the parties involved. In this Trust, parties would be client (founder or settlor), trustee, beneficiaries and protective committees. The settlor needs to own at least 51% of the company shares if it's a Sdn Bhd company. If there is more than 1 settlor, all of them combined must add up to at least 51%. If it is a public listed company,

1.Ownership/ Governance

5.

8.Other Stakeholders

4. 7.

1.Business

6.

1.Family

The above picture shows the family business three circle model For Malaysia businesses to succeed in transferring wealth to multiple generations, firstly, we have to agree that their wealth not only consists of family business and financial assets. Their wealth also consists of family identity, family unity, family harmony, family traditions & family vision.

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Investment Education Christine Benz

is director of personal finance and senior columnist for Morningstar.com.She is author of 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances, originally published in 2010 by John Wiley & Sons and published in paperback in 2011. In addition, Benz is a co-author of Morningstar® Guide to Mutual Funds: 5-Star Strategies for Success, a national bestseller published in 2003, and also authored the book’s second edition, which was published in 2005. Before assuming her current role in 2010, Benz served as editor of Morningstar® Practical Finance™, a monthly personal finance newsletter. She also served as Morningstar's director of mutual fund analysis. She previously edited Morningstar® Mutual FundsTM and Morningstar® FundInvestorTM, a monthly newsletter for individual investors. She has worked as an analyst and editor at Morningstar since 1993. Benz holds a bachelor’s degree in political science and Russian/East European studies from the University of Illinois at Urbana-Champaign. She is on the Board of Directors of Girl Scouts of Greater Chicago and Northwest Indiana and currently serves as the council’s treasurer.

Dividend Payers Hold Appeal, But Be Mindful of Risks Don't swap your whole fixed-income position for dividend-paying stocks.

Question: Are high-dividendpaying stocks a decent proxy for bonds if you think interest rates are going up?

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Answer: Possibly, but only in small doses, particularly if the stability of your principal is as big a goal for your fixed-income portfolio as is current income.

It's easy to see the appeal of dividend-paying stocks versus bonds. For one thing, bond yields are downright depressed because of a stampede into fixed-income assets during the past few years; investors are also rightfully concerned about what a sustained period of raising interest rates could mean for bond prices. (A new supply of higher-yielding bonds will tend to depress the prices of older, lower-yielding bonds.)

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Investment Education

Due to that unattractive convergence, I've been hearing from a lot of investors who have become interested in master limited partnerships because of their often-high yields, and I have written about the viability of preferred stock for retiree portfolios. In addition to those more exotic income-producing vehicles, some investors have also gravitated toward plain-vanilla dividend-paying stocks. It's easy to see the appeal. Some high-quality dividend-paying stocks in the health-care, telecom, and utilities sectors have yields of 2%, 3%, 4%, or even more, making them competitive with bonds on a yield basis alone. Moreover, these stocks generally have greater capitalappreciation potential than do bonds and bond funds. For bond-fund investors, by contrast, yield usually forms the lion's share of any total return you pocket.

of financial wherewithal, and having a dividend yield also provides at least a small cushion against losses. Yet, dividend-paying stocks' volatility profile is substantially higher than in the case for bonds. Given that many fixed-income investors are looking for stability of their principal as much as they are for current income,that means a big slug of dividend payers could be a mismatch in retiree portfolios. True, bonds have had a tremendous run during the past few decades, so it's unlikely that their volatility profile going forward will be as placid, particularly if interest rates go up. At the same time, however, equities wouldn't necessarily be impervious in the face of rising interest rates, though the cause-effect relationship isn't as direct. There are a couple of reasons why. First, rising interest rates mean increased borrowing

costs for consumers and businesses, which in turn affects the ability of companies to grow and expand. Second, as interest rates on newly issued fixed-income securities trend up, bonds and cash become a more attractive alternative to stocks, and decreased demand could depress stock prices. Moreover, dividend-paying stocks aren't looking quite as cheap as they were a couple of years ago. Despite all those caveats, I still think dividend-paying stocks can be a sensible addition to retiree portfolios, for the reasons I outlined above. But if stability is as big a concern for you as is current income, you're better off thinking of dividend-payers as a way to tweak your equity portfolio rather than to supplant your fixed-income holdings.

Due to all of these positive attributes, dividend-paying stocks could work well as a component of a portfolio that would otherwise be devoted to fixed-income securities. At the same time, however, I'd caution against going overboard with such a shift. The key reason is volatility. It's true that dividend payers tend to be less volatile than non-dividendpaying stocks. The former's ability to pay a dividend is an important show

Money Compass

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Real Estate CF Lieu

graduated from Multimedia University with first class honors’ degree in computer engineering. He is an avid REIT investor and the founder of HowToFinanceMoney.com, an up-and-coming personal finance blog in Malaysia financial blogosphere. He also co-founded REITMethod.com, an online educational course on Malaysia REIT, in May 2012 with KCLau. He is currently with Fin Freedom Sdn Bhd, a fully licensed independent financial advisory firm based in Penang.

REIT – What the layman When I started investing in REITs about a year ago, I started to Google articles on what are the criterions to look for in a fundamentally sound REIT. I read a couple of books as well. The very basic, of course, is the return on investment. The thing to look for is an increasing distribution per unit (DPU) year after year. At minimum, it should not be a downtrend. This is very true for retail REITs because a downtrend only indicates complacency of the REIT manager, to a certain extent. However, the same rule cannot be applied for Al-Hadharah REIT, a plantation (oil palm) REIT which is largely affected by the fluctuation of CPO prices. An investor in a plantation REIT should know the nature of the palm oil business and be prepared for the risk associated with it. As you can see, it is easy to generalise things without understanding the whole picture.

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The same can be said for asset acquisitions. We know that any REIT which is actively growing its portfolio would get a lot of attention in the investor community. This is a general sign of a viable investment as the manager is doing the right thing. This is not wrong, but it is also not fair to apply the same rule to all REIT classes. Now let’s go back to REIT portfolio growth – I think in Malaysia, no other REITs can beat the growth story of Axis REIT. It had been aggressively acquiring quality warehouses and industrial properties since the past few years. From 5 to 31 properties (as of Dec 2012) since 2005 - a staggering growth indeed. Then you look at AmFIRST REIT; its asset portfolio grew from 4 to 9 buildings in a period of 7 years since its inception. Just looking at the number alone, a layman would conclude Axis REIT is better managed than AmFIRST, but nothing

can be further than the truth. When I first talked to the CEO of AmFIRST REIT, Mr Lim Yoon Peng, he explained it to me that office assets are lumpy, and they just couldn’t just go on a shopping spree by raising private placements just like Axis REIT did. The cost of acquiring office buildings is substantial, and it just couldn’t be done by doing private placements (limited to 20% of a fund existing capital). And we are not talking about any office assets – the ones that are suitable to be injected into a REIT normally refer to prime office buildings, preferably in CBD area. Then again, you wouldn’t want a REIT manager to just acquire assets just for the sake of growth if the asset is not yield accretive. Or, you cannot expect Capita Malls Malaysia Trust to acquire your local shopping malls beside your house.

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Real Estate

investors don’t see Speaking about yield, I often get asked by members of my REITMethod.com program if it still makes sense to invest in office REIT when the yield is still attractive (6-7 percent). Their main concern is the nature of office properties as office buildings are facing an oversupply problem. We don’t need to be a commercial property expert to know this – just read some analyst reports or a section in a REIT annual report which contains independent research reports from renowned property managers. This is what I think – if the REIT manager of an office REIT is keeping a check on its maintenance cost (aka Property Expenses item in the Income Statement) from rising on par or more than its Net Property Income, then all is good. The importance of tenant retention and negotiation of tenancy renewals, hopefully with positive rental reversion, is of utmost importance. The rest is just noise. This information doesn’t get published in newspapers

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As with any landlord, the longer your tenancy lease agreement is, the more secure your rental income. In this aspect, every REIT class has its norm in its lease duration. For example, healthcare REIT lease duration is normally 15 years. You could not say the WALE (Weighted Average Lease of Expiry) of 2 to 3 years for a retail REIT is bad. Why? Because 3 years is the norm for retail property. This will enable the retail REIT manager to proactively refresh and optimize the retail mix, bringing in new concepts to ensure its shopping malls continue to stay relevant to shoppers as retail trends evolve.

contend with a 6% distribution yield holding onto a localised retail REIT stock rather than a hospitality REIT stock with overseas assets giving 7% yield. For the layman, higher return is better, right? Wrong. Firstly, the hospitality sector is cyclical and when there is an outbreak like SARS, this sector would be the first to feel the impact. Second, overseas assets are subject to foreign exchange risk. With these 2 things in mind, a prudent investor would forego the additional 1% extra return because the uncertainty associated with is just not worth it. Of course, a good REIT Manager will set the game rule so that the rental received from overseas asset are denominated in Ringgit, besides fixing the rental income received from the hotel operators regardless of actual guest occupancy rate.

The nature of the REIT business is another topic which commands much interest. If you ask me, I’d rather

Like they say, safety does not come with what we invest, but with how much we know about what we invest.

nor can you Google it, so doing your own homework and using common sense to understand the business is crucial.

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Financial Planning

Linnet Lee, CFP, IFP, of Linvest Services Sdn Bhd (www.linvestservices.com) is passionate about financial planning and financial education. She develops and runs practical workshops for financial institutions and corporations, leveraging on her 30 years of working experience.

One Insurance Too Many? In the insurance industry, it is a big no-no for an insurance agent to tell prospects or clients to sell off their existing policies and buy a new one from them to generate sales for the agent when it is unnecessary to do so. There is a term for it, called 'twisting', defined as 'the act of inducing or attempt to induce a policy owner to drop an existing life insurance policy and to take another policy that is substantially the same kind by using misrepresentations or incomplete comparisons of the advantages and disadvantages of the two policies' (Source: International Risk Management Institute). So it is of no surprise that such practise is frowned upon by insurance industries worldwide.

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Here are some ways it can be done according to http://www.insuranceinfo.com.my: â&#x20AC;˘ Surrendering or lapsing your existing policy and using the premium moneys to buy a new policy â&#x20AC;˘ Converting an existing policy to reduced paid-up insurance with a lower sum assured â&#x20AC;˘ Converting an existing policy to an extended term which reduces your premium payments for the existing policy The drawbacks from unnecessary changing of policies are: a) Costly conversion due to the increase of premiums as you get older b) The new policy will have a new

waiting period, thus beginning another two-year period of contestability c) Loss of specific features in your policy due to health and age d) Surrender value from cancelling your existing policy will be much lower than the total premiums you have paid. If you already have a cash value life policy, be wary of unprofessional agents who would persuade you to surrender or convert your policy. This is because insurance agents receive the highest commissions from the premiums paid by you in the first year. Professional agents will always place your interest first before theirs.

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Financial Planning

However, in my experience working with my clients, it is quite common for many people to have numerous insurance policies and sometimes for the wrong reasons. Also, after some time, clients have forgotten what their policies cover and they don't know what to do. Here are some common reasons why someone may have more than one policy:

Obligatory policies

1 2

Taken under obligation, as a relative, spouse or a close friend is an insurance agent who has not met their annual targets and you are duty-bound to help them out.

Orphaned policies

The agent who sold you the policy isnâ&#x20AC;&#x2122;t interested in servicing you anymore because your policy is more than six years old and they don't get anymore commission out of it, he has quit this business, moved to another insurance company or have been terminated by the insurance company.

Mis-sold policy

3

Some official from your bank or an insurance company approaches you, presents a very attractive picture of a plan which you bought into, but later realize that the returns and the features are not quite what was told to you and there are other pertinent facts in the fine prints that you are unaware of or may not be agreeable to.

Lapsed policy

4

This is a policy which either your parents took for you when you were studying, or you took it a long time ago, have lost track of it and have forgotten to pay the premiums.

So, what can you do with multitude of policies for which you can't fathom out? Well for one thing, you can sit down and go through each of them

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with your respective agents, or find an agent who can help you sort them out. You may need to pay a fee. Alternatively, you can do-it-yourself, for which if you do, then you will find the following tips useful. Then, you need to decide: i. why do you need an insurance in the first place and ii. how much of insurance coverage do you need iii. types of insurance suitable for you. Write them down so that you can refer to all these when you go through your policies to match them to your needs. Next list down all your policies and break them down to each area of coverage it gives you and how much. If you are not sure, you can always call up the insurance company or the agent serving you.

When you have done that, match what you have with what you need and that would give you a clearer picture whether what you have is sufficient, not enough or too much. Obviously if it is enough, you do not need to do anything. If it is not enough, do your homework and know the pros and cons before buying another insurance policy for yourself or your family member. Consider family packages if there is one, especially for medical plans and you may enjoy a savings in premiums. Remember to check out the plan and compare with having individual medical policies. Should you be over insured you can consider converting it to something you need. This, you will need to discuss with your insurance agent. Should yours be an orphaned policy your options are; to deal directly with the insurance company, get the insurance company to assign another agent to you or work with a financial planner and authorise him/her to act on your behalf when dealing with the insurance company. Do remember that if you feel that it is beneficial to convert your policy, always write to the insurance company stating the purpose of the conversion and that the conversion is not detrimental to you. This will also clear up any doubts of 'twisting of policies'. Leave the twisting to the dance floor with 'Let's Do the Twist' by Chubby Checker (1960).

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Special Report

Mind Your Money

Money Compass Save & Invest Road Shows and Seminars 2013 In confronting the stiff challenges from the rising inflation rate to fitting with the modern daily lifestyle, our life expectancy has become more complex. It has been reported in global studies that all mankind have a longer life expectancy thanks to the advancement of technology and improved lifestyles. Therefore, the biggest question to ask nowadays would be: “How do we keep the pace of our money purchasing power with inflation to match the life expectancy of each stage of our lifestyle and finally have an adequate amount to support our retirement age? With this in mind, Money Compass launched a dedicated platform created to cater to the financial needs of all Malaysians with the Money Compass 2013 Save & Invest Road Shows and Seminars. This year the theme was “Mind Your Money” and the series of road shows and seminars will cover eight major cities in Malaysia including Kuala Lumpur, Ipoh, Penang, Johor Bahru, Malacca, Kuching, Sibu and Kota Kinabalu. The Save & Invest platform was

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launched on 7thMay at press conference whereby Ng Chez How and Poh Teng Siew also presented the Investment Outlook after GE13.

prizes such as digital tablets, health screening vouchers and anti-virus software.

The first of the seminars and road shows kicked off on 12th May 2013 at Berjaya Times Square in KL and more seminars will take place over the May to July period. So far three road shows have taken place in KL, Ipoh and Penang with over 800 public participants in total and 20 booth exhibitors.

Each venue also has an exhibition open from 9am-6pm where the public can obtain free advice from the participating exhibitor booths such as Private Retirement Administrator(PPA), Hwang Investment, AmInvestment, ING Fund, Great Eastern, AmLife, Pathlab Medisavers Medical Insurance, Bursa Malaysia, Affin Fund and Beyond Insights.

The road shows consist of seminar presentations which cover relevant saving and investment planning topics such as money concepts alignment, cash flow and debt management, retirement planning via the Private Retirement Scheme, life & medical insurance, unit trust portfolio, stock investment plus many more financial management topics. The speakers consist of top management of financial institutions as well as professionally certified financial advisers and will be conducted in two mediums; Mandarin and English. The seminar participants also stand a chance to win fabulous lucky draw

The event’s main Platinum Sponsor is the Private Retirement Administrator (PPA) and the road shows are also supported by several major associations; they are Bursa Malaysia, Credit Counseling and Management Agency (AKPK), Malaysia Financial Planning Council (MFPC), Financial Planning Association of Malaysia (FPAM), National Association of Malaysia Life Insurance Fieldforce Advisors (NAMLIFA), Penang Chinese Town Hall (PCTH), Johor Bahru Chinese Chamber of Commerce and Industry (JBCCCI), and Malaysia Entrepreneurs Development Association (PUMM).

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Special Report

Save & Invest Kuala Lumpur

The first of the Save & Invest road shows took place in Kuala Lumpur on 12th May 2013 with the Guest of Honour and Key Note Speaker Datuk Steve Ong, CEO of PPA who also officiated the opening of the workshops. Sessions covered topics such as money saving, risk management through transferring risk, as all as retirement planning by diversifying your investment via Unit Trust portfolios. There was also panel discussion on investment opportunities over various platforms fiven by speakers from Bursa Malaysia, and the Securities firm.

Money Compass

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Special Report

Save & Invest Ipoh

The road show for Ipoh took place over the weekend of 18th May and featured FPAM as Money Compassâ&#x20AC;&#x2122; strategic partner. There was a a talk by CEO of The Pacific Insurance Berhad Mr. Sonny Tan on what to look for when purchasing health insurance as well as a panel discussion on planning your retirement with the Private Retirement Scheme (PRS).

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Money Compass


Special Report

Save & Invest Penang

The Save & Invest road show took to Penang on 25th May and featured Datuk Lam Wu Chang as the guest of honour. The sessions also covered health insurance and retirement planning topics. The talk on the Investment Outlook after GE13 was presented by Phua Lee Lerk, chief strategist of Phillip Futures.

Money Compass

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Silver Malaysia y Jonathan Quek is the author of the best-selling book ‘Why Gold? Why Silver? Why Now?’ He had the privilege of interacting with gold and silver experts such as Jim Rogers (Author of Hot Commodities), James Turk (Founder of GoldMoney.com), Shaykh Umar Vadillo (Founder of World Islamic Mint), Richard Duncan (Author of The New Depression) and Peter Hug (Director of Kitco Metals). He is also the founder of SilverMalaysia.com, an online gold and silver education company that provides retails of physical silver at competitive price. To learn more about silver, go to to download a free ‘Silver Investors Starter Kit’ e-book or register for our complimentary educational seminars.

3 Lessons to Learn from the Crisis in Cyprus It looks like the news coming out of Cyprus is only getting from bad to worse. Initially, this was the plan put to a vote by the Cyprus Government: • Take 6.7% of all savings accounts up to the official insurance limit of €100,000 • A 9.9% levy (or steal) on all deposits above the official insurance limit of €100,000 While many were glad that this suggestion was rejected, what they didn’t know was that the original proposal was even more drastic! Cyprus state broadcaster CyBC reported on Saturday that German Finance Minister actually entered the Eurogroup meeting on Friday proposing a 40 percent haircut on Cypriot bank accounts. Sarris stated on Saturday that this had also been the proposal of the International Monetary Fund. If you still don’t understand what it means by reading the paragraph above, it simply means that Germany & IMF wanted to take 40% of all depositors’ account. Imagine nearly half of your savings is stolen in one day in order to bail out a bank. Unimaginable? Well, that’s what Germany and IMF proposed! While you think that this is as bad as it gets, guess what? Cyprus’s finance minister said that large deposit holders at Cyprus Popular Bank PCL (CPB.CP), the island’s second biggest lender, could face losses of as much as 80% on

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their deposits as the government moves to wind down its operations. Speaking in a television interview with state broadcaster RIC, Michalis Sarris indicated that it could also take years before those depositors see any of their money returned. “Realistically, very little will be returned,” Mr. Sarris said. (Article Source: http://www.foxbusiness.com/news/2013/03/26/c yprus-finance- minister-uninsured-laikidepositors-could-face-80-haircut/#ixzz2OqctR6pb)

So, first it was 10% on savings amounting to about €100,000. Unfortunately, we find out, it was actually 40% that was proposed. But now, they have finally revealed that realistically it could be as much as 80%. In this article, I aim to share with you 3 major lessons that everyone must learn from the crisis in Cyprus.

Lesson 1 High risk, high returns? Think again!

For years, financial planners and bankers have been preaching low risk, low returns & high risk, high returns. Years ago, I was having a conversation with a financial planner Return Investment Limked Policies, Unit Trust

Direct Investment

Inflation Fixed Deposits

Endowment Policies Risk

1

who shared that I’m a high-risk investor after looking at my investment portfolio. I asked him why and this is what he showed. In his exact words, “When you invest in gold & silver, you are going into direct investments. That’s high risk! In order for us to lower your risk, you must engage professionals to help you structure a balanced portfolio. The fact about investments has always been high risk high return, low risk low return.” Today, I guess the incident in Cyprus gives a tight slap to the faces of all financial planners who have been preaching this myth! Like it or not, despite having low returns from your fixed deposits, the money in the bank is not necessarily safe! What people have to understand is that when you put money in the bank, it is not on deposit. Rather you have become an unsecured creditor of the bank. The key to having low risk investments is not by putting your money in the bank. The only thing you can do is to increase your financial intelligence. Just think about it… Imagine giving my car key to someone who has no driving license and does not know how to drive. Is that high risk to both my car and the driver? Absolutely! However, is it high risk for me to drive my own car? Of course not! Because I’ve been driving it all day and night! I know very well what to do and what not to do. Money Compass


Silver Malaysia In today’s world, ignorance is no longer bliss. Ignorance is pain! When you have low financial education, it’s going to be high risk no matter where you put your money. The fact is this… It’s not gold, silver, real estate or stocks and shares that make you rich. It’s what you know about gold, silver, real estate or stock and shares that will make you rich!

2

Lesson 2 Diversify, diversify, diversify. Is that true?

If there is anything to be learned from Cyprus and the mess that is happening in Europe and US, it’s that there are no paper assets that can be guaranteed. This includes all those long-term saving plans, mutual funds, bonds, investment-linked policies and fixed deposits. For years, financial planners and bankers have been teaching their clients never to put all their eggs in one basket. They teach their customers to diversify into different products so that if one stock or unit trust takes a hit, there are others that will go up. The more spread out you are, the more protected you are from losing money. Unfortunately, that’s not true at all! Like it or not, whether you have diversified into long-term saving plans, mutual funds, bonds, investment-linked policies, or even fixed deposits, all your investments are still in paper assets. If what is happening in Cyprus happens to Malaysia, all these paper assets are still linked in the same fragile economy. When the monetary system fails, whether you are investing in CIMB, Public Bank or Maybank, it won’t make any difference because it’s the same investment model. If there is a crash in the property market, it doesn’t really matter if you have invested in condos, bungalows or shop-houses. Your property portfolio might look diverse but they are all still real estate asset class. A real financial planner is one who

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understands the concept of true diversification. I’m not a financial planner but when I invest, I invest across different asset classes such as real estate, commodities like gold, silver & oil, business assets like my companies and yes, paper assets like stocks and shares. True diversification requires you to understand the economic lifecycle. Even if the banks fail in my country, I’ve not much concern because I don’t hold too much paper money. The most depressing fact of all is that the paper money you have in your pocket is a fiat currency, which means currency not backed by physical assets but merely based on the promise of the government or central banks. I diversify into gold and silver because these precious metals have been the true measures of wealth for thousands of years. If you studied history, you will see time and time again, the fiat currency collapsing and this system is one that is designed to fail.

3

Lesson 3 Invest in Gold. Are you sure?

You have probably heard of the possible economic collapse and you have purchased some gold and silver. However, you hate the fact of holding physical and you opt for the passbook accounts, unit trust or ETFs instead. My next question for you is this… If the people in Cyprus have no access to their bank deposits, do you have direct ownership to the gold and silver in your passbook accounts?

When you buy shares in a gold or silver ETF, you are not buying gold and silver. You are merely buying shares in a company that buys gold, whose price moves with the price of gold.

Who owns the gold? It’s the fund, not you! It is held in a Custodian Bank possibly in unallocated account. If what happened in Cyprus becomes a crisis that hits you, the government can still confiscate your gold. They just have to take it from the

Custodian Bank and inform the fund of the event. The fund will then inform you. If the fund holds the gold in allocated accounts, then the government will take it from the fund directly and the fund will just pay their shareholders the proceeds in liquidation in specie. The truth is you only have a direct relationship to the gold and silver price, not the gold and silver bullions! How about gold and silver passbook accounts? Like it or not, it is not even protected by PIDM and it’s as good as paper!

Are You Ready for the Upcoming Financial Tsunami?

Before a large tsunami struck Sri Lanka in Year 2005, a number of animals began to act strangely and seek cover. Elephants were screaming and ran for higher ground. Dogs refused to go outdoors. Flamingos abandoned their low-lying breeding areas. Zoo animals rushed into their shelters and could not be enticed to come back out. God is always fair. He will always warn us of a major disaster before it officially occurs. Over the past few years, there have been warnings again and again showing that the financial system that we are living on right now has done so much damage to itself that it will never be able to recover. As bankrupt nations and banks continue to spiral downward, there will be more and more desperate attempts happening. You have seen these warnings and the choice is now yours. Will you sit back, do nothing, and allow your wealth to be wiped out by the coming financial tsunami or it’s time to start increasing your financial intelligence to understand the fraudulent monetary systems and to take the opportunity of the greatest wealth transfer in history? The choice is yours.

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Silver

Silverr Malaysia

Commodity or Money?

It doesn’t happen very often but at times when I enthusiastically shout in my seminar “Silver is the new gold!” some people will be shaking their heads in disbelief and most are in a state of chronic confusion.

Demand for Silver

So what is silver really? Commodity or Money?

In the recent years, along with the growing wealth in Asian regions like China, India, Vietnam and Indonesia, the rapid growth has been adding pressures to the dwindling supply of silver. It is interesting to note that the more technology drives the culture, the more silver is used per person.

Silver as Commodity

Think about it…

There has been a tug of war recently with debates if Samsung or Apple is the new king of smart phones. In such a depressing economy, it is a wonder how it is possible that sales for both companies are still doing so well. But you may wonder, what has that got anything to do with silver? My answer for you is EVERYTHING! Unlike gold, hundreds of industrial uses and applications depend on silver. Why? This is simply because silver remains the best electrical conductor known to man. It has excellent thermal conductor, highest light reflectivity and sensitivity, highly chemically reactive and highly resistant to corrosion. Gold on the other hand is mostly used for investments and jewellery. Like it or not, gold is merely a hoarded commodity. Less than 10 percent of gold production is used in industrial applications.

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During the years when we were all studying, how many of us were using ‘Buku 555’ to jot down our notes in class? However, in recent years, with the emergence of Apple’s iPad & Samsung’s Galaxy Tab, how many ‘Buku 555’ or equivalents were discarded? In the olden days, a whole kampung had the luxury of sharing one telephone (which is usually at the comfort of Tok Penghulu’s home). However, in our recent years, even secondary school kids have at least one or sometimes two smart phones (especially those who can’t decide between Apple or Samsung). As silver is used in many of such devices, I’m glad that there are no acceptable substitutes so far. This is mainly because silver usually accounts for only a small part of the

total cost involved and this is why manufacturers won’t cease to use silver in these applications. Conclusion: Whether Apple or Samsung wins, silver traders do not really care. Because silver will always emerge as the ultimate winner! I know that you must be smiling from ear to ear. But guess what? Silver is more than just a commodity.

"If you put a gun to my head and said you had to buy one, I would buy silver rather than gold." - Jim Rogers, Multimillionaire and one of the world's greatest investors

Silver as Money

My foray into the history of gold and silver as money has definitely surprised me. I’m surprised because of the near impossibility of discussing silver as money in every culture and religion!

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Silver Malaysia Silver in Christianity

Judas Iscarlot was one of the Twelve Apostles of Jesus Christ. He is probably among the more famous ones for his kiss and betrayal of Jesus at the hands of the chief Sanhedrin priests. The price of the betrayal? Thirty silver coins! Guess what? Why didn’t Judas ask for gold? The first monetary transaction recorded in the Bible is also in Genesis. Abraham weighed 400 Shekels of Silver to pay for his wife’s burial. This is the same Abraham in all the three major religions of the world; Judaism, Christianity & Islam.

the Latin word for silver, ‘Argentum’. In fact, Argentina actually means ‘Land of Silver’.

Biblical records have shown that gold and silver are the first and oldest form of money, the only money that has not failed, and a source of notable value for over the past 5,000 years.

Spanish-speaking people use the word ‘Plata’ to mean silver, money or both.

Silver in Islam

What about Malaysia? Any references?

Abu Bakr Ibn Abi Maryam reported that he heard the Messenger of Allah; may Allah bless him and grant him peace, said:

“A time is certainly coming over mankind in which there will be nothing (left) which will be of use, save a dinar and a dirham.” – The Musnad of Imam Ahmad ibn Hanbal Dinar simply means gold and dirham means silver.

Silver is Money!

To further compound my findings, silver’s monetary role has been so universally recognized throughout history that the very word for silver is synonymous with money in many languages. Europeans refer to both silver and money as ‘Argent’. Heard of this country Argentina? It is derived from

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In Italian, Spanish & French, the words for ‘money’ and ‘silver’ can be used interchangeably.

The Hebrew word for money is ‘Kesepph’, which also means silver.

Go around asking your Chinese friends how do you call the word ‘Bank’ in Mandarin. They will reply you ‘Ying Hang’. If I were to translate word by word, it also means a place to store silver. Go around asking your Indian friends how do you say ‘Ten Ringgit’ in their Tamil language? They will answer you ‘Pakke Veli’. If I were to translate word by word, it simply means 10 pieces of silver. In fact, silver lasted longer as a medium of exchange in comparison to gold! Silver survived until 1965 while gold ceased circulating among people in the US since 1933. Gold was then reserved for balance-oftrade payments until the gold window was closed in 1971. For more information about this history of gold and silver, do grab my book Why Gold? Why Silver? Why Now? at

local bookstores.

Silver as an Investment

Warren Buffett is arguably known as the world’s legendary investor with over 50 books bearing his name that most no doubt ended up as bestsellers. Here’s what Buffett said of gold, “Gold gets dug out of the ground in Africa, or somewhere. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their heads.” I have to agree that his statement does make a little sense and I’m also sure that he had his point right when he purchased 129.7 million ounces of silver bullion in 1997. I recalled when the media shouted “Buy Gold! Buy Gold!”, we were the bold ones to set up SilverMalaysia.com to said “Silver is the new gold!” Back then, it was year 2010 and only selective investors were aware of the potential of silver as an investment. It is no secret that the public is and has always been fond of chasing yesterday’s news and hence their financial status is of no wonder either. My call for you in this article is this, as the dollar continues to collapse, big investors will soon be aware that silver is indeed rarer than gold. In today’s Information Age, information is the last thing that comes slow and people will soon start diving into silver, which is when silver prices will explode!

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Appointments

Reappointment and New Appointment of Deputy Governors of Bank Negara Malaysia Bank Negara Malaysia wishes to announce the reappointment of Datoâ&#x20AC;&#x2122; Muhammad Ibrahim as Deputy Governor for another three year tenure from 16 June 2013 to 15 June 2016. Bank Negara Malaysia also wishes to announce the appointment of Dr. Sukudhew ( Sukhdave) Singh as Deputy Governor for a 3-year term effective 16 April 2013.

Announcement on the Appointment of Chairman The Minority Shareholder Watchdog Group (MSWG) wishes to announce that Tan Sri Dr Sulaiman bin Mahbob has been appointed as Chairman of MSWG with immediate effect.

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Market Info Allianz Malaysia organises a series of activities in

conjunction with Global Money Week

Allianz Malaysia is organising a series of events for children in conjunction with Global Money Week between 15 and 21 March 2013. Global Money Week is celebrated worldwide with more than 50 countries across continents participating and connecting with each other in order to raise awareness on financial education among children and youth. Global Money Week 2013 is being coordinated and led by a global organisation based in Amsterdam named Child and Youth Finance International which strives to increase financial education and financial inclusion of all children and youth. This global movement has already gathered the support of some of the most prominent leaders and organisations across the world, including the UN Secretary General.

Henry Butcher Art Auction April 2013:

Opening The Southeast Asian Gate Henry Butcher Art Auctioneers (HBArt) returns with its highly anticipated fifth sale on Sunday, 21st of April 2013 at the Sime Darby Convention Centre, Kuala Lumpur. HBArt's October 2012 sale concluded with a whopping RM3.74 million, a 94.5% success rate by lot with 60% of the artworks sold above estimates. Besides offering a unique collection of works by leading Malaysian artists, for the very first time, the sale will be featuring a Southeast Asian section where well-known artists from the surrounding region will be introduced to the local audience. This new venture to penetrate the regional market is aimed at promoting and presenting Southeast Asian art to Malaysian collectors and Malaysian art to counterparts abroad - a remarkable move considering growth in the Asian art market has steadily increased over recent years.

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Market Info Great Eastern Life Takes A Revolutionary Step

In Health Insurance

With 105 years of heritage, Great Eastern Life Assurance (Malaysia) Berhad (Great Eastern Life) is taking a revolutionary step in health insurance by rewarding customers for staying healthy through the innovative Smart Premier Health. Embedded into the comprehensive Smart Premier Health is an innovative mechanism that recognises customers’ effort to stay healthy and rewards them on 2 levels, firstly by reducing the cost of insurance they pay and secondly, by enhancing the annual coverage they enjoy every 3 years. The reduction in the cost of insurance, which takes place annually, can scale up to as high as 25% while the triennial increase in the annual coverage will be at a quantum of 10%. Great Eastern Life believes this unprecedented two pronged strategies will become a very effective tool against inflation for the customers.

Ten Years of Continuous Commitment Towards Nurturing The Future Of The Nation Producing iconic vehicles of impeccable quality and standards is a proud philosophy that Mercedes-Benz stands by. Celebrating its 10th anniversary since its incorporation in 2003, Mercedes-Benz Malaysia (MBM) embeds this philosophy in its commitment to social responsibility and has been actively participating and organizing activities for children in its continuous commitment towards nurturing the future of the nation. The MobileKids roadshow, currently in its sixth year since its first appearance at the Kuala Lumpur International Motor Show (KLIMS) in 2006, was kick started on March 10 and slated to take place over the next two consecutive weekends at Bangsar Shopping Centre and The Gardens, Midvalley respectively. MobileKids showcases age-appropriate information boards with games such as road sign jigsaw puzzles and a colouring contest, designed to expand children’s knowledge on road safety.

RHB Bank Celebrates 100th Anniversary With Card Customers Through ‘Win A Volkswagen The Beetle’ Contest RHB Bank Berhad today presented the grand prize of two (2)Volkswagen Beetle to the winners of RHB Cards ‘Win a Volkswagen The Beetle’ Contest which was organised as part of the Bank’s 100th Anniversary celebrations. Ahmad Nazri Bin Hj Abdul Azid, 45 and Melissa Seng Cheng Mun, 34, RHB Credit Card Visa Gold and MasterCardTravel Money cardholders respectively, emerged as the grand prize winners after having been shortlisted from the earlier rounds and successfully answering a question posed by RHB Cards. The contest was held from 1 November 2012 to 8 February 2013 i.e. a period that adds up to exactly a hundred days, to symbolically coincide with the bank’s centennial celebration.

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Prudential Launches PRUlink million To Fill the Protection Gap

Prudential Assurance Malaysia Berhad (PAMB) recently launched PRUlink million in its aim to meet the protection needs of consumers. The plan was created in anticipation of the increasing need for higher level of insurance coverage among Malaysians as the country gear towards becoming a high income nation by year 2020. PRUlink million is a protection focused regular premium investment-linked plan which offers a minimum sum assured of RM500,000 with no-lapse guarantee to protect the policyholder from market downturns. In addition, PRUlink million allows the policyholder the flexibility to customize the coverage term and premium payment term to suit their individual needs. The policyholder can choose to pay premiums for 10, 20 or 30 years or pay premiums for the full policy term. The plan also allows the policyholder to build more cash value with lower insurance charges.

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Market Info Prime Minister of Malaysia

at open dialogue with Asia Business Council members

Dato' Sri Najib Tun Abdul Razak, Prime Minister of Malaysia in an open dialogue with Council members of the Asia Business Council, moderated by Jaime Augusto Zobel de Ayala, Vice Chairman of the Asia Business Council and Chairman & CEO of Ayala Corp (right), at Seri Perdana, Putrajaya, in conjunction with the Council's 2013 Spring Forum. The Asia Business Council is an independent organisation of top executives from leading Asian companies and multinational corporations with significant Asian operations, who share an interest in policies needed to ensure the continued economic development and competitiveness of the region. Among the 60 Asia Business Council members, the 4 from Malaysia are Tan Sri Dato' Azman Mokhtar, Managing Director of Khazanah Nasional Bhd,Dato' Sri Nazir Razak, Group Chief Executive, CIMB Group, Tan Sri Khoo Kay Peng, Chairman & CEO, The MUI Group, and Tan Sri Dato' Dr Francis Yeoh Sock Ping, Managing Director, YTL Group of Companies.

Tokio Marine Life New Recruits Recorded Excellent Result Acknowledging that rewards are powerful motivators for encouraging good job performance, Tokio Marine Life is rewarding its top new talents to encourage its new financial advisors to provide quality service and sound financial advice to their customers. Tokio Marine Life recently rewarded 65 outstanding new financial advisors who played significant roles in contributing to the success of Tokio Marine Life with a pampering trip to Bali, Indonesia. “We are very proud of our new financial advisors’ achievements. This elite group of new financial advisors contributed close to 23% of the company’s new business. Their hard work and commitment to success have secured them a place in this tour,” says the proud Head of National Sales, Mr Liew Kim Wah.

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Alliance Bank Is First Malaysian Bank to Win Asian Banker’s “Best SME Bank” in Asia Pacific-

South Korea.

Alliance Bank Malaysia Berhad (Alliance Bank or “Bank”) was named the “Best SME Bank” in Asia Pacific, Gulf region & Africa for 2013 by the prestigious Asian Banker at the Excellence in Retail Financial Services International Awards 2013 held in Seoul,

“We are extremely honoured to be the first Malaysian bank to be acknowledged with this international awardfor our leading SME Banking business model,” said Steve Miller, Head of Group Business Banking. “These achievements would not be possible without the strong support from our customers, business partners and Alliance Bank staff.” “The award proves that our business strategy based on proactive customer relationship management,a strong programme lending risk model, and innovative product development, has allowed the Bank to differentiate itself in the Malaysian SME segment.”

Launch of Series 7 of the OSK-UOB Focus Bond Suite of Funds OSK-UOB Investment Management Berhad (“OSK-UOB”), a subsidiary of RHB Capital Berhad, launched Series 7 of its OSKUOB Focus

Bond suite of funds. RHB Bank Berhad will be the exclusive distributor of the fund for a period of two weeks from 25 March 2013 to 7 April 2013.

Similar to the previous series, the Series 7 offers investors the opportunity to widen their investment portfolios by investing in a 3-year close-ended bond fund; which invests at least 95% - 100% of its net asset value into global debt instruments/bonds and up to 5% of its net asset value into liquid assets including money market instruments and deposits with financial institutions.

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Market Info Resort World Genting 1st in Malaysia to offer online Multi-Currency Pricing Powered by RBS’s FXmicropayTM solution Resort World Genting, the must visit resort in Malaysia under the management of Genting Malaysia Berhad launched a multi-currency pricing solution on its ‘iHoliday’ online reservation system, developed using FXmicropayTM, the Royal Bank of Scotland’s (RBS) first resort in Malaysia to be offering such a service. At the launch were Mr Thomas Ng, Senior Vice Executive of RBS Berhad together with Mr Chow Wei Heng, Vice President of National Marketing, Resorts World Genting. Through TBS’s FXmicropay, Resort World Genting will receive direct FX rates which are linked to the ‘iHoliday’ online reservation system, allowing customers to conduct instant multi-currency pricing and ultimately charging the same amount.

Local and Global Funds Pay RM23.8 Million Income Distributions Pacific Mutual Fund Bhd announces income distributions for seven of its local funds and three global/foreign mandate funds. “In general, the past 12 to 15 months surprised many on the positive side, especially for equities, amidst the many ongoing economic and geopolitical issues afflicting the different countries and regions of the world. Moving into the second quarter of 2013, our fund managers can still identify good investment opportunities in corporations that have favourable earnings prospects, strong balance sheets and which are still trading at reasonable valuations. Overall, amidst obvious short term volatility, an active investment management strategy coupled with good stock picking / sector allocation calls will be key to performance,” says Gary Gan, Pacific Mutual’s Executive Director and Chief Executive Officer.

Eastspring Investments Berhad Unveils The Latest Income Product With “Bond Plus Fund” Eastspring Investments Berhad announced the launch of its latest fixed income product known as Eastspring Investments Bond Plus Fund (“the Fund”). This open ended fixed income fund aims to provide a steady stream of income for the investors by investing in a portfolio of local and foreign fixed income securities. The new fund will invest a minimum of 70% of its Net Asset Value (NAV) in fixed income securities and up to 30% of its NAV may be invested in foreign fixed income securities.

ASEAN Regulators Implement Cross Border Securities Offering Standards

The ASEAN Capital Markets Forum (ACMF)1 announced that the securities regulators in Malaysia, Singapore and Thailand have implemented the ASEAN Disclosure Standards Scheme (Scheme) for multi-jurisdiction offerings of equity and plain debt securities2 in ASEAN.

The Scheme aims to facilitate fund raising activities as well as to enhance the investment opportunities within ASEAN capital markets. Issuers offering equity and plain debt securities in multiple jurisdictions within ASEAN will only need to comply with one single set of disclosure standards for prospectuses, known as the ASEAN Disclosure Standards, bringing about greater efficiency and cost savings to issuers. Money Compass

Porsche Cayenne prize drives UOB cards billings by record 20 per cent

United Overseas Bank (Malaysia) Bhd (UOB Malaysia) posted a record increase of 20 per cent in its cards billings during its three-month “UOB Drive Away With A Porsche Cayenne” contest, which was held from 26 October 2012 to 31 January 2013. Besides the historic high billings, acquisition of cards also doubled during the contest period with more than 28,000 new cards issued to eligible customers. Mr Kevin Lam, Managing Director and Country Head of Personal Financial Services of UOB (Malaysia) said, “This contest is part of our rewards programme to give our customers the opportunity to enjoy exclusive privileges and benefits. The increase in our cards billings and acquisition is demonstration that cardmembers are looking for great values and opportunities such as winning a luxury car worth RM700,000. With our focus on having a robust rewards programme for retention and acquisition, we expect to increase our billings market share further this year.”

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Market Info The All-New CR-V Receives Record

1MDB awards RM2.1bil contract 1MDB (1Malaysia Development Berhad) has awarded a RM2.1 billion contract to develop eight sites in the relocation of Pangkalan Udara Kuala Lumpur which will be transformed into Bandar Malaysia. Lembaga Tabung Angkatan Tentera (LTAT) will undertake the development through its wholly-owned subsidiary Perbadanan Perwira Harta Malaysia (PPHM). The relocation involves various units of the Royal Malaysian Air Force (RMAF), Royal Artillery Regiment (31 RAD) and the air wing of the Royal Malaysian Police (RMP) from the old Sungai Besi airport.

P1 Wins Gold For Media Strategy At The Marketing Excellence Awards Packet One Networks (Malaysia) Sdn Bhd (“P1”), Malaysia and Southeast Asia’s leading 4G operator fondly known for its edgy and catchy marketing campaigns has added another feather to its cap as it took home the Gold for ‘Excellence in Media Strategy’ at The Marketing Excellence Awards for its ‘Tukar Tak Tukar’ campaign. P1 was also the finalist in the ‘Excellence in Advertising’ category for the same campaign. The ‘Tukar Tak Tukar’ campaign which ran from October to December 2012, mirrored an election theme inciting change from 3G to P1’s 4G broadband plans which gave significantly more usage quota and attractive rebates. It bordered on controversy in true P1 style when many thought it was some form of propaganda during the teaser phase, when it was just a campaign micro-site address and the P1 brand was not revealed.

OSK- UOB Funds’ Distributions OSK-UOB Investment Management Bhd (OSK-UOB), a subsidiary of RHB Capital Berhad has declared distributions for seven of its funds under management. The distributions declared were for the financial year ended 31 March 2013. OSK-UOB declared a net distribution of 5.7770 sen per unit for OSK-UOB KidSave Trust, 5.5000 sen per unit for OSK-UOB Dana Islam, 6.0000 sen per unit for OSK-UOB Income Fund, 5.1000 sen per unit for OSK-UOB Emerging Opportunity, 2.7000 sen per unit for OSK-UOB Malaysia Dividend Fund, 5.000 sen per unit for OSK-UOB Smart Treasure and 3.9000 sen per unit for OSK-UOB Smart Income Fund.

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The All-New CR-V created a new milestone in Honda Malaysia when close to 3,000 bookings were received in the first month of its launch. This is the highest number of bookings that Honda Malaysia has received for a new car model. The 4th Generation SUV also topped its own historical record since it was launched on 5th March 2013 - this highest booking figure surpassed all monthly bookings received for the three previous generations of CR-V. With this record bookings, Honda Malaysia has achieved 43 percent of the 7,000 yearly sales target set for the All-New CR-V.

AXA AFFIN Life Insurance Awards Top Agents

AXA AFFIN Life Insurance Berhad recently awarded its top achievers at the Genting International Convention Centre for their hard work, dedication and outstanding performance in 2012. In his speech, Mr Loke Kah Meng, Chief Executive Officer of AXA AFFIN Life Insurance Berhad proudly shared with the team that AXA AFFIN Life’s industry standing has improved significantly since its establishment in year 2006, and now AXA AFFIN Life is looking at making its mark into the Top 10 position by second quarter 2013. “Our target is to be the Top 5 brand in the industry” said Mr Loke.

Embracing health and wealth in the Year of the Snake Prudential Assurance Malaysia Berhad (PAMB) recently organized the Prudential 2013 Outlook and Wellness Talk as part of its customer appreciation programme to help improve the health and wealth of its customers as they usher in the Year of the Snake. The talk was also attended by Prudential’s agency managers and top performing agents. With wealth and health being the focus of the event, “Corporate Wellness Guru” Wong Yu Jin and Robert Rountree, Director, Global Strategist, Eastspring Investments (Singapore) Limited were invited to shed valuable insights on the best health and wealth practices. Eastspring Investments part of Prudential Corporation Asia, is Prudential's asset management business in Asia.

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Market Info MFPC National Forum,

5th Graduation Ceremony & Dinner The Malaysian Financial Planning Council (MFPC) organized its 5th Graduation Ceremony – Achievers Today, Leaders Tomorrow. Senator Dato Ir Donald Lim Siang Chai, Deputy Finance Minister is scheduled to grace the event. A total of 360 graduates would be conferred the titles of Registered Financial Planner (RFP), Shariah Registered Financial Planner (Shariah RFP) and affiliate RFP and Shariah RFP respectively. In conjunction with the Graduation Ceremony and Dinner; MFPC has organized its 5th National Forum entitled “Investing in Precious Metals” on the same day. Invited speakers include Mr Chan Cheh Shin, Chief Investment Officer, OSK-UOB Islamic Fund Management Berhad; Dato’ Louis Ng, Chairman, Public Gold Group and Mr Paul Khoo, Chief Executive Officer, Standard Financial Planner.

OCBC Al-Amin Targets Young Adults Through Xpres Branches OCBC Al-Amin Bank Berhad (OCBC Al-Amin) officially opened its flagship OCBC Al-Amin Xpres branch at the Masjid Jamek LRT station as part of its effort to further engage its young adult customers. “We expect our approach to resonate with young adults, especially working professionals, who are looking for simplicity and convenient locations at which to do their banking even outside regular banking hours, OCBC Al-Amin Director & CEO Syed Abdull Aziz Syed Kechik said.“We are working to provide quick-access, simple and effective Shariah banking solutions to our customers. Our target is to be top-of-mind among young working professionals and ultimately become their one-stop banking partner,” he said.

Takaful Ikhlas Wins the Best Takaful Provider Award for the Third Time by Euromoney Takaful Ikhlas Sdn Bhd (Takaful IKHLAS) marked its 10th year presence in the takaful industry by receiving the Best Takaful Provider award for the third time at the Euromoney Islamic Finance Awards 2013. The event was hosted at the prestigious Landmark Hotel, London, recently. "We are proud to receive this award and recognition given by Euromoney for the third time. Winning this prestigious award will drive us to continue with our commitment to provide the best services in fulfilling the needs of our customers. This recognition is an important attestation to the quality of our products and services," said the President and Chief Executive Officer of Takaful IKHLAS, Encik Ab Latiff bin Abu Bakar.

PIAM Launches Insurance History Book

UOB celebrates ten years of the Lady’s Card with new Solitaire Card for financially successful women

To cater to the growing number of financially successful women in Malaysia, United Overseas Bank (Malaysia) Bhd (UOB Malaysia) announced the introduction of the UOB Lady’s Solitaire Card, offering luxury travel and lifestyle privileges for women who want to reward themselves for their hard work. The launch of the card marks the tenth anniversary of UOB’s pioneering range of credit cards exclusively for women in Malaysia. UOB Malaysia was the first card issuer to introduce the Lady’s Classic and Lady’s Platinum Cards to the market in 2003. The new UOB Lady’s Solitaire Card is the most exclusive among the three UOB Lady’s Cards1 and is available by invitation only to women earning RM150,000 and above per annum.

The General Insurance Association of Malaysia (PIAM) unveiled a book detailing the history of the insurance industry in Malaysia entitled “A Matter of Risk: Insurance in Malaysia 1826 -1990” at the Lanai Kijang, Bank Negara Malaysia. The book highlights the significant role and contributions of the insurance industry in the economic development of Malaysia. Based on in-depth research, the book traces back on how insurance companies established themselves in ever changing business environment, marketed new products, responded to diverse demands and etc.

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EMC7 - Money Compass (english) June-July 2013